Several legal decisions made at the nascent stages of a business are tremendously important to the business’s success. Corporate form, tax classification, intellectual property, ownership, employment terms, real estate, etc. are all things to handle with care at the outset.
At the time of entity formation, other considerations include tailoring bylaws, Operating Agreements or Partnership Agreements to your particular needs and preferences. Beyond that, corporate governance and the development of written business policies are important–these include employment agreements, employee conduct policies, standard contracts, terms of service, privacy policies, etc.
Finally, there are the nuts and bolts of business management. Appointing officers, conducting board or member meetings, engaging contractors, obtaining permits, reporting to the state, etc. These practices are often neglected until there’s a problem. We routinely help businesses by providing advice and assisting with management and board advisory, including board member services.
Money is the lifeblood of business — even small business. It is very rare the business that can be both founded and grow completely “out of pocket”, organically, to the greatest scale and breadth aspired to by the founder(s). If this is you, great! For everyone else, they will at some point in their business life likely be seeking capital — whether they have a tech startup that needs to hire more programmers to implement their new concept before it’s old hat, are a commercial building owner that wants to renovate to attract new tenants, or are a retailer that needs to finance their inventory to keep sales revenue flowing.
For traditional businesses, we advise on, and can help negotiate financing agreements for a variety of different arrangements, whether it involves a line of credit, SBA loan, a second mortgage, a private market lender (e.g., for a factor or collateral-based loan) or friends & family funding. Particular issues legal counsel should be attuned to include collateral, recourse, and legal formalities (especially UCC Articles 3 and 9 concern negotiable instruments and secured transactions).
For startups, we can assist with seed and venture capital funding (both negotiating and handling the documentation). We can even help with friends & family (F&F) financing — and assist even before any outside funding has been drawn upon by the founders of the nascent company. Indeed, that is the most critical time, as it is the time of greatest influence on the path the company will take and its eventual success or failure. Also, prior to formal VC or seed funding, there is likely to be insufficient legal counsel involved, leading to bad deals, bad agreements, or “handshake agreements” that later can lead to bitter fallings-out. Don’t make that mistake; get legal guidance early and often in your startup’s life — even just to negotiate mom & dad’s ownership rights in GarageCo when they give you your first $50k.
It can often seem like the bane of small business owners is the regulatory state. Certain large states and cities in particular require you to get permission and/or participate in some government oversight process for virtually any type of business activity. From registration & licensing to code request approvals to taxation to code enforcement, it can seem like the government is “always doing something” to pull you away from running your actual business — and the concerns often multiply exponentially the more jurisdictions your business operates in (even if your business operates “purely” online). For large businesses, no big deal — the legal and professional expenses (even if inflated) are a relatively small cost for them. For small businesses, the same requirements are all the more economically and logistically threatening. What’s worse, neglecting to take care of regulatory requirements in advance can lead to surprisingly harsh penalties down the road — or even sink the business.
While in some cases you can minimize the regulatory “hit” to your business with shrewd entity formation and business structure decisions (and we certainly alert clients to such possibilities), more often than not the solution is simply to get legal or other professional advisory that will help you handle the pertinent regulation with a minimum of pain and confusion. At Borrero Law, with our extensive business experience as well as business-advisory and government regulatory/administrative law experience (both inside and outside government), we have the know-how and the perspective to help clients navigate the regulatory shoals adroitly, minimizing the small businessperson’s pain factor, and letting them focus their own time and efforts on the actual running of their business.
Very few businesses can get by without dealing with contracts at some point — and those that think they are “doing find without,” almost certainly actually aren’t, because legal contracts are formed by what you do, not by having a piece of paper full of inscrutable legalese. This includes virtually any buying, selling or investment/financing, whether one-off or done regularly, whether for goods or services, and whether involving strangers, friends, or family. In light of this, all business owners should get legal advice on the contractual aspects of what they are doing — preferably at, or before the founding of their business — even if they aren’t planning on using written contracts for certain activities. And of course, business owners should seek legal advice on whether and for what activities they should move to formal, written contracts. For most scenarios that aren’t covered by well-established statutory law (such as the UCC for goods sales) that can substitute for contracts, it is highly advisable to undertake to create up-front written contracts with the assistance of legal counsel. This is in fact the first step in prevailing in a business’s legal disputes down the road — optimally, preventing them entirely. By reaching a common, explicit and specific understanding with the counter-party, later disagreements giving rise to legal battles are less likely, and when they do occur, your interests will be far better established in the eyes of a court or other neutral arbitrator. Giving contracts their due attention in advance, with the assistance of competent legal counsel, is one of the best prophylactics against later legal costs that can badly impact your business, if not bring it to an untimely end.
Besides market transactions for goods and services, we can assist with common business contract types included non-compete/non-disclosure agreements (NCs/NDAs), employment contracts, contractor and consultant agreements, intellectual property (IP) contracts, privacy & data security policies, “clickwrap” and terms of service (TOS) agreements, and real estate agreements (see next section).
