Cash flow is the lifeblood of a start-up business.  On the one hand, there is pressure to apply it toward funding critical operational areas. On the other, the cost of legal missteps can far exceed the cash savings resulting from foregoing a timely consultation with an experienced business attorney.  Protect your business by consulting with an attorney on issues that impose substantial risk of liability, such as:

  1. Structuring your business:
    • Sole Proprietorship, LLC, Corporation, Partnership?  Each has distinct advantages and disadvantages in terms of taxation, legal liability, and rules and regulations imposed on the business.  Too many businesses wind up re-doing an initial structure that proved less than optimal, often at greater expense.  Strategize with your business attorney before you leap into deciding the optimum structure.
  2. Hiring and terminating employees
    • Rely on an experienced attorney to draft or review your pre-employment documents and employment policies to insure you have a legal  process in place.  You should also consult with your attorney to avoid common mistakes in compensating  employees,  misclassifying employees as independent contractors, and  recognizing when various employment laws apply to your business.
  3. Obtaining financing
    • Most new businesses require capital beyond the savings of the entrepreneur. Whether financing comes from angel funds, venture capital, or bank loans, it is critical to work with an attorney to protect your interests while negotiating the deal.  An attorney will help you understand the ramifications associated with late payment or default, as well as any language that is unclear in the financing or loan documents.
  4. Negotiating/signing contracts
    • You should  have a set of standard contracts tailored to the needs of your business, for use with vendors, suppliers, customers and distributors.  If you must use the standard contract of another party, there is still benefit to be gained by working with your attorney to identify edits or modifications that better protect your business. Finally, there are times there is no alternative to accepting a third party’s standard contract as is. Your attorney can help you quantify the risks in deciding how to address these common situations.
  5. Protection of Intellectual Property
    • Your intellectual property is the foundation of your business and your profitability.  Engage an attorney to protect your rights of ownership in your trademarks, patents, trade secrets or copyrights.  Have a discussion on whether implementation of non-disclosure, confidentiality  and non-compete agreements can further protect your intellectual property.
  6. Leasing space/buying property
    • Most lease forms are drafted in favor of the landlord, so it is important to have an attorney review the lease and draft addendum language that benefits you.  Your attorney will insure that the terms you negotiate regarding lease payment, repair and maintenance liability, utilities, leasehold improvements and early exit are properly reflected in the final document.

When buying a property, your attorney can help you successfully navigate issues of zoning and land use, defects in titles, mechanics liens, hazardous waste and environmental clean-up requirements.

Beyond the legal issues, your attorney can also assist with connections to other service professionals, prospective customers and suppliers, and “best practices” information that can positively impact your business.  And, if you work with an experienced attorney at a larger law firm, you will have access to specialized expertise, such as buying or selling a company, or dealing with environmental issues. Most large firms have special programs tailored to the needs and budgets of small businesses, so don’t let fear of hourly billing stop you from exploring the possibility of having your own general counsel “on call”.

Varnum Attorneys at Law LLP offers complimentary legal services to Michigan startups through its MiSpringboard program. For more information about the program and the referral process for eligible businesses, visit