If you’re in business, you’re probably going to need to consult an attorney at some point. But when is legal advice necessary? What do you need to know before hiring an attorney? And what can you do to control any legal costs? Here are some tips and suggestions to help you make smart decisions when choosing legal counsel for your business.
When Do You Need a Small Business Attorney?
Opinions vary widely on this subject. But seeking legal advice is important when starting a business to make sure all organizational paperwork is properly completed before you open your doors.
However, the U.S. Small Business Administration (SBA) suggest small business owners can use online resources for some of their organizational paperwork, contracts, permits, and tax documentation. Small business owners may want to take advantage of online tools, forms, and templates to handle basic legal matters.
According to the SBA, most small businesses can complete the following without using an attorney, however it is a good idea to have an initial consultation with a qualified attorney because every business is unique and a professional may be able to help identify your needs:
- Naming the business, claiming a trademark, and domain names (URL)
- Forming an LLC or business partnership
- Filing and registering initial business paperwork such as permits, licenses, tax paperwork, and getting an Employer Identification Number (EIN)
- Creating contracts and nondisclosure agreements
- Creating buy-sell agreements
But the SBA recommends an initial legal consultation so new business owners can have a clear understanding about what paperwork needs to be completed. For example, a lawyer can help determine what type of business to establish—LLC, partnership, or corporation—and how it should be structured.
Some of the situations that may require legal assistance, according to the SBA:
- Forming a corporation
- Filing a patent
- Litigation of any kind
- Government complaints
- Environmental issues
- Making special allocation of profits and losses, or contributing appreciated property to your partnership or LLC agreement
- The sale of the company, or purchase of another company
How Can I Find a Good Attorney?
It’s easy to hire an attorney, but it can be a bit more challenging to hire the right attorney. Business contacts can be a good place to start looking for a lawyer. Ask your banker, accountant, or insurance agent for recommendations, since they work regularly with legal professionals in your area. There are also numerous online resources like the American Bar Association, Nolo, and FindLaw.
You should look for an attorney who has experience in your industry. And if you’re looking for an attorney for a very specific reason (like tax issues), you’ll want to look for one who specializes in that area.
Once you have a list of candidates, visit Lawyers.com to get additional information about them. You can read reviews on lawyers practicing in your area—just as if you’d read reviews of restaurants on Yelp.
There’s a lot of importance in the compatibility between attorney and client, which makes an in-person interview an essential part of the hiring process. You need to make sure the attorney is a good communicator, responsive, and willing to teach you about legal issues.
It’s also a good idea to talk to the attorney about any potential conflicts of interest you may have with their existing clients. You should also be clear about how much of your work will be delegated to paralegals, as this could increase costs and show you how much attention the attorney will be devoting to you.
And how they settle conflict is also important—do they prefer to litigate or negotiate? This can have a dramatic impact on costs.
To most small businesses, cost is a huge concern when seeking legal counsel. Make sure you have a frank discussion with each candidate about their billing practices. It’s essential you understand exactly how their billing system works—and what you’ll be charged for. How much do specific services like research and paralegals cost? Get these numbers, and always ask if there are ways you can reduce costs.
Having an attorney on retainer can provide cost savings if you need to consult your attorney regularly or need them to take care of routine matters. If you do opt to put an attorney or firm on retainer, make sure you clearly understand what services your retainer covers.