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Working With Your Local Attorney

Legal Issues

Doing business raises any number of legal issues.  The law affects nearly everything you do, from choosing an entity and organizing your business to entering into relationships, executing agreements, developing your ideas, marketing, licensing, and selling your products, managing your obligations, growing and expanding your operations, etc.

Any time you affect others’ expectations you may incur corresponding legal obligations.  If you are aware of your rights and responsibilities under the law you can protect yourself, use the law to your advantage, and develop the business you intend.  If you are not aware of the legal issues raised by your activities, you may find yourself subject to obligations for which you are ill prepared.

This does not necessarily mean that you must work with an attorney.  If you know the law and are comfortable taking responsibility for your legal decisions, you certainly have every right to do so.  An attorney can help, and it is up to you whether to work with one.  Some basic information about working with an attorney follows.

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What an Entrepreneurial or Business Attorney Does

An entrepreneurial attorney should be able to help a business through any number of the primary legal issues it faces throughout its lifetime.  An entrepreneurial or business attorney is generally hooked in to legal treatment of business matters.

Business law is full of discussion regarding what words are used to communicate intentions and execute exchanges.  The discussion often revolves around “magic words.”  These are terms and phrases used to invoke defining concepts.  Whether or not a contract contains certain “magic words” may dictate its interpretation.  This may relate to whether or not a judge agrees that your contract means what you thought it did.

The law is also full of discussion regarding how we say what we say when conducting business.  Thus, much of an attorney’s work relates to addressing what is said and how, and the impressions and expectations you create or undertake relative to your communications.  You and your business are constantly communicating, and any of that communication may be material under the law.  Your internal and external communications, impressions, intentions, and exchanges are all important.

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Choosing an Attorney

Every attorney is unique in the way he or she speaks, writes, organizes and works with information, sees possibilities, represents and supports you, and understands the applicable facts and issues.  Attorneys may practice in broad or narrow ranges of legal matters.  Select an attorney for the way he or she perceives and handles things.  You should be able to find an attorney whose work and ethics you respect, and with whom you “click.”

Competence

Attorneys must be competent in their practice areas, whether it is their first day or fiftieth year of licensed legal work.  By the time attorneys ever open their practice doors, they must have the requisite knowledge, skills, and resources to serve in their given areas.  Competence is generally an ethical legal license requirement.  If an attorney is not comfortable representing you on a given matter, they should not be shy about referring you to another attorney or generally recommending that you seek someone competent in that area of practice.

Stopping the Work

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If you do engage an attorney, you should be free to stop the work at any time (this does not mean you can skip out on paying for services after they are rendered).  Attorneys in every state must follow ethical rules.  These likely govern your rights, and ensure that you are treated fairly in any attorney-client relationship.  Just the same, be sure to assert all of your questions and concerns regarding any attorney-client relationship into which you enter.  Receive clear, satisfying answers to your questions before you sign any attorney engagement agreement (more on engagement agreements below).

The Initial Consultation

Before entering into a working relationship with an attorney, you will likely meet for an initial consultation.  Many attorneys do not charge for initial consultations, but some may.  Legal work is creative work, and some attorneys with considerable experience may require a fee to apply their thoughts and experience to your situation.  They are performing legal work, and their experience may justify such fees.  You must determine whether your needs and situation warrant such costs.  Ask about any initial consultation fees before you attend a first meeting.

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At an initial meeting, you should be able to interview the attorney to learn more about their experience, how they work, and their general thoughts regarding the issues at hand.  The attorney will interview you to learn more about your circumstances and the work with which you need help.  Together, you will have a conversation to determine whether the attorney can help you.  At this meeting, be sure to discuss the attorney’s fees and what they can and cannot do for you.  Assert your needs and expectations.  Make sure you are comfortable.  You should always be free to leave this meeting without engaging the attorney.

Signing an Engagement Agreement

Before you begin to work with an attorney, you will likely sign an engagement agreement.  This is a contract between you and your attorney.  Your attorney should write it up and provide it to you.  If desired, before you decide whether to sign your engagement agreement you have the right to have it reviewed by an independent attorney.

The engagement agreement should describe the work you and the attorney agreed to during the initial consultation.  It should detail your and their obligations.  Read through the agreement to ensure that it says what it should.  Only sign it if you agree with and can abide by it.

Fees and Retainers

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Most attorneys work for hourly fees.  Some may work for flat fees.  Some may perform a la carte services, which means that if you do not require help with an entire project, they are willing to handle only the limited parts with which you do need help.  Such a la carte services must be reasonable under the circumstances, and the attorney should inform you that they cannot take responsibility for the aspects of the project that they do not handle, nor for the project as a whole.  The attorney can only be responsible for their defined portion of work.  You would be responsible for the rest of the project, and should understand that before consenting to such an arrangement.

