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If you’ve been in business for a while,
chances you’ve had little pesky legal questions or worse legal
situations that you must resolve from time to time.
The high hourly fee is much too expensive to call a lawyer every time you are unsure about the |
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governing your company.
To get legal advice on important issues can add up very quickly. |
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Until recently, a lot of business
owners avoid making a practice of asking their lawyers for answers.
To put it in one owner’s words, “Legal fees can be disastrous
for a small business," says John |
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Compton, owner of a
Pennsylvania fishing tackle supply store.
From routine contracts, tax questions and debt collection
to
trademark and copyright concerns, Compton’s frequently needed to consult
a lawyer - at $175 an hour. |
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Although he paid his law firm $4,000 to $18,000 per year,
his business was a small percentage of the firm's client base.
Compton said, "I don’t feel I’m of great consequence to
the [law] firm.” |
| SOLUTION: Worried that his hesitation to make the $50 to $100 phone calls could lead
to major legal problems costing thousands to resolve, Compton made a call to a
business associate
for a monthly membership into a powerful legal plan. The provider law firm now handles all of his corporate, real
estate, employment, and collection issues. They have already reviewed his
landlord’s new lease, begun work on a contract between one of his suppliers
and himself. The law firm provides Compton with answers to countless day-to-day
legal questions. After one off the cuff inquiry about the Pennsylvania state sales
tax regulations--a matter Compton says he would have considered too trivial to
raise with a lawyer in the past--the law firm discovered a problem in his
invoice system that threatened to create expensive legal disputes. The legal
plan “is like a legal insurance policy," boasts Compton. |
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| MORE POWER: Until
recently, only a fortune 500 corporation could obtain this kind of
arrangement. Conglomerates such as Exxon-Mobile and AT&T have, for
many years, had fixed-fee arrangements and agreements for managing lawyers
and law firms. Today, their strategies are trickling down. For a long
time small-business owners don't have to depend on clout to make deals with the
law firms. Not any more. Ways to do business has changed. |
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| It wasn’t long after Compton enrolled into his new legal plan, a former
vendor attempted a $3,700 credit card charge-back for equipment he claimed he had
returned to his store but really hadn’t. Compton called his provider law firm.
The lawyer suggested how to word a letter to the credit card company. He then
faxed it over, the lawyer made changes and faxed it back, with a powerful
closing. The letter convinced the
company not to debit his account. Since then, Compton has used his legal service
to provide him representation in traffic court at no additional cost.
He said, “The savings that he receives on his car insurance by not
getting the points alone makes this service worth the monthly fee.”
He also has the firm review agreements, consult on tax matters and have
letters prepared on his behalf. "It has solved a lot of problems," he
says. |
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| Prepaid legal plans are growing rapidly. Although most are designed for
individuals, only a few nationwide firms offer legal plans tailored to small
businesses. By making legal advice affordable, the plans encourage business
owners to prevent problems before they either happen or get out of hand. |
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| Professionals call it “preventive law” and it makes a lot of sense.
It’s too bad that many cash-strapped small-business owners take their
chances rather than prepay for it. When you've prepaid for legal counsel,
though, you're more likely to ask for advice. Alec Schwartz, executive director
of The American Prepaid Legal Services Institute, an American Bar Association
affiliate, says "Prepaid legal plans encourage you to call before a problem
becomes big.” |
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| An overwhelming number of observers compare prepaid legal plans to Health
Maintenance Organizations (HMOs) because of the wide range of services offered
for a low, set fee. Like HMOs and insurance, prepaid legal plans have collective
bargaining power. Many doctors and lawyers find it worthwhile to offer low-cost
services in exchange for a greater volume of business. Typically, legal plan
providers contract with one law firm in each state to handle routine matters;
specialists are usually available at reduced rates. |
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| John Compton is elated. He
says, "I now see myself as the big fish in the pond. It gives me entrée to the legal system like never
before." “My plan includes
enough hours per year for legal work so that if his business is involved in a
lawsuit; I’ll have accrued hours over the years to handle it.” “I view it
as a legal defense fund that I'm building up."
“Because I’m taking a lot of preventive steps, I don't expect to be
sued.” "But if I do, I'll
have this legal plan to protect me." |
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| Buyer Beware:
When doing your due diligence for a prepaid plan, look
carefully at the services included or offered for reduced rates. "The
number of services offered by some companies may be limited," says Jerry
Van Hoy, an assistant sociology professor at Purdue University who studies the
legal profession. "Check the plan to make sure they've got what you might
need. What do they charge for the other stuff?" A set fee for additional
work may be preferable to a discount on the firm's "usual fee." |
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| Ask other entrepreneurs who've used such services about the quality of
legal work they received. Low fees don't necessarily mean inferior work, but
bear in mind, lawyers are not interchangeable. Also ask how the company handles
conflicts of interest in case a business with a dispute against you has prepaid
the same law firm. |
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| ASK FOR BONUS BENEFITS: Small
business owners typically have to rely on small or limited
resources. Not anymore. Business owners can now have assistance in all
areas of running their businesses - such as Tax, Sales,
Accounting, Advertising, Technology, Marketing, and Human Resources.
Members think of these areas as departments they can rely on for guidance
and direction on ANY business issue - large or small. If you discover
the right legal program for small businesses it will offer everything from
consulting service and website builder to a business insider
newsletter and directory listings. Also look for resources
included in your legal benefits plan to help you run and grow your
business. |
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| With the legal plan Compton also had Business Consultants
that responds to questions directly from experts in the area of concerns
he has by the following business day. He use this service for opinions, suggestions, where-to-find inquiries, ideas and for any other business areas
that he needs input. |
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| The Hertz #1 Club Gold is another benefit given
to Compton which he said he has saved a "ton of money" and it
has also given him much convenience. |
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