Bar News - December 16, 2015
Business Law & Business Litigation: Innovation on a Budget: How to Cost-Effectively Assist Startups
By: Kristin A. Mendoza
Letís face it Ė working with startup businesses is just plain fun. Entrepreneurs have such passion and energy for their new business that you canít walk out of a meeting with one without feeling a bit of excitement yourself. After all, they are creating really cool and innovative things, which makes us feel cool and innovative by association. The challenge for us as legal advisors comes in serving the needs of these entrepreneurs while respecting their budgets. In this way, we need to be a bit innovative ourselves.
If we begin with the premise that clients perceive value in the work that attorneys provide when: (1) the service changes the clientís situation, (2) at a price that the client is willing to pay, (3) for work that is done right the first time, then we can examine our practices and devise ways to meet those criteria while demonstrating our understanding of our clientsí constrained budgets. Here are some ideas:
Let Analytics Be Your Friend
Steve Jobs made Apple successful by focusing on what Appleís customers wanted, needed and would want. His philosophy was to know what the customers wanted before the customers even knew they wanted it. In contrast, we often wait for clients to initiate contact with us in order to learn of their immediate legal needs and, although we might suggest some follow-up work, we rarely pursue that line of discussion with the client after the immediate need has passed.
One way to be an innovative legal advisor to startups is to provide clients with an annual summary of how their legal dollars were spent. By providing a quick break-down of areas in which there was time and attention spent on their legal needs, attorneys can provide a platform for highlighting how their services changed a clientís situation, where additional work may be needed, or where gaps in the clientís legal focus may exist.
For example, if the client spent last yearís legal budget on entity formation and drafting of service contracts, should time be spent this year on employee contracts or building its intellectual property portfolio, and if so, what do the budgets for those services entail? By utilizing the data in our billing systems, we can demonstrate where focus was spent and partner with our clients on deciding legal strategy for the upcoming year, so that we are continually working to improve their situation and are doing so in a proactive manner.
Consider Alternative Fee Arrangements
Price uncertainty is a real concern among small business clients and is a common reason why clients donít engage legal counsel earlier in a transaction or other legal proceeding. Flat fees, budget caps and other methods that provide pricing certainty go a long way towards addressing this issue, and innovative legal advisors should explore these options. However, these alternative fee arrangements not only reward efficiency, but also demand it.
Before offering alternative fee arrangements, take the time to understand what makes up your overhead and where efficiency can be achieved in your internal processes. Can you use email instead of sending hard copies? Do you have a client portal that can be used for document exchange? Employ strategies that make use of efficiencies when offering alternative fee arrangements.
Employ Payment-Friendly Practices
Many entrepreneurs use credit cards with rewards programs that allow discounts on travel or credit on future purchases. Consider talking with your bank or another vendor about setting up credit card merchant processing services to accept payment of invoices by credit card. By doing so, you are giving small business clients the ability to better manage their cash flow. If your billing system can issue invoices with enabled payment features to accept payment by EFT or credit card, you may find efficiency in your own operations in the manner of reduced staff time receiving and booking payments. You may also find that payments come in a lot more quickly.
Streamline the Drafting Process
Nothing inflates legal bills more quickly than excessive drafting cycles. Whether it is having several attorneys work on a single document or drafting a document littered with legalese that clients canít decipher, innovative attorneys needs to find ways to simplify the drafting process so that clients end up with work product that they can understand and use.
One method is to systematically go through your forms library and weed out archaic, redundant and ambiguous language and phrases from basic contracts. By having all drafters starting from the same clean forms, drafting quality is maintained across a number of drafters and reduces proofreading time of senior attorneys.
If maintaining an internal forms library is too labor intensive, consider an online document assembly subscription, such as ContractExpress offered by Thomson Reuters. By having a computer-generated first draft produced in minutes, drafters can get to the heart of drafting deal terms more quickly and without risk that extraneous or inapplicable client references or deal teams from previous deals are carried over into new documents.
When you implement some of these strategies or others that you devise on your own, although your startup clients may never see the innovation in your practice up-close, they will certainly appreciate the proactive, budget-friendly solutions that you are able to provide.
The result will be that you will have more than a loyal client. You will have a partner who will give you repeat business and sing your praises to their friends and associates for many years to come.
Kristin Mendoza is the principal of Millyard Tech Law, a boutique corporate law firm based in Nashua, NH, that works with high tech startups and small businesses in New Hampshire and Massachusetts.