Top 7 Business Legal Issues

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Top 7 Business Legal Issues

Powers & Neal 6730 N. Scottsdale Rd., Ste. 290, Scottsdale, AZ 85253 480-699-7992

The services our firm provides are largely dedicated to helping individuals, families, entrepreneurs and companies save on their legal costs. That is, our attorneys endeavor to decrease our clients’ exposure to liability and litigation.

Powers & Neal has taken this approach on behalf of numerous small businesses.  Here are the top seven business legal issues we encounter:

No or Weak Agreements. As business owner, all of your business agreements should be in writing, as oral agreements can be difficult to enforce. A well written contract should address future contingencies so that if a dispute arises, the parties have a roadmap on how to handle it. You need to be protected with well written contracts.  Having no written agreements or weak agreements is definitely one of the most frequent business legal issues we see.

Unguided Employees. Employees, while valuable, can cause headaches for business owners. That’s why it is important for you to provide them with guidance. Put another way, you need to convince them to buy into the culture of your business. Whether in the employment agreement, independent contractor agreement or the employee handbook (or all of these), employees should understand that they are “at will” (terminable at any time) and that behavior that breaks federal and local laws (including discrimination, sexual harassment for example) will not be tolerated.

Bad Advice. As companies start up then expand, numerous issues will arise that requires the services of an experienced attorney. Negotiations with employees, tax issues, intellectual property rights, contractual matters, compliance, etc. should be outsourced to experienced attorneys to save you money, time and aggravation.  Bad advice can lead to extra costs, wasted time and lots of aggravation.

Ignorance of the Law. Despite the seemingly infinite number of laws on the books at the federal, state, county, city and town level, “ignorance is no defense.” Hiring an experienced attorney and/or learning about common business legal issues will help greatly. If you are going to play in the sandbox, at least know the rules!

Corporate Records. There many reasons why thorough corporate records are important. Among them is the requirement by states that their corporate entities follow “corporate formalities” to show that your entity is indeed separate from the individuals running it. If corporate formalities are not followed, creditors may be able to “pierce the corporate veil” and get to your personal assets. You should keep records of meetings of directors and shareholders, adhere to bylaws/operating agreements, document stock transfers and document votes. And if the IRS comes calling, you’ll want your financials in order!

Bylaws/Operating Agreement/Joint Venture Agreement/Buy-Sell Agreement. In the beginning, there’s almost always a “honeymoon phase” among partners, who view the future optimistically. However, disputes, however small, inevitably arise. Partners need to have an agreement that adequately addresses the amount of effort and capital to be contributed, how capital raises will be handled, what happens if someone wants to leave the business, what happens if a partner dies, how other investors can be accepted, and other issues. Anticipate!

Litigation. For problems within the company or with third parties (when possible), it is often advisable to include arbitration, mediation or collaborative dispute resolution clauses in your contracts. Doing so usually (but not always) mitigates the costs of litigation and shortens the amount of time needed to resolve the dispute. And again, an experienced attorney can draft your contracts to address potentially problematic points of contention.

These are just a few problems common among businesses big and small. Other areas to monitor include intellectual property issues and keeping up with legal formalities (annual meetings, minutes, etc.).

Powers & Neal helps clients in each of these areas and many more, with the objective of mitigating our clients’ legal costs.  Please call us at 480-699-7992 to discuss how we can help you and your business.


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