Another Entrepreneurship Project of the  Whitman School of Management at Syracuse University

How to Save on Startup Legal Fees

One of the toughest parts about starting is a business can be the cost of legal hurdles. It is a necessary part of the startup process, but it can be a setback if you are not smart and cautious. While sometimes the lawyer fees might be unavoidable, there are some proven ways to save time and money and still ensure business is legal and legitimate. The following outline three possible options for saving on costs incurred during the legal process, as presented by Veronica Picciafuoco, director of content for Docracy—a website housing free, open-source legal documents.

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Minimum viable legal protection

For regular day to day contracts, many attorneys do not suggest using their services as it will cost hundreds of dollars per hour. Instead, you may consider using publicly available standard forms and automatic document assemblers. If you can spend some time educating yourself before you get started, it could save your hundreds of dollars.

If your business collects people’s personal information, you will need a privacy policy. An experienced attorney can bill you thousands of dollars for creating this type of document. However, you can use a privacy policy assembler or start from an open source standard or read articles to make sure you are following industry’s best practices and create a draft which can be reviewed by the attorney in an hour for a small fee.

Alternative fee arrangements

Many lawyers offer flexible arrangements such as a fixed fee instead of a bill by the hour rate. Fixed fees can be a good option for situations like incorporation or filing a trademark, as it makes a lawyer work efficiently—however, be careful of the fine print. Don’t waive off the basic guarantee of good service or sign up for additional services you don’t need and are being billed by the hour.

Another option for a startup is called deferred fees, which means that you can pay your attorney in equity instead of cash. To do this successfully, you have to build a relationship of trust and convince with your lawyer and show him/her that your company is a good investment. However, it is important to strike a balance—investors will not favorably look at a startup where the company’s lawyer got a huge chunk of stock without investing.

Outsourced general counsel

Small companies can consider having an outsourced general counsel, who is basically a part-time in-house attorney on retainer. Many firms offer limited counsel services and they are flexible. You can have a lawyer handy at any time to take care of time-consuming obligations to save you valuable time (and you will also know exactly how much it is costing you).

For all of your substantial legal work, you may want to hire an external legal firm. Low cost “legal subscriptions” are also becoming popular. Companies like LegalZoom and RocketLawyer let you buy a sort of legal insurance for less than $50 a month.

We hope these tips and tricks can help you save some of your essential legal costs and help you build your company to greater heights.

For more information, visit: http://www.entrepreneur.com/article/226780

Thanks for reading, and until next time… stay WISE!

Photo credit: http://startupnation.com

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