Making It Legal:

Q: How much does a lawyer charge to look at a lease?  I am trying to figure out what is important.  I was hoping you might be able to give me some insight.

A: Lawyers’ fees to review a lease generally depend on the amount of time it takes to do the job.  That, in turn, depends on a number of factors, including:

• The billable rate of the attorney
• The length of the lease (or sublease) . . . which is often a reflection of the size (and quality) of the space, the amount of the base monthly rent and the sophistication/experience of the landlord
• The kinds of provisions that may need to be added to the lease to protect you
• The extent to which you want the lawyer to be involved in any negotiations with the landlord, which reflects the extent to which you have been provided with a “take it or leave it” offer from the landlord.

Some attorneys may be able to do the work for a fixed fee, so be sure to ask them if they’re able to perform this kind of service on a fixed-fee rate.  If not, you can certainly ask for an estimate based on the scope of the lease and their billable rate.

I first met David Greer, angel investor and entrepreneur, when he weighed in on my Business Partnership Central blog on the importance of having a written shareholders’ agreement–and how that freed him up (when he sold out his interest) to sail the Mediterranean for two years (drool).

Now he offers some handy insights to follow up on my post, ”How to Speed-Read an NDA,” which I’m delighted to share with you.  David writes:

Thanks so much for the article on NDAs. As an angel investor and entrepreneur, I see those all the time, and I am often required to sign them.

Under the “Confidential Information” section, I also look for who is disclosing to whom. I have seen “one way” NDAs. That is, the information disclosed to me is confidential, but the information that I disclose is not. As I see so many technologies and companies, I am very careful about information I disclose and to whom, making sure that I do mark confidential information as confidential. That doesn’t help if I’ve signed an NDA where the other party isn’t going to keep my information confidential. One of those little “gotchas” that you can pick up in a quick reading of an NDA.

Okay, I get it.  We’re a big ticket item.  We come with a bad reputation.  We can be nasty and ugly (although I’m kinda cute) and speak in a strange jargon . . . where it seems we’re deliberately trying to play intellectual one-upmanship games with you to let you know who’s the smartest guy/gal in the room.  You’d rather undergo root canal without anesthesia than deal with one of us.

And yet.

And yet, we can be your greatest support system.  Your protector.  The cool head prevailing when you’re ready to lose your mind.  The one who talks you down off the ledge.  And maybe (if you’re lucky enough to work with me), we’ll tell you a joke or two and make you laugh, so that you realize the world won’t come to an end if that truly awful deal doesn’t close. 

In his article in the New York Enterprise Report, Daniel Abrams identifies 10 ways you can get the most out of your attorney.  But before you reach that point, you also need to be sure you’ve chosen the right one for your business.  My program, How to Choose and Use Attorneys, available through GreatBusinessLawResources.com, can show you how to do just that.  Like dating, you want to be sure you have the right chemistry with your attorney so that you’re comfortable being vulnerable and exposing your not-so-perfect qualities/decisions.

Why open yourself up to personal liability when you don’t need to?  Today’s query comes from someone wanting to know that fundamental first question: “What form of business should I be?”

Q.:  I’m wondering what kind of company you would recommend for me to register under for a clothing company. I was thinking going Limited Liability because I would not be personally responsible if companies came after me for some reasons and couldn’t take my personal assets. Which one would you recommend because I don’t really know how much money I’m going to make in the first year.

A.:  For all but a v-e-r-y few situations, I recommend that entrepreneurs form either a corporation or a limited liability company.  There are simply too many variables and pitfalls in starting and running a business . . . so why leave your personal assets exposed? 

Which form of limited liability entity you choose, though, depends on a number of factors:

• Where the business will be located
•  How many people will own the business
• The nationality of the business owners
• Whether you will involve passive investors in the company, or want to take the business public
• The federal, state, and local taxes that may be levied against the entity
• The costs of formation
• Your exit strategy and what you want to get out of the business

Before you take the step of forming the business, make sure you’ve taken the time to calculate the kind of financial investment you’ll have to make in startup and ongoing costs.  While 1st year’s revenue will be guesswork, you can have a more solid sense of what’s involved with the right financial planning.  It will also help you decide whether the venture will be worth the risk and financial investment.

This economy has certainly battered my business around a bit. There are times I’ve felt like a ship in a storm-tossed sea. But I have been able to stay on a relatively even keel and keep my sights set on my destination, thanks to my advisory team.

“Advisory team.”  It’s a highfalutin’ term for what some people consider good friends who will be a sounding board for you in a pinch. Whether you pay them or you don’t, have formal arrangements with them or not, they are crucial in one major respect: You can’t build a successful business without them. 

I’ve learned from personal experience that I really flourish when I have others helping me keep my eyes above the dashboard, making sure I keep working toward my strategic goals. Without them, I’ve gotten stuck in my own mishegaas, like a dog chasing its tail. I have people I’m accountable to (other than me, my own worst taskmaster). People to keep me focused so that I don’t spread myself too thin. People to share the victories with. Two who come to mind are Dawn Fotopulos of SmallBusinessHow2.com (”simplify, focus and leverage” is her mantra for me) and Rochelle Lisner of DynamicBusinessGrowth.com (who reminds me to “speak in stories” not “information dumps”). And there are more!  I wouldn’t be where I am without them.

You can build a dream team of your own, too! For tips on how to do that, sign up for a complimentary copy of my Entrepreneur’s Business Law Primer, available at GreatBusinessLawResources.com/bizlaw. It includes an audio clip on “how to choose an advisory team” that I think you’ll find helpful.  Let me know if you do!

Yes, that’s the advice of most of the “success gurus.”  Figure out what you do well–and what you enjoy doing–and leave the rest to someone else.

