Angel investors and venture capitalists are those who invest in your business and can be used interchangeably with hard money lenders.  Initially they may seem like good philanthropists giving away their money, but eventually the horns will surface.  No matter how sincere the investor is almost everything has strings and conditions attached.  There are things to consider before accepting money from angel investors and venture capitalists.

The most important thing to think about first is, “can you finance your business by yourself?” After doing research, you might find that starting a business could cost less than you thought.  If you have determined that you can’t do it alone, consider borrowing money from family first.  That is better than entering a relationship with a hard money lender.

If borrowing from family is not an option, look into traditional lenders.  Currently, banks are notoriously tightfisted, but it doesn’t hurt to try.  You might be surprised by the terms you agree upon.  However, in this economy you might not be able to get a traditional loan and if that is the case then you can look into angel investors.   Be careful though, because they are not your friends.  Hard money lenders are there for business and are waiting for you to mess up so they can capitalize on whatever you put up as security. In other words, you need to protect yourself.

The main thing to remember is all terms are negotiable.  Just because the angel investor has the money, doesn’t mean that they have all the power.  There are things you can do to make an investor happy without giving up too much; you just have to think outside of the box.

Generally, the people who approach a VC for financing are those who cannot get funding from any other source.  VCs are willing to take a risk on someone or an idea when no one else will, but they are not going to do it without getting something out of it.  As a result, the interest rates can be sky high.  This is where things like a convertible note may be the solution.  A convertible note is a loan made to a company at a fixed rate of interest with the right either to be redeemed for cash or converted into ordinary shares at a predetermined date or within a certain period.

VCs may be willing to give more reasonable terms if they know they will end up with something tangible.  A VC will either receive the initial investment plus interest or a share in the company equal to the amount borrowed.

Another trick is to securitize the note with assets either within or outside the business.  Once again, this will make the VC happy because that person knows he or she has collateral that can be taken if the VC wants to.

Finally, it is important to remember that you want to get your angel investor out as fast as possible.  What happens if your investor announces that they want to be a more permanent part of your business? Generally speaking, that is not a good idea.  You want to pay them off as soon as possible.

If you do allow them to be apart of the business, don’t be too ready and willing to give away a large percentage of your business.  Initially, everything might be ok, but in 5-10 years when you are bringing in millions of dollars, a large percentage will go to the investor who had money to invest when you needed it.  That is not a good thing.  Be aware that an angel investor is not your friend.  They are there by necessity and when the need disappears so should they.

For more information, purchase The Naked Contract book today!

Litigation is Expensive

Part of being a savvy and successful business owner means having the ability to recognize what is a necessary expenditure and what is not. That, however, is relative to the business owner’s experience in running and operating a business. A more experienced business owner, for example, would be better able to negotiate a favorable lease term than a less experienced one, thus reducing or eliminating the need for help during the negotiations process. On the other hand, a less experienced business owner should hire professional help with the lease negotiations. The justification is simple: the money saved through favorable terms of the lease would offset the expense of hiring the professional help.

Because of the expenses associated, hiring an attorney, especially early on in the business’ life, is not on the priority list for many small businesses and start-ups. In a tight financial market, like the one we face today, the intuitive decision-making process is centered around business development. This includes marketing and advertising, along with improved customer care and services. In other words, the business intuition today is to avoid the attorney expense until it is absolutely necessary, i.e. litigation.

There is a danger in this sort of approach to hiring an attorney. By the time litigation rolls around, the cost of defending a lawsuit would far outweigh the cost of an attorney early on in the process. For instance, the cost of having your attorney review a contract agreement prior to signing is miniscule compared to defending a breach of contract claim. Within fifteen minutes to an hour, your attorney could walk you through potential pit-falls or traps within the contract. Defending a breach of contract claim, however, could completely offset any profits from the contract.

That is why it’s important to keep the following axiom in mind: paying now is cheap – paying later is expensive.

Selecting the Right Attorney – Trust

The attorney’s experience, knowledge of the law, and reasonable rates should be toward the top of the list of considerations. The top of the list is reserved for trust. Trust is the one variable that cannot be quantified. Years of experience, hourly rates, and number of cases handled could all be assigned a numeric value, allowing you to easily compare attorneys “by the numbers.” Yet, it is trust in your attorney that should be the final deciding factor.

