A court case with a lot of twists highlights the challenges that businesses can face when they try to expand by offering a broader range of services to their clients.
The husband-and-wife team of Sara and Warren Wilson are the founders of Snack Factory LLC, a Skillman-based pretzel-chip company. They are blaming a Philadelphia attorney and his law firm for their loss of a lucrative licensing deal from Pepperidge Farm Inc., a subsidiary of Camden-based Campbell Soup Co., according to the case making its way through Trenton’s federal district court.
"It’s not unusual for a professional services firm to want to do all it can for clients," said Michael H. Karu, a co-managing member of the Livingston CPA firm Levine Jacobs & Co. LLC, who was not involved in the ongoing case. "Without passing judgment, I would just note that smaller firms are often very protective of their clients, but they still have to know their capabilities — and know when it’s time to tell a client that outside help is needed."
A mid-tier or large CPA firm or law firm would likely have specialists in just about every kind of area, he said, but a smaller firm may have to look for outside help to handle an unusual or very large assignment.
The Wilsons said they initially retained Bernard Eizen and his firm, Eizen Fineburg & McCarthy, to help with personal and estate tax planning.
But Eizen "leveraged his position of trust to become the family’s ‘one stop shop’ for all personal and corporate needs," according to the complaint.
The lawyer and his team "knew, or should have known, that they lacked the high degree of skill, experience and proficiency in intellectual property licensing matters necessary to competently represent Snack Factory in these transactions," according to court documents.
Eizen Fineburg doesn’t agree.
"We represented the Wilsons successfully for decades, including in connection with the prior successful sales of two of their businesses to Nabisco and J&J Snack Foods," according to a statement issued by the law firm. "The allegations concocted in the complaint are baseless and grossly inaccurate, incomplete and misleading. ... We stand by all of the advice we and intellectual property counsel have given to the Wilsons."
Concern over litigation like this likely is driving an increasing number of smaller professional services firms to either farm out complex matters to outside experts — while making full disclosure to clients — or to decline an engagement to begin with, Karu said.
"A large financial services client of ours asked us to do some valuation work that I knew was beyond our comfort level," he said. "So I told the client I wanted to contact another firm that could handle it, and everyone was satisfied."
Karu said he didn’t worry about losing the client "because we had good relations with the client and with the friendly competitor firm. It’s not a good idea to learn something new on your client’s dime. If you have to bring in someone else, at least you have some control over the situation."
"When you overextend your capabilities, you can risk ruining the relationship with your client," said Joseph J. Kowalski, president of Capitol Management Consulting Inc., in the Titusville section of Hopewell. "It’s better to be upfront with a client and help them find someone who can handle their needs."
But not everyone agrees with that.
It’s OK to "step outside your comfort zone as long as you can find the people with the knowledge to get the job done," said Bob Zelnick, president of Ashford Consulting Group and chief executive of The Alternative Board North Central New Jersey. "If it’s done right, there’s a lot to be said for saying ‘of course we can,’ and then getting the talent to do the job right."