Some attorneys may accept payment for rendered services after they are performed.  In such case, you would be billed for and required to pay any balance due per your agreement with the attorney.  However, many attorneys will likely require some form of fee retainer.

Retainers transfer money to attorneys for legal work, but not all retainers are forms of pre-payment.  Retainers involve ways to protect attorneys' rights to receive payment and to protect client funds.  Various states may allow specific types of retainers.  For example, in Illinois there are three accepted types of fee retainers: security retainers, advance payment retainers, and classic retainers.

Security Retainers

A security retainer is the most common form of legal fee retainer in Illinois.  It is not a form of pre-payment.  It is a way to ensure that the funds that will be used to pay the attorney exist and are set aside.  Security retainers developed as a response to a long history of hard working attorneys with non-paying clients.  Under a security retainer, you give the attorney an agreed amount of money to cover part or all of the services they will perform (like a deposit), but they do not deposit that money into the firm’s or attorney’s account.  That money does not belong to the attorney.  It still belongs to the client.  Thus, the funds are deposited into a client trust account.  A client trust account is a special account established to hold the client’s money until the attorney earns it.  After the attorney performs part or all of the legal work, they generally notify the client.  The client  must generally approve/confirm that services were rendered before any funds are applied.  The attorney will then withdraw earned funds from the client trust account, and deposit them into the firm or attorney account.  If all funds are applied to rendered services before the work is complete, the client may be required to replenish the retainer.  Any funds remaining in the client trust account when the work is completed or stopped must be returned to the client.  The client should be free to discontinue the work at any time, and to receive any unused funds.  Funds in a client trust account must never be commingled with funds in the law firm or attorney account.  Because these moneys are the client’s property until applied, it is unethical and illegal for the attorney to convert these funds for his or her own use until he or she has actually earned them.

Advance Payment Retainers

This is a form of pre-payment.  An advance payment retainer is up-front payment to the attorney for some or all of the services the attorney is expected to perform.  Upon being paid, these funds belong to the attorney.  In certain situations, transfer of up-front payment to the attorney can protect the client and ensure the availability of funds for legal services when the funds are otherwise vulnerable to seizure, such as during a bankruptcy or other such proceeding.  Because these funds no longer belong to the client, they are out of reach and protected.  Advance payment retainers may therefore be used by attorneys representing clients in proceedings during which the client’s personal funds may be vulnerable.

Classic Retainers

This is a form of concurrent payment; money in exchange for an attorney’s guarantee.  A classic retainer is payment to the attorney to guarantee the attorney’s availability during a specified period of time or for a specified matter.  It does not matter whether the client ends up needing the attorney’s services during the agreed time or for the agreed matter.  The client is not paying for the attorney’s future services; only for the attorney’s present guarantee.  As soon as they are paid, these funds belong to the attorney.

Contact your state bar association to learn more about retainers used in your state.

When You Might Be Charged, and When You Should Not Be Charged

When you have engaged an attorney for agreed work at hourly fees, you will likely incur charges when the attorney performs services on your behalf.  The attorney will keep track of his or her time, and will provide you with a bill or accounting that lists the date and amount of time spent rendering services.  It should also describe the services performed.

Agreed legal services performed on your behalf may include work the attorney does in response to your phone calls, questions, or concerns.  During an applicable call or conversation, the attorney is working on your behalf to apply the information to the issues.  You definitely want your attorney to have all the information, but you should also be aware that you can rack up legal fees if you call your attorney with every thought or inclination.  If possible, to make efficient use of your time and money, organize your thoughts before you call or meet your attorney.

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When you have a question that does not pertain to work being performed under any current agreement, you should not incur charges for an exploratory discussion or phone call.  On the contrary, you should be able to call your attorney with concerns such as, “Our business is thinking about this, or my company just got a piece of mail that says this; do these things present legal issues?”  The attorney might want to further discuss the situation to gain a better understanding, but you still should not be charged for such a meeting or conversation (unless your attorney charges initial consultation fees).  Such discussion is essentially an initial consultation for new work.  Clarify this with your attorney before meeting or proceeding with such conversation.  You and your attorney should generally discuss the new situation so that you can make an educated determination as to how to proceed.  If you do decide to engage the attorney, you will likely execute a new engagement agreement to cover the new agreed work.  How to proceed is always up to you.

Conclusion

You should be able to find a good entrepreneurial or business attorney who supports you in reaching out without incurring charges to explore your opportunities and concerns.  You must be able to make educated decisions in the best interests of your business, without being afraid to pick up the phone.  You should feel free to discuss all of these issues with your attorney.  You should feel respected and comfortable in any attorney-client relationship.  If you develop a relationship with a good attorney, you will have a trusted legal adviser to whom you can turn, and who can either help you or point you in the right direction whenever necessary.