Learn more about planning a business launch.
Have you heard this lawyer joke yet? Q: What do you call four attorneys buried to their necks in sand? A: Not enough sand.
Given that people associate attorneys, like dentists, with bad news, it's understandable that we avoid them whenever possible. But just like avoiding regular visits to your dentist may lead to unnecessarily painful dental surgery, avoiding visits to your lawyer may lead to unnecessarily expensive business mistakes.
So you have a dilemma. It's too expensive to run to your lawyer too much, and it's too expensive to not run to your lawyer enough. What's a business owner to do?
Well, there are some good ground rules for determining when you should see your lawyer and when you can do some of the background work yourself. First and foremost, to keep from having to run to your lawyer with every possible question about operating your business, you should have a good library of small business resources. Obviously, you've already found the Business Owner's Toolkit, so that's a good start.
Second, you'll need to know which events trigger the need to go see your lawyer and how to cut your legal costs wherever possible. Here are some dos and don'ts to keep in mind:
Don't wait until you have a legal problem to find a good attorney. By consulting an attorney early in the life of your business, you can find out much about whether you will be comfortable using the person when it counts. Does the attorney return phone calls promptly? Does he or she send descriptive bills, or merely an invoice for "legal services?" Are there areas that he or she cannot handle as well as a specialist? The best time to get answers to such questions is before a crisis erupts.
Do insist on a fee agreement from your attorney. A fee agreement simply spells out things like when, and how much, your attorney expects to be paid for services. Some good things to check for when you review an agreement include costs per hour of services and what you will be charged for work performed by less experienced associates. Also check the costs for incidentals like photocopying and mileage reimbursement.
Studying a fee agreement provides great opportunities for controlling costs. For example, if an attorney charges hefty sums for photocopying, ask if you can have someone from your business arrange to photocopy anything involving more than say, 50 copies at a time. If you don't like the thought of "negotiating," here's something you should know: Most attorneys will actually welcome the fact that you have asked for, and studied, their fee agreement. It helps show them that you are serious about paying for their work.
Do prepare for meetings with your attorney. Whenever you are planning to meet with an attorney, it is a good idea to prepare a simple outline of the facts of your situation, including specific questions you have. You may arrange to fax your outline to the attorney before your meeting. This helps you avoid forgetting to ask about something that you'll have to call back about later. Multiple calls and visits--when one well-prepared visit would do the trick--waste your money.
An outline also gives your attorney an opportunity to screen your situation and refer you to the person who can best help you in advance. You won't waste--or be billed for--time spent in interviews that eventually result in your being sent to someone else.
Don't ask your lawyer to make house calls unless it's absolutely necessary. Unlike doctors, most attorneys are perfectly willing to visit you at your business. This may be convenient, but you'll pay for it in "attorney travel time" and mileage reimbursement fees.
Do use your attorney like a proofreader, rather than a draftsman, whenever possible. Suppose that you decide you would like to create a handbook for your employees. You could ask your lawyer to draft it. Or you could write it yourself and never talk to your lawyer about it. But a relatively inexpensive third option seems to make the most sense: Use information in the Business Owner's Toolkit as a guide and draft the handbook. Ask your attorney to review only your "final" draft. This gives you the benefit of a handbook that has been checked for land mines by an expert, at a fraction of the cost of having the expert do everything. Besides, you can probably communicate better with your employees and will spare them lots of "legalese."
You can use this make-a-draft first approach for preparing many documents that you'd like input from an attorney about, including contracts. Your attorney may substantially change your draft, but it will usually cost much less than asking the attorney to work from a clean sheet of paper.
Don't wait to contact your attorney about an obvious problem. If you are clearly about to become embroiled in a legal action, such as when you have been served with a complaint, contact your attorney immediately. Doing so gives the attorney enough time to arrange a more cost-effective solution to your problem. If, on the other hand, you have 20 days to respond to a complaint and wait until the 18th day to call an attorney, he or she may have to ask legal assistants to work overtime hours--at an overtime rate--in order to prepare a response for you.
Don't use your lawyer as a substitute for common sense. Many business owners make the mistake of doing something that their business instincts tell them is foolish, then depend on lawyers to bail them out when things turn ugly. It's a costly mistake. To give you an example: The fact you have a legal right to sue a customer or tenant who doesn't pay should not deter you from checking the customer's credit or asking for certain costs up front. If you have to hire an attorney to collect in that situation, you will probably lose money on the job, even if you do collect.
Do read "The Terrible Truth About Lawyers" by Mark McCormick. McCormick worked as an attorney for several years before becoming an agent to sports celebrities like Arnold Palmer. His book provides an entertaining, but highly informative, look into the way lawyers do business. Lest the title fool you, it does not argue that all lawyers are terrible or unnecessary. It does tell you a great deal about how to avoid being overcharged for legal services and expands on many of the points made in this article.