Starting your own small business can be an exciting if not intimidating endeavor. The failure rate for small businesses is generally 50 to 70% within the first 18 months. The thrill of big risk vs. big rewards attracts many entrepreneurs. However, from 2008 to 2010, more than 200,000 small businesses shut their doors according to the U.S. Census.

Of the many pitfalls that small business owners might face, a lack of understanding of the basic ins and outs of running a business rank high on the list. Many small business owners might not think to hire a business attorney. In a budget conscious start-up world, attorneys can be seen as an extravagant expense.  Legal counsel might not be an obvious component of your budding business, but many corporations have started to retain in-house legal counsel. Established small business owners also need legal counsel. This is not a service you should skimp on. Exorbitant legal fees from litigation or payment from violations (environmental, zoning) can close your business doors. So let’s get down to the brass tacks of the whys and whens of hiring a business lawyer.

Why Hire a Lawyer?

Usually people turn to attorneys when faced with a lawsuit or legal question. Running a small business is different. You want to make sure that your company is compliant with the local and federal regulations and laws and legally protected for the future. Many companies and business owners just starting out don’t want to spend the money to retain an attorney. Start thinking of retaining an attorney as legal insurance. The legal fees you will pay now could save you thousands of dollars in future litigation. Pay now, save later.

Attorneys perform a variety of functions outside of the courtroom. From helping you determine the legal structure of your business (corporation or LLC?), drafting contracts, and registering for federal trademark and copyright protection, attorneys are a one-stop-shop for creating a stronger organization for your small business.

When to Hire?

Here are a few crucial moments to seek the services of an attorney:

1)   Planning Stage

Hire an attorney if you need assistance determining the best legal structure of your business. Attorneys can advise you on the advantages and disadvantages of registering your business as a corporation, limited liability corporation (LLC), or business partnership. Although you do not need an attorney to create an LLC or partnership, forming a corporation will need the services of an attorney.

2)   Buying or Selling

Hire an attorney when negotiating large sales agreements, lease agreements for real estate, or drafting contracts. Legal documents can often contain many pages of “legalese” that can confuse even the most well-read individual. Your lawyer will go through the document carefully and make sure there are no surprises before you sign any major agreement.

3)   Litigation

This is the most common time when people seek the services of an attorney – lawsuits. Lawsuits can range from violations of federal or state law, employment, environmental, or governmental issues. Lawyers and law firms specialize in many different practice areas. Be sure to find an attorney that specializes in your particular legal issue.

4)   Patents

If your small business is centered on innovation, then you might want to seek legal advice from an attorney who specializes in intellectual property. First consult an attorney if you want to register your products and services for a patent. Your attorney can advise you through the lengthy process of patent registration and if it is the right choice for your business.

Whether or not you think you need one, hiring a business lawyer and one step to creating a stronger future for your small business.


Connie Davis is a contributing author for NerdWallet, a personal finance website, where you can find advice on a range of topics from managing credit debt to where to find coupon websites


  1. I have a good friend who is going to be starting a business soon, and she asked me to help her so some research about what she needs to do so that her business can start up correctly. I liked how you mentioned that it’s crucial to hire a lawyer when a person is planning to start their own business. I think that this is a good idea, because my friend knows absolutely nothing about law, and neither do I! I’ll be sure to pass this information on to her so that she can start looking for a commercial lawyer as soon as possible. Thank you for the advice!

  2. Knowing these reasons for hiring a lawyer will help my dad decide whether he needs one now that he’s starting a small business. He’s been having trouble with negotiating large sales agreements, so I’m sure that he’ll be glad to know that a lawyer will help him get a lease agreement that he can work with. His new business is based on an original idea that he had, so I’m sure that he could also use legal help with getting the necessary patents for his products. Thanks for this information!

  3. Since there are many businesses out there, there will also be many lawsuits that come along with them. With that in mind, you are very right that need to plan out what you want to do. An attorney or a lawyer would be able to help you out for that situation. If I owned a business and this happened to me, I would for sure get someone with experience in this field.

  4. I really liked this post, especially since I’ve never actually had to hire a lawyer before. I can see how it would be important to have a lawyer for these instances, and especially when dealing with patents. An attorney who specialized in intellectual property would seem like a valuable person to have on your side. Thanks for sharing this.

  5. I appreciate your tip on hiring a business lawyer would be a good idea when facing litigation. I would imagine that an employment lawyer could help you avoid any troubles whenever your company is faced with limitations. My brother is starting a small business so maybe he should hire a lawyer to help him out if he runs into any trouble.

  6. My husband and I love having small businesses, but it does come with a level of risk. I like how you point out here that by hiring a small business lawyer you are taking out some of the risk of starting something up completely on your own. I imagine that they will also be able to give other advice in terms of legal matters to help the business have the most success. I will be sure to keep these things in mind; thanks for sharing!

  7. I think it’s interesting that litigation if the most common time when people seek an attorney. I have a friend who is trying to start up a small business, and they are wanting to make sure they do it right. I will have to ask him if he knows about litigation.

  8. Hiring the business lawyer is indeed an important task if you run any company. Here the information that you have shared through the post is very much important.

  9. Considering all of the necessary times to have a lawyer that you listed, the times you can manage without one seem few and far between. I know that more and more I’m seeing companies sued for all sorts of things, and it’s important to have a lawyer to defend you. In addition to defense, your attorney will also be the key to preventing legal action against your company.

  10. I liked your idea of hiring a business lawyer in the planning stages of starting your own business. You specifically mention how hiring an attorney during the planning stages will help you figure out what the best legal structure for your company is.

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