Trust is developed over time and it takes a very personal relationship to foster that relationship in the right direction. If we were to take the generic thinking about hiring an attorney as we discussed above (i.e. waiting until litigation,) we could see how the lack of trust increases the attorney’s fees even more. That is because if the business owner waits until litigation to select counsel, the trust between the two would have not developed and every single decision the attorney makes will be scrutinized and questioned. That forces the attorney to waste time and money explaining his or her decision process, instead of utilizing the valuable resources toward cost-effective resolution.

In a pre-established relationship of trust with the attorney, however, the business owner would focus his or her efforts on running the business, while not worrying about the litigation that is going on in the background. There would be a candid channel of communication, where the client and the attorney would not hide anything from one another. Ultimately, that would lead to better results, because there would be no last minute curve balls to be dealt with.

That is why it is important to start developing a relationship of trust as soon as possible. The question is, of course, how would you know what attorney to trust enough to begin the relationship in the first place? The answer is simple: trust yourself. As a business owner, you have developed instincts that will guide you to the right attorney when you meet them. Trust those instincts when talking to an attorney.

Nevertheless, here a couple of questions to ask yourself when selecting an attorney.

• Is the attorney flexible with fee arrangements to reflect current economic trends?
• Can the attorney provide you with any references, such as bankers, other attorneys, or clients?
• Will the attorney provide free consultation for the initial interview?
• Is the attorney interested in growing my business, or simply collecting a check?
• Are you comfortable enough with the attorney to invite him over for dinner?

For a small business, selecting the right attorney is crucial. That selection should be done early on in the business’ existence to minimize or even prevent costly litigation down the road. Still, if litigation is inevitable, it is necessary to be in a pre-existing relationship with your litigation attorney, in order to have the trust necessary to go forth efficiently.

When people enter into a partnership profits are divided proportionally based on the efforts and resources being pumped into the business. It may seem fair at first, but things change quickly when there is a bend in the road. Specifically when money is not being made or an issue arises and the partners can’t agree. Most likely, someone will feel as if they didn’t get what they truly wanted when a decision is reached. With that, you have a problem and in the end both parties are likely to end up bitter and unhappy.

If you decide you must have a partner take time figuring out what you need help doing. It is pertinent to identify your weaknesses so you can find someone who can fill the void. Don’t just hire a family member, someone who needs work or the guy down the street. You need to give your organization exactly what it needs. Look for the plus ones who can add to what you are working to achieve.

You also need to do examine your potential partner. If someone is a plus one, chances are that person has a solid foundation of other plus ones. Hopefully, before entering into a partnership, you have looked behind the veil at a person’s life. Do research to figure what crowd he or she are in, will you get along with his or her spouse, what does he or she like to do on the weekends? These facts may seem trivial, but all could potentially hurt your business in the future. Research and find a plus one.

Once you have found the right partner, it is critical to understand the importance of communication. When a business has an internal conflict that requires legal aid, more often than not it is the result of a miscommunication. Decisions and agreements can be interpreted in different ways and lawyers are very good at creating confusion. Bill Clinton said it best, “It depends what your definition of is is.” To avoid this make sure everyone is on the same page from the beginning.

The best way to do this is write everything down and make sure everyone agrees to the terms. After everyone reads it, discuss it in an open forum. It may seem tedious, but a few hours at the beginning can save you thousands of dollars later. This includes discussing goals. Goals can change, but a business needs to start with a direction. With your partners, figure out where you see the business in five years or at a certain point in the future. As your organization grows you can reevaluate and amend the goals so your business can continue being successful.

The Naked Contract is available on Amazon for purchase – buy the book today!

One thing to consider is the epitaph or the headstone for your relationship with the business; it will end someday, and it’s definitely going to end for you. The reality is, even if your business lasts forever, you cannot work forever. Whether you are bought out, the business fails, you pass on, or you give away your shares for some reason, it is going to end, and planning your exit now will save you money and emotional capital later.

Another thing to remember is to always keep up with your corporate formalities. Part of those corporate formalities is your annual minutes. If written correctly, annual minutes can work to protect the corporate veil. You can use that formal process or annual meetings, to ensure you still have your eye on the same prize and through that meeting, you can establish the separation of the corporation and its human entities.

A common mistake business owners make is making you and the corporation one and the same. Do not lend your own money to the company without a formalized agreement. Without the agreement it shows the business’s money is treated like your own bank account and vice versa.

