If you are a software startup or tech company, chances are that you will face many of the same legal issues that traditional businesses encounter on a day to day basis. However, due to the nature of tech companies, you should have a qualified law firm in your city on retainer in case legal issues arise. Below are the best resources for tech companies facing legal trouble:
Consult with a Business Attorney
Deciding if your business will be a Limited Liability Company (LLC) or Corporation is an essential first step. Properly structuring your business from day one enables you to get ahead of potential legal issues that improperly-formed businesses encounter. This requires qualified legal services. A tech company in La Jolla would go see an attorney such as Cory Briggs San Diego law firms and companies in other cities would seek similarly experienced legal representation. Irrespective of how you decide to set up your business, you will need the experience that only an attorney who is familiar with business formation can offer.
Consult with an Intellectual Property Attorney
Most if not all of the value in any tech company is intellectual property. It is critical that a tech company consult with and retain an experienced intellectual property attorney to protect the essence of their business. Once your intellectual property has been introduced into the public domain, it is free to be copied and appropriated by competitors if it has not been properly protected by trademark or patent.
Naming Your Business
When naming your business, it is crucial that the name not be similar to or the same as another business so as to cause confusion, intentionally or otherwise. This is one of the main reasons that companies receive “cease and desist” letters and are ultimately sued for copyright infringement. Make sure that the name you choose is unique but also properly identifies your business as a tech business or software company.
Protect Capital Investments
The nature, intent, and source of your company’s capital investment must be identified and agreed upon in writing by both the investor and the entity. Quite often, investors have a different point of view as to the amount of control they have over the entity than the members of the entity feel that they do. As you can imagine, this has been the subject of much litigation over the years. It is avoidable by simply drafting a memorandum of understanding between investor and entity that clearly sets forth the nature, intent, and source of the capital investment that is agreed upon by all parties.
Create a Business Plan
The business formation attorney with whom you consult must draft a business plan that you and your partners are comfortable abiding by on a day to day basis. This business plan must carve our roles for each individual and duties must be properly delineated and agreed upon in writing. Plans for winding down and dissolution of the business should also be included as should shareholder buyout terms and conditions. Provisions should also be made in the event of the death of a member, partner or shareholder in that other members should retain the right of first refusal before the deceased member’s share is transferred into his or her Estate.
In summary, consulting with an experienced Business formation attorney at the outset and an Intellectual Property attorney will save tech companies many hours and most likely tens of thousands of dollars in legal fees down the road. It is advisable that you consult with and retain a qualified law firm in your city BEFORE getting down to business. Invest the time so you can get to work with the peace of mind that your business has begun on the right foot, in the right direction.