Questions to Ask Your Attorney
There are two professionals every company will need early on: a lawyer and a accountant. The motives for hiring an accountant will be fairly obvious–you need somebody to help you set up your”chart of accounts,” review your numbers occasionally, and prepare all of your necessary national, state and local tax returns. The reason for hiring a business attorney may not, but be apparent. A good small business attorney will provide vital aid in almost every aspect of your enterprise, from fundamental zoning reporting and compliance and signature information to appropriate small business incorporation and liability and lawsuits. First, some general rules about dealing with lawyers:
Most lawyers agree that while nobody likes to cover attorneys’ fees for anything, but the fee a lawyer will charge to keep you out of trouble is only a small fraction of the fee a lawyer will charge to get you out of trouble once it’s happened.
Generally speaking, the larger the law firm, the greater the overhead, therefore the higher the hourly rates you will be expected to pay. Still, larger firms have a number of advantages over smaller ones. Over the past 20 years, lawyers have become incredibly specialized. Sooner or later, these “generalists” will have to refer you out to specialists, and you will find yourself dealing with two or three (or even more) attorneys.
A nasty letter from a “powerhouse” law firm with offices in 30 states is a lot more intimidating than a nasty letter from a solo practitioner who is not admitted to practice in the defendant’s state. Certainly if you run a fast-growing entrepreneurial company that plans to go public (or sell out to a big company) some day, you would need to work with lawyers whose names are recognized in the investment banking and venture capital communities.
If you need help finding the right attorney please visit our category for lawyer in Toronto
Types of Attorneys
Lawyers are becoming increasingly specialized. At the very least, you will need the following sets of skills. The more skills reside in the same human being, the better!
- Contracts lawyer.
- Business organizations lawyer.
- Real estate lawyer. Leases of commercial space–such as offices and retail stores–are highly complex and are always drafted to benefit the landlord. Not so. Your attorney should have a standard”tenant’s addendum,” containing provisions that benefit you, that can be added to the printed form lease document.
- Taxes and licenses.
- Intellectual property Lawyer. If you are in a media, design or other creative-type business, it is certainly a”plus” if your lawyer can help you register your products and services for federal trademark and copyright protection. Generally, though, these tasks are performed by specialists who do nothing but “intellectual property” legal work. If your lawyer says he or she”specializes in tiny companies,” then he or she should have a close working relationship with one or more intellectual property specialist.
If you know you want to incorporate your business, for example, ask if he or she has ever handled an incorporation. Your business attorney should be something of a legal”internist”–one who can diagnose your problem, perform any”minor operation” that may be needed, and refer you to local specialists for”major operation” if needed. If your business has specialized legal needs (a graphic designer, for example, may need someone who is familiar with copyright laws), your attorney should either be familiar with that special area or have a working relationship with someone who is.
Do you have other clients in my industry? Your attorney should be somewhat familiar with your industry and its legal environment. If not, he or she should be willing to learn the ins and outs of it. Scan your candidate’s bookshelf or magazine rack for copies of the same journals and professional literature that you read. Be wary, however, of attorneys who represent one or more of your competitors. While the legal code of ethics (yes, there is one, believe it or not) requires that your lawyer keep everything you tell him or her strictly confidential, you do not want to risk an accidental leak of sensitive information to a competitor.
Are you a good teacher? Your attorney should be willing to take the time to educate you and your staff about the legal environment of your business. He or she should tell you what the law says and explain how it affects the way you do business so that you can spot problems well in advance. The right lawyer will distribute such freebies as newsletters or memoranda that describe recent developments in the law affecting your business.
Are you a finder, a minder or a grinder? Nearly every law firm has three types of lawyer. The”finder” scouts for business and brings in new clients; the”minder” takes on new clients and makes sure existing ones are happy; the”grinder” does the clients’ work. Your attorney should be a combination of a”minder” and a”grinder.” If you feel that the attorney you’re talking to is not the one who will actually be performing your job, ask to meet the”grinder,” and be certain you are familiar with him or her.
Will you be flexible in your billing? Because there is presently a”glut” of lawyers, with far too many practicing in most geographic locales, attorneys are able to have to pay their fees as never before, and it is certainly a”buyer’s market.” Nonetheless, there are limits–unlike the personal injury lawyers who advertise on TV, company attorneys almost always won’t work for a”contingency fee,” payable only if your legal work is completed to your satisfaction.
Most lawyers will charge a flat one-time fee for routine matters, such as forming a corporation or LLC, but won’t volunteer a flat fee unless you request it. Be sure to ask if the flat fee includes disbursements (the lawyer’s out-of-pocket expenses, such as filing fees and overnight courier charges), and when the horizontal fee is expected to be compensated. Many attorneys need payment of a flat fee upfront, so they can pay their out-of-pocket expenditures. You must always request to”hold back” 10 to 20 percent of a flat fee, though, in the event the lawyer doesn’t do the work well.
Lawyers will be unwilling to quote flat fees if the matter involves litigation or negotiations with third parties.
If an attorney asks you for a retainer or deposit against future fees, make sure the money will be used rather than held forever in escrow, and that the lawyer commits to return any unused portion of the retainer when the deal fails to close for any reason. You should be suspicious of any attorney who offers to have an ownership interest in your business in lieu of a commission.
Questions to Ask Yourself Before Hiring an Attorney
Is this person a really frustrated businessperson disguised as a lawyer? Some attorneys become tired of being on the outside looking in when it comes to business transactions. Such a lawyer may try to second-guess your organization judgment. Be wary of a lawyer who chooses too excited an interest in the nonlegal aspects of your work.