If you choose to go into business with a partner, it is vitally important to formalize the relationship you have with anyone in your business. This is such an important piece of dispute avoidance. Oral agreements can, in fact, be binding contracts. However, when disputes arise they become he said/she said contracts.

As a business owner, it is your duty to keep your eyes on the horizon for all potential dangers, know what dangers to look out for, and plan for most contingencies. This means trusting your business sense, following standard operating procedures (SOP), and rather than always avoiding potential conflicts, engaging when necessary.

If it becomes necessary to bring in additional members of a legal team, do so. Do your research, try to create a good working relationship with your attorney, and do not forget to negotiate. You are in business, after all. Do not assume that going to battle will mean total war. Work with an eye towards early resolution. Attempt to use alternative dispute resolution. Work with your attorney to make creative exists to end the conflict. Above all, do not loose control of your case.

The bottom line is that you are in business, and disputes are a cost of doing business. Make your disputes infrequent. Make your battles decisive and short. If you can achieve these two things, your bottom line and your peace of mind will both improve dramatically.

In his book, The Naked Contract, business litigation attorney Fred Gaston gives an example of a dispute between a business owner and another company he has a contract with. In the example, Gaston outlines the steps a business owner should ideally take when deciding whether or not to pursue litigation in the event they feel any part of a contract has been violated.

When the terms of a contract are unfulfilled by one or more parties a contract is said to be “breached” or the party is said to be in “non performance”. Unless both parties have agreed to changes in the terms of the contract or the actions of one party have implicitly been accepted by the action or non-action of the other party all terms of a contract must be honored. Otherwise, a contract breach has occurred and a breach of contract lawyer should be called in to review situation.

As a business owner the first step is to seek legal counsel before immediately pursuing litigation, so s/he is aware of all stipulations of the agreed upon contract. Some contracts might make it more of a hassle to pursue litigation, especially if you own a small business and are in contract with a larger business who can afford to drag out the litigation process.

From the defense side, the decision whether or not to go into litigation has a different angle. If the company is large and can afford it, it may put the plaintiff through the paces because the company can accrue interest on investments it has already made as long as it keeps that money in its hands. Other large companies may go through litigation to avoid being seen as a mark. Even if the plaintiff’s case is strong, large companies might say they view the claim as not as strong as others they’ve dealt with in the past just so other possible plaintiffs know the company will go as far as possible before paying out.

Whether you’re playing for the offense or defense team in the case of a dispute and litigation, it is important to keep in mind the terms of your contract, and evaluate whether litigation is really worth it to you and your company.

Trade secrets include things such as formulas, practices, processes, designs, instruments, patterns, or a compilation of information that is not generally known or easily attained. Using trade secrets, businesses obtain an economic advantage over competition. In order to have a trade secret, companies must take steps to protect the secrecy of their information. Exposing a trade secret means competitors can have access to that knowledge, which could impair that company’s market dominance or market position.

One of the easiest and most basic steps your company can take to protect your trade secrets is to require employees, contractors, and any companies that may be exposed to your trade secrets to execute confidentiality or non-disclosure agreements. Failure to enter into these types of agreements may result in the exposure of your trade secrets and, in effect, the waiver of trade secret protection.

Trade dress refers to the distinctive look of a product or its packaging. Trade dress law is the legal protection for trade dress protected by statute. In order for trade dress to be considered protected under trade dress law, the protectable features must clearly identify a product, much like the Tiffany blue box. The features must also be nonfunctional, not affecting the product’s cost, quality or a manufacturer’s ability to effectively compete in a non-reputational way. The public policy behind trade dress is to protect innocent consumers from purchasing an inferior good or service because of confusingly similar trade dress to a trusted brand.

Copyright laws protect a creative expression fixed in a tangible medium. Copyrights do not protect ideas, but may protect the expression of an idea. A work is protected by copyright the moment it is created and fixed in a tangible form. While not mandatory, copyrights may be registered with the federal government to receive the highest protection possible. The safest course of action is to file for copyright protection to guarantee the highest protection of the work and to save time in the event that you would need to bring a lawsuit for infringement.

A patent is a set of exclusive rights granted by a state to an inventor for a fixed period of time in exchange for a disclosure of an invention. The rights granted to a patentee exclude others from making, using, selling or importing the invention. Obtaining a patent can help you protect your unique invention from infringement by a party unrelated to your business.

