Are you up on the legal costs for your business

As a business operator, do you find your estimated figures for legal costs fall far short of reality? If so, you’re not alone. 

The online legal platform for business and individuals, Lawpath, offers a downloadable ‘menu’ which lists average pricing per project. It gives more accurate insights into possible costs than the hourly standard rates your lawyer may have quoted.  

However, even this may fall out of date as the use of blockchain and automation disrupts the legal sector. You may have heard of smart legal contracts underpinned by blockchain, a distributed decentralised online network. An agreement between two parties or more is written into complex computer code that’s automatically executed and sits on blockchain. That ensures the agreement is transparent, efficient, secure and trackable, yet irreversible. 

Smart contracts sound promising, but are yet to be used widely. That’s because legal and regulatory challenges about interpretation, enforceability, liability, risk allocation, and jurisdictions, to name a few, are still catching up. 

Reasons for seeking legal advice 

Legal trouble is always a potential threat in business operations. Yet, when it hits, eight in 10 executives are unlikely to seek legal advice. Your company may need legal help to deal with: 

• Registering for an ABN, the GST, a TFN, PAYG tax, business name, trademarks or website domains 
• Fair trading issues such as consumer laws, including when your product fails, Australian standards and codes of conduct 
• Contracts and contractors 
• Privacy 
• Anti-bullying laws 

• Employment laws such as unfair dismissal 
• Intellectual property and copyright 
• Importing and exporting 
• Environmental protections 
• Business’ terms and conditions 

• Debt collection. 

However, if you need to take legal action against an overseas supplier, for example, it can be difficult to sue someone over international legal jurisdictions. Your business is left handling the risks. 

Protection against legal risks 

How can you protect your business against the financial burden of possible legal action? 

As your broker/adviser, we can let you know if any of your policies have legal expenses insurance as an automatic inclusion. If so, we can tell you the limits of that cover – including the excess you’ll need to pay. You might think that having liability, professional indemnity or directors and officers’ insurance means you don’t need legal expenses insurance. Actually, the latter covers you for what the others won’t. 

If you don’t have business or commercial legal expenses insurance, it could be worthwhile. It may cover the costs: 

• Of defending your business if sued 
• Resulting from lawsuits third parties take against you 
• Regarding employment (discrimination, personal injury), property/goods damages and contract disputes 
• When issues arise about contracts, tenancies, privacy, compliance and regulation including tax disputes and investigations 

• Related to lawsuits that you take out against others 
• For lawyers costs, court fees, expert witnesses and witness expenses. 

Legal expenses insurance can also come in handy to protect your intellectual property and brand.  

Businesses can take out legal expenses insurance as a stand-alone policy. If you’re looking for a personal legal expenses policy, that’s usually an add-on or part of a group plan. 

Your option for justice 

Commercial legal expenses insurance can be taken out before the event. Legal expenses insurance is usually provided on a claims-made basis, which means that it provides cover only in relation to a claim that is first made against you and notified to the insurer during the Period of Insurance, and of which you weren’t aware prior to taking out the insurance. 

Some policies for commercial legal expenses also cover you for management rights. These offer access to general legal advice whether the policy covers that type of matter or not. If you do make a claim, you may be able to appoint your own management rights specialist lawyer who’ll act on your behalf.  

Unforeseen legal action can confront any business. Having legal expenses insurance offers you peace of mind that you’ll have affordable access to the right legal advice and representation for certain classes of legal action. Talk to us to discuss your needs