Which type of entity is right for the new business I am starting?
It’s a critical question. We regularly help clients determine whether an LLC, S-Corp, C-Corp, LLP or LP provides the right structure, flexibility and protection for your type of business. We will review the pros and cons of the best options, and then create the appropriate business formation documents. We will also assist you proactively to keep your business in compliance with the laws and regulations that govern it.
I’m going into business with my best friend. Do we need an operating or shareholders agreement now?
Absolutely. Today, you have common ground and enthusiasm. Six months or six years from now, your visions and personal interests almost certainly will change. You need to look at who controls the finances, who has the power to hire and fire, and what will happen if your partner becomes disabled or dies. The best time to answer these questions is in the early stages of a business relationship. An operating agreement cannot prevent conflict, but it can lay the groundwork for a faster, less costly resolution if differences arise in the future.
My business partner(s) and I are struggling with a disagreement.
Disagreements among business owners can be enormously stressful. Too often, we see how such disruptions sap the energy of a company, paralyze decision-making, and escalate into bigger problems. Several of us are acknowledged veterans when it comes to negotiating thorny ownership issues. Time and again, our thoughtful interventions have helped owners confront underlying problems, address conflicting points of view, and preserve the business.
Is it okay to use form contracts I find on the Internet?
No, no and no. It’s virtually guaranteed that a generic form contract won’t adequately protect your interests. Essential terms are often missing; included terms may not even be valid in your jurisdiction. Once in force, the contract can deny or limit your options in case of a later dispute. A few dollars saved up front can cost you dearly in fees and potential litigation later. We will work with you to draft the agreement efficiently – and to cover every base on your behalf.
I have built my company from the ground up and now it worth a few million dollars. How do I protect my family, including my own interests as well as my spouse and my children, when I retire or pass?
Business succession planning can accomplish your goals. The most common way is to have a shareholders’ agreement among all current and future stockholders that restricts sales of the stock of the company to outsiders, and protects against creditors of stockholder interfering if a stockholder is experiencing financial difficulties. It is wise to coordinate the shareholders’ agreement with your estate planning documents such as your will, your testamentary trusts, and your living trusts. Our experienced and creative team of business law and estate planning attorneys can help you develop a succession plan for your business that will best suit your specific circumstances.
What damages or remedies are available if there is a breach of contract?
Drafting a contract to anticipate a breach can make a huge difference. Requiring the customer to pay attorneys’ fees if litigation is required is a necessity. Other provisions to consider including are termination limitations (for cause); customer cooperation; deadlines; liquidated damages (pre-determined amounts in case of breach which may eliminate the need to prove what was lost); performance obligations; and dispute resolution mechanisms which can avoid the cost and uncertainty of going to court. If litigation does happen, a court could order the breaching party to perform their obligations. Other times, the non-breaching party who performed their obligations can recover money damages equal to what was promised had the contract been fully performed, losses, or even damage which punish the wrongdoer for egregious behavior. Other less common remedies may be available as well. Reviewing a contract prior to signing is essential to protect against one-sided agreements which automatically renew or which impose unwanted duties. Having an attorney review a contract before signing can be valuable protection against undesirable consequences.
My partner and I want to own our business 50/50. Is that alright?
Owning your business 50/50 with your partner can be done, but opens the possibility of a deadlock if you cannot agree on an important decision. At its worst, a deadlock can destroy the viability of an otherwise successful business. Our attorneys can help you draft bylaws, shareholder and operating agreements that can anticipate disputes among the owners and include mechanisms to resolve those disputes without destroying the underlying business. Often, a dispute resolution agreement that includes mediation (non-binding discussions) and arbitration (third-party, binding dispute resolution) provisions can help and prevent business from grinding to a standstill. In other instances, triggering a forced buyout of one owner by the other can also prove effective.
Why do I need a lawyer when I buy a building for my business?
If you are considering buying a building for your business, you should first take careful and precautionary steps. You may need to determine if your business use is permitted under the local zoning requirements applicable to the property where the building is located and if any special use and occupancy permits are necessary. An attorney can help you determine these issues and assist with any approvals that may be required. Any contract to purchase a building will have provisions that should be reviewed and discussed with an attorney to ensure you are being protected throughout the contract negotiation, study period and settlement process. You will want to ensure that you have an appropriate period of time to inspect and study the property to make certain that it works for your intended use and meets lender and other requirements. This typically includes assessing for any environmental issues. You should include appropriate conditions and representations of the parties in the agreement. If the building will contain other existing tenants, you need to know your rights and responsibilities as a potential new landlord for any such other occupants. It is also important for you to consider who should own the building. Should your business entity own it directly, or should you form a new entity to purchase the property to separate out expenses, tax and other liabilities, and then lease the building back to your business? There are many important provisions and pitfalls to consider before purchasing a building for your business, and reviewing and planning this with your attorney and your other professional advisors will help you avoid losses, a bad investment or other damages to our business.
How can I find a law firm who can answer all my questions?
When searching for the “right” attorney, clients are often faced with the dilemma of locating a law firm large enough to provide necessary expertise, but small enough to maintain a personal relationship. Legal issues have only become more complex with time so it is important that you confirm that the law firm you choose has the right balance to meet the needs of your business. If they are a boutique firm that only focuses on one area, then it is likely that issues will arise where you will require the services of attorneys from a different law firm. Conversely, if they are a very large firm, you may feel that you are being shifted to different attorneys with whom you have no relationship and that can often lead to delays and unexpectedly large bills. Look to identify a firm with attorneys experienced in the areas you will likely require representation that can draw upon a small, but dynamic, group of attorneys within their firm to address an array of legal issues. Look for a firm with established expertise that is provided in a personalized manner. Be satisfied that the attorney you select is capable of responding timely to your needs while bringing insight, perspective and passion to your unique situation.