united-states, law, lawyerShould a person who is working as the CEO of a company have a lawyer to act as his or her consultant on a regular basis?
Is having one common practice?
Someone told me I should get one, but I am on a tight budget and can’t afford a lot of stuff. My business is currently focused mostly on creating crafts and doing woodwork.
If you’re tight on money and you’re only doing some small work, I wouldn’t necessarily say it’s worth hiring on a lawyer to staff, or even meeting with one all the time. If you were in a more competitive field where day-to-day business decisions could win or lose mass amounts of clients or money, I might answer differently. But for what it sounds like you’re handling, where the most IP you’d really have to worry about is probably a copyright here or there, I wouldn’t worry too much.
Lawyers serve a few purposes to businesses at any stage, particularly when they’re first starting to get going. The main job of a lawyer is to manage risk. So if you have a lot of “risks,” in the legal sense, you should keep a lawyer’s phone number handy. But it doesn’t sound like your business necessarily faces those issues.
What I would do in your situation is go meet with a patent attorney (since they generally work a lot with small businesses anyway) for an introductory consultation, discuss where you are and where you’re going, and build a relationship with that attorney. Obviously his or her time (probably) won’t be free, but if you build that relationship early on with something simple like a consultation and maybe filing a few copyrights on your woodwork, it will be easy down the road if you need a lawyer for something to pick right back up with them.
So what ongoing purposes do lawyers serve that might apply to you? While writing this, a couple main points jump to mind. I might well add on a couple later as I think more about it.
Intellectual Property
Patent attorneys can file for patents and other intellectual property (that is, trademarks and copyrights) on your behalf. In doing so, they also act as a guide to many less experienced entrepreneurs about what intellectual property they have that’s even worth protecting. Fortunately for those of us short on cash, such a meeting can generally happen once. You might want to revisit if your situation changes, but unless you’re having them actually file for patents for you, there’s probably not much reason to keep a patent attorney always at your side, at least just for that.
And just an aside, if you’re doing a lot of crafts and artwork, you should probably make sure you’re making the most of the inherent copyrights they hold, and you might even want to shell out the $35 it takes to register a few of your top designs.
Business Formation
Attorneys are generally more knowledgeable about matters pertaining to the creation and preservation of a business as a legal entity. If nothing else, they’ve probably seen many similar companies form and grow, so they know some real-world scenarios that can occur. Long story short here, an attorney is a great person to talk to if you’re looking for help with setting up your corporation to make taxation and wages the most ideal for you. Yet again, this is good to do once in a while, but you don’t really have to have a lawyer with you at all times.
Contracts
You didn’t mention whether you have any employees, suppliers, or wholesale clients, but assuming you do, you probably have contracts. A lawyer could help draft and read through suggested contracts for you to make sure you weren’t signing away any significant rights. A lawyer could also help you with drafting handbooks and other documents.
Generally speaking, you’ll want a lawyer on hand even if you limit your usage on her services.
You will have early needs where a lawyer might be helpful, such as entity formation advice, tax advice, and so forth. An experienced start-up or ventures attorney may be able to make advice about forming an exit strategy or about wooing angels and VCs. They will also assist you in spotting issues and handling claims with regard to vendors, intellectual property, employees, investors, and other hurdles for a startup.
The main benefit to getting an attorney early, aside from forming a solid working relationship early on, is that the attorney has a better sense of your business. That means a better understanding of how your business works, how the pieces fit together, and why some of the practices have developed - and hopefully, how to use that knowledge to better anticipate needs. A lawyer who knows your company and its niche might be able to understand the risks that are particular to your company.
It’s valuable to ask around about reputation, find attorneys who specialize in startups if possible, and then meet some possible attorneys. You should look for those who are a good temperamental fit for you (don’t pick somebody you perceive as a high-powered jerk or a sniveling loser - your relationship will sour and the business could suffer). Be sure to discuss possible future paths of the venture, such as growth, sale, IPO, etc. If you have a productive discussion, you appreciate any professional input the lawyer gives, and you think you could stomach talking to this person repeatedly for months or years, then it may be good to get going early. If necessary, emphasize that the startup must run lean in its early stages and that you are cost-averse in the short-term. If you don’t like any of the candidates and you don’t have pressing legal needs, then hold off on getting an attorney.
You do not need a lawyer on board until you start raising money from investors for equity.
You may need services done by a lawyer in the meantime for contracts or IP, but that should be on a need basis.
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