Attorneys and Their Role in Business

Attorneys are indispensable to business. That is the conclusion you have to draw, when you come to learn of the role that attorneys play in the business world.

Now in order to be in a position to appreciate the role of attorneys in business, it is important to first understand that business is all about conducting transactions. Where there are no transactions, there are obviously no businesses. And contrary to what one may first imagine on hearing this, a transaction doesn’t just occur when a business makes a sale. Rather, a transaction occurs whenever a business does pretty much anything. When a business, for instance, gets a new employee, it has undertaken a transaction with that employee, where the employee in question will, effectively, be selling it his or her services. When a business pays a tax, it has gotten into a transaction with the government; by paying the government the tax money in the expectation of certain services. And of course, when the business purchases any supplies, it is getting into transactions, not to mention anything of when it manages to make a sale.

Having understood that business revolves around the various transactions, the next step towards understanding the role of attorneys in business is appreciating the fact that every transaction usually has a legal dimension to it. Legally speaking, there are always a hundred and one ways through which things could go wrong with every given transaction. Of course, to the layman, these things may not be that obvious. But to the mind with legal training, the loopholes are very easy to spot.

So, having established that business is all about transactions, and having seen that every transaction has a legal side to it, one rather indispensable role served by attorneys is that of being legal advisers to business with regard to the various transactions, and their legal implications. A business that chooses to go about its various transactions without seeking legal advice (and thereby sealing the various loopholes) is at risk of finding itself encumbered with various lawsuits that could bring it down to its knees. And it is out of this realization that many businesses are known to seek the input of their attorneys before engaging in any major transactions. The idea is to identify the possible legal loopholes, and get them sealed. In that way, then, attorneys serve as advisors and, in a way of speaking, legal protectors to businesses; making them pretty much indispensable to the businesses in question.

Attorneys also give businesses the confident to undertake various transactions. This is especially the case with high value transactions, but it can also happen in smaller value transactions. Just having an attorney by your side, as a businessperson, would give you the confidence to make various moves, without fearing legal consequences (as long as the attorney okays them), and without fearing being conned on the other hand. Without an attorney, you are likely to be operating in fear, and this would definitely be bad for business; as success in business is all about boldness.

Of course, when things sometimes go wrong, and businesses find themselves faced with legal complications, attorneys also serve the role of representing them in court and handling the messes on their behalf. Without attorneys, business owners would be forced to mount their own defenses, on behalf of their businesses, and follow the cases through. Not only would this be inconvenient and time consuming, it would also reduce the chances for success, hence yet another factor behind the indispensability of attorneys in the world of business.

Divorce Attorneys – A Legal Ally

Unless you are extremely familiar with the legal system or an attorney yourself, you will need to hire a divorce attorney in order to navigate the legal system in the event of a divorce. Additionally, many couples must hire a divorce lawyer to represent them in court when they must divide their assets. A good attorney is important to divorce proceedings to ensure that the divorcing parties can move on as quickly, and hassle-free as possible. There are logistics involved with a divorce including child support, custody, debt, and assets that can be very difficult for the divorcing parties to attempt to handle on their own. The divorce attorney will provide all documentation in regards to to each of these logistics, and fight for their client to get a fair settlement.

They will also advise their client of their rights and keep them updated on the divorce proceedings. Ideally, the attorney should make the process as smooth as possible and keep the divorce proceedings out of a court of law. It is true that good lawyers are expensive but, this does not mean that all divorce attorneys will be too expensive to retain for divorce proceedings. In fact, many lawyers will be expensive because they may have developed a reputation, which earns them the right to ask for higher attorney’s fees. However, it is possible to find a good lawyer through word-of-mouth recommendations, especially if they are fairly new to divorce law and have yet to build a respectable clientele base.

The best way to find a good lawyer at an affordable price is to research the lawyer’s case records. Case records have information on the lawyer’s previous cases and what type of settlement they were able to get for their client. If the lawyer does not have a large clientele or reputation, these case records can be helpful in determining how the lawyer may handle your case. Most lawyers will offer a free consultation with their potential clients. Consider speaking with several different lawyers during these consultations to ask questions specific to your case to decide if they are compatible with your situation.

