Arguably, legal issues are the cause of more financial losses that happen to individual and businesses than just about all other financial problems combined. These losses don’t only occur just because a person or business get sued either. They can happen because a contract is worded unfavorable against them. Legal problems happen when customers refuse to pay their bills, when suppliers can’t deliver what they were contracted to do and also when employees want to file a claim against a business.
Personally legal problems happen to people when they get a traffic ticket, when they buy a good or service that was represented as one thing but delivered as something completely different and when they too sign a contract that is worded in a way to give them little room to fight back if a deal falls apart.
Of course too, there is the fact that anyone could get sued for any reason.
Financial planning is the process of accumulating, distributing and transferring wealth. However, many financial planning practitioners fail to address the legal needs of their client in order to protect their wealth in the first place.
For those financial planners who are working with the top 10% of the population, there is a good chance that these clients have their own personal attorney’s that they work with. These attorneys can charge anywhere between $150-1000 an hour depending their specialty and location.
What I have seen is that many of the very wealthiest or those who have substantial businesses will always council with their lawyers on any important legal matter. They understand that the largest companies in the world have massive legal departments who look at every angle to give their firm an edge. In order to compete and protect themselves, understanding legal consequences of any important business decision is a must.
However, these fee’s can deter many of wealthiest of individuals from counseling with them before they make any important decision. More than likely, they have not had a big enough problem to justify spending money to get advise. Like everything in life, people tend to need to experience their own mistakes in order to justify additional costs. So instead, many will make a decisions and “wing it” hoping nothing bad will happen.
People who haven’t acquired wealth yet and are in the middle class. Forget it! Most of them are struggling to make ends meet meaning that they will never spend money to consult an attorney to keep themselves out of trouble. Some have friends or family members who are attorneys that they can occasionally ask for help but usually this only happens after they find themselves in big trouble.
Having a cost effective plan in place for legal issues is a cornerstone of a strong financial plan. Prior Preparation Prevents Poor Performance in ones pursuit of financial independence.