Today’s post is a very important lesson for entrepreneurs. Most entrepreneurs (present company included) tend to move quickly and often need advice. One (usually great) source of advice are attorneys. They have seen it all. Structured it all. And have done 20 of your exact same cookie dough fruit loop flavored wedding cake deal this year, maybe even this month. Sounds like an amazing source of knowledge and a great resource? Well, yes it is and they are. HOWEVER, legal fees quickly jump FAST. Here are 7 tricks for managing your legal expenses….
1. Make sure your dog can understand your question. Yes, make sure you know what you are asking. If you need to ask your attorney to help you figure out how to interpret your question, you will likely end up with a large legal bill. And while some people like large things, i guarantee this is not one of them. Go big on your house instead. Make sure your question is already thought through to the point where you are actually asking a question, not asking for a monologue.
2. Use your advisors. Almost anyone is cheaper than your attorneys and no one else bills by the second (okay minute). Ask your advisors, friends, colleagues, accountants and fellow founders your questions first. Make sure you get as far along with an answer that you understand your question (see above). Maybe you’ll even get your answer. Then ‘double check’ with your attorneys. Asking a yes/no questions takes 5 minutes instead of 5 hours. Considering you’re being billed in 6 minute increments, thats a giant savings!
3. Negotiate flat fees. Most attorneys will negotiate fee caps or flat fees for work. Do this. It is RARELY a time when your bill comes in under your cap. It happened to be once, yes once, ever. But i was lucky, my attorney was a friend and hooked me up as a favor (one i didn’t ask for btw and much appreciate)
4. Do first drafts. Ask friends for sample docs and do your first draft yourself. This does a few things. One it allows you to understand what you’re trying to accomplish. Two the hard legal work is drafting. Reviewing is a lot simpler.
5. Ask specific questions. The best thing you can do with your attorneys is ask them a specific question. Don’t ask for a detailed written answer, unless absolutely necessary. Do your homework and ask for a specific answer. Repeat. Be specific.
6. Only do legal work when you absolutely need to. You don’t need a 10 page contract for your first customer in beta. Borrow one or do as simple email agreement. Spending $10k in legal work for a free trial, generally not a great idea.
7. Watch the clock. After you get your first bill, read the details. Understand where you’re spending legal time and optimize. It adds up fast and at $500+ an hour, it eats away your precious capital. Preserve capital. Keep it in the bank