adriel-kloppenburg-14828.jpgMany startup companies operate on a tight budget and try to cut costs where possible. Often that includes forgoing legal advice and trying the do-it-yourself method. But not seeking legal counsel for important early stage decisions can end up being costlier in the long run. Investing in professional advice can help you avoid a number of mistakes that could threaten your business’ viability.

  1. Not having co-founder agreements. It can be easy to think that you can get away with not having co-founder agreements when you’re first starting your business. Everything is going well and everyone is getting along famously. But co-founder agreements exist for when things stop going well, and one or more of your co-founders decide to leave. Not having an agreement can lead to ownership disputes that can lead to a count case that is both lengthy and expensive.
  2. Not having employment agreements. Eventually your startup should reach the day when it’s time to bring in outside help in order to keep growing (and so you can maybe work less than 18 hours a day.) And while it’s easier to seal the deal with a handshake, not having an employment agreement with those working for you leave you at risk.  Having no agreements (or inadequate ones) can mean that the work created by employees may not belong to the company, and trade secrets could walk out the door with employees absent a non-compete agreement.
  3. Not assigning intellectual property (IP) to your company.  In keeping with the idea of having co-founder agreements, you and your partners should be prepared for the day that one of you decides to leave for any reason. Having patents, trademarks, or copyrights assigned to an individual rather than a business entity is a dangerous proposition that could allow for that person to take the valuable IP your business created to competitors, or start a competing company themselves.  
  4. Waiting to take care of legal issues, or hoping they’ll go away.  As the saying goes, “An ounce of prevention is worth a pound of cure.” Many startups and early-stage businesses wait until an issue pops up to address it, rather than trying to prevent the issue in the first place.  Others will let cease and desist letters pile up, with the hope that ignoring them will make them go away. Waiting for potential problems to become full-blown crises is probably not the wisest course of action.

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