As we turn full speed into 2018, there is no better time to be renewing our focus on those things we know are good for us, but that slip in the press of business and life. Entrepreneurs by nature are risk takers. They thrive on, and often succeed because of, that personality trait.
But there is a difference between being a risk taker and throwing money away, which is what you are likely to be doing if you do not take a sensible approach to legal risk for your business. In doing a bit of my own turn-of-year thinking, I see some common themes that particularly apply to the entrepreneurial personality. Here they are in the form of four questions for you (and numerous links to past posts to help you explore them in more detail):
1. Do you have a lawyer you trust to help you sort out when you need a lawyer and, when you do, which kind of lawyer you need?
Different legal issues may call for different lawyers, and few business people have the experience and contacts to sort that out on their own. Just a couple of things that trusted advisor should be doing:
- Tell you when you need the lawyer equivalent of a reliable used car, and when you need a Ferrari. Sometimes you need a high level of expertise and specialization, many times you may not.
- Send you to other lawyers sometimes. No single lawyer is the best fit for every legal issue your business may have.
2. When your lawyer tells you that you are wrong, do you stop and discuss the issue, or do you look for other advice?
Nobody likes being told we are wrong, and in my experience the entrepreneurial personality in particular may resist such advice. There is no reason for a lawyer to disagree with you other than for the purpose of protecting your interests; in the short term, it would be easier for the lawyer to avoid that little bit of friction (and many lawyers do). In other words, that lawyer who is disagreeing is doing you a favor – stop, listen, discuss.
3. Do you have a “drill” to determine when a quick review of a legal contract or other document will protect your business?
Can you explain to me what “indemnification” means? If not (and really, even if you can), you should not be signing any document that includes that word or some form of it, because it can mean you are signing up for a significant obligation.
There certainly may be documents you can effectively prepare yourself, or form contracts that do not warrant a heavy lawyer review, but any litigator can rattle off a list of cases she is currently handling that might have been prevented if a lawyer had looked at a document before her client signed it. A few key questions about contracts (also see here) can help you sort through what documents most likely need a lawyer’s eye to help protect you.
4. Do you and your team know when not to write things down?
“Document, document, document” – clients may pick up this phrase from their lawyers. Often it makes sense. For example, the employer who has memorialized employee performance issues over time will be in a better position to take more significant action against the employee at the appropriate time.
However, preserving every little thought in writing, a common affliction in the electronic age, will sometimes increase liability. Your team should understand when to write things down to protect the business, and when it’s better to walk down the hall and talk. While you do not want to burden your business with a records plan that is too complicated to comply with, here are questions you should ask your business team in connection with creating and saving records.
How did you do? If you are not confident in your responses, click through on those links and think about steps you can take to make sure your resources are going to building your business, and not to paying for avoidable legal issues down the road.
Barnes & Thornburg LLP is a large, full-service law firm that seeks to take a more entrepreneurial and cost-effective approach both to client service and its own business.