Legal fees. They're the scary variable in launching and growing your business. What founder wants to pay, or realistically can afford to pay, a lawyer to broker, say, a straightforward lease or pull together a solid non-compete for new hires to sign?
That's the thinking that created real estate transactional attorney Daniel Brozost's Blackacre Law Group, a firm that creates contracts for a defined group of transactions for a set fee, rather than committing clients to an indefinite number of billed hours.
For many small businesses, legal fees can eat up needed capital in the first year, and most entrepreneurs (and the rest of us) are used to being billed hourly, or even in ten minute increments, for legal help.
But, that might be changing--and that could be a boon for restaurants, retailers and brick-and-mortar stores who need more than patrons to thrive today. Above all, they need clearer figures for siting costs costs in their 10-, 20-, or 30-year business plans.
Brozost has been practicing law since 2002. The idea to ditch the standard, and notorious, lawyer's practice of nebulous hourly billing came five years ago while still a partner with finance-, media- and real estate-focused Raines Feldman LLP. He pitched a batch of leasing work for 30 locations to Zoë's Kitchen for one simple price. Brozost is also transitioning non-leasing real estate clients such as Matthews Real Estate Investment Services to fixed fee billing as well.
Brozost said, "For real estate transactions in particular, it makes perfect sense. Almost all of my clients have a business model, including pro forma financial projections. At the end of the day, they want a number to plug into their models for their legal fees. Uncertainty is their enemy."
Guitar Center, with nearly 300 locations across the country, and Mediterranean quick service restaurant chain Zoë's Kitchen, with over 200 locations in 17 states, followed Brozost to his new firm, launched last month.
While this shift in how companies are billed for legal fees has started as a niche practice for the retail sector, Brozost believes it could eventually move into more of the legal industry. "I don't see any difference between this model, and a situation where a person hires a [building] contractor or takes a car into a mechanic. If the contractor or mechanic said, 'I know what needs to be done and about how long it will take, but I'll charge you hourly', you'd say 'You're crazy. Give me a price for the work.' If the project scope can be defined, then the fee can also be defined," Brozost said.