1. What is the legal team’s background in working with other clients in a similar industry, company size, or stage as a small business owner?
2. What is a realistic budget for legal expenses?
A quarterly, if not an annual, legal budget so small business owners know what amount to set aside.
3. What are realistic timelines for my company’s objectives?
Timeline of legal projects to undertake, their priorities, and how long it takes to accomplish them.
4. What kind of proprietary assets does the company have? Has the company adequately protected its intellectual property?
This is key to understanding fees for budgeting purposes.
5. What is the legal team’s background in working with other clients in a similar industry, company size, or stage as a small business owner?
6. What is the best way a small business owner can protect personal wealth and assets from business risks?
Incorporate the business, treat the business as a separate entity with separate bank accounts, and document important decisions made during the course of the business (such as raising capital, taking on loans, entering into major business contracts) with your business partner. Typically, such documents are known as directors’ resolutions or minutes.
7. What specifically are small business owners most confused about when you first meet with them?
The type of entity to form – LLCs, C corps., S corps., and which state to incorporate.
8. How can quality legal services help a small business grow?
Quality legal services will help a small business grow in two ways. Internally, quality legal services can build a foundation upon which the small business can grow and expand quickly, such as streamlining the process of raising capital, recruitment, awarding of incentive compensation, and creating templates for business contracts. Externally, quality legal services can help small businesses immensely in contract negotiations with Fortune 500 companies, as some of those contracts can be very convoluted. An experienced attorney’s job will be to assist the client in getting favorable terms, protect the client from taking on responsibilities that outweigh the benefits the client will be receiving, while at the same time maintaining a good relationship with the Fortune 500 company with hopes of such Fortune 500 company to further engage the client.
9. How can quality legal services help small businesses save money?
10. How can small businesses maximize the value of their legal team’s services?
Provide your legal team with adequate context surrounding a legal matter. For example, when asking your legal team to review a contract, it will be helpful to provide your legal team with a bit of history regarding the relationship between the parties, how important the project is to the small business, so the legal team knows how aggressive it should be. Also, it really helps the legal team if the client is very organized and asks focused questions!
11. Should business partners have the same amount of equity in a company? Why or why not?
As long as the equity split does not contribute to a deadlock situation, this should be fine. For example, if only two business partners, a 50/50 split will not be a good idea. However, if there are three business partners, it’s OK to have 33 1/3 split each, as a deadlock situation is not possible.
12. What are the top three things a small business owner should be aware of when purchasing an existing business?
Accurately determine the value, review the business’s tax returns to determine profitability, and if there is any outstanding tax liability, determine why the business is for sale.