A trademark is a word, group of words or design that indicates the origin of goods or services. State and federal statutes protect trademarks in a special area of law called trademark law. If your business intends to use a trademark, it is a good idea to file an “Intent to Use” application to secure your trademark. Filing such an application will help protect your trademark ideas against infringement from competition. In contrast, if your business already uses a mark, filing a “use based” application will protect the intellectual property you already use as part of branding your business.

The success of your business may rely heavily on a technology your company created, or even on a secret family recipe that has been passed down through several generations. Whatever your company’s intellectual property is, protecting it can be vital to maintaining your unique share of the marketplace. Taking these basic steps to ensure your intellectual property remains yours may help you avoid litigation, or in the event that litigation arises, may assist when seeking an injunction or protective action in the interest of your business.

Visit the Intellectual Property Litigation section of the website to find out more information about intellectual property rights and protection.

If you are faced with a dispute, it is important to know your options for a resolution. Alternative Dispute Resolution (ADR) has two common forms: mediation and arbitration. The key differences between mediation and arbitration are the formality of the process and how the final decisions are made. In mediation both sides must agree on a resolution; the mediator cannot make a final decision without consent of both sides, as an arbitrator can. Additionally, many times during arbitration there will be a formal swearing in process much like a trial – a process not used in mediation.

ADR can happen at any time during a dispute and may sometimes be forced upon you in the terms of your contract. Often times, there may be a mediation or arbitration clause within a contract that specifies whether you will go into mediation or arbitration, and possibly even outline the terms of the ADR process.

Mediation is generally the more popular choice primarily because a mediator does not have the power to make a final decision without the consent of all parties, like an arbitrator does. A mediator’s role is to present each side with their strengths and weaknesses of its case and, and often more importantly, the strengths and weaknesses of the opposing side’s case.

Because mediation is not successful unless both sides agree, it is important to know what you can and cannot bargain with before you enter mediation. Make sure your expectations are reasonable and attainable. If they are not realistically attainable, entering into mediation will be a frustrating exercise for both sides.

It is also important, when entering mediation, to be aware that sometimes the opposing side may be entering mediation with the sole intention of “smoking you out.” This means that person is only coming to the table to figure out your position on how you are approaching the case. They will look for the strong points of your case as well as what you are willing to let go, but will not give any information in return. While it doesn’t happen often, if you ever get the feeling you are being smoked out during mediation, your best decision is to end the process.

During the mediation process the mediator will usually break the two sides into groups and put them in different rooms. The mediator will go back and forth between the two rooms identifying the strengths and weaknesses of both sides in an effort to reach an agreement. Once an agreement has been reached, be sure to get it in writing immediately to avoid either party changing their minds about any part of the agreement.

In contrast to mediation, arbitration can take many different forms. There could be just one arbitrator present, or there may be a panel of arbitrators. Arbitration can even take form similar to that of a trial. Witnesses may be sworn in under oath and testimony may be taken. The drawback to arbitration as compared to mediation is the expense. Arbitrators are generally more expensive than mediators and because the process is more formal and takes more time, arbitration is a greater financial investment.

While there are some distinct differences between mediation and arbitration, in his new book, The Naked Contract, business litigation attorney Fred Gaston notes that he generally encourages arbitration over mediation. While arbitration can be more expensive than mediation, Gaston says it is usually less costly than going to trial and can be quicker than mediation. In the event a dispute comes up, avoiding trial in a more timely process will save both sides a lot of aggravation.

When it comes to disagreements, credibility often plays a crucial role. If you happen to take your problem to a mediator, judge, or jury, and you have written every event and conversation down, you will have evidence to support your claim. If you come into court and the situation is a good old fashion “he said-she said” scenario, having a chronological timeline created as events were unfolding will give you credibility. Remember, credibility is buttressed by evidence, and credibility is what will win.

You can purchase The Naked Contract the book on Amazon today!

Finding the right employee to add to your team is a timely and sometimes stressful process: Reading through stacks of resumes, screening candidates in phone interviews, scheduling first-, second-, and even third-round interviews and finally extending the offer to the individual you and your team deem the best fit.

When selecting the final candidates, many employers struggle between what they see on paper, how the person presents themselves, and gut instinct. In his new book, The Naked Contract, Fred Gaston’s Plus One Theory teaches the common business owner how to size up potential associates and bring people on board who will help the business flourish.

