Hiring a Lawyer for Your New Business

One of the hardest issues in starting a small business is making sure everything is done legally. The law has been slowly expanding to include every aspect of small business operation, including how you deal with landlords, zoning regulations, your suppliers and the government. It's a wonder the small-business owner can do anything without a lawyer.

The question of when you need a lawyer is tough, but it's usually a good idea to consult an attorney before making any decision that could have potential consequences later on, such as when setting up a partnership or corporation, complying with regulations, obtaining trademarks or patents, applying for a loan, drawing up contracts or pension plans, tax preparation, and collecting debt. You also need an attorney when going to court against an employee dispute or if you're caught up in a liability suit. Don't wait for something to go wrong before seeking out a lawyer; by that time it's usually too late for them to do you much good. Without knowledge of a good attorney before getting caught in a crisis, you may choose poorly in desperation and pay the price for a long time thereafter. A relationship with your lawyer takes time to develop; don't wait until you're going down with the ship to look for one.

Ask other business owners in your industry or from people you trust who have knowledge of legal assistance, such as your accountant. Ask what the strengths and weaknesses of the attorneys they recommend are, then ask the attorneys of your business associates and colleagues for lawyers they recommend and ask them the same questions. Be respectful of this latter category, and phrase your question in a way they won't find offensive. You can even contact your local Bar Association and ask whom they would recommend.

Set up interviews with the attorneys you're considering, usually when you have a pool of five to eight. Let them know a little about your business plans and say you're interested in building a long-term relationship. Find out which ones would be willing to meet with you for a free initial consultation. During the interview, try to gather information regarding their background, availability, fees and references. It's important to find a lawyer who deals with small-business problems on a regular basis, and that they'd be willing to help you on small issues as well as business-destroying ones. If the interviewee seems vague or uses too much legalistic jargon without explaining things in a way you understand, it would be best to avoid them. Also, use common sense when judging their personality; if you two just don't seem to mesh well, the relationship won't work no matter how much you both try.

You may hesitate to consult a lawyer because of the resulting legal fees, but there are ways to save money. Find out what the attorney charges and what format they go by (hourly, per diem, monthly etc.) Some charge for travel, some don't. Some even have a flat fee, which may or may not work for you depending on your situation. If you're facing a lawsuit, many lawyers will sometimes work on a contingency basis - meaning if you win, they receive a portion of your winnings, and if you lose you pay them far less, usually only the court-related costs. At the same time, try to avoid "partial contingency", where law firms will charge more for a successful contract negotiation that saves you money. Make sure you get their billing procedure in writing; if you have multiple attorneys, specify the rate for each one.

There are also methods to keep your legal cost under control. Make sure your lawyer gives you an estimate for each legal matter in writing so you can decide if you really want to go ahead with that issue. If you do go ahead with it and the bill turns out to be higher than the estimate, don't be afraid to ask why. Learn how your attorney's firm determines time as it relates to their billing process. They could bill by the minute, half-hour or hour. Also, be sure to request monthly bills itemizing each service and contract. This way you can keep an eye on the fees being charged and question seemingly unnecessary fees before it becomes too late to do anything about it.

Lastly, try to schedule regular meetings with your attorney, and have whatever documents you need for your meeting on hand. While regular meetings may seem more expensive, in reality it help keep you both on the same page and avoids unnecessary phone calls and memos that can add up. It also has the added advantage of catching small legal problems before they snowball and become mountains.