In most cases, the firm can defray some of the cost of furnishing its new office space by financing the purchase of office furniture, both new and used.
Indeed, if the firm decides that it does not want to purchase office furniture, the firm could simply lease furniture. However, under both the financing and leasing scenarios, the firm would pay a premium in finance charges and interest, and as a result, despite the relatively high cost, simply buying the furniture upfront might be in the best long-term interests of the firm.
FILING SYSTEMS. Although professional services firms rely on computers and electronic media more than ever before, they still generate a significant amount of paper. As a result, in addition to furniture, the firm will need filing cabinets, which, depending on the volume of paper being produced by the
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firm, can be expensive. Shelf files are a more efficient alternative to traditional drawer file cabinets. Additionally, the firm should consider cabinets that can be stacked five to seven drawers high to minimize the price per square foot that the firm is paying to simply store hard copies of documents.
Summary
Locating the right office space can be an incredibly important development in the life of a professional services firm. To make the right decision, the firm should critically assess its needs upfront and arm itself with as much information on the market as it can find. Leasing agents can prove to be valuable allies who possess a great deal of information and expertise. Once the firm has identified the office that best suits its needs, it should take care in negotiating with the landlord and, with the assistance of legal counsel, carefully review all of the various terms of the lease before execution. Last, the firm needs to decide what office design and furniture best suit its needs. Although the firm need not wait until a lease is executed to undertake this assessment, because office finish-out and furnishings can be such large expenses for the firm, it is important that, with or without the assistance of a space planner or interior designer, the firm properly budget for these expenses as early as possible in the office search process.
NOTES
1. Attributed to Abraham Lincoln in multiple sources including http://www.quota-tionspage.com/subjects/success.
2. American Public Transportation Association (APTA) online glossary available from http://www.apta.com/info/online/glossary.html.
3. The Urban Land Institute is available from http://www.uli.org.
4. Candace S. Baggett, Desperately Seeking Space, State Bar of Texas 22nd Annual Advanced Real Estate Law Course (July 12 to 14, 2000).
5. The Urban Land Institute, Office Development Handbook (2nd ed., 1998), available from http://www.uli.org.
6. Workplace Trends in Law Firms, white paper from Herman Miller, Inc. (2003).
7. Gail Repsher Emery, Changes in Modern Office Mirror the Past (Washington Technology, 2001).
19
Legal Counsel
SCOTT M. MCELHANEY AND MICHAEL W. MALAKOFF
A person who represents himself has a fool for a client.
—Anonymous
This chapter covers the selection and retention of legal advisors for professional services firms. As with most businesses, professional services firms require good legal advice—whether for client disputes, incorporation, mergers and acquisitions, or simple contract advice.
Why This Topic Is Important
Professional services firms cover a variety of industries, from real estate to medical practices to management consulting. While such firms may not need counsel on a day-to-day basis, inevitably the time comes when legal advice is required, or at least helpful. Using the right lawyer for the right situation in Disclaimer: The material in this chapter has been prepared for informational purposes only. The chapter is not offered as legal advice on any matter and should not be used as a substitute for seeking professional advice from a competent attorney in your jurisdiction for your particular problem. Although we have attempted to be accurate, we do not guarantee that the information in this chapter is correct, complete, or up to date. The laws of different jurisdictions may be entirely different from what is described in this chapter. The authors will not be responsible for any action or failure to act in reliance on the information in this chapter. In addition, this information is not intended to create, and receipt of it does not constitute, an attorney-client relationship.
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The Back Office: Efficient Firm Operations
the right way can help professional services providers run their businesses more effectively and see legal services as a benefit to their businesses rather than a painful, distracting cost. Thus, we explain in this chapter: (1) the most common times (but not all the times) that the firm should solicit legal advice, (2) how to select, and organize legal service providers, and (3) how to manage the relationship with your legal service providers.
When the Firm Needs a Lawyer
An important aspect of managing a professional services firm is successfully navigating your way through the legal environment. When used properly, a qualified lawyer can help you take advantage of the opportunities the legal system provides, thereby helping you run your firm more effectively, as well as minimizing the difficulties that present themselves from time to time. In this section, we examine some of the situations in which the firm may want to consult a lawyer. This is, of course, not a comprehensive list. Rather, we intend to point out some of the more frequent situations in which a lawyer can be useful. Naturally, a given firm may have many other major needs, depending on the nature of the business and the specifics of the organization, size, geography and other factors.
Organizing Your Firm
Organizing your business is a challenging task for which a lawyer can be very valuable. The considerations when establishing and organizing your legal entity are complex. As discussed in Chapter 3, the firm’s management will be presented with a variety of entity selections to evaluate—corporations, partnerships, limited liability companies, and so on—each with advantages and disadvantages that must be considered. The choices you make during the formation of your entity will have an impact on firm and partner tax liabilities, personal liability, and other important issues. The specifics of taxes, liability limits, and other relevant issues, however, are complex and vary by legal jurisdiction. Working with a lawyer can help you choose the best entity for your specific set of circumstances.
Once you have chosen your entity type, you will need to work through a variety of additional requirements associated with the set up of your entity.
These diverse requirements range from bylaws to shareholder agreements to setting up the company checking account to a host of other checklist items.
Again, working with a lawyer who helps establish new businesses frequently can help a new firm through the many complex issues associated with getting set up. The lawyers will likely have checklists and standard operating practices that may help avoid large omissions during the process and promote the efficient use of your time and money.
Legal Counsel
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Employment Law Matters
In addition to seeking assistance in organizing your business, it is usually useful and, in the long run, extremely cost effective, to consult a lawyer who can guide you through the typical maze of rules and regulations that govern the relationship between your business and the people who work for it. This part of the chapter surveys some of the major topics and considerations you may want to discuss with a lawyer.
INDEPENDENT CONTRACTORS VERSUS EMPLOYEES.
If you need other
people to help you in your business, one of the first questions you should address is whether it is more appropriate for you to hire employees or independent contractors.
There are several advantages and disadvantages to hiring employees. It can be easier to foster a sense of commitment, culture, loyalty, and teamwork in employees than in independent contractors. Hiring full-time employees also gives the employer a greater amount of control over the way employees do their work and allocate their time. On the other hand, hiring employees obligates the firm to pay payroll and other taxes and makes your business subject to numerous federal and state laws that must be navigated. Several of these laws are discussed later in this Chapter.
Hiring independent contractors presents a different set of issues. Independent contractors are typically hired to complete a particular project in a particular amount of time or to provide a specific skill-set. As such, contractors are generally entitled to determine how and even when and where to complete their assigned project. However, a business owner does not have to pay taxes or withhold income tax on money paid to an independent contractor. Depending on the needs of your business, hiring an independent contractor may or may not be a possibility. Typically independent contractors may be hired for specific engagements, but will generally not constitute the backbone or bulk of the firm’s professional staff.
Even if a firm agrees to hire a person as an independent contractor, the firm’s characterization of the relationship is not binding on others, such as the IRS. Depending on several factors, such as the amount of control over where, when, or how a person does his or her job and the permanency of the relationship, a person whom you initially hire as an independent contractor could later be deemed to be an employee, and your business, or you, may be liable to pay back payroll taxes or other benefits. Also, you may be liable for the conduct of the worker if he or she is later found to be your agent or employee; this is particularly troubling because your insurance company may exclude the lawsuit from coverage because the act was committed by someone you told the insurance company was an independent contractor. If you are considering hiring independent contractors, having a lawyer help you determine whether, given the type of help you need, the people you hire can be classified as independent