Legal/Finance
with Chris Felton, of Gardner Leader
Chris Felton, a partner at Gardner Leader, discusses the principle legal matters that all businesses should review for a more secure 2012.
One of the most satisfying things about helping business people is that it is such a great way of acquiring and sharing knowledge.
Because of the way we work at Gardner Leader, we have built strong client relationships in many different sizes of business (ranging from one-man-bands to fully listed plcs). The experience we gain from supporting those clients in many different sectors (technology, banking and investment, property, healthcare, engineering and retail - to name a handful) is something we both learn from and apply to the way we work.
2011 was tough for many. 2012 will also be challenging, so having advisers who understand the commercial reality of starting, running and investing in a business (or all three) is very important.
There were success stories for many of our clients last year. Of course some of those clients didn’t have it all plain sailing, nor could they avoid making difficult decisions or taking risks. However those businesses that did well were (almost without exception) well run by motivated and organised people. Getting everything right all of the time is not possible, but here are a number of key areas which those businesses considered essential rather than optional.
Investors
If you own your business, whether solely or jointly with others, make sure your investment is documented properly either in a shareholders agreement, partnership deed or investment agreement. I hear you all groaning “not another lawyer touting for business” – however in a period where money is tight and the best of “friends” and family are falling out as investors as quickly as the next court case is issued – this is cost-effective and sensible advice certainly compared to litigation.
If you are taking debt or equity to help fund the start of your business or its expansion, make sure that you understand and can comply with any conditions imposed on you.
People
We have seen most successful businesses invest in their people. Not everyone can afford the luxury of a sophisticated HR infrastructure. Nor can the owner/manager of a small business keep his eye on all things going on with his staff. HR issues tend to be very time consuming – though extremely important. Forward thinking businesses are taking on some limited but additional resource in some of the many HR support services or products out there. Online or virtual HR support services such as Gardner Leader’s HR Essential are becoming popular.
Protect your assets
Often a company’s most valuable asset is its ideas and technology. Many companies are becoming more aware of the devastating effect that a failure to protect these can have.
We have dealt with several cases in the last year involving infringement or misappropriation of ideas and confidential information. In those cases the businesses which had registered trademarks or invested to protect the copyright in their ideas and technology were in a strong position to take immediate and decisive action.
Terms and conditions
Reviewing (or even drafting these) will undoubtedly be the most common thing you will be advised to do by a solicitor. However aside from the cautionary tales, numerous articles (I know, further yawns), I would say that the failure to address this issue has consistently led to clients’ biggest legal spend when things have gone wrong.
Ordinarily, spending hundreds of pounds to save tens or hundreds of thousands of pounds would seem like a no-brainer – yet terms and conditions, whether standard form, or bespoke (for larger and more risky contracts) continue to be either overlooked or cobbled together by the parties without taking advice.
Having sensible terms and conditions which work for your customer/supplier are vital. This forthcoming year particular issues to address in contracts should be:
n Clear termination provisions for late/non-payment or insolvency
n Sensible payment terms – deposits or upfront payments to cover significant third party costs or materials
n Putting any essential software/technology into an escrow account
n Guarantees, warranties and indemnities to cover essential terms
Practical steps
In addition to the above, many other practical steps should be considered to get your house in order for 2012 – including insuring your business and directors for those “bolt-ons” such as business interruption, legal expenses and directors and officers risks.
Educate your board and staff by attending briefings on corporate governance and the impact of the Bribery Act 2011. Don’t underestimate the impact of regulation – whether in the financial services sector or in professional services – keep on top of risk and compliance issues.
Dealing with these five key areas will put your business on a stronger footing for 2012, and could significantly reduce legal heartache in the future.
For more information on this, or any other legal advice for your business, contact Chris Felton, of Gardner Leader LLP on (01635) 508128 or c.felton@garnder-leader.co.uk or visit the website www.gardner-leader.co.uk
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