Legal action can be catastrophic for a start-up or SME. When you add up lawyers’ fees, court fees, damages and lost management time, the loser can be on the hook for hundreds of thousands of pounds of losses, sometimes more. Even if you win, the victory may be pyrrhic – for you if not for your lawyers.
So read this list, and you might just save your business.
Trading and commerce
#1 Ensure that all of your products are of at least satisfactory quality, fit for purpose, corresponding with descriptions and samples, and safe.
#2 Meet any regulatory requirements relating to your products (such as CE marking) and include required warnings.
#3 Provide all of your services with at least reasonable care and skill.
#4 Draw up some standard terms and conditions covering each area of your business.
#5 Make sure that your terms and conditions are properly incorporated into your contracts using a defined contracting process.
#6 Ensure that all your contractual documents include appropriate and preferably enforceable limits of liability.
#7 If practicable, do identity checks on customers and suppliers before entering into contracts.
#8 Perform credit checks on your customers who get significant credit, and suppliers who are paid in advance.
#9 Ask for references.
#10 Always review supplier terms and conditions, even if you won’t get the chance to negotiate them.
#11 Employ an experienced lawyer to write your standard terms and conditions.
#12 Consider asking your lawyer to review supplier terms and conditions.
#13 If you use commercial agents, ensure you understand the implications of the commercial agents regulations.
#14 Keep copies of all contracts you enter into, even those on the suppliers’ standard terms and conditions.
#15 Ask a company lawyer and an accountant to advise you on the best structure for your business.
#16 Think about running your business through a limited liability entity, such as a Ltd company.
#17 Ensure you have a comprehensive written agreement (e.g. a shareholders agreement or partnership agreement) with your business partners about your rights and responsibilities.
#18 Arrange appropriate legal protections for those with a minority interest in the business.
#19 Ensure non-director investors and sleeping partners are also appropriately protected.
#20 Where ownership is split 50/50, consider how deadlock will be resolved if at all.
#21 Arrange the businesses’ affairs so that there is a clear distinction between company/partnership property, and the property of individual directors/partners.
#22 Agree what each partner or director will invest in terms of time, as well as in terms of money.
#23 Be sure to follow the statutory rules in relation to any share issues, buy-backs and other dealings in shares.
#24 Keep your regulatory filings up-to-date.
#25 Appoint an accountant to advise on taxation, and prepare accounts and file your tax returns.
#26 Make sure you have properly drafted employment contracts, reflecting the current law and the nature of your business.
#27 Institute fair and workable policies and procedures to govern the various non-contractual aspects of employee relations, e.g. using a comprehensive staff handbook.
#28 Document any side agreements with employees, especially those concerning money: bonuses, commission payments and deferred compensation.
#29 Ensure you meet your obligations to properly consider requests for flexible working.
#30 Don’t discriminate on the basis of age, race, sexual orientation, religion, belief or disability.
#31 Apply disciplinary processes consistently.
#32 Follow a fair process when terminating a contract of employment.
#33 Provide a safe, healthy working environment.
#34 Draw a clear line between employees on the one hand, and sub-contractors on the other, and ensure that all your personnel are demonstrably on one side or the other.
#35 Understand the implications of your occupation of your business premises, whether as owner, tenant or licensee.
#36 Know whether your leases are inside or outside 1954 Landlord and Tenant Act: do you or your tenants have security of tenure.
#37 If you are a tenant, understand your obligations in relation to dilapidations, keep records of the property’s condition, and generally take care of the property.
#38 Generally, understand and comply with the covenants in any lease.
#39 Know whether your lease includes a rent review clause, and how this clause will operate.
#40 Find out if consent is needed for alterations before signing a lease, or at least before making any alterations.
#41 Again, find out if alienation is permitted under a lease – whether by way of assignment or under-letting – before signing.
#42 Diarise break clauses to avoid nasty surprises.
#43 If a tenant of yours defaults under a lease, ensure that the default is dealt with properly.
#44 Be aware of how planning law and building regulations may affect your property?
#45 Don’t make untrue or misleading or inaccurate claims in marketing materials or on packaging.
#46 Be prepared to give evidential support to any claims in marketing materials or on packaging.
#47 Don’t unfairly denigrate competitors, or the products or services of competitors.
#48 Study the CAP Code, and ensure your marketing programmes comply.
#49 Get consent for any marketing emails you send, and include all the required information in each marketing email.
