Startups are often confronted with a number of legal obstacles during the early stages of the development of their enterprises. Although it is difficult to anticipate the typical legal expenses for a company, some 2013 estimates show that, on average, startup firms paid a little more than $1k per month for legal services during the first three years of their operations.
As a result of the need for startups to become more capital efficient, many are taking a close look at their legal expenditures and searching for methods to save money on their startup legal bills in 2011. The following are straightforward methods for startup owners and entrepreneurs to save a significant amount of money on their startup legal bills.
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1. Educate yourself and draught documents on your own.
If you’re the founder of a business, you owe it to yourself and the future of your firm to at the very least become familiar with legal difficulties. Here’s an essential fact you may not have realised: legal knowledge is no longer contained behind large, inaccessible books or behind stone barriers. Yes, it is correct. You may save a lot of money just by reading a few articles on the topic and dedicating some time to self-education. It is especially important to examine commonly accepted alternatives when dealing with the most typical contracts and modest transactions.
Consider the following scenario: you operate a website and you gather some personal information from your consumers; at the very least, you get their email address and their name from them. You’ll need a privacy policy to clarify how you’ll utilise those pieces of information so that your customers understand that you won’t sell their email address or anything else they provide you with.
A good initial draught of a privacy policy may be produced in an hour or less by using an online free privacy policy generator or beginning with a template. Your attorney can then evaluate the document for a set fee when it has been completed within an hour. Avoiding the expense of hiring a lawyer to prepare the paperwork may save you a significant amount of money.
2. Inquire about other methods of payment.
While many attorneys continue to charge by the hour as a matter of course, the times have changed, and the legal business has received a loud and obvious message that its customers want other options. It is true that not every lawyer is in a position to provide alternatives, but it never hurts to inquire and be prepared to provide an option or two of your own.
Consider the following scenario: your company is operating on a short budget, you’re doing all of the work yourself, and yet you want a few legal papers in order to protect yourself and your business.
Some clever attorneys already provide this payment option for the more typical topics they handle on a regular basis, so you may consider asking for a set charge. Fixed fees are beneficial to both you and your lawyer since they provide the lawyer with an incentive to be as efficient as possible. However, make sure you read and understand the tiny language in the agreement.
Instead of paying your attorney in cash, you might use equity to do so. Not all lawyers will accept this alternative, but if you already have a trusting connection with your attorney, it may be worth your while to inquire. Of course, a clever entrepreneur understands that giving up too much ownership too early is a bad idea for a variety of significant reasons, but you already knew that.
3. Engage the Services of an Outsourced General Counsel
A number of recent studies have shown that organisations are abandoning traditional legal services firms in droves in favour of more nimble legal services providers that can supply what they need when they require it. You might think that hiring an outsourced general counsel isn’t an option for your company, but if your company is small but not so small that you can avoid administrative and corporate responsibilities such as board of director’s meetings, human resources compliance, insurance, and the like, hiring an outsourced general counsel may be the best option for your company.