A common worry among entrepreneurs is deciding whether or not they need a lawyer when starting or running a business. Lawyers charge high hourly rates and many businesses don’t have much extra capital to afford, if any. As a result, most small business owners only hire a lawyer when confronted with a serious legal problem.
This is a mistake! While you certainly need a lawyer if you are being sued, you should focus on preventing this from happening in the first place. If you choose to be reactive instead of proactive, the damage that could have been prevented will already be done and the only question remaining is how much you will pay for lawyer fees, court costs, and damages.
Corporate lawyers are professionals who have experience with and knowledge of issues surrounding the starting and running of a business. They provide vital assistance in almost every aspect of your business, from basic zoning compliance, to copyright and trademark advice, to formal business incorporation, and to lawsuits and liability. The following are the crucial moments in the life of a business where you should seek the services of a lawyer:
1. Planning Stage
When you are determining the best legal structure of your business, a lawyer can advise you on the advantages and disadvantages of registering your business as a corporation, limited liability partnership (LLP), or partnership. Your lawyer will also advise you on which form of legal organization suits your business based on its size, location, ownership, liability, tax advantages, and financial concerns.
2. Negotiations
- For buying and selling: Your lawyer can alert you to certain key provisions in your Sales Agreement or Lease Agreements, such as governing sharing of common space utilities with other lessees, lease renewal terms, automatic increases in rent, and lease termination.
- For vendor relations: As a business owner, you are going to use a variety of services to operate your business and you want to be protected in the process. Most service providers have some contract that they make a customer sign. A lawyer can help you review this contract and identify liability, termination, or dispute resolution provisions that may be detrimental to a business
- For mergers and acquisitions: As your business begins to grow, there may be an opportunity to join or even take over another business. Your lawyer will help you investigate the business to determine if an opportunity really exists. Even in the absence of a merger opportunity, there could be a chance to collaborate with another small business or freelancer on a certain project – your lawyer can help formalize such a relationship.
3. Drafting Contracts
Every business will need basic employment or independent contracts. Many businesses may have partnership agreements, customer contracts, intellectual property agreements, etc. Legal documents can often contain many pages of “legalese” that can confuse even the most well-read individual. Your lawyer will draft and/or carefully review to make sure there are no surprises before you sign any major agreement.
4. Patents
If your small business is centred on innovation, then you might want to seek legal advice from a lawyer who specializes in intellectual property. Your lawyer can advise you through the lengthy process of patent registration and if it is the right choice for your business.
5. Litigation
This is the most common reason that people seek the services of a lawyer – lawsuits. Typical lawsuits can be the result of violations of federal or provincial law, employment, environmental, or governmental issues. In conclusion, whether or not you think you need one, hiring a corporate lawyer creates a stronger future for your small business. The small effort of hiring a lawyer in the early stages of your business can save you an enormous headache later.