Five Good Reasons To Hire a Business Attorney Before You Think You Need One

Hiring a business attorney isn’t always a bad thing. In fact, hiring the right attorney at the right time can be a great thing, saving you from unnecessary liabilities and much larger future legal expenses. The best time to hire a business attorney is BEFORE you end up being on the wrong end of a lawsuit!

The American judicial system is arguably the best system in the world…but it has its downsides. First, it’s extremely easy to get into court both for plaintiffs and (by necessity) for defendants. That means, whether you like it or not, you can be sued by almost anyone for almost any reason. Even if someone files a frivolous lawsuit against you, it takes time, effort and money to find your way out of the judicial system.

And that leads to the second point: it’s difficult to get out of the judicial system without spending a good chunk of money.

Third, while you don’t have to be a lawyer to bring or defend your own lawsuit, you will be held to the same standards as a lawyer. Translation: you really need to hire a lawyer to sue or defend a lawsuit, and that costs money.

So when is the best time to a small business owner to hire an attorney? There are hundreds of answers to that question, but here are five biggies:

  1. When you start a new business (or when you convert a sole proprietorship or partnership into a corporation or LLC). A good business attorney can help you understand the different business entities available and help you prepare the necessary paperwork. Sure, you can do it on your own, but what happens if things fall apart and you made a mistake setting up your business? Or worse yet, what happens if you are a huge success and you made a mistake at the start? Partners, suppliers, the taxman, friends and even relatives smell success like sharks smell blood. Surely you’ve heard of the Mark Zuckerberg and the Winklevoss twins (if not, watch “The Social Network” for some valuable business lessons).
  2. When you enter into contracts. As a business owner, you will do business with a lot of people: suppliers, service providers, independent contractors, landlords (for your commercial space), customers, and even your own employees! Most of your transactions will be subject to written agreements, and if you have employees, you should at least have an employee handbook with at-will language, a confidentiality clause and more! Some agreements will be good for you and some will be bad. You need a lawyer who knows your business well enough to help you negotiate good contracts…or at least advise you of the risks you face when you sign the agreement. If your friends say “you can get out of any contract”, that may be true…but it also might come at a high cost (we lawyers call them “damages”). If your friends think contracts aren’t worth the paper they’re written on, ask them to sign an indemnification agreement and see what they think.
  3. Taxes and Required Licenses. Your business attorney may not want to give you detailed tax advice (you should have a good accountant for that), but he or she certainly can give you a general understanding of the potential tax consequences of your particular business entity and your intended transactions. Your business attorney can help you obtain federal, and state tax ID numbers and will make sure you’re properly licensed to operate your particular business. Making a lot of money feels good…until you get hit with a tax or licensing notice for the last few years, wiping out your profits and turning your smile into a grimace.
  4. When you hire a new employee. When you hire your first employee, you’ll want to make sure you comply with the various federal and state rules and regulations. Even before you hire an employee, the way you draft your job description, the interview questions you ask and the way you dig into your prospective employees background (using Facebook, for example) are all ripe areas for problems. But they’re also areas you can easily avoid with good legal advice!
  5. Before you need it… The best time to hire a business attorney is before you need one! Look at it this way: you can wing it and risk defending a very expensive lawsuit, or you can spend a few hundred dollars now and reduce your risk of being sued later. Businesses who fly by the seat of their pants sometimes breathe a sigh of relief after a year or two of “make-it-up-as-you-go”. They are surprised when they’re served with a lawsuit several years later. Guess what—your mistakes today (even little innocuous oversights) can come back to haunt you three-four-five years later or more! Here’s another way to look at it. You can go to the dentist for regular checkups and cleanings and pay a small fee, or you can wait until you have tooth decay and pay for extractions, root canals or more!

Not all attorneys are created equal. When you hire an attorney to help with your business, hire a business attorney who not only does business law, but ideally someone who has done it successfully for many years. Need a divorce? Hire a family law attorney. Need a will. Hire an estate-planning attorney. Arrested? Hire a criminal defense attorney. You get the picture.

If you need to hire an attorney, we would be happy to send you a list of questions you might want to ask. Better yet, if you are interested in your own in-house counsel for your small business, then apply now for your 30 minute Corporate Legal Assessment. It’s a free 30-minute call to assess your current legal issues and find out if an in-house attorney is right for you.