This is the next post in my series on the drafting of corporate bylaws and agreements for companies in Olympia & Tacoma, Washington. My last article discussed the need for a business to keep their corporate bylaws up-to-date. Failing to keep your agreements up-to-date can have devastating results for your company. This can result in inabilities to raise needed capital, to bring in new partners or to expand into new areas, or to “force out” a problem member of the organization. By working with an experienced business law lawyer, you can help protect against these problems. In this article I will discuss another important topic – the potential problems with the use of “self help” company bylaws. If you require assistance, please contact our office to speak with an attorney.
It is not uncommon for entrepreneurs to use self-help forms from Legalzoom or a similar website when they are starting their business. The allure of these forms is understandable – they seem expedient and cost-effective, especially when compared with legal service fees. However, because such documents tend to take a “one size fits all” approach, they often don’t actually fit. This means, for example, that if you are a firm which deals with multiple types of intellectual property, a self-help agreement may not have provisions that would completely govern the distribution of your IP upon the breakup of your company. This can lead to difficulties and litigation down the road. Further, if you are seeking outside investment or anticipating an eventual acquisition, then generalized clauses about the handling of such matters may impede rather than facilitate this funding or acquisition.
While it is understandable that new companies avoid the costs associated with retaining an attorney, it is important to do a full cost-benefit analysis and consider the benefits of hiring counsel and the risks of not doing so. An attorney will work to understand your goals and long-term vision and will craft documents with that information in mind. This may help you anticipate and avoid issues you may not have considered. Such issues could impact your funding plan for your company and your day-to-day management and operations. Sometimes serious, but unexpected, issues can be fatal and lead to dissolution. Anticipating issues allows them to be prevented or mitigated in your operating agreements and bylaws. The issue spotting role of an attorney, which cannot be done by a self-help form, often outweighs the costs of retaining counsel.
If you are starting a business in Olympia or Tacoma, please contact my office today to speak with a business law attorney. I have extensive experience in drafting corporate bylaws and agreements and I will work to create a solution which best fits your needs. Our firm prides itself on providing the highest levels of service and we are ready to assist you. Our firm also serves the Thurston County cities of Lacey, Tumwater, and Yelm, the Pierce County cities of Puyallup, and Lakewood, the Lewis County cities of Centralia, Chehalis, the King County cities of Seattle, Auburn, Bellevue, Burien, and Federal Way, as well as other areas in Washington, including Grays Harbor, Mason, Cowlitz, and Pacific Counties.