Every year, entrepreneurial Americans launch new businesses. 2022 alone saw a little over 5 million new businesses.
At first, someone launching a business worries about things like inventory, equipment, and locking in staffing. In fact, those kinds of concerns can often overshadow equally important but more abstract concerns.
Many new business owners forget that there are often legal necessities that they must watch out for. You can, in theory, deal with some of those concerns yourself. There are, however, many legal hurdles where a corporate lawyer is all but indispensable.
Keep reading for five reasons why your business needs a corporate lawyer.
1. Help You Choose a Business Structure
With the exception of certain kinds of sole proprietorships, most businesses must adopt some kind of legal structure. There are several choices that you can pick between, such as:
- S Corp
- C Corp
Each of these business structures offers potential benefits and disadvantages. For example, an LLC can simplify your taxes, but can’t issue stock. A C corp has more complicated taxes, but it can issue stock.
A corporate lawyer can discuss the type of business you plan on opening with you. Based on that information, they can make a recommendation about what kind of structure will benefit your business in the short and long term.
For example, let’s say that you plan on launching a social media platform. While it’s not necessarily on your mind right now, you may want investors down the road.
Investors typically want a percentage of the company that they receive in stock. In this instance, your lawyer might recommend a C corp to facilitate issuing stock.
2. Protect Intellectual Property
Many businesses, even small businesses, often own intellectual property. For example, a small business may come up with a new design for a product. That design is intellectual property.
If you don’t legally protect the design, anyone can potentially steal it. One of the ways that you can protect intellectual property is through the patent system. While a lawyer isn’t absolutely essential to the process, they can often serve as a helpful guide to getting your patent.
Another way that you can protect intellectual property is through the trademark process. In essence, you get legal protection so that no one else can use images or phrases specifically associated with your business. Trademarks are particularly useful for logos, slogans, and brand names.
Of course, corporate lawyer benefits go beyond helping secure patents and trademarks. Once you have those protections in place, your lawyer can help you enforce those protections.
For example, they can send out cease-and-desist letters to people who infringe on your patents, trademarks, or copyrighted material. If worse comes to worst, they can even prepare lawsuits for you.
3. Managing Lawsuits
It’s an unfortunate truth that businesses wind up as defendants in lawsuits on a regular basis. In some cases, these lawsuits arise from a legitimate complaint. For example, your business doesn’t deliver an order on time which disrupts another business from fulfilling its obligations.
In other cases, businesses wind up as the victims of frivolous lawsuits. These are typically lawsuits filed by someone looking to make a quick buck by settling with the business or their insurance company.
Regardless of the source of the lawsuit, you still need to hire a lawyer to manage the lawsuit for you. Having someone who already knows your business well is one of the business lawyers benefits that you enjoy during a lawsuit.
Since your lawyer already knows your business, they can spend most of their time focused on the specifics of the case. They will also prove helpful in keeping track of and analyzing the paperwork that lawsuits generate.
If the case does eventually go to trial, you have someone to represent you or make a recommendation for someone to represent you.
4. Drafting Paperwork
New business owners often fail to realize exactly how much legal paperwork running a business involves. For example, businesses often want to hire people using contracts.
Yes, you can find boilerplate contracts online. Those boilerplate contracts often require a lot of adjustment to fit your specific needs. Unless your legalese is excellent, you can end up with contracts that don’t say what you want them to say.
Using a lawyer to create contracts means you wind up with the exact contract you want from the start.
Beyond that, lawyers can help you devise non-disclosure agreements that will stick. For example, let’s say that you’re meeting with a potential investor that you don’t know well. You might want an NDA from them prior to disclosing specific details of a new invention or product.
As for employees, your lawyer can even build confidentiality clauses or non-disclosure agreements into contracts for you.
5. Future Business Acquisitions
Another thing that new business owners often don’t consider is the possibility of buying out or merging with another business down the road. Yet, if your business becomes successful, you can find yourself in a position to do just that.
When it comes to mergers and acquisitions, you want corporate legal solutions on hand. M&A involves a veritable mountain of detailed negotiations, due diligence, and paperwork. A corporate lawyer or law firm is ideally suited to handle that kind of work for you.
That frees you up to manage the high-level negotiations and move on to the other pressing work that all business owners face.
Businesses Need a Corporate Lawyer
While it might not look like it at first blush, almost every business needs a corporate lawyer. Lawyers provide too many specialized and useful services that you can’t easily replicate.
For example, a corporate lawyer can give you advice about what business structure offers you the most long-term advantage. They can help protect your intellectual property and represent you in lawsuits.
They can draft important legal paperwork. They can also help you navigate the mergers and acquisitions process.
Looking for more tips on getting the most from your business? Check out our Business section for more posts.