Most small and mid sized businesses use lawyers in one of two ways: they either don’t use them at all, or only use them when a situation comes up in order to avoid excessive and unpredictable legal fees. It’s an understandable situation, many businesses don’t think they have any legal or risk issues if they aren’t getting sued so they avoid using lawyers all together. On the other hand, when a situation does come up business owners want it handled as quickly and efficiently as possible. They usually don’t ask all the questions they need to and want it over as quickly as possible in order to get out with the smallest bill possible. Why would a business owner want to work with a lawyer on an hourly basis? It’s completely against their interest, they want it done quickly and the lawyer wants to drag it out as long as possible in order to meet annual hours billed quotas. I recently heard a story from a small business client about trying to get some legal help on a straightforward question that most lawyers could answer off the top of their head, and being told by a lawyer at a small firm that the billing rate was $325/hr., and a $1,500 minimum charge. This makes it easy to understand why most small businesses avoid lawyers.
The real disservice here is done to small businesses who don’t use lawyers, usually due to fear and uncertainty of costs, in a way that could have a positive impact on the business, both in terms of limiting potential liability (often unrecognized) and have an impact on the bottom line. Businesses should use lawyers as strategic advisors, sure getting the contract drafted is important, but most small businesses are operating in uncertain environments (especially these days), and need real world advisors who have an understanding of business, not someone looking to pad their hours and talk in endless circles of hypotheticals. What business owners should be doing is using their lawyers as creators of solutions or strategies that can move their business forward. Technology, the internet and other advances have taken away the exclusive control over production that lawyers once enjoyed; it’s no longer a secret about what a contract should look like, or how to form an LLC; Google will tell you. Production is the easy part, and it’s not the part any business owner should be paying a lawyer for, it’s heading more and more towards automation in any case, and will continue to have less and less value to business owners. What business owners should be doing is using lawyers to create ways to strategically limit risk, maximize opportunities and reduce competition. The production work behind implementing any of that isn’t what is valuable to companies, production is just the copying down of what’s been created. However, too many business owners are focused on and paying for production, which isn’t providing them very much value. Business owners should shift their focus, look for lawyers who are business savvy, with real world business experience, have practical solutions and understand that business owners are looking for solutions, not to hear “no”. That’s where the real value is in businesses using lawyers.
On the flip side of that, the job and expectations for a strategic lawyer and business advisor is to provide advice to the business regarding potential risks, weighing the courses of action and helping to develop solutions that will get the business where it wants to go. Businesses should expect their lawyer to be able to communicate with them effectively. Nobody wants to hear legalese; it’s nonsense. It’s important to understand the industry and specifics of the particular business and focus on developing proactive solutions, strategies and plans that will move the business forward while avoiding potential pitfalls.
Here are a couple of examples of what a lawyer, acting as more of a strategic business advisor, as opposed to a document producer, can provide a business:
- Develop and monitor company processes and systems (for example a contract management system or an independent contractor management system) in order for the business to be more efficient and profitable.
- Keep ownership or the executive leadership informed of new or changing laws that may affect or relate to their operations and suggest the appropriate action to navigate changes going forward.
- Establish guidelines or playbooks for the company or employees to understand legal matters and protocols that relate to the company’s operations.
- Understand the contracts signed by the company as well as restrictive agreements, confidentiality and trade secret protection in order to leverage any such agreements in the businesses favor.
- Implement, monitor and adjust the hiring/firing processes, employee management and dispute resolution, compliance with regulations and codes in operations.
- Provide strategic alternatives and ideas on both legal and business issues affected by legal considerations with more of an emphasis on longer-term strategy and put together the plans to realize the benefits and mitigate the risks.
- Keeping the company aware of compliance issues and recommending a course of action to remedy such matters and corporate governance.
There are some real opportunities for small business owners to leverage legal services to their advantage, it’s about building the right relationship and shifting some expectations on what a lawyer can, and should, be doing to help the business.
Have questions about risk management, proactive legal services, or how a lawyer can be a strategic business advisor for your business? Contact us for a free consultation.