Websites and the internet
#50 Institute an IT usage and security policy for staff.
#51 Incorporate terms and conditions of use on your website.
#52 If you sell anything through your website, you should have terms and conditions governing the contract of sale, and potentially a delivery policy and a returns policy, on the site.
#53 Know whether you are providing an “information society service” – and if you are comply with the disclosure and process requirements of the ecommerce regulations.
#54 If you are selling to consumers via a website, ensure that you comply with the distance selling regulations.
#55 If you allow uses to publish material on your website, decide how you will mitigate any risk you may have as a publisher of that material.
#57 Get consent for the use of web cookies and similar technologies.
Ideas, inventions and creations
#58 Check that your business name and logo don’t trespass on anyone else’s prior registered or unregistered trade mark rights.
#59 Register trade marks for your name and logo.
#60 Consider using a trade mark attorney or “soft” IP solicitor for the above two actions.
#61 Keep inventions confidential for as long as possible.
#62 Consider protecting any invention that you make with patents.
#63 Check that your inventions don’t contravene the claims of any prior patent or application.
#64 Take advice from a patent attorney on the above three points.
#65 Consider protecting any designs you produce with registered design rights.
#66 Get permission before you use others’ copyright materials.
#67 Include a copyright notice on all your published copyright materials (e.g. written and graphical works).
#68 Register your domain name early.
#69 Do some defensive domain name registrations, covering non-core TLDs and name variations.
#70 Try to buy any domain names that pre-date and reflect your trade mark.
#71 Use a decent non disclosure agreement when disclosing confidential information.
#72 Include good and site-specific T&Cs covering website use, as well as website sales where appropriate.
#73 Ensure that owner/director/partner IP is where appropriate assigned or licensed to the business.
Information and privacy
#74 Only collect personal data that you need, and delete it if you don’t need it any more.
#75 Store personal data securely, and sensitive personal data very securely.
#76 Include data protection clauses in contracts that involve the transfer of personal data.
#77 If you transfer personal data outside of the EEA, make sure that you do so on one of the permitted bases.
#78 Understand what a subject access request is, and comply if you receive one.
#79 Don’t publish or distribute others’ personal or private information unless you know that you have a legal basis to do so.
#80 Know what your market or markets are for the purpose of competition law.
#81 Don’t try to impose fixed or minimum resale prices.
#82 Don’t bet part of a cartel or otherwise collude with your competitors to the detriment of market competition.
#83 If you are dominant in a particular marketplace, don’t abuse that dominance.
#84 If your agreements fall within the territory of a block exemption, ensure that they meet the relevant requirements.
#85 Have non-compete clauses in your contracts checked by a good commercial lawyer.
#82 If you provide services, get a good professional indemnity insurance policy.
#83 If you supply products, get a good product liability insurance policy.
#84 In either case, get a good public liability insurance policy.
#85 If you have any employees, ensure that you have employee liability cover.
#86 If your business is a company, consider directors’ liability insurance.
#87 If you are in a regulated industry (e.g. financial services, estate agency, pharmaceuticals) become familiar with the regulatory environment.
#88 Keep up-to-date with changes in the law affecting your business.
#89 Choose your lawyers very carefully, preferably on the recommendation of other lawyers.
#90 If it is commercially justified, consider appointing an in-house counsel, whether full time or part time.
#91 Be careful with documents and information that you find on the internet – particularly if the author/source is not clear or not respectable.
#92 Have your old contractual documents review and renewed once every few years.
#93 Don’t assume that documentation used by a competitor is kosher.
#94 Train your personnel in the legal issues that affect them in their day-to-day roles.
#95 Get early legal advice on important business decisions.
#96 Don’t ignore letter of claim or other legal problem, hoping it will go away.
#97 Treat all of your personnel, customers, suppliers and business partners well – more nicely than they deserve to be treated if possible.
#98 Don’t treat legal information as legal advice.
#99 Despite everything else I’ve said, don’t be scared of litigation.
#100 Don’t treat this list as comprehensive.
#101 Don’t complain if your lawyer splits an infinitive.
Feel free to add any more ideas you have using the comments box below.
With thanks to Peter Beisty at mpm Legal for help with the section on employment, Mark Ellis-Jones of Pritchard Edwards for help with the section on property law and Matthew Cunningham of Waterfront Solicitors with help on the company section. Needless to say, any stupidities remain mine.