5 Questions Business Owners Should Ask Lawyers but Rarely do (Part 1)
(As produced for the Salt Lake Chamber of Commerce : http://slchamber.com/blog/5-questions-businesses-owners-should-ask-a-lawyer-but-rarely-do-pt-i-10004190.htm)
As a business owner first and foremost, I got my law degree to better understand and to participate in the legal system that played such a big role in my various businesses. Let me share with you some of the things I have found to be most helpful when dealing with legal issues for businesses.
Question 1: Why should I invest in legal services when starting a business? And why not use basic Internet forms?
Answer 1: Throughout my life I have learned that things often do not go exactly as planned. As an attorney, I have learned that proper planning from the outset can help improve the situation when the unexpected can and will happen.
If you want to save thousands if not millions of dollars for your business, start with quality legal advice and document preparation. Whether a business goes really well or really poorly, having it properly structured (and that structure being carefully and cautiously negotiated in the beginning) allows its owners to rest at ease knowing that win or lose, at least they know what they are getting.
In most business formation situations, whether the owners are sophisticated or not, I have found many concerns that the parties had not thought of or assumed could be dealt with later. In my experience, leaving concerns unresolved or unrecognized is only good for the lawyers.
Usually it is not until they are stuck in court that business owners think the small initial fees for competent legal advice on the front-end would have been superior to the legal battle they are now dealing with. Legal battles involve depositions, discovery, threats, delays and the obligation to pay a lot of money monthly over the next several years are not ideal. Additionally, legal battles tend to break up friendships and kill business interests that were once very viable.
Even though I would always recommend hiring competent legal counsel when organizing a business, I understand that attorneys aren’t cheap. Oftentimes incurring such an expense is simply impossible at that time. In these situations, even though Internet forms or “corporate services” from volume or discount service providers may be the only viable option to get the ball rolling, they will likely cause more problems than they solve. Phrases that seem commonplace to you may raise red flags for attorneys, and you do not want to bind your business to those terms without knowing the potential consequences.
It is worth budgeting an amount of money to meet with an attorney to discuss your business and what “ownership” or “management” means to all of the owners. Almost all attorneys will agree to a flat fee to meet with you and anyone that you want to bring to the meeting. As long as you are well prepared for the meeting you should walk away feeling more confident about the internal aspects of your business’ future.
Overall, planning ahead now may save you lots of money, frustration, friendships, and possibly your entire business. An attorney can help you structure the best situation for your business and can take your budgeting concerns into consideration.