Is it Time for Your Legal Check-Up?

We understand that business owners want to focus on running their businesses, not looking for legal issues. It can seem like a hassle that is all cost and no income. However, an ounce of prevention is worth the investment in the long run. A legal audit is a modest relative expense of time and money that can yield substantial long-term benefits. Take a few minutes to learn what a legal audit is, how it works, and how it can benefit your business. It will be worth it.

WHAT IS A LEGAL AUDIT?

A legal audit is a comprehensive legal analysis of your business that ensures that no hidden risks exist within your company. It helps you better understand the reality of your legal position and provides guidance on how to avoid penalties and expensive litigation.

LEGAL AUDIT AS PREVENTATIVE MEDICINE

Hopefully, you do not only see the doctor when you are sick. Committing to an annual check-up makes for a better overall lifestyle as the doctor identifies and addresses potential health issues early before they lead to serious consequences.

Why would your business be any different?

Just like with your body, an ounce of prevention is worth a pound of cure to your business. Legal audits completed regularly identify potential legal issues in many areas and provide concrete, actionable advice so those issues do not result in serious business consequences.

HOW DOES IT WORK?

A legal audit is like a preventive health check-up. First, we examine how your business works, review its vitals, and determine what hurts and what works. The size of your company, number of employees, and the complexity of your industry will determine the scope of the legal audit. However, some typical areas of concern are:

• Industry and business-specific issues;
• Organizational structure;
• Ownership agreements and standards of practice;
• Standard business practices with customers, suppliers, employees, and contractors;
• Areas of concern or weakness for your business;
• Potential tax matters;
• Written and oral contracts or agreements;
• Intellectual property ownership and use;
• Real property ownership and leasing;
• Employee practices, including agreements, policies, hiring, and firing;
• Regulatory compliance;
• Sales and collection practices;
• Ongoing or potential litigation; and
• Owner-specific exit plans and estate plans.

We conduct our review with you through discussions, documentation review, and talking to key staff.

Once we conclude the audit, our team reviews the information in detail and compiles its findings. We then share our observations and suggestions with you through a written memorandum, in-person meetings with key personnel, or both.  We also prefer, if possible, to include your business’s other professional advisors (accountants, consultants, financial advisors or planners, etc.) in our audit as they usually have good independent insight.

After reviewing our findings and suggestions with you and receiving your feedback, we work to help implement any changes you decide to make based on the audit. Our recommendations typically include making adjustments to:

• Business practices (such as standards of collecting payment or dealing with customer issues);
• Written agreements, invoices, and purchase order forms;
• Ownership agreements;
• IP, confidentiality, and non-compete agreements;
• Employee handbooks and policies;
• Leases and real property title records; and
• Employee or key personnel coaching or education.

Just as you would hire an accountant to review your books, hiring a qualified business attorney will provide you and your company with clear and objective advice about your business’s operations. In addition, we will work with you to implement “best practices” that will make your life as a business owner more manageable, both while you own the business and if and when you decide it is time to exit the business.

Remember, a legally healthy business is much easier to own, operate, and sell.

BENEFITS OF A LEGAL AUDIT

You may still be asking yourself: A legal audit sounds like a lot of work, so why should I do it? While each business will derive different benefits based on its unique structure, most companies experience a smoother operational and transactional experience, as well as a reduction in risk.

Additionally, a legal audit lays the groundwork for legal compliance and prevention to ensure that the company’s goals, structure, and operations are consistent with the latest developments in business and corporate law.

Other benefits include improved employee relations, reduced exposure to liability (for the business and its owners), greater ability to obtain credit, and increased confidence for contractual obligations and remedies.

Investing the time and money in a periodic legal audit provides incremental benefits over time, but does not completely alter your business operations. We’re here to help you align your business’s practices with its goals in a manner that is efficient, legal, and workable. To learn more about how a legal audit can improve the health of your business, contact us here.