Business Law FAQs
What we wish our clients knew
The basics we think about.
What should a founder (and a business) look for when hiring an attorney?
(The Overlooked Obvious.)
Founders should search for the obvious (but often overlooked) issues that make a great attorney.
First, an attorney should k now why you are there, and not assume that your issue is just like any other. It isn’t if the attorney is doing their job. A universal opinion is a poor legal opinion.
Second you want to find honesty and candor. A business will fail to grow or address new legal problem if an attorney only does what a client requests. There is no value in insincere agreement; there is always value in loyal disagreement.
Third, you want flexibility and hunger. While it would be easy to say you should enjoy working with your attorney, that only certain attorneys are competent to deal with certain types of situations, or that how much you pay an attorney indicates quality, these are not particularly true. Irrespective of where you find them, you want an attorney who will climb a mountain for you. You want their eyes to sparkle when they see a challenge. The intense attention of an attorney is the most valuable thing you are buying from an attorney, and is the one thing that allows problems to be solved.
Why does any business need an attorney sooner rather than later?
(It avoids larger costs.)
Planning is cheaper than reacting. Attorneys help with three basic groups, (1) insiders, (2) outsiders, and (3) governments.
Insiders, or people inside the business such as co-founders, investors, and key employees are more likely to invest their attention in a business when their interests are clearly and properly aligned with the business, a service that a good attorney provides. Explicit agreements that convince everyone (including judges) that the relationship between insiders and the business is good serve a dual role, they minimize hard feelings and waste if there are disagreements.
Outsiders, like customers, suppliers, users, and certain types of workers change with time and need. Inherently this change creates risk, an attorney can either limit this risk and provide foreseeable consequences, or they can change the type of relationship you have with outsiders, potentially bringing them into the fold.
Governments are the silent partner in any business. While they don’t build the company, they create the foundation of laws that each business stands upon. This foundation is not free, and it is not to be taken for granted. To gain the benefit of stability businesses pay not only the obvious taxes, but bear responsibilities to the community and to maintain limited liability. A good attorney fights against the possible collapse the foundation of your business due to mismanagement, mistakes, and misapprehensions.
How do attorneys bill you?
(By how you hire them.)
By your contract with them. Despite the love for hourly billing (in increments of six minutes or .1 of an hour), a good attorney will look at the needs of the client and based upon their initial needs use the most cost effective form of billing. This rarely happens.
Rather in our admittedly nonscientific study, we have found that the hourly charges for business law consultations are from $300 - $1000 dollars an hour with some associates charging $150 an hour. The assumption is that the more experienced you are, the less time it will take the attorney and the hourly rate will even out. We aren’t comfortable with this logic alone.
Although hourly billing is the best of solutions at times, rarely it is the best solution all the time. What is more important than the rate the attorney charges, is the value the attorney brings to the table. We find that the focus and determination of an attorney is the number one reason that quality cost effective work is produced. It is part of our hiring criteria, rather than the ego of the applicant.
How much will it cost to incorporate?
(It depends on your plans for the future.)
More if you don’t spend your money well initially.
Incorporation seems simple, much like making pottery. In pottery there are always those ugly (but cherished) pieces that your son or daughter makes, and you keep because of love. If your friend tried to sell you the same thing, it might not be to your liking.
How people run their businesses is a personal thing driven by the passions and ideas of the founder. The key in incorporation is not just building the legal foundation but making sure you can replicate the positive energy (and business practices) of the founder and pass it on to the business itself. At the same time, you need to avoid the negative effects of failure.
Done properly this costs between $2,500 to $10,000, though at times it can be more expensive or it can be cheaper (we have some cost efficiencies and assume others should have them) depending on the elegance of the business needs. Much like any contract, the documents are not the majority of the cost of incorporation, rather the right words and logic behind the documents is the bulk of the cost. The attorneys at our firm enjoy when our opponents don’t initially hire an attorney who is focused on their needs, when they go online to incorporate, or when there is poor planning. It is like blood in the water.
How do I minimize costs if starting a business?
(Plan ahead and avoid issues)
Protect yourself from legal liability by both incorporation into a limited liability business form and learn what causes lawsuits.
Pay attention to taxes and tax consequences of everything.
Protect the secrets of your business by contract and intellectual property.
Make sure you know how the relationship and rules to ownership and equity rights when there are multiple owners.