When Does Your Small Business Need a Lawyer?

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In my experience, we small business owners are a scrappy bunch. And by “scrappy,” I of course mean, “cheap.” We don’t want to pay for something we can do ourselves, so it’s tough to stomach paying hourly for someone as expensive as a lawyer. And with Legal Zoom being so convenient, do we even need a real, in-person attorney anyway?

Well, yes and no. There are some things Legal Zoom works well for (setting up a single member LLC, for example), and there are times it’s a good idea to hire someone with experience.

On this week’s Localist podcast, I talk with small business attorney Tripp Watson of The Watson Firm about when we should hire a lawyer and when it’s fine to go it alone. We get into common questions like how much can expect to be charged and how to tell if your lawyer is the right one, but Tripp also shares how to determine whether you need a lawyer in the first place. Here’s how to know if your business needs an attorney — and when is the right time to find one.

Initial Setup: Naming Your Business and Setting up Your LLC

Whether or not you use a lawyer to set up your LLC depends on whether or not you have business partners, according to Tripp. He says that, for a single member LLC (it’s just you), you’re probably fine to use Legal Zoom. But for any multi-member LLC (you have business partners), he says it’s worth paying a lawyer who can help you file and write an Operating Agreement.

It’s also a good idea to consult a lawyer when naming your business. You can get a pretty good idea of what kind of competition you’ll have for your name by Googling it, searching for URLs and social media handles, and you can go deeper by checking TESS (the Trademark Electronic Search System from the US Patent and Trademark Office). But to really ensure you have the rights to the name you plan to use, it helps to engage a lawyer, especially if you’re planning on taking your business national or international. (This goes for naming the business, but also for naming products and/or major service lines.)

Three Areas of Risk: Owners, Employees, Customers

In the podcast, we talk about three areas of risk to think about when you’re considering a lawyer: owners, employees and customers. As Tripp says, a lawyer can never eliminate risk, but having a lawyer help set things up for you can mitigate the risk. Here’s what an attorney can do for you in each area:


If you’ve ever owned a business with another person, you already know why it’s important to legally set up expectations and boundaries. If you haven’t … get ready. Even if you’re family or the best of friends (maybe especially if you are), problems come up in business relationships that you’re probably not expecting.

An Operating Agreement is a written plan for how you’re hoping to handle the business, both in good times and in bad. I’m a huge fan of Operating Agreements because I think making it through the bad times is a lot easier if you already have a plan in place.


If you have employees, they increase your risk exposure. Could your employees get hurt on the job? Are you worried about them sharing confidential information? What you need to talk to your staff about and what you need to have them sign off on is going to be different depending on the kind of business you have, and even the kind of employees you have (part time, full time, etc.). Your lawyer can help you determine what you need to do to minimize those risks (buy insurance, establish confidentiality agreements, etc.).


You’ll try to keep your customers happy, of course, but that’s not always possible. Some of them will stop at leaving bad Google reviews — and some will try to sue you. You can protect yourself from litigious customers with service agreements and proper warnings about your product or service. A good attorney isn’t just there to write these things up for you — they’ll also help you determine which you need in the first place.

I love thinking of the three categories of risk because it takes something that seems huge — the never ending list of things you could possibly need an attorney for — and boils it down into just a few categories that seem manageable. Personally, I think there are lots of things you can DIY when it comes to your small business, and I don’t use a lawyer very often. But I do think it’s helpful to meet with a lawyer when you’re getting started, both to set your business up for success, and also to develop a familiarity with the process and a relationship with an attorney in case you ever need one.

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