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How do emerging and maturing businesses procure legal services?

I hear the horror stories of business owners engaging lawyers and law firms with disasterous results -- mostly due to the billable hour fee. Do emerging and maturing businesses ever engage lawyers on a fixed monthly fee basis or would they find such an arrangement of interest?

Public Comments

1. Yes and they sometimes hire them exclusively. Check with your insurance carrier.
2. As a current law student myself, I'd say it's simple. Find smaller law firms or private practices! OR, you can find recent law grads, they're always looking for clients!
3. HOW TO FIND AN ATTORNEY: Firms and lawyers can be found through local bar associations, lawyer referral services, as well as referrals from clients or other attorneys. When you have a few attorneys that you are interested in, Martindale is a useful website that has an attorney - peer rating system based on legal experience and provides attorney credentials. Also, check your local bar association to see if any have been suspended or sanctioned for any reason (particularly, for billing problems). WHAT TYPE OF ATTORNEY TO GET: Determine what sort of relationship would be most beneficial to your company. Does the company have expansive growth plans? If so, a law firm that can quickly respond to rapid business changes and growth might be a better choice. Is the company a smaller family business? If so, a solo practitioner who takes the time to know the business and the family might be a better choice. There are these sorts of trade-offs with different types of attorneys. More experienced attorneys cost more per hour but can be more efficient (ie - take less time) while less experienced attorneys cost less per hour but may require more time to attend to your needs. Larger law firms have more attorneys to help resolve diverse number of issues quickly. However, they may cater more to larger companies and may spend less time understanding smaller businesses. Solo practitioners tend to spend more time getting to know your business, yet they may require more time to respond issues depending on their experience. WHEN TO USE THEM: Businesses have a variety of legal needs and should consider legal expenses part of the operating business. However, law is also a business and your business typically does not need to address every legal need in the beginning. Viewing legal work as crisis prevention will lead to creating a successful legal expense strategy. 1) Use an attorney to identify what legal issues need work. An attorney will be able to let you know generally what issues need to be address and what s/he believes the most immediate needs are. 2) Prioritize those issues to your business's survival. For example, if you are a small software company, intellectual property patents would be a high priority. However, if your business provides services, developing a good general contract to use would be a crucial expense. You know your business needs; your attorney will know your legal needs. See where they meet up and how you can plan your expenses. 3) Discuss different fee structures with the attorney for the different things that you want done. Attorneys can set up fee agreements on an hourly basis, on a project basis, etc depending on the rules of professional conduct in the state. FIXED MONTHLY FEE: With regards to the fixed monthly fee basis, it is unlikely an attorney would agree to such an arrangement. First, there are very stringent rules on what an attorney can bill and to whom. Client billing typically is the most scrutinized of all professional ethics violations and many attorneys steer clear possible problems with billing and stick with traditional fee structures. If an attorney would agree to this, s/he would likely deposit the payments in a retainer / trust account that the attorney's services would be billed against. Second, once the attorney agrees to take on a client, the rules of professional conduct obligate them to serve as the client's attorney as the client understand the attorney's role. If a client were understand that an attorney will do all his/her legal work as stated in the fixed agreement, the attorney would be forced to practice an area of law s/he might not be competent in and/or the costs would bury the attorney. Law is about crisis management. It is a set of rules to explain what to do when things go wrong. Think of lawyers and fixed monthly fees this way - would one doctor agree to provide all of your healthcare for a fixed fee? The answer is not likely. Having a family doctor do brain surgery under a fixed monthly agreement would scare him/her (and you). It is no different with law. PRE-PAID LEGAL SERVICES / "LEGAL INSURANCE": As someone suggested, there are programs out there called "legal insurance" that provide attorney support for a monthly fee. However, you should note that while it can bring the benefits of predicatable legal expenses, it also inherits the problems of managed health care. While they can be beneficial for wills or other expensive document drafting projects, you aren't retaining an attorney or law firm. Rather, you get who is available and willing to take your case when your legal crisis occurs. That is to say, it is possible to have one attorney for corporate formation, one for drafting a contract, etc. Since the insurance company sets a rate for how much an attorney will get paid for that work, some attorneys are willing to take lower rates in certain areas but not in others. Moreover, legal insurance has limited coverage just like your medical insurance. Read through these policies carefully as your business's needs may not be covered. A FEW NOTES ON FEES: A) Attorney's fees often are separate from costs and expenses. That is to say, if a company agrees to an hourly fee of $250 an hour, it still m, be billed for copying expenses, paralegal time, etc. B) Conversations with an attorney once the attorney has been retained will likely be billed at the hourly rate. C) Ask your attorney what sort of time increments they use with billing their hours. Some bill in .25 increments (15 minutes). Some in .1 increments (6 minute). If you end up with an hourly agreement, it will be rounded up so it is helpful to know so that you maximize your dollar when you need to call.
4. Yes, some businesses retain lawyers for a fixed amount per month, it's called putting the atty on retainer. In my experience, retainer agreements are most common where there is an established relationship -- where the company has been working for the atty for a while, so the atty can figure roughly how much work the client needs per month, and there is established trust between both sides. But that doesn't mean it couldn't work with an atty you haven't worked with before, you'd just need some of the basics agreed upon beforehand. There is no set amount or set approach; areas of negotiation are, (i) the amount of the fee, (ii) how many hours maximum will the atty be required to put in per month (it wouldn't be fair for him or her to get $500 and then be expected to give you 20 hours of work), and (ii) if you don't use the atty or use the atty minimally in a given month, do you get a credit against next month's retainer? Let me add something that I'm sure will rub some of my colleagues the wrong way, although I think there is growing acceptance of this idea.... Legal services for small companies are largely becoming commoditized. There are a lot (I don't know if too many, but a lot) of lawyers now, and information (which in the end, is one of the few things a lawyer really has to offer) is just so widely available to everyone over the internet. What this means is, there will probably more acceptance to your proposition than there would have been, say, 10-15 years ago.