Does Your Business Need Outside Legal Counsel?
Whether you’re founding a start-up or managing a substantial operating company, businesses of all sizes face a diverse set of legal requirements that often need expert guidance. Businesses facing complex compliance or regulatory issues or even just day-to-day legal matters might be asking themselves when is the right time to seek outside legal counsel.
Take it from Michele Leonelli, an attorney who has worked with a wide array of startups as outside general counsel, “If you find yourself asking, ‘Do I need a lawyer for this?’, you almost certainly do.”
But not every business needs to break its budget to hire an in-house attorney. When weighing what type of expertise to seek, there are many factors to consider.
In this article, we’ll take a look at questions you should ask yourself before hiring legal counsel because being proactive about your legal needs empowers your team and your business.
What business or industry are you in?
The complexity of the business may be a better indicator of when it’s time to seek outside legal counsel than the size of the business. You might have a small start-up, but if you’re entering a crowded, heavily regulated space, it’s important to have a good lawyer.
In some cases, a larger business that has just one service or provides one product and has less complexity in their business might have less of a need for legal counsel.
As Leonelli puts it, “chances are, the more regulated you are, the more you’re going to need some oversight or assistance figuring out what regulations apply, and how they affect your business.”
If you’re in a high-growth company, or you’re raising money, you definitely need good legal counsel to ensure you structure your financing in a way that’s safest, and most advantageous to the company and its owners.
What are your daily or ongoing tasks?
If you’re building a prototype in a garage by yourself, it might be possible to get away without a lawyer for a while. But once a business involves more players — whether it be a co-founder, an investor, or a contractor -— you should seek legal counsel to protect yourself and your business.
Negotiation with third parties, reviewing and revising contracts, reviewing regulations and compliance: all of these are instances that would be helpful to have legal counsel help guide the ship.
How often does someone in your organization ask a non-lawyer to review a contract?
It’s all too common for businesses to use a shortcut here and there to delay the commitment of getting outside legal counsel, but these shortcuts are nearly always a mistake that can carry major repercussions. C-level employees who have a background redlining contracts often feel they’re more than qualified to review an agreement, but this can often be a waste of time.
“You hear it all the time, ‘We had our CEO look this over, they do stuff like this all the time,” says Leonelli. “But that’s probably a mistake.”
We’ve all likely worked with someone who claims to have “looked at a lot of contracts before” or “handled contracts in a different context,” but relying on people who might not know what they’re doing can be a huge miscalculation. And it can often take more time for a lawyer to fix an error than starting the process fresh and with the correct help in place.
Recently, new resources like Rocket Lawyer have become helpful starting points for a small job or a new company, but while these services are highly affordable, you often get what you pay for. If you care about your business and want to safely scale your business, investing in legal counsel is a must.
Many companies delay seeking outside legal counsel because they fear it will be a significant financial endeavor, but hiring effective outside counsel should help you save money and increase efficiency by allowing your in-house all stars to do what they do best. And most importantly, proactively addressing your company’s legal needs avoids being reactive, which ends up costing far more time and money than doing things right the first time.
Tune in to the replay of “How Do You Know if You Need Legal Counsel for Your Business.” PW: yz5?2iWm
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