Have you ever asked yourself any of the following: “Why would I hire a lawyer?” “Isn’t LegalZoom good enough for setting up and running my company?” “Can’t I find everything I need on the Web?” “Nobody files lawsuits anymore, I’ll just take the risk.” “Lawyers just want to charge high fees and you can’t really trust them anyway.”
Here are some insights from one who has managed a commercial business, as well as practiced law both as a business trial lawyer and a business lawyer, totaling over 30 years.
The answers to these questions depend upon your vision for your business. Is your vision limited to earning an income from your business? Or, do you want to build a legacy? Do you want to sell your business someday? Do you want to build your business for your children and their children?
How a Knowledgeable Lawyer Can Protect You and Give Peace of Mind
Retaining a knowledgeable lawyer is essential to building and protecting a solid business, whether you want to build that legacy, sell the business, or pass it on to your children? You, the business owner, know about your products and services, but a great business lawyer knows how business works, how to protect your assets, as follows:
Online sources, while helpful for an overall appreciation of a particular area, cannot counsel an owner on the myriad situations that he or she faces in building the business. In my own practice, for instance, clients have retained me on several occasions to fix “LegalZoom mistakes”, made at a time when they did not have a lawyer at all. Generally, the cost has been greater than if they had retained a lawyer in the first place. And it has been not just poorly constructed legal entities, but one was a trademarking issue that caused the cancellation of a marketing campaign that cost the client dearly to undo.
A lawyer’s services are invaluable at any time in the process to building and protecting a business owner and giving peace of mind. The proper form of entity and good company practices, for example, will help you even as you are “Getting In” to the business.
Later, as the business has become profitable and self-sustaining, an owner typically wants to improve his or her business by hiring employees or outside services to take on various tasks in the business. A knowledgeable lawyer can help in the “Getting Better” phase in any number of way. For example, a lawyer may help the owner by setting a solid legal foundation with personnel so that they can understand what the owner is building and do their part. The lawyer can also help set the ground rules with customers and suppliers by crafting agreements that track how your company actually delivers its products and services.
Selling the business also requires special assistance. Having your company properly structured for sale or even transfer to the next generation – that is, the “Getting Out” phase – requires planning and execution long before the sale or transfer.
While the specter of the ruinous lawsuit seems to have subsided in general in Texas, a lawsuit can still disrupt building the business. Any lawsuit, no matter how small, takes focus and attention away from providing products and services to customers, with document productions, answering written questions, and preparing for and giving depositions.
And lawsuits can come from any source. While customer or supplier suits are distracting enough, a suit by or against a former employee can damage morale among the remaining personnel, as well as expose weaknesses in how the business operates. These can include wage-and-hour disputes, harassment charges, unlawful discrimination, trade secret and non-compete agreements – any number of avenues. Each of them has the potential for ruining good working relationships among the business owner and the business’ personnel, which in turn will greatly affect whether the business gets better.
As to lawyer fees, the business owner can negotiate. Competition among lawyers for business is fiercer than it has ever been and modern attorneys do make alternative fee arrangements much of the time. These can include flat rates for a fixed scope of work, hourly rates capped in total amount, and reduced hourly rates with a contingency on recover. The latter is not common in or even necessarily adaptable to business transactions, but a business owner should feel free to discuss fees with a potential lawyer.
On the flip side, realize that lawyers need to make a living too. They cannot just give away advice.
Therefore, your focus in obtaining legal services and negotiating the fee should be on value to achieving your vision. Consider the cost of inaction, i.e., What if the risks fall in, such as, a customer walks on a big order because you do not have your terms in place; an employee leaves with your customer list and goes to a competitor; your partner becomes disabled and cannot work in the business; or any of a number of other business risks. The cost of legal services to reduce or even eliminate those risks will pale in comparison to the cost of inaction now.
Finding and Retaining a Lawyer
Now, for the hard part of hiring a lawyer. Where or how does an owner find a lawyer with experience in business and who will negotiate his or her fees?
Lawyers have ethical restraints on advertising, and “cold calling” is generally prohibited. Other forms of advertising, such as websites, social media, mail, and other correspondence have restrictions as well.
The best ways to find attorneys who practice in protecting the interests of business owners are
In connection with any of these sources, you should review the attorney’s website to see just what services the attorney offers or focuses on, just how much experience the attorney has, as well as review of any articles or blog posts he or she may have written in the area.
Once you’ve narrowed your list, here are some questions you should ask the attorney you are considering:
And when you finally find an attorney, realize the relationship must be based on trust. Trust is rarely instant, of course, but remember that lawyers are called to far higher ethical standards than most businesses, and most lawyers actually deliver on that calling.
Here’s hoping that retaining a lawyer who can help you goes well and helps you achieve the dreams you have for your business.