Don't Leave Home (Or Your Business) Without One...

Are you a business owner? Do you execute a power of attorney when you go on vacation so someone can act on your behalf when you're gone?

Should you? Should you have one even if you aren't going anywhere?

Actually, yes.

If you need to leave your business and have someone make decisions for you (and/or sign documents for you) while you're unavailable, you need to have a power of attorney.

There are several kinds of power of attorney, but for the purposes of a business discussion, we'll only talk about the ones that apply here.

It is important to note that you can appoint whomever you want to be your agent (as long as they're a competent adult) with a power of attorney. The person you appoint doesn't, in fact, have to be a lawyer. But the person you appoint is often referred to as an "attorney in fact".

Make sure that the person you appoint is someone you trust. If the person were to be untrustworthy, they could cause you quite a lot of trouble.

The most broad is a durable power of attorney. The durable power of attorney allows someone to make decisions for you and act on your behalf even if you should become disabled physically or mentally and cannot make your own decisions.

It is something that, should you be a sole owner of a business, that you should consider having so that if something should happen to you, your business and your family can be taken care of. In fact, I often advise my clients to have one with their spouse so that if they should ever be incapacitated, your spouse can do things that require both of your signatures (like sell your house) even if you can't sign. Please note, however, that this will not cover medical decisions and that is a different kind of power of attorney.

Another kind of power of attorney is a nondurable or special power of attorney. It generally puts someone in the position of being able to sign documents for you for a specific purpose (e.g., to sell your house, to sign a contract for a merger, etc.) It does not survive your incapacity or incompetence though.

It's very important to check the laws of your specific state when giving power of attorney. Although some states allow an oral power of attorney, many states require it to be in writing. In fact, here in New York, your power of attorney is even required to be notarized.

I would suggest that you have it in writing even if your state doesn't require it. Here's why...

Some governmental entities, for example, the IRS, and even banks will not accept an oral power of attorney. Also, even states that allow a power of attorney to be oral require it to be in writing if the power that you're giving would require you to have a written contract (e.g., sale of real estate, wills, etc.).

It's not something that business owners think about very often, particularly small business owners, but you certainly should give it some thought.

Top 5 Factors for Choosing the Right Lawyer

You know you need a lawyer. You do.

You're a responsible businessperson and you want to make sure that you're protected. Or, you're too late to protect yourself and you need a lawyer to help you resolve the situation.

Either way, you've got a big decision to make. You don't want to choose the wrong person, do you?

As of the end of 2002, according to the American Bar Association, there were over 1,049,000 lawyers and the number certainly has gone up since then.

So, how do you pick the right one?

In my opinion, there are five major points to examine before hiring an attorney. They are (in no particular order) area of practice, cost, firm size, reputation and personality.

Many people make the mistake of thinking that cost is the most important factor, but it's certainly not. It's better to pay a little more and have it done right the first time than to have to have your matter cleared up later on by an attorney who could have done it right in the first place.

So, let's take a look at these factors (listed, in my opinion, in order of importance):

1. Area of Expertise - You wouldn't go to a cardiologist to deliver your baby, would you? Of course not. You want a doctor who specializes in delivering babies.

Contrary to popular belief, attorneys also have areas of the law that they specialize in. It's a little confusing because there are laws in many states that forbid attorneys to claim that they are a "specialist" in a certain field.

That being said, certain lawyers are good at certain things and no lawyer is good at everything. Don't believe otherwise and if a lawyer tells you that they can handle every matter that comes up for you, don't believe them.

I can even use examples from my own practice.

I focus my practice on online businesses. Although I do general business law (i.e., setting up companies, drafting general business agreements, etc.), I specialize in the special things that online businesses need (i.e., privacy policies, terms of service, contest rules, trademarks, copyright issues, WIPO domain name disputes, etc.)

And I wouldn't suggest that you have someone who isn't familiar with all of the issues surrounding a particular part of the law. For example, I won't do tax law. I know nothing about taxes and I wouldn't feel comfortable advising a client on tax law and tax liability. I also don't do litigation work anymore. I have other attorneys that I refer my clients to, but I don't have the time or bankroll to do a good job for a client.

2. Reputation - You should check out the person you're about to hire. Use the Internet. Google them. Do some searching and see what they've done. See what past clients have to say about them.

Attorneys can't give out their past clients' names without permission, but often they have permission from some of their clients to allow other people to call for references. If not, they may have testimonials on their website, their LinkedIn page, or other places that may allow you to gauge the reputation of your potential lawyer.

Ask your friends, family, colleagues or network who have had similar legal situations for recommendations. Who did they use? Were they happy? What do they wish they asked at the beginning?

3. Personality - You wouldn't think that your lawyer's personality would matter that much. But it does.

Assume that you're going to be working closely with this person for the duration of time that your project takes. You want someone who is easy to talk to, who takes time to listen and really understands and cares what you want to achieve.

You want to be comfortable asking your lawyer all of your questions, even the ones that you think are dumb. You also want someone who doesn't sound like they're rushing you off of the phone every time you call or that you're bothering them when you need to talk to them.

They work for you, not the other way around. If they can't be nice to you, then there are about a million other lawyers to choose from. Certainly, one of them would be more than willing to be nice to you.

4. Cost - I'm not nutty. Cost is certainly a factor. You should feel like you're getting the best representation that you can afford for the money that you can spend.

Ask up front what it's going to cost. If the lawyer works on an hourly fee and the project is something that they do often, they should be able to give you a ballpark figure as to what it is going to cost.

The exception here is litigation (or other negotiations). I've seen them take as little as $5-10 thousand dollars to way over $100 thousand.

Here's what I would suggest. If you really want to hire an attorney who can't give you a good ballpark estimate, have them keep track and update you on how much is being spent on a more frequent basis than monthly. That way you have a better idea of how much you'll be spending.

5. Size of Firm - This factor actually ties into some of the others.

As a rule, larger firms tend to charge more. A lot more.

They tend to have a team working on your project rather than a single attorney (as it would be in a solo practice), so you don't necessarily get to talk to the same person all of the time. This can sometimes lead to confusion in your project.

That being said, for complex matters, like litigation, it makes sense to use a larger firm. They have the finances to withstand the costs of a long, drawn out litigation. They tend to have very experienced people in very focused fields.

However, as a solo practitioner, I can tell you that most large firms that do what I do charge about $400 - $600 per hour for an attorney with my level of experience. I don't have their kind of overhead and I pass that savings on to my clients.

Who is the best lawyer for you?

Only you can answer that question. But if you keep the factors I've discussed in mind, you'll find yourself in a good relationship with a good lawyer.