Do It Yourself: Business Hypotheticals
Everyone has completed or at least attempted to complete a do it yourself project. The results are usually mixed from limited success to catastrophic. One area in which doing it yourself could be catastrophic is doing your own legal work yourself.
Hypothetical #1: You decide to purchase a business. You “crib” documents from another business owner and off the internet. The purchase of the business goes smoothly. You congratulate yourself. That is until your business is sued by a vendor for an unpaid invoice that was incurred by the previous business owner. You remain unconcerned until you seek the advice of an attorney. You are then informed that you purchased the stock of the business, rather than the assets, and as a result, your business is now responsible for all of the debts and liabilities of the old business.
Hypothetical #2: You decide to incorporate your business yourself because that “simply” requires filing a document with the Minnesota Secretary of State and paying the filing fee. There is no need to spend the money on an attorney. After you have been in business for several years with no issues, disaster hits. Your business is in a dispute with another business regarding the contract your businesses entered into. Your business gets sued, and the lawsuit requests that the corporate veil is pierced and your personal assets, as the owner, are seized to pay any judgment on the lawsuit.
Since your business is a corporation, and thus, your business is required to be represented by an attorney in court, you retain an attorney. Your attorney explains to you that the claim to pierce your corporate veil is actually a viable claim with potentially devastating consequences because you have failed to treat your business as a separate entity from your personal accounts (since you complete your own bookkeeping and taxes), and you have no corporate minutes, bylaws or any of the other required documents.
Hypothetical #3: You enter into a contract without understanding all of the terms of the contract. Therefore, you do not realize, until you have been sued, that the contract that you signed requires the parties’ dispute to be heard in court in New York City, which significantly increases your expenses. Further, you are informed that New York laws apply, which are completely different from Minnesota laws and are not advantageous to you.
Hypothetical #4: You do not have any job descriptions for your employees. There have not been any issues during the entire time that you operated your business. That is, until you hired Bob, who claims that he was discriminated against on the basis of disability because he was terminated when he was unable to lift certain items. Since you do not have job descriptions, which will include the essential functions of Bob’s job, a jury finds that you discriminated against Bob and enters a judgment that is more than your last five years of gross revenue.
Hiring an attorney should occur prior to anything bad happening so that you are in the best position possible if it does. Spangler and de Stefano, PLLP are experienced business attorneys that can help put your business in the best position possible if something bad happens.
The material contained herein is for informational purposes only, and is not intended to create or constitute an attorney-client relationship between Spangler and de Stefano, PLLP and the reader. The information contained herein is not offered as legal advice and should not be construed as legal advice.