When Do I Need A Business Lawyer?

Among the countless worries for entrepreneurs who are starting or are already running a small business, is the question of whether they need a business lawyer. There is a perception that attorneys charge high rates and many small businesses don't have much, if any, extra capital with which to pay lawyers.

As a result, most small business owners only hire an attorney experienced with business matters when confronted with a serious legal problem such as sued by a customer. However, legal help is a cost of doing business that often saves you money and helps your business in the long run.

In today’s business climate, every business owner needs to have a lawyer on their team. Lawsuits and other legal complications can arise seemingly out of nowhere, and you will need to be protected. Here are five reasons you should have a relationship with a business lawyer and you will also see that it is not necessarily expensive.

While you certainly don't need an attorney for every step of running your business, every ounce of prevention is worth a pound of the cure. This article will explain when you can cover legal issues on your own or with minimal attorney assistance and when you will definitely need a business lawyer.

All businesses need to be strategic when hiring attorneys for assistance. A lawyer will improve your ability to understand different legal issues. Certain situations make it necessary for business owners to involve their lawyers. These include being sued for discrimination by employees, legal violations and negotiating the sale of a business.

Entrepreneurs are constantly envisioning ways to improve their business and attain growth and longevity. Sometimes, however, growth and success take priority over one not-so obvious, yet critical business ingredient: a talented corporate attorney.

Many business owners risk not hiring a corporate attorney to avoid financial burdens, but others simply don’t know they need to retain a lawyer at all. In lacking an experienced corporate counsel, a company is strangely vulnerable on all fronts.

When You Might Need an Attorney for Business Start-up

There are certain matters that are fairly straightforward and/or not necessarily difficult to learn and therefore do not require the services of an attorney who charges at least R4000 per hour.

However, there are enough expenses associated with running a business, and many hurdles that a business will experience and by having a business lawyer on hand is always worth having when weighing out the risks involved or likely to be involved.

The following is a list of some tasks that business owners should consider being taken on by a business lawyer:

• Writing a business plan

• Researching and picking a name for your business (previously trademarked business names can be researched online)

• Reserving a domain name for your website

• Creating a legal partnership agreement, limited liability company (LLC) operating agreement, or shareholder's agreement

• Applying for an employer identification number (EIN), which you will need for employee tax purposes

• Applying for any licenses and permits the business requires

• Interviewing and hiring employees (there are laws which regulate the hiring of employees)

• Submitting necessary SARS forms

• Documenting LLC meetings

• Hiring independent contractors and contracting with vendors

• Creating contracts for use with customers or clients

• Creating a buy-sell agreement with partners

• Updating any partnership, LLC, or shareholder's agreements under which you are currently operating

• Handling audits initiated by the SARS

• Navigating the many forms and requirements of legal documents, like incorporation documents, that are involved.

• Assurance the start-up is being done right.

• Enabling you to focus on other aspects of the business so you don't have to spend time learning the legal processes.

• Support with specific tasks like trademarking your name, reviewing lease documents, discussing potential legal structures, and preparing incorporation forms.

• Online legal form providers don't always do it right. Businesses aren't one-size-fits-all, so blanket legal documents don't always work.
 

The above is not an exhaustive list of legal tasks however it should be stated that if your business is not well-funded or you feel that you don’t need the assistance of an attorney, you can always attempt to see to the above as a business owner yourself.

Issues Where You Will Need a Business Lawyer:

Most of the issues outlined above can be handled by any intelligent business owner (if you can run a business, you can certainly fill out SARS forms or fill in business forms. There are times, however, when a business faces issues that are too complex, too time consuming, or fraught with liability issues. And at that point, the smartest move is to retain a business lawyer.

A few examples include:

• Former, current, or prospective employees suing on the grounds of discrimination in hiring, firing (unfair dismissals), or hostile work environment
• Local, national, or international government entities filing complaints or investigating your business for violation of any laws.
• You want to make a special allocation of profits and losses or you want to contribute appreciated property to your partnership or LLC agreement
• An environmental issue arises and your business is involved; even if your business didn't cause the environmental problem, you may still be penalized
• Negotiating for the sale or your company or for the acquisition of another company or its assets


An Ounce of Prevention

While you certainly need to retain an attorney for the serious issues above, your emphasis should be placed on preventing such occurrences in the first place.

Prevention does not necessarily involve hiring an attorney, though consulting with one wouldn't hurt. By the time you or your business is sued, the preventable damage has already been done and the only question that remains is how much you'll be paying in attorney's fees, court fees, and damages.

Such as, by the time a prospective employee files a lawsuit claiming gender discrimination based in part upon questions posed at the job interview, all you can do is hire an attorney to defend the lawsuit.

If, on the other hand, you had done your own research on anti-discrimination laws, or you had consulted an attorney beforehand, you would have known not to inquire as to whether the applicant was pregnant or planned on becoming pregnant. The small effort at the beginning of the process would save you an enormous problem later and let’s not forget the legal fees now involved.

