When Should You Speak To A Business Lawyer?

Legal work is often easier to deal with when you have a little time on your side.

If you're about to sign an important contract, hire someone, bring on a co-founder or make another significant business decision, getting legal help earlier can give you time to ask questions, make changes and deal with anything unexpected.

That doesn't mean every business needs every legal document sorted from day one. Legal work can simply involve more than expected - further research may be needed, documents may need amendments or another party may need time to respond.

So, when should you actually speak to a lawyer? There is no set number of days or weeks. A useful rule is to get legal help before you make an important decision that could become difficult or expensive to undo.

Why Is It Better To Start Legal Work Early?

Not every legal job is simply a matter of sending a document to a lawyer, having a few words changed and getting it back.

Sometimes the work is relatively straightforward. Other matters have a few more moving parts.

Depending on what you're doing, a lawyer may need to understand how your business operates, review existing documents, work out which laws apply, research an industry-specific requirement or clarify what has already been agreed with another party.

A first draft or review can also uncover questions you hadn't thought about.

Perhaps a customer contract doesn't explain what happens if the scope changes. Your founders haven't agreed what happens if someone leaves. Or a large customer has sent you a contract containing obligations your business can't realistically meet.

These aren't necessarily complications with the legal work. They're often the exact issues the legal work is designed to identify.

Once something comes up, you may need to make a commercial decision, your lawyer may need to amend the document or another party may need to consider the proposed changes.

That is why it can help to start the legal conversation before everything else is already locked in.

So, When Should You Actually Get Legal Help?

There isn't a standard legal lead time that works for every business or every legal job.

A straightforward document where everything has already been agreed may require much less work than an arrangement involving several founders, negotiations, due diligence or complicated regulatory questions.

Rather than counting backwards a set number of weeks, think about the point at which you're about to commit.

Setting up a business with co-founders: Get legal help before shares, money or valuable intellectual property (IP) start changing hands.

Signing an important customer, supplier or commercial contract: Ideally, get advice before signing, paying a deposit or starting the work.

Starting to sell to customers: Have the important customer-facing terms sorted before customers begin accepting them.

Hiring an employee: Deal with the employment arrangements before they start work where possible.

Engaging a contractor: Sort out important terms, including IP ownership, before valuable work is created.

Committing to a business name or brand: Consider the legal side before investing heavily in branding, signage and marketing.

Signing a lease, raising investment or buying or selling a business: Get legal help as early as practical, before important commercial terms become difficult to change.

If you've already passed one of these points, it doesn't automatically mean you've missed your chance. It simply means the legal position may need to be considered based on what has already happened.

Before You Sign Something

One of the clearest times to get legal help is before you sign an important contract.

Once you've agreed to a contract, changing a term can become much harder. Australian Government guidance also recommends getting help with contract terms you don't understand before signing, particularly where the arrangement carries significant risk.

Getting a Contract Review before signing gives you an opportunity to understand what you're agreeing to and, where appropriate, negotiate changes while there is still room to do so.

It is also worth remembering that a contract doesn't always arrive as a beautifully formatted document with a signature box at the bottom.

Depending on the circumstances, legally binding agreements can sometimes be formed without a formal signed contract, including through verbal agreements or an exchange of emails.

So, deciding to "sort the contract out later" doesn't necessarily mean there is no legal arrangement in the meantime. Getting important agreements in writing early can make everyone's rights and responsibilities much clearer.

Before Other People Start Relying On The Arrangement

Legal arrangements can also become harder to untangle once other people have started acting on what was agreed.

This comes up often with founders, employees and contractors.

If you're starting a company with someone else, it is generally easier to agree on ownership, roles, decision-making and what happens if somebody leaves while everyone is still on the same page. A Shareholders Agreement can help record those arrangements before disagreements arise.

Employment also comes with legal requirements from the beginning.

Under the Fair Work Act 2009 (Cth), employers must give every new employee the Fair Work Information Statement before, or as soon as possible after, they start their new job. Casual employees must also receive the Casual Employment Information Statement, while employees entering a new fixed-term contract must receive the Fixed Term Contract Information Statement.

Ideally, the broader employment arrangements should be clear before the employee starts too. An Employment Contract can record matters such as the employee's role, pay, confidentiality and IP, subject to their minimum legal entitlements.

