Who gets to pick the lawyer when the seller is paying for one

The situation

What Dirk was actually afraid of, when he first laid out the problem, was not the lawsuit itself. It was the idea of losing control over how it was handled while someone else's chosen lawyer, answering to someone else's interests, ran the defence of a claim that could still land on his desk personally, and on the clinics' reputation, if it went badly. That fear was why he called us before responding to the seller's letter, rather than after a response had already conceded ground he did not need to concede.

The background: Dirk and Anh, both chiropractors who had spent years building their own practices before deciding to grow through acquisition, had led the purchase of a multi-location clinic group in Milton roughly a year earlier, in a transaction in the thirty to fifty million dollar range. The purchase agreement included a standard indemnity under which the seller agreed to defend and cover the cost of any claim arising from conduct that predated the closing, a common allocation of risk in a deal of this kind, meant to protect the buyer from liabilities it had no role in creating. Not long after the acquisition closed and Dirk and Anh had begun integrating the clinics into their existing operations, a former patient of one of the acquired clinics filed a lawsuit alleging conduct that had occurred entirely before Dirk and Anh's team took over, squarely the kind of pre-closing liability the indemnity was written to cover.

Under the agreement's terms, the seller had both the obligation and, on its own reading of the clause, the right to control the defence, including the choice of counsel, so long as it was footing the bill. The seller moved quickly, within days of being notified, to appoint a law firm it had used before on unrelated matters, a firm Dirk had never worked with, and instructed it to take over the file without meaningfully consulting Dirk or Anh about the plan, the strategy, or even the basic facts as the clinic's own staff understood them.

Dirk and Anh's management team, which also included Tuan, the clinic group's operations lead and the person fielding most of the day-to-day staff and patient questions once word of the lawsuit spread internally, had real reasons to want a say in how the claim was handled. A defence run purely to minimize the seller's payout, without regard for the clinics' ongoing reputation in the community or the operational disruption a poorly managed defence could cause among staff and patients alike, was not necessarily the defence that served the business Dirk and Anh now depended on for their livelihood and had every intention of running for decades to come.

What the documents showed

Everything turned on the actual wording of the indemnity and defence provisions in the purchase agreement, and this was where the file's turning point appeared almost by accident. The seller's outside counsel, in the same letter announcing the choice of defence firm, quoted a clause claiming it gave the seller unrestricted authority to select and instruct counsel. But the clause, read in full rather than in the excerpt the seller had quoted, actually gave the seller the right to assume the defence subject to the client's reasonable approval of counsel, and it further provided that if a conflict of interest existed between the seller's interests and the client's interests in how the defence was run, the client could retain its own counsel at the seller's continued expense.

That distinction was not a technicality. A defence-control clause that requires approval of counsel is a meaningfully different right than one that gives the paying party unilateral choice, and the seller's letter had simply misstated which version applied. We confirmed this by reviewing the full agreement rather than relying on the seller's characterization, a step that turned out to matter enormously once we set out the actual language in response.

The conflict point mattered too. The underlying lawsuit alleged conduct that, if proven, could expose the seller to a much larger indemnity claim than the lawsuit's stated damages alone, since a finding against the clinic on certain facts could trigger separate representations and warranties the seller had made elsewhere in the purchase agreement. That gave the seller a live incentive to steer the defence toward a quick, low-cost settlement that limited its own broader exposure, even if that settlement was not in the clinic's operational interest. That was precisely the kind of conflict the agreement's carve-out anticipated.

Once we laid this out in writing, citing the agreement's own language back to the seller's counsel, the seller's early tactical move, quoting the clause selectively rather than attaching the full agreement, became the weakest part of its position. It signalled either an unreliable read of its own contract or an assumption that the client would not push back, and neither assumption survived contact with a careful comparison of the letter against the agreement itself. From that point forward, the seller's counsel was negotiating from a weaker footing than the one it had opened with, and the tone of the correspondence shifted noticeably once the full clause was on the table rather than the seller's chosen excerpt of it.

