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Monday, January 30, 2012

When Do You Really Need a Business Lawyer to Start a Business or Review Contracts?

I receive several calls a week asking for business law support. Specifically, there are two categories that come up most frequently -- contracts and "starting a business". The question is -- do you really need to pay for a lawyer in either case? Now, obviously, if you have a voluminous contract with complicated contingencies and difficult to follow clauses, a business lawyer is key. But what about the standard two pager? How can you tell?

First, you don't always need a lawyer. At least half the folks I speak with end up not needing legal assistance. Part of my job as a good attorney is to not only recommend the proper course of action, but also be willing to indicate when you should not pay for legal services. Sound counter intuitive? Not really. A good lawyer is honest about services, and should always be upfront with what's best for the client. Period.

In terms of contract law, the rule of thumb is NOT how long a contract is (I have seen some one page contracts that bring tears to experienced lawyer's eyes...namely mine), but rather, what is at risk. In a good business contract, the following terms are always spelled out clearly:
  • name and contact information for each of the parties involved
  • what service or good is being offered (what you promise to do)
  • what is agreed to in return for the service or good
  • what time frames and conditions are there on performance
  • what happens if something goes wrong (how do you get out of this deal)
  • how will you handle disputes

While there are obviously many other possible clauses and items to cover, these basic items form the backbone of every contract, no matter how complicated or long. When these items are present in your contract, and the risk of loss to you if something goes wrong is negligible (or -- acceptable), then no additional review is needed. However, if you have significant exposure, then contact us -- you need a business lawyer! Exposure is defined on a sliding scale -- the more risk there is that you could have to pay more money than you have to cover a loss, the higher the exposure. (For example, you have "high exposure" if the value of the contract is significantly more than you could afford to pay if things went wrong). The cost for reviewing a contract is $50 per page -- that's a small amount to pay when you could have $1000's or even $10000's worth of exposure on a contract.

Starting a business is an entirely different matter. Usually, an incorporation service can help you, and lawyers will merely be a more expensive alternative. Except in rather unusual circumstances where you are starting partnerships, or require special incorporation documents to cover different classes of shares, etc. -- retaining a business lawyer to help you start your company is overkill. If you aren't sure -- call us! If you don't need to hire a lawyer from Hanover Law, we'll let you know, and point you in the right direction so you can do it yourself.

Remember -- this law firm will always act in your best interest. It services us no purpose to take your money for something you can do on your own -- we want you to contact us when you really need legal help with business law. For that, you have to trust us -- and I assure you, you can.

Sean R. Hanover, Esq
HanoverLawPC.com

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4 comments:

Runaway Fox said...
This comment has been removed by a blog administrator.
Mac said...

Owning a business is one of the most difficult and most rewarding endeavors a person can undertake. Business ownership is fraught with traps for the unwary, which can cause severe financial hardship if the owner is not properly prepared.



Business Lawyer Boston

James Anthony said...
This comment has been removed by a blog administrator.
Sean Hanover said...

It's a toss up about cost. Many inexperienced business owners don't see the value in spending the money. In fairness, most will be fine. It's like an insurance policy.

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