When Do I Need a Business Lawyer for My Small Business?

Among the many worries for entrepreneurs creating a startup or running a small business is whether they need a business lawyer. The perception is that attorneys charge high rates, and many small businesses only have a little, if any, extra capital to pay lawyers.

As a result, most small business owners only hire an attorney experienced with business matters when confronted with a severe legal problem (e.g., you're sued by a customer). Legal help is a cost of doing business that often saves money and helps your business in the long run.

While you certainly don't need an attorney for every step of running your business, an ounce of prevention is worth a pound of the cure. This article will explain when you can cover legal issues independently or with minimal attorney assistance and when you need a small business lawyer.

Issues You Can Handle on Your Own

Certain matters are pretty straightforward or not unduly difficult to learn and, thus, do not require the services of an attorney who charges a high hourly rate. There are enough expenses associated with running a business. Why not save yourself a load of money and do it yourself?

The following is a list of some tasks that business owners should consider taking on themselves (with the aid of self-help resources, online and in print):

• Writing a business plan

• Researching and picking a name for your new business (you can search existing and trademarked business names online)

• Reserving a domain name for your website

• Creating a legal partnership agreement, limited liability company (LLC) operating agreement, or shareholder's agreement (see Choosing a Business Structure)

• Applying for an employer identification number (EIN), which you will need for employee tax purposes

• Applying for any licenses and permits the business requires

• Interviewing and hiring employees (there are federal and state laws that regulate the hiring of employees)

• Submitting necessary IRS forms

• Documenting LLC meetings

• Hiring independent contractors and contracting with vendors

• Creating business contracts for use with customers or clients

• Creating a buy-sell agreement with partners

• Updating any partnership, LLC, or shareholder's agreements under which you are currently operating

• Handling audits initiated by the IRS

The above is a partial list of legal tasks that small-business owners can do independently. If your business is well-funded or you feel that you need the legal guidance of an attorney, you can always retain a lawyer to help you with everything listed above.

Issues Where You Will Need a Business Lawyer

An intelligent business owner can handle most of the issues outlined above. If you can run a business, you can certainly fill out IRS or boilerplate business forms. There are times, however, when a business faces issues that are too complex, too time-consuming, or filled with liability issues. At that point, the wisest move is to retain a business lawyer.

A few examples include:

• Changing the type of business

• Navigating commercial leases and real estate transactions

• Former, current, or prospective employees suing on the grounds of discrimination in hiring, firing, or hostile work environment

• Local, state, or federal government entities filing complaints or investigating your business for violation of any laws

• Protecting intellectual property through patents, trademarks, and copyrights

• You want to make a "special allocation" of profits and losses, or you want to contribute appreciated property to your partnership or LLC agreement

• An environmental issue arises, and your business is involved (even if your business didn't cause the environmental problem, you may be penalized)

• Negotiating for the sale of your company or the acquisition of another company or its assets (see Mergers and Acquisitions)

An Ounce of Prevention

While you need to retain an attorney for the serious issues above, your emphasis should be preventing legal trouble in the first place. Prevention does not necessarily involve hiring an attorney, though consulting with one wouldn't hurt. When someone sues you or your business, the preventable damage has been done. The only question remains: How much will you be paying in attorney's fees, court fees, and damages?

For example, when a prospective employee files a lawsuit claiming gender discrimination based in part upon questions posed at the job interview, all you can do is hire a business law attorney to defend the lawsuit. However, if you had researched anti-discrimination laws or had legal advice beforehand, you would have known not to inquire whether the applicant was pregnant or planned on becoming pregnant. The small effort upfront saves you an enormous headache later.

Consider a consultation arrangement with an attorney. Such an arrangement would entail you doing most of the legwork of research and the attorney providing legal review or guidance. Consultation agreements can prevent unnecessary attorney costs at the start of your business entity and tremendous costs during a lawsuit.

For example, you might use self-help and online resources to create a contract with a vendor and ask an attorney to review and offer suggestions. Or, from the previous example, you might research types of questions to ask during an interview and then send the list to an attorney for their approval. This way, you prevent the potential headache later, and the cost to you is minimal because you've already done most of the work, and the attorney reviews the document.

Get in Touch With a Business Attorney Before You Need One

You won't need a lawyer for every legal issue in your business. But when you do, knowing where to find the right one is good. You may only know you need legal help once it's too late. Attorneys can help you follow the law and spot developing legal issues early. Get ahead of the curve by finding an experienced small business attorney near you today.