Real estate transactions are a necessary part of most types of business — with the exception, of course, of startups still in the “garage phase.” Yet, they can seem especially confusing, cryptic, and intimidating to the small businessperson. The dollar values in question can seem (and in way, are) disproportionately high — e.g., the $1000-a-month small office lease which is mandated to be under a 5-year contract and thus comes to over $60,000, and which requires you to make good on the contact even if you want to leave half way through or your business folds! The issues, costs and benefits at stake rapidly escalate from there as businesses approach even the mid-range of size. Simply put, there’s too much at stake in even the “smallest” business property transactions not to get trusted legal advisors to help you understand your risks and rights, avoid pitfalls, and win you important concessions.
Whether you are negotiating a lease for your office, storefront or warehouse, or purchasing or selling commercial property as all or part of your businesses’ core activities, we are well-versed in real estate transactions and can provide you with legal guidance that will give you peace of mind and effectively further your interests.
Business Purchase & Sale
Transactions of entire businesses are major events for both sides to the transaction, entailing a myriad of intertwined legal and financial concerns. The dollar values at stake (as with real estate) are typically high, and there are many “moving parts” and nuanced, sometimes unique aspects to businesses that dovetail with different forms of potential liability for the seller. The buyer will (or should) typically be trying to control for these risks with the proper contractual clauses, entailing a high-stakes, back-and-forth negotiation process. In addition, it is often far from clear what exactly is being sold (or how to delimit it) with many types of businesses — particularly those based upon, or heavily involving intellectual property (IP). However, such concerns, as well as other “intangibles,” are often even in play with “brick-and-mortar” businesses — e..g, where trademarks/branding, distribution rights, territories and non-competes, “goodwill” value, and even social media accounts are an important part of the picture. Finally, there is the overtly financial element, with buyers having an interest in doing accounting diligence, sellers sometimes providing financing, and/or buyers seeking major outside finding/new investment creating a multi-party dynamic and giving rise to independent financial-legal concerns.
Commercial & International Law
Not all business law can be reduced to contracts, general advice or litigation/related legal strategy — there are also the major encoded regimes of business law embodied in commercial law and international law.
Commercial law in the US is primary encoded in the Uniform Commercial Code (the UCC), which 49 states have adopted. The most commonly-encountered UCC areas by businesses cover sales of goods (Article 2) as well as financing (primarily securitization and negotiable instruments, Articles 9 and 3 respectively). If you sell anything in the US, you almost certainly will need to deal with Article 2 at some point (at a minimum, factoring it into your general business strategy). Secured transactions, Article 9, is also very likely to come up, given its integral role in many common business financing arrangements (these dovetail with Article 3). We can help you navigate these areas of the UCC, as well as the other, more “niche” areas that may apply.
When it comes to doing business internationally, different countries’ jurisdictional legal regimes, as well as international treaties must be dealt with. Even the simple act of shipping goods to an individual retail customer in another country introduces a new world of legal concerns: there is customs (on both sides), as well as the general law of the other country (e.g., is the item even legal to sell into that country?). Branching, offshoring, and international business contracts require more in-depth consideration of the relevant law of the other country. Then there are the multilateral international law regimes (treaties), such as UNIDROIT and CISG (analogous to the UCC but for the international arena, with the former not limited to goods sales), the major WTO treaties (formerly GATT) covering virtually all areas of trade, the Euro Area’s extensive body of rules and directives, and the rules of other regional trade blocs (ASEAN, NAFTA, and prospectively, TTIP and TPP). We are well steeped in international law, and can be your guide through what are (both literally and figuratively) foreign shoals.
Litigation & Alternative Dispute Resolution
Even the most diligent business, which, in line with the above, has enlisted competent legal advisors well in advance and conducted its business with due care and an overriding ethical concern, can still find itself in arbitration or facing a lawsuit — or needing to file one to uphold its own rights. Indeed, conflict situations start long before any side takes formal confrontational action; if you haven’t prevented the conflict with pre-emptive legal counsel, you may still be able to defuse it to your benefit with the right pre-litigation legal advice. After all, judicial court litigation, and to a lesser extent, private arbitration, are an inherently expensive processes.
If you are even facing the prospect of having to deal with a business dispute in a formal tribunal — indeed, if you are even anticipating that a legal conflict may arise — that is the time to get responsive legal counsel. We can help you at this early stage, lending critical legal and strategic advice and communicating with the prospective adversaries, in an attempt to avoid an expensive battle in a legal tribunal, or to set the stage for the most positive outcome to your business interests. We are also extremely experienced in litigation in a myriad of federal and state jurisdictions across the United States, as well as private arbitration, so we can represent your interests should a business dispute invariably end up in a tribunal.