Monday, January 14, 2008

A Lawyer for Your Business and How to Afford One

Do you want success for your business? Then you need a lawyer. Let me explain why.

Too many legal issues have the potential for swamping the business. Getting legal counsel before needing a trial lawyer can prevent many of those legal issues.

Other legal matters may make the difference between a profit and a bigger profit. Again, asking for legal advice, counsel, helps the business.

Time spent by you trying to keep up with the legal matters that affect your business while trying to run the business is not time well-spent. Outsource that job to the people who know what they doing. Here, try this: turn this scenario around to where I - the lawyer - are trying to do the work you do for myself while also running my law practice. Does this make sense to you for me to do this?

Update 1/19/2008: Talking About Flat Fees - Record Time.

If you are still thinking you do not need a lawyer, I suggest you read Does Your Company Need a Business Attorney?. A good checklist for deciding when you need a lawyer and some of the services you should expect.

I think Legal: Does Your Business Need a Business Lawyer? It may sound expensive, but it could save you money in the long run should be read even though I have some disagreements with the article. I agree with his criteria for selecting a business lawyer and I have absolute agreement with this list:

Why do I need a business attorney? Because he or she can:

  • Ensure compliance with company or corporate formalities. A business attorney will draft resolutions, minutes, etc.
  • Prepare and review business documents and contracts. Although there are quite a few self-help legal guides and pre-printed forms do exist, you should not rely on these materials exclusively. The law can be complicated, and mistakes can be costly.
  • Prepare employment agreements and employee policies/handbooks protecting you from wrongful discharge and discrimination lawsuits.
  • Amend or replace basic agreements like shareholder agreements or operating agreements and purchase agreements.
  • Provide immediate access to legal counsel with knowledge of your business in times of crisis to evaluate situations as they arise and provide you with timely advice and guidance.
  • Provide a confidential sounding board to help assess company issues, strategies and plans.
  • Point out potential problems that you may not anticipate with your company, its employees, operations, policies and procedures.
  • Negotiate on your behalf for the sale of your company or the acquisition of another company or its assets.
  • Negotiate financial arrangements.
  • Navigate the sometimes complex landscape of obtaining State and Federal licenses your business may need.
I think the list is not exhaustive but it covers a lot of territory. How many of these did you think of needing for your business? Who is handling this work now and how well are they doing their job?

I disagree with the discussion about fees. First, if I were starting a business my eyes would have really popped when I reached this paragraph:
Attorneys handling business matters typically charge more than $200 per hour for their services. This may sound expensive, but the key considerations are the value of the services provided and efficiency of use.
They popped enough as is. the writer recognizes only an hourly billing rate when many business services can be provided on a flat fee basis. In this age of computers, most document preparation services should be billed on a flat rate basis. I do that and have no rational explanation for the firms who still bill on the hourly basis.

All businesses need the means to calculate their costs. An attorney billing on the hours too open a cost for a business. Flat fees should give businesses a means to calculate their costs, value for the client and profit for the lawyer.

Hourly billing does not lend itself to preventive law. I think the amount of fees in the following paragraph as being accurate:
If a contractual or employment dispute were to arise for a business, the cost of litigating the matter may well run from $20,000 to over $50,000. Having properly prepared contracts at the outset may prevent the matter from ever leading to a lawsuit.
But what you want for your business is to not go to court. So you weigh the upfront costs of a running meter at the attorney's office with the possibility of a lawsuit and opt not to talk to an attorney. That works so long as you do not get sued.

On the other hand, you need to recognize that there are costs on the attorney's side. Unique and creative work may need to be done on an hourly basis. I do charge on the hourly for one-off work that is not standardized. That is where the business wants something written that will be used once and I do not have an ongoing relationship with the business.

With my practice, I see flat fees as providing an incentive to clients to prevent their problems. What I do is offer a range of monthly fees that starts with only providing a set amount of telephone consultations each month and proceeds upward depending on the additional services. These might include contract and document drafting as well as consultations and litigation. With litigation, I specify whether the fees will be contingency, reduced hourly rate, or another alternative fee.

I am not the only lawyer who offers other than hourly rates for business clients. I may be the only one in Indiana who has the fee structure I have just written about but I suspect there are others. If you own an Indiana business and want to know specifics about fees, please give me a call at 765-641-7906.

Update 9/6/08: I just added Business Law: Contingency Fees for Litigation.