HOW WE ARE DIFFERENT
You have already seen from our welcome that we are different. We speak different than most lawyers, we talk more like you than most of our colleagues. That’s because we are you — first and foremost, we are entrepreneurs, business owners just like you who understand what it takes to start a business, grow a business, and turn that business into a venture that improves the world forever.
Explaining to you how we’re different (in ways you can’t see on the surface) requires an explanation of what the “traditional” experience with a business lawyer is like. If you’ve worked with a lawyer to prepare business entity formation or incorporation documents for you in the past, this will sound familiar.
During that traditional experience, you’ll go in and meet with a lawyer who might make things seem complicated and confusing. You’ll have a good idea that the lawyer is smart and seems to know what he or she is doing, so you’ll nod and answer questions, as if you understand everything. Because you want to do the right thing for your business, you’ll have the lawyer prepare incorporation documents for you and you’ll sign the documents, feeling relieved that you’ve got that taken care of.
BUT, THEN WHAT?
Maybe you will get a fancy Corporate Record Binder to take home with you. Maybe. (I’ve seen plenty of lawyers who don’t even do that.) You’ll take your fancy planning binder home, stick it on a shelf or in a drawer, mark incorporate business off on your checklist as DONE and never think about it again. Until something happens, that is.
You might remember your business lawyer said something about agreements (with clients, vendors, lenders, partners) but it didn’t go beyond conversation and you realize you still have open-ended incomplete agreements. Maybe you have even asked your lawyer for help, but you call your lawyer’s office, get a voicemail, leave a message and wait for a call back, (which takes several hours at least and sometimes days) and by that time, you’ll have gotten busy with other things and never get around to finishing that agreement.
And it’s the same way for all those other things you know you’ve got to get handled –trademarks/copyrights, insurance, maybe even financial systems and tax strategy.
Perhaps you do connect with your lawyer by phone, ask a few questions and then a few weeks later, you’ll get a bill in the mail for $67.50 for 15 minutes of your lawyer’s time for answering a couple of questions. You’ll make a mental note– don’t call lawyer ever again unless absolutely necessary.
Years go by and you don’t talk to your lawyer. What you don’t realize is that you not only never finalized your agreements, but your lawyer never customized your operating agreement or bylaws. You have not been having annual meetings or documenting annual meeting minutes.
Business will go on and you’ll know you’ve got these things hanging out, incomplete, but you are way too busy to think about it. It puts a slight drag on your creativity to know they are out there, but you don’t want to call your lawyer because you know you’ll get a bill in the mail two weeks later.
Plus, your lawyer doesn’t seem to be able to move things forward either and you are simply too busy to project manage anything that does not contribute to the bottom line.
You’ll hear something about a change in the tax law, but you figure you’d surely get a letter in the mail from your lawyer if it was something that affected you, so you don’t worry about it. And, you’d have to dig through boxes to find your incorporation documents so you can remember your lawyer’s name and find her contact information. Who has time for that?
It’s not until something happens (an employee lawsuit, a client complaint, a vendor dispute, a big tax bill or an audit, or the need/desire to borrow money, raise capital or your own incapacity or death) that you (or your loved ones) realize with a sinking feeling, your corporate documents are incomplete and you are not able to respond properly to the situation.
You are at a loss. And you can see clearly that you’ve lost time by not having this all taken care of and, boy, are things an emotional mess. What you may not know is that you’ve been losing money all the way along. Or, at the very least keeping your business from generating anywhere close to the profits it can.
You see, having your business legal affairs in order and complete is as high priority as having your marketing plan and business model in place. It’s one of the little known secrets to the most successful companies – they were set up right.
It’s no mistake that the IRS audits unincorporated sole proprietors 5-7 times more often than it does incorporated business entities … the IRS knows if you do not have your business set up right, you are probably not doing your taxes right. And we know that you are probably also not hiring and firing right, have not enough (or too much) insurance and that it’s probably not the right type. You are probably paying more for insurance than you need to as well, if you have it.
All of this leads to your business being built on a house of cards, one crisis away from closing your doors.
HOW DO I KNOW ALL THIS?
Because not too long ago, my own business was set up this way too and once I saw how my business changed once I took care of the foundation, I swore I would never let this happen to one of my clients.
And since then, I have seen countless clients come in to see me who have had this exact experience.
Unfortunately, what I discovered is that most lawyers who hold themselves out as business lawyers, do nothing more for their clients than incorporate their entity and send them on their way. Heck, you could get your business entity incorporated a lot less expensively by using a document drafting service if that’s all you are going to have taken care of by your lawyer.
Your business lawyer should be a counselor, not just a document preparer.