1.) “Good lawyer” is not an oxymoron. Hire a good, experienced attorney. “Preventative lawyering” is one of the best investments you can make in your business. Building a business without good legal counsel is like building a skyscraper without a structural engineer.
2.) Protect Yourself From Personal Liability. Consider protecting yourself from personal liability by forming a corporation or limited liability company to own and operate your business. If property formed and maintained, the entity (and not you, personally) is responsible for the debts of your business and your personal assets should stay well out of the line of creditor fire.
3.) Use Insurance. While we are on this personal liability issue, find a reputable insurance agent and discuss with him or her exactly what insurance is available to protect you against liability for claims against you and your business.
4.) Read the Fine Print. Let me say that again: Read the fine print. You’ve heard this before, but there’s a reason. We lawyers like to say that the deal is in the details and we are right.
5.) Avoid Personal Guarantees. Now, having said that, I appreciate the realities of business and know that sometimes it is just not possible to do your deal without personally guaranteeing some obligation, whether it be your lease or a line of credit. If that’s your story, try to negotiate some limitation on the extent of your liability. For example, consider a cap on your financial exposure and/or limit your guarantee to a fixed number of years.
6.) There is No Such Thing as Boilerplate. Do not buy into the myth that there are boilerplate documents out there which can be used to save you professional fees. As a general rule and speaking from experience, “boilerplate” is just another way of saying “cut and paste job”.
Sometimes these boilerplate provisions can be relevant, sometimes not. However, I can assure you that often buried in the “boilerplate” are all sorts of clauses that do not work for your deal and/or may, in fact, be detrimental. In a perfect world, you would have your lawyer draft up your documents. If you have decided to pass Rule #1, then carefully read all of these other Rules and strictly apply.
7.) Don’t Pretend to Know. Ask questions of your lawyer and anyone else with a pulse. Knowledge is power. Now is not the time to be shy.
8.) The Pre-Printed Form is Not Sacred. Just because you are presented with a pre-printed
form does not mean that some or all of the terms are not negotiable. Refer to Rule #4 above and then refer to Rule #9 below.
9.) Negotiate Where Appropriate. Business is about win-win. Make this your mantra. Now, repeat this mantra as you step into negotiate your deals. In other words, be judicious (pun intended) in your negotiating. Focus on the points that are critical to your success. Don’t spend psychic energy fighting for the little things and lose sight of the big picture.
10.) When You Are Sensing Trouble, Get Help. Don’t wait until you can see the whites of their eyes. Many business problems can be resolved in the early stages. However, the longer you wait to address an issue, the more warts it will grow and the more expensive it will be to resolve. Understand that using your lawyer and other professionals comprising your team at the early stages is money well spent.
**This great article was contributed by Gay L. Harwin Esq.
Gay Harwin.is general counsel to Lucky Napkin and founder of The Harwin Law Firm an internationally respected firm representing local, national and international businesses and their executives in all aspects of operations and recognized expert in the area of start-up enterprises. Ms. Harwin is also a member by invitation of several Federal Government regulation organizations and still makes time for her philanthropic work representing such organizations as the Elton John AIDS Foundation and Planet Hope.
Gay L Harwin Law Offices - 9454 Wilshire Blvd # 707, Beverly Hills, CA
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