In the modern, high-tech, complex world of business, legal problems can be excessively costly. That fact is particularly true for owners and entrepreneurs who make the grave error of thinking they can save money by not hiring lawyers to review transactions in advance. For example, when buying machinery, signing a lease, or entering into a joint venture with another company, there are innumerable legal risks.
Fortunately, most decision-makers in the corporate world understand how essential it is to have a licensed lawyer review all transactions beforehand. What can competent lawyers do? In addition to offering general insight, they can make sure your interests are fully protected before transactions take place. Here are the three most common reasons to put a lawyer on your team.
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1- To Safeguard Trade Secrets and IP (Intellectual Property)
The challenge of protecting trade secrets and IP arises during most acquisitions, mergers, and partnership agreements. During those times, an organization’s valuable secrets and IP are in danger of “leaking out“ to third parties. A skilled lawyer can make sure that all the right protections are in place before, during, and following the merger or partnership transaction.
It’s a fact of life that parties to a merger need to share highly sensitive technology, trade secrets, lists of clients, and other valuable data. In the absence of proper legal protection, such data can fall prey to misuse or unwanted disclosure. That usually leads to substantial monetary hardship for the organization.
To avoid such situations, a licensed lawyer will draft pertinent documents and perform an in-depth review of things like non-compete agreements, confidentiality contracts, and other documents that can go a long way toward shielding IP and similar information from misuse and disclosure.
2- To Abide By Regulatory Requirements
No matter the size of a company, it must comply with a vast array of city, state, federal, and industry guidelines. Of course, these stipulations and rules vary by location, industry, and size of the organization. But failing to follow them can lead directly to a sullied reputation, fines, voided transactions, and, in extreme cases, criminal penalties for owners and founders. Unfortunately, it’s easy to fall into the trap of assuming that a skilled accountant or highly educated manager can deal with regulatory requirements.
However, companies must hire a lawyer to effectively deal with situations like mergers, labor laws, environmental rules, land-use regulations, zoning laws, building codes, and product liability insurance. Additionally, it’s crucial for business owners to hire lawyers who specialize in the pertinent field of a given transaction, whether it be real estate, environmental matters, tax law, etc.
3- To Minimize Legal Liabilities and Risks
Keeping legal liabilities and risks to a bare minimum is the primary function of most business lawyers. Every commercial transaction comes with its own unique set of problems and potential pitfalls that can lead to costly lawsuits, fines, or penalties. For instance, when companies merge, one of the entities typically has pending litigation, unpaid back taxes, or other issues. By conducting due diligence, a trained lawyer can identify these types of problems well in advance and advise the owners of a safe course of action.