How to Decide if You Need to Hire a Corporate Lawyer

I have a confession to make. When I went to law school, I had no idea if I wanted to actually be a lawyer.
What I knew is that I didn’t know what I wanted to do and that I needed an advanced degree (a story for another day). I took all the grad school tests – GMAT, GRE, LSAT (ok, not the MCAT) … I scored well on the LSAT, so I applied to some law schools. Okay, it was a little more thoughtful than that, but not much.

I knew I didn’t want to be a litigator. I hate litigation. Sometimes I help my Texas clients with mediation and working through disputes. Occasionally, I will file a lawsuit for them. But, I never intend to litigate a case to trial. We’ll get someone else to step in and handle all those briefs and motions and technical arguments – that’s not for me. My goal is keeping clients and myself OUT of litigation!

Early in law school, I heard people talking about corporate law. They used the term corporate lawyer as though it were the direct opposite of a litigator. I figured that’s what my future held – corporate law. If I don’t want to be a litigator, I must be destined to become a corporate lawyer. And, that’s basically how it happened.

What is a Corporate Lawyer?

“Corporate lawyer” is a term used more by lawyers than by clients. Large clients with big in-house legal budgets, the types of clients that use big law firms regularly, may be familiar with the term. Most small to medium-size businesses aren’t used to the term, which is often used confusingly as we’ll discuss in a moment.

In this context, “corporate” is essentially synonymous with “commercial” or “business.” When used by lawyers, it typically means a lawyer that works on business transactions – forming companies, helping them raise capital, merging them (Learn more on Mergers and Acquisitions Here) breaking them apart, creating joint ventures and other things that involve contracts and that happen outside the courtroom.

Confusion Over Labels – Business Lawyer, Corporate Lawyer, Lawyer vs. Attorney

Because most my clients aren’t initially familiar with the term corporate lawyer, I use the term “business lawyer” with clients and on this website. Confusingly, litigators – the type of attorneys who spend their time writing, arguing and defending lawsuits – may call themselves business litigators or corporate litigators. However, most litigators refer to themselves as “consumer litigators” or “commercial (business) litigators,” which keeps things a little clearer. Still, be aware you will see lawyers who call themselves business lawyers and they may do what I do and/or they may litigate. Generally, though, if you see the label business lawyer or corporate lawyer, it’s most likely a transactional-type attorney — someone who forms companies, creates contracts, moves assets around, helps clients buy or sell businesses, things of that sort.

Business Litigation Attorneys vs Transactional Attorneys

If you are searching for a lawyer to file or defend a lawsuit, include the word “litigator” in your search. If you are searching for someone that does transactional law (the things I do), try the words “business transaction lawyer” or “transactional business attorney.”

Also, when searching for a litigator, always search for one in the local area where you are going to file the lawsuit. Lawyers get paid (by you) to travel, so it doesn’t often make sense to have a litigator who isn’t in the county where the lawsuit will take place. Corporate lawyers, on the other hand, don’t necessarily have to be local. Lawyers are licensed under state law, although contract law is more nuanced, not always a matter of state law. I live in Austin, Texas and most of my clients are here or in Houston or Dallas. But, I have clients in other areas. Giving general legal advice to them is fine (in fairness, this issue is simpler for me to navigate because I am also licensed in Delaware and Delaware law drives a lot of transactional work). Some clients want their CPA and their business attorney to be close. If that’s not as big a deal to you, you may be fine working with a corporate lawyer that isn’t in your city. If you’re open to that, it’s good – it gives you more options to find the right fit, meaning you can search simply for “best business attorney” rather than “best business attorney Austin, Texas” or “best business attorney Houston, Texas.”

A few more words on how litigators are different than corporate transactional lawyers. Litigators step in when a transaction has gone wrong or when the company has done something wrong and the case is heading into litigation, i.e., someone is filing a lawsuit. In contrast, corporate attorneys steer clients along the “right” (oftentimes a complex determination) path when running their companies. Companies rely on their business transactional lawyers to guide them through deals and transactions, while protecting the company’s interests and advising of potential wrong steps.

As for the words attorney and lawyer, they mean the same thing. No difference.

Understanding Lawyer Specialties

If you are dealing with a tax audit or a highly complex merger with major tax implications, you need a tax specialist. Your corporate attorney can help you decide when you need a specialist and when you don’t.