To prevent unnecessary attorney costs at the inception of your business as well as tremendous costs after a lawsuit has been filed, you might consider a consultation arrangement with an attorney. Such an arrangement would entail you doing most of the legwork of research and the attorney providing legal review or guidance.

For example, you might use self-help and online sources to create a contract with a vendor and ask an attorney to simply review and offer suggestions. Or from my previous example, you might research types of questions to ask during an interview and then send the list to an attorney for his or her approval.

This way, you prevent the potential problem later and the cost to you is minimal because you've already done most of the work and the attorney simply reviews your document.

Get in Touch with a Business Attorney Before You Will Actually Need One:

You won't need a lawyer for each and every legal issue that comes up in your business. But when you do, it's good to know where to find the right one. And -- more to the point -- you may not know you need legal help until it's too late, as attorneys can help you stay in compliance with the law and spot developing legal issues early. Get ahead of the curve by finding an experienced small business attorney near you today.

Here are six short undeniable reasons why your company needs an attorney today:

1. Gain a key business advisor without supporting the weight of a new employee.
A business attorney isn’t just there to represent you in court. Rather, your business lawyer is trained to advise you in a variety of matters concerning your company, including contract formation, mergers, taxes and more – all without you having to hire him/her as a new employee.

2. Develop stronger, good faith relationships with investors.
As a new business, you will most likely team up with investors in multiple phases to help get off the ground. An investor will typically request a myriad of essential documents before an agreement is reached. Your corporate attorney can ensure all documents are complete, accurate and properly stored.

3. Educate staff about your business and the laws that apply.
A strong corporate lawyer can teach. Your attorney is able to educate you and your staff regarding various legalities and illegalities throughout the course of your day-to-day business. Your entire operation becomes more efficient and compliant as a result.

4. Develop smarter legal relationships with business partners.
Have a business partner? As you form your company, you’ll need to articulate that relationship in a legal context. Your attorney can assist you and your partner(s) in constructing and agreeing upon a legally binding relationship that will benefit all parties long term.

5. Use your attorney’s connections to spread the word about your business.
Any experienced, well-established business lawyer will typically have a wide variety of connections. And any competent attorney will tap into his/her network to send business your way.

6. Follow the law.
Ignorance is not a defence. Unfortunately, many individuals are convicted of crimes they didn’t know they were committing at the time, especially white collar infractions. But with a business attorney at your side, you can ensure your company complies with all applicable laws and avoids costly litigation

Having a lawyer on your team can tilt the field to your advantage in the event of a lawsuit.

If you are threatened with legal action, having a lawyer already on your team means that he already knows your business, which allows him to hit the ground running. Even more importantly, a savvy business lawyer will have constructed your business agreements in such a way that you will have an immediate advantage in a legal dispute.

A lawyer can ensure that your contracts and legal agreements are airtight.

Many business owners don’t grasp the importance of solid contracts until it is too late. As a result, their agreements are vague or incomplete, and their clients, contractors, and associates may be able to take advantage. Having a lawyer on your team can help you avoid these costly oversights.

An experienced business lawyer can help you avoid mistakes of which you were not even aware.

Running a business is full of potential legal pitfalls. This proves true for both experienced entrepreneurs and young business owners who are just getting started.  A good business lawyer, with specific knowledge of your business, will help you avoid problems that you did not know existed, which can save you huge amounts of money and stress.

An experienced lawyer will know who to refer you to if you need other specialized assistance.

A business lawyer can quickly help you realize when you need additional help – especially with complicated tax matters, or any other specialized assistance. A well-connected business lawyer will be able to quickly refer you to other professionals that can provide the assistance and the guidance that your business needs.

Having a business attorney on your team can make it easier to get paid.

If a client, vendor, partner, or other associate owes you money and is dragging his feet on the matter, by simply asking your lawyer to send a request on your behalf, you can motivate immediate action. In the event that this alone is not enough to convince the individual to pay, your lawyer will know what your next steps should be in order to collect the money you are owed.

Whether you need an attorney to start your business depends on what type of business you're starting. The simpler your business, the less you'll need an attorney.

However, having read the above article, you will realise that having a business lawyer will be more of an asset to you than just another expense on your expenditure sheet. Consulting with a business lawyer is a smart idea when you’re forming a business, managing a business, transferring a business, or having trouble with your business, or just ensuring you’re always covered when needed.

With owning a business there are always risks involved and the best thing you could do for you and your business is to take the necessary preventative measures – one of them being, having an excellent business lawyer by your side.

Never commit yourself or absolve yourself from anything before consulting with your business lawyer, never place yourself in the line of fire prior to taking all essential provisions into account, never acquaint or entertain anything that could put your name or your business at risk and the best way to keep you and your business safe is to have a business lawyer that knows your business and your businesses best interests at heart.

If you own a business, you need a lawyer on your team – it is that simple. We are proud to offer assistance for businesses that lacks the resources or needs for a full-time, in-house counsel. Our firm enables businesses to receive the ongoing legal guidance that they need.


Petrushka Hemraj

Candidate Attorney
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