Most new entrepreneurs are aware that legally protecting their businesses is an important part of setting a solid foundation for success, but legal bills can stack up quickly. Since most founders don’t have a ton of cash on hand when they first startup, it can be tough to find the money to pay legal fees and tempting to let things slide, telling yourself you’ll circle back once you’re on more solid financial footing. If you neglect the legal issues upfront, however, it’s likely to be much more expensive, complicated, and painful to put things in order later.
While I’m not an attorney and can’t provide legal advice – you must speak with a properly accredited lawyer to receive legal counsel – I have learned some tricks along the way that will help you get legal advice for less. Here are some tips to lower startup legal fees so that you can get all of your ducks in a row from the start and save yourself major headaches later.
Know what requires a top notch lawyer and what doesn’t. Basic paperwork that’s simple and straightforward does not require a name brand law firm that charges $700 per hour. Only spend the big bucks when a star lawyer’s expertise is truly valuable and necessary.
As much as possible, have your lawyer review legal documents and not draft them for you. The fee for a document review is typically much less than for a document drafting even though in reality the lawyer is just having a 1st year associate use a template and then reviewing that when s/he “drafts” the document. Use Google and forums like Angellist and Quora to get samples of the documents you need, personalize them for your situation, and then have the lawyer review that document. The end result will be the same but the bill will almost certainly be less.
Consider outsourced general counsel arrangements for “legal overhead” type items that require a lawyer but are straightforward and routine like Board of Directors meetings. These arrangements are typically more cost effective than paying by the hour for such services.
Ask your lawyer about alternative fee arrangements. While most lawyers still only charge by the hour, there are a few – especially those that work with startups often – that may be open to different payment terms. Flat rates for certain services, deferred payment agreements, and even equity may be agreeable options to some lawyers and you’ll never know if you don’t ask. Just be sure you fully understand the arrangement and its fine print before agreeing to anything. You know the lawyer certainly knows what s/he is signing.
Consider using new online services like UpCounsel that are similar to eLance but focus on the legal profession to find the best rates. You’ll post what you need and lawyers will bid on the project. You then have the opportunity to review lawyers’ proposals and backgrounds and choose the one who is the best fit. This model allows for much lower rates because it eliminates the overhead costs of a traditional law firm.
Legal fees are never fun, but they’re unavoidable, so it pays off to utilize some of these hacks to get the bill down to a manageable level so that you can redirect that cash towards strategic growth initiatives.