Tuesday, October 20, 2009

Hiring legal expertise during an economic downturn

Business is good but it’s not that good. So says the business person struggling to keep the doors open, the employees working, and the customers satisfied during the economic downturn. If only I could afford an attorney to help me with my contracts, build my business, and respond to issues that seem to come up on a daily basis.

Perhaps it is time for the business person and the attorney to become creative. How can this problem be solved?

Facing a similar situation recently, I recently proposed three alternatives to the normal attorney-client billing and working relationship.

1) Traditionally, attorneys bill on an hourly basis for services performed. In this suburban town, based upon experience, overhead, type of work, etc., hourly rates range from $275 per hour to just over $400 per hour (large downtown firms are generally in the $600 per hour range for comparable services). Under this arrangement, compensation is fair but the client may be conscious of the “tick of the clock” during every conversation.

2) Contract work has always been an alternative and its use is now growing. Under this scenario, the business may hire the attorney for a particular project as they would any other subcontractor. However, a better arrangement would be to hire the attorney for a fixed number of days each week at a fixed price. For example, having ready access, in your building, to legal expertise two days a week at a reduced hourly rate (for example, eight hours times two days at a rate of 50% to 60% less than the normal hourly rate) would not only provide a consistent, fair return to the attorney on an on-going basis but it would also allow the client to focus on the issues rather than the clock.

3) Finally, there is the alternative of bringing the expertise in-house as a full time employee. Again, the hourly rate drops (perhaps 30% off the contract rate) but the attorney picks up employee benefits rather than just 1099 status. Now the businessman has a “partner” in the business with an interest in success.

But wait a minute, if my business is already struggling, how can I afford to hire a legal expert on a regular basis? That is where more creativity comes into play.

Who says the guy with the legal training can’t also be your Ops or Marketing guy? An attorney with a business background no doubt enjoys making decisions rather than just rendering opinions. Why not make him a part of the senior management team? In one major private company in Dallas, the General Counsel is also the VP of Human Resources. He is a one-man legal department but also manages the entire HR function. An attorney with experience supporting Sales, Marketing and Operations could step into the role of VP of Operations in addition to being the in-house legal counsel. This could even work on a contract basis where the attorney performs “business related duties” in addition to legal work. In a start-up, who says those with legal training can’t run a department or empty the trash cans? Yes, there are some ethical issues to be addressed, but they are not insurmountable.

In this economy, it is time for attorneys and business people to be creative in many areas, including the hiring of legal expertise and the billing for those services.

It may be legal, but is it right?

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