Risk Management

Be smart but don’t cheat…

Posted on by thelegalknow

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There is a reason why mega successful businesses spend thousands, sometimes millions of pounds/dollars on legal advice. I cannot tell you the number of times that I have almost cried because a client has brought me a problem that could have easily been avoided IF legal advice had been sought in the first place. In the long term, getting proper legal advice could save you so much MONEY and isn’t that what it’s all about – MONEY? You know that saying, what’s worth doing at all is worth doing well…it’s said for a reason! I don’t feel good billing you for my time when it’s for an issue that really shouldn’t have ever become an issue!

Think of it this way, when you have a tooth ache you go to a dentist -you don’t pull out the tooth yourself. When you feel sick you go to a doctor you don’t diagnose yourself. SO, if you need a contract drafted, guess what, you DON’T do it yourself. You go to your lawyer! You should be focusing all your energy into your product/service/idea not struggling to draft a 30 page contract or represent yourself at Court.

So what am I saying? I’m saying be smart BUT don’t cheat.

I am a lawyer and it took me 6 years of training to qualify to be one (a 3 year degree, a 1 year professional practice qualification and a 2 year training contract at an international law firm in the City). You cannot read this blog and become a lawyer BUT you CAN read this blog and become legally smart so that when you seek proper legal advice you are not doing so blindly. You are firing out questions and demanding the best service possible!

It’s quite simple, do things properly at the outset and you will reap the rewards later.

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Who are you in business with?

Posted on by thelegalknow

Suspicious Package

Not all that glitters is gold, but sometimes if you want your business to grow you have to take risks, even if the glitter turns out to be coal. HOWEVER never risk who you do business with! It isn’t worth it. All it takes is one bad business partner or one bad supplier to tarnish your brand or disrupt your product/service/idea. This is why I advise my clients to always verify (investigate and confirm) the entities they contract with. When a company/person says they are something or they are someone NEVER take their word for it, always check them out yourself. Business is about money and money attracts all sorts of wannabe Warren Buffets with an abundance of international debt stowed away in their closets…behind the skeletons. Here are some simple checks that you can do for free/cheaply, to confirm the credentials of those you are in business with:

  1. Check their details on Companies House (or your country’s equivalent)- Companies House is a database of all companies and LLPs  incorporated in the UK, type in the company name or company number and you get a whole load of information for free just like that. You can see their previous company names, their registered office address, their directors’ details, whether the business is still active, when their accounts were filed (or due) and a history of its filed documents. For a few pounds you can even obtain their latest filed accounts and judge their progress for yourself!
  2. Search for disqualified directors – You can do this on the Companies House register or on the Insolvency Service register (look up your country’s equivalent), these registers will tell you if a director of a company has been banned or disqualified from being a director (if the name pops up REPORT them, they tried to play you).
  3. Check the bankruptcy and insolvency register to see if an INDIVIDUAL is bankrupt OR the register of insolvent companies to see if a company is insolvent (bust).
  4. Check their website – Does it look comprehensive? Are there any TESTIMONIALS from their clients? Does it show who is behind the business? What is their mission statement? Where are they based? Do they provide contact details?
  5. Go with your gut – Finally, what does your gut feeling tell you about the company/person? If you have any suspicions or you are uncomfortable dealing with the company/person, walk away and take your business elsewhere.

In the legal profession we call the above DUE DILIGENCE and it is a process we undergo to verify OUR OWN clients (although there are further, more thorough requirements, such as passport copies and knowing who the shareholders are etc). It is a good habit to get into. Even better, keep a record that you checked these companies/people out – if your business blows up and your lender requires an audit before increasing your loan, you will thank yourself that you kept some evidence of your good business practice.

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Filing for bankruptcy when you don’t have a cent!

Posted on by thelegalknow

thrid post

So I’m sure most of us have read that a certain famous rapper has filed for bankruptcy in the US. His lawyers are assuring the world that it’s just business as usual HOWEVER sadly that wouldn’t really be the case if you were made bankrupt in the UK. Here’s a quick post to clarify what bankruptcy means under UK law.

To be made bankrupt, a court has to issue a bankruptcy order against you. This can happen in 3 ways:

  • you apply to the court  because you are unable to pay your debts and want to declare yourself bankrupt;
  • your creditors (the people you owe money to) apply to make you bankrupt if you owe them £750 or more (yup as little as that); or
  • an insolvency practitioner applies to make you bankrupt because you broke the terms of your Individual Voluntary Arrangement (an agreement with your creditors to pay all or part of your debts, the insolvency practitioner manages the payments you make under the agreement).

If any of the above occurs, the Court will issue a bankruptcy order and the following will take place:

  • you will receive a copy of the bankruptcy order and may be interviewed about your situation (this helps the Court to determine what assets you have to pay your creditors);
  • your assets will be used to pay your debts (this could include your car, your income and your home although there are circumstances when assets are exempt, such as items of equipment which you need to use personally in your employment or business);
  • you will have to follow rules called ‘bankruptcy restrictions’ (these rules, amongst other things, stop you from borrowing more than £500 without telling the lender you’re bankrupt, acting as a director of a company, and creating, managing or promoting a company without the Court’s permission); and
  • your name and details will be published on a bankruptcy register called the ‘Individual Insolvency Register’.

After 12 months you’re usually released from your bankruptcy restrictions and debts. It seems grim but sometimes bankruptcy is a way for individuals to get their finances back on track. Bankruptcy only applies to individuals. Limited companies that can’t pay their creditors are ‘insolvent’ and can face compulsory liquidation which is a topic for another post.

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One thing every business should do!

Posted on by thelegalknow

second post

As you know, I’m a lawyer so I cannot give financial advice. Even the legal tips that I give in this blog cannot be relied on in place of the lawyer/client relationship (I’m merely here to inform you so that you are legally empowered and not legally enslaved). HOWEVER I have no caveat for what I’m about to tell you. There is one thing that every business should most certainly do and that is …..GET INSURANCE!

Lawyers try to help you achieve good results but we also consider from the outset what could go wrong and often there is no better solution than being able to fall back on a good old insurance policy. Have a think about what your business/start up/trade is most at risk from and take a considered look in the market to see if you can get an insurance policy to protect against that risk.

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