Starting a small business can be both exciting and risky. Small companies usually do not have deep pockets; however, there is still risk involved when it comes to business development. The best news is that hiring an experienced small business lawyer does not need to break the bank, but it could save you from expensive legal trouble in the future. All of that being said, here are a few common scenarios where small businesses and startups should seriously consider retaining a small business lawyer:
Contracts and agreements: The importance of hiring qualified personnel to draft business contracts cannot be overstated. There are thousands of contracts in use every day and many of them contain language that is vague or that is written in poor English. When a small business owner or startup wants to sign an agreement or contract, he or she should do so with a lawyer on retainer. The last thing you want is for something in your contract to become legally worthless because your company did not have the budget to have it translated. By hiring a small business attorney to review and enforce such agreements, you could rest assured that you are not putting your business at further risk.
Intellectual property: Protecting your small business intellectual property is also very important. Most small businesses have some form of intellectual property (IP) that they have developed and that is owned by the business. This IP may include trade secrets, domain names, slogans, logos, or website content. There are a variety of reasons why a company would wish to protect its intellectual property, but the most common reason is so that others will not steal your ideas and your business model. This is why attorneys specializing in IP cases are so valuable.
Business formation: When a new small business is forming, it is essential that the owners and entrepreneurs understand their legal rights and responsibilities when it comes to establishing a corporation. Without having an experienced business lawyer on retainer, small businesses are leaving themselves open to many costly lawsuits. Also, by allowing other people to form a corporation for them without consulting with a licensed attorney, the business owner might be opening themselves up to serious business risks. By working with an attorney experienced with small business corporations, a business owner can make sure that his or her intellectual property is protected legally.
Franchise law: Another area where hiring a small business lawyer can help protect a small business is with franchise laws. When a franchisee buys into a company, he or she often becomes a partner. That partnership quickly takes a turn for the worse when the franchisee finds out that the company he or she was a partner in is not really what he or she thought it was. As with all partnerships, it is imperative that the franchisees take their rights seriously and hire an attorney to help protect them. A lawyer will help determine which laws the franchise will need to follow and he or she can also help the franchisees deal with the bureaucracy that often comes about when companies try to protect themselves from such claims.
Commercial leases: While commercial leases are rarely litigated by attorneys, they do need to be handled carefully. Most of the time, small business owners will enter into agreements blindly. Sometimes these agreements create new legal problems for the owner. For example, if the owner does not fully read over the fine print before signing the agreement, he or she may find that the agreement contains some sort of stipulation that could be interpreted as a restrictive covenant between him or her and the company. Such clauses can have serious legal implications.
Operating agreements and partnership agreements: Just as with commercial leases and franchise agreements, operating agreements and partnership agreements should also be carefully considered before signing. Often times, there are specific financial penalties that become due to a company going out of business. Similarly, there may be specific requirements that apply to a particular type of operations. For example, there may be strict limitations on how much money one partner can contribute to the venture (e.g., a lease option). Such considerations should be made before entering into an agreement.
Capital raise: Last but not least, some partnerships and investments require that some sort of repayment to be made at the conclusion of the partnership or investment. In many instances, small business attorneys will not sign such agreements unless the partners in the venture offer to repay all or a portion of their capital on a case by case basis. Again, consulting with a small business lawyer is extremely important. This is especially true where the venture capital firms are involved.