In 2020, there were 1.33 million lawyers in the United States. There’s no doubt that legal services are invaluable, but people are often hesitant to spend money on services that they are unfamiliar with. . However, following legal rules and regulations is vital for every entrepreneur to avoid finding themselves in legal trouble.
According to the Small Business Administration (SBA) study in 2021, 36 to 53 percent of small businesses are sued each year. In another study, 43 percent of small businesses said that they had at least been threatened with a lawsuit.
Although having an attorney on staff or hiring a lawyer may not be an option due to expense, there are other options available to get legal help. We’ve put together some basic information covering why you might need legal professional help and where you can go about finding it.
Small business legal issues post-pandemic
“Complicated” is just one word used to describe small business labor and employment law. And in the post-COVID era, don’t let legal pitfalls and blind spots grind your business to halt. Laws are changing and many entrepreneurs’ time and resources are limited. Legal issues are the last thing a business owner needs to deal with during these stressful times. Here are some new legal issues that may arise in the coming years:
Employee classification
In the emerging gig economy, business owners have options when hiring. However, those options come with legal ramifications. For example, both Uber® and Lyft® faced a lawsuit from the California Attorney General after they denied that drivers classify as employees. Misclassifying a worker can lead to issues with overtime pay, tax payments, insurance obligations, and unpaid benefits. This post can be a starting point when deciding how to classify an employee: Quick Facts: 6 Types of Employees.
Sick employee mandates
One new federal mandate is the Families First Coronavirus Response Act (FFCRA), which requires certain employers to provide paid leave to employees for reasons related to the COVID-19 pandemic.
In a statement, the White House said the law "provides paid leave, establishes free coronavirus testing, supports strong unemployment benefits, expands food assistance for vulnerable children and families, protects front-line health workers, and provides additional funding to states for the ongoing economic consequences of the pandemic, among other provisions."
Employers that are required to provide Emergency Paid Sick Leave and Emergency Paid Medical Leave must put a notice of employees' rights in all work sites or its website or send the poster to all employees by mail or email by April 1, 2020. The notice is free to download and print on the U.S. Department of Labor's website.
Employee handbook
An employee handbook might not be top-of-mind, but this is an important document. Be sure it includes a code of conduct and guidelines for vacation time, paid leave, travel reimbursement, and COVID-19 pandemic-related protocols, like wearing a mask and social distancing.
With the explosion of remote work due to the COVID-19 pandemic, many employees are on the move. This can bring up issues such as employee expense reimbursement, privacy, equipment uses, health and safety, and payroll law. Many legal requirements vary depending on location so it’s worthwhile to hire a lawyer to make sure you are meeting the requirements of the law. Our article, Small Business Employee Handbook Tips has additional best practices when putting together this important document.
Digital media
Implementing a solid social media/digital media policy for all employees is important to protect your brand online and mitigate security and legal issues. Your policy can stop an employee from inadvertently sharing private business information or infringing on a copyright. Digital media includes recording telephone calls, using a picture or an image of someone, and using information from another source.
Diversity and inclusion legal requirements
Every company needs to show that they don’t tolerate discrimination by implementing an Equal Employment Opportunity (EEO) policy. Foster an atmosphere where people want to come to work and give their best to support your business, while also feeling included and cared for.
Types of lawyers for a small business
When it comes to your small business, you’ll want to find a legal professional who is familiar with the small business landscape and the intricacies of laws that can impact your enterprise. Here are some types of legal professionals to consider and their respective areas of expertise:
- General business lawyer
A general business lawyer can provide legal advice on a wide range of matters. You can ask them questions about various issues that could affect your business to help determine if you need a more specialized lawyer.
- Employment and labor lawyer
An employment and labor lawyer might be required, especially during the COVID-19 pandemic. When hiring, laying off, furloughing, or letting employees go, an attorney in this area of the law can keep you compliant. This type of attorney can help draft employee manuals for your business and ensure adequate safety standards are in place. Due to the gig economy that has flourished during the COVID-19 pandemic, employment law is evolving rapidly. An employment and labor attorney should help you stay on top of new legal issues.
