Legal support is generally regarded as a reactive service. When you need advice due to a business challenge, a significant transaction such as a contract negotiation, or in the event of loss, your lawyer is on hand to help resolve your issue. But what if there was a way to reduce risk of an issue happening in the first place?
For too long, businesses have used lawyers in the same way that they would use a dentist; if you have a toothache – a visit to the dentist usually fixes the problem but at a cost! Same scenario with a Lawyer.
This isn’t to say a trusted law firm doesn’t do a good job in banishing legal troubles to the darkness they came from, it’s just not a very cost-effective method. From disruptive disputes and costly claims to company restructures and corporate transactions, instructing a lawyer when the damage is done or the deals on the table isn’t exactly the most efficient approach.
Instead, businesses should consider a paradigm shift and utilise law services as a critical business asset. Incorporating it into their core strategy would enable them to start benefiting from proactive support. Rather than waiting to pick up the phone at the point of absolute need, leaders would be wise to keep their lawyers on speed dial.
Establishing a relationship at the inception of the business and seeking regular assistance can reduce risk and drive profits.
This shift is now happening and, increasingly, organisations are seeing on-demand legal services as a means of gaining a competitive advantage. As a result, they’ve succeeded on several levels:
Getting off to a great start
For those unfamiliar with the process, starting up a business shouldn’t be a guessing game. The decisions you make today will determine the way your organisation will operate for the foreseeable future, so it is by no means something that should be rushed. Choose the wrong entity, for instance, and you could find yourself carrying more personal liability than is necessary.
Unfortunately for some, this decision can and has come back to haunt their business further down the line.
Similarly, drawing up your organisational structure without advice may save you a few hours in the short-term, but once your business has grown beyond a certain point, you may find that the organisational design prevents agility and restricts operational success.
If you are relying on third-party investment to kick-start the company or are going into business with a partner, bringing a lawyer in at the last minute to finalise an agreement is certainly one way to increase risk of a contractual dispute. What’s worse is going it alone, rushing into uninformed decisions and casually signing binding contracts because they “sound right.”
If this is your approach, be prepared to pay a high price in legal fees should things go sour.
Instead, entrepreneurs need to consider seeking assistance as early as possible to determine how the company will operate and how the powers will be divided in a shareholders’ agreement.
In a landscape fraught with uncertainty, organisations must learn to be both resilient and dynamic; they must have strong foundations yet maintain a certain degree of adaptability to navigate the choppy waters ahead.
To master this paradox, new businesses should seek specialist advice from an expert business lawyer at the inception of the firm. Beyond this, their dedicated lawyer can provide guidance on how to properly maintain corporate records and ensure that all paperwork is drafted correctly.
Best practice and due diligence at this start up stage of a business can reap rewards long term when considering a sale.
Gaining the edge on the competition
When insufficient preparations are undertaken, legislative change can throw a proverbial spanner in the works of several business functions at once. Suddenly, strategies within the sales, marketing, IT and even HR departments are called into question and the business must rethink how to balance compliance with high performance.
Consider GDPR, the biggest shake-up to data protection laws in 20 years. Now consider the many businesses who didn’t bother to check how the new rules would affect them versus those who had specialist legal advice on tap to shine a light on the complexities involved. Having failed to contact their lawyer until a few weeks before the deadline, some businesses were faced with the prospect of cleansing their data, bolstering their information security department, training key members of staff and overhauling their entire marketing strategy within a very small window of time. Indeed, some are still actually working on GDPR even after it went live in May 2018.
On the other hand, other businesses – the ones who consulted with expert lawyers upon hearing of the rule change – did not just ‘survive’ GDPR. Aware of the ways in which the new data legislation would impact their operations, they benefited from the new regulation. By working closely with well-seasoned business lawyers to determine the best approach years before it came into force, organisations were able to gain the edge over their competitors.
By the time the deadline date rolled around, these firms had long been compliant. While their peers ran around like headless chickens trying to tie up any loose ends, those who planned sat back and enjoyed another day of ‘Business as Usual’ – all thanks to proactive legal advice.
Using tailored expertise to your advantage
For fast growing companies, a professional relationship with a specialist lawyer can make all the difference. Should you consider expanding into other countries, for example, having someone who is well-versed in commercial law and understands the ins and outs of your business will prove invaluable in determining your strategic approach. Timescales for set up varies from country to country, so it’s essential to plan and ensure all the legal, tax and other regulatory necessities have been considered in good time to align with commercial objectives.
Similarly, a firm looking to merge with or acquire another company would be short-sighted to contact their lawyer at the very last minute. Mergers and acquisitions are notoriously complex; they require careful planning and a great deal of due diligence from an expert in the field.
In such a significant corporate transaction, it makes sound financial sense to be proactive and undertake the groundwork prior to any transaction occurring. Working with your lawyer or law firm well in advance will allow you to build a clear picture of your target before any agreements are formally made. You will be prepared and ready to take advantage of any opportunity that arises.
The smart approach to legal services
When it comes to legal support, proactive work usually prevents reactive work: it’s as simple as that.
By incorporating law services into your business strategy and actively taking advantage of the expertise of a dedicated professional, you minimise the risk of commercial disputes that cost in time as well as money.
Working with a professional lawyer or law firm that understands business as well as the law would enable you to create a robust and strategic business that adheres to best practice, has completed due diligence and business planning to grow profit and ensure that any potential challenges are kept to a minimum.
Those who choose to invest in a positive, long-term relationship with experts in corporate, commercial and employment law will undeniably benefit from cost savings that their competitors could only dream of. If they are to gain the edge, organisations should see legal matters as a fact of business life and prepare accordingly.
If businesses work smart and work closely with their legal support network, they will reap the rewards of future planning and create a business that has strong foundations for future growth and increased profitability.