Orange County Business Lawyer
1. FAILURE TO HIRE A LAWYER WHEN STARTING A NEW BUSINESS OR WHEN PURCHASING AN EXISTING BUSINESS Orange County Most business start ups fail for a number of reasons including the failure of the owner to consult with an experienced business lawyer before starting the business. An experienced business lawyer can provide invaluable advice to the start up business. For example, many people starting a business think it would be a good idea to partner up with someone that wants to do the same business. However, partnerships can be an accident waiting to happen and are not usually in the best interest of the person who wanted to start their own business. Most of the time, the business originator does not need a partner. He may need capital, sound advice, and/or labor but all of these may be obtained without tying your idea to the whims of someone else who may not have your work ethic. Many times a new business owner will give a percentage of the new company to a friend to help start the business as a favor to the friend. This sole act can ruin the friendship and the business. Business Lawyer A good business lawyer can also advise the start up entrepreneur on how to best protect himself from personal liability by operating the business as a corporation, limited liability company or limited liability partnership. Which form of personal liability protection should be used depends on what the business is or will be doing. A good business lawyer can also help the start up owner avoid liability by: 1. Drafting the proper contracts for the business customers and suppliers; 2. Reviewing advertising materials before they are published; 3. Advising the client on any relevant license the business requires; 4. Drafting the required operating agreement for the company such as corporate by-laws; 5. Advising the owner on how to preserve the corporate protections to limit personal liability; 6. Drafting employment agreements; 7. Drafting a dissolution agreement to provide for what happens when one or more of the principles of the business want out; 8. Advising the owner on the proper insurance the business should have; 9. Advising the owner on materials that must be posted in the work place; 10. Advising the owner on how to avoid sexual harassment and discrimination claims; 11. Advising the owner on how to avoid safety issues which can lead to worker’s compensation claims and increased costs to the company; 12. Advising the owner on the proper retention of electronic information; and 13. Advising the owner on how to lower his tax liability. The buyer of an existing business needs many, if not all, of the things listed above performed by a good lawyer but also needs additional help. A good business lawyer can help the buyer of a new business in many ways. Most importantly, he can help prevent a lawsuit over the sale of the business. Most lawsuits over the sale of a business occur after one or more of the parties failed to have a lawyer represent them in the transaction. There are so many things that can go wrong after a business is sold that I could not possibly list them all here. A partial list includes: A. The contract is vague as to what is actually transferred; B. The contract fails to address who gets certain receivables; C. The contract does not have a non compete and/or non solicitation of clients clause; D. The non compete clause is over broad and not enforceable; E. The assets of the business sold were not secured properly; F. The contract fails to disclose certain liabilities of the business; G. The contract fails to address what happens if the payments due the seller are not made; H. The contract fails to state a jurisdiction and venue clause; I. The contract fails to have an indemnity clause; J. The contract fails to place a duty to do due diligence on the buyer; K. The contract fails to address contingencies the parties discussed and intended to be in the agreement; L. The contract provides for the Buyer to license a trademark but the sale is completed without the licensing agreement being entered into… If you are buying a business, you need to do your due diligence to determine the business is as represented. A good lawyer can help you, along with other professionals such as a CPA, to determine if the business is as represented. If you are buying a business you need a lawyer to make sure you are getting what you actually think you are getting. If you are selling a business, you need a good lawyer to limit the Buyer’s ability to come after you after the sale and to lessen the chances of the Buyer collecting damages from you. Now and then even a good lawyer makes an error related to the sale of a business that can cost the seller a fortune, especially if the buyer is making payments over time. No lawyer can guarantee that the buyer is actually going to make the payments required. But a good lawyer can take steps to ensure that the assets will revert to the seller should the payments not be made. |
