In this economy, you may think twice before consulting an attorney to avoid the fees. Sometimes that's a good idea. Sometimes it's not and can cost you lots more in future litigation. Here are some basic guidelines relating to two important issues - contracts and insurance - to help decide when to use an attorney and how to use them efficiently.

Contracts.

A good contract is the basis for any smooth business relationship. Contracts are essential. Not only do they clarify roles, responsibilities and ownership issues, they limit potential liability. Attorneys can help you draw up a contract that covers all your bases, but if you want to use your attorney efficiently, do some homework first.

Sit down and in your own words define the relationship you're setting up and describe those who you're setting it up with. Anticipate industry-specific issues that affect your risks and liabilities in the contract. Point out best and worst-case scenarios that affect the success of your product and how that will affect the contracted parties. Address ownership issues. Now set up a meeting with your lawyer.

You may think that signing a contract is a simple proposition. Just read what it says. Wrong! It's not only what a contract says, but rather what it doesn't say that matters. A contract can be deliberately written to be ambiguous and open to various interpretations, which are not always in your favor. Often, you are so personally involved in the contract negotiations - agreeing to amendments, changing clauses day by day - that you feel that after all the discussion, it MUST be right. Before you sign, have an attorney look at it. What you gain from an objective eye is far greater than what you pay in fees. You can add protective steps to your contracts, which may help in cases that lead to litigation. Include a provision in contracts that states that if you need to sue, legal fees are recoverable for non-performance or payment. You will probably have to include a reciprocal clause for the other party. You could also include a dispute resolution clause that specifies the use of binding arbitration. You can even specify a mutually agreed upon arbitrator in advance.

Insurance

Whether you're buying or renewing insurance - be wary! Don't be intimidated by complicated language. Ask all the questions you need to thoroughly understand your policy. If your policy is just incomprehensible, ask your agent to suggest a "plain language" policy.

Legally, any renewal is considered a new contract. Don't assume you are getting the same coverage! Read the renewal policy carefully. Ask your agent to confirm in writing whether there are any changes in the renewed policy, and, if so, then what are they so that you are not surprised after a loss.

If a claim is filed against you, immediately notify your insurance company and agent by certified letter, even if you don't think you're covered. This is your responsibility. Failure to notify your insurer of an insurance claim is a cause for non-payment of your claim.

If your insurance company or broker denies claim coverage, contact an attorney. Don't try to negotiate on your own. It is our experience that insurance companies deny responsibility too frequently. An initial denial of your claim my simply be a negotiating tactic.

If you have a dispute with your insurance company, consult your policy to find out how much time you have to start a lawsuit and contact an attorney well before that time expires.

Remember, the money you spend now for legal fees to prevent future problems is a drop in the bucket compared to the fees you will pay in future litigation. If you use your attorney wisely, it could be one of the best investments you make.