Being an entrepreneur can be tough enough without thinking about the legal aspects of starting a business. But the truth is, being an entrepreneur can leave you needing a lawyer in more situations that you probably realize. I’ve been lucky enough to have some great lawyer friends who advised me in the process of setting up my business, but if you don’t have that resource, there are several circumstances when you could need legal counsel.
Whether you’re already working your side hustle, or just thinking about beating the nine to five, here are six situations which could leave you needing a lawyer as an entrepreneur or solopreneur.
1. Setting Up Your Company
The first time you probably want to consider getting a lawyer is when you set up your company. Now, for most businesses, you’ll probably start off as a sole proprietor which doesn’t require much legal paperwork (laws vary by city and county). However, if you want an official business structure in the eyes of the IRS, you’ll probably need some help drafting the necessary documents.
There are services, like Legal Zoom and Rocket Lawyer that can prepare and file your paperwork for you, but if you have anything that is more complicated, you’ll probably want to get professional legal help instead of trying to do it yourself.
2. IP Protection
Depending on your industry and company type, you may need to consider getting some intellectual property protection, like a copyright, trademark, or patent. Many successful online business owners will scoff at this, because on the Internet, these are rarely enforceable but cost a fortune. Instead, they would suggest speed, agility, and value for your customer. But, I digress…
If you need to get IP protection, a lawyer is the way to go because they can really help you make sure that your idea is protected. If you do it yourself, you run the risk of not covering all your bases, and if you have the next billion dollar idea, you could find yourself in a tough spot.
3. Responding to the Inevitable
At some point in time, you will most likely have to respond to something – a cease and desist notice, a claim against you, or just a demand letter. These types of notices are typically the first step in the legal process, so if you don’t respond or take action, you could end up in court.
Being an online business owner, a common occurrence that arises is copyright infringement. I have to take action almost monthly on various websites stealing my content. However, big broadcasting companies have started getting sloppy over wrongfully accusing individuals of stealing content. The most comical example of this comes from one of my favorite sites, The Oatmeal.
Basically, another website, FunkyJunk, accused The Oatmeal of stealing their content. In the spirit of The Oatmeal, the creator, Matthew Inman, drew a comic highlighting the fact that this was incorrect, and in the comic included 100+ links to where FunkyJunk was actually stealing The Oatmeal’s content. This made FunkyJunk mad, and they sent a cease and desist letter. Long story short, you never know what some random person will accuse you of and you may have to defend yourself.
In these situations, it would be extremely wise to consult a lawyer about the best course of action for you and your business.
4. Going On The Offense
On the flip side of the equation, there may come a time when you need to be the one sending the cease and desist letter. This happened to me one time, where my websites and businesses were being attacked by a teenager. Whether out of boredom or malice, this kid was causing me serious monetary loss over the months that we was doing his actions. Being rather tech savvy, I tracked this guy down online, got his address and contact information, and asked him to stop. When he refused and escalated the situation, I drafted a cease and desist letter to his parents, since they were his legal guardians. Needless to say, I received an immediate apology from his parents (who had no idea what he was doing, and didn’t even really understand), and the behavior stopped.
In my case, my lawyer friend sent me a draft of a standard cease and desist letter that they use in their law office, and simply edited it to match my needs. But my lawyer friend also walked me through step-by-step on the process, and it was very value-added. If you’re planning on fighting back, make sure you consult a lawyer.
5. Enforcing Contracts
If you run a business that deals with contracts, you could face a situation where you need to enforce the contract with the other party. If you’re using contracts, you should probably have a lawyer draft your contract for you, so that they are aware of the stipulations. Then, you can leverage that same lawyer to help you enforce the contract if needed.
Contract law can be tricky, and there are a lot of loopholes, so this is one area where having an expert set of eyes can be extremely useful.
6. Estate Planning
Finally, you may not think about it early on, but you do need to do some estate planning with your business. What happens if you are a solopreneur and you die tomorrow? What will happen to your business’ assets? Who takes control of your company?
These are questions that you need to ask yourself, and then seek out a lawyer’s help to draft a will, trust, power of attorney, and any other estate planning documents you will need. If you have a small business, it is probably even more important that you have these documents in place sooner, rather than later.
Have you ever had to use a lawyer for your small business? Are you planning to look into one after reading this?