Does this individual communicate well? J. P. Morgan said,”I do not pay my lawyers to tell me what I cannot do, but to tell me how to do what I want to do.” The ideal lawyer for your company won’t react to your questions with a straightforward”That’s OK” or”No, you can’t do that,” but will outline all your accessible options and inform you what other businesses in your situation normally do.
Are the offices conveniently located? You need to see your lawyer frequently, especially in your first few years in business. You should not have to waste a day travel to and from the closest city each time you require legal advice. When in doubt, select a lawyer close to home.
Do I like this person? Don’t neglect to follow your feelings and instincts. You should have the ability to communicate openly and freely with your lawyer at all times. Should you feel you can’t trust a particular lawyer or you believe the two of you have various viewpoints, keep looking. Just keep in mind that Ally McBeal is not reality: good looks and a dynamic personality aren’t as important in a lawyer as precision, thoroughness, intellect, the willingness to work for you and focus on detail. As a former customer once told me:”My father always said,’Never trust a lawyer who has 20/20 eyesight and wears Armani.’ I chose you as my lawyer because you look like you work for a living.” The ideal lawyer for your business will take that as a compliment.
Where to Start Looking to select the right attorney/legal representative
A great place to Begin is with the Law Society of Ontario or Law Society of Upper Canada. Their website has a wealth of information for consumers and professionals alike that have valid questions. In the “Hire a Lawyer” section, you’ll find information on public service lawyer referral programs, wherein you’re interviewed to get your needs diagnosed and then provided with a referral to a lawyer or to useful community resources.
There are also commercial lawyer referral providers on the web. Go into TOP5BIZ.COM, for instance, and you’ve got instant access to thousands of lawyers. You can search by city and state, and several outcomes come up inside the area you specify, with details of each company’s background, areas of practice, printed works, attorneys on staff and so forth.
For most entrepreneurs, the idea of consulting a lawyer conjures up frightening visions of skyrocketing legal bills. While there’s no denying that attorneys are costly, the good news is that there are more ways than ever to keep a lid on costs. Start by learning about the various ways lawyers bill their time:
Hourly or per diem rate. Most attorneys bill by the hour. If travel is involved, they could bill by the afternoon.
Flat fee. Some attorneys suggest a set fee for certain routine matters, like estimating a contract or closing a loan.
Monthly retainer. If you anticipate a good deal of regular questions, one option is a monthly fee that entitles you to all of the routine legal counsel that you need.
Contingent charge. For lawsuits or other complicated matters, lawyers often work on a contingency basis. This means that should they succeed, they get a percentage of the profits –usually between 25% and 40 percent. If they fail, they get only out-of-pocket expenses.
Value billing. Some law firms bill at a greater speed on company matters in case the attorneys obtain a favorable result, like negotiating a contract that saves the customer thousands of dollars. Try to avoid lawyers who use this method, which can be occasionally called”partial contingency.”
If you think one method will work better for you than another, don’t be afraid to bring it up with the attorney; many will provide flexible arrangements to meet your needs. When you hire an lawyer, draw up an agreement (known as an”engagement letter”) detailing the charging technique. If more than one attorney works on your file, make sure you define the hourly fee for each individual so that you aren’t charged $200 an hour for legal work done by an associate who only costs $75. This arrangement should also specify exactly what expenses you are expected to reimburse. Some attorneys expect to get reimbursed for food, secretarial overtime, postage and photocopies, which many people think about the costs of doing business. Whether an unexpected charge comes up, will your attorney call you for authorization? Agree to reimburse only reasonable and essential out-of-pocket expenses.
No matter what type of billing method your lawyer uses, here are some steps you can take to control legal costs:
Have the attorney estimate the cost of every matter in writing, so you can decide whether it’s worth pursuing. If the bill comes in over the estimate, ask why. Some attorneys also provide”caps,” reassuring in writing the most cost of a specific service. This assists you to budget and provides you greater certainty than simply getting an estimate. Also remember to pay your attorney bill on time otherwise it might affect your credit score and you have to deal with a collection agency as well.
Learn what increments of time that the company uses to compute its own bill. Attorneys keep track of the time in increments as short as half an hour or as long as half an hour. Can a five-minute telephone call cost you $50?
Request monthly, itemized invoices. Some lawyers wait till a bill gets big before sending an invoice. Request monthly invoices rather, and review them. The most obvious red flag is excessive fees; this means too many people–or even the wrong people–are still working on your file. Additionally, it is possible that you could be wrongly charged for work done for another client, so review your invoices carefully.
See whether you can negotiate prompt-payment discounts. Request your bill be discounted if you pay within 30 days of your invoice date. A 5-percent discount on legal fees can add thousands of dollars to your yearly bottom line.
Be Ready. Before you meet with or call the attorney, possess the necessary documents with you and know exactly what you want to go over. Fax needed documents beforehand so that your attorney does not have to read them throughout the seminar and can instead get right down to business. And refrain from calling your attorney 100 times a day.
Meet with your attorney regularly. At first glance, this may not seem like a good method to keep down costs, but you’ll be amazed at how far it reduces the endless rounds of phone tag that disturbs busy attorneys and entrepreneurs. More important, a monthly five- or 10-minute meeting (even by phone) can save you substantial sums by nipping small legal trouble in the bud before they have a chance to grow.