What we're talking about 

Most business owners know just how vital an accountant is for helping out with finances and taxes. That isn't always the case when it comes to bringing a lawyer on board: most business owners will look for a lawyer only when something goes wrong, rather than being proactive about building a relationship with one over time. You certainly shouldn't wait until a cease and desist letter arrives on your doorstep to hire a lawyer. 

You can bring in a lawyer at any stage of your business, but it can be beneficial to establish a relationship early. Initially, you might need help incorporating your company, filing a patent or creating a standard employment contract. As you grow and encounter different challenges in your business, you might find that you need a more specialist lawyer: for instance, as you hire employees and grow your team, you'll need someone to support your human resources department or help out when it's time to exit the business. 

Why it's important

They might be one of the unsexiest parts of running a business, but contracts are a fundamental part of everything you build within your company. From the very beginning, you'll likely be signing contracts for software licenses, office space, manufacturers, suppliers and new hires. If you were to go about it yourself, you'd not only need to understand the ‘legalese’ but also the legal landscape of the state or country you're operating from. That could take a significant amount of time away from running your business.  

As a small business, it's highly unlikely that you'll be able to hire a full-time, in-house lawyer. But you can still find somebody to hire on a retainer or for a fee. Crucially, it needs to be someone who understands and has experience in your industry, respects your position as a small business owner and is willing to fight your corner in any dispute. You'll want someone who can read – or write – the fine print for you and translate it into layman's terms, so you can make decisions with a full understanding of the risks. 

Things to note

Know what you want. Rather than hiring a generic small business lawyer, you'd be better off with a legal specialist. You might need an intellectual property specialist in the early days and, later on, somebody who can negotiate important client contracts. Your needs will change at various points in your business journey, but it's best to start with a solid idea. 

Ask how they charge. Lawyers' fees differ wildly depending on the firms they belong to. Usually, the larger the firm, the bigger the lawyer's rate. It's important to know from the get-go how they'll charge you. Some charge by the hour, while others will have a flat fee for certain work that can be somewhat standardized. Many firms are eager to work with fast-growing businesses and may discount their fees early on to win the business. Take advantage of this and look out for retainer options with maximum flexibility (for example, the ability to roll over unused hours to the next month).

Find someone who works for you. Sure, specialisms and fees are important, but you'll also need to engage with the right size firm for your needs. If a public exit isn't on the cards, it's unlikely that you'll need a top-tier legal brand. If you're able to engage with advisors remotely, regional firms can offer excellent service at a much lower cost than their big-city peers, especially for routine tasks like maintaining website terms and conditions.

How to find the right lawyer

1. Start with the why. What's the specific legal problem you're looking to tackle, either proactively or reactively? Are there multiple overlapping issues and would you benefit from hiring somebody who has several different specialisms?

2. Research – and ask around. A good place to look for recommendations is within your own network, especially if you've built up a rapport with other small business owners. You might find that somebody can refer you to a lawyer who helped them with a particular issue.

3. Ask for references. Depending on the specific issue that you need a lawyer to help with, you might be able to ask for references and success stories that are relevant to your own case. Don't be afraid to ask if they know about regulatory issues in your particular sector, for instance, or if they could connect you with a previous client. Some firms offer a free initial consultation, which would be a good time to ask for this. 

4. Work out timings and costs. If you need a lawyer to help you with a single task – for instance, coming up with a policy or writing up a patent application – you'll likely only need to keep them around until that task is completed. On the flip side, you might need a lawyer on board for a more extended period, particularly if you're dealing with disputes. This will likely drive up the fees, too. Insist on a cost estimate from lawyers before committing, until you have confidence in the relationship. 

5. Draw up an agreement. You've outlined your needs and how often you'll communicate with one another. You've also worked out if you can afford to hire a lawyer financially and how payments will be structured. It's now time to agree to an engagement letter. 

6. Prepare for your first meeting. As mentioned, some lawyers might offer a free initial scoping session or consultation to ascertain whether their expertise fits in with what your business needs. After that, it's quite likely that your lawyer will ask you to prepare specific documents to bring to each meeting so that the case can keep moving. It's important that you do this, so you don't waste their time and your money. 

7. Communicate regularly – and know when to stop. Naturally, you'll want to stay updated on the progress of your case and, depending on how quickly it moves, you'll have pre-agreed on the communication schedule with your lawyer. When you feel the issue is resolved, it's OK to part ways with them – or you can keep them on a retainer for similar issues that might arise. 

Key takeaways 

• When hiring an accountant, you can usually hire someone generic, but hiring a lawyer isn't quite the same. You'll likely need someone who has some level of experience in your industry or at least in dealing with the specific legal issue you have. 

• You can start building a relationship with a lawyer or legal firm whenever you want – this might be a better strategy than employing someone only when there's a problem. 

• If you plan to operate or expand across multiple countries, you'll need to hire legal help on the ground in each country – or even different states, if they have different legal or regulatory requirements. 

Level up

Tool. A number of legal technology tools are becoming available to small businesses, helping business owners keep track of open cases and reducing the amount of time spent managing legal issues. Check out Brightflag and PocketLaw

Example. Recently, London-based TOAD Bakery changed its name after being hit with a cease-and-desist letter from a high-end restaurant with a similar name. Check out this article on how the owners dealt with it in the immediate aftermath. 

Perspective. For the most part, finding and working with a lawyer is still quite a manual, time-intensive process. Read this piece on the opportunity in digitizing legal advice, particularly for small- and medium-sized businesses. 

A version of this article was published in the Courier Weekly newsletter. For more useful stories, tips, tricks and simply good advice, sign up here.

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