There are certain fundamentals that all businesses must have in order to be successful — and in the long run to survive — such as capital, customers and cash flow. However, there is another critical piece of the puzzle that is too often overlooked: a seasoned and experienced business attorney. Though many companies do not need an attorney every day, a business attorney is a vital contributor to the long-term success of an enterprise. Due to the complex nature of the legal landscape, most businesses require regular legal support to maximize value, achieve the best results, and minimize the risk of lawsuits and other liabilities.
According to Jeffrey Gitchel, a business attorney based in Pittsburgh, “A legal expert is a fundamental team member who can assist at almost every stage of the business life cycle. Whether it is drafting the documents and agreements necessary for business formation, providing ongoing strategic advice, or helping to transfer ownership – an attorney plays a pivotal role every step of the way.”
From facilitating dispute resolutions to negotiating legally binding agreements, an attorney can help optimize results. Jeff Gitchel provides a brief overview on why an attorney is a valuable asset to any business.
Business Formation
The need for an attorney often starts before the business is formed. There are many different forms a business can adopt — sole proprietorship, partnership, S or C corporation, LLC — each with its own advantages and disadvantages. An attorney can help assess the best form for a particular business. And once chosen, an attorney can advise on what is necessary to organize and operate the business — what forms need to be filed with the state? what founding agreements are needed? are separate bank accounts necessary? and so on.
Once the business is formed, it needs to get to work. That can involve such legal activities as entering into leases, supply contracts, and sales contracts, hiring employees, getting business insurance, and drafting other legal documents. It may also entail getting permits and licenses. Legal advice is crucial at each of these points, and failure to account for legal needs and risks can be detrimental, sometimes devastating, to the business.
Providing Sound, Strategic and Competent Advice
A business attorney can also provide valuable and timely advice on issues that are critical to a company, such as planned or impending material transactions, decisions that have (or could have) legal implications and changes in the legal landscape that affect the business. A business attorney stays up-to-date on legal developments (and possible or pending developments), and provides strategic, practical advice to mitigate risk and exploit opportunities.
Governance is another area where a business attorney can help. Governance often sounds like something for large corporations. The reality, however, is that every business needs to run itself. Day-to-day activities and decisions can be called operations, and they usually don’t need an attorney. Decisions that have medium- and long-term impact are the governance of every company, and legal counsel is a critical voice when considering such matters.
Connecting to Other Legal Specialists
Although a business attorney can provide advice on a wide range of matters, no business attorney knows every area of the law thoroughly. A business attorney can identify areas that need to be addressed and usually has an extensive network of specialists who can be called upon to provide counsel and advice on specific legal matters such as taxation, intellectual property, employment, real estate, and so on.
“An experienced and reputable business attorney will obviously have a strong understanding of relevant law and other important topics, but there will invariably come a time when the client will need the advice of one or more specialists,” commented Jeffrey Gitchel. “By giving their client access to the resources in their professional network, business attorneys help their clients save time, stress and money.”
Litigation and Dispute Resolution
“A business attorney can play a pivotal role in helping companies avoid litigation down the road, by making decisions or taking actions now that reduce or eliminate potential legal exposure,” commented Jeffrey Gitchel. “Considering the costs and risks of litigation — even for parties who are ultimately on the winning side — the contributions that an attorney makes in this area can be invaluable.”
Even putting financial costs to the side, he noted, litigation is stressful and typically prolonged — with some cases lasting for several years. A business attorney can help a company develop strategies that minimize the risk of litigation and maximize the chance of success in the event of a dispute.
“Few people want to be in litigation and the vast majority of legal issues are resolved behind-the-scenes through settlements, arbitration or mediation,” commented Jeff Gitchel, who has published numerous articles on various business law topics, including legal considerations when using social media for business.
“It is usually in the best interests of all parties to address the matter out of court one way or another,” Jeffrey Gitchel continued, “but when this is not possible — for example, the other party is being unreasonable or is getting bad legal advice — then a business attorney, on behalf of his or her client, must have the competence and fearlessness to litigate the matter in court.”
A business attorney can develop a strategy to maximize the chance of success in litigation while also making settlement more likely. Added Jeffrey Gitchel: “People can make up all kinds of stories out of court, but it is a different matter when they are under oath, even at a deposition, and their positions are finally questioned. Many people back down and resolve the matter when they realize the gravity of the matter and the problems with their own case. A good business lawyer knows when to be aggressive and apply the full power and weight of the law to serve their clients’ interests.”
Change in Ownership or Business Structure
Businesses are continuously evolving to meet shifting consumer demands or their own changed circumstances. According to Jeffrey Gitchel, “Evolution for a small business usually means a shift in structure or ownership. Whether one is buying or selling a business, adding a partner, raising funds, transferring the company to an heir, or filing for bankruptcy, it is wise to work with an attorney rather than do it alone.”
For example, the process of transferring business ownership can be highly complex, sometimes requiring an extensive range of signatures and paperwork. The previous owner may transfer all current assets and liabilities, including all intellectual property, leases, and contracts.
The precise process depends on, among other things, the type of company and assets involved, the desired outcome, and state and local laws. An attorney helps ensure that the company’s goals are achieved efficiently and effectively.
Knowing When to Hire an Attorney
“A business attorney should not just be a hired gun who is called on when there is a specific legal matter to deal with,” commented Jeff Gitchel. “Rather, a business attorney should be a trusted partner and advisor who is committed to the long-term success and stability of the business. It is best to retain an attorney before the business is formed. At the latest, a business should consult an attorney as soon as it needs experienced counsel, rather than wait for a crisis.”
