How to identify legal areas of concern at your business

Most of the time business owners identify the legal areas of concern for their businesses only when the issues are on fire. They become totally distracted by the fire and can no longer be actively involved in their growth. Instead of doing that, it is a good idea to try to identify problems before they fester and become major legal issues.

How is this done? First, you can see what consistent issues that you have had in your business in the past. Have you had a few discrimination or sexual harassment lawsuits in the last several years? Unless you have determined the cause of these lawsuits and have retrained your team that has been responsible, you could see these issues rise again.

Second, most business owners work closely with their management teams. When the management team has regular meetings, they raise issues for things that they see in their arenas. For instance, the head of manufacturing may have had some minor safety incidents that have happened that were not reported, or the safety reporting structure is not working correctly. The sales manager may see that the sales rep's who have left the company are violating a noncompetition clause in their agreement. The CFO may find that team members with an expense allowance are not providing the backup documentation that will protect the tax deductions for the company. There are numerous issues that turn up. Maybe the issue is dealt with, but sometimes not the underlying cause.

Third, business owners find out about potential legal issues from business associations that they are involved with, that may highlight the biggest legal issues that are expected in the next year. Alternatively, business owners find out what their friends are facing in their businesses as they interact with them at social events or the golf course.

What's wrong with this method of finding out what potential legal issues may be? For one, it is unstructured and haphazard. If the business owner happens to go to a conference, they may learn something that they have to pay attention to. If the management team thinks that they have solved a smaller issue, the business owner may never learn anything about it. In addition, when you are a small or medium-sized business without full-time legal counsel on staff, then you can't see the potential legal issues in everything from contracts to compliance. You only know what has been become an issue for you, or what you may have learned from someone else's issue.

A better way to properly identify potential legal problems is to use the services of an outsourced general counsel (OGC), who will do a risk assessment for every area of potential legal risk. That OGC will review the reports for each sector that have occurred in the past several years and interview each of the members of the management team. They may visit with line personnel to find issues that may not yet have risen to a problem, or review contracts to see where negotiating can occur or potential issues may lie, as well as take a deep dive in HR to make sure you are as compliant as possible while nurturing a healthy culture. The OGC can identify, evaluate, and recommend how to keep red flags from becoming a major legal issue in the future.

An OGC is an invaluable resource that works for you as an addition to your staff without the headcount and expensive of a full-time employee. You pay an agreed upon monthly fee for their services and they learn your business, help protect you from potential legal issues, as well as help advise you on a variety of business issues including succession planning, real estate, buying and selling business, and many other key needs.

I have found that many business owners and leaders think they can't afford an OGC, but the reality is you can't afford not to have one. Would you rather have to concentrate on a legal “fire,” or the growth of your business? It is up to you to decide.

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Denice Gierach

Gierach Law Firm

Denice Gierach is an attorney, CPA, Northwestern University business master's graduate, and has owned several businesses from real estate to manufacturing. She is the lead attorney at Gierach Law Firm in the Chicago area. With more than 30 years of experience, she has been a respected and sought-after resource for businesses looking to grow, sell, solve problems, and succeed long term. Her insights across business areas gives a fuller lens to business issues and solutions, and helps businesses grow and succeed with less time spent on legal issues and other time-consuming problems.

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