Points to Note for a Small Business when Engaging a Solicitor
Choosing a solicitor for your small business can be a difficult decision. Most small business owners have got many other things to consider without the additional hassle of having to trawl through countless solicitors and websites to determine which solicitor would be best for their business.
The following is a list of such considerations which Engage Legal recommends small business owners should take into account when choosing their lawyer. We hope you find them useful. Alternatively, if you would like Engage Legal to consider these issues with you and put you in touch with some of the expert small business solicitors, for free, please fill in the form opposite.
The financial bottom line will probably be first on your mind, and let’s face it, costs is an issue that all small businesses grapple with. As you would expect, there are several financial considerations that should be had when considering hiring your solicitor.
The first issue is the structuring of the fees. Most lawyers will quote an hourly rate, increasing based on seniority of the staff members at the law firm. Generally, yes, a lower charge out rate is better, however the efficiency with which a firm operates should not be forgotten, so ask for an estimate of the amount of hours likely to be spent by the lawyer(s) on the matter.
Also consider the “leverage” with which the firm operates. Will the partner be doing all the work at the higher charge out rate, or will most of the work be done by juniors at much cheaper rates? See if you can get this breakdown in your fee-quote.
See if you can get an estimate or range of costs for a specific task or tasks. This should be fairly common in simple transactional matters, although becomes more difficult for larger transactions when there are more moving parts.
As a lawyer, litigation is particularly hard to provide costs estimates for. This is because of the competing interests of both parties, and the court in the middle. Where possible, in litigation, see if you can get a quote based on a series of steps, and have the quotes (and steps) reviewed with the lawyer on an ongoing basis.
One point to note is that things generally take more time than anyone (including your lawyer) expects. As such, solicitors often underquote, and rarely overquote. Another point is that the precise scope of the task should be determined, and the client/business should be aware of this. Quite often additional work beyond the scope of the initial quote will be required of the lawyer, and if so, his fees will have to me amended. The lawyer should advise you if this is likely to be the case.
On the topic of litigation, some claims are suitable for a “no-win no-fee” pricing structure, also known as a success fee or conditional fee arrangement (“CFA”). This will generally arise when the client is the claimant in the proceedings (i.e. brings the proceedings) and not where the client is defending them. Where your business is looking to bring a claim in the court, you should ask your lawyer about a CFA.
Often, firms will ask new clients for a retainer, or money up front. This may be some, or all of the fees. This is common place so expect this. After all, they are a business just like you and they want to make sure that they will also get paid.
Finally, don’t be afraid to negotiate with your lawyer. You might be able to negotiate a lower fee structure, or alternatively, a novel or more convenient payment method, such as fees only being payable on completion of the deal, delayed for a period following the deal. You might even be able to negotiate a lower retainer, or provide some other sort of collateral instead of the retainer.
2. Location of the lawyer’s Office
Gone are the days when it was necessary for your solicitor to be located near your office. Phone, email and the internet mean that it is quite reasonable to have a lawyer located in another town/area. So long as the lawyer is located within the relevant jurisdiction (i.e. England and Wales) the law is all the same and there is no issue with this.
Indeed, sometimes there can be significant benefits in your business engaging a lawyer in a different area. For example, a solicitor with the specific expertise you need may be located some distance away from you. In this case, there are obvious advantages to choosing this solicitor in a different location. Conversely, you may be a London business with a reasonably vanilla business lease or property purchase. In such circumstances, it may be beneficial to have a firm outside London to do the transaction for you. Regional firms outside London generally have considerably lower rates than firms within London, as well the level of expertise required for such a transaction.
The location of your solicitors is also particularly important in litigation, where the presence of the law firm near the relevant court will be necessary for the attendance at any court hearings.
Of course, in some circumstances there remain good reasons for solicitors to be located near to your business. If documents need to be collected, delivered or witnessed, or when meeting are required are the obvious benefits. The working local knowledge held by a local solicitor may be beneficial for some commercial transactions, and the close proximity may help to foster a better relationship between your solicitor and you.
