In my last post, I talked about the importance of building a solid professional team to help you maintain compliance. One of the most important members of this team is an attorney. In an ideal world, you would consult with an attorney frequently as you start and grow your business. You would use an attorney to review your company documents, prepare your contracts, and for a variety of other reasons, of which there are many.
But most startups can’t afford to spend thousands of dollars on legal bills. So what you do? Only you can make the ultimate decision of when to hire an attorney, but with these tips, you will be able to spend less money while still getting the legal advice you need.
- Assess your risk. Typically it is a good idea to have an attorney conduct a general review of your business model and point out any particular areas of concern. You may also have an adviser, mentor, or consultant who is experienced dealing with small businesses issues and can advise you when you are entering a risky situation. For instance, contracts should be reviewed by an attorney, especially if there is a considerable amount of money on the line. By assessing your risk, you can prioritize which issues you want help with from your attorney. If you decide to do legal work yourself, there are many free resources and legal templates available online.
- Do your research ahead of time. When approaching an attorney, learn as much as you can on your own. You probably know your business better than your attorney does and can learn a lot about legal issues and regulations through trade journals, publications, and other resources available in your industry. If you come across specific regulations or court cases that may be relevant to you, provide those resources to your attorney. Doing some of the leg work ahead of time will help cut down on billable hours. You can also find information on general business legal issues through the Small Business Administration (SBA).
- Ask for help with specific issues. Along the lines of the previous point, if you have a specific concern, come up with a specific legal question or problem you want your attorney to solve. Focusing your attorney’s work will help you get an answer without leading to off-topic discussions or extraneous research. For instance if your attorney is reviewing a real estate lease document, instead of saying, “please review this document and tell me if it is ok” say something like, “I’m concerned with lead-paint in the building and want to know what disclosure statements I need to include”.
- Talk about fees early. Asking an attorney about their fees and flexibility in pricing should be one of the first things you talk about, if not the first. I can’t tell you how much time I’ve wasted over the phone describing my situation and questions to secretaries or junior attorneys only to find out at the end of the discussion that the firm’s fees are way more than I was willing to spend.
- Ask if you will be charged for a consultation prior to scheduling a meeting. Many people do not realize that most business attorneys charge for consultations. It is not always the case that the secretary will inform you of this cost upfront. I’ve seen people get a $400+ bill in the mail after a one hour initial sit down, which primary purpose was finding out if the attorney and the business were a good fit for each other instead of getting advice on the actual issue.
- Find out if the attorney would be willing to offer fixed or capped prices. Attorneys often prefer to bill hourly so they get paid for all of their time. Having worked at a law firm where the firm would bill by six minute intervals, many attorneys would bill 1/10th of an hour for sending a quick email or leaving a phone message. When an attorney’s rates are $500-600 an hour, fees quickly add up. If you find an attorney who works on a flat fee basis, or if you can cap the amount of work at a certain number of hours, then you may find yourself saving a lot of money.
- Don’t make fees your only consideration. I’ve had some of the best experiences with attorneys who bill in the $200-250 an hour range. Oftentimes attorneys who are outside of big cities have lower overhead and lower fees. That said, for certain issues, hiring the best is worthwhile. If you are investing thousands of dollars developing a product and applying for a valuable patent, finding the best attorney for that purpose is probably more important than saving a few hundred dollars.
- Look at firm size. Generally speaking, I’ve learned that service providers who are the best fit for small business are similar in size. A small firm, whether a law firm or marketing firm, will typically be the best fit for a small business. They tend to better understand the issues you face and work at a faster rate. I’ve also noticed that some larger firms refuse to take startup businesses as clients.
- Consider specialization. Just like doctors, lawyers typically specialize because the law is vast. You may have an attorney who practices general business law but you may need to seek specialized counsel for dealing with specific issues like local zoning or patent applications. Also note that some attorneys are litigators, meaning they represent clients in court, while other attorneys are counselors, meaning they advise clients and prepare documents. It is important that your attorney has the expertise to help you with your issue, or else it may take him considerably longer to address the issue, potentially leading to higher fees.
There you have it, some actionable items you can use to get the legal advice you need without spending too much money. Have any tips you’d like to add? Please share your experiences below!