Disagreements between lawyers and their clients tend to be common. Find tips below that can help you keep the legal fees fr your business reasonable. Most small businesses, in particular minority or female companies, have limited financial resources available to them. If/when legal advice is needed, it can be very expensive. This makes it imperative to keep the fees down, and find some ways to do this below, including from non-profits or charities that help minorities with legal issues about their business, pre-paid insurance type plans, volunteer attorneys and more.
If there is a dispute, it often arises over matters to do with how much money clients owe their lawyers for services provided for their existing business or idea. The law in some states attempts to minimize grounds for misunderstandings by requiring lawyers to present both personal or business clients with retainer agreements or fee agreements in writing. Understanding the basics of the ways in which attorneys charge you is the best way to avoid unpleasant surprises, come payment time.
Contingency fee vs. hourly fee
When your lawyer agrees to be paid in the form of a contingency fee, the attorney will only get paid if they win for you. Maybe you as a business need to sue or dispute services provided by a vendor. Or maybe someone violated your patent. While such an arrangement may seem ideal, you need to pay attention to the fact that the fee can be as much as 40 percent of the sum your lawyer wins for you.
If the facts of your case are clear-cut in the way they prove the other party’s culpability, and if the other party has insurance to pay you with, your case is likely to be a straightforward win, in which case, paying 40 percent is likely overly generous. You can get some insight as to whether the case is clear cut by talking to other attorneys (including black, Latino, or females) who may give free consultations for a defined period of time. Or due you own due diligence.
A contingency fee is a good idea for your business, on the other hand, when your case isn’t clear-cut – it is a low risk option for minority or women run companies. In those cases the your lawyer must accept the considerable risk that they won’t get paid at all while working on it.
A flat fee is when an attorney gives you a fixed, flat rate to complete the task. This means you can budget for your business easier as you know the total cost for the work to be done. There are some groups, such as SCORE, that have partnerships with local attorneys or law-firms that help minority, Latino, veteran or females businesses with their legal needs at a reduced rate.
Stay away from security interests
Sometimes, a lawyer who handles civil business cases may propose a plan in which they put off being paid until your case concludes. If you win, you pay them out of the proceeds of the case. If you lose, however, the agreement has you giving them the right to sell your house to collect their fees, which can be devastating for any person, much less a female or minority small business owner. This kind of agreement is illegal in most states. If it is legal in yours, you should still stay away from it.
Look into pre-paid legal insurance type policies
There are several companies, such as Legal Shield as well as Nationwide LegalGuard, ARAG Legal Insurance, and other organizations, that offer legal advice on business (or personal matters) at a reduced rate for their members. They work similar to health insurance policies in that the business owner (including women or minority) pay a monthly premium for the plan and they get access to a network of attorneys at a reduced rate.
As an example, Legal Shield charges $30 to $50 or more per month for their legal plan, and the attorney can write letters for you, help with debt collection matters, provide you as a business owner with hour(s) of free consultations, and even help with trial defense among other services.
Free pro-bono legal services for disadvantaged businesses
There are many non-profit and charitable options for free or low cost legal aid. Female owned or minority owned companies, including Black, Asian, Latino, and others can turn to non-profits, charities, volunteer lawyers and others who give free advice. Some of the free or low cost legal aid is based on the client’s income, but other groups give back to disadvantaged businesses in an effort to help address systemic racism or sexism. Some of the groups or legal clinics may organized be SCORE, the Urban League, the American Bar Association, or the United Way 211 service.
There are also Black or Latino lawyers, women, Asian attorneys, veteran resources and other lawyers that give back to their community. They often volunteer their time, or give reduced rates to a small number of clients. Some may even offer free advice. Find a list of women or minority owned law firms or even legal services.
Make sure that you understand your written fee agreement
The written agreement that your lawyer gives you should include information about what the retainer or deposit is, when you need to replenish it, what their hourly fee is, how much time you have to pay your bill, what discounts there are for early payment, what penalties there are for late payment, and what you need to do when you don’t agree with a charge. Review the proposed contract closely.
As a small business owner or women or minority seeking to start a company, small business is about the details and it is about numbers! Quite frankly, if you can analyze a proposed fee agreement from an attorney and ask them thoughtful question, you probably should not be in business or trying to start one.
The agreement should also inform you about how litigation, if it is necessary, comes with court fees, fees for expert witnesses, investigators, process servers, copying costs, and so on. Your copy of the fee agreement should also identify the specific lawyer in the law firm who will work on your case and represent you in court, and offer information about whether they will be available to you in the event of an appeal.
Tips to help women and minority business to save on their lawyer’s fees
Once you understand the basics of your lawyer’s fee agreement for the business needs you have, it can help to go in with an idea of the different ways in which you may be able to make the bill more affordable.
Ask about a payment plan: While you should find a lawyer whose hourly billing rate you can afford as a small business owners, many lawyers offer payment plans, as well. Especially those who give back to the Black, Latino, or vulnerable community. A lawyer who is able to let you pay your bill off in monthly installments is likely to be easier to afford.
Be on the look-out for “intra-office conferences” charges: If there is more than one attorney, or an attorney and a paralegal, working together on your care, make sure they do not both charge you for the same business activity at the same time. For example, if they are both on a business call, this is called intra-office conferences. Lawyers may try to charge for interoffice conferences that are of an educational, supervisory or administrative nature – do not pay those fees.
