Forecast for legal expenses depends on rates, services Businesses might pay hourly rates or flat fees for counsel, depending on different situations

Planning for legal expenses is a tricky venture, especially for owners of small-to medium-size businesses, which may not be large enough to justify in-house counsel.

But owners of smaller businesses do have legal needs that must be anticipated and planned for, according to Springfield attorneys.

Attorneys determine their fees in a number of ways, said Lois Zerrer, executive director of the Springfield Metropolitan Bar Association.

An hourly rate may be assessed for some legal duties, while a flat fee may be quoted for a specific job. Hourly fees for Springfield attorneys average between $100 and $125 per hour, Zerrer said.

How much a business owner can expect to pay for legal assistance depends largely on the nature of the job whether it simply entails drafting documents, or if it requires substantial research or court appearances.

Bankruptcy creditor. If a business owner is named as a creditor in a bankruptcy proceeding, he or she might not require legal counsel, but Springfield attorney Doug Evans, of Evans and Green, advises busi-nesspeople against going it alone.

"You don't have to have counsel, but I would think it would be hard for a layman to navigate the proceeding alone," he said.

"If it (the debt) involves any substantial amount of money, they still need to consult an attorney."

Consumer bankruptcy is on the rise, Evans said, and while larger companies have in-house counsel to handle bankruptcy issues, there is little that can be done to estimate costs for small- to medium-size businesses.

"It's hard to project that," Evans said. "It's just part of the cost of doing business."

Employment practices lawsuits. Business owners who find themselves in a legal dispute over such employee issues as sexual harassment or discrimination could be looking at steep legal fees, according to Springfield attorney Ransom Ellis III, of Ellis, Ellis, Hammons & Johnson PC.

Ellis said it is difficult to predict how much employers could expect to pay for representation in such cases since they are usually very complicated.

"Lawsuits don't come in a plain vanilla format," Ellis said. "There are wide variations in potential costs. Generally speaking, the more complicated the case, the more damages are involved, the higher the cost."

Sexual harassment cases in which the plaintiff claims emotional distress can be particularly costly, as they involve the use of experts and considerable discovery time.

Ellis said to prepare and take such a case to court, a business owner could spend anywhere from $50,000 to $80,000. While not a firm figure, Ellis called that estimate "a good average."

The amount spent defending a business owner in a sexual harassment case grows even higher in some instances, when a prevailing plaintiff exercises his or her right to request that the defendant pay their reasonable attorney's fees.

"That's what causes settlements," Ellis said.

Discrimination on the basis of disability, race or gender is another expensive type of legal defense for a business, Ellis said.

Although insurance is available to cover the legal expenses businesses incur for these claims, Ellis said, such coverage has its down side.

"With insurance, you don't always get the counsel you want, and the interests of your company may not necessarily be aligned with those of the insurance company," he said.

The most effective strategy for controlling the costs of these claims is to put policies and reporting systems in place that reduce the chances for this type of claim against an employer, Ellis said.

"Good policies, along with consistency of application and fair treatment, can eliminate a lot of these problems," Ellis said.

Workers' compensation. Workers' compensation insurance carriers provide legal representation for business owners involved in workers' comp claims, according to Springfield attorney Patrick Platter, of Daniel Clampett Powell & Cunningham LLC.

Businesses with five or more employees (an employee is defined as anyone on the premises engaged in the regular course of business), must carry workers' comp insurance, Platter said. Construction businesses are required to carry workers' comp if they have only one employee.

Businesses that are trying to squeeze an extra employee in without carrying workers' comp could be in for a surprise from the State Attorney General's Office, according to Platter, who said employers who don't insure when they are supposed to are subject to prosecution by that office.

In a workers' comp situation, the insurance company provides legal counsel, Platter said, eliminating the hassle and expense of trying to plan for such an incident.

"The insurance company will have a pool for you to choose from," he said. "The pool that you pick from will be very experienced in that type of claim."

Where price projection comes in is not with legal fees, but with insurance premiums, Platter said.

"The business' frequency of claims influences price more than the severity of the claims," he said. "That will be a significant factor as to how the premium is assessed." Less frequent claims indicate better risk management, which brings premiums down.

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