Feeling overwhelmed? Don’t know where to start? This post is for you.
You’ve built a successful business that you actually love. You’ve got employees and customers depending on you and this business has transformed from a hopeful dream into your actual retirement plan. You suddenly realize: you need to protect what you’ve built. In the beginning, you had nothing to lose. Suddenly, you have everything to lose and you realize that it’s time to get legally protected.
But what does “legal protection” even mean? You don’t know where to start with legal stuff in your business, and you fear opening Pandora’s Box - what legal issues might be lurking around that you didn’t even know about? The legal side of your business has become a lurking anxiety that keeps you up at night.
As a CEO, you know you can’t stay frozen. You need to move forward, but in a way that makes sense. Here is the good news - this is actually possible! Here are four shifts to get your company on the path to legal protection:
Ditch the boogeyman syndrome
When we fear something, but don’t have much knowledge or education around it, our imagination jumps in to fill up the gaps. If business law is a black box for you, your imagination has been busy dreaming up worst case scenarios.
I call this phenomenon The Boogeyman Syndrome, and I’ve found that many founders, CEOS, and business owners suffer from it. Think back to when you were a little kid and you were afraid of the dark or of the “boogeyman”. What was that fear really? It was the fear of the unknown; the fear of what you could not easily see or perceive. Yet one day (hopefully) you got up the courage to climb out of bed, look underneath and realize . . . there was nothing down there except dust and forgotten socks.
The only way to find out what is “under the bed” of your business is to roll up your sleeves and face it. If you’ve been running a business for 5, 7, or 10 years without much legal intervention, there will certainly be things to face and to fix. But if you were tough enough to build a successful business, you are tough enough to face what needs to be faced and get legally protected.
Decide to become proactive - not reactive
If your only experience with lawyers and business law has been reacting to emergencies, of course you are going to associate the law with stress and anxiety. Reacting to being unprepared causes stress, but proactive preparation brings peace of mind.
It’s like dental care. If you brush and floss your teeth regularly, you are less likely to need a major dental intervention. If you don’t brush or floss regularly, every interaction with your dentist is likely to be a parade of horribles - cavity fillings, pulled teeth, or even root canals. When you don’t do the regular maintenance, every experience becomes an emergency.
The same is true with legal maintenance in business. There is regularly scheduled legal maintenance that is required to keep a business healthy. A proactive approach implements regular maintenance and decreases the likelihood of a major emergency. The choice to become proactive is a choice to stop living in panic mode and start having peace of mind.
Understand the 3 types of legal protection
As a CEO or owner, you may worry that legal protection is a never-ending black hole with no clear ending point. However, legal protection can actually be defined and quantified. I am going to break down the three types of legal protection. Knowing what the three types are can help you effectively partner with a lawyer to determine which is most relevant for your business today.
Protection from Bad Events (aka liability)
Companies need protection from bad stuff happening. In the legal world we call this “liability”. Bad events are everything from unhappy customers who want refunds to untrustworthy business partners, to employees bad-mouthing you on social media.
While this category may seem broad, there are three specific ways to protect a business from bad events: insurance, contracts, and systems. Strong contracts control the relationships with the customers/employees/business partners and place guardrails around what they can and cannot do to you. Insurance protects the company finances, and good systems help to keep things running smoothly and prevent bad things from happening in the first place.
Protection from Thieves (aka intellectual property)
A business is nothing without intellectual property (IP), because without IP, it has nothing to sell. IP is the brand people buy from, the products and/or services they consume, and the unique ideas that distinguish the business from its competitors.
Because IP is the money maker, it is a natural target for thieves. These days, IP theft (usually) doesn’t mean someone breaking an office window and rifling through file cabinets. It’s more likely to involve copying company IP and re-selling it, an employee who downloads your client list before quitting, or a licensee or franchisee who keeps using your IP even after you have terminated their agreement.
Again, the solutions to these problems are well-known and established. Part of the role of an IP lawyer is to register valuable IP such as patents, trademarks, and copyrights and to establish procedures for securing proprietary information like trade secrets.
Protection from the Government (aka Compliance)
The final type of legal protection is from the government, also known as “compliance” in the legal world. Compliance is important because a government investigation, audit, or enforcement action has the potential to sink any business. The financial and reputational damage can be irreversible. Certain government agencies are relevant regardless of the type of business. A good example is the IRS, because all companies have to comply with tax laws. But there are also specialized agencies that are more or less relevant depending on the industry. Food and beverage companies are probably most focused on the FDA, advertising or marketing agencies may be most worried about the FTC, and financial services businesses are likely most concerned about the SEC.
Companies solve their compliance issues by hiring law firms and/or consultants who specialize in local, state, and federal regulations. These professionals create a plan for keeping the business within the government’s boundaries.
As you can see, legal protection is not an undefined enigma; it is three specific categories with known solutions. By partnering with a good law firm, your company can create a plan based on which of these categories is most important for your stage of business.
Bye bye Boogeyman Syndrome.
Embrace the ongoing journey
Legal protection may not be a one-and-done, but it can be a reasonable process that actually makes sense. Unless you are a large, multinational corporation, all three of these categories are probably not equally urgent all at the same time. As a result, you can prioritize based on the stage of your company.
If you are a successful CEO, you are well-acquainted with the reality of an ongoing process. Building a company is not a one-and-done, and that is okay. In fact, that’s what keeps it interesting.
Thanks for reading the Bevel Law Blog! While this information is hopefully helpful to you, nothing in this blog is intended to be legal advice. Always consult a lawyer before making any legal decisions based on topics in this blog.
Ready to secure your intellectual property? Book a call today at bevellaw.com/call.