Sooner or later, every business is going to need legal representation. A lawyer can either be an expensive line item or a huge asset for your business. As an entrepreneur, it’s up to you to make that choice.
If you haven’t hired a business attorney before, the process can be intimidating. I’ve seen the process many times, having been hired by hundreds of clients to represent them over the course of my career. When the client (that’s you) is informed and knows what they’re looking for, there’s a much greater likelihood of having a positive result for both sides – the lawyer and the client.
Ultimately, we both want the same thing: a mutually-beneficial long-term business relationship.
To help you achieve that result, I’ve put together this list: 7 Keys to Choosing the Right Lawyer for Your Business
1. Figure out when you need to hire a lawyer.
This is going to vary for every client. Generally speaking, the sooner you establish this crucial relationship and start getting good advice, the better off your business is going to be.
However, good legal advice isn’t free. (On the other hand, bad legal advice is easy to find.)
If you’re just starting out, I’d suggest you start contacting business lawyers and asking them what their rates are for basic services like an initial consultation or a business formation. You can put those numbers into the budget as you get the funds together to start your business – whether it’s a solo, bootstrapped operation, or one where you’re seeking investment capital.
Finally, be sure to hire a lawyer before you do something that’s going to get you into trouble. For example, if you’re forming a partnership, entering into a lease, taking money from investors, or putting a product out there that might create some liability, hiring a lawyer to protect your rights should be a high priority.
2. Focus on the type of lawyer you need.
Most business attorneys can handle typical formation needs. This might include creating a corporation or LLC, putting together a partnership agreement, or drafting common business contracts.
- Tip: With all of these, be sure to ask if the documents are being customized to your specific needs. It’s OK if the lawyer is starting from a template; sometimes there’s no need to re-invent the wheel. But your lawyer should be doing more than just pressing Print and handing you a document to sign.
If you just need a trademark, or you only have a question about tax law, then you can focus on an attorney who specializes in those areas. If you’re looking for general, long-term legal counsel for your business, find a business attorney, and he or she can put you in touch with specialists from time to time as needed – whether they’re in the same firm or outside counsel.
Think of your business lawyer like your general practice doctor: you go to her for checkups and your regular medical needs; if and when you need a specialist, she’ll let you know and make a referral.
3. Find a lawyer who understands – or is willing to learn about – your market or niche.
This is a follow up to Key Number 2. Yes, you need a general business attorney. But if that attorney has no clue about your industry or how your business operates, there are bound to be communication challenges.
This doesn’t mean that if your company makes green left-handed back scratchers, you need an attorney who only works in the green left-handed back scratcher industry. It does mean that your legal counsel should have a willingness to learn and understand what your company does every day and who your main customers and strategic partners are. These points should be factored into your legal strategy.
Of course, in the event you work in an industry that’s specialized and highly regulated, you’re probably going to benefit from the advice of someone who understands those regulations. If you’re opening a nuclear power plant, an attorney who is familiar with the complex web of regulations involved in that type of project is going to be the right fit for you.
For most businesses, however, a basic willingness to learn is enough to meet your needs.
4. Pick a law firm of the right size.
There are pros and cons to working with big firms, small firms, and solo practitioners. If your business grows to be the next Facebook, Amazon, or Tesla, you’ll probably be engaging the services of large law firms from time to time – of course, by that point, you’ll also have your own in-house legal department.
Sometimes – and this is by no means always the case – startups and small businesses find themselves to be a low priority for larger law firms. If the law firm is really making its money representing Fortune 500 companies, large government entities, and the like, it can be challenging for the firm to be responsive to the needs of every individual client.
Another potential issue with working with a larger firm is the question of who you’re actually going to be working with. Are they going to assign your work to a new associate attorney fresh out of law school? Is that associate going to be with the firm for the long-term, or will he be looking for a new job just when you get used to working with him? Will your file get passed from one office to the next?
However, there can be advantages to working with larger firms if your business requires the resources the firm can bring to bear. Very complex lawsuits, for example, may be better suited for a larger firm than a solo attorney or small firm. Sometimes, clients prefer a blended strategy – working with a solo attorney or small firm on a regular, ongoing basis, and using a big firm (typically at a higher cost) for specific, occasional projects. If your law firm is not willing to collaborate with outside attorneys, that may be a red flag.
Tip: No matter what size the law firm, be sure to understand up front who you’ll be working with. How do you get in touch with her? What’s her availability should an urgent issue arise?
Most firms with multiple attorneys have different hourly rates for each attorney, so that’s an important consideration as well. If a young associate with a low hourly rate will be handling your matter, will the file also be reviewed by a more senior partner? If so, are you going to be paying the partner’s much higher rate for that time?
