Acquiring legal help is necessary for any business. Although having an attorney is not needed every step of the way, there are certain business steps that are done safest with sound legal counsel, such as contract drafting and incorporation. Moreover, having a business lawyer on standby can mean the difference between resolving a conflict out of court and getting sued.
However, the cost of legal assistance is what often makes business owners think twice before seeking a lawyer. It’s no secret that legal fees are often expensive and can serve as an added strain on your already tight cash flow, but prevention is always a better option. You don’t want to risk your business falling into legal hot water because you didn’t hire an attorney, much less end up in court.
To protect your business against legal repercussions without draining your cash reserves, here are some helpful tips on how to reduce legal expenses for your business.
Look into your network
If you already know a lawyer, they will likely be able to refer to a business attorney that they know. Voice out your budget concerns and ask them if they know someone who has affordable rates. For instance, if you’ve worked with an experienced family law attorney before, their firm may also cover business law, and since you’ve already built a rapport with your current attorney, they may be able to help you negotiate lower rates.
If you don’t know a lawyer, the best way to find one that fits your budget is to consider multiple options. Interview as many lawyers as you need to in order to find the right one with the right price. Most lawyers, especially newly licensed ones, are willing to negotiate prices with you, so don’t hesitate to ask about their rates during the first interview.
It’s also important to find a lawyer that you can see a good professional relationship with in the future. The longer you partner with a lawyer, the better chances you have of reducing your legal costs as your partnership progresses.
Figure out the best calculation method
There are three main ways on how you will be charged by your lawyer, which are: by the hour, flat fee, and contingent fee. Let’s talk about each one in detail:
- By the hour. A lawyer’s hourly rate depends on their level of skill, experience, and expertise. Usually, hourly rates for reliable legal services range from $50 to $150. Your lawyer’s fee will be calculated based on the number of hours they work on your case.
- Flat fee. For specific jobs, such as creating contracts and drafting patent proposals, your lawyer may give you a quote for a flat fee. You pay that fee regardless of how long they work on it, which can be more beneficial if the job is tedious.
- Contingent fee. If the lawyer will be able to recover an amount for you after a settlement or trial, they will keep a percentage of that amount as their contingent fee. Apart from that, you will be expected to reimburse their out-of-pocket expenses made in the duration of the case.
Push for alternative dispute resolution
If you find yourself in conflict with another party, settle the case through alternative dispute resolution instead of litigation. Obviously, you won’t always have a say in the matter, but as much as possible, push for mediation or arbitration instead of going to court. Doing so will help you save a ton of time, money, and energy.
Here are three main types of alternative dispute resolution:
- Negotiation. This is the informal process of coming up with a settlement without a third party. The negotiation will be between you and the other side only.
- Mediation. A mediation is conducted with a mediator present who will help both parties reach an agreement (which is usually non-binding)
- Arbitration. Similar to mediation, arbitration is done with a third party who hears each side and comes up with a decision that may either be binding or non-binding
Request forms for routine transactions
Ask your lawyer to draft forms for routine transactions that you will simply fill in as needed. This helps you save time and money by not having to get a separate form done by your lawyer each time.
Offer a minimum number of work hours
Your lawyer may be willing to reduce their hourly rate if you guarantee them a minimum amount of work hours per year. For instance, if they charge $70 per hour, they may be open to dropping that rate to $60 per hour if you offer them at least 200 work hours a year.
With these strategies, you can effectively reduce your legal costs without compromising your business’ legal safety. All things considered, having a business lawyer by your side is way cheaper than facing an expensive case later on.