An attorney is a vital crew member
on your small-business journey
If you think of your small business as a voyage, then
your lawyer is one of the most vital members of your crew. Your
lawyer's the one who will help you pick the right legal vessel at
your launch, provide both armor and weapons, and then steer you
around the shoals.
Yes, attorneys draw up the papers when you need legal
assistance, but they can also assist in less obvious ways, experts
say. Here's what a good one will do:
- Advise on business planning
They should be involved in the planning stage of any new business
and can offer advice on choosing a business entity, dividing stock
and negotiating leases. "A lot of small business owners just go
out and start the business," says Marc Auerbach, a lawyer with
& Lockhart in Miami. "They have a dream, and they want
to get their dream accomplished, but they don't necessarily do
all the things that they should do upfront to protect themselves."
- Provide everyday business
Once a business is operational, an attorney can review contracts
and leases, collect delinquent accounts and arrange for financing.
"The entrepreneur is handling a lot of functions, whereas in a
larger corporation you'll have specialists in many areas," Auerbach
says. "So it's important to have an attorney to give them some
general overview with respect to a lot of the issues that affect
Jeffrey Levy knows how valuable the right attorney
His attorney went beyond drafting documents for his
business, says Levy, a partner of Leads for Life Inc., a Metuchen,
N.J.-based insurance marketing firm. "He makes sure that we're getting
competitive lease agreements. He also has counseled us on purchasing
property vs. leasing property, and he gave us the correct advice
not to purchase."
- Assist with networking.
Due to the nature of their business, which brings them into contact
with a wide variety of people, attorneys are a great source of
referrals. An attorney may, for example, bring together one client
who owns a large piece of undeveloped land and another who is
a builder or developer.
- Advise on personal matters
Often, personal tax, estate, and family issues are closely
related to and affected by business issues. Many people are sole
proprietors whose personal and professional finances and interests
are tied together, says Carol Cooper, publisher of Martindale-Hubbell,
a leading directory of law firm and lawyer information. "There
might be estate planning issues involved as well as business issues.
There are times when money is well spent by taking a holistic
view of the situation."
Steps to finding the right attorney
How can a small business owner find a good attorney? Experts suggest
looking for the following qualifications:
- Proper experience
Small businesses should choose attorneys who not only specialize
in small business issues, but who also have experience representing
other companies in the same industry. "The choice of an attorney
with the right experience and credentials can really impact the
outcome of either advice or legal matters," Cooper says. "Lawyers
do specialize, so matching the client's needs with the lawyer's
qualifications is important."
- A comfort factor
Since an attorney-client relationship is based on trust, the
business owner should feel comfortable with his or her attorney.
"To get the most out of an attorney, you have to be completely
candid," Pierson says. "They have to know you so they know how
to handle your needs. Problems arise and if your attorney knows
you, he can calm the situation and advise you in a way that's
going to fit your personality."
- Firm size that's right
for the business
A sole proprietor probably does not need to hire the largest,
most prestigious law firm in the state to handle collection work.
In fact, this could even be counterproductive.
"An attorney who only represents Fortune 500 companies is not
necessarily going to be tuned in to the issues that are going
to affect a small business," says Auerbach.
To choose an attorney, business owners should follow
the same procedures they do when selecting any vendor: Seek referrals.
Interview. Check references.
"A business owner should be able to ask an attorney
for some referrals with respect to similarly situated individuals,"
Auerbach says. "If the attorney is hesitant to allow him to contact
people he's represented in the past, the warning bells should go
The cost of legal help
Legal fees vary greatly and depend upon the size of the firm,
the experience of the attorney, and the area of the country in which
the firm is located.
Auerbach says a good corporate attorney typically
charges $175 to $300 per hour. He also recommends the parties create
a retainer letter that spells out the terms of their agreement.
As with any other service, he says, business owners
"should know upfront what the lawyer is being engaged for, the
scope of services he is going to be providing, how the lawyer bills,
how often he bills and what ancillary services they're going to
be charged for. The retainer letter should incorporate all the costs,
so that they really know what they're getting. If the lawyer's not
willing to give it to you in writing, I'd be concerned."
As a business grows, it might be advisable to bring an attorney
in-house, not just to save money but to obtain legal advice on everyday
"There are a lot of benefits in having someone in-house,"
says Jared Slosberg, vice president of business development for
a Mountain View, Calif.-based Web site that provides legal information
and referral services for lawyers and consumers.
Typically, he says, lawyers "are very bright and business-savvy
people. They tend to have a lot of good general business advice,
especially if they've dealt with business issues. You also get a
much faster response time because if you use an outside attorney,
you're competing with 10 other things that landed on the desk that
Learning from mistakes
Whether it's in-house or a hired gun, though, getting the right
attorney is crucial. Dan Pierson found out the hard way. When he
formed his business 13 years ago, he relied upon one of his partners
to find an attorney to handle the legal work for the new company.
That attorney incorporated the business -- Technical
Aero Services Inc., a distributor of aircraft parts and equipment,
based in Miami. But that's all he did. He ignored the other corporate
formalities -- details such as issuing stock and preparing minutes.
"It was apparent to me that this guy wasn't doing
the stuff that he was supposed to be doing," says Pierson, the company's
president. "It's one thing to incorporate, but you have to do an
annual filing, you have to have minutes, you have to have shares
issued. He never did that."
Pierson quickly hired an experienced business attorney.
He now considers his attorney to be a "very good friend" and understands
how important the right one can be to a business.
"The law and your personality have to go hand in hand.
You want to get somebody who can truly understand you, so therefore
they understand your business."
Robyn A. Friedman is a freelance
writer based in Florida.
-- Posted: Dec. 15, 1999