When Should I Hire a Business Lawyer?

In general, most of us aren’t thrilled about the idea of seeing a lawyer. We tend to associate that with legal problems, and nobody wants to deal with those. But sometimes, a business lawyer is just what you need. And for more than just dealing with legal problems – a good business lawyer can help you set up your business, handle your intellectual property rights, create good contracts, and establish good employment practices. They’ll also help keep you informed about changes in local and federal laws that might affect your business. In other words, working with your business lawyer upfront can actually help you avoid facing legal trouble down the road. And if legal trouble does arise, your lawyer is there to help you deal with it.

Of course, hiring a lawyer costs money – and small or new businesses are often on a tight budget. That means it doesn’t make sense to go to a lawyer for every single issue that might have legal implications. But it can be tough to know when you can handle a legal question yourself and when you should contact a business lawyer. So here are a few of the times when a lawyer is worth it.

1. Changing Your Business Structure or Ownership

One of the first challenges you face when setting up a new business is choosing a structure. That choice will impact your future company’s tax liability, stock options, and other matters. But when you first start out, you can probably handle the decision on your own. If you’re the only owner, you have the option to change your structure down the road if you need. Just remember to keep your business and personal finances separate!

However, if you do decide to change that structure, it’s time to talk to your business attorney. They’ll walk you through the pros and cons of the change and guide you through the process of getting it done. This is especially important if you’re bringing in new investors or partners. Anyone with ownership in the business has legal rights and you’ll need to create certain documents (like a shareholder’s agreement) to set out how the business relationships are going to work, define each party’s role, and outline a structure for dispute resolution, among other issues.

2. Creating Contracts

For most non-lawyers, contracts are a maze of legalese and confusing jargon. As you start your business, it’s worthwhile to sit down with your business attorney to draw up standard contracts that you’ll use when you work with suppliers, clients, and other relevant parties. They’ll be able to spot issues that you may not have considered and they’ll also be able to make the contract legally clear and enforceable.

For a lot of day-to-day, simple transactions, a standard contract will do the trick. If you’re working on a bigger deal or a long-term arrangement (like a lease or a loan, for example), it’s time to go see your attorney again to work out the details of that specific contract. There may be serious tax implications or terms that give the other party a lot of power or leeway and your attorney can help you spot those and negotiate the terms.

Signing a contract that you don’t understand or that doesn’t cover important issues is a recipe for expensive and time-consuming litigation down the road, so invest in the legal advice upfront to help avoid it.

3. Issues With Employees

Employment law is a specialized and complex field. The rules for overtime pay, family leave, workers’ comp, and various employees’ rights change periodically and it can be hard to stay up to date on all the rules and regs. Your legal obligations to your employees may also change depending on the size and structure of your business. As you start to layout your employment policies, take an hour to sit down with your business attorney to make sure you understand your legal rights and obligations and those of your employees.

If you’re considering an unusual employment situation (like paying employees in stock options, for example), this is even more important. Again, there may be tax implications and you and your employees will have different legal rights and obligations. You want to address all those issues out front.

And of course, you’ll need to work with your business attorney if an employee brings a complaint. Harassment and discrimination obviously require the assistance of an attorney, but consider giving your lawyer a call even for smaller issues. Saying the wrong thing about something as simple as a dispute over pay could open you up to liability. Hear your employee’s complaint and then talk to your lawyer before you do anything about it.

4. If You Get Sued

Unfortunately, the nature of doing business may mean that your business may face a lawsuit. It’s fairly common for a lawsuit to be sent directly to your attorney anyway. They’ll help you understand the basis for the dispute and the options for dealing with it. For example, contract disputes can often be handled through mediation or arbitration rather than an expensive lawsuit.

Your Business Attorney Is A Great Resource – Use Them

Don’t wait until you’re facing a giant lawsuit to find a business attorney. They’re there for a lot more than just representing you in court. They can help you set your business up for success from the get-go! Consider finding a business attorney early on in the lifespan of your venture and starting to build a relationship with them. Keeping them involved in the ins and outs of your business means they’ll be able to do better work for you.

And don’t be afraid to shop around for a business attorney that fits your budget – not all attorneys charge the same rates and many are willing to work on a sliding scale or do pro bono (free) work to help new businesses get off the ground. To find an experienced business attorney in your area, both the American Bar Association and FindLaw offer searchable online resources.