When your business outgrows downloaded templates and ad-hoc contracts, it’s time to get the right legal advice.
There comes a point when every business needs legal advice beyond the basics. As your legal to-do list grows, you need a lawyer – and one with the right expertise. But short of knowing a solicitor who specialises in exactly the areas you need, it’s hard to know where to start.
A quick Google search will often lead you to lists of lawyers on review sites, which are hard to check and unpick. Searching ‘lawyers near me’, is rarely the best place to start either, because the right firms won’t necessarily be nearby. A smaller solicitors’ firm on the high street is unlikely to have the expertise and the range of experience larger businesses need. At the other end of the scale, a firm with an address in the City of London could be big and global (with the fees to match). So somewhere between these two ends of the spectrum is a good place to start – but then what?
Bear in mind is that the issue you need help with now is unlikely to be a one-off. One query soon leads to another: so if, say, you’re raising funding from friends and family, those transactions will need to be documented legally. And if that money is in return for a share of the business, you’ll also need to review your shareholder agreement.
This knock-on effect is common, so whatever your immediate need, it’s worth making sure the lawyer – and the firm – you choose can help you beyond it. In most cases, this means finding a ‘full-service’ law firm that can help you with a range of issues at different times.
If your issue is very small – chasing a debt, say, for several hundred pounds – then the small claims court might be the most cost-effective way to go.
There are also several DIY options on the internet, but always weigh up the risks of going with a more templated answer which is designed to cover a wide range of businesses and not tailored to fit your circumstances. It’s worth remembering that, even though you might be no more likely to make a mistake with a template than with a document prepared by a regulated lawyer, if a lawyer’s mistake costs you money, you can ask for compensation.
Sometimes you’ll need more specific expertise (which will narrow down the options for you). Some law firms, for example, specialise in trademarks and IP; others only deal with pensions law or corporate manslaughter. In these cases, it might be best to go directly to them rather than use a full-service law firm.
Similarly, if you’re operating in markets beyond the UK and you need a firm with offices in, say, South Korea and Russia, or a lawyer who speaks Portuguese and Mandarin, your list of possible lawyers will be pretty short.
So a ‘full-service’ firm will fit the bill for most growing businesses, but which one? There are hundreds to choose from and, at first glance, they can all seem broadly similar.
The legal industry loves annual lists and rankings, and, for a growing business, the Top 200 law firms is a sensible starting point. The two main directories, Chambers and The Legal 500, cost a few hundred pounds each, but they’re not as straightforward or easy to interpret as they might first appear.
It’s easy enough to rule out the top ten firms that only deal with global corporations (so are unlikely to be interested in helping you sell your business for less than £50 million), but the further down the list you travel, the more it helps to know a firm’s people, expertise and reputation. It should follow that a firm higher in the rankings is ‘better’ than one lower down the list, but in practice it’s far more nuanced than that.
First, look for a firm’s expertise: do they have corporate and commercial departments – and, within those, lawyers who work with smaller businesses – as well as employment law teams, and, if you need it, lawyers with experience in international business? Beyond that, you also want to know they’ve got the right experience (both generally in helping growing businesses, as well as in your sector or line of business). If you’re a construction business, for example, are their corporate teams used to the ins and outs of working in your industry?
Job done? Not quite… On paper, the ‘experience x expertise’ equation sounds like a sensible way to filter out firms who can’t help, leaving you with a list of frontrunners. The truth is that most full-service firms say they’re experts in areas like employment and have the right services listed on their websites to match the issues you’re dealing with. But they’re not always their main areas of expertise. So how do you know who’s really got the right experience? With a little digging and more detailed reading of the data, it might be possible to see what percentage of a firm’s income actually comes from working on employment issues, for example, as well as what percentage comes from areas and issues you’re likely to need in the future.
In short, it’s possible to find the right firm through your own reading and research, but it will take time. Even then, it’s still hard to do without some knowledge of firms’ reputations, which usually comes from working in law for a while. It’s one of the reasons why talking to one of our advisors or someone
An initial chat with a lawyer (before you formally hire them), should work both ways: they want to find out how – and if – they can help; you want to get an idea of the process, fees and, importantly, the fit for you and your business.
