When you’re starting a business the first thing on your mind is not likely to consult a lawyer, but according to David Rieveschl, a partner with the Stone Pigman law firm, it should be high on the top of a new entrepreneur’s to-do list.
“The sooner you contact a lawyer the better,” he said. “We can help put the right pieces in place for success early on and save time and money that would have been spent fixing things later that could have been avoided.”
Attorneys have a wide range of specialties, so finding a lawyer who focuses on business and entrepreneurism is vital. In addition to offering a free initial consultation to business owners, Stone Pigman, for example, partners with entities like the Tulane Innovation Institute and the Idea Village to conduct various entrepreneurial workshops and even puts together an “Entrepreneur Boot Camp.”
While there are many legalities entrepreneurs need to consider, depending on what stage their business is in, Rieveschl touched on some of the essentials, beginning with the startup phase.
“You have to form some kind of legal entity,” he noted, “ideally with a liability shield.” Among the factors that determine the specific legal structure of a business include the number and type of partners, whether and when the company will seek to raise capital from investors, and whether employee compensation may include equity in the business.
If multiple founders are involved it is also important to execute appropriate founder agreements. Depending on the circumstances, these may cover expectations regarding investment of time and money, assigning of responsibilities and ownership percentages. The agreement should also address partner exit plans and processes and include non-compete agreements.
Critical in any entrepreneurial setting is managing intellectual property, which can include trademarks, copyrights, patents, software codes, business processes and even recipes – essentially any type of trade secret.
“Intellectual property can be a little tricky to quantify,” noted Rieveschl. “It’s not generally something you can hold and feel and touch.”
Intellectual property agreements should cover all staff and consultants, and sometimes even partners. Under Louisiana law, IP may by default belong to its creator unless otherwise arranged, so owners should be sure that all relevant agreements assign IP rights to their company, and that all other necessary protective measures are in place.
Employment and consultant contracts not only need to be very specific about issues of IP, confidentiality and non-competition, “they need to be tailored by time and geographic scope,” Rieveschl added, noting, “Some aspects of this are very narrow under Louisiana laws.”
Contracts should also address issues including compensation, benefits and work location, i.e., in-office versus home.
Topping the list of frequent entrepreneurial headaches is obtaining licenses and permits. Attorneys can serve well here, as they are familiar with the processes and often have established contacts within government, enabling them to cut through a lot of the bureaucracy.
Another issue becoming more urgent every day is data security and privacy. Hackers are relentless and ruthless — Rieveschl reported that Stone Pigman itself experiences multiple hacking attacks almost daily. Addressing this potentially catastrophic problem from day one is critical, as everything from trade secrets to employee data can be at risk. As well, some industries have legal requirements to which companies must adhere to regarding protection measures and disclosure of breaches. Companies who fail to meet these requirements can be held liable.
One final issue to consider — too expansive to address in this space — relates to investor relations and agreements. Highly complex federal and state regulations, as well as founder and company priorities, all need to be considered.
“Entrepreneurship is one of the scariest and daring things you can do,” he said. “We all need to be investing in the entrepreneurial ecosystem.”
Keith Twitchell spent 16 years running his own business before serving as president of the Committee for a Better New Orleans from 2004 through 2020. He has observed, supported and participated in entrepreneurial ventures at the street, neighborhood, nonprofit, micro- and macro-business levels.