“Plus Ones” are the people with whom you want to surround yourself in life and your career. One of them may become your spouse, best friend, colleague or mentor. Regardless of what place Plus Ones have in your life, being with them creates positive experiences. The effect on you is an exponential increase in the quality of the type of person who runs in your circle. These are also the types of people you want to have working within your business.

“Zeros,” on the other hand, are neutral territory. This does not make them bad people or indicate they are worthless, but they do not contribute to your life one way or another. These are the friends that are great to socialize with, but not ones whom you value their opinion when making a decision or confide in them with the hope they will offer guidance. Discuss your favorite sports team with a zero; don’t go into business with a zero.

At the opposite end of the spectrum from your Plus Ones are the “Negative Ones.” These are the emotional, financial, and/or psychological vampires, who always seem to be surrounded by drama and can never seem to get it together. In the business world, you will discover that Negative Ones sometimes have money and will even offer it to you. Never take money from a Negative One. Disassociate yourself right from the beginning and avoid the nightmare.

Face it, business people may not be people people, but they do know people, and as a business person, you have to trust your gut.

When a business fails during a dispute, or when a point is reached where a dispute is unavoidable, two things immediately pop into a lawyer’s mind: fraud and piercing the corporate veil. These are reasons you want to set up your corporation, and manage it correctly. For example, if a scandal causes your business to go under as a result, it is important for you, as the individual, to retain your assets. If your business is set up correctly, no one can touch you or your assets.

As a business owner, if you are forced to shut down your business, it is a very emotional and stressful time. But the most important thing to remember is that you need to undertake the proper steps of business dissolution to avoid legal complications and ensure your interests are protected. While there are often costs involved in dissolving a business properly, closing a business without taking these steps can result in ongoing tax and other legal liability. Therefore, before you close your business, be sure to seek the advice and counsel of a business dissolution attorney so that you can make the necessary filings and tax clearances.

Always maintain a written record of all oral communications both with internal people and outsiders. Every day, you will be in meetings, attending conferences, talking with or emailing sources, company representatives, legal officials, etc. You should make notes of all meetings and conversations, whether they are formal, scheduled events or casual encounters. This can be done in a number of ways consistent with your practice and comfort zone. It doesn’t matter the technology used, it must be done. It is critical that you maintain a daily log of every telephone conversation and meeting you have. In the Internet age there are no secrets and there is no right to privacy in these semi-public forums.

Scandals affect all business to an extent; maybe that business won’t have to close its doors but its credibility and reputation are immediately questioned. Every case is different, and the plan of action will differ depending on the client.

In his new book, The Naked Contract, Fred Gaston helps new and experienced business owners maneuver through the intricacies associated with business law. The book looks at creating contractual agreements to resolve conflict before it becomes litigation. Purchase your copy of The Naked Contract today, on Amazon.com.

When faced with the decision of contingency versus hourly, generally, you, as the client, want to pay the hourly rate. And, here is why: Suppose you have a regular business tort. You paid someone $2 million for a piece of property in Mexico, and, for whatever reason, it turns out that the title is bad. Now you have discovered you do not own the property. The defendant is a deep pocket defendant; that if you can get a judgment against that party, you will actually get paid the $2 million. If you sit down with your attorney, you both go through the possible costs from beginning to end, and consider the cost of mediation versus litigation and everything in between, you will get an idea of what your overall costs will be. It might turn out to be $250,000 if you pay by the hour. As you sit across the table from your attorney, it feels really good not to have to write a check right then, but fast-forward a year or a year and a half down the road, you have a $2 million judgment, and look at the numbers. If you were working on a standard California contingency rate of 40%, if you win and the defendant pays, you pay your attorney $800,000 (2 million x .40). Thus, for taking the contingency option, you pay a premium of $550,000.

Another thing you should consider, and any good attorney will tell you this up front, is that the cost of the case is not included in the attorney’s fees. If you are working under contingency, the lawyer is going to take his 40% right off the top. Using the example above, after attorney’s fees, you will be left with $1.2 million dollars. Out of the amount left to you, you will still have to pay all of the court reporter fees, mileage fees, court filing fees, jury fees, expert fees, and everything else. After taking all of this into consideration, contingency fees from a business perspective are not an attractive option if you can afford the hourly rate.

