It’s wise to think about long-term legal expenses associated with starting and running a business. I know you mentioned you’re concerned of legal expenses outside of the basic formations so that’s why I’m going to focus on. First, though, it’s important for you to recognize that the legal expenses can vary depending on many factors. Even if two businesses are in the same industry, their legal expenses can be significantly different.
You’re going to accrue legal expenses related to:
Contract formation and yearly review. The yearly review is important. Laws change. The changes that occur could affect your rights. The best way to stay on top of those changes and protect your business is to have a relationship with a lawyer that is well-versed in contract law for your state. Another important caveat regarding contracts – if you’re in one state and you use contractors or virtual employees in another state, you need contracts that are properly drafted and that also list which jurisdiction will be used in the event of any legal claims.
Trademarks, patents, and other forms of intellectual property. Protecting your intellectual property is not cheap. It can also be extremely difficult to register your own trademark or file a patent. Attorneys who focus on intellectual property are well worth their price.
Collections and other lawsuits. Sometimes people don’t pay what they owe. Small business owners always have the option to attempt to collect on their own, but there are state and federal laws that must be followed. You have fewer options when you do it yourself than if you hire an attorney. You will need an attorney if you are sued or if you need to sue for breach of contract, negligence claims, or have other legal disputes.
Now, let’s talk about money. Startups need a budget for legal expenses. Lawyers often require a retainer of several hundred or several thousand dollars up front. Then, they usually bill their time against the retainer. It’s important that you ask whether the lawyer charges an hourly rate or if they are charging you a flat rate. Something like writing or reviewing a contract may be done for a less expensive hourly rate; the same can be said for many intellectual property matters such as trademarks and patents. However, lawsuits include writing answers and other responses and time in court. Often, lawyers will charge an hourly rate. The more experience a lawyer has, the higher their hourly rate usually is.
While it can be hard to give you an exact estimate of what you may need, you can take a good look at your business to determine the legal services you’ll need and then do a little research regarding lawyer fees in those areas. This can help give you a general idea. If you find yourself in a little bit of sticker shock, you should know that a good lawyer is worth the costs associated. They protect your business in a number of ways. You also have options.
You can look for lawyers that perform their tasks for a flat fee or you can useto get the legal help you need for a flat rate. We’ve helped thousands of startups get the legal help they need for reasonable rates.