When is the Best Time to Involve a Lawyer in Business Transactions?
Many business owners think they don’t need to bring a lawyer into a business transaction until after the letter of intent is signed, but it is crucial to have a lawyer involved in the initial stages of negotiations. If you don’t involve your lawyer in even the earliest stages of business discussions, then you can end up agreeing to essential business points or waive items that should have been discussed initially. To try to undo these items later or try to raise new issues may stall the process and be viewed as a re-negotiation – making you look less than trustworthy to opposing side. Here we give a hypothetical that highlights why involving your lawyer from the start is the best idea.
What if You Don’t Involve Your Lawyer?
Let’s look at an example that’s relevant to just about any business owner. Say you are preparing to enter into a new lease or renewing an existing lease. After speaking with the landlord and visiting the property if entering into a new lease, you may be presented with a letter of intent to lease. It can be very tempting to sign a letter of intent without involving counsel because it is only 1-2 pages and you don’t think you need to have your attorney involved at this initial stage because they can always deal with the issues later on in the final document. However, the letter of intent is a critical stage in the process because it sets the stage for negotiating the lease.
All too often, lawyers are brought in after the letter of intent is signed. A lawyer is then limited in their ability to negotiate terms that are most beneficial for their client. An exit strategy, right of relocation, first right of refusal for adjacent space among many other issues could be forfeited if not explicitly included in the letter of intent. In addition, there are many provisions that the attorney could possibly negotiate at this initial stage if they are involved, such as having no personal guaranty, a limited personal guaranty, a guaranty that burns off after a certain period of time or an ability to post a letter of credit or larger security deposit in lieu of a personal or corporate guaranty, among many other issues. A lawyer would have been able to ensure the negotiations covered all fundamental deal points and fully protect the tenant from both good and bad changes in business and the economy.
Contact The Law Offices of Kirk Halpin & Associates, P.A. Today
Practicing together in Howard County since 2004 – first in Columbia and now in Clarksville, The Law Offices of Kirk Halpin & Associates, P.A., is here to help with a variety of business, real estate and finance law issues. We have a long list of practice areas, a long list of industries served, and a long list of success stories and recommendations in helping businesses, no matter the size, grow, reach their goals, and surpass them. If you’re seeking counsel on a business, real estate or finance law issue, always feel free to contact us via our contact page or call us at (410) 531-1700. While you are here, remember to follow us on Facebook, Twitter, Google+, and LinkedIn to stay up to date with our blog and the latest happenings at our firm.