Your Attorney is your Trusted Advisor

Law Talk – By Denice A. Gierach
As published in the Business Ledger – July 27, 2009

When you have given birth to that business idea, you want to take the idea and run with it.  You may or may not have experience to know the legal items that you will need and you may or may not have the accounting background to do a proper financial plan.  While both money and time are at a premium when you start a business, it is a good idea at that point in time to begin growing your team of advisors, one of which is a good business lawyer.

A good business lawyer can give you insights about your idea that you do not have.  Perhaps, your lawyer may have seen a similar idea, how that might have been developed and whether it worked or not.  Perhaps, your idea requires a patent or copyright to protect it, so allow you to market it without as much fear that it will be stolen from you.  Perhaps you will need to share it with another company who will be assisting you with marketing it and you feel uncomfortable doing so without having that company sign a legal document acknowledging the idea is yours.  Your lawyer will write up a confidentiality agreement for that purpose.

Your lawyer can assist with or review your business plan for the development of and marketing of the new idea.  Your lawyer can prepare the documents necessary to register your business with the state, and if your idea is national, to register your name with U.S. Patent office.  You may need to find investors, which may require a long look at how you structure the business, who is in control of the business, who runs the business day to day, how the investors might get their funds out of the business, whether the business must comply with either the state or federal securities laws, to name a few.  All of these things must be documented, so it is a good idea to review these issues with your lawyer.

If you are going to have partners, it is important to decide up front who is responsible for what job and who is in control.  As in a marital premarital agreement, it is a good idea to decide up front how to unwind the transaction between the partners, if they cannot get along, if they are unable to agree, if one partner has financial problems, or if a partner just wants out.  The best time to decide how to handle this is when the business is beginning.  Your lawyer can memorialize your agreements in either a shareholder agreement or an operating agreement, depending if you are using a corporate form of entity or a limited liability company form of entity.

Having assisted other clients in obtaining financing, your lawyer may be a good resource to a good business bank and may be able to assist you in obtaining your working capital loans.  A commercial lender will always have voluminous documents meant to protect the bank, but who will be looking out for your interest in those documents?  Your business lawyer will be able to decipher all of the verbage and identify the areas that should be of concern to you.

Once the business is started, you will need space to operate the business in.  If you lease your space, the commercial leases these days may be forty to fifty pages.  You, the entrepreneur, may have negotiated the economic terms, but do you want to spend the time to negotiate through the language? If you decide to buy the property, should the property be owned by a different business entity?

Maybe you are hiring subcontractors and need an agreement that you can use.  Maybe you will be hiring some employees.  Do you need to have an agreement?  What needs to be included in such agreement?  Your business lawyer can provide this for you.

As you can tell, there is a lot that a good business lawyer can do to help guide you through your transaction, which will hopefully protect you from problems in the future.  Many entrepreneurs feel that they have to do everything themselves, even delving into areas that are not their “strong suit.”  Over time, they report that they become increasingly isolated, wishing that they could have someone to run their ideas past—a trusted advisor.  They wish that they had started using the trusted advisor sooner.

How do I know this?  I am their business attorney.