What does it cost to have corporate bylaws drafted by an attorney? If you have recently incorporated a business, you may ask this question. Let’s explore this question and review general information about corporate bylaws and why they are necessary.
How Much Do Corporate Bylaws Cost?
Corporate bylaws are a recorded set of detailed rules that serve as an operating manual for a corporation. When a business is incorporated, the owners are tasked with creating the bylaws and setting up rules for how the business will be run.
The proposed bylaws are approved by the board of directors and become part of the corporate records. Bylaws will include:
- Rules about the management structure
- Meeting requirements
- Stock issuance
- Other important company policies
They dictate procedures and standards that the company will follow. Bylaws will state what a company can and cannot do and outline the roles of each director and corporate officer.
Corporate bylaws are private and aren’t filed with any government entity like other business documents. However, most states require corporations to have bylaws for the business to exist legally. Bylaws should be accessible to the IRS or any other entity that can audit your corporate records.
Even if a corporation is established in a state that doesn’t require bylaws, they are an excellent corporate document. Bylaws communicate the roles and responsibilities of owners and directors and establish the company’s policies.
Having these rules published in corporate documents can help resolve disputes arising through business practices.
It is common for company owners to hire a business lawyer to draft corporate bylaws. A lawyer with experience in this field will know what information needs to be included in the bylaws, which is especially important if it is a state requirement.
Based on ContractsCounsel’s marketplace data, the average cost of corporate bylaws is $1,237.50 across all states and industries.
What is Included in Corporate Bylaws?
Corporate bylaws are created by the company owners and approved by the board of directors. The bylaws will vary based on the company’s size, structure, and management needs.
All corporate bylaws should include the following basic company information:
- Statement of purpose: This describes the purpose of the business and includes information like why the business was established, the target customers, what it does for customers, how it stands out from competitors, and business goals.
- Board of directors: The board of directors is integral to corporate governance. The board oversees the company's officers and represents the shareholders' best interests. Board members usually are not company employees, so it is important that the bylaws clearly define the board’s roles, responsibilities, and limitations within the company.
- Members: The member section of corporate bylaws lays out the rules for the types of members the company will have, voting rights, and procedures for adding or removing members. Some corporations don’t have members, so this clause may not be included in all corporate bylaws.
- Corporate meetings: Corporations are required by law to hold an annual shareholders' meeting. In addition to the shareholder's meeting, many corporations have monthly or quarterly meetings. The bylaws will dictate how these meetings are called, and the procedures followed. In addition, some states have specific requirements for corporate meetings.
- Committees: Some corporations create committees within their board of directors to perform specialized tasks for the company. Bylaws should include information governing the committees.
- Stock issuance: Issuing stock to shareholders should be one of the first orders of business for a newly incorporated company. The corporate bylaws will detail the number and type of stock classes that can be issued, who is entitled to receive stock, and how stocks will be transferred.
- Officers: Officers are usually company employees who oversee the day-to-day operations and report to the board of directors. The bylaws will lay out how officers are elected and appointed and what responsibilities they will have. Officer titles are usually President, Vice President, CEO, Secretary, and Treasurer.
- Policies for amendments: This section will dictate how corporate bylaws can be changed or amended.
These clauses are easily customized to fit any business. For example, a corporate lawyer will know how to draft corporate bylaws that work for your company.
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Corporate Bylaws Drafting
Corporate bylaws are important company documents, and if your state requires bylaws, they are necessary to run your corporation legally. Therefore, corporate bylaws must be drafted correctly and adhere to state regulations.
Before beginning the draft for corporate bylaws, a lawyer will meet with the company owner to learn about what the company does, its management structure, and the goals for its bylaws. Once the lawyer has a good understanding of the company, they can begin drafting personalized corporate bylaws.
Corporate Bylaws Review
Some company owners choose to draft their own bylaws. While this is always an option, it is recommended that a licensed attorney familiar with corporate bylaws reviews the document before it is published as a corporate document.
A lawyer can review the corporate bylaws to ensure they include all necessary information and abide by state laws. The document must meet all state requirements if your corporation is ever audited and bylaws are requested.
Corporate Bylaws Drafting Cost
A lawyer hired to draft corporate bylaws will charge the company owners for their time and legal services. This usually includes:
- A consultation
- Time spent drafting the bylaws
- Revisions
- Follow-up meetings
ContractsCounsel’s marketplace data shows the average corporate bylaws drafting costs are $1,237.50 across all states and industries.
Corporate Bylaws Review Cost
Review costs are typically lower than drafting costs because they require less time from the lawyer so drafting your own bylaws and having a lawyer review them is an excellent way to save money on legal fees.
ContractsCounsel’s marketplace data shows the average cost to review corporate bylaws is $850 across all states and industries.
How Do Lawyers Charge for Corporate Bylaws?
Hourly Rates for Corporate Bylaws
Hourly rate fee structures are attorneys' most common fee arrangement in all areas of law. In an hourly rate agreement, the lawyer will bill their client a set rate for time spent working on the case. Lawyers generally track their time by the 10th of an hour in six-minute increments.
The downside of an hourly rate cost structure is that the client doesn't know the final cost of legal services. This can leave some clients anxious about how much their final bill will be.
ContractsCounsel’s marketplace data shows that the average hourly rate for a corporate lawyer ranges from $200 - $400 per hour.
Flat Fee Rates for Corporate Bylaws
A flat fee rate fee agreement is a pre-arranged total fee for legal services that are usually paid upfront before the lawyer begins work on your case or project. It is common to see this type of payment structure for short-term projects with definitive ends like drafting and reviewing corporate bylaws.
Flat fee rate structures are beneficial for both attorneys and clients. A client knows exactly how much the legal services will cost, and there are no surprises after the project. The attorney benefits from collecting a lump sum fee upfront and not keeping track of hours or regularly bill the client.
ContractsCounsel’s marketplace data shows the average flat fee rate for drafting corporate bylaws is $1,237.50.
Get Help with Corporate Bylaws
Do you need help with a corporate bylaws project? If so, post a project in ContractsCounsel’s marketplace to receive flat fee bids from corporate lawyers to handle your project. All lawyers on the ContractsCounsel’s platform are vetted by our team to make sure you are provided with top tier service.
