INTRODUCTION
The
enthusiasm of starting a business oftentimes cloud the founders from seeing the
need to hire/consult a lawyer. There is a popular saying that ‘an ounce of
prevention is worth a pound of cure’ but some entrepreneurs are easily
starry-eyed optimist ignoring any foreboding waiting till something bad happens
before they consult a lawyer.
Legal
guidance in setting up of a business is of great importance in ensuring the
success of the business.
''I
have never met a successful business person who never had a brilliant lawyer''.... Olufemi Awoyemi (Founder and
Chairman of Proshare Nigeria Limited)
An
entrepreneur needs to be legally guided in every facet of his business from;
incorporation procedure, regulatory compliance, trademark and copyright
protection, insurance, raising capital, obtaining patent.
3
REASONS WHY START-UPS NEED LAWYER
1. Legal Structure for the Entity
2. Safeguard Intellectual Property
3. Drafting and reviewing
contractual agreements
1. Legal Structures for the Business
Entity
Start
-Up founders sometimes make the mistake of taking on many roles in the setting
up of their business. They want to act as the lawyer, accountant, marketing
analyst, sales rep. etc, neglecting the availability of professional advice. A
lawyer is knowledgeable in the legal issues which pertains to the right legal
structure to adopt for business.
The
notion of saving money and time by not contracting professionals for advice can
far outweigh the possible expense of going astray when selecting the business
structure for your firm. The dynamism of law makes it of utmost important to
consult a lawyer who is abreast with the latest regulations and requirements
necessary for the choosing of the right business structure.
The choice of the best business structure
depends on factors such as; liability, taxation and record-keeping. The form of
business under the law to be chosen from are;
a.
Sole
Proprietorship
b.
General
Partnership
c.
Corporation
These business options have their advantages and disadvantages, its best the lawyer relates the pros and cons
2.Safeguard Your Intellectual Property
Start-Up
founders make the mistake of relegating the idea of having a good IP strategy
for their business but focus on other aspect of their business. They are
oblivion to the fact that the most important aspect of the business is the
Intellectual Property which must be safeguarded and avoid the risk of third-party
intellectual property issues.
Safeguarding
your IP will mean different things to different start-ups the common aspects
are protection of your software, Industrial designs or brands, patents,
copyrights, trademarks. The less common IP related rights include, database
rights, trade secrets etc.
A
lawyer understands the fact that having an IP strategy that aligns with the
ideation of the startup business is very crucial and it aims at ensuring the
new venture has a solid foundation for future growth, expansion and investment.
His
role is to ensure he identifies and register your idea, designs, technology or
artwork under respective copyrights, trademarks, and patents. This will prevent
the unlawful use or reproduction of the idea you have under IP, and where it’s
discovered that someone copying your idea, the lawyer would push for legal
steps against the violator.
3. Drafting and Reviewing
Contractual Agreement
One
of the greatest pitfalls of startup founders is the Bartimaeus attitude while
entering contractual agreement at the initial stage of the business mostly due
to the enthusiasm of starting a business oftentimes cloud the founders from seeking
for a second view on the contractual agreement before executing same.
Having
a lawyer either draft or review your contract before it is executed ensures
that your business’s best interests are protected. He will draft in the favour
of his client, coupled with his expertise knowledge in the industry, he can
offer advice on typical contract terms that would benefit the business.
Having
a lawyer helping with the drafting and reviewing of contractual agreement, would
pay far more and prevent lose of valuable property, or exposure to unnecessary
business and financial risks, including costly lawsuits.
While
some startup founders cultivate the habit of drafting contractual agreement by
self, risking leaving out key terms that are necessary to make the contract
enforceable. A template agreement found on the internet may be outdated or may
not consider the laws of your state or the specifics of your transaction.
CONCLUSION
We
all can agree that it’s best to seek legal advice and have safety net before you
need it. The aim of the article is to lay emphasis on the fact that start-up
founders need not learn the hard way by falling into unobvious traps in the
early stages of their startups. In the words of JAMES CAAN, he posited
that;
‘’ Regardless of the nature of
your business, industry or sector, when it
comes to establishing a startup, you will come across legal issues’’
The
aforementioned reasons are inexhaustive as we have other reasons why you need
to hire a lawyer as a start-up founder. It is worthy to note that just like a
lawyer can help form the business, it can help develop policies and guidelines
on how the business can come to an end.
