When starting your small business, it may never cross your mind to hire an attorney. If it does cross your mind, you may wonder if keeping an attorney on retainer is even necessary.
Hiring an attorney to help with everything from incorporation to contract negotiation to tax filing is crucial to the success of your small business. With the right legal professional on your side, you can proceed with confidence that you have all your legal ducks in a row as you get down to business. To give you an idea of what to expect during and after hiring a small business lawyer, The Muse answers your most pressing legal questions.
Why does your startup need a lawyer?
Though there are dozens of reasons your startup may need an attorney, there are some situations in which it is more important than others to have legal assistance. Many times, those situations may involve you dealing with the following groups:
- Third Parties and the Public: An attorney can help you implement risk control measures for interactions with customers, employees, suppliers, end-users and the general public.
- The Government: Legal violations can cost your small business thousands to hundreds of thousands of dollars. A lawyer can help ensure you abide by the law in everything you do and avoid costly mistakes.
- Your Partners and Shareholders: Disagreements between business owners and shareholders are common. A lawyer can help you draft contracts that establish the rights and expectations of each interested party and that help mitigate future disagreements.
You may also want to hire a lawyer during the incorporation phase when hiring employees, when attempting to raise capital or when attempting to protect intellectual property.
What legal priorities should you focus on?
Understandably, you may not have the budget to retain a lawyer full-time and for every issue your business encounters. If this is the case, it is important that you prioritize your legal needs. Priority issues include help with business formation; the negotiation and establishment of ownership and equity rights in the company; tax issues; and intellectual property protection.
How much should you budget for legal fees?
The cost of legal help varies greatly and is dependent upon your needs, the size of your company and the complexity of your issues. However, The Must recommends budgeting between $2,000 to $5,000 for the startup phase alone.
Many business law attorneys charge an hourly rate in addition to a retainer. This rate ranges from $350 to $800 per hour. However, some small-town attorneys charge as low as $150 per hour, while major firms in big cities may charge as much as $1,000 per hour.
Retaining a lawyer is a major step for many small business owners. However, it is necessary if you want to set your business up for success.