- M&A (Mergers and Acquisitions) lawyer
When you buy and sell businesses, negotiating for the property and assets of those businesses must be handled correctly. M&A lawyers have the client’s best interest in mind during this complicated process. Work with this type of attorney to make sure you get compensated fairly for what your business is worth.
- Tax lawyer
It’s no secret that the U.S. tax code can be complex. A qualified tax professional, such as a Certified Public Accountant (CPA) or a tax lawyer can help you navigate this area, so you don’t face penalties or fines by underpaying or missing deadlines.
- Intellectual Property (IP) lawyer
Do you have trademarks or patents? An IP lawyer specializes in matters surrounding copyrights, trademarks, and patents. Note that “information” is also considered intellectual property. You might face legal troubles for sharing the wrong data. For example, posting “Just Do It” to promote your business could lead to trouble with a company like Nike®.
- Contract Lawyer
Online contract templates are frequently used by business owners because of speed and cost. But every business is unique, and a template might not cover your needs. Language contained in any contract can be complicated, so it is wise to consider hiring a contract lawyer to draft or review your contracts to avoid any problems
Legal resources for small business
Not all legal matters require a lawyer, but you should know where to go for assistance. Here are some resources for small business owners and entrepreneurs to explore:
The American Bar Association (ABA) has a comprehensive Consumers’ Guide to help business owners hire an attorney and includes a map search feature to help find legal help in your area.
SCORE® is an organization dedicated to helping small businesses offering free and confidential small business advice. Find a local SCORE branch here and ask if they have legal experts available to answer questions.
AllLaw® is a one stop shop for legal information. You can also use a location tool to find an attorney in your area. The most popular topics and products on the site include debt, business and money, wills, trusts and estates.
For owners of small businesses or for entrepreneurs looking to launch a business, LegalCORPS® volunteer attorneys can provide advice to help prevent costly troubles. LegalCORPS attorneys can give assistance for issues concerning taxation, government regulation, employment, and real estate.
5 ways to get free legal advice for a small business
Here are five options to explore if you’re in need of free legal advice:
- Attend free legal workshops and pro bono clinics.
Bar associations, responsible for licensing attorneys in the state and regulating their work, have requirements for free or pro bono hours that lawyers must complete each year. One way lawyers fulfill this requirement is by participating in free legal clinics and workshops.
- Take advantage of free consultations.
Free consultations are another way an attorney can meet their state bar’s requirements on pro bono hours. This is an opportunity for you to find a lawyer who is a good fit for your business.
Topics to consider asking to ask during your initial consultation include:
- Legal Background
- Industry experience
- Strategies to address your specific legal issue
- Communication methods and policies (phone, email, or in-person appointments)
- Fee structures (i.e. how the lawyer will be compensated for the work they do)
- Choose a lawyer who uses a contingency fee structure.
Find an attorney that is open to flexible billing arrangements. Instead of an hourly rate, business lawyers can use a contingency fee structure or alternative arrangements. A contingency fee structure means the lawyer is compensated from the settlement award only if you win your case. Their fee is deducted from the money you’re awarded.
- Use an online legal service.
An online legal service can offer help for free or at a low fixed rate. This resource can help you find the right legal forms, provide advice on business structure, or connect you with a local lawyer.
Some online service to explore include:
LegalZoom®: Fixed monthly rate for custom legal forms, document review, business formation, and phone calls with a lawyer.
Rocket Lawyer®: Fixed monthly rate for custom legal forms, document review, online legal Q&A, business formation, and phone calls with a lawyer.
LegalShield®: Fixed monthly rate for legal correspondence, debt collection assistance, document review, and phone calls with a lawyer.
Nolo®: Free articles, authored by attorneys, about a range of legal topics.
- Sign up for online legal courses.
Another option for free and inexpensive legal support is to take advantage of online courses tailored to those running a small business to help entrepreneurs navigate the complexities of starting and running a business.
