Why do Business Owners Need Attorneys?

Business owners do not work in vacuums all by themselves. They hire employees, use contractors and sign contracts with vendors, business associates and clients. They have to anticipate and plan for risks, problems, joys, successes and crises. Planning for all the "what ifs" and all the "If ____ happens, then ______" can be overwhelming.

That's why owners form alliances and utilize the services of professionals like bookkeepers, CPAs, attorneys and IT specialists, just to name a few. This article is an overview of five general areas where attorneys can help business owners of all types. There are (obviously) many other reasons why business owners use attorneys. Those reasons vary according to the types of businesses, states/countries where business is conducted and specific needs of the owners.    

A business structure is any tool that business owners use to protect their assets or streamline business operations.

Some business owners choose to protect their personal assets and limit their personal liabilities by conducting their businesses out of an entity (S corp, LLC or C corp). Selecting the entity type depends upon a variety of factors. A business owner who uses an entity must run the businesses separately from conducting other affairs, or the "shelter" or "veil" of the entity can be pieced. If the veil is pierced, then the business owner can be personally for damaged incurred by an injured party.

Another type structure is a contract, agreement or any document that is intended to bind people in terms of behaviors and/or activities. While contracts are available at office supply stores or online, these contracts may not be specific enough to cover all of the needs of business owners. These template contracts may not contain all the requirements for business done in the state where the entity was created. These generic contracts may not be useful to business owners doing business outside the US. Contracts that are properly drafted can save business owners tens of thousands of dollars and months and/or years spent to litigate who the parties actually are, what they actually agreed and what the damages were for the actions/inactions/ wrong actions of one party, both parties, all parties, users of products or anyone affected in the course of business.

Business owners want structures that can be used to register and protect their intellectual property. Patents and trade secrets can be used for inventions and processes that business owners want marked as "theirs." Trademarks and service marks can be essential for some business owners. Registering a copyright can give holders certain benefits.       

People are a part of all business operations. Some business owners need assistance but believe they do not need employees. They hire independent contractors and then add employees as they need them at a later date. Sometimes employees and contractors work together and discover that they have different classifications but are conducting similar duties in similar manners. This discovery can lead problems if contractors may seek back pay and benefits. Resolving these disputes can become expensive and time-consuming for business owners.         

Business owners have to follow federal, state and local laws. They have to draft employee manuals and policies. They need internal documents that cover all recruiting, screening, hiring, promoting, firing and emergency needs.   

A business owner may be a member of a profession that restricts him from taking advantage of some business opportunities. Some professions, like psychology, law, medicine, finance and accounting are strictly regulated. Members of these professions cannot work in some capacities or make some statements without being disciplined.

Alternatively, a business owner may have a great idea for a business and have a location picked out that is actually high risk for future complications. An attorney can help the business owner select a location that is low risk. For example, an owner that wants to build an outdoor climbing wall near a local elementary school may face opposition from the parents of children who attend the school. This could lead to a nuisance lawsuit. Choosing a location farther away from the school would avoid unnecessary conflict. 

Attorneys can act as sounding boards for business owners. A sounding board is a no-risk test zone for business owners. They can run ideas past attorneys who knows and understands them. An attorney who knows her clients think can anticipate problems that her clients may overlook due to their enthusiastic about their business ideas. In the above example, an attorney would tell her client that outdoor climbing walls are best located away from where children congregate, likes parks, schools and malls.

My clients helped me to group their needs into these five categories. When they are worried about conflicts that are ramping up, we talk about dispute resolution. We talk about how to approach the settlement process. We also discuss the details and impacts of litigation. When they want to implement plans that believe are "the next big thing," we talk out the details and look at the risks. HR comes up regularly. HR issues are best handled sooner rather than later. Problems between people (what I call "the human factor") can escalate with little or no warning and become emotionally volatile in the blink of an eye. Methods and plans for conflict resolution can be applied and used in almost an automated fashion. This takes the emotions out of situations and diffuses them fairly easily. When crises are avoided, business owners can give everyone a reward (according to the handbook of course) and things can get back to business as usual.   

This article provides general information only. This article is not intended to be, nor is it, legal advice. If you need the assistance of an attorney, seek competent independent legal advice.