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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 Kirkpatrick & 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 advice
    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 small businesses."
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Jeffrey Levy knows how valuable the right attorney can be.

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 off."

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."

In-house attorneys
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 transactions.

"There are a lot of benefits in having someone in-house," says Jared Slosberg, vice president of business development for FindLaw, 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 day."

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

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