Many people think they know about corporate law, but the truth is that there are a whole bunch of myths out there. This post will present five common misconceptions about corporate law and explain why they’re wrong.
1. All Your Contracts Should Be Complex and Lengthy
Contrary to popular belief, longer and more complex contracts aren’t necessarily better. In fact, they can serve as a source of ambiguity and confusion. The ideal contract is a short, simple, and to-the-point document that outlines the promises of each party. There’s no need for lengthy descriptions or complicated legalese. And yes, you should have all your contracts reviewed by legal counsel to make sure they’re airtight.
2. You Should Only Hire a Corporate Lawyer When You Have Problems
If you only hire a corporate lawyer when you have problems, it can be too late. It’s better to establish a good relationship with your corporate law firm during times of success. You want your lawyers to understand your business and how it operates so they can help you proactively avoid trouble. This way, if something happens, you’ll already have a great working relationship with your legal team.
3. All Corporations Are Created Equal
Every corporation is different. There’s no such thing as a “standard” business structure. Some corporations, like LLCs and S Corps, have more advantageous tax structures than others. On the other hand, some corporations have greater liability protection if they’re sued. It all depends on the situation. The only way to find out which type of corporation is best for you is to consult with a legal expert.
4. Corporate Lawyers Are Very Expensive
This is a common myth based on the fact that many corporations hire large law firms to handle their legal needs. But this isn’t always, or even usually, how it works. Smaller businesses and startups often turn to boutique corporate lawyers who bill by the hour and don’t require lengthy retainers or anything like that. A new startup might hire a corporate lawyer for an hour or two to review its operating agreement and make sure everything is up to date. If you’re just starting out, this might be the most cost-effective option for you.
5. Small Entities Don’t Need Corporate Lawyers
This is probably one of the most widely perpetuated corporate law myths. It’s pervasive in part because corporate lawyers often deal with large corporations, but it’s also based on a misunderstanding of corporate law in general. The truth is that all businesses need corporate lawyers to help them establish and maintain their legal structure and protect themselves from liability and taxes. Even small businesses and startups should hire corporate lawyers to ensure their corporate structure is legally sound and that they’re handling things properly.
The total value of worldwide mergers and acquisitions was 2.8 trillion dollars in 2020, compared to 3.4 trillion dollars in 2017. However, this does not mean that the need for corporate lawyers is now lower. In fact, it continues to be a dynamic and rapidly developing field where new regulations are constantly being put into place. Are you looking for a corporate lawyer you can trust to help you with your growing company? Contact us for a consultation today.