I want to make sure I do everything by the book, but I don’t have a lot of money for legal advice. What are the essentials I need to speak to a lawyer about when starting a business?
It is a fact of business that quality advice costs money.
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It is also a fact of business that quality advice can help you manage risks to avoid mistakes that could cost a lot more money.
So what can you do? Here are three tips to help manage your legal expenses.
1. Do your own research
The internet is a great source of information, some of which (assuming it is correct) is very useful free advice.
There are many great websites operated by government or private companies, such as StartupSmart, that offer great general advice, FAQs and other pointers to guide you to the information you need.
You should spend as much time as you can to read as much as you can about your business.
For example, you can understand the type of structures or licences required for your business and the requirements for those licences from the state offices of consumer and business affairs.
There are also government agencies that specialise in helping small businesses in each state that could be a valuable free resource.
But not everything out there is correct or applicable, so don’t absolutely believe everything you read.
I have seen clients too focused on legal topics that are not applicable in Australia or are out of date.
Another common problem is using template legal documents downloaded from the internet that have not been adapted for Australian law or that are not appropriate for your circumstances.
2. Know what to instruct your lawyer
One of the key ways to minimise legal spend is preparation. The more you have researched and prepared and the more specific your questions the more focused your lawyer will be when answering questions and less time is wasted on non-essential matters.
Don’t just ask a lawyer to “advise generally on (topic)”.
On the flip-side however the less scope you give your lawyer to consider and advise the greater the chance that your lawyer’s advice may not be useful or appropriate.
I have been in a situation where I was given specific instructions to focus on one clause of the agreement and “nothing else”.
Sure enough, it turned out that there were other clauses in the agreement that my client should have considered and that significantly exposed my client to risks.
Similarly, giving sufficient history, background and context to your lawyer is important to ensure that the advice you receive is appropriate and useful.
3. Know when to get your lawyer involved
Having a lawyer with you from beginning to end may significantly reduce your risks but it may also significantly increase your costs.
I have found that the most cost efficient method for clients is to involve the lawyer early in any proposed deal, leave him out during negotiations and bring him back to document the deal.
By involving your lawyer early you work out strategies and flush out potential pitfalls and traps you need to be aware of before you head too far in.
By leaving your lawyer home during commercial negotiations you ensure the discussions are commercial (which is what you do best) rather than getting bogged down by details.
By bringing back the lawyer at the end you ensure your commercial arrangement is properly documented to bind the parties.