Legal advice isn’t just a nice-to-have, but a must: protecting yourself, your business, your employees and your customers, and making sure you’re obeying all the relevant laws, should be at the top of your agenda right from the start.
For most people, the legal industry is something to be accessed on an as-required basis – and those requirements tend to be infrequent. For business owners, the aim too should be to make recourse to legal expertise as infrequent as possible: not only can it be an expensive endeavour right from the off, but regular requirements for legal representation normally indicate that something, somewhere, is wrong with the business. However, skimping on legal advice at the beginning of the entrepreneurial journey can prove hideously costly in the long run: paying for the right assistance right from the word go, whilst it may seem like an outlay which could be better spent elsewhere, could mean you avoid existential difficulties when you’re up and running.
Moreover, a solicitor’s advice might not be limited to purely legalistic matters: many have long years of experience dealing with start-ups and might have numerous examples of successes and failures for you to learn from. Don’t forget, too, that the solicitor’s role isn’t just an advisory one: there may well be a significant chunk of official paperwork required to get your business established and some (especially if the business has multiple shareholders) can require professional expertise well beyond most laypeople. Your lawyers will be there to take much of this burden off your shoulders.
When you engage a solicitor, he or she will go through a detailed checklist looking at all aspects of your business and ensuring that you are properly legally prepared in all areas. As a result, you need to be totally open with them (don’t forget, your relationship is protected by their obligation to confidentiality); you may find that the questions they ask throw up a few challenges you hadn’t previously considered, and this is in fact one of the benefits of an advisory engagement so make sure you expose the full extent of your business plan to their scrutiny.
One of the first things the solicitor will look to determine is your business’s structure: will you be operating as a sole trader or do you need to set up a company? Will you be going into partnership with others and if so how is ownership to be apportioned? If you are going to set up a company, will it be a partnership, a limited company or a limited liability partnership, for example? You may have gone into business with a particular structure in mind, but your solicitor may well give you some very good reasons why a totally different structure might be more appropriate. Again, he or she will be able to draw up the paperwork for the solution upon which you eventually decide.
If your business is going to involve designs, content or brands which you need to protect legally – and most do – you will need to get legal advice on how best to protect this intellectual property (IP); then, of course, you’ll need actually to protect it, which will involve a degree of bureaucratic endeavour including checking that you yourself won’t be in contravention of anyone else’s IP. Of particular importance is your trading name: when setting up your business you may want to align your trading name with your website’s domain name but, of course, just because a domain name hasn’t been taken doesn’t mean the company name itself hasn’t, so before settling on JoeBloggsTrading.com ask your solicitor to check that Joe Bloggs Trading isn’t protected for another business.
Your would-be business may well require you to obtain certain licences prior to starting trading – for example, if you’re setting up a pub, restaurant or any other business where alcohol is sold you will need to ensure you’ve been granted the correct licences or you will be breaking the law when you make a sale. Your solicitor will advise you on which licences are required, and will be able to assist you with the application process. You will also be advised if you need to renew your licences and how often; make sure you keep up to date as it’s easy to forget your obligations when you’re busy building and growing your business.
If you require premises, a whole new legal minefield opens up before you. Not only is there legislation about what can and cannot be done on certain premises, and a huge array of health and safety regulation which needs to be abided by; there is also the potential for issues to arise over your contract with your landlord or for problems to develop with the local authorities when it comes to planning. This kind of issue can destroy even the most promising business and you will need to ensure that you are fully au fait with your legal obligations and any problem areas. Your lawyer will prove invaluable here, and will of course be able to give an expert assessment of any contract you are considering entering into.
When you supply products and/or services to paying customers you take on a number of legal responsibilities around safety and quality, as well as subjecting yourself to a broad swathe of contract law. While the responsibility of abiding by your legislative responsibilities rests entirely with you, you need to know what those responsibilities are in the first place – and once again you will almost certainly need to take legal advice to be sure you’re fully compliant with the relevant laws. You will also want to be informed about your own rights as a purchaser of the goods and services which you yourself use – and potentially about where you stand with regards to consumer rights in the event of complaints or requests for refunds, for example.
A solicitor can also play an important role in areas which may seem the domains of others. For example, you can get extremely useful advice on financing and tax matters from solicitors with the relevant expertise, though many business owners might consider those to be more the responsibility of an accountant. You can also get independent advice from a solicitor on your insurance obligations and liabilities – this is especially valuable when you are considering which insurance provider to go with – and help with connecting with firms overseas, and how to go about getting the necessary permits, if you are looking to trade internationally.
The legal profession has a notorious reputation for high fees and this isn’t necessarily wholly undeserved. However, as noted earlier, saving money by avoiding legal fees can prove a recipe for disaster. If your budget is extremely limited, shop around hard and try to do as much of the work yourself as is feasible – but don’t avoid legal advice entirely as it could well be the difference between success and failure in the long run – and could keep you out of the bankruptcy court, and even prison, in the event of disaster.
One huge area of the law of particular relevance to small business owners is employment law. If you are going to be employing staff you are obliged to act according to an impressive, and potentially terrifying, mass of legislation the failure to observe which could send your business under. Equality of opportunity, harassment, health and safety, disciplinary and dismissal procedures, grievance frameworks: all these and many more may be mere phrases on a page as you read this but will immediately become crucial areas of concern the moment you take on your first employee, so taking full advice on your rights and responsibilities as an employer is simply indispensable.
Words: Jamie Liddell
This article was first published in Your Business with James Caan in January 2012.