Why Legal Access is Vital for Entrepreneurs


Are you your own Legal Deptartment?There are over a hundred thousand articles on the topic of what an entrepreneur needs to get started in business. Literally! Many of them incorporate the legal aspects of business ownership among other things (see the links below). So when Coline Walther, the Virtual Virtuoso, invited me to write an article on the legal issues involved with starting a business, my first thought was “Great! I can do that!” It was quickly followed by panic as I thought, “Wait – hasn’t that been done to death already? So…what will I write about?!”

That’s when I decided to focus on legal access. What’s the difference? The former focuses on legal matters which appear before a business opens its doors. The latter handles the day-to-day legal situations affecting a business. As you can imagine, legal access is much more powerful since it covers the planning, operating, and even the sale of an enterprise. Thus, this is the access all entrepreneurs need.

Legal Access: More Than a “One Time” Thing

For example, in the article “Starting a Business? 10 Steps Every Entrepreneur Should Know,” Caron Beesley, a Community Moderator for SBA.gov, listed the following as necessary steps an entrepreneur must take before ever opening his or her doors:

  • Deciding on a business structure
  • Registering your business name, getting a Tax ID
  • Registering with the appropriate tax authorities
  • Applying for permits and licenses
  • Hiring employees

A business owner benefits from getting legal advice in each of those areas, and in some (like hiring and dealing with employees) likely needs ongoing access to consultation with qualified attorneys. Take deciding on a business structure. You’ve heard of a Sole Proprietorship, C Corporation, S Corporation, and Limited Liability Corporation (LLC). You do some research, get a general idea of what’s best, and decide on a LLC. However, is that better than, say, an S Corp in your situation? Chrissie Mould wrote an excellent article outlining the differences between a S Corp and a LLC, comparing both the advantages and drawbacks of each business model. So isn’t that enough information to make a decision? Perhaps it is. Yet with the number of new federal, state, and local laws enacted yearly, and updates in understanding to how these codes apply, would you really want to take the chance? I always tell people, every article on the Internet (including this one) provides information. Lawyers can give you business advice on the legal ramifications of your decisions that is both timely and locally applicable.

Unfortunately the typical scenario is a fledgling owner seeks access for only a few of those situations. There are many reasons why this happens. Perhaps the owner feels some matters aren’t important enough to consult an attorney, or may feel he or she has enough experience to deal with the matter personally. However, in my experience, the main reason entrepreneurs don’t consult attorneys more often is money. What’s the solution? We find it by answering the following question…

What’s the REAL Cost?

What does an attorney cost? The simple answer is $200-$300 per hour…on average. That number increases with the number of years the attorney practiced law and sometimes on the particular area of expertise offered (for example attorneys who specialize in tax and entertainment law charge more than general practitioners). That can add up. So what’s a cash-strapped business owner to do? Recognize that there is a cost to using attorneys, and a cost to not using them.

Sometimes the cost of not consulting an attorney is greater than using one. Time and again, businesses find themselves in serious financial straits because they made a decision without having all the facts available – facts easily obtained if they consulted an attorney. Even if we acknowledge this reality, it may still cost too much to consult with an attorney on every matter. Therefore, many will resort to the following:

  • Let Google be my attorney. Confident that “everything is available online,” a person will research a matter using a search engine. While this approach has no out-of-pocket expense attached, it is time-consuming, often confusing, and comes with no guarantees that you’ve properly addressed all the factors in your particular situation. Together, those factors often make it very expensive in the long run.
  • Consult the SBA/SCORE. The Small Business Administration provides help to business owners. They have mentors with expertise in various industries, including attorneys. You can make an appointment and sit down for a consultation. The challenge is getting the time to visit, and of course hoping the area of legal expertise matches your need.
  • Pick and choose which issues merit attorney attention. Rather than getting no help, some opt to bring the “big items” to an attorney. That’s commendable. The caveat is that governing laws change constantly, as mentioned above. Therefore you can’t always be sure which items are the big ones.

One option gaining popularity among savvy business owners is purchasing a legal service plan. For an affordable flat monthly fee they receive unlimited legal advice along with a suite of commonly used services. The model is similar to that of health insurance, where many pay into a pool, covering the attorneys’ costs. Since everyone doesn’t need help at the same time, it works out to be a “win” for everyone. Additionally, a business gains access to attorneys with multiple disciplines. This is important because when it comes to your business, one attorney is probably not enough.

There are many issues facing startups and established businesses. We’ve discussed some of them, and the resources below list more. Addressing them in a timely manner is critical. Make sure you aren’t hit by the “hidden” costs resulting from not having legal access and give your business a better chance to thrive. It’s vital that you do!

Do you have legal access for your business? If so, which method do you use? Could you benefit from more access? Let us know what’s on your mind.

(This post originally appeared on The Virtual Virtuoso, January 22, 2014. Comments closed for this post. Please join the discussion here)

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This entry was posted in Business Law, Business Planning and tagged , by Kerwyn Hodge. Bookmark the permalink.

About Kerwyn Hodge

Kerwyn Hodge has been an entrepreneur from early on. He’s been both a worker and manager, predominantly in the design and construction industry. Kerwyn transitioned to the Direct Selling industry, and joined LegalShield in July 2009. He works with businesses of all sizes, helping to protect the legal rights and identities of employees and their families, as well as helping to protect and grow small businesses with 100 employees or less. Check out his blog at https://kerwynhodge.wordpress.com. You can reach him at 646-340-8087, or via email at kerwynhodge@gmail.com