I was speaking at a small business event the other night in Chicago and a young entrepreneur asked me what one of the most common mistakes that new business people make and what would I recommend be done to avoid the consequences of the mistake. The answer that immediately came to mind was that some business people think that because they started a successful business that they can do everything for that business including being their own lawyer.  Nothing could be further from the truth.

 

I have been practicing law for 27 years and have represented many 100’s of small businesses. Some of the stickiest problems that I have seen is when the business owner tries to solve legal problems themselves.   Such unfounded hope can only lead to one thing…. a bigger and more expensive legal problem.  Some of my most successful clients consult with me proactively but they are the rare few.   Some clients come to me with a legal problem and a proposed solution.  That is the vast majority and a great way to start.  I appreciate when a client thinks about a legal solution but is smart enough not to act until they consult with me.   

 

On the other end of the spectrum is the client that has a legal problem, thinks that they know a legal “solution” and has implemented their own legal “solution” and later learn, much to their disappointment, that they actually added gasoline to the already burning legal fire.  All is usually not lost but the legal solution first involves undoing the damage and then solving the problem.  

 

Here are a few of the most–common issues we see:

 

Failure to Document – It is human nature to trust other people.  While that may work in the context of borrowing your neighbor’s garden tools, it is a recipe for disaster in business.  Business people need to clearly define expectations in the business setting and then set them to paper for the parties to read and understand. The failure to document what is expected from each party can be a killer: Who is going to do what? What if more money is needed? How will the profits be distributed? What happens if a partner dies or wants out of the business? Get an attorney involved at the start to document the answers to these and many more questions.

 

Using Internet Documents – The Internet is great for some things, news, research on products, shopping, comparing and the like, but the Internet never went to law school.  While I do not dispute that a large portion of some legal documents is legal “boilerplate” language, the really important part of the documents need to be “tailor made” by a real lawyer for your specific business.   Just like every business is not alike, every business cannot be governed by the same documents.  That is a fact that is sometime lost by those that looked to the Internet for legal answers.

 

Putting Too Much Information in Writing – email is the norm today. It provides a fast and easy communication medium, but it also provides a –paper trail– in ways that cannot be matched by a phone call or in-person meeting.  While it is natural to try to settle a business dispute early, take caution with what you write or rather, what you admit.   I always write an email as if I am going to be an exhibit in a deposition someday.  Emails are like letters and memos of the old days, they do not go away and you have to live by what you write.

 

OK, he said, “I got it.”  Bottom line, think and consult before you act on legal matters; document what is important and be careful what you write. My last piece of advice to him: Don’t be embarrassed to ask for help, there is never a dumb question.