A growing startup needs a lawyer just as much as it needs an accountant or business manager. Far too many small businesses seem to think that they can put off retaining a lawyer until a legal emergency arrives.
A lawyer is like a fire extinguisher, designed to snuff out legal disputes before they engulf your business. And you do not wait until your house is on fire to buy an extinguisher.
Retaining a lawyer may seem costly in the short-term, but the right business attorney can save you a lot of money and get your legal affairs in order.
When you’re ready to search for a business lawyer, here are five mistakes to avoid.
Mistake #1: Relying solely on online legal services
If you are strapped for cash you’ll likely turn to online legal services like LegalZoom as opposed to hiring a lawyer. But while LegalZoom may charge less compared to a lawyer, there is a reason that they explicitly state “LegalZoom and its services are not a substitute for the advice of an attorney.”
LegalZoom takes a “one size fits all” approach which may work for very simplistic issues, but it is not tailored for unique or complex business needs. Keep in mind, LegalZoom also has no responsibility for the documents they send you. In contrast, if a lawyer screws up your documents, you can sue.
Mistake #2: Prioritizing skill over fit
Most business lawyers (in a certain specialization) possess a fundamental level of common skills and services. But, don’t overlook the importance of retaining a business attorney you can trust; someone who fits with your company culture. Reach out to your contacts for referrals.
Mistake #3: Passing off simple legal tasks
The legal world can seem complex and confusing. It’s easy to hand over legal issues to an attorney and let them handle all the bureaucratic legal stuff. But there are some legal tasks that business owners can (and should) possess a working knowledge in and undertake.
According to one Brookfield business lawyer, some things business owners can learn include writing a business plan, applying for business licenses, and handling the IRS. You can retain a lawyer to help for things like this if you have the money, but there is no reason not to learn it on your own. Most lawyers are happy to teach business owners how to handle minor legal tasks.
Mistake #4: Overlooking ‘connected’ attorneys
Business law covers a wide variety of legal issues. Everything from hiring employees to purchasing real estate and registering trademarks or patents involves the law. And a potential lawyer’s professional connections can be beneficial when it comes to getting things done quickly or navigating your local legal system.
A good business lawyer should also be able to refer you to a specialist whenever you need legal help outside of their specialization. It doesn’t hurt to have access to an attorney with powerful advocates and a support network. A lawyer with industry connections is worth it.
Mistake #5: Not asking for a flat fee
There’s a current trend toward flat fees, “value billing,” and other unconventional fee agreements, so don’t shy away from asking. According to the American Bar Association, “Flat fees provide certainty for clients who want to know what their legal problem will cost them. Flat fees also provide advantages for lawyers, but only if the lawyer can predict with confidence how much work will need to be done on a particular matter.”
Some lawyers will balk at the idea of a flat fee arrangement, especially if you’re trying to cut corners on cost and retain the same value add. Priori Legal recommends, “As a client considering a flat-fee lawyer, it’s important to remember that you’re not looking for the cheapest way out – you’re looking for the same value at more modest prices. Instead of just trying to drive down attorney fees and get the lowest estimate possible, look for a win-win situation to maintain a proper alignment of incentives.”
This article has been edited and condensed.
Simon Crompton is a freelance journalist and entrepreneur running several online businesses including his marketing firm, Threecolors.blue. Simon spends the majority of his time blogging about business startups and consulting on web development. He has launched multiple online companies. He is also a dedicated follower of fashion, and has written for the Financial Times and GQ. Connect with @PermanentStle on Twitter.