We’ve talked about building a financial team that includes a strong attorney. Your attorney will play a major role in structuring and protecting the business. However, one of the most important tasks your lawyer will focus on is preventing potential legal liabilities. “The reality is that an ounce of legal prevention is worth a pound of cure in most circumstances,” explained George Megaloudis, founding member of Roach, Ioannidis & Megaloudis. “Don’t be put off by the fact that it may cost money to do something,” Megaloudis continued. “The cost of prevention is almost always cheaper than the cost of curing a legal headache.”
There are a few key areas your financial team’s lawyer should focus on to prevent legal culpability:
- Employees: In areas like employee termination, disgruntled employees, immigration checks, and harassment and discrimination claims, proper forethought and planning can minimize complaints. Clear employment guidelines, documented records, termination papers, open communication, and regular meetings will prevent many problems and quickly minimize others before they escalate.
- Customers: Unhappy customers can easily become a legal thorn in a business’s side. Conduct proper customer relations with quick responses. Track feedback and work to remedy faulty products and errors. This can help keep customers from banding together and seeking legal action.
- Proper Records: Make sure to keep and maintain necessary records. For example: accounting and employment records, stock transfers, board meeting minutes, vendor and client contracts, and tax returns. Request a tax extension if needed. It’s better to file late and correct, than to rush and submit incorrect documents.
- Copyright and Patent Issues: Before expending time and money on new product development, thoroughly research the marketplace. This way, you can avoid any potential copyright, intellectual property, or patent infringements.
Unfortunately, ignorance of the law is not a valid legal defense. Business owners should always ask their attorney about potential risks and how to minimize them. As Jenifer Pinkham, an Associate at The Law Firm of Schlossberg, LLC recommends, “You should be able to confide in your attorney, call them regularly, and feel comfortable reaching out.” It’s always better to ask. You may spark a conversation that can possibly prevent a legal liability, than ignore the situation and put your business at risk.