I Own a Small Business, Do I Need a Business Lawyer?
I get asked this question all of the time. Mainly, this question comes from people I run into that own and function a small business and have always done things for themselves. The business may have a few employees, own some assets and is quite profitable. When speaking with them, I always hear “I don’t really have any legal problems so why do I need a lawyer? Business is good and my employees love me.” Well, when I hear this, I know what I am getting into.
The first thing I ask these people is: how is your business structured? LLC? Corporation? Once we determine that answer, the next questions become: Do you have an operating agreement if you are an LLC or by-laws if you are a corporation? Do you have annual meeting minutes? Seven out of ten times people respond “no” to these questions. This is why they need a business lawyer. If they are not following corporate formalities and organizational protocols and someone would sue the company, the chance of that plaintiff piercing the corporate veil and attacking the owner’s personal assets increases exponentially.
Another question I ask is: do you have written contracts for the work you perform and the business dealing you are involved in? About 4 out of 10 say no. Again, this is why they need a business lawyer. The handshake agreement doesn’t work in today’s society. Everything should be in writing, not because you can trust no one, it is because you need to protect your rights. If they don’t have contracts they use or have written them themselves, you can bet that they will use insane amounts of money to settle disputes that could have been prevented by working with a business lawyer from the start.
Lastly, I usually ask them if they understand the various federal and state employment laws that govern the employer-employee relationship. Most respond with “Pennsylvania is an employee at will state and I can fire anyone at anytime.” This is what I call a ticking time bomb. Yes, it is true that Pennsylvania recognizes employment at will; however, there are various laws that give employees protection from discrimination, unfair treatment, unfair wages, etc. Most of the time these business owners have no idea what they don’t know and end up doing something that costs them ten of thousands of dollars to settle. This is why they need a business lawyer.
So as you can see, there are many reasons to work with a business lawyer when you own a business from the start. People improperly assume that the only time they will need a lawyer is in the event that they get sued. However, a good business lawyer will help you run your business in a way that limits the reasons for which you could be sued at a fraction of the cost it will take to litigate and resolve a argument down the road.