Mistakes Business Owners Make When They Don’t Hire The Right Lawyer

by | May 4, 2021

If you’re running a small-to-medium size business (SME), you’ll be keen to avoid those common mistakes business owners make. Perhaps you’re at the beginning of your journey as an SME owner or are experiencing growth and want to check you’re not making any of those common business mistakes. Or perhaps you’ve been told either you should or shouldn’t invest in a lawyer for your business and are looking into whether hiring a lawyer is necessary.

As a champion of small to medium businesses, we talk to business owners daily and have a great understanding of the difficult art of balancing risk whilst avoiding unnecessary spend. The truth is that whether outsourcing responsibilities to a professional lawyer is necessary depends a lot of what you do and how many pitfalls you’re likely to meet.

Here we will explore some of those common mistakes business owners make and consider whether they might have been avoided by hiring the right lawyer. Hopefully, you’ll be able to measure whether any of these might apply to you, now or in the future, and decide on the right course of preventative action.

Do Small Business Owners Need To Hire A Lawyer?

It’s completely natural to dread the process of hiring and working with a lawyer. Working with a lawyer can be costly and some entrepreneurs will tell you that you can manage all the legal paperwork and draft contracts yourself.

Important – Many social media influencers dispensing business advice haven’t so much built a business as made themselves into a brand. Make sure you research those who are giving you advice and check that you have common interests and similar business models. An influencer making YouTube videos and not hiring employees or entering into legal agreements with clients or suppliers may not be the best person to help you decide whether you need a lawyer for your company.

The reality is that almost all contracts and policies you need for a small to medium business can be taken care of by the business owner, no law degree required. This is great news for start-ups. The freedom to draft your own contracts dismantles barriers for those with limited funds. However, in many cases, getting the right advice can work to protect your business and save you money long term.

Have you done a risk assessment for your small business yet? Many of the potential issues that could be a threat to your business will likely be legal ones.

These might include;

  • An employee dispute
  • A client who withholds payment
  • Having your intellectual property used against your wishes

Utilising the expertise of a legal professional in the early stages of your company can safeguard against these threats. Generally, the law is set up to keep the marketplace open and fair for all businesses, regardless of size. Yet, sometimes it requires an expert in the game to ensure we are playing by the rules too. Many mistakes business owners make happen when they’re undertaking tasks usually reserved for those who’ve spent five years studying to become lawyers.

Why Shouldn’t I Hire A Lawyer For My Business?

There are many valid reasons to be put off hiring a lawyer. It’s difficult to find the right one and the wrong lawyer can cost you unnecessarily. Outsourcing anything carries a risk that an outsider may misunderstand your business leading them to make mistakes or misrepresent you. Careful research and an effective consultation should help avoid mistakes business owners make when hiring a lawyer. However, more often it’s the open-ended billing and traditional legal pricing models that put SMEs off hiring a lawyer.

Turning to a legal professional can often make SMEs feel like they’re losing money and control of their business, being spoken to in legal jargon and being charged by the hour. However, there are alternatives within the legal market that can provide more tailored solutions for SMEs, including fixed priced legal services available through LegalDrop’s legal services comparison platform.

First though, let’s establish how what pitfalls small-to-medium business owners might fall into and whether hiring a lawyer would have avoided these.

What Are The Common Legal Mistakes Business Owners Make?

1. Unconsciously Violating the Rights of Others

Your daily actions as a business may have legal implications involving the rights of others. Most people will consider themselves ethical but when you’re running a business you’re juggling many responsibilities. It’s not always possible to scrutinise every business action and many mistakes are made unconsciously. It’s also not within your expertise to know whether the decisions you make might negatively impact or discriminate against somebody else.

For businesses that are purpose-led or pride themselves on their ethical practices and values, unconsciously violating the rights of others is highly detrimental. However, this is harmful to almost every type of business because reputation is so important. Investors and consumers won’t just look at what you do or how much money you make, they’ll want to know that you operate responsibly. A claim of discrimination or breaking of human rights laws will not just cost you in court, it could destroy your reputation and therefore your business.

It’s easy to assume that violating the rights of others is not something you’re likely to do, as an ethical business owner. However, if you don’t have proper policies in place you can leave your business exposed even if the problem has been created by an employee or by an oversight.

By protecting your business with the help of a certified and experienced lawyer, you’re more likely to steer clear of unnecessary complications that could harm both your business finances and your brand.

2. Losing Focus on High-Priority Tasks

Handling legal work independently can take a lot of time away from other important tasks. Not only are you undertaking the work yourself but you’re having to research, read up and educate yourself beforehand.

Although it is entirely possible to draft documents such as terms and conditions and business agreements yourself, it’s worth considering how much time this is taking you. A common mistake business owners make is attempting to save money on a lawyer but failing to account for how much their own time is worth.

With your business’ best interests in mind, allowing a professional to handle the legal stuff will provide you with more time to grow and focus on becoming a profitable and sustainable business.

3. Facing Unwanted Expenses

Although side-stepping legal instruction may seem like a money-saver, it has been found that SMEs suffer millions in losses by not hiring a lawyer.

If your intellectual property has not been protected, for example, you could find yourself in legal battles that are ongoing for years and drain your company of resources. Or else you might be forced to go to court because your terms and conditions are unclear and leave room for a client to argue that they don’t need to pay for a service you’ve provided. Small oversights can cost big in business and sometimes spending money early on means saving far larger sums of money in the long run.

In the event that any legal issue occurs down the road, a business may need to cut budgets and operations to pay for the damage. This can result in expenses that could have been avoided by hiring the right lawyer ahead of time.

A Worthwhile Solution for SMEs to Consider

SMEs can now purchase legal services online at a fixed price per task without any hidden fees.

Exploring this option is a great way for SMEs to minimize legal expenses, understand what they’re paying for, and continue to grow as a business.