When Should I Call My Business Lawyer?
Entrepreneurs carry heavy burdens, often for years without much respite. Running a business involves navigating a complex web of legal considerations that can impact every aspect of your operations. Knowing when to consult a business lawyer is crucial for protecting your company and ensuring long-term success. From entity formation to contract negotiation, and intellectual property protection to compliance with labor laws, the guidance of a skilled attorney can help you avoid costly mistakes and make informed decisions. This post explores key situations where calling your business lawyer can safeguard your interests and support your business growth.
As a bonus, we created this graphic to keep handy as an easy reference for you and your team.
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Entity Formation, Structuring, or Restructuring
When deciding to form a new business entity or change the legal or tax structure of your business (e.g., LLC, corporation, partnership). You need to consider the best entity type based on liability, taxation, and management considerations. This is especially true when bringing in a new business partner, entering into a joint venture-like relationship with another business, or offering equity or other equity-based compensation to an employee or key person.
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Drafting or Reviewing Contracts
Any time you need to draft, review, or negotiate contracts with clients, suppliers, or partners. You need to ensure the terms are clear and enforceable to protect your interests. You should have a nondisclosure agreement prepared to use with all key clients, suppliers, and partners (except government entities).
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Intellectual Property Protection
When you are developing or need to protect your intellectual property, such as by registering trademarks, copyrights, or patents. You should also have a nondisclosure agreement with non-circumvention and non-disturbance provisions, together with an intellectual property assignment provision. This nondisclosure agreement should be in place with your employees and contractors who are preparing any type of work product for you.
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Employment Law Compliance
For issues related to hiring, terminating, managing, and compensating employees. This includes drafting employment agreements, severance agreements, employment compensation plans, equity-derived compensation agreements, and employee handbooks to ensure compliance with state and federal labor laws.
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Outside Investment or Raising Capital
If you plan to invest in another business venture or raise capital through investors, loans, or crowdfunding. You must navigate state and federal securities laws, review or draft investment agreements, and ensure compliance with financial regulations.
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Regulatory Compliance
To stay compliant with industry-specific regulations, health and safety standards, environmental laws, entity and service provider licenses, and other governmental requirements. These can apply to the business, to its owners, employees, and contractors, and to the real estate upon which you operate your business and will help you avoid penalties and operational disruptions.
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Mergers and Acquisitions
If you are considering buying, selling to, merging with, or entering into a joint venture with another business. You should conduct legal due diligence, engage in negotiations, and draft comprehensive transaction documents to protect your interests and achieve favorable terms during and after the transaction.
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Dispute Resolution and Litigation
When disputes arise with customers, employees, partners, or competitors. Before you engage with the opposing side, you should discuss strategies for resolution through negotiation, mediation, or litigation.
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Real Estate Transactions
For leasing, purchasing, or selling commercial property, including real estate you own personally but use for business purposes. You should review and negotiate real estate agreements and property boundaries and restrictions, such as easements and licenses, to ensure the terms align with your business needs, protect your rights, and are tax efficient.
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Corporate Governance
Ensure proper governance practices, such as maintaining corporate legal and financial records, holding annual meetings, and complying with bylaws and shareholder agreements. These formal requirements are generally simple but should not be overlooked to help avoid personal liability, create a comprehensive chronological record, and ensure smooth operations now and into the future.
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Exit Strategies and Succession Planning
Plan for the eventual sale, transfer, or closure of your business. Each of these involves complex legal considerations requiring a strategy that maximizes your ownership value and ensures a smooth transition without significant legal ramifications post-closing.
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Risk Management
Proactively identify and mitigate potential legal risks in your business operations. These include potential liability issues, obtaining adequate insurance coverage and periodically reviewing it, and keeping abreast of regulatory changes surrounding your business model and employees.
Conclusion
Proactively engaging a business lawyer at critical junctures in your business journey can be the difference between thriving and facing legal challenges. Whether you’re structuring your company, protecting intellectual property, or preparing for a merger, expert legal advice is invaluable. By understanding when to seek legal counsel, you can navigate complexities with confidence, secure your business’s future, and focus on what truly matters—growing your enterprise. Don’t wait for legal issues to arise. Make your business lawyer an integral part of your strategic planning today.