Listen in to my conversation with Rosalie Lober, PhD., author of the newly-released Run Your Business Like a Fortune 100: 7 Principles for Boosting Profits. We cover:

• Rosalie’s case study of Terra Plantworks, which grew revenue from $3 million to $11 million in three years, by letting go of less-profitable business divisions–and how Terra came to that decision
• The importance of having a fully-integrated business
• Three key steps to doing your due diligence on any strategic alliance partner
• The top three problem areas for most strategic alliances (and, yes, how a written agreement can alleviate them)

Gotta toot my horn on this one:  Making It Legal made SheTakesOnTheWorld’s list of the Top 30 Business and Entrepreneurship Blogs by Women!  I’m joining illustrious company such as Escape from Cubicle Nation, Sparkplugging, Ali Brown’s Blog and Diva Marketing.

Now you’ll excuse me while I go do my “happy dance” in the living room. 

From the “No good deed goes unpunished” department:

Q: I deposited more than $20,000 into my business partner’s account under the impression that he would add my name to the new company and to the house I had paid off for him and that he would put my name on the new car title,  too. But none of the above has happened and he refuses to discuss it since I am not going hungry or without a place to stay.

He now says he cannot trust ANY woman to do the right thing in money matters that involve him (But he sure took my money without any qualms).  How can this be resolved?

A: You have a thorny situation on your hands, and I don’t envy you.  Unfortunately, without having anything in writing (which I assume you don’t; otherwise your business partner wouldn’t be as cavalier with your money), your only option right now is to sue him.

You may get lucky in that the threat of bringing a lawsuit (and the costs he’ll incur) may make him reconsider his actions,  either by making you a rightful business partner in writing or by refunding your money.  The catch is that you’d need (and want) to have your own counsel begin this process for you.  If you try to handle this yourself, he may not take you seriously (especially as he doesn’t seem to do doing so now).  Contact your local bar association, as it may be able to give you referrals to attorneys in your area who are familiar with these legal issues.

The best way to handle a lawsuit is to avoid getting into one.  Rare is the small business that has the funds set aside to pay for the lawyers (and possible judgment) of a lost case–heck, these companies often can’t afford to pay their owners a regular salary!

So how do you keep lawsuits off your back?  Attorney and syndicated columnist Cliff Ennico has his top 5 tips, which include:

1. Have a limited liability business entity.
2. Get insurance and keep it updated.
3. Disclaim legal liability in your contracts (but check with your attorney to make sure they’re worded properly).
4. Transfer assets out of your own hands (mind the timing of this, though).
5. Say “sayonara” to high risk customers.

“Why can’t I handle my own patent/trademark/copyright filings?” you ask.  “I’m getting started on a shoestring–do I really need to spend the legal fees?” Go right ahead and DIY . . . but if you’re not on target about what you’ve done or how thoroughly you’ve handled your background research, you could find that you’ve dumped a lot of money into IP that you simply can’t protect.

Listen in to my interview of Amy Goldsmith, Esq., an  intellectual property attorney and partner at Gottlieb, Rackman & Reisman, P.C. in New York City. Amy gives us the lowdown on:

• Why you can’t “patent” a company name (you trademark it)–and why it’s important to get the terminology straight
• What kinds of trademarks pass muster with the Trademark Office
• How a trademark search (done by professionals) will unearth possible obstacles you never dreamed of  . . .  and save you time, money and energy

If you want your intellectual property to become a valuable company asset, listen to this interview!

Investors can be a real boon to your business, but no question–they’ll want a piece of the action.  What’s involved in issuing shares to them?

Q: We currently have a market cap of $200,000 (2,000 shares X $100 per share). We were wondering how to authorize new shares to new investors.

A: It’s not unusual for companies to issue new shares at some stage in their existence. This can happen when:

• You want to provide bonuses to employees or directors
• You’re issuing additional equity as part of a takeover of another company
• As in your case, you want to provide equity to new investors.

However, before you run to the secretary of state and fill out the forms to issue more shares (and to change your certificate of incorporation to reflect the increased number of authorized shares), you need to look carefully at a couple of matters. First, is there a shareholders’ agreement among the current owners?  You need to be sure that you properly document the shareholders’ approval of this transaction and follow the procedures in the agreement for admitting new shareholders.  If this transaction will dilute the profit percentages (and it likely will), the current shareholders may need to be specifically apprised of this effect that the transaction will have. Make sure your legal counsel helps you through this process. 

In addition, you’ll want to speak with your accountant to determine both the value of the shares and whether they will fall within the same class of shares as those already issued. If not, that, too, will need to be documented and squared away with the secretary of state of the state you’re incorporated in.

“Can I? Can I?” I hear you asking. Well, you’re asking the wrong question. The issue is not whether you can download your client contracts from the internet, it’s whether you should.  And once you do (because you know you’re going to do it, right?), how can you get the best use out of doing so?

Downloading agreements from the internet is good for starting to educate yourself about the kinds of terms you might want to include in agreements with your clients. But here are two significant things the online agreements (even the ones you pay for) can’t tell you:

• They can’t tell you whether there are any provisions in the contract that could hurt you.
• They can’t tell you whether there are any provisions that are missing that could help you.

Poke around the internet all you like; but in the end, only you can decide which business terms are best for you. What specific products or services will you provide to your clients? Within what time frame do you want to be paid? What happens if you’re not paid in a timely manner? Have a look at my program, How to Train Your Clients to Pay You, to get the lowdown on the important decisions you’ll need to make. And once you’ve made those decisions, have your attorney wrap them up in a nice, neat legal bow to protect you properly.