Legal Fees to Consider for Your Startup

Startup costs can be expensive. Fortunately, entrepreneurs are using many new fundraising methods to launch their startup journeys. It is important to remember that legal fees can be a significant expense. During business planning, prospective business owners can often overlook the expense legal costs pose when beginning a new venture. Seeking legal advice from the outset of your journey is essential to ensuring your business complies with the law. This article will explain legal fees to consider when thinking about beginning your startup journey and how you may incur these costs. 

What are Legal Fees?

Legal fees are the fees charged by solicitors for providing legal services. This includes any charges for consultations, document preparation, court representation, and other legal services.

Legal costs may seem daunting, but expert legal advice is often invaluable at the beginning of a new business venture to ensure your startup’s compliance with the law and long-term success. 

Legal Fees for Startups

Startups, like any other businesses, require a strong foundation to flourish. Legal advice is crucial in protecting the interests of your startup. As you embark on your entrepreneurial journey, paying attention to particular areas where the law is concerned is essential. The legal advice you may be required to pay for depends on your intended business model, industry, and growth plans.

Let us explore common fees you may incur when beginning your startup journey.

1. Business Formation Costs

Forming and registering your business will require initial setup costs. Firstly, you may seek advice about choosing the proper business structure (for example, sole trader, partnership, limited company) and how to register your business. 

If you run your business with a co-founder or investors, then it is crucial to put bespoke governance documents in place. For example, you might engage a lawyer to help you draft an articles of association or a shareholders deed. These documents can assist in protecting your rights as a founder. You will need a lawyer to draft these governance documents correctly to avoid any issues down the line relating to how you own and operate the business. 

2. Intellectual Property Fees

You may require legal advice for registering your intellectual property (IP). Your IP can include trademarks, copyrights, or patents for your startup. Navigating the requirements to register and protect your IP can be complex. Legal experts can ensure that your IP is registered correctly. 

3. Contract Review Fees

You will incur legal fees relating to contracts if you need a solicitor to write contracts or review those you have already prepared. Such contracts could include agreements with employees, suppliers, partners, and clients. These contracts form the legal backbone of your business relationships. Importantly, it is a legal requirement to have employment contracts in place where you engage employees for your business. Accordingly, an employment lawyer can assist your business to remain legally compliant. 

4. Leases and Property

Acquiring property can be a complex process that involves several legal intricacies. If you need to obtain property for your new startup venture, you may want to seek legal advice. For example, if you are purchasing a freehold or a long leasehold, you will need a conveyancer to act on your behalf and ensure that your interests in the property are protected. If you are entering into a lease, for example, to rent office space, you should get a lawyer to review the terms of the lease. You want to ensure it reflects your commercial agreement and be aware of any costs or liabilities you may incur as the tenant. Solicitors can prepare the required legal documents associated with acquiring property. Ultimately, legal guidance can make for a smooth process. 

The Cost of Legal Fees

Remember that the specific cost of the legal fees you will incur depends on the type (and amount) of legal advice that you require. Fees can also vary based on the type of business structure that your startup will adopt, the level of legal expertise you need, and the kind of law firm that you approach. 

When approaching legal services, transparency is key. You should request comprehensive cost estimates before engaging legal services. This is a proactive step to prevent any unexpected financial surprises when you receive a bill for legal fees. 

You should prioritise potential legal fees to protect your startup’s business interests and mitigate future risks. 

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Key Takeaways

Starting a new business involves several costs, including legal fees. Legal fees are charges for the services provided by solicitors. Allocating financial resources for legal fees at the outset of your journey is a wise investment in your business’s future success. 

Legal fees are an essential expense for startups. Paying for legal fees is an investment in your business’ compliance and long-term outcome. Solicitors will charge you for tasks such as consultations, document review, and preparation. Tasks commonly associated with accumulating startup legal fees include business formation, intellectual property registration, contract reviews, and property-related advice. The exact cost of legal fees varies based on the type of advice you need, the business structure, and the level of expertise of the advising solicitor. 

If you are beginning your startup journey and would like legal advice, our experienced startup lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.

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