There are thousands of sayings and famous quotes concerning the importance of timing. Arnold Palmer, the world champion golfer, once said, "Timing is everything in life and in golf." Take a simple spin around Google, and you will find thousands of quotes just like that one. I think it is safe to say that we all agree timing is important.
Knowing when it is the right time to hire an attorney can be challenging when you are a business owner, start-up company, or budding entrepreneur. After all, when you are focused on using your available resources to drive attention, sales, and revenue to your products or services, you may come to convince yourself that hiring a business attorney is unnecessary or even unaffordable. So how do you know when it's time to hire a lawyer to help you with your business?
Business Set-Up
There is a myriad of websites, YouTube videos, audio programs, and books that offer general education and information on starting a business. Additionally, some legal services companies operate nationwide that offer business set-up services. The issue with these resources, including the legal services companies, is that they are not looking to learn about you, your business, and your needs. They provide general information or cookie-cutter business registrations and documents. More often than not, legal services companies are unaware of state-specific filings or registration, and you end up being out of compliance or trying to do it yourself.
Often businesses are tempted to rely solely on these free or low-cost resources to set up their business. While the process may seem simple, months down the line, most of these businesses end up regretting not having a lawyer help them set up their business and build out their contracts. It is common for business owners who rely on do-it-yourself or similar programs to find themselves in legal situations without adequate protection. As a result, they spend unnecessary time and money trying to remedy what should have been done right in the first place.
Setting up a business requires more than the filing of papers. If you are serious about your business, you need someone who can assess risk and help establish contracts, policies, and procedures limiting your exposure and liability.
For example, assume you want to start a landscaping business in New Jersey. It seems relatively straightforward, right? You register your business as an LLC, purchase some equipment, create a website, and you build your client list. You read the books, watched the videos, and feel confident that you are ready to go.
However, what you did not know and did not learn from the general business content you used to guide you is that in New Jersey, a landscaper must obtain a Home Improvement Contractor's License. So, while you are at a job, you accidentally damage your customer's wooden retaining wall. The customer demands that you pay for it, and you disagree that the amount they are asking for is accurate for the damage that occurred. Of course, they sue you. Instead of just seeking damages for the retaining wall, they include claims for Consumer Fraud and seek three times the actual damages and payment of their attorney's fees. Had you used a qualified lawyer, they would have made you aware of the licensing requirement, which would have reduced your liability.
Takeaway
Even if you believe it is easy to set up your business, you should always consult with a business attorney. An attorney will make sure that you comply with local and state laws and significantly reduce your liability. As for the money, it is much cheaper to spend money on the "front-end" of your business by hiring an attorney to help you get set up than it is to pay an attorney to defend you in a lawsuit.
Contracts and Agreements
Regardless of the type of business you own, drafting, negotiating, and signing contracts is part of your business life. One of the most significant sources of trouble for business owners stems from inadequate or poorly written contracts. While it is tempting to download a form contract from the internet or copy competitors' contracts, you should never do so. Unless, of course, you are interested in finding out how much it costs to hire a litigation attorney.
Your business is unique, so you need contracts that meet the needs of your individual business. Cookie-cutter forms might work for a little while but will ultimately cause you profound grief down the line. Your contracts should be carefully drafted by an attorney to protect your business.
Takeaway
Contracts should never be an afterthought. Unfortunately, many business owners treat them as such. Having proper, attorney-drafted contracts may cost a little bit of money upfront but will save you tens of thousands by limiting or avoiding contract liability and lawsuits.
Customer/Client Disputes
If you are in business long enough, you will undoubtedly encounter clients or customers who are unhappy with your products or services. The time to contact an attorney is as soon as you become aware of the dispute. Bringing an attorney into a budding dispute allows them to analyze the situation as it is developing and provide guidance that may help you avoid a full-blown and costly lawsuit.
Or course, there are times when a lawsuit may blindside you and your business. As soon as you are served with a Complaint, you should immediately retain a litigation attorney to represent you. A defendant only has a short period of time to file an Answer or other responsive pleading. For example, in New Jersey, a defendant has 35 days from the date the Complaint is served to file an Anwer. Every state has different deadlines. If you do not file an Answer within those deadlines, the Plaintiff can seek to enter a default judgment and obtain an award against you, regardless of whether your company was actually at fault.
Bringing an attorney into a budding dispute allows them to analyze the situation as it is developing and provide guidance that may help you avoid a full-blown and costly lawsuit.
Takeaway
Many small businesses have gone the way of the dinosaurs because they failed to get an attorney involved with significant customer disputes or consumer lawsuits. Litigation is a unique process and is not something familiar to every attorney. The golden rule is never to try to handle a legal dispute on your own.
Conclusion
The best way to reduce your liability is to have an attorney help get your business set up correctly from the start. This means that you should hire an attorney to assist you with forming your business entity, create custom contracts, and help you respond to consumer disputes as needed. I understand the need for new or smaller businesses to try to save money wherever they can, but skimping on legal representation will only end up costing you a significant amount more in the end, and in some situations, may even cost you your business.
If you would like more information about this post or if you want to discuss your legal matter, please contact me at pl@pjlesq.com or at (201) 904-2211. Don't forget to check out and subscribe to our podcast and YouTube channel. We have hundreds of podcasts and videos concerning a variety of business and legal topics. I look forward to answering any questions that you might have.
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