How to get more bang for your legal-fee buck

Insurance, rent, legal fees: they’re all costs of doing business. How do you manage them and get more value from them? The unfortunate truth is that many small business owners are not savvy legal consumers, and the internet has added even more options for people to find and get legal services. I’ve already written about the risks of buying a set of business formation forms online and then not completing them – properly or ever. Is the Internet a useful or dangerous tool? Where are all the good lawyers and how can you keep your bills down?

Here are some tips on getting more value for your legal budget.

Hire lawyers like a General Counsel. General Counsels hire other lawyers all the time. Their goal is to find the right lawyer or firm for the job. Whether the lawyer is your employee, a contractor, a solo practitioner or a member of a firm, it’s the individual that matters. Don’t just Google it or get one referral.  Did you hire your last employee without an interview or reference check?

Manage your lawyers like other consultants. Before you hire, ask candidates about their specific experience and qualifications to do the matter at hand. Understand how they work and how they bill and don’t be afraid to negotiate. Be honest about your budget. You can tell a law firm that you need to know who is assigned to your matter and their rates before they start to work. Talk to them about whether your matter really requires an expensive partner’s time or the assistance of three research associates. Tell them that you want to have a consistent lawyer assigned to you – and which one. You can ask them to not increase their fees in the middle of a matter (most firms have annual fee increases). Ask about discounts, charging on a fixed fee or other alternative billing basis. A lawyer or firm may disagree with some of your requests, but they want happy clients and there is a lot of competition. Be prepared to switch if things aren’t working out or circumstances change.

Don’t expect the same lawyer to do everything. Any one lawyer who tells you they are an expert in every legal issue you will face is lying. Lawyers specialize. A lawyer may know something about many areas, but won’t know everything about everything. If a lawyer is learning while doing your work, you’ll pay more regardless of the rate. This doesn’t mean you need a stable of different lawyers for every different legal issue you face or the top legal expert for every matter, but be prepared to use more than one and don’t hire your divorce lawyer to handle your technology licensing.

Understand legal business and delivery models.  Lawyers work alone and in all sizes of practice groups. Large law firms have the advantage of having many lawyers to cover all types of specialties.  But they are also the most expensive and may not be as attentive to small clients.  Their rates and bills are higher because of their organizational structure which is based upon using multiple tiers of lawyers and staff to accomplish the work. Smaller firms and solo practitioners don’t handle every type of legal matter and some are very specialized. The “boutiques” may focus exclusively on patents, employment law or personal injury, for example. The bottom line is that top notch lawyers aren’t exclusively in large firms. Many highly experienced, quality lawyers are available from small firms at more reasonable rates.

Consider hiring in-house counsel or a contract lawyer. The biggest advantage of having an in house lawyer is having someone who really understands your business, your goals and your culture. An outside lawyer just doesn’t have that kind of access. When your legal budget exceeds the salary and benefits of a full time professional employee, you may want to think about adding a lawyer to your staff. But remember that one lawyer may not be able to replace all the different outside lawyers you use.  Another option is hiring a lawyer on a part time or contractor basis for special projects or for regular legal work that’s not quite full time.

Use the Internet for general education and background research. But like anything on the Internet, you need to consider the source and know how to find relevant information. Reading up on the tax consequences of partnerships on a Louisiana law firm site may have some good insights but will not be very helpful to the owner of a Colorado LLC. Similarly, while helpful on a very topline level, sites like Nolo and Legalzoom can’t begin to advise you on the specific legal issues your company has. And you could spend a lot of time reading through useless information. If you like to do your own research, ask your lawyer to point you to some good blogs and other materials about your legal issues. They also have access to materials that you, as a non-lawyer, cannot reach.

Your best use of the Internet is to find out about a lawyer you may want to hire. Most law firms have websites which include the biographies of their attorneys. Most lawyers are on LinkedIn. Lawyer rating sites like Martindale Hubbell (martindale.com) and Avvo (avvo.com) can help you locate a lawyer and give you more information about their practice and capabilities. But just because a lawyer doesn’t have a big internet presence doesn’t mean they aren’t worth hiring. Most business lawyers are still hired through referrals, but the Internet is a way to find out about more about the lawyer than the reference might know.