Regardless of what type of business you own, sooner or later you will most likely need to find an accountant and find a lawyer. Situations like buying property, signing a lease on a new storefront or office, dealing with employees, or changing the structure of your business from a partnership to a corporation will all be easier if you have a good lawyer. Below are a few tips that will help you to find the right lawyer for your business.
Decide when you will be needing a lawyer
This typically varies from business to business. Generally speaking, it’s better to get a lawyer before you launch a major new business venture than to wait until you are already in trouble and then start looking for one. An example is when you are getting in new investors or releasing a new product that has not been all that well tested. In both cases, you could end up suffering major financial losses because you were not prepared to spend a much smaller amount upfront on a good lawyer.
If you are starting a new business, we would recommend that you contact a few business lawyers and ask them how much they will charge you for basic services such as setting up a partnership (or whatever business type you have in mind), drawing up employment contracts, and other routine services you expect to be provided.
Decide what type of lawyer you need
The majority of business attorneys can help with creating an LLC or corporation. They can also help draw up common business contracts, or draft partnership agreements. There are times, however, when you should try to find a lawyer that specializes in a specific area. Examples include when you want to find out how tax laws will impact your plans for a new business venture, or you want to register a trademark. In these cases going to the nearest lawyer around the corner might not be your best decision. Think of it like this: if you have a persistent cough you go to a GP. If you need a lung transplant you go to a specialist.
Ask your business colleagues for a referral
Once you know what type of lawyer you are looking for, a good idea is to discuss this with a trusted business colleague whom you know recently used that type of lawyer. If they had a great experience with a particular lawyer your search might be quickly over.
You can also ask one or more local (general) lawyers to refer you to a legal specialist. Another option is to consult online sources such as Google. There are also a number of very helpful online directories that list lawyers according to their field(s) of specialization and location.
Do your own research on the referrals you received
Once you have more than one referral it’s time to do your homework. Search for reviews from people who have used their services in the past. Specifically look for things like trustworthiness, diligence, and competence. Also read what clients who used their services in the past say about their fees. Consider how well the firm’s lawyers are able to stick to timelines. Some lawyers take on more work than they can reasonably handle. This often results in some client jobs facing unnecessary delays.
If you can find no reviews of a particular lawyer online, or there’s only a string of negative ones, walk away. One or two bad reviews, however, need not be a deal breaker. Provided there are more positive ones.
Choose a legal firm of the right size
Working with legal firms of different sizes all have their own pros and cons. If you are lucky enough and your new business becomes the next Tesla or Facebook, you will certainly not be employing the one-man legal operation around the corner. By that time you might well have your own legal department.
But when you start off the big law firms might not be overly interested in serving your business legal needs. If a legal firm is making the bulk of its money from Fortune 500 businesses, it might not really understand your small firm’s business. So, rather find a medium-sized legal firm with all the experience and expertise but without the attitude.
If your business, however, needs the resources only bigger law firms can bring to the table, you might have no choice. Very complex and specialized court cases, for example, will most often be better dealt with by a legal firm that already has all the expertise on board.
Another option is to consider a mixed strategy. This entails working with a small firm to handle your routine legal matters and using a bigger firm for projects that require specialized skills.
Regardless of the size of the law firm you choose, you should know who you will be working with. You should also be have an understanding of their availability to handle urgent matters. Bear in mind that if a legal firm is not prepared to collaborate with other attorneys, this could be a red flag.
Make sure the lawyer you choose can bring additional resources to the table
Let’s face it, a great lawyer seldom comes cheap. Here’s a couple of questions you might consider asking to make sure you get the most for your money:
- Are they able to refer you to other professionals (not just attorneys) if you in the future have specialized needs?
- Are they willing and able to introduce you to other strategic partners?
- Do they belong to groups such as trade associations that your business might benefit from?
Lawyer fee structures
The lawyers on your shortlist should not be reluctant to discuss their fee structures with a potential client like you. Do not feel embarrassed to bring up the issue. Whether you are a sole proprietor or running a major company, your firm will incur legal costs.
Traditional billing structure for lawyers
In the past, the majority of business lawyers used to bill on an hourly basis. This meant every lawyer would have an hourly rate and you would be billed for either full hours or parts of an hour. Some lawyers charge a minimum fee for smaller tasks. If something, for example, takes 5 minutes to do, you would still be billed for 15 minutes since that is the minimum. In recent years, some lawyers have started abandoning the hourly billing system and they now bill a fixed amount for every service.
Hybrid billing structure for lawyers
The system most commonly used at present, however, is a hybrid of fixed fee and hourly billing. If your selected firm, for example, requires assistance with a very complex negotiation, it’s nearly impossible to determine upfront how long it will take and hence how much it will cost. Chances are, therefore, that you will be billed per hour. If it’s a fairly standard job like registering a corporation or LLC, both parties could be better off with a fixed rate.
The most important point to take away from this is that, whatever arrangement you and your new lawyer come to, it must work for you because you are the one who will ultimately have to foot the bill.
If you prefer to always know upfront how much a specific job will cost, insist on a fixed rate. If you prefer hourly billing, communicate that to the legal firm. As long as you are clear about your expectations, they should be prepared to work with you. If they refuse, this might be another red flag that they are not the right lawyers for you.
Deciding on a lawyer: Draw up a checklist
Before making your final decision, draw up a shortlist where you compare the candidates. List out the factors in terms of the things that are most important to you. If a legal firm ticks the boxes in every other area, but its fee structure is not exactly what you had in mind, you should either be prepared to compromise or talk to them about it.
Don’t, however, compromise on things like expertise, quality of service, and reputation. If there are too many red flags, or you are uncomfortable with their business ethics, turn them down. Someone who insists on being paid before providing a proposal should also be a huge warning sign.
Consider a trial period
In an ideal world, one would find a lawyer for your business and that will remain your lawyer for the lifetime of that business. Unfortunately, that is not always how it works in real life. The day might come when you may have to part with their services. Consider starting with a trial phase. This will help prevent a premature breakdown before both parties have invested significant time and effort in the relationship.
Decide on a legal firm and give them a fairly small job to handle. Afterward rate them on the way they handled the job, their fees, whether timelines were adhered to, and anything else that’s of particular importance to your business. If you are not happy about something, talk to them to see how they handle dissatisfied clients. This should give you a fairly good idea of whether you should make a long-term investment in this relationship or not.