There are many reasons to hire a business lawyer, and an increasing number of entrepreneurs and business owners are opting to do so. The below represents just a few of the many reasons why working with a lawyer early on can be advantageous to your company.
1. Legal Compliance
One of the first reasons to hire a business lawyer is legal compliance. For example, if your business operates internationally, there are certain tax implications that govern how international companies do their accounting and prepare their financial reports. All the benefits of hiring a business attorney are that you are maintaining compliance at all times so as not to avoid fines or penalties that could negatively impact your business's long-term success. If you are planning on operating your business in several states or want to expand into other countries, it is important that your company comply with all applicable laws and regulations for each state or country, respectively. This can be extremely difficult unless you have a company lawyer who understands what specific laws apply to which areas.
2. Expected and Unexpected Disputes
No matter how well you plan and how closely you watch your business, at some point, you will likely find yourself in a dispute with another party, whether it is a customer, supplier, partner, or former employee. It's important that your company be prepared for such disputes by knowing what kind of legal protections apply to your company and having a team of legal professionals who know what they're doing when it comes to resolving such disputes. For example, if you do not have contracts in place with all of your vendors and contractors (if appropriate), then there's no way for them to hold up their end of the bargain. If a dispute arises, this leaves you subject to potentially losing revenue as well as footing the bill for the services that you've yet to receive.
Hiring a business lawyer can ensure that you have legal protections in place with all of your vendors and contractors, ensuring that your company is protected against disputes with them. When disputes do arise, knowing how to properly resolve them quickly and efficiently without it impacting the bottom line is paramount for any business owner who wants their enterprise to be successful over the long term.
3. Financial Transactions
Another important reason to hire a business lawyer is financial transactions. Any time your company does significant deals or enters into any kind of transaction, it's critical that you have legal protections in place. You should work with an attorney who can help protect the investment that you are making, as well as provide insight into how best to structure the agreement to ensure all parties involved are properly protected financially.
For example, if your company has done well and has decided that now is the right time for an initial public offering (IPO), then having an experienced attorney provides necessary guidance about what kind of IPO would be best for your business at this point in its evolution, where to go about doing so successfully, etc. I can be extremely profitable for companies, if it's done right. On the other hand, if not enough planning is put into an IPO and insufficient protections are in place for investors, then there can be serious financial consequences of a poorly planned IPO.
4. Other Structural Issues
In addition to contracts with your suppliers and vendors, you should also have working relationships in place with key company stakeholders that include having comprehensive non-disclosure agreements (NDAs), work-for-hire or work-made-for-hire agreements in place when appropriate, and having buy/sell agreements between founders of a business in the place in advance of any significant transaction taking place. All of these represent valuable protections for the business owner, as well as necessary tools needed by talented employees who want to ensure that their work and expertise are properly protected and compensated.
5. Mergers and Acquisitions
Just as financial transactions should be carefully thought out before they take place, so too should mergers and acquisitions (M&A). It's always better to prevent a merger than to attempt to go through the process of undoing such a transaction after it has already taken place. Maintaining clear legal boundaries between company stakeholders protects your investors, key employees, and the company in general from potential disputes that can arise over misunderstandings, miscommunication, or disagreements about the terms of the agreement among various parties. Hiring an experienced business attorney early on provides many of these protections and allows you to avoid costly litigation down the road.
6. Prevents Litigation
One of the biggest benefits of hiring a business lawyer is that it prevents litigation. Hiring an attorney early on provides you with legal protections in place so that you can avoid disputes before they ever happen, or at least before they get out of control and become far more complicated than if proper measures were taken beforehand.
If you're already engaged in litigation, then it's too late, – just as if someone had “called for an ambulance”” after the heart attack hit instead of taking preventative measures, by that time it's usually too late. To protect yourself from potentially debilitating litigation costs, make sure appropriate agreements are in place with all key stakeholders and do not hesitate to call upon your business lawyer when necessary during these periods of potential disputes.
7. Legal Documentation Can Save Money
One of the most important reasons to hire a business lawyer is for the documentation they can provide. As the owner of a business, you are busy running your company and putting out fires as they come up. But, oftentimes, it is not until your company starts to show signs of growth that you may decide to re-examine certain agreements or contracts that were once adequate but no longer work for your changing needs. When this happens, you will be forced to either create new documents from scratch or attempt to modify existing ones, which usually do not account for all the changes made over time.
This kind of back and forth between key stakeholders and other employees in order to clarify responsibilities and other expectations puts everyone at risk if there should be a disagreement over what was actually agreed upon initially. Proper documentation ensures that everyone is on the same page and that no one will be able to come back later saying, “I thought it was supposed to be done this way.”
Hiring a business lawyer protects your company and key stakeholders in its entirety by ensuring that all the necessary documentation is in place to prevent misunderstandings, confusion, or disagreements. Hiring an attorney also provides you with legal protections when disputes do arise so that you can avoid costly litigation down the road.
