3 Situations Where Hiring a Lawyer Will Save You Money

You can avoid hiring an attorney for many business issues. But there are good reasons not to skimp on expertise.

IN THE INTERNET AGE, with Google doing your legal research and LegalZoom your contracts, you may have the illusion that your legal ducks are all in a row. This illusion seduces even those entrepreneurs trying to avoid disputes. “I always operate by what my grandmother said: ‘An ounce of prevention is worth a pound of cure,’” says Matthew W. Richter, who co-owns Agora Auctions, an online coin-auction site. As a CPA, he carefully vets contracts, patrols his inbox, and deals with any potential conflicts immediately. Even so, he has faced problems. “My partner wanted to save money and used an online legal service,” says Richter. “They completed the form saying we had employees in New Jersey. Which we didn’t have.” It took Richter a year of steady phone calls to the state to undo the glitch.

The problem is that you may not know what you need until it’s too late. “Businesses can get pretty far without a lawyer,” says C. Erik Gustafson, who oversees 300 attorneys at the Virginia law office LeClair Ryan. Others assume their lawyer is watching the road. “‘Why do I have to think about this?’ ‘Why do I have to worry about this?’ I hear that all the time,” says Barry Schwimmer, a partner at the Stamford Innovation Center in Connecticut, which advises startups. Schwimmer says too often companies believe that agreeing to work out problems in arbitration, rather than in court, will take care of everything. But, he adds, arbitration won’t save you from aggravation and cost. Says one entrepreneur who’s been through the process: “You still have to prepare your case. And that’s time away from running my business.”