If you are launching a company or venture, you rarely want to call a specialist first. Even if you are doing something where you know it may require a tax specialist, for example, the tax specialist will not generally have a lot of insight and perspective on the overall venture. The more complex the venture, the more need you may have for specialists, but also the more need you absolutely have for a corporate lawyer who can help you navigate how to put the whole thing together and figure out what to do. A specialist will only help you decide what to do regarding their particular area of the law. This can sometimes be confusing or lead you to divert an inordinate amount of your time and money into a niche area when there are many other pressing matters. Specialists usually refer to themselves by their specialty, e.g., a bankruptcy lawyer, an employment lawyer, etc. When you see that, you know they are not a corporate generalist.

To find a corporate generalist, go back to looking for a lawyer that uses the label corporate lawyer, business transactional lawyer or something similar. As if it weren’t confusing enough, you will find lawyers who calls themselves corporate lawyers or corporate transactional attorneys and who specialize in a transactional niche, such as mergers and acquisitions, securities law or, as you will often see these days (a new development compared to 20 years ago!), startups. You should think of these lawyers as generalists still, but with experience in a niche or an interest in attracting a certain type of client.

Deciding to Engage a Transactional Corporate Attorney

Every business needs a corporate lawyer. You don’t need to hire one in-house or spend tons of money on outside legal services, but you want a relationship with an experienced, trustworthy corporate attorney. A corporate attorney who understands your business will help you make good decisions around what to do and what not to do. Think of this person as a quarterback for your business — someone to spot issues and risks. They give legal advice to company management and draft legal documents (but not usually lawsuits).

Corporate lawyers understand business relationships and work with founders and management to help the company succeed through business-oriented strategies. They can be problem solvers throughout the life of a company – from initial founding documents to termination of the entity. There are times when you need a specialist – an employment law, bankruptcy law or tax law expert, for example. These are some of the areas where you will often find lawyers who practice only that specific type of law. For other areas where you are more likely to encounter specialists than generalists, look at the areas of the law where your state Board of Legal Specialization provides certification. In Texas, you can see that information here – http://www.tbls.org/specialtyareas.aspx.

The Type of Work Corporate Lawyers Do

As a business transactional lawyer, I spend a large amount of time advising clients on their day-to-day business operations, as well as drafting and negotiating legal contracts. Occasionally, I assist clients in avoiding litigation by working out solutions for failing deals or business relationships. We do this through mediation or other dispute resolution processes. A corporate lawyer tries to preemptively avoid problems by drafting solutions and protections into client documents. A well-prepared agreement will clearly and unambiguously define the rights and responsibilities of all parties, especially if the event something goes wrong.

Business lawyers work at law firms, have their own firms or work in-house as part of a company’s private legal team. As a corporate lawyer with my own firm, I draft contracts, facilitate mergers and acquisitions, help form companies, and help raise capital. Through performing these functions, a corporate attorney ensures compliance with legislation, regulation, statutes and policies. The attorney may even draft policies for the organizations. Most importantly, the corporate attorney advises companies on how to comply with rules and laws. Advice on duties and responsibilities of corporate officers, directors, and insiders is also part of the role of a corporate attorney.

Clients come to me when they need advice or have a problem. I listen to their issue and seek to solve their problem. Here are a few scenarios from clients I deal with frequently:

“I have this business idea, but I’m not sure where to go next.”

The key to any transaction is for the corporate lawyer to accurately understand the business idea. Before even legally registering an entity, a corporate lawyer needs to consider what structure best suits the client’s needs – a sole proprietorship, partnership, limited liability company, corporation (for-profit or nonprofit) or other type of entity.

A corporation can be incorporated in any state, so the client and attorney must weigh the costs and benefits of incorporation in potential states. Many larger companies incorporate in Delaware because the state provides tax benefits, low incorporation costs and favorable corporate governance regulations. However, the corporation must still register in any state where it conducts business. For a business with no plans of expansive growth, incorporating in their home state may be the best option.

For new ventures, administrative processes (such as issuance of stock and voting requirements) need to be established through documents a corporate lawyer drafts to comply with the governing state and federal securities laws. If a new entity failed to hire a lawyer and comply with regulations, the corporation and owners could be exposed to liability and fines. As a corporate lawyer, I advise the company managers, officers, founders, or partners on their fiduciary obligations. Again, the corporate lawyer is a company’s quarterback, helping spot issues and risk.

A business lawyer may also facilitate the startup process by drafting intellectual property assignments, stock purchase and vesting agreements, non-disclosure agreements (NDAs), independent contractor agreements, and/or necessary supply and services agreements.

