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When I was planning the launch of my first business, I wrote a business plan that included financial projections, such as legal fees. As I called around for quotes, I couldn’t believe the cost of something as seemingly routine as an incorporation, for example.
Not wanting to take a chance on something as important as incorporation to a website, however, I dove in and paid the going rate. I didn’t regret it and haven’t looked back since.
The truth is, the majority of small business owners don’t like paying these fees because they don’t appreciate the complete value of sound legal service.
My first encounter with a lawyer involved a conversation that opened my eyes to other risks and opportunities in my business. We ended up discussing everything from patents and trademarks to vendor and customer agreements, employment contracts and non-disclosures, among other things. Over the years, I have used all of the above and more to strengthen my business.
While a skeptic might say that the lawyer was trying to up-sell me, the optimist in me knows she was providing much needed coaching and education on what the options that could protect both my business and myself.
The first step to making your legal counsel work for your small business involves, not surprisingly, finding a great lawyer. I tend to gravitate towards a counsellor who is approximately my age and matches my personality – someone who is casual and laid back, but detail-oriented and deadly blunt when necessary.
Secondly, don’t expect to find a commercial contracts expert, intellectual property guru and human resources super hero wrapped into one. Rather, your general counsel should be the centre of that hub, able to leverage his or her network to bring you other specialized expertise as and when needed.
Just because you can formalize a complicated agreement with just about any party over any transaction, legal discretion is advised. No small business has an unlimited supply of budget for professional services. Even those with deep pockets need to pay out accountants, consultants, etc. So, pick your battles and make sure your lawyer, while explaining all the options of a particular scenario to you, has the objectivity to keep it simple and relative to the real risk involved and the size of your business.
That said, when you’re not sure, pick up the phone. A few 20-minute phone calls throughout the year to give your lawyer a head’s up on a new project or direction in your business could generate some great legal advice, cautionary warnings or unbridled support. Any of these scenarios is valuable and the price you pay will be minimal when compared to the value of risk management you’ve achieved.
Don’t think about the hourly rate. That’s just a distraction and will likely lead to an emotional decision, not a pragmatic one. Think of the long-term value your business enjoys by having access to a well-trained and experienced lawyer who is on call when you need her, and will typically provide an undeniable return on investment. Even if all your lawyer does is support your original projected approach, at least you will have the confidence to step on the gas and proceed full steam ahead. As far a worse case scenarios goes, that sounds pretty sweet. I wish all business investments were this easy. Make the call.
Chris Griffiths is the Toronto-based director of fine tune consulting, a boutique management consulting practice. Over the past 20 years, he has started or acquired and exited seven businesses.