When do I need to hire a corporate attorney for my business?

Some scenarios are obvious — you should call a criminal defense or civil litigation attorney when you’re being investigated by government officials for tax or securities fraud, when an employee is injured on the job or when a customer is injured by one of your products.

But you should also consider hiring a corporate attorney or startup lawyer in other situations, like:

  • When you are starting a business.
  • If you are a tech startup and entering into agreements with investors and employees.
  • When you are buying or selling a business.
  • When you are considering dissolving your business.
  • When you are hiring senior or key employees.
  • When you are hiring employees with access to company secrets or confidential information.

When You Probably Need a Business Attorney

Here are a few examples of when you should consider hiring a good business attorney (or startup attorney) for your large business or small business.

  • The members of your LLC, shareholders of your company, or partners of your partnership want to allocate the profits and losses is a special way in the LLC operating agreement, shareholder agreement or partnership agreement.
  • The business partners will be contributing capital other than cash to the partnership, company, or LLC — like intellectual property, know-how, or appreciated property.
  • In connection with the purchase of a business that has significant potential liabilities like: environmental issues (state and federal environmental laws impose liabilities on landowners in the chain of title, regardless if they caused the contamination); product liability, employee liability (sexual harassment or employee discrimination claims); excessive debt; or special capital calls.

Please note.  If you are a member of a limited liability company, a shareholder in a closely held company, or a partner in a partnership, keep in mind that the company lawyer (or startup lawyer) is representing the company, not you.  There are times when members, shareholders or partners decide to form their business or eventually go separate ways.  The corporate attorney hired for the business has the business as its client and protects the business’ interests.  In the scenario of forming the business, each business partner has its own interest in mind, which may be adverse to the proposed company (for example, if one member is contributing intellectual property to the new business, it may want to have an exit strategy to keep its intellectual property if they part ways).  Or in the event of a “business divorce,” where the remaining members, shareholders or partners are buying out other LLC members, company shareholders or partnership partners, the company lawyer has the company’s best interest in mind, which interest is adverse to the departing business partners.  Business partners, members and shareholders should be represented by their own corporate attorney to avoid conflicts of interest, or at the very least, the business lawyer needs to advise the partners of, and they have to waive in writing, the conflicts of interest.

If you need help with deciding whether you need to hire a business attorney, you should contact a licensed business lawyer or startup lawyer for an initial consultation.  As the old saying goes, an ounce of prevention is worth a pound of cure.