As the football playoffs approach, I think of the saying “defense wins’ championships.”  The same can be said about businesses.  It is much easier to stay out of legal trouble, then have to pay me, or any other business attorney to defend against a lawsuit.  According to the SBA, a business related lawsuit can cost a business $50,000 – $100,000 to defend.  In most cases, the lawsuit could have been prevented in the first place; had the business consulted with an attorney first.

This leads me to the topic of this article…budgeting for legal services.

As we break in the new year, many business owners are working on your budget for the new year…but, I bet most haven’t considered legal services.  Not the legal services needed to get out of trouble, but the little consultations that will keep your business out of trouble in the first place.  To help you decide if you are going to need to budget legal services, I have compiled a few possible scenarios your business could face this year:

Contracts:  Does your business routinely enter into contracts with other businesses, vendors, contractors, or customers?  Does your business offer warranties, or have a written return policy?

Employees:  Does your business intend to hire an employee, or fire one?  Do you have a written employee manual? Do you call your employees contractors so you don’t have to do withholding?

Shareholders:  Does your business intend to bring on new shareholders or partners?  Do you intend to loan money to the business or buy out a shareholder or partner?

Company Growth:  Are you looking to expand your business and purchase new assets, or bring on new investors?

Trademark/copyright:  Do you own a trademark or are you considering registering a trademark?  Does your business produce original written works on behalf of clients, such as web copy, or architectural plans?

Incorporation:  Are you a sole proprietor (not incorporated)? Are you operating your partnership or corporation without a written partnership or shareholder agreement that outlines all the duties and obligations of the parties?

If you answered yes to any of the questions listed in the categories above, then you are going to need an attorney at some time during the year, and you should consider budgeting legal services.

Now, how much should you budget?  That depends.  Typically, a small business with fewer than 5 employees can get by with a budget around $2,000 to $3,000 a year, but that number can change based on the businesses needs and the law firm the business chooses.  At Grantham Law, we offer a free business review.  During this review, we will meet with business owners and discuss what the business plans are for the upcoming year and work on a budget plan that will best benefit the business.  For more information, feel free to call us today and set up an appointment.