The Importance of Lawyers

Clif Bar: A Case Study

Clif Bar is a popular energy bar brand boasting all-natural ingredients and delicious flavors, including brownies, mint chocolate, and oatmeal cookies. However, the company has a history that not many are aware of, described in the NPR podcast How I Built This hosted by Guy Raz.

For all its popularity, Clif Bar had some truly company-ending disasters that they barely survived. The founder admitted that he had little to no business knowledge, which was made very clear by how he delayed paying his manufacturers until he got sales profits. This is a very risky business decision, and it could have been mitigated somewhat by presenting estimated sales figures to manufacturers and sellers. This would have those groups become more confident in the product and built trust.

While that was very risky, there are two other events that would have been avoided entirely if a lawyer was included in the decision-making process. The first event happened after Clif Bar ran an ad implying that their major competitor PowerBar was inherently inferior to Clif because they didn’t have natural ingredients. Unsurprisingly, Clif Bar was promptly sued. Their insurance settled the costs, and the case was settled out of court. In this case, a lawyer could have advised the company on what to avoid when making such a provocative advertisement, or how to make it so they couldn’t get sued.

The second event happened because of the founder’s refusal to contact lawyers regarding a “handshake deal” - a verbal contract that is nonetheless legally binding. The distributor did not hold up their end of the deal, so the founder cancelled the contract. However, the handshake deal meant that nothing stopped the distributor from suing for ownership, which dragged the founder into a legal battle for the fate of his company. The case cost so much money that the company needed to get a bank loan.

Lawyers are a vital tool in any entrepreneur’s toolbox. When in doubt, consult a lawyer on any potential advertising and contracted deal because legal trouble is often expensive and stressful. While lawyers may cost a lot of money, the consequences of not hiring one are often worse.