Business decisions are guided by legal opinions. In a large organization, those opinions come from lawyers. Lawyers help craft policies on how business decisions are made, create forms to execute management choices, and write scripts for sales professionals or customer service. Law firms will be asked to provide formal written opinions, or to participate in meetings where business decisions are made. Successful business people count on having good lawyers only a phone call away.
In smaller businesses the legal opinions that guide business decisions may come from the business owners. Smaller businesses may not have such easy access to legal help. They sometimes struggle to make careful use of limited working capital, and choose to rely on their own understanding of the law, or worse, what they can find on the internet. Legal fees are too often seen as a budget line item necessary only when you get into trouble.
A judge in Texas recently captured this truth:
“When two individuals decide to join forces and form a business venture, they can take one of two paths. The first is to seek and pay for sound legal advice to define and structure their relationship and fairly allocate business risks, and to pay for sound financial advice to properly project future financial performance and accurately record the past. Or they can eschew the advice, save a little money, and just wing it. And that can work out fine in those few cases where the venture succeeds and prospers. But failure occurs far more often. And where, as here, business failure goes along with a lack of proper documentation, the parties can end up in litigation, and the attorney fees paid to litigation counsel are many times the fees that would have been paid for proper legal and financial advice up front.” Insp. Mgmt. Sys., Inc. v. Colliau (In re Colliau), 2017 Bankr. LEXIS 1420, (Bankr. W.D. Tex. May 24, 2017).
An ounce of prevention is worth a pound of cure. Avoiding legal problems is almost always less expensive than fixing legal problems. A successful business, whatever its size, recognizes the value of a trusted legal advisor. That is what we offer our clients.
Author: Jesse Jones, Attorney
The McIntosh Law Firm, P.C.