Flying Blind

Major corporations often have large in-house legal teams. These internal lawyers review contracts and documents, advise human resources on employment law matters, and help to avoid expansion missteps caused by regional or national variations in regulations. Hiring a lawyer or lawyers to provide the first line of defense against expensive legal screw-ups is just a part of doing big business.

But smaller companies, especially those with less-experienced management, often forgo the hiring of in-house counsel or the retention of outside legal advisors, sometimes for years. Usually this is due to budget constraints, but even fast-growing young companies with money to burn can put off adding legal staff for far too long, confident that a lack of legal trouble early on means no legal trouble will ever develop.

But if a company has clients and hires employees, eventually they will find themselves in a legal dispute. It's inevitable; a predictable cost of doing any kind of business.

It is a common occurrence in any kind of employment practice to see employee agreements with horrible flaws, such as illegal provisions regarding hours and overtime, unnecessary arbitration clauses, unenforceable non-compete clauses, and the like.

Or you will see contracts signed with clients that lack vital terms of the deals - like payment schedules or rainy-day backup plans - leaving it up to a court to figure out what performance the parties owed to each other when they inevitably disagree and accuse each other of breach.

Too often small companies try to coast on their history of legal peace, confident that simply because they have not so far been sued by anyone that they will never be sued. But as they grow and employ more people and take on more clients, the odds of conflict increase dramatically. It's just a matter of statistics. The more people you work with, the greater the chance of legal dispute. Not every deal will work out. Not every employee will be compliant. Not every manager will behave themselves.

Though the majority of my practice is on the plaintiff's side of employment disputes, it would not hurt my feelings at all if more companies took the important step to add wise internal counsel to avoid or mitigate many of the conflicts that can arise in the usual course of doing business. The fewer employees who suffer discrimination, the better. The fewer client contracts that turn out to be huge legal losses instead of huge revenue gains, the better. The fewer managers who have to take the stand and risk the reputations of themselves and their companies by giving embarrassing testimony about their mistakes, the better.

Young and growing business owners: when it comes to legal issues, don't fly blind.