Business and the Law 1

Reprinted with permission from Janet Attard* Copyright 2004. All rights reserved.
     
If you are like most small business owners, you don't ever expect to become involved in a lawsuit. However, whether you sign a $100,000 contract to remove asbestos from a school building or sneeze and scare the cat (who leaps up off the windowsill and spills your open bottle of Yoo Hoo onto the turn-of-the-century heirloom family Bible you were restoring for a customer), as a businessperson, your actions have potential legal consequences.
While there is no way to anticipate or avoid all possible legal entanglements, you can learn to steer clear of some common pitfalls. This chapter should help you get through the school of hard knocks with fewer bruises.

Does every business need an attorney?

In a word, yes. While it isn't practical for a small business to call in an attorney to dot every i or cross every t in every business transaction, sooner or later every small business can benefit from an attorney's advice.

When do I need an attorney?

Kent Seitzinger, a California attorney who frequently works with small business clients and who has taught business law at California State University, Sacramento, says:

The easy answer is [to retain an attorney] before a problem ever arises. In law, as in most endeavors, the proverbial ounce of prevention is worth a pound of cure. Translated into the legal arena, what this typically means is that you can pay an attorney a few hundred dollars to advise you before entering into a matter or pay the attorney several thousand dollars to help bail you out later on.

Therefore, among the times when your business should seek an attorney's advice are:

• when a contract must be signed and the terms or clauses in the contract are difficult to understand
  
• any time you sign a contract for a significant sum of money or that obligates you to do something over a lengthy period of time
  
• any time you buy a business or franchise
  
• when you need to structure an agreement to discourage employees from starting their own businesses to compete with yours
  
• any time you are sued or are threatened with a lawsuit
  
• when you have an invention to protect
  
• when you form a partnership or corporation

How can I find a good attorney?

The best way to find an attorney is through a referral, whether you get the referral from another business owner or through an industry association to which you belong. Although your sister's husband's uncle might be a great divorce attorney, he or she may not be the best person to represent you when your client claims your rewiring job was responsible for the fire in his office.
If you don't know anyone who can refer you to a business attorney, you might try calling the local chamber of commerce, Rotary, or a local industrial association in your area and ask for referrals. If you can't get a specific referral from one of these groups, call the local bar association, or look in the Yellow Pages of your phone book. If you want to get biographical information about an attorney you see in the Yellow Pages, go to the public library and look him or her up in the Martindale-Hubbell Law Directory. You can also use the Internet to find attorneys. The Martindale-Hubbell web site (http://www.martindale.com) has a search capability as does http://www.findlaw.com.

How do I know an attorney is the right one for me?

An attorney is no different from any other person you hire. You must be able to communicate with him or her, and he or she must have the background and experience to handle the work you need done. Ideally, your attorney should have experience handling matters for other businesses with similar legal needs and problems to those of your business. To determine how closely the attorney's experience and personality mesh with your needs and preferences, ask the attorney questions like these:

• Is there a charge for an initial consultation?
  
• What is your background and experience?
  
• What type of clients do you have?
  
• Do you have a specialty?
  
• How big are the businesses you typically serve?
  
• What do you charge ?
  
• How much experience do you have with?
  
• Are you the person who will do most of the work, or will a paralegal or someone else be involved?
  
• Could the legal fees exceed any settlement costs?
      

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