Working with small firms or sole practitioners can have its advantages. Typically, you’re going to receive more individual attention. And many solo practitioners establish relationships with other attorneys to act as an informal version of a traditional law firm – meaning, your needs will still be covered if that lawyer goes out of town, or if you come up with an issue that’s outside of his or her areas of specialization.
So, if you decide to go with a smaller firm, make sure it’s one that has access to resources that you’ll need as your business grows. Which leads me to…
5. Choose a lawyer who brings other resources to the table.
Let’s be honest: good legal services aren’t cheap. Here are some questions you can ask to help get the most bang for your buck:
- Does this law firm host regular events for their clients to meet and network?
- Tip: These may take the form of live events, webinars, or other virtual resources.
- Do they have a network of other attorneys and professionals that they can refer you to when you have specialized needs?
- Are they members of trade associations or other groups that you can benefit from?
- Are they willing to make introductions to other clients, potential customers, and strategic partners?
Don’t be afraid to ask these types of questions and dig for detailed answers. But approach this line of inquiry with a bit of skepticism: beware the attorney who over-promises. Use your best judgment.
6. Do you need a lawyer in your city or state?
This one can vary depending on your specific needs. Of course, it’s great to be able to meet face-to-face on a regular basis. But I find that even with my local clients, the vast majority of our contacts are through phone and email rather than in person.
If you live in a small town or a place without a lot of lawyers (how depressing!), you may not have easy access to a local attorney who has the skills and experience that you need. And often, that’s not really a problem.
Now, if your attorney has to go to court, he or she may have to live near you, or at least in your state. But for many business law needs, an attorney who lives in another state may be able to serve you just as well. This means that you can cast a wide net and seek out the best legal counsel for you.
So feel free to look for legal counsel outside of your geographic area, but be sure to let them know where you are and confirm that they’ll be able to handle the transactions you require.
- Tip: If your business has customers, vendors, or partners in another country, be sure to ask if the firm has relationships with attorneys in that country.
7. Make sure you’re comfortable with their fee structure.
Your potential lawyer should not be afraid or nervous to discuss fees with you. And you shouldn’t be hesitant about bringing it up. Whether you’re a solo entrepreneur or seeking legal advice for a big company, you still need to be able to plan for your legal costs.
Traditionally, most business lawyers would work on an hourly basis. This means that each attorney has an hourly rate, and the attorney bills in increments of that rate (for example, 1/10 of an hour, with a minimum of 2/10 of any hour for any particular task.)
Some lawyers have moved away from hourly billing entirely and only bill a fixed amount for each service.
The most common approach is a hybrid of hourly and fixed fee billing, depending on the project. For example, if your business needs help with a complex contract negotiation, it can be very difficult for the attorney to estimate the amount of time involved, so billing based on the clock might make the most sense. But if they’re doing the type of filing that they’ve done many times before, and they know pretty much what it’s going to take, both sides might be better off with a fixed fee for that project.
The most important part of this conversation is to be sure that the arrangement works for you, the client. If you prefer one or the other – hourly, fixed fee, or some other type of arrangement – be sure to communicate that to the attorney. As long as you’re upfront about your expectations, he or she should be able to work with you; if not, this probably just isn’t a good match.
And that’s OK: as I said at the top, not every attorney-client pairing is a good match. Hopefully, applying these 7 Keys will speed up the process of finding the right match for you and your business.
Bonus Tip: This is not a “Till Death Do Us Part” decision.
Ideally, you’ll establish a relationship with a lawyer that will last for the life of your career. Maybe you’ll even become good friends. But just like with any other type of business relationship, there’s no way to know that on Day 1.
It’s possible the day will come when you have to tell your lawyer “It’s not you, it’s me.” Or whatever your preferred breakup line might be.
Nobody wants to hear this from a client. Believe it or not, lawyers are people too. We have feelings like anyone else. But, for the most part, we’re also professionals, and we know that not all client relationships are going to last forever.
If you get the feeling that you and your lawyer aren’t on the same page, the best thing you can do is pick up the phone and express your concerns. I suggest you avoid doing this over email – despite all the advantages of technology, when things get sticky, it’s best to talk it out whenever possible to avoid escalating the situation. If you can get together in person, even better.
If that doesn’t work, and the situation just can’t be reconciled, your lawyer is, in most circumstances, obligated to return your files to you or forward them to your new attorney. If you have funds remaining in the firm’s client trust account (also referred to as a “retainer account” or “IOLTA account,”) those must be returned to you as well.
I hope these keys were helpful. Please feel free to leave a comment or send me a message about how you’ve been able to put this into practice and find the right legal counsel for you.