Like emergency preparedness planning, legal services are always cheaper and more effective when obtained at the right time, in advance, in order to prevent future problems. In our Planning for Business Expansion Financing blog post, we talked about one of those milestones: preparing to obtain first stage financing. Most business owners know they also should consult with a lawyer when forming a new business or when they are sued.
However, what other milestones in the life of your business are the right times to get legal help and when is consulting with a lawyer as a preventative measure the most cost-effective? Some common milestones include :
- Formation: select and form the entity, document agreements between business partners, obtain the right licenses and insurance
- Hiring the first employee: information on insurance, disclosures, employment policies, contracts, confirm which state and federal laws apply
- Hiring the 11th employee: same issues as above, but now different laws will apply and policies may need to change
- Hiring the 50th employee: even more of the same
- Purchasing or leasing real estate: evaluate options for how the property will be financed and held; review the lease
- Purchasing, licensing or protecting intellectual property: due diligence to confirm ownership, options to protect property (trademark, patent or copyright), review key licenses
- Contracts: review critical clauses for termination, insurance and indemnification issues and complete scope. Create strong form contracts
- Litigation: get paid for work performed, enforce contracts, protect intellectual property, and defend the business from lawsuits
- Expansion: update the capital structure to accommodate new partners and financing, review loans and financing vehicles, plan for major negotiations
- Succession Planning: prepare for the business to grow or the founders to exit, divorce or reduce their involvement
- Mergers and Acquisitions: due diligence, negotiations, document the deal, track the deal through to completion
- Buy/Sell: similar actions as for mergers and acquisitions
Consulting with an attorney BEFORE reaching any of these milestones is almost always cheaper in the long run than hiring an attorney after the milestone. Your goal during that “emergency preparedness” consultation is risk management: to understand the risks and pitfalls that may occur when your business achieves the upcoming milestone, and, if negotiations with others (like employees, partners or vendors) are involved, be prepared to negotiate the most favorable deal.
When your business is approaching a milestone event, contact our Business Law Group partner, David A. Closson, for an “emergency preparedness” consultation, at [email protected].