5 Tips for Hiring Legal Counsel in Your Small Business
Some readers know that I used to be a corporate attorney. As a General Counsel I have hired literally hundreds of outside law firms to represent the company I worked for. Trademarks; patents; litigation; transactions; collections — you name it, I’ve probably hired a law firm to handle it.
I’ve managed counsel in law firms ranging in size from solo practitioners, to the largest law firms in the world, such as Jones Day, Mayer Brown, and Squire Sanders & Dempsey, to name a few.
As a General Counsel a key responsibility of mine was to hire the outside counsel; oversee the matters for the company’s best interests; and most importantly, manage costs. And I can tell you that managing costs is something that can be done with simple steps. Many steps work just as well in a small business as in a large corporation.
Interestingly, the same steps that you use to manage costs also help you avoid many of the frustrations that clients often feel. Those frustrations include unpleasant surprises from fighting litigation for years only to be pressured to settle on the courthouse steps (when you could have done it much earlier and saved countless dollars and hours), to transactions that die a slow death from overlawyering, to misunderstandings between counsel and clients (often due to the client’s unrealistic expectations caused by the failure to discuss expectations up front).
That’s why I was so interested in a new survey by Rocket Lawyer. Asked what poses the biggest risk to their businesses, one-quarter of small business owners said “legal issues.” But even though they’re worried, business owners aren’t turning to lawyers as often as they should. The reason? More than half of small business owners (51 percent) contend that legal help is too costly.
Failing to consult a lawyer is often penny-wise and pound-foolish. In fact, getting legal help is actually a smart way to save money for your business. A good lawyer can help you prevent costly problems later, spot loopholes in contracts and agreements that can cost you money, help you save on commercial leases and more.
Fortunately, it’s possible to use a lawyer without spending a fortune. Here are five steps to keeping your business’s legal costs down.
1. Understand how the lawyer bills you.
Some attorneys bill hourly, some by the day (per diem), and some on a monthly retainer. Attorneys may also charge flat fees for standard jobs like contract review. No matter what method your lawyer uses, ask questions to be sure you understand the details. For instance, if the attorney has assistants, are you billed for their work at the attorney’s rate? Also ask about extras — some lawyers will pass the cost of faxing and making copies on to the client, while others won’t.
2. Use time wisely.
Time is money for a lawyer, so when you meet with or talk to your attorney, plan ahead to keep the time as brief as possible. Make a list of questions so you don’t forget anything you need to ask; then focus on what you need to do.
3. Keep it simple.
The less work the attorney has to do, the less you’ll get billed for. Provide the lawyer with documents he or she will need to review before the meeting. Have your information in order. Send one detailed email rather than 17 short ones with question after question. Like any businessperson, lawyers appreciate it when you make their job simpler.
4. Review your legal bills.
If you’ve got a complex project with an attorney, ask for an itemized bill. Go over it in detail to make sure you weren’t overcharged and that you understand what you’re being billed for.
5. Be proactive.
Some entrepreneurs are scared to talk to their lawyers for fear of incurring a fee … so they let small problems spin out of control. Make it a point to communicate with your attorney briefly every month or so and bring up any issues of concern. This way, you can nip problems in the bud and take advantage of opportunities for growth when they arise.
Editor’s Note: This article was previously published at OPENForum.com under the title: “5 Ways to Keep Your Legal Costs Under Control.” It is republished here with permission.
About the Author
Anita Campbell is the Founder of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses; and also serves as CEO of TweakYourBiz.com. 
Blue Fountain Media
Anita—
This is extremely good advice. One of the things I would also add is that no one should allow their legal counsel to intimidate or talk down to them. Legal services are a customer service business, be sure that you lawyer is treating you with mutual respect and listening to what you think the issue is in the contract or business dispute.
Melinda Emerson
@SmallBizLady
[...] This post was mentioned on Twitter by Anita Campbell, Weboptium, PRO Legal and others. PRO Legal said: Real Estate Insights: 5 Tips for Hiring Legal Counsel in Your Small Business http://ping.fm/ZTPjm. — – I'm pas… http://bit.ly/i1OAZG [...]
Great advice. Attorneys should provide a link to this article in their engagement letters.
Thank you, Anita!
It never fails; folks that are exploring options in franchise, heck, even non-franchise business ownership-tend to get a little cheap when things start getting serious-as in they’re getting ready to write a check!
I always encourage anyone that’s going to be involved in a business transaction to get an attorney. (And not their Uncle Bob!)
Get the right attorney for the job at hand.
So, do you miss corporate America, Anita?
The Franchise King
[...] expenses can quickly spiral out-of-control.
Having sat through my share of meandering meetings, I agree that having an agenda for any communication will save you time (and in the case of hourly billing that equals money).
Nice tips about the legal counsel, Really extremely good advice.
Wouldn’t it be an interesting business idea to start with “affordable” legal help for small business owners, presenting its value in an understandable way for a layman?
Could you get legal help if you join a business interest group, like NSBA or NFIB?
@ martin lindeskog.
If your having trouble finding legal help, why not try legal insurance. You can have top rated lawyers on call for less then a cup of coffee a day.
check out
http://101legalplans.com
Anita – Great post. Being formerly in-house myself (and now back in private practice), I give a hearty second to all of your advice. I would make one more suggestion: Leverage Your Investment: Wherever possible, make sure that the money spent addressing one problem (and lessons learned) are used to improve legal risk management across the organization. A corollary to this is to find a lawyer willing to educate you and your employees on ways to leverage (and in the long run, reduce) legal spend. This can be difficult for a company without a GC, so finding a “business-minded” lawyer is essential. Look for attorneys willing to provide value-added services (like a complimentary seminar on common employee-related issues). Sure, it’s marketing for the lawyer, but it is often a good indicator of the lawyer’s attitude towards his or her value proposition.
This is an excellent article, Anita! As an attorney representing small businesses and start-ups, this article outlines everything needed to keep communications lines open. However, one thing that clients should know is that many attorneys are willing to be flexible with clients in terms of billing plans. For example, often a membership plan or a “retainer” type plan can be used. Under that plan, a monthly fee is paid and a client has access to a lawyer on an “as needed” basis without being fearful of the meter running. This means that a client can more readily call a lawyer before a small problem spirals out of control. The key thing is to ASK your lawyer.
[...] How to hire legal counsel. Anita Campbell, founder and editor of Small Business Trendsputs her legal know-how as a former corporate attorney to work in this great post on how to hire and then manage the costs of an outside law firm. Whether you’re a big corporation or the smallest of startups, this primer will give you important tips about how to handle your legal representation in a variety of situations. Small Business Trends [...]
How To Hire Legal Counsel For Your Small Business…
Sooner or later, you are likely to require legal representation for your small business. When the time comes, or perhaps before trouble arises, you can look into hiring an attorney by following these simple tips from a pro. Remember, legal representati…