Back to Basics: Where Can a Business Attorney Help Me Most?

Entrepreneurs should be savvy with their money, but they also shouldn’t cut off their noses to spite their faces.

Where does a business attorney provide the most bang for the buck?

1. Agreements Between the Owners

Just like nobody gets married with the expectation of divorce, nobody thinks their business partnership and working relationship will blow up. If this happens, a good up-front agreement (shareholders agreement, operating agreement, partnership agreement, buy-sell agreement) will lay out how an unhappy owner can get out or how to resolve a deadlock among owners. It will also lay out what happens upon the death, disability, incompetency or divorce of an owner.

Without this kind of up-front agreement, often the only remedy is a judicial dissolution of the business. If this happens, the assets are liquidated and each owner gets their percentage of what is left after debts.

2. Form Contracts

A form contract is one of the most cost-effective methods of protecting a business. It will contemplate the largest risks of the business and provide a mechanism for reducing or allocating the risk. This may include requiring the other party to have certain insurance, providing an early termination fee if necessary, or stating where and how disputes will be resolved. It may also involve a price adjustment for risks that can’t be shifted or otherwise lessened.

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