A good lawyer is essential to any business’s success. This article will teach you everything you need about interviewing, hiring, and finding the best lawyers.

By Cliff Ennico

Entrepreneur contributors do not necessarily agree with the opinions expressed.

A lawyer and an accountant are the two most important professionals that every company needs. An accountant is needed to set up your «chart» of accounts, review your numbers regularly, and prepare all your federal, state, and local tax returns. However, the reason for hiring a business lawyer might not be obvious. A business attorney can help you with almost all aspects of your business. This includes basic zoning compliance, copyright and trademark advice, as well as formal incorporation, lawsuits, and liability. Here are some guidelines for dealing with lawyers.

• It’s too late if you are being sued. Many small businesses delay hiring a lawyer until they see the sheriff standing at their door and issuing them a summons. Bad mistake. Before you get sued, it is a good idea to find a business lawyer. It’s too late if you’ve been served with a complaint and summons. The problem is already in progress, and you’ll have to pay the court costs, attorney’s fees, and settlements to resolve it.

The American judicial system is very similar to a Roach Motel. It’s easy for you to get into court but difficult to get out of once you’ve been «trapped.» Many lawyers agree that although nobody enjoys paying attorneys’ fees (heck, let us let our hair down –nobody loves dealing with lawyers), the fees a lawyer charges to keep you out are only a fraction of what a lawyer charges to get you out once you’re in trouble.

• Small or large firm? In general, the larger the legal firm, generally speaking, the more overhead you will have to pay. However, there are many advantages to larger firms over smaller ones. Lawyers have become extremely specialized over the past 20 years. It’s possible that a small or solo practice won’t have the necessary skills to help you grow your business. There are very few small firms with less than ten lawyers that can handle your lawsuits, file trademarks or patents, negotiate office leases or retail spaces, draft software license agreements, help you terminate disruptive employees, or oversee your annual corporate meeting. I do not know of any solo practitioners. These «generalists,» sooner or later, will need to refer you to specialists, and you may end up dealing with more than one (or more) attorney.

Although larger firms can be more costly to work with, they offer two important advantages: 1) They usually have all the legal skills that you need «under one roof,» and 2) they have a lot of clout within the local, regional, and (perhaps) national legal communities. A nasty letter sent by a large law firm in 30 states can be more frightening than one from a single practitioner not licensed to practice in that state. A connection with a well-respected law firm could have tangible benefits. They may be able to refer you to funding sources or provide their name for partnership agreements. If you are a founder of a rapidly growing entrepreneurial business that wants to go public or sell to a large company, it is important to find lawyers who are well-respected in the venture capital and investment banking communities.

Types of Attorneys

Lawyers are becoming more specialized, just like doctors. A lawyer who specializes in wills, house closings, and other non-business matters is not the right fit for your company. These are just a few of the skills you’ll need. The more skills you have in common with your fellow human beings, the better.

1. Contracts. A lawyer can help you understand your business and prepare standard forms of contracts with clients, customers, and suppliers.

2. A lawyer can help you determine whether a limited liability company (LLC) or a corporation is better for your business and to prepare all necessary paperwork.

3. Real estate. Commercial space leases, such as offices or retail stores, are complex and always written to benefit the landlord. You might think that they cannot be negotiable because they are «printed form» documents. This is not true. Not so. Your attorney should prepare a standard «tenant’s addendum» that contains provisions that will benefit you, and that can be attached to the lease form in printed form.

4. Taxes, licenses

5. Intellectual property. It is a plus if your lawyer can register your products or services for federal trademark protection and copyright protection. These tasks are usually performed by experts who only do «intellectual properties» legal work. Your lawyer should be able to work closely with one or more intellectual property specialists if he or she says that he or they «specializes in small businesses.»

