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Let's Make It Legal: When Should You Consult an Attorney?
Let’s Make it Legal: When Should You Consult an Attorney?
By Emily Chew
More women are going into business for themselves than ever before. Entrepreneurial women know that the road to business ownership and profitability can often lead to mountains of paperwork and decisions related to partnerships, contracts, employees, profit and loss, taxes and various other legal matters.
And life presents the occasional tricky situation, even for women who don’t own a business. How do you decide when to roll up your sleeves, do some research and handle these issues on your own? Do you know when consulting a lawyer is the best decision to save you time, money and future problems?
Imagine your daughter asks you to join in a venture to turn her jewelry-making hobby into a business. You might consider these options:
1) Hire a lawyer to incorporate the business
2) Form a limited liability company (LLC) for your daughter and yourself
3) Keep things simple by forming a partnership, and file for the necessary business license and permits
You probably wouldn’t need to hire a lawyer to get started, but you should:
- Create a written partnership agreement to clarify each partner’s rights and responsibilities
- Obtain your federal employer identification number
- Register the business name
- Apply for a business license, seller's permit and any other required licenses or permits
Down the road, if your family business prospers, you may want to consult a lawyer to
- Discuss incorporation options that provide tax benefits and shield you from personal liability for business debts
- Review your contracts to identify potential loopholes that could help or hurt you
- Ensure you are compliant with labor laws and regulations when dealing with employees
If you don’t mind spending the extra time and effort to educate yourself about legal issues and requirements, you may decide to you can handle some business-related legal tasks on your own. An ambitious businesswoman armed with thorough research and a good self-help resource can do the following on her own:
- Research and reserve a trademark or trade name for your business
- Apply for and reserve an internet domain name
- Create your own partnership or shareholder's agreement
- Apply for your business employer identification number (EIN)
- Apply for the required business licenses and permits
- Lease commercial space
- Interview and hire employees, and complete the necessary IRS paperwork
If you’re a professional woman who prefers to do her own legal legwork, you may be able to hire an attorney to review your contracts and other paperwork in a cost-effective "legal coach" arrangement. Lawyers who are open to this arrangement offer strategic advice and help you educate yourself on how to best handle your own legal matters. In the event you are faced with an escalating legal issue, they can step in to apply their sophisticated technical skills and take over as your formal counsel.
“An initial consultation is, in essence, legal coaching,” says attorney Jill Dimick. “We are frequently contacted by prospective clients who may be considering starting a new business, or who have an existing business and are looking to expand, take on partners, or lease or build a new building. A business owner may bring in documents and sit down with the attorney to review the documents and discuss the matter in detail. We also are happy to arrange this via fax/email and with a phone consultation.”
It’s Never Too Early to Call a Lawyer
When deciding whether to retain a lawyer for a specific issue, consider the consequences. If you make a mistake in dealing with this issue, what might it cost you —in lawsuits, lost business or diminished reputation? It’s important to realize when paying for the help of an experienced lawyer could more than offset the potential harm you might cause your business if you make one or more mistakes in dealing with a legal matter.
It’s never too early to consult a lawyer, but it can be too late. “An hour’s consultation with an attorney may save hours of headache or litigation,” says Jill Dimick, business attorney with Jocham Harden Dimick Jackson, PC. “The rule of thumb should be if a decision or agreement would potentially jeopardize the financial stability of the business, talk with an attorney first.”
Tasha Norton was starting a business with her best friend. She was concerned that a loosely constructed agreement based on "friends forever" could cause some problems down the road. Although she didn't know what they might be, she scheduled a meeting with Hannah Joseph of Hollingsworth and Zivtz. After an hour she understood the best way to structure the agreement and felt relieved that she had discussed her new venture with a professional attorney. "It was the best hour I ever spent. We now are working toward an agreement that is fair to both of us and our minds are at ease."
Consult with a lawyer early to prevent problems before they emerge. Ask your lawyer to
- Review your business plan and agreements
- Advise you on designating special allocations of profits and losses
- Counsel you on labor disputes or environmental issues
No matter how you decide to approach your personal and business legal issues, seek out an attorney with whom you have a good rapport, who communicates promptly and openly and is willing to advise you in handling some of your own legal issues. The most helpful resources in your search for a qualified attorney include:
- Personal referrals from people who have experienced the same problem you face
- Business referrals from your banker, accountant, insurance agent, or real estate broker
- Lawyer referral services with high standards for screening and qualifications
Helpful Resources
It can pay to educate yourself, even if you do plan to hire an attorney to handle your business legal matters. These links can provide some guidance and useful information:
 And on a personal side, Kena Hollingsworth of Hollingsworth and Zivitz reminds us that if we are considering a change such as divorce, understanding the law and the process prior to making that decision can arm a woman with good information. During times of stress having an understanding of the legal process can be less of a worry.
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