“I need to expand my business through additional investments – either through family or outside investors.”

A corporate lawyer hears this and understands that the client needs money. While the client has only proposed two sources of funding, a corporate attorney could recommend additional avenues of funding and help give advice on the best option. Some of the following are considerations: Would bonds or loans be options? Is the end goal for the client to go public? Are the potential family members accredited investors?

To facilitate raising capital, the business attorney may help with convertible notes for friends and family, angel investor seed rounds, negotiating venture capital term sheets or stock purchase and grant agreements. In drafting these documents, the client and I work through the financing terms while ensuring regulatory compliance.

“I want to grow my firm and am looking to acquire/merge with this business.”

Most mergers and acquisitions require the assistance of a corporate lawyer throughout the process. Before buying or merging with a company, the client and corporate lawyer conduct due diligence to understand what exactly the buyer is buying, the liabilities assumed, contractual obligations and potential risks.

Based on the legal due diligence, a business attorney drafts and negotiates the merger documents, purchase and sale documents, bills of sale, consulting agreements and/or earn-outs. After “closing the deal,” I often consult on integration issues and give advice on post-closing rights and obligations.

Mergers and acquisitions (M&A) is one of the common areas of law where corporate generalists end up focusing. This doesn’t mean you need to hire a lawyer that calls herself an M&A lawyer. And, a general business transactional attorney may be the right fit for advising on the business you are buying or selling. However, M&A gets complex. Lawyers that like acquisitions and mergers and who are good at it, often end up doing a lot of it. That helps because the key in M&A law is knowing what you don’t know, i.e., spotting potential issues and things that haven’t been considered. Sometimes that’s tough to do before you reach a certain amount of knowledge, which is only acquired over time.

Creating Business Agreements

An experienced corporate lawyer has probably drafted and negotiated just about every type of business contract you can imagine. I feel comfortable creating:

  • Supply Agreements
  • Service Agreements
  • Commission Agreements
  • Non-disclosure Agreements
  • Asset Purchase Agreements
  • Stock Purchase Agreements
  • Merger Agreements
  • Stock Option Plans
  • Vesting Agreements
  • Leases,
  • Promissory Notes
  • Security Agreements
  • Earn out Agreements
  • Licensing Agreements
  • Settlement and Separation Agreements
  • SaaS Agreements … the list goes on.

Unless your business is very large or very complex, a corporate generalist is likely the right person for creating your contracts. There are times when I feel it’s helpful to bring a specialist in to create a contract. There are lawyers who spend their entire career dealing with intellectual property licensing. Is that the right lawyer for you to call first? Maybe. A good corporate lawyer can help you make that decision, though, which is another reason to have a strong transactional attorney relationship in place.

Choosing the Right Type of Attorney for Your Situation

When deciding which type of lawyer you need to hire for your business needs, you will typically choose between a litigator and a corporate transactional lawyer. Some lawyers do both, but not most. If you know you are going to file or defend a lawsuit, hire a litigator.

When it comes to specialists, unless you know you clearly need a specialist because you are filing bankruptcy or have everything covered other than, for example, a niche tax or employment question, your first call should be to an attorney that handles business transactions – a corporate generalist.

Again, it’s best to think of your business lawyer (corporate attorney) as the quarterback of your legal team. Don’t worry, though, this doesn’t mean they only direct people to do work and that you need to pay for your corporate attorney to tell you who to hire to get things done. Corporate lawyers produce a lot of work product, which is exactly why they have a lot of perspective on the world. They understand how things work — how to take business deals and put them into necessary legal documents and how to navigate laws to get business done.

If you’re still a little fuzzy regarding the type of attorney you need, please get in touch. I am happy to help point you in the right direction. If it turns out (in your opinion and mine) the right direction is me, great. If not, that’s fine. I want to be helpful.

Author: Brett Cenkus

Brett Cenkus is a business attorney with 18+ years experience based in Austin, Texas. He has worked with a variety of businesses and has clients throughout Texas as well as many technology clients throughout the United States. Brett is a Harvard Law graduate with a sharply seasoned mind and an entrepreneurial heart. As a founder of 6 companies himself, he is especially passionate about helping startups succeed. In 2016 Brett was named the winner in the Individual category for RecognizeGood’s Ethics in Business & Community Award. He offers businesses solutions that are in sync with their culture, goals and values. You can learn more about Brett by visiting the About page on this website.

2021-08-11T10:40:57-06:00