I wrote recently about the importance of bringing your lawyer into your business decisions early and often (please see the article here). I have also previously written about how to measure “reasonable” attorney’s fees (please see the article here). Balancing the need for your lawyer and the costs of your lawyer is a calculation a smart business has to do on each occasion. Generally, the highest fees are incurred in litigation. Thus, another reason to avoid litigation.
How much does it cost to avoid litigation? As in the old MasterCard commercial, one might say “priceless.” All joking aside, the best way to avoid litigation costs is to ensure that you have proper processes, procedures and documents in place long before a dispute ever arises. Keeping your lawyer on your team in creation, refinement and implementation of these things may cost you some amount of money in the short term, but may save you tens of thousands in the long run.
Examples of areas where using your lawyer proactively can save you in the future can be seen throughout your business. Having a lawyer involved in the formation of your business and its foundational documents (such as an operating agreement for an LLC or bylaws for a corporation) can protect your personal assets from business liabilities and ensure that your business is secure. Having a lawyer involved in creation of employee handbooks and employee policies can reduce your risk of being sued by employees or the state for failure to follow employment laws. Having a lawyer involved in creating your contracts, invoices or other agreements can ensure that all of your rights are protected and there are consequences to the other party if the contract is not honored.
Nobody likes paying legal fees. However, the fees that you pay by being proactive can be substantially less than those in having to pay to resolve disputes. Furthermore, there is greater financial predictability in being proactive. Many lawyers will prepare some of the documents discussed above on previously arranged flat-fees. In addition, there is simply no way to reliably predict the costs of litigation. There are far too many contingencies such as the aggressiveness of the opposing party (or lawyer). Being proactive is always your best option.