Hiring a lawyer or legal firm to work with your business can often be viewed as an expensive and unnecessary cost by many. Speak to anyone who has ever found their company in legal hot water and they’ll vehemently argue against that though, as legal issues usually result in expensive costs whether you’re on the winning side or not.
In many cases, it can be far cheaper in the long run to hire a lawyer to work for your company full-time or contracting a law firm, than only paying for their services when required. Here are some of the circumstances when hiring a lawyer is the most cost-effective option.
Starting a Business
Along with an accountant, a lawyer is someone who every start-up should be working with in their initial stages. There are three key areas where every new business needs legal help and advice to ensure there are no initial problems or issues further down the line:
- Government: Complying with all the appropriate business laws is vital to ensure you are paying all the correct taxes, have set the company up to trade and do business legally and are not violating any laws.
- Customers, employees and third parties: There are all sorts of legal issues that surround employing people which must be abided by, while risk must be controlled when dealing with customers and third parties such as suppliers (through both written and verbal agreements).
- Business founders: To avoid costly lawsuits in the future, it is best to sort out who owns and has rights to what aspects of the company for each of the founders at the beginning.
A lawyer can sort out these three areas and make sure your business is legally compliant from the start. If you find a problem with any of these and only then decide to hire legal help it will be too late, as there is less a lawyer can do and the financial and reputational damage will already be done.
Safeguarding Your Firm
To minimize the chances of your business being sued for millions, hiring a lawyer can be a much more cost-effective way to safeguard it legally and financially. Simply stumping up the costs to defend a business, whether it is in the right or wrong, can be financially damaging when sued by a client, customer, third party, other business or anyone else.
In order to avoid reputational damage, some companies may choose to settle out of court. This can make sense if it is possible to settle on reasonable terms. However, this is less likely and if your business is in the right or there are other circumstances that must be considered, then fighting claims in court is the best option. Here you will require legal representation, the costs of which will usually be lower than any out of court settlement.
Working in a Risky Industry
There are certain industries which are more at risk of legal trouble than others. If you are setting up or run a company in any of these sectors that will be more at risk of being sued, then hiring a lawyer to deal with more constant claims will be more cost-effective than paying for legal help only as and when it’s needed, if that’s going to be often anyway.
In general,it is the biggest businesses which are sued most, as they have higher numbers of customers and suppliers and individuals think they’ve got a better chance of being paid off for making a claim. Otherwise automotive, financial and energy industries are the most sued, as faults and mistakes they make can have an especially damaging effect on individuals’ lives.
Protecting Expensive Assets
Running a business that has many high-cost assets will require extra legal protection to avoid losing a lot financially should anything happen to your firm. An art gallery, high-class fashion retailer, jewelers and other such businesses all require specialist legal advice to protect their expensive assets.
There may be more specific laws and pieces of advice that your business could be making the most of to protect its valuable goods. A specialized lawyer or law firm will be able to help when it comes to taxes, planning and other structuring issues to best ensure such costly assets are protected from the likes of theft, fraud and other threats.
Finding a Model That Fits
Depending on the size of your company you will need to enlist the legal help of an individual or firm appropriate to it and your budget. There’s no point hiring a team of ten lawyers if your whole staff only adds up to three individuals. Plus, it is important to create and agree on a contract that suits both your financial and legal needs. It could be purely for advice or representation as well.
For your business, it can be far more cost-effective in the long run to hire a lawyer than risk it or rely on one-off services, especially if any of these points apply.