Why your Startup/Business needs a lawyer.
By Stanley Alieke, Esq.
When running a business or investing in a startup in a place like Nigeria where both the legal and political system is complex and filled with a lot of bureaucratic policies, you need to be extra careful and make sure you do everything by book in other not to encounter hitches that will ground your startup or budding business to a halt.
As a foreign investor funding a startup in Nigeria you definitely need a company lawyer that will lead you by hand and work you and the new business through the huddles of the never-ending Nigeria legal policies, statutes, and laws regulating the business and corporate world including the local government bye-laws of the area government where your startup is situate and also the state and federal laws regulating the industry you are in.
Even as an indigenous investor or startup owner in Nigeria, you surely need a lawyer especially if the startup is in fintech that is disrupting business lines and models that are heavily regulated by the regulatory authorities.
From the conception of the idea of the startup to the pre-contract and pre-incorporation to negotiation to incorporation and post incorporation to the contract stage to funding; you need a lawyer to vet and double check all these to make sure you don’t get burnt immediately or later in the future.
Some take home points on how a lawyer can help your startup and budding business, hence why your startup needs one.
From the conception of the idea of the business you are investing in, funding, or starting up, you need a lawyer to get the necessary registrations, certificates, and licenses that protect those ideas. Ideas are things of high value in the business world and it is classified as intellectual property hence why it is protected and guarded with jealousy. The lawyer would get necessary certificates that Protect your business’s technical know-how and ideas through trademarks, patent registrations, and copyright registrations. Intellectual Property Protection is key at the onset. Trademark, copyright, and Patent Registration should be done at the beginning of any business particularly if the startup is in the creative industry or in the industry where ideas are traded.
Therefore, if business ideas, trade secrets, and other intellectual properties are at the core of the business or the startup then you need a lawyer that will get the relevant registration that protects such properties of the intellect.
The lawyer will also help you protect the startup’s trade secrets by preparing appropriate confidentiality agreements and nondisclosure clauses between you the founder and the staff or employees of the company.
Some e-commerce store and fintech startup owners that float their businesses through websites do not even know that they can trademark their domain names as their startup intellectual property and they also do not know that websites can be registered as copyright, and every graphics, image, letters, color and every component of that site copyrighted as the intellectual property belonging to the company so as to legally protect it from copycats and intellectual property theft.
A startup lawyer can as well help you Incorporate and register the business/ company. According to Nigerian laws, a business or a startup which have not been duly incorporated with the corporate affairs commission will not yet be recognized as a statutory body or legal entity or be given the status of a legal entity. You as the founder will need a lawyer to help with the incorporation of the business and registering the business with the corporate affairs commission to make it a legal entity totally different from its owners.
The lawyer will know the right way to incorporate your startup. He can advise you by the nature or structure of your startup on how the business will rightly be incorporated either as a sole proprietorship, partnership (business name), or a Limited Liability Company (LLC/LTD).
I constantly run into business owners who by the nature and structure of their businesses the business ought to be incorporated as companies but was instead incorporated as business names and they end up spending extra money and wasting time to change the status of the business with the corporate affairs commission.
A competent startup lawyer can also help in registering the startup in foreign countries if the business is expanding to other jurisdictions and territories for operations.
Also, The startup lawyer will ensure that your business operations and activities are in compliance with laws, statutes, policies, and governmental procedures and regulations. There are enormous statutes and policies regulating Nigeria’s corporate world and ignorance of any of it will not excuse you as a startup founder or business owner if you breach any of those laws and that is why you need a lawyer.
A startup lawyer will assist with identifying the specific regulation for your business and advice on compliance.
Some company owners operating in Nigeria do not know that they are expected to get a certificate called Special Control Unit against Money Laundering (SCUML). This is one of the strict requirements enforced by financial institutions and the EFCC against business owners and in some instances your bank account will be frozen if you have not obtained the certificate. This is why you need a lawyer to advise you on how to comply with these requirements in order not to find yourself on a hot seat.
You need a lawyer as well to vet all correspondence and official documents coming in and going out of the confers of the company. The lawyer should review the proposed business plans, and contract bids, and review clauses and terms of the contract to make sure that the interest of the company is duly protected.
Also, your Lawyer will be able to draft the essential documents required to support your business’s digital presence or online marketing strategies if your business is carried out majorly in the digital world. For instance, you need a lawyer to draft up website terms and conditions, personal data collection and usage, etc.
Moreover, You as a founder need a lawyer to draft and specify the Shareholding of the founder(s) and draft the partnership agreement of the partners if the startup is a partnership.
Startup lawyers come up with the share structure of the founders and spell out the conditions for qualification. It is a known secret that founders/ investors have different agenda and different interests while funding or investing in a startup and each founder/ investor wants his individual interest to be fully protected. The Startup lawyer as a master in the craft can come up with agreements that will capture and protect the interests and sentiments of each investor and founder so as to avoid clashes that would warrant investors to pull out that could make the business park up.
Also, When many people form a company or establish a business, it’s best to understand and clearly specify the expectations of the founders and the assignment of each partner to avoid disagreements in the future. So a lawyer will draft the Founders agreement, shareholders agreement, specify the liabilities of partners, mode of partnership, types of partnership, what is expected of each partner, dividends sharing formula and agreement, percentage interest of every founder or partner, etc.
Most importantly, an incorporated startup/ business is deemed in law a separate legal entity hence, the startup is to be protected from the investors and even from the founder(s).
Also, as the founder of a startup, a lawyer will help in Protecting your personal assets from business liabilities. The lawyer will advise you on how best to protect your personal assets and the legal consequences of some contracts. You will want your business to be appropriately structured to protect your own personal, non-business assets.
A lawyer will also Advise you on approved advertisements and commercials formats in order not to run into trouble with the advertising regulating authorities. Some adverts are tagged offensive and prohibited to be projected to the public and any company which projects such adverts always get sanctioned and punished by the authorities and it does not matter if you are not aware that such adverts are prohibited. This is why you need a lawyer to guide you through so you don’t incur sanctions and punishments.
The lawyer will as well advise the company on the proper hire and fire policy which will be in compliance with labour act/laws and employment laws of Nigeria, draft company policies, draft rules and regulations, and handbook for staff and workers of the company.
If you are yet to hire or consult a lawyer for your startup or up-and-running business, you need to do that now to save your business from legal issues that will come up. To cap it up, Startup Lawyers do not only bring their legal expertise to the table but also their business experience having garnered enough experience from working with other startups.
Your startup(s), budding business, company do need some legal support and backup for them to scale up and expand.
Stanley Alieke is a legal practitioner based in Abuja.
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This work is published under the free legal awareness project of Sabi Law Foundation (www.SabiLaw.org) funded by the law firm of Bezaleel Chambers International (www.BezaleelChambers.com). The writer was not paid or charged any publishing fee. You too can support the legal awareness projects and programs of Sabi Law Foundation by donating to us. Donate here and get our unique appreciation certificate or memento.
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