What we did

1. Pulled the full purchase agreement and read the defence and indemnity provisions end to end rather than accepting the seller's excerpted quotation of a single clause, because that same excerpting habit had already misled Dirk about what rights the agreement actually gave him, and we were not willing to repeat that same mistake in reverse when the client's real position was on the line.
2. Identified the approval-rights and conflict carve-out language that the seller's letter had conveniently omitted, then mapped that language carefully against the specific facts of the underlying lawsuit to confirm the conflict carve-out was genuinely triggered here on these facts, and not merely arguably relevant in the abstract. A carve-out that looks relevant on a surface reading but does not actually apply to the facts is not a basis to challenge counsel selection, so this step had to be rigorous, not hopeful.
3. Sent a detailed written response to the seller's counsel quoting the full clause verbatim, explaining precisely why the alleged conduct created the kind of conflict the agreement's carve-out contemplated, and formally asserting the client's right to retain its own counsel at the seller's continuing expense, because a clear written record established early would matter enormously if the dispute escalated further.
4. Recommended experienced defence counsel for the underlying claim who specifically understood healthcare-adjacent liability work and the sensitivities involved in defending a clinic against a former patient, so the client's chosen firm could step into the file competently and quickly rather than losing valuable time getting a new lawyer up to speed on the facts from zero. Dirk and Anh interviewed two candidate firms before deciding, well within their rights under the funding obligation.
5. Negotiated directly with the seller's counsel over cost-reimbursement mechanics, since the seller, having lost the counsel-selection point cleanly, tried next to slow-walk invoice payments through its own internal review process, and we needed the funding obligation enforced in practice on a reasonable schedule, not merely conceded on paper without consequence. A right to funding that arrives months late is a much weaker right than the agreement's language suggests.
6. Coordinated closely with the client's new defence counsel on strategy input from Dirk, Anh, and Tuan's operational perspective throughout the litigation, making sure decisions about settlement posture accounted properly for the clinics' ongoing reputation and patient relationships, not only the narrower dollar exposure the seller's counsel cared most about. Tuan's day-to-day contact with staff meant he often flagged operational concerns before they reached Dirk or Anh directly.
7. Monitored the underlying litigation's progress and the seller's ongoing compliance with its funding obligation through to final resolution, stepping back into the file whenever an invoice dispute or a strategy disagreement threatened to reopen the control question the seller had already lost at the outset. This ongoing oversight mattered because a won point can quietly erode if nobody keeps checking that the other side is honouring it in practice.
8. Kept Dirk and Anh briefed in plain language at each stage, translating the litigation's procedural developments into terms that mattered to a clinic operator rather than a litigator, since their real interest was operational continuity, not the technical mechanics of the pleadings, and an anxious client kept in the dark tends to make worse decisions than one who understands what is actually happening and why.
9. Reviewed the final settlement terms against the client's operational priorities before advising sign-off, confirming the agreement contained no ongoing obligations or public statements that could affect the clinics' standing with patients, since a financially favourable settlement that created a reputational liability would not have been the win Dirk and Anh were actually looking for. Tuan reviewed the operational language specifically, since he would be the one managing any fallout with staff and patients after the file closed.

The outcome

The seller backed down on counsel selection within about two weeks of our written response, once it was clear the agreement did not support unilateral control and that the conflict carve-out genuinely applied on these facts. Dirk and Anh's chosen defence counsel took over the file, funded by the seller as the agreement required, and ran the litigation according to a strategy the clinic's management team actually had meaningful input into from the start, rather than learning about decisions after they had already been made.

The underlying lawsuit itself settled roughly eight months later on terms the client considered favourable, at a value within the range the client's own counsel had projected early in the file, without the clinics absorbing any of the defence cost at any point along the way. The seller paid the full defence bill throughout the litigation, including a modest amount it had initially tried to withhold pending its own internal review of the invoices, which we resolved through direct negotiation with the seller's counsel rather than a further formal dispute that would have added its own delay and cost.

Beyond the immediate result, the episode gave Dirk and Anh a template for reading their own agreements more carefully going forward, in this deal and in any future one. Dirk told us afterward that the experience changed how his team reviewed vendor and contract language generally across the business, no longer taking a counterparty's quoted excerpt at face value without checking the full document first, a habit he said had already caught a smaller but similar issue in an unrelated supplier contract. The clinics continued operating without interruption through the entire litigation, with no patient-facing disruption and no staff turnover attributable to the dispute, which had been Dirk's real concern from the first phone call.

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