How Much Does a Small Business Lawyer Cost?

The cost for a small business lawyer can range from $150 per hour for a junior lawyer in a small city to over $1,000 per hour for senior partners at large firms in major cities. You will also need to consider that sometimes there will be a group of lawyers working and not just one per case.

What Issues Are Worth the Small Business Lawyer Cost?

Some small business owners hesitate in hiring lawyers. This is because they believe the high cost is not worth it, especially when they're just starting out.

For larger, more complex issues, it's best to find a small business lawyer. If you're nervous about liability issues or don't have time to spend on other business-related matters, you might want to keep a business lawyer. Some examples of when hiring a lawyer would be helpful include when:

  • Employees sue you for discrimination about hiring, firing, or working in an unfriendly environment
  • Environmental issues happen and involve your company
  • Government units file complaints or investigate your business for possible law violations
  • You want to discuss either selling your company or buying another company or its assets
  • Determining exit strategies and succession for cofounders

What Issues Are Not Worth the Small Business Lawyer Cost?

When starting a small business, you want to keep all extra costs at a minimum. There are many matters you can take on yourself. Arm yourself with self-help resources, available either online or in print format, and save yourself the cost of hiring a small business lawyer. Some of these tasks include:

How to Pay the Cost of a Small Business Lawyer

Most small business lawyers charge hourly fees. Once you decide what you need the lawyer for, check to see how much time the lawyer needs to complete your task. Lawyers want to form strong relationships with their clients. They might be flexible on fees and payment schedule. Some might even offer alternative fee arrangements (AFAs) or do work on a commission. Occasionally, lawyers may give free consultations to small business owners. This is a time to ask questions and get a strong understanding of what advice the attorneys would give.

Try not to make cost the main goal in hiring a small business lawyer. Oftentimes the cheapest lawyers have the least experience. It may seem appealing to hire the cheapest option. However, you may find that you pay more in the long run. You either end up paying more an hour because they don't have the experience or you end up hiring more qualified attorneys to fix the unresolved issues.

Before hiring the attorney, be clear about your budget and overall expectations. Work out the fees and then complete the standard fee agreement with the lawyer. This document states that you fill the attorney's retainer, which you should negotiate. Retainers are an agreement where the small business owner pays an advance for money done today or anytime in the future. Lawyers can pull from this fund while working on tasks for you.

Another option is a fixed price payment. Some lawyers charge a flat fee, no matter how long the task might take to finish.

Monthly retainers are another choice. This option is common for small businesses that want to use an experienced attorney to work closely with them for a time. That way, one attorney knows every part of the small business and can fix any issue that arises. After six months to a year has passed, you and the lawyer should meet and see what completed work occurred. That way both parties can renegotiate a monthly retainer.

How Do Hourly Fees Work?

As mentioned, the most common fee for small business lawyers is an hourly fee. Most attorneys charge from $150 to $325 an hour. Remember that this number can change depending on the country's area and the lawyer's experience. Larger cities, such as San Francisco and New York, may charge upwards of $1,000 per hour. Lawyers who have more years of experience can charge a higher hourly fee.

Should you need litigation work if your issue goes to trial, you may end up paying higher rates. The same goes for acquisitions or mergers.

How Do Flat Fees Work?

Flat fees allow you to know exactly how much to set aside for lawyer fees. Flat fees can range anywhere from $500 to $2,000, again depending on the task and place. Some flat-fee documents involve reviewing business contracts and forming a Limited Liability Company (LLC).

Flat fee arrangements usually do not include fees for third parties. You must pay those costs separately. For instance, if you pay your lawyer to create an incorporation, you still owe the state fee.

Signs You Should Spend More on the Cost of a Small Business Lawyer

After calculating your small business's needs, you may find you should spend more money in certain areas. Some tips on finding out if you need to spend more on a small business lawyer include:

  • Number of founders. If your small business has more than one person who created the company, you must increase your legal fees. This is important for startup companies because the founders must have an established and documented relationship. Even if the cofounders are relatives or close friends, you should have everything documented.
  • Raising capital. If you're using a third party to help raise capital, you should increase your legal fees.
  • Public company. If your small business has a public presence, you may need to spend more on legal fees to combat third parties. You may need to protect your company against these infringers for breaking trademarks or stealing your ideas.

Common Mistakes

Not hiring a local lawyer: Bigger, more experienced firms might seem like a better option because they have worked longer in the law industry. However, smaller, local firms tend to work better with small businesses. They usually respond quicker and have strong communication with their clients.

A solo practitioner who used to work at a large firm allows you to pay for solo practitioner rates but for larger firm experience. Local lawyers have connections that can help with funding and can introduce you to other local businesses at events. This can help you network and spread information about your business.

Hiring an unlicensed/inactive/suspended attorney: Check on your attorney's current license status by doing a simple Google search. Type "attorney search" followed by the state's name, just like this: Search the Florida Bar attorney directory.

Employing an unresponsive attorney: It's okay to get your attorney's voicemail every once in a while. But if it becomes a pattern, you may want to re-evaluate your contract. Communication is very important to having a strong lawyer-client relationship.

Giving you false promises: Once you hire the attorney, make sure you have everything in writing. This can include recording conversations with your attorney. But make sure he or she knows you are recording it. You can also follow up the phone calls with an email so you have written proof. The documents can help you if your lawyer says something but does not follow through.

Offering poorly written work: If the contract you receive has many grammatical errors and misspellings, this attorney is not a good fit. To weed out the poor spellers and writers, have the attorney give you a sample contract. If there are typos or other mistakes, you should find a different attorney.

Contact an Attorney

If you need help with determining the cost for using a small business lawyer, post your question or concern on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience. They have worked with or for companies such as Google, Twilio, and Stripe.