We’ve all dreamt about standing up in front of a packed courtroom and shouting the words, “You can’t handle the truth!” But when it comes time to protecting our small businesses and our personal assets, reenacting A Few Good Men won’t get us very far.
There are several legal myths that small business owners commonly believe in. These myths aren’t only dangerous to our companies, but they can be dangerous to our personal livelihoods. Take a look at the five legal myths below to make sure your company isn’t sinking into hot water.
Legal Myth #1: “My word is my bond.”
Doesn’t anyone remember that line in Jerry Maguire when Cush’s dad told Jerry, “My word is stronger than oak,” and then sure enough, he broke the deal they had. Sure, it’s not as memorable as some of the other lines from the movie but I’m proving a point here. In business, as in all legal matters, having your word be as strong as oak ultimately means nothing. It sounds nice and has a very promising ring to it but unless you get any sort of agreement written down and signed by both parties, that agreement can be extremely difficult to hold up in court. Furthermore, handshakes, fist bumps, and any other form of consent that is not a written contract with a signature on it might as well be null and void. When you’re performing business transactions, get it in writing and protect yourself, your employees, and your assets.
Legal Myth #2: “They can’t use my brand name, it’s trademarked.”
Between trademarks, copyrights, patents, and a bunch of other marks you’ve probably never heard of (service marks, certification marks, collective marks), it can be difficult to know which legal protection your brand name and/or product names need to be bulletproof. Furthermore, when you do register for a trademark or copyright, there are certain stipulations that can prevent your brand or product from being eligible, becoming ineligible down the road, and allowing loopholes for intellectual property thieves to bank on. Don’t get me wrong, trademarking and protecting your intellectual property is always a good idea but you shouldn’t consider it an impenetrable entity. Talk to a lawyer about the best legal protection for your company.
Legal Myth #3: “I’m entitled to my opinion, so here it is!”
You certainly are entitled to your opinion, but didn’t your mother ever tell you to keep your mouth shut if you don’t have anything nice to say? She was on to something there, as was the United States Supreme Court that held up the defamation law to all bloggers and blog commenters. While no one is telling you not to use your company’s blog to vent, express, persuade, and praise your company, you might want to think twice before you bash the competition and claim their products will turn your hair blue or will fail after a month’s use. Even if you’re writing an opinion editorial, you can be writing statements that can be deemed libel…meaning a lawsuit could be coming your way. Your blog is one the most powerful marketing tools in your company’s possession, but use it wisely or you’ll be defending yourself in court.
Legal Myth #4: “I can hide behind my LLC.”
So you’ve built a business and your natural next step would be to turn it into a Limited Liability Company that separates the company you’ve built from the person who built it. In a perfect world, this would mean when things go south the company gets sued, not the owner. However, this isn’t exactly a perfect world and an LLC is still limited, as its name implies. There are several exceptions where a person or company you’ve done business with can go right through your LLC and attack you personally. These scenarios can vary by state; however, personal negligence, personal guarantees, and operating outside of the LLC can make protecting your personal assets tricky. Speak to a lawyer about what your LLC protects and what instances can make it vulnerable. It’s bad enough if your business goes under, but you don’t want to go down with it.
Legal Myth #5: “I don’t need a lawyer.”
Maybe the biggest legal myth in the history of business, refusing to talk to a lawyer about any number of issues can get you and your company into hot water down the road. While you might be able to Google the legalese and find a nice template for a contract online, a lawyer’s expertise simply can’t be beat. When you’re building a business from the ground up, hiring employees, expanding services, and raking in more money than ever before, protecting yourself every step of the way should be a high priority. Don’t be afraid to call a lawyer when you’re unsure about a transaction, agreement, or even the right way to fire an employee. Having a legal team on your side will allow your business to continue profiting and advancing for years to come.
As small business owners, we are proud of what we’ve accomplished and how we’ve accomplished it. But don’t let your pride get in the way of legally protecting your business. While this article should not be taken as legal advice, it merely suggests the legal myths you should be keeping an eye out for. And when all else fails, get a lawyer on the phone.
Written by Pete Wise for the Douglas and London Law Firm; whom represent clients across the entire US, taking on cases noone else will. They have decades of experience as an law firm in New York and it translates into the courtroom.