10 Legal Mistakes Most Businesses Make

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
    • Now it is a no-brainer
  • Not inherently a "legal" item
    • However, failure to have one can create legal risks

To watch the full webinar, click here.