Whether you’re a newly-started startup or a multinational corporation your business will need a good lawyer to advise you and assist you in dealing with laws and regulations. For startups and new businesses, a business lawyer can help you get the legal foundation of your business laid and give you advice on how to use the law to protect your new business. For established businesses, a business lawyer can make sure your merger or acquisition goes without a hitch or navigate any tricky compliance issues you may face.
The most common fee structure used by a business lawyer is the payment of an hourly fee. For some common business work some lawyers may accept a flat fee instead.
How do Hourly Fees Work?
An hourly fee is the most common fee structure used among lawyers. Typical hourly fees range from $150-$325 per hour. However, this can vary widely depending on market and the attorney’s experience. Large city markets like San Francisco or Austin will likely demand higher hourly fees than small towns. More experienced lawyers will demand a higher hourly fee as well. Litigation work, if the issue goes to trial, can demand even higher rates. Complex work such as mergers or acquisitions can demand much higher rates.
A lawyer will work out how their fees are to be paid when they first meet you. A standard fee arrangement will require you to fill the lawyer’s retainer. The retainer works by providing a set amount to the lawyer that they may draw on for their first amount of work. Any subsequent work would be completed at a standard hourly rate agreed upon.
How do Flat Fees Work?
For some standard business work some lawyers will perform the necessary work at a flat fee. Incorporation, LLC formation, drafting employment contracts, and reviewing business contracts are among the many business services some lawyers will perform for a flat fee. As an example, a flat fee for forming an LLC in California can range anywhere from $500 to $2,000. Keep in mind, with a flat fee arrangement, typically fees to third parties are not included and you must pay them separately. While you may pay your lawyer $500 for the incorporation you will owe an additional fee to the state you are incorporating in.
Equity for Payment
There’s a trend in startups and new businesses to offer a lawyer equity in their new venture instead of monetary payment. This arrangement is allowed under legal ethics however it’s a risky bargain for the lawyer. Because of this risk many lawyers will not consider this sort of payment arrangement.
Which Fee Structure is Best?
The best fee structure is one that works best for the client. Business lawyers are sensitive to the needs and limits of a business and want to ensure the client gets the best bang for their buck. Lawyers like to establish relationships with their clients so they have clients who come back to them when they need legal assistance in the future. Keeping this in mind, a lawyer meeting a new potential client may be flexible on their fees and how they are paid.