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Good Business Legal Advice: Open Questions…Early Review

At Silverman Sherliker, we specialise in giving good, timely, business legal advice. Entrepreneurship is in the DNA of the firm. Our clients like that approach.

Getting good business legal advice is easy but you do need to ask for it and, most importantly, you need to ask for it EARLY. So whether it is a new start-up, a commercial investment or a new collaborative initiative -get yourself over here as early on in your project as you reasonably can.

As practising business lawyers, we enjoy helping clients in this way, right at the beginning of a new business venture – and we usually find that we can add significant value for the client at this point. A short review meeting with us right at the beginning of the project is time very rarely wasted and can very often help avoid some very expensive and avoidable mistakes. Don’t wait until a legal problem heaves into sight….take some early legal advice and avoid the legal problem arising in the first place! After years of seeing what can often go wrong in business, we can usually, very quickly, identify the key areas of legal risk and the most likely legal problems down the line.

Most importantly, we can also usually suggest some very simple things that can easily be done to avoid these risks and difficulties. So set up an early review meeting and come along and pitch the project to us. Ask us some open questions. Ask us some general questions.

For example, your question might be: “I am thinking of getting together with some people I know to set up a new online business. What do you think?”

Get ready for some questions in reply:

• Who will be developing the web-site?
• Who is putting the money in?
• Are any of you currently in a competing business?
• Are any of you currently employed?
• Who will have management control of the business?
• How will you protect minority directors?
• How will you get your initial investment out?
• What will happen if you have an irreconcilable difference of opinion?
• What happens if one of you quits the business or dies?
• What if one of you wants to sell out?

A proper contract with the web developer with sensible payment milestones and acceptance procedures can help avoid delays and points of subjective interpretation that are inherent in web development contracts. It will also ensure that the copyright in the web deliverables are properly assigned and not just subject to a licence from the developer that can be terminated. Will the web rights be assigned straight into the company or held outside the company and licensed to the company to protect the main asset in any future insolvency situation? It would probably also be a good idea to put the developer under a support obligation and prevent the developer building a competitive site for a couple of years or so.

A basic shareholders agreement will prevent any of the participants holding the business to ransom down the line and ensure minority rights are protected by veto on major business issues. A simple mechanism to deal with share purchase and valuation on exit and dispute resolution would also probably avoid much future contention and uncertainty.

You begin to get the general idea. These are the kinds of simple legal issues that are often over-looked but can easily and inexpensively be addressed at the outset, saving untold problems later.

Good business legal advice is about identifying and avoiding legal problems…not being a slave to them down the line when you should be enjoying the fruits of your success!

So the moral is…for good business legal advice…discuss the likely legal issues with us early on before you make any irreversible commitments…ask open questions…ask general questions…come and pick our brains…what’s left of them!

Call or email me to arrange a meeting.

Chris Sherliker

cjs@silvermansherliker.co.uk

Tel +44(0)20 7749 2700

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