When You Should Consider Hiring a Business Lawyer

Running a small business means every cent is valuable. It can be challenging to justify spending money on non-essential items. However, hiring a lawyer during crucial periods in your small business might appear unnecessary at first glance. Nonetheless, investing in a business lawyer could ultimately save you time, money, and effort, while also safeguarding your business. Leaving anything to chance is not advisable when it concerns your small business. Despite entering into employment contracts or partnership agreements with good intentions, it is crucial that everyone involved comprehends their rights and responsibilities in case things go awry.

Therefore, it is highly recommended to have a lawyer review three specific contracts or agreements.

Employment Contract

If your business utilizes employment contracts with workers, it is crucial to have a comprehensive understanding of what should be included in those contracts. This includes outlining the terms of employment, specifying the conditions under which the employment relationship can be terminated, and establishing clear employment expectations.

Furthermore, if your business deals with confidential information, trade secrets, or sensitive matters that require employee discretion, an employment contract can serve as a means to enforce such provisions. By incorporating clauses that protect confidentiality and trade secrets, you can safeguard your business and ensure that your employees understand their responsibility to maintain confidentiality.

It is important to recognize that an employment contract is designed to benefit both the employer and the employee. However, a poorly written or ambiguous contract can lead to complications and challenges for all parties involved. To avoid any potential misunderstandings or confusion, it is highly recommended to seek legal assistance in drafting a contract that clearly articulates the employment expectations.

By engaging a lawyer to draft an employment contract, you can minimize the risk of any misinterpretations or disputes arising in the future. Such a contract lays out the rights and obligations of both parties, providing a solid foundation for a successful working relationship. With clear expectations set forth, all parties involved can proceed with confidence, knowing exactly what is expected of them.

Partnership Agreement

A partnership agreement is a legally binding contract that outlines the operational framework of a business venture between two or more partners. This agreement plays a crucial role in defining the rights, responsibilities, and obligations of each partner, ensuring a harmonious and efficient partnership. However, it is essential to address various aspects to ensure a fair and balanced partnership.

One of the key considerations in a partnership agreement is the distribution of decision-making authority. While it is common for partners to have an equal say in most matters, this can be tailored to the specific needs and expertise of each partner. For instance, partners may agree to assign decision-making authority based on their individual strengths or areas of expertise, ensuring a more efficient decision-making process within the partnership.

Financial responsibility is another crucial aspect to address in the partnership agreement. Partners must determine whether they will equally contribute to the financial needs of the business or if there will be a proportional division based on their respective investments or ownership percentage. This provision ensures transparency and fairness in the financial operations of the partnership.

In the event that one partner wishes to terminate their involvement in the partnership, the agreement should outline the process for withdrawal or dissolution. This may include provisions for the transfer or buyout of the departing partner’s share, ensuring a smooth transition and minimizing any potential disruptions to the business. Additionally, the agreement may address the possibility of admitting new partners, allowing for the growth and expansion of the partnership as the company evolves.

While drafting a partnership agreement, it is highly advisable to seek the assistance of a business lawyer. These legal professionals possess the expertise to create a comprehensive and clear agreement that not only addresses the immediate concerns but also anticipates potential future scenarios. They can help identify and resolve issues that partners may not have considered, such as the impact of partnership growth on decision-making, profit distribution, and liability allocation.

Shareholders Agreement

A shareholders agreement is a legally binding contract that establishes the rights, obligations, and responsibilities of each individual owner of a company. It functions similarly to a partnership agreement, but specifically focuses on the ownership and management of shares in the business. By clearly outlining the expectations and guidelines for each shareholder, it helps to prevent misunderstandings and conflicts that may arise in the future.

One crucial aspect addressed in a shareholders agreement is the decision-making process within the company. It specifies which matters require unanimous approval from all shareholders and which can be decided by a majority vote. This provision ensures that important decisions, such as changes to the company’s structure, mergers, or significant investments, are made collectively with the full agreement and support of all shareholders. Conversely, routine matters, such as day-to-day operations or minor policy changes, may only require a majority vote, allowing for more efficient decision-making processes.

In the event that a shareholder wishes to sell their shares, the shareholders agreement typically includes provisions that outline the procedures and restrictions surrounding such transactions. It may specify that existing shareholders have a right of first refusal, meaning they must be given the opportunity to purchase the shares before they are offered to external parties. Additionally, the agreement may establish a valuation method or mechanism to determine the fair price of the shares, ensuring a fair and equitable transaction for all parties involved.

It is crucial to recognize the importance of shareholder agreements, as they serve to protect the interests of all parties involved and foster a harmonious and productive business environment. Disputes or disagreements among shareholders can have detrimental effects on the company’s operations and ultimately lead to its failure. Therefore, engaging the services of a proficient attorney to draft and negotiate the terms of the shareholders agreement is highly advisable. This way, potential conflicts can be preemptively addressed, expectations can be effectively managed, and the groundwork for a prosperous and sustainable business can be firmly established.

Final Thoughts

A business lawyer offers guidance on your legal rights and responsibilities, ensuring that your contracts safeguard your interests. They also bring attention to potential concerns you may have overlooked and propose strategies for handling different scenarios. Regrettably, numerous small business owners only seek legal counsel once they are confronted with a significant problem. Consulting a business lawyer prior to facing legal action safeguards you in case any legal matters arise. Moreover, if you have enlisted the help of an attorney to draft unambiguous contracts initially, it is possible that no legal issues will arise.