Do new businesses and startups need lawyers?
It depends on the nature of the business and the owners’ knowledge of legal requirements, ability to dedicate time to legal needs, appetite for risk, and budget. New businesses in highly regulated industries, such as financial services will benefit from working with an attorney early in order to understand the regulatory landscape of their industry. For entrepreneurs who are venturing into less regulated areas, there are DIY options on the market that can assist with the basics of naming the business, incorporation, registration, and standard contract templates. But keep in mind that these resources tend to be generalized for every small business and simply focus on meeting minimum legal requirements. On the other hand, engaging an attorney will not only help ensure that all legal boxes are checked, but an attorney can also assist with identifying needs unique to the business or needs that the entrepreneur has not yet identified. Working with an attorney will certainly help mitigate future risks. So, making room in the budget to hire an attorney early on may actually turn out to be less expensive than realizing the risk later down the road.
Speaking of the legal boxes that need to be checked, what should entrepreneurs consider when forming a company?
One of the first steps to forming a company is naming the business and the product. Entrepreneurs need to be careful to select names that aren’t currently being used by others and can be defended if others attempt to piggyback off of future success. This is why conducting trademark searches and trademark filings are important. A brand new business may also need to register with the city, state, or country in which they are doing business and file for various business licenses that are required for product or services being offered. These include sales and use permits, health permits, or zoning permits. Entrepreneurs also need to decide whether to incorporate their business and what type of entity best suits their business needs. New businesses also have a variety of contract needs, such as business partner agreements, operating agreements, NDAs, real estate or rental agreements, and employment agreements. Finally, inventors of new technology, products, or services may want to consider ways to protect their intellectual property, such as filing for patents.