All businesses need to use external advisors at some stage, whether they be accountants surveyors, IT specialists, lawyers, corporate financiers or otherwise.
These advisors, whether as individuals or firms, can be a valuable source of specialist, independent support and the fact that their conclusions are usually underwritten is a further major benefit of their deployment.
However, it pays financially to be careful at point of contractual engagement with them and beyond.
This is because many may charge by the hour as a default position in the event that an alternative arrangement with a customer is not reached at point of work commencement or is not subsequently in place at any point during the engagement while work is being performed.
Important considerations to such engagements are thus as follows:-
1. Ensure no chargeable work is able to be performed prior to you signing written contractual engagement terms with which you are comfortable
2. Can a fee structure preferable to an hourly rate be agreed, such as a fixed, deferred, capped or contingent fee arrangement? Or could the work be performed equally or even more efficiently by a non executive director directly appointed to the company board with relevant expertise at a cheaper price point?
3. Get any agreed preferred arrangement in writing for the avoidance of doubt down the line
4. Ask the advisor to confirm in writing that this arrangement does not negate any of your rights under their insurance policy (and do not be shy in asking for a copy of that policy to place on company record)
5. Insist upon regular written updates on fees that have been incurred to date being provided so these can be properly reviewed against estimations/expectations and future costs budgeted for
6. If unhappy with fees, ask for a written breakdown of fees before payment - most advisors are duty bound to provide this and ought not in any event to refuse
7. Take notice of any shortened 'chargeable codes' contained on any breakdown.
If a code, for example, reads "CO" standing for "consideration" and seeks to charge 1 hour of chargeable time for that privilege, then ask how and where the 'consideration' took place and what was the customer beneficial outcome, because is not inconceivable that generic codes such as this might be subject to inadvertent abuse where employed service providers may themselves be paid only proportionate to their billed time
8. Do not be afraid to seek a deduction in fees if you can reason this in writing and seek a credit note against any invoice(s) accordingly if / when agreed
9. Should it be necessary, ask the provider about both internal and external complaints procedures available to you and, again, do not be afraid to use those procedures if needed.
And remember at the end of the day, many excellent advisors want to be measured by results, not be time driven.
Length does not necessarily equal greater quality
Indeed, Paul McCartney jokingly accused Bruce Springsteen of ruining live concerts for many by introducing single artist sets of 2-3 hours as opposed to previous style half long hour sets by numerous artists on the same ticket. So, if you ever find yourself asking yourself why an advisor is using 1,000 words to explain what could reasonably and clearly be explained in 100, then you may feel you know the reason for this and could well wish to review engagement terms as a result!
In addition, whenever appointing a new advisor or firm of advisors, it may pay to seek a number of quotes and meet each candidate to assess their skill, ethos and personality compatibility with the business. Or to ask for customer references. Or research whether they have any particular experience in your field of business operation and their involvement in an advisory capacity could therefore help build your overall brand or secure core corporate objectives such as fund raise. And feel free to request sample work with any confidential detail deleted or obsured by them as necessary.
If you can relate to the contents of this post and would like us to assist further or make an introduction to a specialist who might be able to as appropriate, feel free to reach out to us in confidence via our "Contact" page.
For further information in this regard, please consult our "Legal Notices" page.