10 Legal Mistakes Most Businesses Make
IceMiller Legal Counsel
To Start:
- Avoid mistakes by learning from those made by others
- The common thread – failure or refusal to plan
- Legal "health" requires check-ups and basic maintenance
1. Failure to have a Succession Plan in place
- Do it now!
- Write it down.
- Stakeholders need that certainty.
- Lack of certainty/stability impacts the success of a business.
- Buy-sell provisions are a bare minimum.
2. Shoot First, Ask Questions later with HR decisions
- HR decisions are inherently dangerous
- Law in the area is constantly evolving
- Low-hanging fruit: cost of addressing is generally peanuts compared to the cost of a misstep
- Hiring environment adds a new element to risk of getting rid of an employee
3. Failure to Protect Intellectual Property
- Every business is an "IP" business on some level
- There are both offensive and defensive reasons to protect IP
- Create assets/value. Conversely, avoids costly mistakes
4. Failure to Lock Up Employees
- Key components
- Noncompete
- Nonsolicitation
- Confidentiality
- Assignment of inventions
- Failure to address leaves the business vulnerable to competitors
- Can provide "weapon" in employment disputes
5. Allowing “Fairness” or “Justice” to drive litigation decision
- Principles cost $$$$
- Life (and litigation) is unfair
6. Fall into a Commercial Contract Malaise
- Don't be fatalistic about contracts – you often can get what you want
- Must redefine expectations
- Contracts, like life and litigation, are not fair
- Form/template contracts can offer benefits in a cost-effective manner
- Not all business relationships are created equal
7. Employee Incentive Compensation Pitfalls
- We often see the plan does not fit the desired goals of the plan
- Lower morale is often the perverse result
- Negative tax consequences for employees
- Ownership = entanglements and risks
8. Failure to Prepare for Business Sale
- Don't "fall" into a sale
- It is likely the biggest business event in your professional lifetime
- Preserving value takes effort/strategy
- Missteps can drive down the value
- Distraction is inherent to a deal
9. Failure to Conduct an Annual Review
- Businesses need “Check-ups” just like people
- Maintenance is no accident – it takes careful planning in a systematic fashion
10. Failure to have a disaster plan in place
- Would not have made my shortlist just a few months back
- Not inherently a "legal" item
- However, failure to have one can create legal risks
To watch the full webinar, click here.