WHAT IS A “LEGAL CHECK UP”?
During the past year and a half that I have been writing this column, I have suggested several times that business operators and owners meet with a lawyer to perform a “legal check up” of their business operations. Several people have contacted me and asked that I explain what I mean by having a “legal check up.”
What I have suggested is that all business operators, be it the president of a corporation or a sole proprietor, meet with an attorney and have a review of business operations, to make sure that there are no open legal issues which could come back to haunt the operator and impose liability on the owners and/or employees of a business. This should be done on a periodic basis, no different than having a personal physical, to make sure a business or company is not sick and in need of attention.
When meeting with an attorney, you should be prepared to answer questions about what your business actually does, how it is being operated, what type of clients/customers you have, what contracts are used on a daily basis, the type of insurance that is in place, and if there are agreements that effect the ownership of the business. You should bring with you to such a meeting several items, specifically: copies of your minutes and bylaws if you operate as a corporation or limited liability company, a copy of any buy sell agreement between any owners, a copy of your certificate of insurance, a copy of any standard contracts and a copy of any company brochure if one exists.
During the meeting, a qualified attorney should review and discuss with you various areas of concern. A review should be conducted of your minutes and bylaws to make sure that they are up to date and include information to keep the “veil” in place. There should also be a review of the type of business format the business is operating under and a discussion of any agreements (and a review of those that exist) relating to ownership between the operators and/or investors in the business. There should also be a review of employee/employer relationships and a determination if a policy and procedure manual should be put into place. At the “legal check up,” a review of insurance issues should be completed, as well as a review of any standard contracts. Finally, you should have a discussion with the attorney relating to certain tax matters, if the attorney is qualified. If not, you should have this discussion with your accountant, specifically to make sure you are following all applicable rules, and if you should be implementing any new tax or business agreements.
Each of these issues will vary by business, and there is no standard format to be followed. You should plan to spend about an hour and a half with an attorney reviewing these items, and the cost should be between $275 and $350. If you are seeing the attorney for the first time, the first half hour should be at no cost, as this is the time that should be spent deciding if you like the attorney or not. After the first half hour however, do not expect the attorney to give you a complete “legal check up” at no cost.
Remember, like many medical conditions, a “legal check up” can avoid serious problems in the future.