How to Mindfully Use Legal Counsel: Tips for Small Businesses
Small business owners wear many hats — owner, strategist, manager, problem solver-in-chief. While “legal” is often thought of as something that is required the conflict arises, in truth most aspects of business have a legal component. From formation, to contracts with clients and vendors, financing, marketing, branding, employment - all of it has legal underpinnings. Limited budgets have business owners looking to ChatGPT for answers to so-called simple legal problems. The problem is that all legal problems are simple, until they’re not.
How can a business owner make good business decisions about when and how to engage legal? Here are 5 tips from a lawyer who is also a business owner.
1. Risk Management Means Strategic, Not Reactive Thinking
Don’t wait for a lawsuit or dispute to call a lawyer. Legal strategy is most powerful when built into your business plan from the start. Whether you’re hiring, signing contracts, or marketing, identify the legal team you want to work with. Preventative advice is almost always cheaper than damage control.
2. Know the Difference Between Templates and Tailored Advice
There are plenty of forms and free resources online. They can be fine for basic needs, but the moment money, reputation, or relationships are on the line, you need tailored guidance. Do not rely solely on templates and AI! You may be missing critical information that will put you at risk.
3. Use Legal Counsel as a Business Partner
The best lawyers don’t just cite statutes, they help you weigh risks and make smart business decisions. Ask not only, “Is this legal?” but also, “Is this the smartest path forward for my business?” Legal choices always have business consequences, and your counsel should understand both.
4. Budget for Legal Like You Do for Marketing or Payroll
Many small business owners treat legal as an afterthought, but it’s part of the cost of doing business. Set aside a realistic budget each year for legal services — formation, contracts, compliance, and risk management. You’ll spend less overall if you plan ahead rather than scramble in a crisis.
5. Know When Not to Call a Lawyer — and When You Must
Not every decision requires formal legal review. Reading contracts carefully yourself can save you money when it comes to day-to-day vendor relationships, but when it comes to long-term and high-value contracts, seek guidance. Other red flags include: taking on investors, hiring or firing employees, protecting intellectual property and facing regulatory issues. If it could significantly impact your finances, growth, or reputation, that’s when you bring in professional help. Follow your instincts - if its feels like you need guidance, reach out to counsel.
