Planning to Start a Business? Here’s What You Need to Know About Hiring a Lawyer

Planning to Start a Business? Here’s What You Need to Know About Hiring a Lawyer
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Choosing and working with a lawyer can sometimes be a daunting task, especially if it’s the first time you’re working with them. When it comes to starting a business, it is essential to work with a lawyer.

You’ll be more confident knowing that you’ve got the right legal aid on your side as you concentrate on your business.

Read below to learn how to choose a lawyer and to know more about the attorney-client relationship.

Let’s get started:

What to Look for When Hiring a Lawyer?

It is important to choose a lawyer who fits your needs. Look for a person you can trust, can enjoying working with, can get along with, and who is interested in you and what you’re doing. Referrals are an excellent place to start.

You need someone that is experienced with the legal issues you’re dealing with, competent and responsive. The considerations that come with incorporating a software company can be different from those for incorporating a restaurant.

You’ll also need to hire the right seniority to handle your legal matters. You surely don’t want an inexperienced lawyer to negotiate with a highly experienced venture capitalist for you.

Lastly, you’ll want to consider the magnitude of the business matter at hand. If the matter is serious, you should be prepared to spend a little more for your attorney.

What are the Common Situations You’ll Need to Involve a Lawyer?

Basically, start-ups will need to get legal advice in the US when dealing with these groups:

1.       The Government

To avoid violating laws, you need to ensure that you’re not creating an unnecessary tax liability when doing your business and that you’re paying the taxes you owe the state.

2.       The Public and Third Parties

It’s essential to ensure that you take the required steps to minimize the risk that would come from your interactions with suppliers, customers, employees, users, and the general public.

3.       Each Other

When forming a company with other people, it’s advisable to establish the expectations and rights of the founders beforehand in case disagreements arise over time.

Here are some instances start-ups will require the help of a lawyer:

  • When hiring employees
  • When raising capital
  • When negotiating contacts with suppliers and customers
  • When obtaining patents (where applicable)
  • When forming a business entity

When to Use a Lawyer and When You Can Depend on Sites Such as LegalZoom?

The real benefit of hiring a lawyer at the incorporation stage is not to help prepare the actual documents but to help identify what you need i.e. what type of vesting schedule is ideal, LLC vs. corporation, etc.

LegalZoom can be ideal only if you know what you need but can’t give advice on what needs to be done on your unique situation.

How Do Attorneys Bill Their Time?

A lawyer’s advice is their stock in trade. This is a common quote that lawyers often use. Lawyers earn their income by billing clients for the advice they receive and for their knowledge in the legal field.

As a client, you may not have an idea of how lawyers bill, and may not understand the bill when you receive it.

Just like bills issued by plumbers, doctors, electricians, as well as other service providers, bills received covers the services you’ve received, as well as the operating expenses. Common terms associated with legal billing include “hourly rate,” “contingent fee arrangement,” and “retainer”

The hourly rate refers to the amount a lawyer will charge on an hourly basis to offer services to a client. This is the most common billing method used by lawyers.

A retainer refers to the amount of money a client pays towards legal fees. Just like down payment, you’ll pay it at the beginning of your lawyer’s representation, usually when you’re billed on an hourly basis.

Some attorneys refund the retainer while others don’t, so be sure to inquire from your lawyer.

The contingent fee arrangement is usually applied when dealing with personal injury cases. It is contingent upon a favourable outcome of the case.

What Legal Issues Should You Prioritize When on a Small Budget?

Here are some legal issues that need to be addressed early:

  • Establishing some sort of business entity (LLC or corporation) to cover you from business liabilities
  • Making sure the company’s intellectual property is protected, especially if independent contractors are developing it
  • Ensuring you’re sensitive to the tax consequences of your actions, especially when giving people equity
  • Establishing ownership rights (in the case of multiple founders)

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