In summary, there are a combination of factors which will determine whether you should choose a local solicitor or one elsewhere in England, but this is certainly something to be considered when considering which solicitors to instruct.
3. Solicitor’s Expertise
There are numerous aspects of commercial law which may affect your business, and a multitude of solicitors and law firms offering advice in relation to these. Not all solicitors and firms are able to, or indeed wish to be experts in all areas of law, so you must give some thought to the solicitors level of expertise with regard to the area(s) of law that your business will require advice in.
Many local, high street firms are able to provide general commercial advice to business on routine business transactions. However, these firms may not have the expertise necessary when it comes to the sale of your business to a potential buyer, or necessary to defend your business in an aggressive commercial claim. Conversely, a small business with few staff will not need a full service national commercial firm for its business needs.
There are also specialisms within specialisms. Some firms specialise in bringing litigation on behalf of multiple claimants. Others focus on defending such claims. Other firms are experts in negotiating and preparing leases, while others specialise in negotiating and preparing e-commerce and e-payments contracts. Before you engage with your solicitor it would be worthwhile asking them what their expertise is, and seeing how that is suitable to your business.
At the heart of all things, your business is a commercial venture. As such, you will want your solicitor to be able to provide commercial, concise and practical advice.
Many lawyers, even good lawyers, can get caught up in the details of the law – what it is and the procedures for how certain things should happen. However, a great lawyer, and one that you want for your business will be able to advise you on the law in a way which is concise, precise, relevant and applicable to your business.
Unfortunately, it is very difficult to determine in advance how commercial or practical a lawyer is. The most obvious way to get a handle on the commerciality of your lawyer is to talk to them about your business. A great commercial lawyer will be able to hold a sensible discussion with you about the commercial side of your business and offer you some general tips and strategies in respect of this (although note they are not a business advisor so cannot by law give specific commercial advice). Another good strategy is to speak about the last matters they have recently worked on. It would also be helpful to have your potential lawyer speak generally about your proposed matter – what he envisages will happen and what issues generally arise in these transactions. This will give you an idea as to how commercial and practical that lawyer is.
You should also remember that in some cases the law, or the relevant facts which are relevant to the issue in question, will not be clear. Such circumstances, while not ideal, are inevitable. As such, there will often be no clear or correct answer. In this case, it will rather be a matter of risk management. A good lawyer will give you a series of options and the relevant risks, advantages and disadvantages of these, and it will fall to you, as the client, to make a commercial decision based on those risks.
Also remember that your business is also a commercial entity, and you, as the business owner should remain focussed on the end goal. Will the cost of engaging the lawyer be outweighed by the commercial advantage or mitigation of risk which it provides? Think about the proportionality of the size of the business, the cost to the business and the benefit provided. This is particularly the case in litigation. Litigation is a tool for your business, and the solicitor helps you achieve this. You shouldn’t be litigating on principle – once you start doing this, fees become grossly disproportionate and chances are you won’t get the result you want.
5. Firm Regulation
All solicitors in England and Wales are governed by the Solicitor’s Regulation Authority (“SRA”). The SRA publishes a code of conduct (available here) which all solicitors must comply with.
In almost all cases, before starting work the solicitor will have you formally sign an engagement letter – a formal contract outlining the solicitor’s provision of services to you, and your rights and responsibilities. This should contain certain information that a solicitor is obliged to make known to you. It should be noted that a solicitor’s engagement with business is generally less regulated than engagement for personal legal issues.
To be a practising solicitor, that solicitor must be both qualified as a solicitor, and have a current practising certificate. To tell if your solicitor is qualified, check here.
Firms must also be registered with the SRA – you can do a search for the firm here.
Further, to find out if your solicitor has been the subject of disciplinary proceedings, check here.
Additionally, all firms must maintain professional indemnity insurance, usually for a minimum of £2 million.
We hope you have found our suggestions helpful. If you have any questions in relation to these, or indeed if you would like us at Engage Legal to see how we can assist you in finding a solicitor for your business, just fill in the form opposite and we will have one of you expert commercial solicitors contact you free of charge.