Contractors are another good example of why early documentation matters.

As a general rule, IP created by a contractor may remain with the contractor unless ownership is dealt with in the agreement. The precise position can depend on the type of IP and the circumstances, so it is worth addressing ownership clearly in a Contractor Agreement before the work begins.

If someone is developing your software, designing your branding or creating other valuable work, agreeing on ownership from the outset can be much easier than discovering months later that everyone had a different understanding.

Before You Launch Or Start Trading

It is also worth thinking about the legal side before customers start buying from you.

For example, Business Terms & Conditions can set out things such as what you're providing, how payment works and what happens if the scope changes or an order is cancelled.

Those terms also need to comply with the law.

The Australian Consumer Law, contained in Schedule 2 of the Competition and Consumer Act 2010 (Cth), includes protections against unfair terms in certain standard-form contracts.

For new or varied standard-form contracts from 9 November 2023, the expanded small business protections can apply where a relevant business has fewer than 100 employees or annual turnover below $10 million.

Privacy may also need to be considered if you're collecting personal information. Most small businesses with annual turnover of $3 million or less are generally not covered by the Privacy Act 1988 (Cth), but there are important exceptions.

Rather than assuming your turnover settles the question, it is worth checking whether the rules apply to your particular business. Where you need one, your Privacy Policy should reflect what the business actually does with personal information.

Your brand is another area where thinking ahead can make a real difference.

IP Australia currently says registering a trade mark in Australia takes at least seven months.

That doesn't mean your business needs to wait seven months before launching. It does show why brand protection is worth considering before you've invested heavily in packaging, signage, websites and marketing.

If trade mark protection makes sense for your business, looking at Trade Mark Registration earlier in the branding process can give you more options.

Bigger Deals Usually Benefit From More Time

Some legal matters naturally involve more steps than others.

Signing a commercial lease, raising investment, buying or selling a business or entering into a significant long-term agreement can involve several parties, negotiations, due diligence and multiple documents.

You may also be waiting on information or decisions from someone else. An investor might request changes to documents, a landlord may need to respond to amendments or due diligence might uncover something that needs to be dealt with.

For these kinds of transactions, getting legal help earlier gives you more room to deal with those steps before the proposed completion or signing date.

What If You've Already Left It Late?

This happens all the time.

Maybe the contractor has already started. You've verbally agreed to the deal. Your employee starts tomorrow. Or someone has just sent you a long contract and wants it signed by the end of the day.

It doesn't automatically mean you've missed your opportunity to get legal help.

Tell your lawyer exactly what has happened and what the real deadline is. They can then look at the current position and work out what needs attention now, what might still be changed and whether anything should be documented or dealt with afterwards.

The important thing is not to hide the urgency or assume something can simply be fixed later.

The sooner everyone understands the actual position, the easier it is to identify the practical next step.

Do You Need To Do Every Legal Job At Once?

No.

Engaging with legal work early doesn't mean completing every possible legal document before your first customer walks through the door.

The goal is to identify what matters at the stage your business is actually at.

When you're setting up, that might mean your structure, founder arrangements, important IP and the customer documents you need to start trading.

When you start hiring, employment and contractor arrangements become more important. As the business grows, larger contracts, privacy, trade marks, governance and investment may move higher up the list.

Getting the right legal work sorted at the right time can also help prevent smaller issues from becoming much bigger problems later. We've covered some of the biggest legal mistakes Australian startups and small businesses make, and how getting ahead of them can help keep your business on track.

Good legal support should help you prioritise rather than simply give you a longer legal to-do list.

Key Takeaways

There isn't a magic point where every business suddenly "needs a lawyer".

A better rule is to get legal help while you still have choices.

If something important is about to be signed, launched, promised, transferred or relied on by someone else, that is usually a good time to consider whether the legal side should be sorted first.

Starting earlier gives you room for questions, research, amendments and negotiation where they're needed. It doesn't mean doing every possible piece of legal work at once.

And if you've already left something later than you would have liked, that doesn't mean you should avoid getting advice altogether.

Not sure whether you need legal help now or whether it can wait? You can speak with one of Sprintlaw's small business lawyers about what you're planning, what stage you're at and which legal work may be worth prioritising. You can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.