You’ll obviously want to set out your legal issue and give the lawyer the lowdown on your business (be specific here – tell them about your future plans too). On top of that, here are some of the main things to think about so you get the information you need as quickly as possible.
Have they worked for businesses like yours in the past? Ask for examples of work they’ve done for businesses of a similar size and set-up to your own, as well as work they’ve done within your industry. Don’t be swayed by blanket “yes” answers: if a lawyer understands your business, they should be able to share what you can learn from the work they’ve done with similar companies. If you’re calling about an employment issue, find out more about how the lawyer has helped not just with the legal side of things, but also what they’ve learned about implementing new legislation and putting it into practice (around flexible working, for example).
When you talk about your business and your legal needs, a good lawyer with the right experience should both listen and ask questions that make you think. Lawyers for small businesses should have a broad commercial view on top of their own specialisms, balancing the detail of your business with the bigger picture.
It helps to find out the structure of the lawyer’s team and how they work together, as well as how they work with other lawyers across the firm.
Instinctively, if you’ve got a pressing legal issue, you want the best lawyer you can get. Practically, though, you only want to pay for their expertise at the right times (i.e. for their legal mind, not their admin). For example, if you’re leasing new premises, some of the more straightforward contractual work could be done by a junior member of the team, but you might need a more experienced partner to advise on and negotiate the terms. So don’t be afraid to talk about the balance of work, who’ll be doing it (and when), and how you’ll be billed.
It’s also useful to find out who you’ll be dealing with day to day and when – and how – your lawyer will communicate with you. If you’re someone who’s often away from your desk, you might want a lawyer who arranges meetings over WhatsApp (it happens!), rather than a more formal ‘speak to my PA’ set-up. Think about how you work best and ask the lawyer how they’d work with you.
Ask the lawyer to set out how they think the legal issue will play out based on their experience, what’s involved and the broad timings you can expect.
If, say, someone’s suing you for unfair dismissal, you’d expect the lawyer to set out the ways in which they’ll try to prevent the case getting to court, which is often a last resort. They should also be able to give you a broad idea of the timings involved and how to manage the case in your business (so it doesn’t become a toxic issue with your other employees). A good lawyer will help you manage the legal problem and your business’s reputation at the same time.
For any legal work, you want to make sure you’re paying the right price, not the cheapest price and get the best value for your legal spend. Most firms only publish their residential conveyancing rates, which don’t help you as a business and are hard to unpick and compare. But you do have a right to know what you’re paying, as well as what you’re paying for.
There are several ways to cut it and no hard-and-fast rules:
A fixed fee (when the work is properly specified): When you can, this is most often the best way to go for you and the lawyer alike.
An hourly rate: This isn’t usually the best option unless, say, a lawyer can’t be sure of the outcome, e.g. if it’s a dispute with someone else. Hourly rates are also hard to compare because there’s no common approach among law firms, or even within the same firm, and much will depend on who is actually doing your work.
A mix of the two: A fixed fee for a set piece of work (e.g. reviewing another party’s NDA), then an hourly rate if anything extra crops up (e.g. negotiating amends to that NDA) can work well.
It’s also worth remembering you only want to pay for the top lawyer’s fees when you really need them to be involved. Let more junior members of the team take care of some of the basics.
Generally, for a discrete piece of work (e.g. a shareholder agreement), both you and the lawyer can set clear parameters and a fixed fee. It’s also always worth asking if a firm offers special rates for small businesses, given that you may become a long-term client as your business grows. We’re happy to give you guidance on fee structures and what you can expect.
Lawyers have to give you an estimate in advance and you can ask them to come back to you if they think they’re going to go over that estimate (preferably before that time comes so you can weigh up your options). Every lawyer should do this but, anecdotally, it doesn’t always happen. Make sure you get a written estimate that clearly sets out what’s involved, and what may take extra time and money.
Generally, retaining a law firm at a fixed monthly fee only makes sense for small businesses once they have over 50 employees and need more regular legal advice. If you find yourself picking up the phone to a lawyer more often, you have an ongoing legal problem, or you’re raising a huge amount of capital, a retainer might be worth looking into as it helps to spread the cost and may ultimately mean you pay a lower fee.
Download a PDF of this guide here