A lot of attention is placed on the financial health of a business, and rightly so. But you are missing a very important trick if you don’t pay attention to the legal health of your company too.
In this day and age, businesses and working practices are evolving more quickly than ever as they try to keep pace with changes in modern technology and labour markets.
Contracts are often drawn up, signed, filed and then, worryingly, forgotten. A contract which might have been right for your business at the time it was signed, may not be relevant as your business relationships evolve.
A Legal Health Check is designed to ensure that your whole house is in order. It will confirm whether you are complying with your legal obligations, whether others are complying with their obligations to you and will help to reduce your risk to financial and legal exposure.
A thorough Legal Health Check will be tailored specifically to the client, but in essence the following issues should be covered off:
All too often, it is not until a company runs into a disagreement about how to manage certain elements of the business, that it finds there is no mechanism to solve the issue and move forward.
Company directors can find themselves at an impasse at exactly the moment when important decisions need to be made, having to resort to ill-timed and costly solutions or settlements.
A Legal Health Check will confirm whether a company’s articles of association and shareholders agreements are in place, relevant and fit to govern any potential disputes.
A Legal Health Check will also help to ensure that transactions with your company’s biggest customers and most important suppliers are on the best possible terms and that you have the necessary legal protection.
A review of existing terms may also reveal opportunities for savings or growth, if key terms for re-negotiation can be applied.
Similarly, a review of terms can help safe-guard your company by identifying its vulnerabilities and over-dependency on one customer or supplier. Should, for example, one of your biggest suppliers run into difficulties, the knock on effect to your business could be over-whelming.
A Legal Health Check can highlight areas of your business where it would be prudent to diversify.
An out-of-date agreement can have unfortunate consequences. If a contract expires without your realising it, you might find yourself without the commitments and protections that you thought you had.
It is also all too easy to miss a vital “trigger” date, such as a break clause, or a one-time-only right to renew. Missing a key date can have significant financial consequences for your business.
No business wants to be faced with a hefty fine, and certainly not at a time when other financial priorities are proving challenging.
A Legal Health Check can confirm whether your business complies with regulatory requirements, and if the business doesn’t comply it will highlight policies and procedures that should be implemented so that that, in the future, compliance happens as a matter of course.
It can be tempting to cut corners on the protection of your brand and IP. But in fact, your brand and IP could well be your most valuable assets.
A Legal Health Check can help you understand the value of your IP to your business as a whole. It can identify whether your company’s IP differentiates you from your competitors, and therefore whether it has the potential to drive revenue and build value.
A Legal Health Check can also be of huge value if you are thinking of selling your business. It means that you can start discussions with potential buyers, without being worried that their legal due diligence will dig up problems and throw a “spanner in the works”.
In summary, a Legal Health Check is vital to the overall success of a business. It will help dispel any liabilities which could prove damaging or costly and can offer a fresh perspective on business operations which may have become dysfunctional. Most importantly it will provide you with peace of mind and a roadmap to a secure future.
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