When to Hire a Business Attorney

It is prudent for business owners to hire an attorney specializing in business law before facing a lawsuit or issues with employees.

By Brad Nakase, Attorney

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How Can a Business Attorney Help a Small Business?

The thought of hiring a business lawyer may not seem too appealing, due to the fact that most people associate seeing an attorney with legal problems. Of course, nobody wants to think about going to court or paying damages. However, there are many instances in which a business lawyer can be very helpful for growing small businesses. Plus, there can do a lot more than help out with legal dilemmas. In fact, a good business lawyer can help an entrepreneur establish his or her small business, manage their intellectual property rights, create legitimate and favorable contract, as well as put in place good employment practices. A business attorney will also help a small business owner stay up to date regarding charges in local and federal laws which might impact the business. Essentially, working with a business attorney can help a small business owner face legal problems down the road by planning ahead. Should any legal issues arise in the future, the attorney will be there to help the entrepreneur through it.

Of course, it can be expensive to retain a business attorney, especially for small businesses that do not have much money or are on a strict budget. This means that it might not make sense to go to an attorney for every single problem that might have legal ramifications. But it can be difficult to know when one can handle a problem on their own and when it is best to consult an expert. Therefore, below we will discuss some of the instances in which a business lawyer is worth consulting.

Therefore, below we will discuss some of the instances in which a business lawyer is worth consulting.

  1. Changing a Business Structure or Ownership

When an entrepreneur begins a new small business, one of the first issues he or she will face is the need to choose an entity structure for the business. This choice is not arbitrary; it will affect the company’s tax liability down the road, as well as stock options and other important business elements. However, when a business owner is first beginning his or her startup, they can likely handle this issue on their own, without the help of a lawyer. If the entrepreneur is the sole owner of the company, then he or she has the ability to change the structure in the future if needed. It is important to remember, of course, to keep business and personal finances separate.

That said, if a business owner decides to change the structure of their company at some point, then it is the appropriate time to speak to an experienced business attorney. The lawyer will explain the advantages and disadvantages of the switch, as well as guide the business owner through the process of changing the entity type. This is an important step if a business owner is bringing onboard new investors or partners. Any individual who has an ownership stake in the business has legal rights. Therefore, a business owner will need to create specific documents, such as a shareholder’s agreement, in order to lay out how the business relationships will work, what each party’s role will be, and how disputes will be resolved if ever they occur.

  1. Creating Contracts

For individuals without a legal background, contracts can be confusing due to strange legal jargon. When a business owner starts his or her company, therefore, they should be sure to consult a business attorney about how to create standard contracts. This way, the business owner can use these templates when working with clients, suppliers, and other necessary parties. An experienced business attorney will be capable of identifying issues that a business owner may not have thought about. They will also be able to craft a legible, clear, and enforceable contract.

When it comes to daily, simple transaction, a general contract will be more than enough. However, if a business owner is working on a big deal or a long-term arrangement (a lease, a loan, etc.), then it is best to consult an attorney to establish the details and terms of that important contract. In fact, there might be major tax implications or terms that grant the other party a lot of power or maneuverability. An attorney can help identify these problem areas and negotiate better terms.

It is a bad idea to sign a contract that one does not understand, or a contract that does not address vital issues. This kind of error can lead to expensive and time-consuming legal action in the future, so it is best to get legal advice at the start to prevent this from happening.

  1. Problems with Employees

The field of employment law is complex and specialized. Laws that govern overtime pay, workers’ comp, family leave, and employees’ rights routinely change. Therefore, it can difficult to stay current with all the different regulations and rules. A business owner’s legal duties to his or her employees may also change according to the structure and size of his or her company. As a business owner begins to structure his or her employment policies, it would be worthwhile to speak with a business attorney to ensure that he or she knows their legal rights and duties, as well as those of their employees.

If a business owner is pursuing a unique employment setup, such as paying employees in stock options, then it is even more important to consult a business lawyer. This is because there may be tax implications, in addition to the fact that the business owner as well as their employees have different legal rights and duties. All of these matters should be settled in the beginning.

Naturally, a business owner will also want to consult a business lawyer if an employee brings forward a complaint. Without question, harassment and discrimination problems require the help of an attorney. Small issues, however, may also benefit from an attorney’s assistance. Even saying the wrong thing about a pay dispute could open a business owner up to liabilities. A business owner should listen to the employee’s complaint and then consult their business lawyer prior to taking any action.

  1. If the Business Is Sued

One of the realities of running a business is the possibility of facing a lawsuit. It is likely that a lawsuit will be sent directly to one’s attorney, who will help a business owner understand the reason behind the dispute and what their options are for handling it. For instance, contract disputes may often be resolved through mediation or arbitration instead of a costly lawsuit. When facing a lawsuit, a business owner should contact a Los Angeles business dispute attorney to defend the lawsuit.

Conclusion

A business owner should not wait until he or she is facing a big lawsuit to contact a business lawyer. A business attorney can help a business owner with a variety of legal issues, not just going to court. In fact, they can help an entrepreneur set up their small business, putting it on the road to success right from the start. It is a good idea to identify a business lawyer early in the lifetime of a business so that the owner can build a relationship with their attorney. By keeping the lawyer apprised of the various aspects of the business, an owner can ensure that their lawyer is better able to assist when needed.

A business owner should not hesitate to shop around for the business lawyer that fits their needs and budget. Not all attorneys charge the same and a number of lawyers are okay with working on a sliding scale or doing free work to help startups get off the ground. In order to find an experienced business lawyer, a business owner should check both the American Bar Association’s and FindLaw’s searchable online resources.

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