Legal Horror Stories:?This series is brought to you by eMinutes.com to help educate and inform young business owners.?See if you qualify to have your business incorporated for free today!
Today?s story comes from Geeta Raj The Global Sleepover?a start-up for children about fictional sleepovers all over the world.
On the whole, I rely on legal guidance to keep checks and balance. ?No, you can?t do this? or ?Yes, you can do this and here?s how.? Doing things correctly the first time around, even at early stages of a start-up, is invaluable.
The Global Sleepover is my first start-up; I?m particular in ensuring things are done right in efficient and affordable ways. Most of us can?t afford high hourly rates for legal advice that, with research and exploration, is actually available for free. It?s a great feeling of accomplishment when you put in some effort, play the guessing game, find answers to your legal questions and save that $200 ? $400. Then there are situations which merit spending the money in exchange for peace of mind.
My business partner and I set-up The Global Sleepover LLC and its related Operating Agreement using research and exploration. It worked beautifully. (See below for tips). Soon after, though, the terms of my partner?s involvement changed drastically. Worse case, myself individually and the business were suddenly vulnerable to future lawsuits, claims and blurry lines of ownership. This was further complicated by the legal implications of foreign ownership as he?s a UK citizen.
I didn?t have the patience or capacity to explore and research. My goal was to protect the business and ensure all legal obligations were satisfied. I called a lawyer who came recommended, told him what had happened and where I wanted to go, and handed it over to him. His response, for $200/hour, was: ?Yes you can do this and here?s how.? He told me what steps I needed to take, drafted all relevant documents, and the LLC was protected from future vulnerabilities. Putting the burden on the lawyer to ?get it done? also freed my time to manage the situation in other ways. It was worth doing right the first time around.
Tips for the Research and Exploration Method:
- Talk to anyone knowledgeable on the subject matter you?re working on. Your answer will come from piecing together answers from numerous sources.
- Don?t be afraid to ask questions. It?s amazing what people will tell you if you just ask.
- Keep informed! Book stores and libraries still exist. Go spend a few hours reading up. You have to know enough to be able to ask the right questions and make intelligent guesses.
- If you?re dealing with a legal issue that involves a government entity, call that government entity. Talk with them. If the person answering the phone isn?t helpful, hang up and call again.
- ?Some lawyers offer free consultations ? take advantage!
- ?Services exist where, for a small monthly fee, you can get a set amount of legal questions answered and documents reviewed. These can be worth the money.
- You can source the first-half of standard legal documents online for free. It?s a good start and you?re half-way there.
- You?ll naturally miss some things by doing your own research and exploration. Sometimes it takes a few tries to optimize. I re-wrote the Operating Agreement for my LLC numerous times.
Tips on Utilizing Legal Consultation Effectively and With Results
- Ask around for a recommended lawyer.
- Understand how you operate and work best ? this will help you maximize the lawyer?s time when you?re paying by the hour.
- Figure out, in advance, what you want to happen. Make sure you?re 100% clear on this.
- Rely on the lawyer as an enabling tool to get you to your end result. Don?t rely on the lawyer to set goals ? that?s your job.
- Ask the lawyer as many questions as you want.
- At times, it might be wise to get a ?second opinion? or do independent research.
- Set terms of payment, consultation, involvement in advance and with a signed document.
- Document all communications with lawyers ? even if it?s a phone call.
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Category: Legal/Accounting, Startup Advice