123’s of When to Hire a Business Attorney
A common denominator among our business clients in the healthcare sector, our business clients in the professional services sector, and our business clients in any other sector is the struggle with this common question: When do I need to hire a business attorney? Consistent with the adage “an ounce of prevention,” our most successful business clients follow the 5/50 rule.
The 5/50 rule is actually a choice we present to our clients when this very question is posed. The choice is whether the client would like to pay $5 now to proactively structure their business, set up compliance protocols, or address legal issues in their business. The alternative choice is to do nothing now and pay $50 to clean up the mess later. Though admittedly we should adjust the rule to realistic dollar comparisons, the 5/50 ratio is realistic. In making the choice more personal by drawing an analogy to one’s personal health, we ask our clients whether they would rather stick to an annual wellness treatment plan and pay the associated costs or go to the doctor and react to a stage 4 cancer diagnosis.
Our clients often then ask how to know whether they are properly using legal counsel to guide their business. A great litmus test is to look at budget and spending for legal counsel for the business. If a business has budgeted or spent under $12,000 in an uneventful year for legal fees, the business is not utilizing legal counsel proactively. Most on-going businesses spend between $18,000-$30,000 per year when using counsel to advise and proactively address the legal needs of the business. Smaller businesses or single-owner physician practices may spend less, but still be in the $12,000 range on the low end.
The first step to change how and when legal counsel is used is to shift thinking in budgeting and shift thinking on utilization. Good attorneys think strategically and creatively and can be a great confidant for new business ideas or issues. Start calling your business attorney as a sounding board to work through these ideas and issues. It does not have to be lonely at the top.
ByrdAdatto has created a platform to ease this transition. Specifically, our Access+ monthly retainer program creates a set monthly fee for a defined scope of work suitable for the typical needs of a business. The key to this program is unlimited access by phone and email to the attorneys at ByrdAdatto. The hope is that this will incentivize proactive communication with us to help keep the business on the 5 side of the 5/50 rule.