You should always take into consideration who the defendant will be. If the defendant is someone that you suspect might not be able to pay, you might consider using a contingency agreement to minimize your business cost while maximizing your potential gain. This shifts the risk from the client to the attorney. If you get the judgment, but you cannot collect, you will have received your attorney’s work for free. If, on the other hand, the defendant does pay, you receive an unanticipated 60% of the money you are owed minus costs. Note that any decent attorney will do the exact same calculation. If it is a judgment-proof defendant, such as Joe on the corner, no levelheaded attorney would be willing to work the case on a full contingency. This leads us, naturally, to our next topic of nontraditional fee structures.

Nontraditional Fee Structures
The idea of the billable hour began in the last century. Everyone hates it: clients, attorneys, associates, bookkeepers, and everyone else. The problem was, until recently, there really wasn’t any better pay-as-you-go system for legal services other than a flat fee. However, because of the recession, people are rethinking the way they pay for legal services, and lawyers are rethinking the way they get paid. Here are a few of the more creative options:

A La Carte Fees
Here, you can pay for your case piece by piece, and pay different amounts for different parts of the case, depending on how time intensive they may be. The client pays the money up front and has the assurance that he or she will not pay more for that particular portion of the case. Many people see the hourly fee structure as equivalent to handing their attorney a blank check, which can be very intimidating for some. A la carte is not hourly; it’s not contingency. It’s a specific rate for specific pieces of work. A la carte is just an extension of a flat fee, and, because the lawyer, the client, the associate, and everyone hates the billable hour, a la carte fees provide a breath of fresh air. Here are some examples of how it could work in a garden-variety noncomplex business tort case:

1. Initial research and drafting of original complaint: $5,000
2. Opposition to demurrer: $2,500
3. Deposition per witness, court reporter cost included, limited to one day each: $5,000
4. Trial, per day: $10,000

Part of the beauty of such an arrangement is that:
a. The client obtains security in his or her cost exposure and, perhaps more important,
b. The client takes an active role in determining how the case will be built, based upon his or her own determination, after considering the lawyer’s advice.

Fee and Hourly Lids
Here, the attorney and client throw the discovery phase out of the cost calculation, and then everyone agrees that the client will not spend more than X and the attorney will not work more than Y on a particular phase of a case. Again, this is reassuring for the client because he or she knows the costs right up front. It is reassuring for the attorney because he knows he will not be held captive on an infinite project for an a la carte/flat fee amount. The added benefit of this is that if, in fact, the work takes less time than expected, the client receives the added benefit of a potential cost reduction on the work, which is not possible with an a la carte pay structure.

Blended Agreements
Another option that I see more and more frequently is the blended agreement. Personally, these are my favorite as they allow the attorney to put skin in the game, partner with the client, receive a bump in pay if successful, and provide the client with a lower up-front cost structure. Imagine a spectrum where point A is an hourly agreement at whatever hourly rate you agree upon and point B is 100% a contingency amount with whatever rate you agree to with your attorney. Then you take the ball and slide it somewhere in between points A and B. For example, let’s say the normal billing rate is $400 per hour, and the normal contingency rate is 40%; sometimes we can meet in the middle where you agree to pay only $200 per hour, and I will take only 20% if we succeed. You and your attorney can agree to slide the ball anywhere on the spectrum that works for you. This structure is frequently dependent on the strength of the case and whether the defendant can pay when the case is won.

Traditional Nontraditional Fees
Attorneys don’t always have to be paid in currency. I come from a long line of attorneys, and I am used to the Thanksgiving table stories of the criminal defense lawyers being paid with a nickel plated .45, samurai swords, or an old Mercedes. Paying for a business litigation case with nickel plated .45s would necessitate a huge amount of firepower and would probably get both you and your attorney an interview with the ATF. However, the basic creative concept can be applied in the business realm.

If you are a business, attorneys are one of the few exemptions to the rule that you cannot pay in company stock for services. The specific rules regarding this practice will vary from state to state. This is not an uncommon arrangement if a business plans on working with an attorney during a long period of time. For example, the attorney might help with a lot of different things, such as contracts or day-to-day incidents or paperwork, not just litigation.

Many clients choose to do this not because they cannot afford the hourly rate, but because they want their lawyer to have skin in the game, which is the business. The attorney gets a percentage of the business, and the client receives a reduced hourly rate. But a word of caution: There are all sorts of ethical issues to be aware of, and any attorney worth his or her salt will let you know that up front. In this instance, for the purpose of a contract, your attorney is not your attorney, but a businessman, and you must recognize that difference.