How to Interview Attorneys

• Are your skills and experience? Ask a lawyer directly about his or her experience. Ask a lawyer if they have ever done incorporation of a business you are interested in.
• Do you have a good network? A business attorney should act as a «legal intern» and be able to diagnose the problem, perform minor surgery, refer you to specialists, and, if necessary, make recommendations for you to «major surgery.» A lawyer cannot possibly be an expert in every area of law. Your attorney should be familiar with the specific areas of law that your company needs. For example, a graphic designer might need to know copyright laws. There shouldn’t be a need to search for a new attorney every time you have a different legal issue.
• Are you familiar with my industry and the legal environment? If not, they should be prepared to learn about it. Check your candidate’s magazine rack or bookshelf for the exact same professional literature and journals that you have. However, be wary of lawyers who represent you or your competitors. Although the law code of ethics (yes, there is one) requires that your lawyer keep all information you give him or her confidential, it is important not to expose sensitive information to a rival.
• Are your skills as a teacher good enough? Your lawyer should be willing and able to help you and your staff understand the legal requirements of your business. Your attorney should explain what the law is and how it affects your business so you are able to spot potential problems early. A good lawyer will give you memoranda or newsletters that explain recent developments in the law that affect your business.
• Do you consider yourself a finder or a minder? Nearly all law firms have three types of lawyers. The «finder» is responsible for scouting new businesses and bringing in new clients. The «minder» handles existing clients and ensures their happiness. The «grinder» handles the client’s work. Your attorney should have a mix of a «minder» and a «grinder.» If you feel that the lawyer you’re speaking to isn’t the right one for your case, you can ask to meet the «grinder» and make sure you feel comfortable.
• Are you flexible with your billing? There is currently a «glut,» which means that there are too many lawyers in all geographic locations. This puts lawyers in a position where they can negotiate their fees. It is certainly a buyer’s market. There are limitations. Business lawyers will almost never charge a «contingency fee» unless your legal work is satisfactory. This is unlike personal injury lawyers advertising on TV.

A majority of lawyers will charge a flat, one-time fee for routine work, such as the formation of a corporation or LLC. However, they will not waive this fee unless you request it. Ask if the flat fee covers disbursements, which are the lawyers out of pocket expenses such as filing fees or overnight courier charges. Also, ask when the flat fee will be due. Most attorneys will require upfront payment to cover out-of-pocket expenses. In the unlikely event that the lawyer does not do the job properly, you should ask for a «holdback» of 10-20 percent of the flat fee.

Flat fees are not usually quoted by lawyers if there is litigation involved or negotiation with third parties. A friend of mine explained it bluntly: «Even though this transaction has been done many times before, if the other party’s lawyer wants to fight every semicolon and comma in the contract, then I cannot control how much time I will be dedicating to the matter and I will lose money if they quote a flat rate.» In these cases, the hourly rate of the lawyer will be charged to you. Always ask for a written estimate and notice if you need to change the lawyer’s estimate.

A retainer or deposit is required by a lawyer to cover future fees. The lawyer must guarantee that the money will be used, not kept in escrow. If the deal does not close, the lawyer must also promise to return any remaining retainer. Any lawyer offering to purchase a share of your business in exchange for a fee should be avoided.

Questions to Ask Before You Hire an Attorney

• Are they really frustrated businesspeople disguised as lawyers? Sometimes lawyers tire of looking in on business transactions. This lawyer might try to question your business judgment. Avoid a lawyer who is too interested in the legal aspects of your work.
• Is this person able to communicate well? J. P. Morgan once stated, «I don’t pay my lawyers for telling me what I can do, but to show me how I can do it.» A good lawyer will not answer your questions with «That’s OK» and «No, you cannot do that.» Instead, they will explain all options to you and give you information about other businesses in your area.
• Are they easily accessible? In your early years of business, you will need to see your attorney often. It shouldn’t take you a whole day to travel to the nearest city every time you need legal advice. If in doubt, contact a local lawyer.
• Is this someone I like? Follow your gut instincts and feel. Your attorney should always be available to you and allow you to communicate freely and openly with him. Keep looking if you don’t trust a lawyer or believe you have different views. Remember that Ally McBeal is not real: a lawyer’s ability to be a person of substance, intelligence, accuracy, thoroughness, and willingness to work hard for clients and pay attention to details are all important. A former client told me that he used to say this: «Never trust a lawyer with 20/20 vision who wears Armani.» You look like you are a professional, and I chose you to be my lawyer. That is a compliment for the right lawyer to represent your business.