In the first part of this three part post, I explained some of the benefits of having a good strong relationship with my banker. Establishing a similar relationship with a business lawyer is also tremendously important.
Small business owners are often loathe to spend money on something they can do themselves. For me, I chose not to use a lawyer for a long time because I knew I was perfectly capable of handling the few contracts that Big Bang LLC would encounter. How tough could it be? Ha! A few years later we actually have two attorneys - one for intellectual property (IP) like our patent and the second for business needs like contracts, non-disclosure agreements, real estate, lawsuits, etc. I unfortunately wasted entirely too much money and time, and caused numerous problems for the business, by doing things myself first.
I don't recall which we hired first, business or IP, but they have both been invaluable. We initially went through a patent application process with an IP firm in the area that unfortunately did not specialize in technology IP. So, when their first patent search, which cost about $5,000.00 for just the search, came back with references to Microsoft Word documents and image scanning instead of HARD DRIVE IMAGING, I should have known to run the other way. Instead I tried to train them up on my product, and we filed a patent application that was of little value and severe expense.
When my general manager, Matthew Burger, came on board, he rightly insisted that we change over to an IP attorney with a sound background in technology - Thomas Sylke. Tom was justifiably mortified by what our other IP firm had done, and several months, and a trip to DC to meet with the patent office later, we actually had a patent in place that reflected the UIU software. The additional expense I added due to my novice move? About $20,000.00 wasted on the first firm. The potential risk associated with not getting the patent or not covering things correctly? Immense! So, while we are not like Microsoft, pumping out patent after patent, working with an expert like Tom was absolutely necessary.
Our other attorney, Jan Scott Pierce, is with the boutique business firm of Mawicke and Goisman, and handles all our business law issues. And like with the patent, I believed I could handle our legal contracts and I was beyond wrong. As an example, when we began selling our UIU software through a distributor, it was the distributor who brought the contract to the table. I reviewed it - everything seemed to make sense - and off we went. Imagine my surprise two years later when their attorney tried to claim they had a sixteen percent ownership in the UIU. WHAT?! At that point, I needed an attorney, and like before, Matthew steered us well to Jan.
Since that debacle, our Distribution Agreements and Reseller Agreements have been rewritten - this time by us. Every contract is reviewed, every End User License Agreement is analyzed by my lawyer. Why? Simple. As business owners we know what we mean, and we expect our customers and our vendors to understand all the terms and agree with us. Sadly, that's rarely the case. Anything can be interpreted incorrectly if it is not specifically spelled out, and that's what your attorney is for. His job is to think of all the ways something can be twisted or misinterpreted and make sure it's fully explained before any signature hits paper. It is worth every dollar.