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What do Early Stage Businesses want from their Lawyers?

July 15, 2010

Before considering what start ups require from their lawyers, it’s worth remembering that many businesses tend to change radically in the early years. A few years after starting up, they may look nothing like their initial manifestation.

This is because it’s common for new businesses to not know what it is exactly that they do, and who they do it for. Even professionals, like lawyers and web designers, who you would think know pretty clearly what they do, struggle with this.

Start ups therefore take time to find their feet. As a business gradually achieves clarity about the demand for its goods and services, and figures out which services will generate revenue, and responds to the market, its offering and initial focus changes.

Early phase legal work

Early phase legal work can therefore often be of temporary benefit only. 

Yet what happens in practice when a start up chooses lawyers is that a price is set for the various documents or services the lawyer considers the business needs. This might include a trade mark, terms of business, a website development agreement, documentation for the website, and anything else that is particularly appropriate for a given type of business.

 This effectively relegates solicitors to a role of providing documents or advising on specific transactions. How did this state of affairs come about?  Why lawyers have transformed from their traditional role of trusted business advisers to becoming providers of documents is a subject I will explore another day. For now what I want to focus on is that if the value a lawyer offers to start ups is the mere provision of documentation or a particular legal service, then is it any surprise they are increasingly perceived to be a commodity?

Many start ups forego the costs of these documents altogether. Many more of them turn to unqualified advisers or template stores or simply do their own drafting in order to implement the necessary documents for their business.

In response to this state of affairs, some lawyers in these recessionary times have dropped their prices to ridiculously low levels. What few of them have done is to reassess their offering altogether.  I have.

Pricing model

In my view the fundamental flaw is with the business model of law firms. Whether we charge for our services using hourly rates or fixed fees, this transaction based focus is what reduces our role to a marginalised one.

What start ups would benefit from far more would be to retain lawyers on an ongoing basis. Lawyers may lack an obvious reason like the accountant’s annual audit to justify ongoing involvement, but actually have a huge contribution to make to their clients’ business success by remaining   involved and in regular touch on a one to one basis.

Terms of business need constant review

Instead of offering transaction or document based advice to start ups, a lawyer could help them budget, and identify how best to manage the risks, in order to get maximum value from their resources and budget for legal spend.

I have developed a pricing model and legal solution so Azrights can offer real value to clients, by playing a bigger role in their businesses from the outset – not just when they have grown successful enough to warrant an in house style legal service.

 By supporting clients in their dream and helping them get what they want we lawyers can make a far greater contribution than by focusing primarily on the legal ‘deliverables’ clients may need. For example, do they really need a highly technical legal agreement, or could something else written in plain English be quite adequate?  Our new pricing model will provide clients with regular access to our know-how, guidance and business insights. Clients will be able to run ideas by us, brainstorm before entertaining a new deal – and have legal documents reviewed before they sign them – all while getting budgetary certainty.

Being in business myself means I understand the emotional, financial, and creative investment clients make in their own future. With my insight into legal risk, I am well placed to offer them something quite different – that is, real help to manage and prioritise their legal budget so as to keep them out of trouble. Making decisions without legal assistance exposes entrepreneurs to the risk of litigation and other problems, and can be quite scary. I will also bring objectivity to help them reach great decisions for the growth of their business.

Start ups coming to us will, if they are suitable potential clients, receive an in depth evaluation of their needs, so that we can offer them a monthly retainer fee plan based on their diverse and varied needs.

This approach reflects my insights and experience. For example, I know that the terms of business a start up begins with will likely need complete overhaul on a continuing basis to keep up with the changing business. Using our services a start up will not get a false sense of security from having consulted a lawyer in the early days of the business and had terms drafted. What often happens to start ups is that they don’t budget to have their terms kept up to date so they are likely to be inadequately protected despite having spent a lot of money on legal services when first starting up. Using us includes a plan for maintaining the terms up to date and relevant.

In conclusion the traditional approach to charging for legal work often results in a poor deal for both client and lawyer. What we are all about at Azrights is providing cost effective and appropriate legal risk management as well as help to grow the business on solid foundations.

What Next?

Register for the Free Teleconference to find out about our new system for assisting online businesses to access legal help at prices all SMEs can afford.

This post is part of a series, to view all of the posts in this series, please click here.