How to Budget for Legal Fees in Your Business

Published On : 06/21/2021

Businesses are often confused about how to budget for legal services. It isn’t hard to see why. It’s difficult to determine how much money you’ll need for lawyers who are billed hourly, or you may feel you don’t need an attorney unless you’re sued. The truth is, most companies need proactive legal services, so you’ll have to devote some spending towards legal fees.

How to Approach Spending: Cost vs. Everything Else
More often than not, a business will prioritize the cost of an attorney over anything else, but appearances can deceive. A lawyer may look inexpensive, but costs can add up depending on their skill level. For example, an experienced lawyer will cost more per hour, but a newer attorney can take longer to finish daily tasks. In the end, the new lawyer may cost more.

You also need to consider if it’s less expensive to hire an attorney at a flat right or whether or not the contingency fee (courtroom fees) if a disagreement goes to trial. To learn more about how lawyer fees work, Mayfirm has an in-depth guide on how a lawyer delegates their fees.

Identify Your Companies Goals
Ask yourself what your business goals are because it can help you determine how often you’ll need legal services. Your start-up may want to expand its services or product offerings, manufacture new ones, or expand to another territory and hire more staff. A new marketing strategy will require an advertising lawyer who can help you avoid breaking copyright law.

Businesses with a physical location will need insurance that keeps personal injury lawyers on staff in case a customer trips and hurts themselves, but eCommerce sites typically provide protection. If you’re running your own website, you’ll need to draft terms & service. There are endless reasons your company may need a lawyer, but not all businesses need total protection.

Determine Your Legal Risks
Look for a lawyer that offers free consultations because you may not know what type of legal protection you need for your business. Both large mega-companies and start-ups need lawyers for similar reasons; it’s just that budding entrepreneurs are less likely to handle the impact of a lawsuit. Find a lawyer that can help you stay legally compliant with employees and contracts.

Proactive vs. Reactive Legal Advice
Odds are you aren’t going to become a successful business without a lawsuit. The bigger you are, the more likely someone will sue you, even for an unjust cause. However, many entrepreneurs still think they’ll never be faced with a legal issue and won’t hire a lawyer.

If that sounds like you, consider the following scenarios for your business:

• You can call a lawyer anytime an issue occurs, which seems cheaper, but reactive legal services are much more expensive and take up more of your time. While you will know how much an attorney’s hourly services cost, you won’t know how long they’ll take.
• On the other hand, proactive legal advice will cater to your business strategy, and attorneys who provide counsel can prepare you if a full-blown dispute occurs. You can easily budget for a proactive attorney as their costs are predictable and transparent.

Taking the safe approach saves you more money in the end, although it may feel like a hefty upfront cost at first. The knowledge you gain from a proactive attorney will help you address risks and how to mitigate them before you get sued, have to settle, or a case goes to trial.

Staying protected is the most inexpensive option in the long run. Most businesses should include a lawyer in their company’s goals who can resolve a potential issue before it gets worse. The right legal partner can have a positive impact on your bottom line.

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Jessica Weisman-Pitts

Jesse Pitts has been with the Global Banking & Finance Review since 2016, serving in various capacities, including Graphic Designer, Content Publisher, and Editorial Assistant. As the sole graphic designer for the company, Jesse plays a crucial role in shaping the visual identity of Global Banking & Finance Review. Additionally, Jesse manages the publishing of content across multiple platforms, including Global Banking & Finance Review, Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune.