Why Your Business Should Hire an Attorney — Before You Need One

When most people think about starting a business, the first thing they should do is consult an attorney, but that’s usually the last thing on their minds. They’re much more focused on establishing operations, building their customer base, scaling growth, and generating profits. They consult an attorney only when they’re facing a crisis.

As an attorney, I understand the reluctance to seek legal counsel (and start paying for it), especially in the early stages of getting a business up and running. However, I also witness the fallout of waiting too long to seek legal counsel — penalties, fines, contract disputes, infringements of intellectual property rights, operational disruptions, expensive litigation, and reputational damage.

Taking a proactive approach to managing the legal aspects of running a business can save you money in the long run and give you the peace of mind to focus your full attention on running your business. In this post, I highlight the benefits of proactive legal consultation and encourage you to start building a long-term relationship with a trusted legal advisor now instead of waiting until you “need” a lawyer.

Recognizing the Benefits of Proactive Legal Consultation

The best time to start an attorney-client relationship is when you’re forming or incorporating your business. An attorney can help you choose the best way to structure your business (for example, S-Corp, LLC, or C-Corp); obtain the necessary permits and licenses; and help you ensure that your business complies with any federal, state, or local regulations. An attorney can help you set your business on the right path and, in the process, can get to know you and your business from the very start.

As your business evolves over time, an attorney can provide the following services:

• Review and draft contracts or agreements: An attorney who understands you, your business, and its short- and long-term goals and objectives can ensure that your company’s contracts and agreements are properly aligned with your wishes, and are comprehensive, clear, and legally binding, which may prevent misunderstandings and disputes.

• Maintain compliance with federal, state, and local regulations: Staying compliant with evolving regulations helps avoid penalties and maintains a good reputation for you and your business. For example, an attorney can keep you informed about new laws related to digital transformation, data privacy (like GDPR and CCPA), and the implications of the rise of remote work.

• File trademarks, copyrights, or patents: Protecting your company’s intellectual property is essential for maintaining a competitive edge and building the value of your business. An attorney can navigate the complex process of filing for trademarks, copyrights, and patents, thus ensuring that your brand, intellectual property, and creative works are both legally safeguarded and yours to sell.

• Advice on employment law: Employment laws are intricate and vary by jurisdiction. An attorney can help your business comply with regulations that apply to wages, working hours, anti-discrimination policies, and proper termination procedures. This is vital for creating a fair workplace and avoiding lawsuits.

• Handle disputes, negotiations, and litigation: Disputes are a predictable part of business, and having an attorney to help you mitigate and manage them can save time and resources. This includes handling breaches of contract, employee grievances, and conflicts with other businesses.

• Assist with business transactions, mergers, and acquisitions: Mergers and acquisitions require meticulous legal scrutiny. An attorney with M&A experience can guide you through the complexities of these transactions, from due diligence to final agreements, ensuring legal compliance and protecting your best interests.

• Identify and mitigate risks: An attorney can assess potential legal risks that could impact your business and recommend legal approaches to mitigate them. In today’s business environment, this especially includes issues like cybersecurity threats, changes in employment law and regulations, and contractual vulnerabilities, thereby preventing legal liabilities before they arise.

• Negotiate commercial leases and property issues: Real estate transactions and zoning issues can be complex and fraught with legal pitfalls. An attorney can negotiate favorable lease terms, assist with property acquisitions, and ensure compliance with zoning laws, helping your business secure the right locations for operations without unexpected legal challenges.

• Provide general legal counsel: Having an attorney on hand for general legal counsel can be invaluable. A skilled attorney can offer advice on a wide range of legal matters, from day-to-day operations to long-term decisions, ensuring that your business remains informed and well-prepared for any challenges that may arise.

Mitigating Fear

An often-overlooked benefit of having an ongoing relationship with an attorney is their ability to help manage the fear that can infect and paralyze a business, especially in the areas of funding, human resources, and mergers and acquisitions. As an attorney who specializes in negotiating business mergers and acquisitions, I have witnessed numerous mutually beneficial business agreements falter and nearly fail when one or both parties have fallen victim to fear.

I have also experienced the devastating effects of fear in my own personal life and career — a topic I explore in my book, FEAR DYNAMICS: Harnessing fear and anxiety to create lasting happiness and meaningful achievement.

Knowing that an attorney has your back can enable you to move forward with greater confidence. An attorney who understands the role that fear dynamics can play in business decisions provides the added benefit of helping you identify when fear is influencing your thought process, analyze the impact it is having, and address the root causes. In some cases, fear can be an important warning sign. In others, it is merely a debilitating emotion. An attorney with an intimate understanding of fear dynamics can help you tell the difference.

For more about this, please read my blog post, “How Fear Can Kill a Great Deal.”

Connecting When Times Are Good

Many business owners contact an attorney only when they encounter a legal problem they cannot solve on their own — in a crisis. But you do not need to wait until you are in legal trouble. You can also start your attorney-client relationship when times are good, such as in the following situations:

• Your business is growing, and the simple business agreements that worked in the past are no longer sufficient.
• Your business has become so successful that someone wants to buy it, and you are ready to sell. Skilled legal representation can help you negotiate the sale, so you get more of what you want.
• Your business has been successful enough that you are now in a position to buy a competing or complementary business.
• You have identified a potentially successful merger opportunity, or another business owner has approached you with such an opportunity, and you are unsure of how to proceed.
• You need guidance on how to obtain capital to grow your business — via loans or investments.
• You are ready to retire from your business and pass it along to your heirs or sell it.

In business, needing an attorney is often a positive sign — an indication that your business has been so successful it needs additional legal counsel to navigate the next steps.

A Relationship, Not Just a Document

The difference between hiring an attorney to perform a specific task or establishing a long-term attorney-client relationship is vast. When you have a relationship with an attorney — a relationship in which you are both invested — your attorney knows you and your business and can provide insight and guidance related to ongoing matters, big and small. When a legal issue does arise, your attorney is poised to act quickly and decisively.

Establishing and maintaining such a relationship does not require keeping an attorney on expensive retainer. It is more about having an attorney standing in the wings who is familiar with your operation. Someone who knows your business is in a better position to provide thoughtful, proactive advice instead of reactive guidance based on a limited amount of hurriedly dispensed facts that you happen to think are relevant to the current situation.

In addition, when you have an ongoing relationship with an attorney, you are more likely to consult them when they can provide the greatest benefit — before you sign a document or enter an agreement that you may regret later, when you have little to no legal recourse to renegotiate.

Build Your Relationship Before the Fire Drill

If you are reluctant to approach an attorney before you need one — maybe assuming you’ll come across as wasting their time — keep this in mind: Most attorneys welcome the opportunity to start a relationship with a business owner before engaging in a major project or responding to a legal emergency.

I often find that I am better able to craft a solution or provide advice that is tailored to and reflective of my client’s needs when I have a history with the client. Of course, I handle my fair share of emergencies with new clients, but more and more frequently in my practice, the client-attorney relationship begins before the fire drill, so we have time to connect and lay the groundwork for successful collaboration. This gives me time to understand my clients and their business, and it gives them time to recognize the many ways I can help them achieve their goals.

Schedule an Initial Consultation

Many attorneys offer free or discounted consultations to discuss your legal needs, explain what they offer, and determine whether the two of you are a good fit for one another. I urge you to schedule an initial consultation with a few highly recommended business attorneys and choose one before you need their services.

“Hire an attorney” does not have to be a dreaded phrase. By establishing a relationship with an attorney before you need one, you can significantly reduce the fear and anxiety that often accompanies this topic, and it will certainly reduce the fear and anxiety that comes when you actually need legal services.

However, you do need to focus some time and attention on carefully selecting an attorney who is right for you, which is the subject of a future blog post.

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About the Author: Stephen J. Dietrich, JD, is a corporate attorney who focuses on mergers and acquisitions, debt and equity financing, joint ventures, and restructuring transactions. His latest book is FEAR DYNAMICS: Harnessing fear and anxiety to create lasting happiness and meaningful achievement. Stephen often draws on insights gleaned from his personal and professional experience with fear dynamics to help his clients understand and address how these very real emotional issues can impact and complicate decisions, relationships, and negotiations.

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Disclaimer: The information in this blog post is provided for general informational purposes only and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice from Stephen J. Dietrich, JD, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this blog post should act or refrain from acting on the basis of any information included in, or accessible through, this blog post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.