It’s difficult to manage the complexity of legal concerns that businesses face these days unless you have an attorney on your team when you first start out.
When do you require the services of a lawyer? Although the answer varies depending on your business and circumstances, it’s always a good idea to consult a lawyer before making any decision that could have legal repercussions. Setting up a partnership or corporation, ensuring regulatory compliance, negotiating loans, obtaining trademarks or patents, preparing buy-sell agreements, assisting with tax planning, reviewing business forms, negotiating and drawing up documents to buy or sell real estate, reviewing employee contracts, exporting or selling products in other states, and collecting bad debts are just some of the services available. If something goes wrong, you may need an attorney to defend your trademark rights, take an employee conflict to court, or represent you in a product liability litigation.
Some entrepreneurs wait until something goes wrong before consulting an attorney, but this isn’t the best strategy in today’s litigious environment. Many business owners compare their connection with a lawyer to that of a marriage: it takes time to grow. That’s why it’s critical to start laying the groundwork for a successful relationship as soon as possible.
Choose a Lawyer
How do you go about finding the correct lawyer? Request recommendations from other business owners in your sector, as well as trusted professionals such as bankers and accountants. Ask for the specific qualities and limitations of the attorneys they recommend, not simply their names. Then inquire as to which attorneys your business associates recommend and why. (If you phrase the request as “If for some reason I couldn’t use you, who would you recommend and why?”) Attorneys are more willing to help if you express it as “If for some reason I couldn’t use you, who would you recommend and why?” Contact your local Bar Association for extra leads; many of them offer referral services.
Next, schedule a meeting with the top five attorneys on your list. Tell them you want to develop a long-term connection with them, and see which ones are ready to meet with you for a free initial session.
Prepare to outline your company and its legal requirements during this initial meeting. Pay attention to what the lawyer says and does, and search for the following characteristics:
Although finding an expert in your sector isn’t required, it makes sense to search for someone who specializes in small-business issues rather than, example, maritime law. Check to see if the lawyer is prepared to take on minor issues; for example, if you’re trying to collect on a modest invoice, will the lawyer consider it worth their time?
You’re seeking for a long-term partner in the expansion of your company. Sure, you’re a startup right now, but does your lawyer understand where you want to be in the future and share your vision?
3. Communication skills
Look for someone else if the lawyer speaks in legalese and doesn’t attempt to explain the phrases he or she uses.
Will the lawyer be available for meetings at your convenience rather than theirs? How quickly can you expect to receive a response to an emergency phone call?
Is this someone with whom you can get along? You’ll be talking about personal issues, so be sure you’re comfortable doing so.
6. Fees that are reasonable
Attorneys’ hourly rates range from $50 to $1,000 or more. Before making a decision, get quotations from a few different companies. However, you should avoid comparing attorneys solely on the basis of fees. Because a novice attorney may take twice as long as an experienced one to accomplish a project, the lowest hourly prices may not imply the best value in legal labor.
Inquire about the types of businesses or cases with which the attorney has previously worked. Compile a list of clients or other attorneys with whom you may speak about competency, service, and prices.
Draw up an agreement (called a “engagement letter”) detailing the billing mechanism when you hire an attorney. If you have more than one attorney working on your case, make sure you identify each attorney’s hourly rate so you don’t end up paying $200 an hour for legal work done by an associate who only charges $75 an hour.
This agreement should also spell out what expenses you’ll be responsible for. Meals, secretarial overtime, postage, and photocopying are all expenses that some lawyers expect to be compensated for. Accept that only reasonable and required out-of-pocket expenses will be reimbursed.
Whatever methods your attorney use, there are things you can take to keep legal expenditures under control:
Make a written estimate of the expense of each matter from your attorney so you can evaluate whether it’s worthwhile to pursue. If the bill exceeds the estimate, inquire as to why. Some lawyers also offer “caps,” which guarantee the maximum cost of a service in writing. This aids in budgeting and provides more assurance than simply getting an estimate.
Find out what time intervals the company uses to determine its bill. Attorneys keep track of their time in six-minute intervals up to half-hour increments. Is a five-minute phone call going to set you back $50?
Request itemized bills on a monthly basis. Request and review monthly invoices. Excessive fees are the most obvious red sign; this indicates that your file is being worked on by too many individuals—or the incorrect people. It’s also possible that you’ll be invoiced for work done for a different client, so double-check your invoices.
See if you may get a discount for paying on time. If you pay within 30 days of the invoice date, you can get a discount on your payment. Thousands of dollars might be added to your bottom line with a 5% discount.
Prepare yourself. Know exactly what you want to talk about with your lawyer before you meet with him or call him. Send any necessary documents ahead of time so that your attorney doesn’t have to read them during the meeting and can get right to work.
Meet with your attorney on a frequent basis. This may not appear to be a cost-cutting strategy, but you’ll be surprised at how much it cuts down on the unending phone tag that plagues busy businesses and attorneys. More importantly, a monthly five- or ten-minute consultation (even over the phone) can save you a lot of money by catching little legal issues early on before they get out of hand.