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Speaking. Additional reading. Lawyers involvement in Managing a business entity
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SPEAKING
You are a starting businessman. You are creating your own company.
1. Decide which goods or services you will provide.
2. Which type of company is it going to be?
3. Give a name to your company
4. Make a structure of the company.
5. Define duties for all departments and members.
6. Make a kind of presentation to your group mates, telling them about
your company.
ADDITIONAL READING
LAWYERS INVOLVEMENT IN MANAGING A BUSINESS ENTITY
During the course of the lifetime of a business entity, many legal situation may be encountered which require the professional experience or assistance of a lawyer or legal professional.
One of the ways to have legal aid for the company is to invite an outside lawyer for the problems which have already appeared or are to appear in the nearest future. It will be very hard for the newcomer to handle with these problems on the spot and will cost much time and money for the company. Companies that use outside lawyers pay an hourly rate that covers not only the time of the attorney, but also the attorney’s offices, staff, supplies, insurance, and so on. (1) __________
On the other hand, many companies hire a legal advisor or establish their own in-house law department. The reasons for this include cost benefits, the need for preventive legal advice, careful observance of government regulation, the scrutiny of consumers and competitors. It has the advantage of being closer to and familiar with the company affairs. (2) _____________. Only when the case is too special or complicated the outside lawyer can be invited.
While hiring a lawyer, the employer considers the training base of the applicant. Usually it is a kind of law school where the lawyer receives generalized training which enables him to adapt to a wide range of tasks. The average person thinks that a qualified lawyer knows all laws by heart and often asks unexpected questions and wants an immediate answer. But in reality lawyers are versed in a great amount of legal principles and they know how to find the relevant law and to apply it to particular circumstances.
While studying in law schools the future lawyer obtains general training and professional skills that equip him for various specialized tasks. The most widely spread is the practice of counseling for the company or the client. The counselor should help the host to avoid possible legal problems, be imaginative, offer alternative actions and foresee the probable legal consequences. (3) ____________________.
Another role of the in-house lawyer is a kind of investigator, which means that he accumulates potentially useful information and then uses his data for the particular task. It concerns possible competitors, former clients, mass media information and so on. He has “to keep his hand on the pulse” in his special branch and to be ready to use his knowledge for the exact task.
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(4) ________________________. Contracts, corporate deeds, corporate instruments, securities registration statements are just a few of the documents that are commonly prepared by lawyers. Good drafting is important to avoid problems for the company.
A business lawyer must possess negotiating skills. The role of the negotiator is very like that of the advocate. The lawyer presents the client’s strongest arguments in order to achieve the best result. Successful negotiation often avoids costly suits, work stoppages, and other undesirable economic consequences.
Being an advocate, the lawyer is to represent the company’s interests. This may take place in a court, administrative or legislative body, or in another arena. The lawyer’s duty as an advocate is to present the facts and the law in the light most favorable to the client or the company. (5) _______________. This is the adversary system which helps the judge and other members of the court to consider all the arguments before arriving at a reasonable decision.
One of the most challenging areas of lawyers’ involvement in the company life is debtors and creditors relations, the refinancing and restructuring of a business entity through mergers and acquisitions, to insolvency and winding up.
A lawyer’s involvement in the legal aspects of debtors and creditors for a business entity are somewhat different from his/her involvement for a private individual. In the case of a private individual debtor, a lawyer may be required either to defend the debtor or act for a creditor in relation to:
· accuracy of the amount claimed;
· the entry of judgment against the debtor by the creditor;
· the registration of the judgment against the debtor’s property;
· proceedings for the sale of the property of the debtor to realize the amount of the judgment for the creditor.
In the case of business entities, there may be some similarities in a lawyer’s involvement, but the expertise and experience would be quite different, and the results may also have different consequences for the business entities compared to those of a private individual. In a partnership, for example, all partners are jointly and severally liable for all debts of a partnership to the full extent of their assets. If a partner gives a personal guarantee or a legal charge to a bank as security for a business debt, he/she should make sure that the bank accepts that they are only responsible for any debt incurred before the partnership is dissolved. (6) _____________. In effect, what this means is that partners with the most assets have the most to lose.
If one partner has had to pay a partnership debt, that partner has the right to sue other partners for their share of the debt. A lawyer may be involved in relation to the question as to whether a partnership actually exists. Usually if there is no written agreement, and two or more persons are carrying on business with goal of making a profit, a partnership may be deemed to be in existence. However, persons who are not partners in other business transactions, but share the profit of one transaction, can be regarded as partners for that transaction. If, for example, two lawyers, who are not partners, come together and are jointly retained to act in a case and they agree to share the profit from acting in the case, then they could be deemed to be partners as far as the case is concerned. So a partnership may be limited to one situation, but the rights and liabilities of partners are the same as those applying to ordinary partnerships.
(7) _________________. Unless directors have given personal guarantees, they are not liable for the company’s debts, so long as they run the company lawfully.
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