Money or the lack thereof is often a reason start-ups will take shortcuts when it comes to their legal affairs. Start-Ups put their businesses at risk by trying to cut costs by copying things like privacy policies and terms and conditions off the Internet. While copying documents off the Internet is very risky, it’s not always necessary for start-ups to go see a lawyer.
This is supported by Scott Chamberlain, CEO of Chamberlains Law Firm who says now start-ups have more affordable options available to them before they start incurring the hourly fees most people associate with a traditional law firm.
“One of the options available to start-ups is to use online legal documents,” says Chamberlain.
“While there are many online publishers providing “dead” templates for which they accept no responsibility, start-ups should insist on “live” online documents accompanied by a statement of legal advice,” he cautions.
Chamberlains has five ‘lawsuit repellent’ tips to ensure your business has the ‘minimum viable legal protection’.
Founders should agree how the company will operate. This will include who will own it and control it, what will be contributed to its success, and the circumstances in which people can be forced to leave. Without this agreement, it can be impossible to be rid of under-performers and you may find yourself in business with someone’s spouse or relatives if they die or get divorced.
Founders can be tempted to offer equity as a way of covering initial costs. This is almost always a mistake. Aside from the complex tax implications, any new shareholder should be bound by the shareholder’s agreement and having too many small shareholders can pollute your share register and make it almost impossible for your company to restructure or attract new investment.
You often have to tread a fine line between secrecy and collaboration when it comes to sharing information about your business. Non-Disclosure Agreements can protect the confidentiality of any information you might have to disclose when exploring the possibilities of a deal or project with another individual or business.
In real life things go wrong, shipments are delayed, products break and we sometimes have deadbeat clients. Service Agreements and Terms of Sale documents manage the fallout when things don’t go according to plan. Most importantly, they confirm ownership of intellectual property, limit your liability so that you are not unexpectedly liable for massive damages because of a missed shipment date, or a small-but-crucial failure to perform.
Businesses can get themselves into trouble if they don’t understand the difference between an employee and contractor. Start-ups can crippled by unfair dismissal claims from disgruntled ex-employees they thought were contractors, or payment of unpaid worker’s compensation premiums. Worse, while employers own the IP their employees generate, contractors own the IP they generate. You may find that someone else owns crucial parts of your business IP.
A careless beginning can cause you a world of pain down the track, therefore getting your business ‘legal’ is an unavoidable requirement and should be one of the first things you do if you are serious about protecting yourself, your business and avoiding potential disputes in the future.
Chamberlains Law Firm offers a number of cost effective options that cater to those who want to do it themselves, those who need a bit of guidance and those who want someone to do it for them.
If you prefer more guidance then you can arrange to have one of Chamberlain’s lawyers come to your premises for a fixed daily rate that is significantly cheaper than hiring a lawyer at an hourly rate. They will identify the documentation you need as well as prepare and execute them.
To find out more about Chamberlains In-House email hello@chamberlains.com.au or call 1300 676 823
If you prefer to have Chamberlains handle the entire process for you then our team can handle your matter in the traditional way at traditional rates. To get a free quote to find out how much it would cost for us to identify and prepare the legal documents you need to start your business contact us at commercial@chamberlains.com.au or phone 1300 676 823
The presumed compliance through the transition period will end on 30 January 2014.
The PPSA has been working as a register of securities since January 2012 and operates as a noticeboard of securities held over personal property. It is broad reaching as to the personal property that is covered. Old presumptions and the traditional thinking about ownership, proper title and priorities are somewhat skewed. Effective registration can see creditors take priority and being able to enforce against personal property, whether subject to insolvency scenarios or just generally, resulting in them being better off than those who fail to register. A failure to register can result the debtor being able to transfer goods with clear title and a presumption that there is no one claiming security.
Existing documentation and concepts of security agreements are still effective to an extent to be used in the registration process. It is essential however to know how the PPSA treats property and its proceeds to ensure that the security will be able to be effectively enforced. Failures at the stage of drafting the security agreement or through registering the interest will lead to lost property.
If you are working on a retention of title basis and seeking to secure goods in the usual course of business then the right to claw back may not exist without a proper registration. If you want to claim a right over the proceeds of the goods following a sale in the usual course of business then the situation can become even trickier, with a need to ensure that the security agreement properly describes the goods and extends to the proceeds.
In addition, there are strict times limits to register certain security interests and you will lose priority over other creditors if you do not meet the deadlines.
Agreements in place prior to January 2012 will be given some level of protection through the transitional period ending on 30 January 2014. Any interest established after January 2012 should have been registered. From February 2014 every thing becomes fair game, with the end of the transition period meaning that there is no safety net, with interests in personal property being lost without registration.
Those who take the initiative to become familiar with the PPSA and the register will be better placed to ensure future interests, to be able to take property satisfied in the knowledge that there are no competing interests, which will naturally lead to benefits in business.
For more information on the PPSA go to www.ppsr.gov.au
If you need assistance to ensure documents are appropriate and interests are properly registered contact David Robensfor a free quote or send an email request by clicking on the ‘Make An Enquiry’ button on the right hand side of this page.