Hire an Attorney Before You Need One

The single biggest mistake most businesses make in retaining an attorney is waiting until a serious legal problem develops.  As a result, resolving the problem may be significantly more time consuming and expensive.  This article will discuss two questions:

  1. When should you first consult with an attorney?
  2. How do you select an attorney?

When to Consult an Attorney

As soon as you start planning to set up your business, you should consult with an attorney and an accountant.  This is important for several reasons:

  1. If you plan to set up a corporation or limited liability company (LLC), the business must be properly established and maintained.  If it is not, you could lose the “legal shield” between your personal assets and your business assets.
  2. If you have more than one shareholder (corporation) or member (LLC), you need a written document describing the role of the various owners of the business.
  3. Whether you are going to provide services or sell goods, you need a standard agreement or contract that will help ensure your customers understand what they will receive from your company, the cost of the goods or services and your company’s responsibility if the customer has a problem with your goods or services.
  4. If you are going to have employees, you need to understand the “dos and don’ts” of managing your employees.
  5. When a problem develops, you need to have an attorney you can call who is familiar with you, your business documents and your business.

While it may be tempting to avoid the costs of consulting with an attorney during the early stages of forming a business, the cost of resolving a problem that could have been avoided will be substantially more.  If your business is already established and you do not have a relationship with an attorney, you should consult with an attorney so that you can quickly obtain legal advice when the need arises.

How to Select an Attorney

The first question you need to ask is if you want to use a large firm or small firm.  A large firm offers the advantage of numerous attorneys that individually limit their scope of practice to a specific area of law.  A small firm offers the advantage of working directly with a single attorney experienced in a wide range of issues.  In addition, there are many small firms that focus their practice in specific areas such as construction law, patent/trademark law, federal and state contracting, commercial law and securities law.

The next issue to consider is whether you need a transactional attorney, a litigation attorney or an attorney that has experience in both areas.  A transactional attorney is one that primarily provides advice and prepares documentation, e.g. a patent attorney that does not handle patent disputes.  A litigation attorney is a trial lawyer who typically tries cases involving various areas of law.  The advantage of hiring an attorney that has experience in transactions and litigation is that the attorney’s litigation work will give him/her insight into common pitfalls in preparing or advising on transactions that could give rise to a dispute.

Once you have decided what type of attorney will best meet your needs, talk to people that have had similar issues and ask them for recommendations.  If you cannot obtain recommendations from friends, check with the local bar association or investigate attorneys in your area on the Internet.  In addition, consider the attorney’s involvement in his/her profession and local community.

You should always interview an attorney before you make your final decision.  The key part of the interview process is learning if the attorney is one that listens to you, asks questions to ensure he/she understands the problem and is frank with you about the pro’s and con’s of the issues involved.  The most critical skills you need from an attorney are the ability to communicate clearly, ask you the tough questions and be frank with you regarding the issues confronting your business.