As I represent so many small to mid-sized companies, I’m frequently asked for my best advice for these types of businesses. While the list is long and the advice can depend in part on the industry in which the businesses are in, the single best over-arching piece of advice for their success boils down to this: Hire a general counsel, work with him/her to develop your contracts and procedures, and talk to him/her monthly (or at least quarterly) about developments, changes to your business and growth.
Still, it never ceases to amaze me how many entrepreneurs, independent contractors and small to mid-sized companies still do not do this. Their reluctance seems to fall into two principal categories: cost, and the belief that they can work problems out themselves. Although I usually applaud optimism, this type of optimism is dangerously inaccurate, and can prove to be financially devastating.
Legal advice is not cost prohibitive
The leading excuse that I hear for avoidance of legal advice is cost. The reality is that most companies are too small to need (much less afford) their own in-house, full-time general counsel. Many make the mistake of assuming that this means they don’t need a general counsel – or can’t afford one – at all. Nothing could be further from the truth.
Many firms, including mine, serve as outside general counsel for a variety of businesses that aren’t at a stage requiring of in-house counsel. You can gain the benefits of solid business advice and years of experience in dealing with issues just like those you face, by retaining an attorney on an hourly basis, discussing with him/her your initial needs, conducting a review of your contracts and procedures, and touching base with that attorney on a monthly or quarterly basis about any changes to your businesses, your practices, your contracts, and with respect to growth. Attorneys can even ballpark the cost of projects to help a company budget for these needs.
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A general counsel can help level the playing field
Starbucks, Costco, Macy’s, Wells Fargo, Intel, Google, Johnson & Johnson, Kraft, Mattel, and Gensler all have in-house counsel, but there is no reason a smaller player can’t have the same advantages on call.
An outside general counsel can advise your startup on best practices and business strategies, just like the big guys. A business lawyer sees thousands of companies start up, grow, survive, thrive, and fail in your industry, in your sector, in your geographic location, in a variety of economic climates.
Those who are determined to learn from history are wise to heed the counsel of those who know.
Your general counsel can be your best partner for ensuring you play within the rules, sustain your growth, and enter into wise strategic partnerships.
General counsel can also help you avoid costly mistakes
The famous saying “You don’t know what you don’t know” is true, and it holds especially true in law. Whether intentional or not, a violation of the law can prove to be a costly – and sometimes very serious – mistake. Preventive maintenance makes good financial sense. It’s always cheaper and less stressful to avoid problems and mitigate risk to begin with than to try to repair the damage after harm has already been done.
An attorney can help you navigate unfamiliar waters and help ensure compliance with applicable laws, manage risk, and position your business for success. The best ally is one who has already seen the problems, crafted a variety of arguments regarding those issues, and who has negotiated resolutions or helped develop solutions. Business attorneys are adept at identifying risk and balancing both business and legal interests to arrive at workable solutions to even the most delicate of problems. And their contacts, insider knowledge, and connections can help you achieve more favorable solutions.
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Your attorney is your strongest advocate
As an entrepreneur, you already know that you can’t do it all, and that one of the best tools at your disposal is the ability to hire experts to help guide you. Your team should include a business attorney whose advocacy can help you navigate difficult situations by helping to weigh risks and consider alternatives and solutions.
An attorney can also lend you credibility in the event of a dispute by sending a message to the other party, alerting them that you already have trusted legal counsel on your side. And an attorney can help you in negotiations by being the bad guy insisting on certain contractual language so you can preserve your business relationship with the other contracting party.
Whatever your startup’s industry and whatever stage it is in, a business is well advised to seek – and heed – legal advice on an ongoing basis.
The foregoing is provided for informational purposes only, is not an advertisement, does not constitute legal advice or legal opinion, and does not create an attorney-client relationship. The content may not apply to the specific facts or a particular matter. You should not act or rely on any information contained in this article without first seeking the advice of an attorney licensed to practice in your jurisdiction.
