Leadership

Tips for Startups on Using Lawyers

  • author image

Most successful entrepreneurs possess that certain something that sets them apart from the crowd: the spirit, tenacity and a do-it-yourself determination that morphs a good idea into a thriving success. In a fledgling business, money is usually tight and these people, possessing the entrepreneurial spirit, pride themselves on their ability to wear many different hats, from the “Marketing Guru” to the “Public Relations Extraordinaire.” 

While this spirit is often the driving force behind getting businesses off the ground, it can also stand in the way of a startup’s success. A perfect example of this is a startup business’ reluctance to seek the advice of an attorney — “It just costs too much!” 

This reluctance is understandable, misguided as it may be. According to a recent Pew Research Center survey, most of the American public thinks attorneys don’t contribute much to society’s well-being. Indeed, when asked to rank various professions according to their worth, respondents ranked lawyers at the very bottom of the professions that were the subject of the survey. 

Couple this with the abundance of free and low-cost legal resources that can be found online, and it is no wonder entrepreneurs routinely avoid seeking the services of an attorney when starting their businesses. However, failure to seek business advice from an attorney could, in the long run, affect the viability of the business and cost the owner thousands of dollars in litigation fees that could have been avoided. 

Attorney’s services vs. online resources 

Although not readily apparent, an attorney can benefit a business in ways that the online legal document services couldn’t possibly dream. 

Sure, online legal document companies can provide a business with the forms needed to create a legal structure. But what is the difference between a sole proprietorship, a limited liability company and a corporation? What are the benefits and liabilities of each? Which structure is best for which type of business?  

Determine the legal structure of the business 

Deciding on a legal structure for a business will impact a business in a variety of aspects, from how much the business will pay in taxes to the personal liability of the business owner. An attorney can advise a startup on which legal entity would best suit its needs based upon the specific facts and circumstances of the startup’s business. 

While the online companies only provide the documents necessary to create the corporate structure, having your own attorney also provides follow-up advice to insure that the business adheres to all the corporate formalities. This important follow-up is necessary in order to maintain the corporate structure and limit any liability the owner may have. 

Protect brand and intellectual property 

After the business structure is determined, what next? Most startups will want to protect their business name, logos and any distinguishing taglines. Registering trademarks and servicemarks with the United States Patent and Trademark Office can and does offer this protection. Trademark registration forms are available through the online legal companies. But there are 45 distinct classes in which a trademark and/or servicemark can be registered. Which one will offer the most protection? Should the trademark and/or servicemark be registered in multiple classes? 

Online services don’t advise what’s best for your business. Business attorneys will be able to help a business navigate these tricky waters in order to offer the best protection of intellectual property.  Indeed, if a trademark and/or servicemark is registered in the wrong class, it will offer a business little or no protection.  

Contracts 

Now the business has a proper structure and its intellectual property is protected. What about contracts? A business is run and protected by its contracts, from non-disclosure agreements and employment agreements to leases and service agreements. 

Boilerplate examples of each of these types of contracts can be found on the Internet. But a contract for construction services is very different from a contract for software licensing. In certain fields such as construction, the necessary language contained in its contracts is governed by statutory law. 

Hiring an attorney to draft and/or review business contracts serves many purposes. First, an attorney will insure that the contract is valid and contains all necessary language in order to create a binding enforceable agreement. Second, an attorney will draft the contract specifically tailored to your business in order to provide you with the best possible protection under the law. 

Finally, a contract properly drafted by an experienced attorney will serve to protect a business from future and potential liability. Given the expense associated with contract litigation, the expense of hiring an attorney for this purpose is well worth the money. 

In short, the customized advice an attorney can provide to a business, no matter its size, more than makes up for the fees a business will pay when using a real attorney as opposed to the online legal forms companies. An attorney can review a client’s business and financial goals and can provide customized advice based on the business. The value of these personalized services will be seen throughout the life of your business. 

Times they are a changin’ 

While many entrepreneurs and business startups may now see the benefit of hiring a business attorney, most are faced with the same dilemma: Can I afford to hire an attorney? The answer to this question is yes, due in part to the changing structure in the way the law is practiced. Gone are the days that led to the negative public perception of attorneys in which old men charge exorbitant fees for services that are questionably unnecessary. 

A new kind of law practice is emerging that offers fixed rates for services such as incorporation, trademarks, copyrights and contract drafting and review. This transparency in cost allows a business to create a budget that includes having a business attorney on its team and takes the guesswork relating to hourly fees out of the equation. 

Based on this new type of law practice, the question seems to be not whether a business can afford to hire a business attorney, but whether it can afford not to. 

Lisa Allen is an associate attorney at the Lotus Law Center, where she specializes in helping small business clients with their legal needs. The Lotus Law Center was founded as a way to make legal services affordable for all sizes of businesses. Focusing on the practice of business and technology law, the Lotus Law Center provides premium personal and professional responses to the legal needs of business clients at an affordable fixed or hourly rate. Contact her at Lisa@lotuslawcenter.com.

 

 

 

Post Your Comment




Leave another comment.

In order to post a comment, you must complete the fields indicated above.

Post Your Comment Close

Thank you for your comment.

Thank you for submitting your comment, your opinion is an important part of SandHill.com

Your comment has been submitted for review and will be posted to this article as soon as it is approved.

Back to Article

Topics Related to this Article