It is better and cheaper to hire a lawyer at the start of a project than after it blows up.
A little Cost Now, or a Lot Later
Most people only think to hire a lawyer when they get into trouble or are threatened with (or need to threaten) a lawsuit. However, talking to an attorney early in your business venture can save you time, headaches, and money later.
Hiring a lawyer is a bit like going through a divorce. It is a whole lot cheaper to get into a tough spot than it is to get out of it. It's certainly a lot more paperwork.
How do you decide when to hire a lawyer while living on a limited budget? Each situation is different, but here are some helpful tips on when you should consider talking to an attorney.
Rushing Doesn't Help
Most small businesses owners are focused on getting their product or service to market. They want to generate sales as quickly as possible. Hiring a lawyer is not usually on the top of a new business owner’s list of things to do. However, you should hire a lawyer early because its a wise decision. You'd rather know up front if you have to include a disclosure on a form up front, than be sued by the FTC and shut down next year.
Ideally, all new business owners would look for an attorney to advise them immediately upon registering their business with the Secretary of State. Realistically, cost prevents some new businesses from employing counsel to do all those things. If you have wisely decided to hire a lawyer, we have reasonable cost structures for business. We even have some flat fee options. Contact us today at (888) 200-9824 to find out how easy it is to hire a lawyer to help you.
When safety is an issue
If your business could potentially cause injury to people, things, or property, you should hire an attorney before selling your product/service. Not only will you want to ensure your product/service does not harm others, but injuring another can result in direct catastrophic liability to you (even if you are incorporated), and could even lead to criminal prosecution. It simply makes sense to retain counsel when safety can be at issue. It is also wise to obtain an appropriate insurance policy, and your insurer can assist you in evaluating the safety risk of your business.
When the transaction is large
Few business owners ever believe their biggest transactions could result in loss or failure, especially if it is with someone they like or trust. However, the big transactions are the ones that you have the most to lose, and thus represent one of the most important times you should retain qualified counsel. Sometimes these big transactions are for the sale of good/services, and sometimes they are for large investments in resources or for property leases. Getting into a large transaction is usually a whole lot easier and cheaper than hiring counsel to get out of it (or keeping the other party in it).
When exposure to loss is large
Another factor to consider in thinking about hiring counsel is when money is tight is to look at your total exposure if the deal fails. If your greatest potential loss in the event the deal falls through is significant, then hiring counsel to help with the transaction is probably a wise idea. This is true whether the amount of money you could lose is great, or if the loss would represent a large percentage of your business. For new businesses, the risk here is usually located in their real estate lease or with startup loans. A real estate lease means considerable financial exposure because a large amount of money will be paid over a long period of time under a sizable number of conditions and obligations. It can also contain dangerous personal guarantees that you will want reviewed, as can personal guarantees on loans. Some loan contracts also contain cognovits, which are very risky clauses for borrowers.
Multiple small transactions
If your business model is selling something illegal in your area, you would probably benefit from knowing that early in your business’ life. We are not talking about drugs. You could be inadvertently failing to provide proper disclosures that makes each transaction illegal. For example, gyms are requires to provide specific language in each contract or they are rescindable indefinitely into the future. A class action challenging each small transaction would obviously be devastating. If your business relies on multiple small transactions, it would be wise to ensure those comply with any technical code.
Selling to consumers
If your business model sells goods or services that are used by people for household, family, or personal purposes, then you should talk with qualified counsel. Consumer laws cover every kind of supplier you can imagine, including car dealers, door-to-door salesman, debt collectors, retail stores, telesales, tax preparers, and others. These kinds of laws almost always include provisions where you must pay for the cost of the consumer’s lawyer if they sue you and win. Talk to a lawyer before selling to consumer good or service.