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Getting the best legal support for your business without breaking the bank
by Startacus Admin
Recently Thomas Taylor a director at Legal Document provider Net Lawman has written some fab posts for Startacus on the legal issues that face many a small business and startup.
This week Thomas returns with a handy advice post on getting the best legal support for your business without breaking the bank...
"Start-ups often go without legal support in the early days and can run into difficulties later on.
Cost is often the reason, especially when cash flow is tight and spending money on reducing the probability of something happening in the future seems less important than spending the money on getting the business going today. There are ways, however, to reduce spending on getting the legal tasks in the new business done.
Use a legal specialist, but not necessarily a solicitor
As in any profession, most solicitors are specialists. They learn a little about many areas of law when they train, but then tend to specialise. Very few will turn down your business if you are willing to pay. So if you approach one and ask whether he can help with a particular matter, he is likely to say that he can – regardless of whether he is the best person to do the work.
Your high-street solicitor is unlikely to be a specialist in more than one or two areas of business law. In those areas of work where he is not a specialist, he is likely to have to work longer reading up on the law (the changes since he trained) and less likely to produce as high quality work as someone who specialises in that area. Work will take longer, be more expensive, and probably be of a lower quality.
As your business grows, you will probably need to buy legal services from several different sources.
You can often find an expert in the law who is not a solicitor - the most obvious example is a barrister (although most barristers have high charge out rates as well). All solicitors are members of the Law Society, a quasi-commercial organisation that also regulates the profession. Many lawyers prefer to work without being members of the Law Society for perfectly valid reasons (such as to avoid rules about how they must structure their businesses). They might call themselves simply “lawyers”, or “paralegals” or “retired solicitors”.
While there are certainly reduced risks if you use a solicitor (for example, a solicitor must have mandatory insurance to compensate you if he runs off with your money from the sale of your house), it certainly isn’t the clear cut “solicitors good, non-solicitors bad” situation that the Law Society would like us to believe.
You should assess your legal help by the experience that the service provider has, not the memberships he holds.
Limit the scope of the work and ask for a fixed fee
You should be able to ask for fixed fee for your work so that you can plan your cash flow and so that costs can’t over-run.
To do this, you’ll need to be clear in the scope of work you agree. Extras, such as telephone calls, or letters to potentially interested third parties can really increase costs without any benefit to your business. Make sure the work you want carried out is in writing.
Lawyers are best used for specialist advice
A good lawyer is invaluable if your situation is unusual or complex.
For the simpler stuff, you can save money if you do your own homework first.
The substance of many agreements is commercial in nature – how the deal will work in practice – rather than legal. That means that you, as the business owner, are often in the best position to understand what the deal should be. Your solicitor, who may have never run a business, let alone a business in the same industry as you, might be less commercially savvy.
There is plenty of good information about the law on the Internet, such as from the government website Gov.uk. Ten or fifteen minutes reading about the basic subject can save a hundred pounds on lawyers’ fees to explain the same background material to you. If you can take up less of your lawyer’s time, you will spend less.
You can edit a legal document template yourself to create a legally binding document (especially if the document is written in plain English, comes with guidance as to how to edit and is for a common legal matter). Use a lawyer to review it if you want to be very confident it will do what you need it to do.
(As a side note, using a solicitor is not a necessary ingredient to make a document legally binding. It is the circumstances of the deal itself that make a contract binding, not who is involved in recording it.)
The key to doing more yourself is to find good advice and use good document templates. Look up who has written the advice or document, what qualifications he or she has (and importantly as already mentioned, what experience he or she has) and when it was written.
There are ways of getting legal support without spending huge amounts of money on solicitors. Any professional is worth paying in certain circumstances. You just have to know when you don’t need to do so.
Thomas Taylor a director of Net Lawman, an alternative for small and growing businesses to using a solicitor to obtain legal documents. He is a qualified accountant (FCCA, FPA/FIPA).
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