Is hiring a lawyer good for your business?
Sometimes business owners treat lawyers like plumbers – rarely calling one until there is a really out-of-control problem. Unfortunately, by then it's often too late to prevent the flood of complications that can arise from the failure to be proactive with managing business risk.
Timely legal advice can help business owners to create a safety net before they need it, and it will, inevitably, save costly expense down the road.
Small and medium sized businesses are the backbone of our economy, but they often lack the financial resources to hire in-house legal counsel to advise them on day-to-day commercial transactions. Large companies have the advantage of staffing legal departments with corporate lawyers devoted to their particular business needs. Fortunately for smaller businesses, however, some of the best corporate lawyers still work in private practice, often with small and mid-sized law firms. This means their services are readily available and reasonably affordable.
Not only do corporate lawyers ensure the legality of commercial transactions but they also advise business owners and managers on their legal rights and duties – including their responsibilities with regard to corporate governance.
Here are just a few ways a corporate lawyer can add value to any business – from its initial start-up to its eventual succession:
Contract review – Transactions as basic as leasing and financing business assets, or as complex as buying or selling a business, require experienced oversight and input from a corporate lawyer. It is important to ensure that you understand your contract rights and obligations so you can negotiate the right deal from the beginning. This will enable you to make informed decisions and save your business money.
Incorporation – There are many different enterprise formats including sole proprietors, partnerships, joint ventures, and business corporations. A corporate lawyer will help you choose the best model based on the nature of your business, tax issues, financing concerns, succession planning, and human resource management.
Corporate governance – Ensuring compliance with partnership or shareholder agreements, local laws, and a myriad of regulations governing your business, are essential to avoiding personal liability. It is the role of a corporate lawyer to protect you from being exposed to these types of risks.
Intellectual property – Your business’ intellectual property or “know-how” may be its most valuable asset and what gives you a competitive edge. If this is not legally protected by trademark, copyright, or patent registrations, you may find these assets copied or used by your competitors without your license or permission.
Customer agreements – Valuable contracts with the suppliers and customers of your business are the very essence of your goodwill. Properly managing these relationships requires clear contractual terms and conditions in order to prevent costly disputes. The cost of a corporate lawyer's work to ensure transparency in these agreements is minor in comparison to a costly and destructive dispute with a customer or supplier.
Owner / partner exits – It is easy to overlook succession planning until it actually becomes a concern. The failure to plan and protect your enterprise against abrupt departures by business colleagues, or to chart a course for your employees or business associates to purchase the assets of the enterprise, can have serious financial consequences in the long run. Having a succession plan in place early will prevent your business from being dramatically affected by such departures.
Employment issues – Human resource management is one of the most difficult and important concerns businesses face at all stages of growth. Aligning employee incentives, having valid employment agreements, non-disclosure and confidentiality covenants, non-competition and non-solicitation agreements, and obtaining general advice on HR compliance issues, are all standard pillars of employee retention and a healthy business culture.
Restructuring – Financial issues and looming creditor pressure need not spell doom for a viable business. In Canada, both federal and provincial law provides relief for businesses and their stakeholders. A business lawyer with insolvency experience can help craft a reasonable restructuring plan to ensure the continuation of the business for the long-term benefit of its employees, creditors and other stakeholders.
A private corporate lawyer works with you, your accountant, and your business managers, to plan for all reasonably foreseeable contingencies, to manage the risks associated with your business activities, and to protect your hard-earned investment. Smart business planning includes retaining a private corporate lawyer up front to prevent problems by acting proactively to manage the risks of a variety of issues that could otherwise damage your business irreparably.
When you hire corporate lawyers to help your business, it’s important to hire someone you trust or who comes highly recommended. They will, after all, be an extension of your business, which for many entrepreneurs, is an extension of themselves.