I’m not in trouble! Why does my small business need a lawyer?

July 18, 2021 | Written By N’kia

N'Kia, Parlatore Law Group

When does a small business need an attorney?

If you love mafia movies or tv shows, you already know that a business "needs" an attorney before it "NEEDS" an attorney. Here are a few times when every business, regardless of size, needs to at least consult an attorney. 

1.     FORMATION  

Your business structure determines your business' rights and responsibilities, including how you are required to run a business with that specific structure once you register it. Of course, the law gives you a lot of discretion on things like choosing the products you’re going to sell or deciding when you’re going to hire employees.  

But, for example, the law doesn’t let you register your business as a corporation and then run it like a sole proprietorship. So, if you are considering a corporation, you’ll probably want to figure out whether you can or want to deal with the requirements that are specific to corporations. 

A consultation with an attorney before registering your business is your opportunity to fully understand the distinctions between the various business structures, choose the best structure for your needs, and learn some of the DOs and DON'Ts of the business structure you choose. That way, you might be able to avoid later needing an attorney to defend against claims of noncompliance or help you bring your company into compliance. 

2.     CONTRACTS  

Frankly, contract law does not always seem to follow the rules of common sense. This is because many of the laws relevant to businesses factor in some sort of hook that is intended to protect specific groups of people – like consumers, tenants, or employees. But if you are the business owner in the equation, these hooks might seem to go against all reasonable assumptions. So, knowing the rules in advance increases your ability to follow them.  

For example, special rules often apply to certain types of contract clauses, particularly ones used for limiting either a party’s rights or liabilities – such as noncompetition (or “noncompete”) (which may soon become a thing of the past), waiver, and indemnity clauses. If your State allows your business to use these, it might have specific guidelines for the wording (or even font size or color) that it considers sufficient to make each type of clause valid.  

Unlike many other aspects of running a business, contracts are not so easy to just figure out as you go along. So, a bit of guidance from an attorney early on can help your business avoid using contract clauses that seem reasonable but may be invalid or unenforceable, as well as take advantage of tricky clauses that may beneficial but are only enforceable when written a certain way. That way, you might be able to avoid later needing an attorney to help you rewrite all your company’s contracts and figure out whether you can even enforce the ones you have already used. 

3.     DISPUTES  

The most common reason that dispute settlement negotiations stall or get prolonged is that both parties are absolutely convinced the law is on their side. Since two reasonable minds can disagree, it’s possible that both parties could be at least somewhat right. But regardless of how right (or wrong) either party may be, one of your main underlying goals for dispute settlement is assessing if/when it might be best to settle and if/when it might be best to take your chances in court.  

So, settlement negotiations involve more than back-and-forth offers and counteroffers based solely on how much money one party is demanding to be paid and how much another party is willing (or able) to pay. They involve legal analysis – (if you’re the party who might have to pay) how much a court might order you to pay vs. how much the other party is demanding now, (if you’re the party who might get paid) how much you’ll likely take home at the end of a lawsuit vs. how much the other party is offering now, etc. 

Very rarely do two parties with opposing interests agree on which one of them is wrong and exactly how to “right” the wrong. (If they did, there wouldn’t be much of a dispute to settle.) But guidance from an attorney before entering into negotiations can help you evaluate your business' legal rights and liabilities, which can help you decide when to compromise and when to stand your ground. That way, you might be able to settle a dispute sooner, and avoid later needing to hire an attorney to represent the company (or you) in a lawsuit. 

Due to budgetary concerns, small business owners regularly find themselves waiting to speak with an attorney once they feel they "NEED" one. (We get it!) However, even if your business isn't ready to put an attorney "on retainer" yet, simply consulting with one before making big decisions or changes can help your business avoid really, really needing one later. 

Contact N’kia to speak with her about your business' legal needs. She can be reached at: nkia@parlatorelawgroup.com or 919-335-6399. 

 


 

N’kia is Counsel with Parlatore Law Group and dedicates her practice primarily to business law concerns, including business formation and development, employment, board licensure, anti-competition, contract formation and disputes, and intellectual property. She also handles a variety of general civil litigation matters, with her special interest being defamation (libel and slander) and constitutional/civil rights interests. Her well-rounded legal background makes her well-equipped to meet her clients’ diverse needs. For more about N’Kia, click here.

 

 

 

 

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