Most business owners quickly realize that to succeed, they must be quick on their feet and adapt to new challenges. But there is always a pivotal point where one realizes additional help is needed.
Here are four key moments to consider retaining legal counsel:
(1) A third party just sent you a new contract.
No matter how sophisticated a transaction is, the contract’s language has to be clear on terms such as liability, termination, jurisdiction, and most importantly: payment. Furthermore, if the other side is making oral promises that are not contained in the contract, a lawyer is best suited for ensuring that these promises are incorporated into the final version. Many disputes arise from oral promises that never made it into the signed agreement.
(2) A key relationship has just changed.
If a business owner is being pushed beyond the scope of the terms of his or her contract with a client, it is likely time to renegotiate terms. Perhaps it is time for an entirely new contract. Another example is personnel changes: a key employee may be elevated to an equity position after years of hard work, or conversely, a partner may request an amicable separation from the company. These relationships are important and often require drafting new contracts and maintaining careful records.
(3) You’ve made a deal without a strong contract and you’re in a dispute.
Although few attorneys would ever encourage this approach, some contracts are made by handshake, informal email exchanges, or a copy-and-paste (DIY) effort by the business owner. Starting work on a project without clear contract terms is a big problem, but there may be a way for your lawyer to salvage the business relationship and assist in resolving the conflict. Lawyers approach conflicts from a different perspective than most business owners. It could ultimately help both parties to the agreement if you have an objective, trusted advocate by your side.
(4) There’s a threat against your company.
If you receive a demand letter or are served a lawsuit, you should contact your insurance carrier. Considering that not all insurance policies cover the wide array of lawsuits, you may also need to quickly hire an attorney. This is very instinctual but not all business owners realize how fast they need to act to preserve defenses and ensure compliance with answer deadlines. If you retain proper counsel after receiving a demand, you have the opportunity to resolve the dispute before it’s even filed in a courthouse.