Check out the advice from LegalEdge CEO Donna Sewell on how to manage your legal budget, whilst protecting and growing your business.
1. Find the right resource for the jobYou don’t need a cardiologist if you’re looking to treat chickenpox. The same goes for lawyers because they’re not all created equal, offering a wide range of different specialties and approaches. Many SMEs will opt for an expensive specialist when, in fact, they need a good business or ‘in-house’ lawyer, who understands how companies operate and will be more cost-effective.
SMEs need help managing day-to-day legal matters, such as dealing with investors and shareholders, contracting with customers and suppliers, protecting assets and managing staff – all these responsibilities can be handled by an in-house lawyer. If you go down this route, be sure to engage a lawyer who has worked in a business similar to yours, so they know what is important and how to prioritise.
Consult specialists when you require niche advice for tax or litigation, for example, or on complex projects like a big acquisition or IPO. Shop around and find a lawyer who understands your business, as well as the bigger picture, to help you achieve your goals. Don’t work with lawyers who insist that theirs is the only approach, or confuse you with legal jargon.
2. Put your house in orderThink of your business like a house: it needs regular maintenance, and if you ignore that damp patch for long enough, your ceiling could come crashing in. What was once an easy-to-fix leak could become a major and expensive repair project. Start-ups often get away with being reactive but to grow your business successfully you need a proactive, grown-up approach.
Examine all your business functions, from sales to marketing, IT to HR, and facilities to finance. Note any red flags, such as projects that are starting to go wrong, high-risk deals, and so on. Consider whether you have processes in place to deal with them.
If not, get them sorted as a necessity, as this will distract you from scaling and growing. Then you can prioritise according to the likely impact and level of risk to your business. By spending some time setting up processes and managing priority issues you’ll avoid expensive and avoidable crises in future.
Have a legal line item in your budget (and someone to help manage it). Legal budgets vary depending on many factors, such as being in a regulated industry, the stage and size of your business and the type of customers you deal with. Nonetheless, it’s crucial to include a legal line item in your budget otherwise inevitable legal spend will always come as a horrible surprise.
The right legal resource can help set up the right budget and stick to it. This, in turn, will allow you to grow your business faster whilst managing risk and keeping spending in check. So, stop thinking of it as a necessary evil or distress purchase, and start viewing it as an enabler to growth.
3. Where to start?
- With help from the right sort of lawyer, allocate budget to the urgent, business critical areas you’ve identified above, prioritise them and get them sorted.
- Look at each function of your business and allocate some budget for ongoing maintenance and support, in priority order, such as streamlining customer contracting processes, protecting assets like intellectual property, and so on.
- Make sure you have the right and latest tech at your disposal to ensure your processes, tracking and reporting does not become a burden.
- Think about business milestones you have coming up in the following year. It can be adding new products or services, expanding into new markets, restructuring, securing investment, new infrastructure, and the like. Allow appropriate legal spend for each of these projects.
- Put some contingency in the budget for the unexpected, like a project going wrong or a disaffected employee making trouble.
4. Don’t ‘over-lawyer’We often see SMEs tied up in knots with unnecessarily complicated contracts or never-ending negotiations that delay getting the deal signed and revenue in the door. This can happen when lawyers get hung up on debating esoteric points, whilst they rack up time on the clock, rather than focusing on what is critical and the end game. We call this ‘over-lawyering’.
Make sure your lawyer keeps their activities focused, relevant and practical. The right legal resource should be responsive and enable business, not prevent it. If your lawyer isn’t helping you achieve your goals then it’s time to make a change, and do it quickly.
So, are you letting your business down with ineffective processes, bad deals or avoidable mistakes? Let LegalEdge show you how better legal can help you navigate big business milestones, avoid roadblocks and grow faster. Take a look at their infographic packed full of advice about how to successfully drive growth.
ABOUT LEGAL EDGE:
LegalEdge is a fresh alternative to many legal providers whose advice can be too complex, expensive or impractical for growing companies. They’re flexible business lawyers who’ve all worked inside companies before. This means they know exactly how to manage your legal strategy, processes and budgets better, using the latest templates and tech available to get the best results.
They provide an on-demand flexible service so your legal support can be used when you need it and scaled up (or down) depending on the volume and urgency of your work. They really get under the skin of things (dealing with the day-to-day legal issues) and adding real value through being the flexible missing link in your operational team.