One Legal Advisor, Dual Roles: Streamlining Business Transactions

Introduction

Using the same Legal Advisor to act on behalf of the buyer and seller of a company/business is a proven method that fosters trust, reduces costs, and streamlines the entire transaction process.

A frequent question I receive is whether the buyer and seller, especially in management buyouts where the parties may have a long-standing relationship, can use the same legal adviser.

Yes, or No?

While nothing legally prevents the buyer and seller from sharing a legal adviser, it’s highly improbable that a solicitor will agree to represent both parties. The adversarial nature of the legal system in England and Wales, governed by Solicitors Regulation Authority rules, classifies this as a conflict of interest.

However, as a law graduate and Chartered Governance Professional, my firm is not bound by these same restrictions. Over the past 12 years, we have successfully represented both buyers and sellers in numerous transactions, providing a unique and effective service.

The Process

When we are engaged to represent both parties, we follow a transparent and inclusive approach:

·        Drafting: We create a balanced Share Purchase Agreement.

·        Open Meeting: Both buyer and seller participate in a detailed review of the agreement.

·        Explanation: We explain the implications of the agreement to both parties.

·        Warranties and Disclosure: We review the warranties with the seller, prepare the Disclosure Letter, and ensure the buyer is present during disclosures for complete transparency.

Advantages

This collaborative approach offers several benefits:

·        Cost Efficiency: Only one legal fee is incurred, split between the buyer and the seller.

·        Expeditious: With buyer and seller working alongside each other the whole process is far less protracted and delays in completion are averted.

·        Streamlined Process: Avoids point-scoring between lawyers, which often delays completion and escalates costs.

·        Transparency: Promotes openness from the start, which our clients have found preferable.

Precedent

As indicated above, we have acted in this capacity on numerous occasions. In addition to our experience, this approach has established global precedents and is adopted as a successful strategy. For example, in Austria, it is customary for both the buyer and seller of residential property to share a lawyer and review sales documents together.

Contact Richard Jenkins on 024 7698 0613 or Richard@clariclegal.co.uk for further advice

or assistance if you are considering buying or selling a company.