Designing a Legal Plan for Your Business
One size doesn’t fit all startups
on April 27, 2018
Updated on August 29, 2022
Launching and operating a small business can expose you to a variety of types of legal liability, making it often difficult to have a good grasp on what exactly your legal needs are. Particularly with a limited startup budget, it’s important to have guidance on what to do, and when.
Enter Boston transactional business attorney Sofia Lingos. “Most of my clients come at the formation stage, when they’re trying to understand exposure and liability,” she says. “I like to start with just giving them some good early education, and help them set up what I think of as akin to a business plan. A lot of people get caught up in thinking they need everything right now, but that’s usually not the case.”
Setting Goals and Priorities
Lingos works with her clients to review their goals, so as to tailor her approach to meet their needs. “I really like to say, ‘From the beginning, we talk about the end.’ What’s their exit strategy—what are they trying to accomplish? And then think about, at different milestones, the documents we need to create,” she says. “We’ll then build a legal budget around that, so they can understand and plan accordingly.”
Initial steps typically include liability protections like entity formation and negotiating contracts. Lingos helps prioritize what’s needed, and in what order. “People often assume that formation is the first thing that should happen. But sometimes, getting some contracts in place is going to be more valuable, or protecting ideas with confidentiality and nondisclosure agreements. Sometimes, that’s the stage before we even get into formation matters,” she says.
“Usually, the next thing to focus on after liability is licensing,” Lingos continues. “It’s shocking how many regulations exist, and they’re different for every industry. One little niche, for example, is if you have a gas station: You have a whole different level of permitting if you’re going to have open cartons of dairy products for coffee versus using those little creamers. Laws like this can actually change how you operate your business. You might think it would be cheaper to just put some milk in a container for people to use in their coffee. But when you look at the licensing, maybe not.”
Another topic in business legal planning arises with hiring employees. Lingos explains the complicated process of bringing a team member on board, which essentially necessitates a lawyer. “If we could figure out how to make it easier to hire one employee, that could easily turn into two or three, which would give small businesses the opportunity for growth. The law is not always as accessible as it should be. I would love to lose business to having this be easier for people.”
Budgeting for Legal
Lingos further understands the financial constraints many clients face as they start out. “When I tell people my hourly rate, that can be hard on the budgeting process for a startup,” she says. “Not being able to afford it all right away doesn’t mean they need to forego it, just that they may need to plan a little differently. Maybe it’ll slow down the process, but you don’t want to jump into the deep end of freezing cold water before you put on the appropriate attire.
“We do alternate fee arrangements; usually every document that we produce can be done as a flat rate. I always tell people to do what they can themselves—I’m happy to cut out whatever piece someone does on their own, and I can come up with a custom plan for them. And then, have a lawyer available for those things you can’t do yourself. It doesn’t help me if they can’t afford me, and it doesn’t help them. I want this to be a longstanding relationship.”
If you’re starting a business and need some legal help, contact a law firm and look for an experienced transactional lawyer whose legal services focus on working with business owners and startup businesses. Ask about flexible fee options and legal planning that addresses your specific needs and goals. For more information on this area, see our business organizations overview.