Originally published on New York Enterprise Report.
When hiring an attorney, cost is often the foremost concern. Because most attorneys bill on an hourly basis and hourly rates can run very high, it is challenging to correctly budget for legal expenses. As a result, many business owners defer seeking legal services until there is a crisis to avoid the high and unpredictable costs, but unfortunately, once a crisis exists, it can be even costlier to resolve than it would have been to avoid with the assistance of an attorney.
As an attorney myself and the CEO of Priori Legal, I believe that attorneys offer an invaluable perspective for small businesses, but I also understand why businesses are reticent to work with attorneys. Based on my experience, I’ve compiled some tips that can help small businesses select the right attorney and minimize costs.
Hiring an Attorney
Many businesses still find attorneys through word of mouth recommendations, but anytime you hire an attorney, you should make sure to meet with several to be able to compare your options on several points: cost, personal rapport, and the scope of work the attorney proposes. You should get a sense of what different attorneys will charge you for the same service, and how they define what those services include. One of the problems plaguing the legal market is opacity, so there really is no ‘standard’ price. The more comparative price points you have, the better negotiating position you will have vis-à-vis your preferred attorney.
When preparing for your first meeting or consultation, it’s important to set the tone by being knowledgeable and professional. Many business owners think that they should be tough and hard driving to negotiate the best deal, but that is often counterproductive. If you appear to be the type of client who might argue with every single bill, you might find yourself paying a higher overall rate.
If you are considering working with an attorney on an hourly basis, don’t take a lower rate at face value. Ask the attorney—in their experience—how long similar matters have taken. If they say that ‘it depends,’ ask what factors influence how long it takes. Similarly, find out from the attorney what types of law they practice, how much of their time they spend working in each practice area and how much experience they have with your particular type of concern. An expert will likely be able to work faster, and predict more accurately how long a matter will take.
When you are deciding between attorneys, you have the most leverage at a firm where the attorney sees you as a valuable and long-term client. Be clear with the attorney that you are not a one-off customer, or if you are a one-off customer, you can point out your access to other potential customers (for example, within a particular industry-type).
Don’t be afraid to ask: “Is that the best you can do?” The worst thing that can happen is the attorney will refuse. When and if you do try to negotiate their rates, be clear that you value the work that they do. The surest way to undermine yourself is to come across as though you think they are selling a widget rather than a critical service.
Once you’ve decided on an attorney, be clear and thorough about expectations up front. Clarity about how your matter will be handled avoids many disputes down the road, and allows you to negotiate when there is a problem. Here is a list of some basic issues you should consider:
- What fee structures does the lawyer offer? Depending on the type of representation, options include hourly, flat, contingent, or monthly retainer. Some attorneys might also be open to equity or an exchange of services. As always, there is no harm in asking.
- How and when will you pay? Usually, when representing clients on an hourly rate, law firms will send you a monthly invoice. However, many also offer ‘deferred payment,’ which means that you can negotiate when you pay your bills, if not how much the services cost.
- Who will do the work? If you are considering a larger firm, discuss who will be responsible for your work. Associates bill at lower rates, but are less experienced than partners so their work often takes longer. Also, you’re going to pay for the partner’s time reviewing the associate’s work. I’ve seen many legal bills where the client thought they negotiated a great deal by having the associate do most of the work, only to discover that it cost as much, if not more, as it would have if the partner had taken the lead.
- Are you going to be responsible for legal research? What other types of disbursements might the firm bill you for? Will you be charged for paralegal and administrative work? What are these rates?
- How will new work be handled? If you are paying on an hourly basis, ask your attorney to contact you before doing anything outside the explicit scope you established.
Setting clear expectations at the outset of a representation will serve you well later, as you can refer back to it if there are any difficulties.
During the representation, remain an active and engaged participant. If you are a client who pays bills on time and is responsive and clear in discussions with your attorney, your attorney will likely be more responsive when you do take issue with a line item or the quality of work you received.
- Check your bills. If work took longer than expected, ask why.
- Make sure all the ‘client calls’ and ‘client emails’ align with your records.
- Don’t be afraid to mention inaccuracies, discrepancies or mistakes in your bills.
- If there are issues with the work-product—especially if it doesn’t align with what you asked for, tell the attorney and be clear that it is their responsibility to fix it.
Legal bills can be negotiated and you can take proactive measures to minimize your costs. A good lawyer will not be cheap, but using these tips you can keep your legal bills as low as possible.
When considering what lawyer to hire, please, balance price and quality. In law—like most areas of life, in my experience, you pay for what you get, so don’t let price be the sole driver of your decision. I’ve seen a great many companies who chose the ‘cheap’ option only to be saddled with hugely expensive legal bills down the road to rectify mistakes made.
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