Small and medium-sized businesses also need lawyers.
Trevor Faure examines the way large corporate clients approach their legal needs. He also discusses ways they could rethink how they purchase legal services. There are many reasons to target clients with large budgets and highly skilled in-house legal capabilities. However, there are many actors in the legal services market, including millions of small- and medium-sized businesses (SMBs) that rely on legal work of high quality, but not at the level of large corporations. They also need lawyers.
According to the U.S. Small Business Administration (USSBA), 99.9% U.S. businesses are small, which is defined as having fewer than 500 employees. The average employee count across more than 5 million businesses in the U.S. Census Bureau 2016 Annual Survey of Entrepreneurs was also just over 20. This is a significant number considering that around 89 percent had less than 20 employees. A recent USSBA report estimates that small businesses account for 44 percent of the country's GDP. SMBs not only make up a significant portion of U.S. law clients but also contribute significantly to U.S. economic growth.
There are many players in the market for legal services, including millions of small- and medium-sized businesses.
This article explores how SMBs view their legal needs. We also discuss how they find legal counsel. TruQC was established in 2011 to create digital process-management software for companies that can be used to streamline their workflows and simplify reporting. The St. Louis-based SMB began by serving industrial painting clients. It has expanded its services to include petrochemical, infrastructure, and marine industries. Megan Brinker serves as its COO, and Aaron Boyll is TruQC’s President. We spoke to them about their legal journeys throughout the years. Sara Stock, their lawyer, was also available. Stock Legal, a St. Louis-based law firm with 12 lawyers, was established in 2005 and is the vice chair of the American Bar Association's Middle Market and Small Business Committee. The firm's target clients are clearly listed on its website. "Our clients range from pre-revenue start ups to emerging companies that have just begun to scale to mature operating businesses with over $100M in annual revenue."
What legal requirements do SMBs have?
It is a good idea to begin with the legal requirements of SMBs. SMBs have a wide range of legal needs. SMBs can have very different legal needs than gyms or trucking companies. However, there are overlaps and the legal needs for an SMB can be similar to those of larger companies, even though they have smaller resources and are more complex. Stock says that many of the challenges faced by SMBs mirror those faced by large corporations. SMBs are subject to legal challenges in only a few areas.
Corporate governance.All businesses must understand and adhere to the laws that govern their operations. The size and scope of a business depends on its structure, geographical location, and other factors. However, SMBs must be aware of all legal requirements regarding corporate governance. Stock said, "Maybe they're forming a company. Or maybe they've reached a point where the two-guys/a dog operating agreement doesn't work anymore." No matter what the circumstance, corporate governance is essential. This is a great opportunity to learn and share best practices and risks. We also discuss how to avoid owner disputes and pierce the corporate veil. It is important to note that corporate governance for an SMB differs from corporate governance for large multinational public companies. This is why it is crucial to match the right lawyer with your needs.
Contracts.Contracts can be simple sales contracts or more complicated. A SMB may have several contracts in order to provide services for a variety of clients. SMB clients will benefit from the expertise of lawyers who can help them to create these contracts that meet their requirements and teach clients how to use them.
Employment It doesn't matter whether an SMB has an internal or external HR function, there are common employment agreements (which cover basic necessities such as wages and insurance) and events (such as hiring or firing someone). These can have legal consequences.
Megan Brinker, chief operating officer at TruQC, was asked how she found her lawyer.
Regulatory.SMBs must also address a range of regulatory issues in their respective localities, states and federal (for example, those related to food safety, or environmental regulations). SMBs need to be able understand and adapt regulations. Lawyers are necessary for this reason.
Contextual.An SMB may also be subject to other legal considerations. They could be buying another SMB, or selling theirs. They may be the owners or heirs to intellectual property that requires protection. They might need to think about legal considerations that are specific to their industry, or other factors depending on their location. All depends on the SMB's particular set of circumstances.
How do SMBs find a lawyer?
Are you an SMB looking for the right lawyer? Brinker, Boyll and others believe that the internet played little role in finding TruQC's outside counsel despite the rise of lawyer-referral sites like Avvo or Super Lawyers. They prefer to refer people who are experienced or knowledgeable.
Boyll stated, "I was just getting into TruQC when Stock Legal discovered Stock Legal." The first thing I did was call up my friends who were attorneys to get their opinions. Boyll says that when Boyll is looking for legal counsel to help his business succeed, it's all about finding the right person. Referring to peers in the industry, customers, or other lawyers is more trustworthy and trustworthy than looking through online directories. Brinker says, "I don’t believe we ever looked on the Internet at all." "We all knew people from our networks who trusted that we would find the information we needed." It made more sense to go to them, at the end of the day.
Stock supports this approach because it is consistent with a larger trend she observes in her office. According to Stock, SMBs still seek out lawyers through personal referrals from trusted advisors. Stock Legal targets SMBs as its client base. It is therefore important to make the most of offline connections to potential clients. Stock states, "I built my client list at Stock Legal by having lunch, dinner, and coffee with literally thousands." Stock is a member of many boards and networking groups. Stock can recommend the best service provider to every client. This has allowed Stock Legal to direct SMB clients to Stock Legal.
Aaron Boyll, President and CEO of TruQC, stated, "I have friends who are attorneys at large St. Louis law firms. They know that I cannot afford them."
Stock calls this her "old-fashioned" way to connect with her clients. The firm is actually seeing more clients visit its website. Stock claims that the firm has seen an increase in client intakes online this year. This is partly due to a more strategic online strategy. This includes improving the firm's social media profile and creating an educational blog that will help potential clients with common SMB legal issues. Stock reminds us that a lot of their online success is due to the simple things that helped them build their client base. Stock explains that "Our opportunity today is to leverage online tools to convey to the marketplace how people feel when they meet with us." That feeling is vital. Clients can feel connected to us and we can address their concerns in a way which shows that we care. We are currently working to make this feeling online.