Legal Fees to Consider for Your Startup

When you start a new business, you will need to set up a range of legal services. From having a lawyer review your commercial contracts to ensuring that you adequately protect your business’ intellectual property, small business owners have a lot of legal services to consider. However, legal services can be pricey, especially on top of general business startup costs. Therefore, when forecasting your business’ budgets, you should consider what legal fees you might have to pay to get your startup on the right path. This article outlines three key areas where lawyers typically help startups, followed by a breakdown of how law firms generally charge legal costs.

Key Legal Areas

Small businesses can retain legal services for a vast range of legal areas. However, small business owners typically focus on the following:

Branding

Branding is an essential element of any startup. As a business just beginning to emerge in the market, your business name and logo allow customers to identify your business and its associated reputation. When it comes to branding, you may seek out various intellectual property protections such as:

• registering a trade mark to gain the rights to use your business name, logo and slogan to the exclusion of all other businesses; 
• registering a patent to gain the exclusive right to use, licence and sell a device, method or process such as an inventive step in operations management; and
• copyright protection for any written, artistic, visual or lyrical materials that comprise your brand.

Business Structure

Whether you set up a limited liability company, a partnership, a public company or wish to operate as a sole trader, your business structure has vast implications for how you operate your business and the subsequent business taxes you have to pay. To decide on a structure, a lawyer can advise you on what legal structure best suits your proposed business model and provide the advantages and disadvantages of each legal structure.

Insurance

Across many industries, you may need to meet specific insurance requirements to operate your business. More broadly, certain insurance policies can help minimise risk to your startup, which can be necessary for laying sturdy foundations for your startup. For this reason, insurance can be an essential area of concern for small business owners.

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Legal Fees

Law firms typically charge clients for their services on:

• an hourly rate; or
• fixed fee.

Hourly Rates

Depending on which firm you retain for legal work, they may charge you an hourly rate for your work. Although hourly rates widely vary between firms, a general guide of hourly rates includes:

• $200 – $250 per hour for a junior lawyer;
• $250 – $500 per hour for a senior lawyer; and
• $500 – $1,000 per hour for a practice leader or a partner.

If a firm charges you an hourly fee, you may be able to request an itemised bill. An itemised bill provides you with a more precise breakdown of costs for legal services, ranging from the time a lawyer spent drafting documents for your matter to time spent negotiating with other parties. If you disagree with the items listed in the bill, you should speak with your lawyer directly and negotiate the bill. If you cannot negotiate your bill to a lower price, you may be able to file a complaint with the Legal Services Commission.

Flat Fees

Rather than charging you on a time-cost basis, most firms now charge based on a fixed fee model. A fixed fee service can give you certainty when retaining legal services since you can note the bulk of the legal costs before you retain a firm for their services.

The cost of a fixed fee service depends on the type of legal work you give a firm. For example, some common fixed-fee matters and their prices are set out below.

No matter what, it is wise to call ahead and see which firms can provide you with a fixed fee quote for the legal services you have in mind.

Key Takeaways

When forecasting your business startup costs, you must consider potential legal costs. Startups generally retain legal services to protect their intellectual property, help set up their business’ legal structure and ensure proper insurance policies are in place. When retaining legal services, firms can charge an hourly rate or a flat fee. Legal fees will vary depending on which firm you retain and the nature of the work you provide the firm with.

If you need help with your startup, LegalVision’s experienced startup lawyers lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.

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