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Business-Smart Decision Making, or How to Reduce Legal Fees

Especially if you are a small or mid-size enterprise, you might be thinking: “Easy, by not spending any dime on lawyers”. But the problem is, lawyers are often blamed for these expenses unfairly. In fact, it is possible for entrepreneurs to reduce these fees with a few relatively simple precautionary steps, without giving up on precious legal advice.

The reason why I had small and mid-size entrepreneurs in mind is that I assumed big-size entrepreneurs have often more than enough financial and human resources for finding the most efficient resource management, meaning they can tailor their legal expenses efficiently enough. But articles like this one might prove more beneficial for smaller-size entrepreneurs.

Law practice has many layers, beyond public law and private law; that are almost two different universes – with a lot of intersections indeed. It affects everyday life more than many other professions, whether we realize it or not. The points that I will address below are more related to the private law, but it is applicable to a limited extent to public law as well (with very simplistic terms, when you get into trouble with authorities, it is most probably over a public law problem, and when you get into trouble with other private parties, that is most probably a private law problem).

Law firms are often associated with trouble, either because you go there when you get into trouble, only to find yourself in an even deeper trouble. But in fact law firms often save you from considerable further expense on legal liabilities or potential future legal claims of counterparts in a contractual relation. And in plus, it is easily possible to prevent obscene bills, or to a lesser extent, not to need lawyers’ assistance at all.

Early Stages of Your Business

When you first start a business, a lot of the times you think you are too busy to think about “trivial details” such as compliance with various regulations that apply to your business. But most of the time, overlooking these points is likely to be costly in the future and these “turns-out-to-be-not-so-trivial-details-after-all” will most likely haunt you during years to come. The advice that I would give about this point is 1) start to have legal advice early in the life of your business 2) start to keep good records from the moment you start your business, regardless the size of your business.

1) Early Legal Advice

  • will prevent you from having to pay for fees that you are likely to receive because of violations you weren’t even aware of. And don’t forget, you don’t have to start with the best lawyer/law firm in town, but be careful about finding a decent lawyer, or at least not to find an incompetent lawyer. If you feel the need to change your lawyer, you can always do that.

  • will also help you to structure your business in a more efficient way,

    • for tax purposes

    • and for your business goals in the future. A simple example would be, the type of the legal entity you will establish will change the liabilities that you would have regarding your business (limited or unlimited personal liability) or the level of control that you would have over the legal entity / your business (via different management structures). Although it is never impossible, it might be hard to change these structures at later stages of your business, sometimes simply because of the headache that this change might cause.

  • Even at later stages of your business, it is crucial not to delay the legal advice, to prevent additional liabilities related to delays in payments that you have to make and regulatory violations.

Good record keeping is crucial for any business.

2) Keeping Good Records

  • will not only be helpful for accounting purposes, but more extensively, it will make your job easier and allow you to navigate more easily with the masses of information that is flooding in every day in and out of your business. This mass will only get bigger at later stages of your business, so establishing a systematic way to organize the information related to your business will make life easier for you and for people from whom you seek service (lawyers or accountants).

  • will also easily save you thousands of dollars when you will need all your records related to a certain field of your business

    • either because of a litigation,

    • or in the context of a corporate transaction, such as a merger or an acquisition.

Later Stages of Your Business

Business life has its own balance and order, but this order is not like a clock’s. I am more inclined to say it’s more like the order in a jungle, wilder, fair, but not necessarily in the same way you imagined. Once you get accustomed to how to run your business, you will start to get into contractual relations with various parties, it is very important to 3) understand the contractual relationship you are getting into. I know some people “think” they actually don’t sign any contract and their business runs based on “mutual trust”, but they are usually not aware of verbal contracts and that even the terms of these contracts are enforceable in the courts – as long as the claimant can prove its claim. And it is scary how technology gets involved in the legal aspects of our lives – with emails easily constituting a contract, and many more examples from our everyday life.

3) Understanding Your Contracts

  • is key to understand your business, with your

    • rights and

    • obligations.

  • People can usually read their contracts fine, but they have a harder time with understanding it. It has nothing to do with being dumb, but because they are not used to the legal language – which is somewhat technical. That’s why it is very important to seek legal advice, even if you are signing a boilerplate contract. Fine prints and boilerplate/template language can easily cause a lot of problems in the future either because of unfair distribution of rights and obligations in the contract or because it might not fit well your business model and wouldn’t allow you in the future to do certain things in terms of investments or business mechanics.

4) Language of the Contract and 5) Competent Jurisdiction

Although these two advices do not really concern very small entrepreneurs, usually, once an entrepreneur gets big enough, they start to look for other markets for their business. At this point, the language of the contract and competent jurisdiction for the enforcement of that contract become very important. They deserve an article on their own, but briefly:

When you run your business, don’t try to be different just for the sake of being different. Because of the importance of understanding the terms of your contract, try to avoid having the contract in a language that you are not professionally familiar with. Any specific language skill will mean additional expenses, and even at that point, you don’t have much assurance for the exactness of the translation or for whether your understanding is correct.

On a similar note, avoid at all costs to choose competent jurisdiction based on your uneducated presumptions, which often do not have any other support than rumors in the society. Before you sign a deal, talk with a competent lawyer and have a somewhat related jurisdiction to your business as competent jurisdiction. Either a relation to one of the parties, or a relation to object of the contract, or another relevant relation.

Unfortunate Ends

Not all stories have a good ending, neither they need to have one. Sometimes you learn more from your failures than you do from your success. But nonetheless, let’s admit it, it is hard to admit failure. But as much as I value tenaciousness, I think it would be safe saying saying that “it is a virtue to admit failure”. If you see that you are bankrupt, don’t delay filing your bankruptcy. And before that, of course I will recommend you to find a good lawyer, you would be surprised how much a good lawyer can save you by navigating you as safely as possible, under circumstances, in the dangerous waters of bankruptcy.

Final Advice

All in all, having legal advice is not the source of the inherent problems that the society has with lawyers. It is either bad lawyers or hard truths of legal systems. It is easy to play the victim in this setting, but it is within your control to defy long-accepted myths and bloom your business by using right tools and people.


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Said Ertekin
Following his passion for leaving his imprint on world, Said decided to study Law. His multilingual high school education is followed by Law education in Switzerland, where he had the opportunity to get an international perspective thanks to constantly interacting legal rules in a country in the middle of Europe. He then finally crowned his studies with a master in Georgetown, a school known for its contribution to the international legal field. Although his studies seem to be over, his education and training still continue at DLA Piper LLP, a global law firm, located in the heart of New York. His practice focuses on capital markets offerings, leveraged finance and national and international project finance. He is excited to be part of international writer community of Youngsday and LinkedIn Pulse.

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