You'll never know as much about the legal services your attorneys provide as they do. It's a classic instance of information asymmetry, with the side with the least knowledge receiving the short end of the stick. You are the founder of a startup in this circumstance.
I totally understand what it's like to be on both sides of the table as an experienced lawyer who has worked with a handful of start-ups. I've devised a method for limiting legal expenses based on my expertise that you can use to help guarantee that you get the most bang for your buck when it comes to legal expenses.
I'm sure you've looked up the definition of retainer in your dictionary. In layman's terms, a retainer is a little fee paid to a lawyer on a regular basis by someone (you, the business owner). In exchange, the lawyer supplies the client with legal services as needed.
Retainers are especially useful for startups that want legal services but do not have the funds to engage an experienced lawyer.
Don't get the terms "retainer" and "retainer agreement" mixed up any more. When a lawyer is "retained," it means that someone has hired him or her, and the retainer is the sum of money paid to the lawyer. When someone hires an attorney, they sign a contract called a retainer agreement.
You also have to be aware that every lawyer has a distinct professional fee for his retainer. Not every lawyer you meet has the same skill set or experience.
The following pointers are what you should lookout for when hiring a lawyer for your business.
1. Hire lawyers who have experience with the particular task you are asking them to perform.
Most lawyers have a specialty (however vaguely defined) in which they excel. Paying a lawyer to learn about a new practice area is the last thing you want to do. Lawyers frequently include their major practice areas on their websites or social media profiles since these are the areas in which they are most likely to be knowledgeable. Hiring a lawyer to do work that isn't clearly mentioned on their website is, in my opinion, a mistake. If you're thinking about hiring a true business generalist, try to get a sense of the practice areas where he or she most frequently provides advice and make sure there's a lot of overlap with your requirements, such as experience working with start-ups; also, consider raising the required minimum level of experience to at least 5-10 years. If your company operates in a certain industry (technology, agriculture, entertainment, etc. ), be sure the lawyer you select has experience in that field.
2. Educate yourself and then let your lawyer know you understand the basics.
Today there are numerous high-quality, free templates and other resources available for the most common legal tasks facing start-ups (there are sample templates prepared by business-in-a-box which saves you time and money. If you need new Terms of Service, for example, carefully read one of the many templates available, insert comments where you see fit, and pass on this marvellous example of intellectual aspiration to your attorney for final drafting. This will let the attorney know you have a basic understanding of what the assignment entails and at the very least reduce perceived asymmetries of information, improving your relative bargaining position. A subscription plan is required to access the document templates. You can also contact me here if you need direct assistance on how to purchase any of the templates.
3. Ask to be notified when a certain naira amount has been billed, or to receive an informal billing update at the end of each month ( even if billing is not strictly itemized)
It's usually a good idea to know where you are when it comes to monthly payments. While providing thorough off-cycle billing may be time demanding for lawyers, sending an informal billing update to a client is typically not, and most practitioners will comply. Also, it never hurts to ask your lawyer for cost estimates before starting an assignment — you can request that the lawyer notify you if the cost estimate is exceeded; even if only subconsciously, you have anchored the amount the lawyer believes is appropriate to bill on the matter, which can give you leverage on future assignments if they eventually exceed that amount.
4. Ask for an “emerging company” discount
Most startup attorneys are willing to provide discounts to smaller businesses: larger firms to attract the most well-funded startups, and smaller firms or solo practitioners to better serve their primary client type — small, undercapitalized enterprises. Remember that the majority of solo practitioners are entrepreneurs who have taken the risk of starting their own business (albeit a law practice), and they may be unexpectedly sympathetic to other business owners in similar situations.
5. Get clarity on costs, expenses, billing rates for administrative assistants, paralegals, etc.
Working with firms that employ assistants, paralegals, junior and senior associates — all of whom support the firm's partners — has one distinct advantage: billable rates often range from low to high. You can delegate the most routine (but time-consuming) work to paralegals and young associates, leaving critical conversations to partners and high-level writing to senior associates wherever possible. Finally, make sure you understand the fees and expenses that the legal firm will charge you (e.g., photocopying, mailing, couriers, travel) and, if possible, ask whether these charges may be waived or reduced.
If you follow these guidelines from the start, you can be confident that you will efficiently deploy resources to meet your legal service demands.
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