Maybe you have come up with a fantastic business idea or started setting up your online store. It may have taken off from underneath you, or you may have been slowly working away at it for years, and are now thinking about your exit. At all of these stages, you should be considering your business structure, but it is also important to think about your business structuring lawyer.
When finding the right lawyer to assist with your business structuring needs, it is important that you do your homework. All commercial lawyers should be able to explain the difference between a sole trader and a proprietary limited company but the right lawyer for you should understand your specific business, your industry and your business plans and aspirations. Lawyers will tell you that choosing the right structure for your business is very important. What is equally as important, is choosing the right lawyer for your structuring.
When’s the Best Time to Find a Business Structuring Lawyer?
You may need to speak with a business structuring lawyer at many different stages of your business’ life. However, if you are just starting out it is important to have that first conversation early on, to avoid potentially complex and costly restructuring later down the track. If you are in your early stages, consider looking for your lawyer before:
- Entering into major contracts which suppliers etc.;
- Developing your Intellectual Property, or if not possible, before bringing on external people to assist with the development;
- Hiring staff;
- Taking on a large number of clients/customers; and
- Seeking investment.
You may have set up a simple structure early on while you were testing whether this business had legs and now you are considering getting this reviewed. Alternatively, you may want to speak with a business structuring lawyer if you are changing or expanding your offering, looking to protect yourself better personally, or preparing for your exit.
How Well Should My Lawyer Know My Business?
Your lawyer should have a holistic understanding of your business before recommending a structure. Does your lawyer understand the way your business currently operates and any plans for expansion? They should ask you about your ownership structure, what role you and other founders have in the business, and what roles you plan to have. You should discuss your current assets, cash flow and future assets, such as Intellectual Property. Importantly your business structuring lawyer should speak to you about your potential investment plans and understand what investors look for when they analyse a business’ structure.
Test your lawyer’s knowledge of your business. Don’t be afraid to clarify their understanding and their experience in your field. A business structuring lawyer may not necessarily know the ins and outs of every commercial industry their clients work in, but a good lawyer will have dealt with similar clients and have the ability to transfer over these skills and knowledge. They should be willing to understand the complexities of your industry and ask questions when they don’t understand certain commercial aspects.
Your business structuring lawyer should have the necessary technical skills to structure your business in a way that reflects your specific needs. They should also be able to identify when matters are outside of their experience – such as when you may need specialist tax advice from your accountant.
What Should I Look For in a Commercial Firm?
When seeking out a law firm to help your new or growing business, it is important that you ask around, read testimonials and check out their website, LinkedIn and any articles written about them to see whether they are a good fit for you.
If you have found a great business structuring lawyer, you should also consider whether they are part of an equally great team. It’s likely that help with your business structure is not going to be the only legal requirement for your new or growing business. For this reason, consider whether your lawyer has a team who they can call on for other areas of speciality, or in times of high demand. If you need help with a developer agreement or trade mark registration, will you have to find another firm? If your lawyer is on leave, do you trust that their colleagues can step in and deal with any urgent enquiries you may have?
When it comes to firms, bigger does not always mean better. You should find the right balance between the specialised, tailored and more cost effective experience of a smaller law firm, with the skills and resources of a larger firm.
What Questions Should I Ask My Potential Business Structuring Lawyer?
Before engaging a business structuring lawyer, you should ask the following important questions:
- Have you worked with businesses like mine before? If they haven’t, now is the right time to establish whether their experience will transfer across. Are they willing to learn?
- Who will I be working with? A senior lawyer or partner of a firm will have support staff, both legal and administrative. Find out who will be your point of contact to understand your likely relationship with the firm better.
- How do you bill? Does your lawyer charge hourly in arrears, or are they embracing alternative forms of billing? Consider whether they can provide you with up-front, fixed fee pricing so that your legal bills can be more easily slotted into the budget.
- What time frame are we looking at? This question is key to understanding the resources of your lawyer and their team. Your business is moving quickly, you want a lawyer who can keep up with you.
Choosing the right lawyer to help structure or restructure your business is important. Finding a good firm early in your business’ journey will ensure that you are best protected from the outset and will save you money in the long run. Questions? Get in touch on 1300 544 755.