Startups lacking legal foresightedness
Honestly, Start-ups are all about passion and risks. Entrepreneurs get support from investors, family, friends, and well-wishers to let them succeed. Entrepreneurs also put their heart and soul into the venture and don’t leave any stone unturned.
But, when it comes to daily risk management and legal issues Startups plays a very clever game and either doesn’t care or just keep avoiding the legal issues.
Persistent Risk Management and precaution are always better than a cure.
Who wants to think about the old boring Laws. Well, we all are lawyers in ourselves, we know what is best for us. Which is actually a seed of fatality and nothing but being unaware and unprepared for a greater loss which might be waiting just across.
90% of startup websites are just like a sitting duck, waiting for some issue to happen, very basic clauses like jurisdiction, law, ADR are not on the website.
Startups think about legal risk management is all about hiring an advocate for court hearings, well its cure and not a precaution. Risk Management shall be on every step, with every customer and vendor and even partners which 90% of startups fail to have.
Startups generally fail to understand a legal advisor and litigating advocate or having your own legal department. Well, Advisors only gives you pieces of advice and don’t involve himself in the outcome, its a pure advice, and you are of your own then. On the other hand, Litigating advocate is someone who bails you out from a situation, and then you are again on your own.
Having a legal department or employing a lawyer is not possible until and unless the company starts generating some handsome revenue, but the same is very crucial. Once a problem becomes a reality, costs also aggravate, which is much more when legal issues start cropping up. A common legal mistake made by entrepreneurs and start-up companies is little or no upfront legal planning.
The founders are sharp and they try to trick and bypass the situation just to avoid and ignore headaches down the road.
The emergence of new business models brings with it new sets of challenges and one of them seems to be legal battles. Conflicts are bound to encounter when two companies involve poaching each other’s supply side.
Having an in-house legal team is strategically important and essential for the stability of a venture.