As you launch and scale a company you will, undoubtedly, face challenges and spend countless nights awake worrying. And invariably, you will encounter a problem that leads you to ask: do I now need to hire an attorney for my business? Attorneys have a reputation for being expensive and un-relatable. For that reason, many business owners treat attorneys like they do doctors: call on them when the pain becomes unbearable.
That strategy may serve you well some of the time. But eventually, just like underlying medical conditions, it will bite you. Key decisions in a company’s life, such as hiring a new employee, taking out a loan, or leasing a new property may all seem harmless, but they can have lasting legal impacts that you should proactively plan around and manage for.
That’s why it’s critical to know that investing in a business attorney early on will often pay substantial dividends and help your company thrive in the long run.
When to Hire a Business Lawyer
You definitely do not need an attorney for every single step of setting up and running your business – any smart business owner is capable of filing simple business or IRS forms – and there are certainly many straightforward and self-explanatory matters that could be handled without spending hundreds of dollars on business attorneys. After all, there are so many business expenses in starting up a company, so why not try to save a load if you can do it yourself? On the other hand, it is essential to know exactly when you will need legal help and how to find the attorney that’s right for your business before the calamity strikes.
Like with insurance and accountants, the best time to hire a business lawyer is often before you think you need one. Even if you are trying to be extra cautious with your money, it’s worth looking into a few small business attorneys in your state anyway – if you ever decide to hire one, you’ll have a few names to choose from.
Where You May Get Stuck
Here are some key preliminary issues that business owners might try to handle alone, but then realize it makes more sense to get professional help:
- Writing a business plan
- Researching and choosing a name for your business (research online for existing previously business names)
- Purchasing a domain name for your website
- Applying for an employer identification number (EIN), which is necessary for filing taxes with the IRS
- Applying for any licenses and permits your business might require
- Interviewing and hiring employees (check into federal and state laws which regulate the hiring of employees or look to JUSTLAW for help)
- Preparing key organizational documents for your company
- Creating contracts for customers or clients
- Getting insurance for your business operations
- Finding tax breaks for your small business
There are likely more business-related matters you can probably do on your own to conserve capital, but if you want 365-day peace of mind for your business, or you just want a pro to handle the paperwork that distracts you from operations, retaining a business attorney might be a great investment for the future of your company.
When to Call a Pro
You will face legal issues that are too complex to handle on your own, to be sure. At such time, you should find and retain a business lawyer. Here are some common situations when you might need help with your legal needs:
- Choosing a business entity type: LLC? S-Corp? C-Corp? The options can be mind numbing and confusing. Choosing a business entity affects the future of your company’s growth and impacts your tax consequences. A small business attorney will be able to help you with the cost/benefit analysis and ultimately help you make the decision that is right for you.
- Raising money: When raising outside money and/or selling equity to investors, it’s a good idea to have a lawyer who can help you structure and close the deal.
- Drafting founder agreements: In the case that you have partners in your business, then writing out the roles and responsibilities of each partner, and the equity for each, right at the beginning can keep disagreements from happening in the future. An attorney can assist you with partnership agreements and corporate bylaws.
- Contract review: A lawyer can help you in drafting and negotiating contracts.
- Handling employment issues: As a business adds to its workforce, a business attorney can help keep up with labor laws and lawsuits. This is more important than ever in light of the COVID-19 pandemic.
- Disputes. Dealing with demand letters and responding to lawsuits, both of which can have serious monetary consequences for you and your company.
- Intellectual Property. Applying for a Trademark for your company name.
How to Hire a Business Attorney
When you decide it’s time to hire a small business lawyer for legal advice, it’s best to give a couple options. Most attorneys will be happy to have a short meeting with you as a consultation, and to get to know one another.
A few issues you might want to consider when evaluating any attorney you meet:
Specialization. Make sure that the attorney is specialized in business law. Hiring a litigator or an attorney who isn’t familiar with the ins and outs of business law can be disastrous and even costly in the long run.
Client list. Client testimonials and reviews (Google, etc) are common nowadays, so if your attorney doesn’t have any prominently displayed, it could be a redflag.
When you do meet your attorney, considering asking her:
How do you typically work with clients? From billing time, to communication channels, to response time.
Who does the work? Many law firms are pros at the old bait and switch. The experienced rainmaker gets you in the door, and then passes you off to a junior attorney that actually does the work. Buyer beware.
Have you worked with other startups or growth-stage companies? At JUSTLAW, our founding team has over 75 years combined experience with startups. It’s important to work with an attorney who knows how startups are built and scaled, and can render sound, fast advice on a reasonable budget.
The dreaded fee conversation!
Everyone knows lawyers are expensive, right? Well, sometimes, and sometimes they’re worth the money. But you don’t always need to spend a fortune on good legal help four your company. Most growing businesses are working with limited budgets, so attorney fees are an important concern. It’s important to get each detail of your fee agreement in writing, so that both sides can manage expectations and measure performance.
Four typical fee arrangements are:
- Hourly fee. Most lawyers charge an hourly fee for their work. Try to keep a record so that you are not surprised by a hefty bill in your mailbox.
- Contingency fee. Note that litigators often agree to contingency fees whereby they risk working for free, but then earn a percentage of your civil award if your case is successful. However, this fee structure is generally inapplicable to transactional law representation.
- Flat fee. Good Business lawyers charge flat fees for simpler projects like setting up your entity and drafting short contracts. Flat fees are usually less expensive than an hourly rate for the same project and help you save money.
- Monthly retainer fee. Some law firms provide the option of a monthly retainer to pay in advance for legal costs you use throughout the month. This can give you a peace of mind if you want to make a phone call because that time is already included in your budget. Some of these retainers run into the thousands per month. But some companies are offering a unique service where for a much lower monthly payment (around $15 per week), you can have access to a dedicated attorney for unlimited consultations, and then upfront fees when you need pen-to-paper work done.
Whichever fee structure you choose, the most important thing is that you feel comfortable and clear about the path ahead. Building a business is hard enough. You should have to worry about unknown attorney fees or disregarded legal risks.
As we’ve seen, not every issue you face in business requires an attorney. However, when you do, it’s important to understand where and how to find the one who’s right for your business. We hope this article has been helpful. You may not be aware that you need legal help until it’s too late, but it’s always a good idea to think ahead and find an experienced small business attorney who can help you stay in compliance with the law and spot developing legal issues early.
Add a JUSTLAW Approved Attorney to your team today.