Business lawyers are necessary to help in the drafting of documents to support many of the day-to-day transactions common in a corporate environment. Facilitation of corporate transactions is a central component of a business lawyer’s job. Corporate transactions must be carried out correctly in order to assure that both parties fulfilled the terms of the transaction, and did so without incurring any unwanted burden or liability. In this article, we’ll outline some key reasons why you need a business lawyer for corporate transactions, including to ensure the ongoing profitability of the company, to facilitate transactions quickly while providing insight into areas of risk, and to provide a wide range of support and analysis throughout the transaction process.
Corporations and Corporate Law
Corporations are legal entities created under the laws of the state in which they incorporate. As such, corporate law in the state of incorporation creates the fundamental legal framework governing corporate activities. There are notable exceptions to this, including the Securities Act of 1933, the Securities Exchange Act of 1934, the Sarbanes-Oxley Act of 2002, and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Federal intervention into corporate affairs has largely occurred to impose more stringent regulations on corporate affairs than state law provided.
Many states choose to model corporate law on the Model Business Corporation Act, which is published and updated by the American Bar Association and can be found in full here. Many states have chosen to adopt the Model Business Corporation Act in part or in full. The state legislature can choose which parts of the Model Business Corporation act to fold into its corporate law structure. Due to variations in state corporate law, some states are seen as more advantageous for corporations than others. The choice of which state in which to form a business formation determines the body of law that governs that corporation, including expectations related to conduct, how and when the corporation can transfer assets, and a variety of other facets of every day business.
The Role of Business Lawyers in Corporate Transactions
The body of law that governs corporations intersects with law related to contracts and commercial transactions in important ways. Understanding which regulation, statute, or body of law governs a particular action or transaction for a corporation is a central duty of a business litigation and corporate transactions law firm. Corporate attorneys must have extensive experience with the law that governs corporations in order to be effective at their jobs. Business litigation lawyers typically specialize in certain areas of the law. For example, one business litigation lawyer may specialize in contract law, while another business litigation lawyer specializes in mergers and acquisitions.
The short answer as to whether you need an attorney for corporate transactions is “yes”. Business litigation lawyers fulfill an important role in corporate transactions, and there are a number of crucial reasons why you should use a lawyer to complete your transactions. To illustrate this, let’s start by outlining the common elements of agreements related to corporate transactions. Common forms of transactions for corporations involve the sale of goods and services, supply arrangements, marketing agreements, and distribution or resale agreements. Each transaction has some basic characteristics that are consistent across the wide variety of corporate transactions in which a business lawyer may be involved. The transaction must define the scope of the agreement, the responsibilities of the parties involved, and the conditions that must be met by each party for the transaction to be considered valid. Business lawyers must evaluate the transaction to ensure that regulatory and legal requirements are met. This helps to limit their client from unwanted legal exposure and business disputes.
A core function of a business litigation attorney is to carry out corporate transactions. During the course of corporate transactions, the attorney must ensure that risk is appropriately allocated to both parties in the transaction. This requires an inherently high attention to detail, as corporate transactions can be extremely complex in both form and substance.
Business lawyers specializing in corporate transactions can offer a number of advantages and legal services to their business clients beyond simply drawing up the form of a transaction. Effective business lawyers are business-minded and will work to understand the core mission objectives of the corporation and the associated risks. Business lawyers will be able to offer insight and advice during the negotiation process by recognizing possible risks to their client. By approaching business transactions from a legal perspective, business attorneys may determine when a transaction is unfavorable to their client. Importantly, a business litigation attorney must ensure that the form and substance of a transaction avoid any unwanted liability for their client. For this reason, each detail and word in a transaction must be carefully considered and examined to ensure that no errors have been made.
Business attorneys are an especially important part of corporate transactions dealing with the movement of assets. In particular, the buying and selling of business assets is a key area where a business attorney can ensure the transaction goes smoothly. A business attorney will be able to verify that the terms of the deal meet regulatory and legal requirements. He or she will also be able to make sure that the client doesn’t take on unwanted liability through a poorly crafted, or misleading, transaction. Business attorneys may ensure that all relevant paperwork has been filed, and that both parties in the transaction are on the same page.
Business attorneys provide a number of other services that add value for corporate clients, including the recognition of risks associated with corporate operations and objectives.
It is much easier, and cheaper, to avoid litigation before it occurs. Skilled business attorneys are adept at recognizing the risks their clients face and suggesting ways to minimize exposure to those risks.
To find out how a business litigation lawyer can improve your business transactions, contact an experienced Commercial and Business Litigation attorney at Bremer Whyte Brown & O’Meara LLP.