Whether you are an existing business or a new startup, having legal representation can be the difference between long-term success or bankruptcy. Long-standing companies can become complacent after not experiencing legal issues, only to become overwhelmed when a crisis eventually rears its head, and entrepreneurs with a strong vision tend to focus on the specifics of developing, manufacturing, promoting, and selling their new idea, product, or service, not legal protection. What they all commonly fail to address – and what can sink any new venture or established business – is not securing legal representation from the start. There are many legal threats a business can experience, whether they are a sole proprietor or have hundreds of employees. In order to avoid the negative repercussions of any avoidable mistakes, here are a few common legal issues businesses should be aware of:
While it might seem like a given – don’t talk about business topics that are considered “top secret”, such as manufacturing processes, product ingredients or formulations, company protocols, etc., — it may not be that obvious to every employee, client, or business partner, and to many, it just isn’t a priority or a concern. A business may not even be aware of the financial harm that could be caused by someone inadvertently sharing company information. Anyone employed by, or who interacts with your business, should sign a non-disclosure agreement (NDA) to ensure they don’t share proprietary information accidentally, or won’t purposefully share your ideas with the competition.
Life happens. Unfortunately, people also often leave this world too soon, as well. If you are the owner or partner of a company, what will happen to your business in the event of your demise? How will your stake in the company be resolved? Will your family retain ownership, be compensated fairly, or maintain control? If you have life insurance, will your policy be used to pay any business debts before being released to your beneficiaries? These are questions every business owner or partner should ask themselves. It is crucial that business owners and partners invest in a will kit that is overseen by a neutral legal representative to ensure the assets of their business is protected and that a designated owner be appointed in the event that they become unavailable.
Most entrepreneurs and startups will eventually need to address topics involving vesting at some point. Ownership of shares is important to business owners, co-founders, and investors, and is often a perk offered for investment funding. To whom, how much, and when that vesting is earned is a financial decision best arrives at with the help of a legal expert. Having a vesting plan in place can protect a business owner in the event that their partner leaves at a critical time in the company’s development – and prevents them from being able to take more than their fair share.
It can be hard for small business owners to imagine that they can possibly be faced with the prospect of others infringing on their intellectual property assets until it’s too late. It is worth the time and money investment to get seek legal aid to protect your trademarks, copyrights, patents and to ensure your trade secrets legally registered. It’s also wise to work out how those assets will be distributed in the event you or your partner are no longer alive. These are issues that don’t generally need constant legal representation and can be handled by attorneys on demand.
Many new companies create brands and use terms they think are original, without actually checking whether there is already a similarly branded product, name, or trademarked idea in place. The problem is, if a new company (or even an existing company) tries to promote a product or idea that has a previous patent or trademark, they can be sued. A trademark lawyer can ensure that not only has a company not encroached on another company’s trademark, but will fight back when competing businesses try to use their trademarks. Startups shouldn’t be discouraged about legal issue costs because attorneys on demand make it affordable.
There are many different business structures, and all of them need specific legal representation and protection. From sole proprietors to corporations, S corporations, limited liability companies, partnerships, all business companies have needs when it comes to structuring. Whether a company is privately or publicly funded factors in as well. Bringing in new investors is always a signal a company needs legal advice. New business owners should invest in legal advice to ensure they’ve structured their new business in the best way possible.
Besides protecting a company and their loved ones in their business venture, there are other key benefits to accessing legal help. They include gaining a key business advisor – companies don’t need to hire a new department to deal with legal issues. A business attorney will represent companies in court. In addition, business lawyers are trained to advise companies in a variety of different issues they never imagined needing addressing, including anything concerning their company, contract formation, taxes, mergers, and more, without having to hire entire departments to handle the issues.