Most people will think of lawyers as a group of savvy talkers, who overcharge their clients for legal services. However, during a sensitive and stressful time, a divorce lawyer can be a very handy ally and companion. Divorce is a big life decision, and finding a good, trustworthy attorney should be a thorough and informed decision.

How to Sell A Business: Working With Your Attorney and CPA

When selling your own business, it is critical that you understand the points in the deal process when your attorney and CPA should get involved. The first point to make is that both of these parties must be involved in your selling process. You should think of them as a part of your “Exit Strategy Team.”

Your CPA

Your primary goal with your CPA is to minimize the tax impact of your sale. Small changes in deal structure can make large differences in your after-tax cash from the sale, or be the difference in whether or not a deal gets done at all. A seller can save literally hundreds of thousands of dollars in taxes as a result of deal structure and asset allocation decisions. If you have a small business that won’t sell for hundreds of thousands of dollars, don’t think there isn’t a role for a quality CPA. There is.

A typical CPA is going to charge you somewhere between $100 and $200 for a one hour consultation. For a smaller business, a good CPA should take no more than thirty minutes to give you an intelligent assessment of your tax exposure based on likely deal structures. Spending $100 to save $1,000 on a small business sale, or to make sure you simply didn’t miss an opportunity, is a good deal.

When to Meet with Your CPA

Meet with your CPA at two critical junctures: after you first decide to sell, and when you are evaluating an offer that includes any agreement on the structure of the deal.

The first meeting will allow you to develop an understanding of deal structure issues, particularly in terms of tax implications. This will make you a more informed decision-maker and a better negotiator. There are numerous internet based resources that will help you gain a base of knowledge that will make your time with a CPA more valuable. Simply type “how to sell a business” in a search engine like Yahoo, MSN or Google, and you will be able to find several quality resources.

A second meeting over a specific offer gives your CPA concrete variables to calculate your tax liability, and possibly reveal solutions to minimize it.

You may meet with your CPA more often if you have multiple offers over time. After you get a little education from him or her, you will be able to make some decisions on your own, but call your CPA before entering into a final and binding purchase agreement. If they are familiar with your situation, a shorter, cheaper phone call may suffice.

If you’re trying to economize, you can meet with your CPA only before committing to a deal that includes financial structure details that can affect your tax situation. We do advise working out allocation issues prior to a binding purchase agreement for the simple reason that you don’t want to get the parties committed to a deal and then blow it up over a meaningful change due to tax concerns.

TIP: All CPA’s are not created equal. You need one with experience in business transactions. If your normal CPA does not frequently deal in business transactions, then you need to find one who does. Ask CPA’s pointed questions to see if they seem to have a grip on the implications for a business sale.

Your Attorney

A good business attorney will help you review your purchase agreement both for issues that protect your interests, and to ensure that it complies with legal requirements in your jurisdiction.

You can find excellent purchase agreement templates online that are designed to be balanced and treat both parties fairly. While you can settle most of the issues in your deal with one of these templates, be sure to have an attorney review the agreement before committing to it. Your deal or business may have unique attributes that need to be accounted for. In addition, each state has its own laws and regulations, and your attorney will ensure the standard required language in your state is included, either by changing the body of the form, or through an addendum.

When to Meet with Your Attorney

There are multiple points in time when you may want to consult with an attorney. There are two critical points, however, when an attorney must be involved. The first is prior to signing a binding purchase agreement, as noted above.

The second time an attorney must be involved is at closing. Do not, under any conditions, close the deal yourself only to save a few hundred dollars in attorney’s fees. It will come back to haunt you. Ideally, you should use an escrow attorney who is not representing either party to close the deal. If it is a larger deal where one party has an attorney on staff, you must use an independent attorney to handle the closing, or have both parties attorney’s manage the process together.

TIP:

Attorneys have specialties. You want one who has been involved in numerous business transactions. Also shop prices. For a typical small business transaction, you don’t need a $1,000 per hour attorney, just one with experience processing business sales including business purchase agreements.

Use Your Exit Strategy Team

Although some key points at which to involve both your CPA and attorney in your deal have been outlined here, never hesitate to involve them at other points in the process when you have doubts or concerns of a tax, accounting or legal nature. It’s a lot cheaper to pay for an extra ten or fifteen minutes of time than it is to deal with the aftermath of a failed or flawed agreement!