Many business owners think they don’t need or cannot afford legal advice to prevent potential legal problems. However, as the saying goes -an ounce of prevention is worth a pound of cure. While there is no replacement for a comprehensive legal risk assessment, there are some easy steps you should take to protect your business from liability and ensure you can enforce your rights.
Every business has some intellectual property, which means you may have to deal with someone infringing your rights or being accused of infringement. Your business name, logo, website domain and content, services, products, or processes can often be protected by registering your trademarks or patents with the U.S. Patent and Trademark Office and your copyrights with the U.S. Copyright Office. In some cases, you may also want international protection. Registration puts others on notice of your rights and allows you to sue infringers in federal court. An added benefit is that going through the process of registration requires that you search for similar intellectual property and you may realize that your material infringes on someone else’s rights before they sue you.
Often, businesses share confidential information with other parties such as employees, consultants, vendors, and business partners. If those individuals reveal that information, it can severely damage the company. Accordingly, you should have written agreements with anyone who may be privy to confidential information or trade secrets and include a non-disclosure provision. This allows you to clarify your rights and sue them and obtain damages for disclosure.
Typically, companies must register to do business in a state. If they fail to do so, they may be subject to penalties and forfeit the right to sue another party in the state. Some businesses also have other filing requirements, such as the need to obtain authorization to collect and pay sales tax or to sell alcohol. Again, there are serious consequences for noncompliance. Importantly, you must check whether you need to comply with laws in more than one state.
Violations of wage and hour laws are common because employers do not understand or stay abreast of federal, state, and local laws. Reviewing job duties and agreements with anyone who does work for the business is necessary to ensure compliance with all rules. Many businesses mistakenly categorize employees as independent contractors or non-exempt employees as exempt employees. However, individuals in each of these categories have different rights and employers may face significant liability for their errors including payment of back wages, fines, and penalties.
Some business disputes cannot be prevented, but litigation is costly and time-consuming. An effective way to resolve disagreements without resorting to litigation is by including a provision in contracts requiring ADR. The contract should state that the parties must first mediate in good faith. Then, if they still cannot agree, they must go to arbitration. The parties can agree in advance on how the arbitration will be conducted and set tight timeframes and expedited rules regarding pre-hearing discovery. Further, they can give the arbitrator the authority to award costs, including attorney’s fees, to the prevailing party in any potential arbitration, which further reduces the likelihood of frivolous claims, defenses, and counterclaims.
These are just a few of the many ways that you can minimize risk and protect your business from common legal problems. However, the best way to safeguard your legal rights is by getting comprehensive proactive advice from skilled legal and financial advisors.
We have extensive experience counseling businesses on a wide range of issues. Our fractional general counsel services allow small companies to obtain skilled, affordable, reliable legal assistance when and how they need it. Contact us today.
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