3 Common Legal Mistakes and How to Avoid Them

Be Proactive About Your Business’s Legal Needs

Launching a business is thrilling, and arguably part of the thrill is the inherent risk involved. Excitement and uncertainty often go hand-in-hand. That being said, it kills me when I see business owners taking unnecessary legal risks that leave their organization open to potential litigation. In most cases, there were easy steps that could have been taken to avoid legal issues.

Over 100 million lawsuits are filed against small businesses in the U.S. every year.

Think your business isn’t vulnerable to legal troubles? I hate to sound melodramatic, but I’d advise you to think again. Over 100 million lawsuits are filed against small businesses in the U.S. every year. Contract disputes are an incredibly common source of liability for businesses, and according to Court Statistics Project, median costs for a business liability lawsuit start at $54,000, and average around $91,000 for contract disputes.

Based on my experience, here are some of the most common legal mistakes that businesses make, and how to proactively avoid them.

1. Protect Your Intellectual Property (IP)

Who’s creating it, what’s being created and who owns it? Even if you’re the company founder and the entire business was initially your idea, chances are other people are helping you create IP from your original idea. It’s essential to make sure you’re protecting your IP. There needs to be a very clear definition of what intellectual property belongs to your business.

Additionally, your company’s success will often lead to imitation and competition, and as such, you’ll need to be strategic about protecting the proprietary assets—tangible and intangible—of your organization. Something else you may not have considered: Your business may find itself inadvertently infringing upon another company’s IP. In any of these scenarios, having a trusted business attorney can help safeguard your business.

Put everything in the name of the company, even seemingly inconsequential things, such as your hosted URL.

With the right legal help, such as with the utilization of an outsourced General Counsel (GC), the IP of your company will remain secure through the administration and management of proper non-disclosure agreements, copyrights, licensing, patents, non-compete agreements, terms & conditions and privacy policies. It’s important that everything created for the company is owned by the company.

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Share A Compelling Story Around Your Brand

Put everything in the name of the company, even seemingly inconsequential things, such as your hosted URL. Make sure that you’re using IP assignment agreements, especially for any work done with independent contractors and freelance workers. This is especially important if you didn’t utilize those IP assignments in the early days of your business. Even if IP is covered in your employee agreements or company handbook, it’s always a good idea to have a separate IP agreement on file with each employee, contractor or vendor. This makes your IP less susceptible to dispute, which also gives confidence to your company investors.

By Beth Lebowitz

Beth Lebowitz is the Founder and CEO of Auxana Inc., a marketplace for companies, attorneys and executive resources. She is the Founding Attorney of Nimbus Legal, an Outsourced General Counsel law firm. Beth's goal in practice is to completely change the nature of the attorney and client relationship.

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