Manny Miyar, president of American Logistics Services, a $1.5-million distribution company in Northlake, Ill., recently ran into a legal nightmare. "A landlord misrepresented a building we leased," recalls Miyar. His $250-an-hour lawyers told him to drop the case.

Instead, Miyar switched representation, to Small Business Advocate, a Chicago law firm that offers a new twist on controlling legal costs. "We charge companies an annual premium, similar to a medical-insurance premium," explains vice-president Erika Smith Dreger. "For a start-up or a company with no history of protracted legal problems, that's $575. Then we discount our hourly billing rate of $135." For most legal services, participants pay 20%, or $27 an hour; on more complicated matters, such as Miyar's case, clients pay $67.50 hourly. There are no limits on annual usage.

Miyar eventually won a $75,000 settlement from his landlord -- and intends to stay with Small Business Advocate. "Since my legal fees are discounted, I now ask questions in advance."