Attorney fees and costs are as mandatory to a company as are the accounting documents or the budget for reception. Most of the legal documents either need to be updated or are required in certain stages of a company’s activity. So, the budget for legal fees is one that needs to be considered and granted an important place.
To many, legal fees may seem familiar from TV shows, where attorneys represented companies. In the real world, legal fees also cover issues such as taxation, transactions and intellectual rights. But let’s discover more on legal fees and how they can be optimized within a company’s activity.
What Are Attorney Fees and Costs?
Attorney fees and costs are some of the consistent charges a business can incur and numerous firms have been bankrupted by exorbitant legal fees. Even then there are a number of ways of going about reducing the attorney fees and costs for your business. Most often few companies never think about their legal costs up until they are faced with litigation, and they are in need of a lawyer.
At this point their ability to carry out research and get a good lawyer are minimal. If you plan ahead you can easily secure a good lawyer and still reduce their attorney fees and costs if they planned ahead. Usually,there are general guidelines on what an attorney can charge you. However, most often lawyers and law firms are at liberty to levy the kind of fee that they consider commensurate with the services they are offering you. Sill, there are number of decisions that can help you lower your attorney fees and costs.
Who Needs Attorney Fees and Costs Reduction the Most?
Most SMEs (subject matter experts) as well as large firms that spend lots of money on litigation need to be able to institute ways of reducing their attorney costs and fees. Such firms ought to use legal-tax deductibles. There are a number of legal expenses that are deductibles which you can take advantage of during the course of business. First, the business legal fees are deductibles and so is the legal fee for tax advice. Secondly, legal investment expenses can be deductible as miscellaneous itemized deduction if they relate only to investments.
How Much Is Usually Spent on Attorney Fees and Costs?
The cost of in-house lawyers in the US alone is about $5 billion. The more than 23 million small firms in the US reported spending more than $7600 a year each on attorney fees and costs. The legal fees in employment cases where recoveries involve either wages or non-wage income also qualify deductions.
Depending on your nature of business, there may be other legal expenses that are subject to deductions that you can rely on to lower your overall attorney fees and costs.
6 Ways in Which You Can Reduce the Attorney Fees and Costs
1. Get Big Law Talent Not a Large Law Firm
Lots of companies assume that they need the services of a big law firm, especially when faced with litigation. However, large law firms are not always big because they are good at what they do. There are lots of large law firms that owe their size to undue influence. It’s often better to scout for young, brilliant lawyers who can offer you top rate advice without the huge attorney fees and costs. Do your research. You are most likely to run into small or medium yet reputable firms with fair legal charges.
2. Negotiate Fixed-Fee Arrangements
There are two primary ways in which attorneys bill their clients. These are the flat fixed rate and the hourly rate. Make sure you analyse your firm’s legal needs. Then, figure out whether the flat rate or the hourly rate will work for you. If you have lots of legal paperwork and issues to sort in a typical financial year, then compute how much hours will go into that, multiplied by the hourly fee. The result can be more than the flat rate – then choose the fixed rate. If it’s less than the flat rate then hourly charges would be more prudent.
3. Use Form Documentation
Some businesses use lots of legal contracts of similar nature. In such instances, you can ask an attorney to draw the documents that you’ll need for your transactions. This allows you to reuse the same document over and over again with each client that walks through your door. Also, it works well for consulting agreements, engagement letters, as well as vendor agreements. You may have a business where you have lots of counter parties. Then, the attorney should include an alternate clause that is favorable to you and yet accommodates push-back for your counter parties.
4. Be Forthright With Your Attorney
Be pragmatic yet prudent when dealing with your lawyer. Give them what they ask for but act quickly. For your case to proceed correctly, your attorney will need the facts of the case from you. Providing irrelevant or distorted information could jeopardize your case in court. This will in turn lead to more frustrations, and higher billable hours. Therefore, during the first meeting ask him or her about everything that they might need from you before pursuing the case. Armed with that information, prepare all the records that are necessary and keep them ready.
5. Keep Organized Files
Keeping proper financial, transaction, administrative, and legal records is crucial to your business. Records help to protect your firm from trumped up charges and provide you with the legal ammo needed to fight back. That’s why you need to invest in proper record keeping complete with a backup. Remember, the court simply weighs in on an issue on the basis of the evidence presented. During the legal proceedings, don’t forget to keep the paperwork properly. This will come in handy in case you need to change your attorney midway through the case.
6. Invest in Legal research
Due to the proliferation of online writing sites, it’s possible to have your legal research outsourced to India or Kenya at $20 per hour or less. Once this part is done, you can then proceed to involve a lawyer who’ll negotiate the rest of the case for you. Most often, when the attorneys conduct the legal research for you, the billing goes significantly higher. This outsourcing focuses on the availability of lots of fine legal minds who can carry out the research at a fraction of the cost, and at a faster pace.
To Sum It Up
Reducing your legal fees is mostly about planning. You always have to organize your activity at the beginning of the year and decide which legal work your firm will need. You’ll also need to set aside reserve fee for any litigation issues that might come up. This will help you set aside a budget for attorney fees and costs in the annual financial planning for the company.
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