Optimizing the Use of Legal Counsel
Every small business will eventually need legal counsel. The key is to leverage these experts in the most efficient and cost-effective manner.
Types of Issues
There are many instances when legal counsel can come into play. It could include tax issues, client or vendor contracts, leasing or purchasing real estate, protecting patents or trademarks, workplace lawsuits, buying or selling a company, and more.
Type of Attorney
As a small business, it may seem natural to work with a similar-sized law firm. This isn’t always the best option. While smaller law firms offer certain benefits, such as competitive pricing and partner attention, larger firms have some distinct advantages.
You may need an attorney with a certain specialty, such as in HR, intellectual property or litigation. Large firms are more likely to have these specialists on staff. Larger firms may also have business contacts that could benefit a small business in the event of an IPO or M&A, or issues related to globalization, VC funding, etc.
Good legal counsel isn’t cheap, yet the cost of not having proper advice could be far greater. As such, put an attorney’s time to good use. Also, understand the various billing methods and how they would apply to you. Law firms will often bill a flat fee, hourly, per diem (daily), on a monthly retainer or contingent on an outcome. Will you also be billed for expenses, such as mailing and travel? Will you be billed by a senior partner – at a much higher rate – or a junior attorney? Most attorneys will require you to sign an engagement letter which will typically include an explanation of fees and disbursements, billing practice and conflicts policy. Pay attention to the terms in the engagement letter to minimize surprises.
Finding an Attorney
A referral from your accountant or another trusted business advisor is often a great way to find an attorney. You can also check your state bar association as well as websites such as lawyer.com or findlaw.com, among others. Don’t hesitate to interview your potential counsel as you would any employee, vendor or key advisor and always check references, particularly if you locate the attorney through the internet.
Hopefully, your company grows to where you can benefit from an on-staff attorney. Two basic factors must be examined in evaluating whether hiring an in-house counsel is warranted. In order to be cost effective, you’ll want to consider both the amount and type of legal work. If the stream of work is not steady enough or the legal matters faced by your company are too diverse, it would be difficult to justify employing a general counsel, regardless of the amount of revenue generated by your business.