Ask about fee unbundling: Lawyers sometimes charge their clients all-in fees that cover all their services – legal advice, legal research, fact collection, negotiations, document drafting, appearances in court, and so on. Some of these individual services, however, cost less than others. You may be able to obtain a lower hourly rate by going with a lawyer who agrees to unbundle their services, and charge you only for the services you actually use. As a disadvantaged women, veteran, or minority owned business, never hesitate to ask for unbundling either.
Ask for an itemized bill – not a “Block Bill”: A monthly itemized bill that describes in detail what services were rendered and what payments and expenses were incurred for your case, can help you keep track of where your bills are headed. A Block Bill is not acceptable, and this is where an attorney lumps all their charges into one lump sum.
Once again, small business is about knowing the numbers and details, and women and minorities need to maybe even focus on that even more as they generally have less resources to work with. You should ask your lawyer to provide you with an itemized bill each month even if your retainer isn’t all used up. In addition, it’s a good idea to ask your lawyer to inform you of all expenses over $50 before they charge you.
As a business owner, ask to be kept in the loop: It’s a good idea as a small business owner that is minority or female owned to ask your lawyer to alert you whenever they need to do any major work on your behalf. Except in cases of emergency, you should be kept in the loop when large expenses turn up and before that work is done.
Record all time spent with your lawyer: The time you spend talking to your attorney – in person or over the phone — is time that you are billed for. Keeping an accurate log of all the time that you spend with your attorney can help you in the event that they should make a mistake when they bill you.
Share a lawyer or barter through a business group: It’s possible for small minority or female owned business in your community to save money by sharing a lawyer or bartering for services. It’s important to remember that you can only do so if your case is a good fit for a certain lawyer and if you’re on good terms with each other. As an example, maybe you are a sole-proprietor or small minority business that develops websites, does marketing or PR, or some other technical job. Maybe you can help an attorney and agree to giving them X hours of your expertise for Y hours of legal support. In these cases, if it’s possible to share a lawyer, be sure to put the agreement down in writing. Or if there is a business issue that impacts multiple companies, maybe you can share legal costs with those other businesses – such as a zoning issue for a commercial property.
Ask about phone minimums: When you call your lawyer to discuss something about your startup company or business, you shouldn’t be surprised if they charge you for a minimum of 15 minutes, even if you only spend a couple of minutes on the call. Lawyers work on the assumption that after the distraction of a phone call, it takes them time to resume work at the speed they had before the call. If your lawyer charges you for at least 15 minutes each time you call, it can help to only call when you have enough questions to ask, to last as long.
Ask about hiring an entry-level lawyer or paralegal: If you use a law firm with multiple lawyers, you can use an experienced lawyer for important negotiations or for your trial, but ask to use a less experienced lawyer or even a paralegal with a lower hourly rate to do drafting or other routine work. This even allow you, as a minority or female, to help ensure other minority or female attorneys get real world experience with business matters. It can help to ask if such an arrangement might be possible.
Ask about how you will be billed: You may have your law firm assigning more than one lawyer to work on your case. Before you sign on, you need to ask about how you will be billed for two or more lawyers. If multiple lawyers sit together and discuss your case, will you be billed for just one of them, or for all of them? It makes sense to go with a law firm that only bills you for the most senior lawyer in a discussion. See the intra-office conference tip above.
Ask about photocopying costs for your business: Some law firms have their clients paying them as much as 25 cents a page when they photocopy the hundreds of pages that their cases require. If you could get it done at a copy shop yourself that does this work for Small businesses (even like Staple, Fed Ex, or a library!), however, you would be charged as little as 4 cents a page. It’s a good idea to ask if you can do all needed photocopying yourself.
Ask about communication and messenger expenses: Messenger services, faxes, overnight mail, and so on, can add up if used frequently. You can ask your lawyer to only use these expensive services when absolutely necessary.
Organize all business documents requested: If your attorney asks you for 10 different documents about your business or legal issue, delivering them jumbled up in a pile isn’t a good idea. Your lawyer will need to spend billable time organizing and categorizing them. As a small women or minority run business, put in the time to organize your documents – this is a required skill for any business owner or entrepreneur. It’s a much better idea to organize all documents requested yourself, and deliver them neatly categorized in separate files.
Don’t treat your lawyer as a friend: It’s natural, when you discuss your case with your lawyer, to want to vent your feelings about how unfairly you’ve been treated. For instance, if you’re going through a lawsuit, you might want to talk about the unacceptable ways in which your business partner or the competitor behaved through your relationship. If you have an attorney from your community, gender, or ethnicity such as a Black or Latino lawyer, you may be more likely to vent as a minority yourself. Don’t! While venting to your lawyer may feel good, however, you need to remember that the time you spend on it is billable time. It’s a much better idea to seek out a friend or therapist if you need to talk.
Every dollar counts for minority and female business owners – control your legal costs
A little common sense is all it takes to ensure that your legal bills are as affordable as you can make them. Never, ever hesitate to ask a clarifying question, negotiate, or “push back” on unfair or questionable legal charges. As all small business owners know, especially minority, veteran, and female owned ones, every dollar counts.
By Jon McNamara