Startup and emerging companies typically don’t have the cash or the desire to incur a lot of legal fees. However, the founders of these companies understand the importance of building their company on a solid legal foundation. So, they know they should take care of the essential legal documentation in the early days of their company’s life – operating agreements, service agreements, employment agreements, independent contractor agreements, etc. – but they’re worried about how much money they’ll have to spend to put it all in place.
During every new client meeting, I ask them about their business and their expectations for growth. With that information, I explain the legal documents that they need to put in place to protect their business. Sometimes it’s just a few documents, and other times it’s more – five documents, eight documents, sometimes a dozen.
Understandably, every client wants to, at a minimum, get an idea of how much it will cost to get their legal house in order. When legal work is done hourly, attorneys can give an estimate of how much time it will take them to complete a document and, based on their hourly rate, come up with an approximate price. But, that price always comes with a disclaimer that the cost could go up if, for whatever reason, the attorney has to spend more time than he/she originally thought.
This can be a scary proposition for any client, but especially startup and emerging companies who may be pre-revenue. In one new client meeting, I had a client say to me “In the past, my legal fees have been like a black hole. I never knew how high the bill was going to be when it arrived.”
Well, first of all, that signifies a major communication problem between the attorney and client. But, it’s true that attorneys often end up spending more time than they originally estimated on a matter, which means a client’s legal bill is often higher than anticipated.
That’s why so many of our Stock Legal clients get excited when I tell them that I can prepare many of the basic documents they need for a fixed fee.
With our fixed fee documents and packages, I can say to a client “you need these documents and I can provide them to you at this price.” There is no time estimate involved, and no disclaimer that if I spend more time on it, the price will increase. Our clients know up front what it will cost them to receive the finished document.
No mystery. No blank check. No black hole.