PB Law Blog... Trusts and Stuff

Monday, October 23, 2017

Avoiding Business Mistakes: The Importance of Having a Savvy Legal Advocate in your Corner

Every business owner, at some point, must make decisions that will effectuate a change in the business and likely in the business owner’s personal life.  Although, it is ideal that the two remain separate, all too often, business decisions carry severe personal consequences.  With the right planning and representation, business owners can protect their personal life and business, while having the confidence to make sound decisions on behalf of both. 

I came across an article in the Huffington Post that discussed how Karen Neuberger, an entrepreneur, created a business that became quickly popular when it was featured on Oprah’s Favorite Things.  Neuberger started designing her own line of women's sleepwear in 1994.   Neuberger's line of pajamas were stylish, comfortable, and seemed to appeal to all of the right buyers, including Oprah herself.  However, when Neuberger received a large order in which she couldn’t fulfill with her own resources, she looked outward and made a deal with a friend who had the resources needed to fulfill the large order.  The two became business partners, and Neuberger’s friend insisted that he have control over the stocks in order for a deal to be made.  Neuberger agreed to the deal thus fulfilling her large order.

Karen made some major mistakes here.  She didn’t review the legal documents with her own lawyer, and instead used her friend’s lawyer, trusting that she would be getting sound advice.  Neuberger had faith that her new business partners's lawyer would be looking after her interests as well.  Sadly, Neuberger's failure to have her own counsel review the business documents causing a tumultuous sequence of events involving litigation between her and her new business partner.

After some time, a legal battle between Neuberger and her partner ensued ultimately causing Neuberger to lose her rights to her own brand.  Now, she cannot use her own name in connection with a business entity after being shut out. Read more about Neuberger’s story here.

This is an unfortunate example showing why it is so imperative, as a business owner, to retain and consult with your own lawyer!! Doing business with friends is common, and can work out to benefit all parties involved. However, keep in mind that as business owner, whether you are working with a partner or a group of partners, you need someone to advocate on your behalf, for the benefits of your interests. 

Having your own representation can:

  • Eliminate awkward and possibly confrontational situations;
  • Keep legal matters legal;
  • present your individual wishes and goals in a matter that is effectively researched and communicated professionally and separate from any personal relationship you may have with your partners;
  • Provide you with peace of mind knowing that you have someone who is advocating on your behalf; and
  • Provide a framework for how business decisions and procedures will be conducted, which add overall clarity to your business.

Also, lawyers can work collaboratively!  Yes, I know it seems inconceivable, but it’s a major part of the job! Attorneys regularly get together, representing their client’s interest, in the hopes of finding a commonality or an agreement that can work for everybody.  This allows you to run your business, keep your private affairs private, and allow your attorney to represent you on matters relating to the legal and administrative aspects of the business.

Being cautious by having your own attorney is not only smart, but a responsible way to run your business and will generate a higher likelihood of your business succeeding. Protect your livelihood and business by protecting your individual rights!


-by Laura Bown (Law Clerk/JD Candidate, 2018, Boyd School of Law, UNLV) with Tiffany Ballenger Floyd, Esq. (Nevada & California Estate Planning Attorney), Phillips Ballenger, PLLC

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