Small business owners seek legal help for myriad reasons during the life of a business, from corporate formation and basic tax matters, to complex needs such as trademark prosecution and litigation protection.
Before you meet with a lawyer, have an idea about the payment method that might be required of you. Once you’ve considered the various payment methods, you’ll appear better prepared to negotiate the fees and help your attorney understand your needs.
Here are four common payment methods at law firms:
1. Hourly Rates—Particularly common among attorneys who serve small businesses. Both parties would agree to the rates in advance.
2. Retainer Fee—For longer-term commitments like lawsuits, this indicates a commitment on your part in advance of the service and helps guarantee that the lawyer will be available to you.
3. Contingent Fees—Typical for personal injury cases and debt collection, the attorney gets a percentage of the settlement or money upon judgment.
4. Flat Fees—Typically requested for simple projects like bankruptcy filings.
Remember: Many lawyers are willing to be flexible to get a new client. As you seek counsel, three other factors could determine what and how you pay:
1. Regional differences—Where are you located? In rural settings, hourly rates may start in the low $100s. But in urban areas—where larger firms are generally located—rates can get as high as $600 per hour.
2. Monthly rates—A growing trend for small business lawyers is to charge a monthly fee for consultations, based on the level of service, says Kim Wright, founder of the Renaissance Lawyer Society in Asheville, N.C
The amount could be as low as $250 per month for a small business "to be able to pick up the phone and ask questions or get contracts reviewed," Wright says.
3. Online services—If you have basic legal concerns but limited funds, consider an online service like Legal Shield, a website that connects businesses with provider firms throughout the country. Clients can call any time with questions on copyright and patent services, audit preparation and setting up a new business.
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Lissy Peace, president of Lissy Peace & Associates in Chicago, says she pays her Legal Shield lawyer $50 a month for a variety of services and legal representation—arbitration would cost extra. "I need help reviewing contracts, making sure my license is in order, an employee question here and there," she says.
For contracts and boilerplate work, look to sites like LegalZoom first; then bring the boilerplate to your lawyer. That shows that you know your business and could ultimately save you money.