Why Every Small Business Needs an Attorney

By Scott Branam

Most small business owners rarely hesitate to take advantage of certain human resources -- such as accountants and insurance agents -- when they first start their businesses, and throughout the life of their businesses. Business owners view these resources as a cost of operating a business.

Business owners, unfortunately, don't often view attorneys in the same light. A business attorney is a resource that business owners should have in their portfolio of business advisors for consultation on a variety of issues. If you're a small business owner, you may need a business attorney at certain times more than others; however, you should always have an attorney at your fingertips.

Don’t wait till it’s too late

Business owners are hesitant to contact an attorney until a major issue arises. Do not wait until the sheriff is standing on your doorstep with a lawsuit. Lawsuits, whether you are the plaintiff or the defendant, are expensive, time consuming, and emotionally draining.

While there are costs associated with involving an attorney before a lawsuit occurs, those costs can be minor compared to the cost of litigation. Involving your attorney at an early stage can help you avoid situations that increase your business’s liability exposure, and save you money in the long term.

What an attorney can do for you

A business attorney can advise you on issues that your business may face throughout its existence; examples of issues include what legal entity (e.g. corporation vs. LLC) to use to form a business, the legal implications of using employees versus independent contractors, drafting and negotiating contracts, governmental entities that might be investigating your business, terminating a contract or employees, or merging or acquiring another business.

Any time your business is uncertain about a potential action that it might be taking, contact your business attorney to discuss the action and any ramifications that might result from that action. It is generally better to err on the side of caution and pull your business attorney in sooner rather than later.

As an example, let's look at how an attorney can help your business with contracts. Contracts are prevalent in all types of businesses, but businesses rarely have their attorneys review contracts before they are signed. An attorney can pinpoint typical problem clauses in contracts related to assignment, termination, and dispute resolution.

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More specifically, if your contract does not have an anti-assignment provision, the other party may be able to assign the contract to a third-party with whom you do not want to do business. Similarly, your attorney can change the contract to require that the parties mediate disputes before running to the courthouse, which may save your business money if a dispute arises. These are simply things that your attorney can do before a contract is signed that may save you money down the road.

Businesses are often quick to take action under an executed contract, such as withholding payments or terminating contracts, without consulting an attorney. Maybe the contract does not allow the business to terminate the contract without giving the other party the chance to cure the breach of the contract.

Similarly, if a business uses independent contractors, the business’s attorney can draft an independent contractor agreement that is favorable to the business. In that light, you should consult with an attorney before terminating any employees or independent contractors. Discuss these actions and issues with your attorney to ensure you are not exposing your business to greater risk.

It’s a relationship

Consider interactions with your attorney as relationship builders, rather than as individual transactions. Your attorney should invest time in understanding how your business operates to offer you the best advice. As you continue to work with your attorney, he or she will become more familiar with your business’s short and long-term business goals. Over time, this understanding will allow your attorney to become more efficient and effective with their advice.

In that light, don’t be afraid to demand a lot of your attorney in terms of advice. Like any other business advisor relationship, your attorney should add value to your business by protecting your business. Ultimately, your relationship with your attorney should grow to the point where your attorney relationship is one of your most important business relationships.

Like any good relationship, the relationship should be reciprocal. Good attorneys will candidly tell you when you can handle an issue without their involvement. An attorney should value the long-term nature of the relationship and not harm that relationship by billing you for work you can perform on your own. However, even if you think you can handle a matter on your own, it's always sensible to briefly check with your attorney to see if he or she thinks of issues that you may not have otherwise considered.

In conclusion, if you're a small business owner, a business attorney is a consistent resource you can utilize throughout the life of your business. An attorney is a necessary element to protect your business's short and long-term interests, -- and can save you time and money. Think of a business attorney as a cost of doing business, rather than as an expense related to repairing problems.