Newark's Lesley Purveur, of Larken & Co: Now is the time to give your business a legal health check
As we start emerging from lockdown, we need to think about having a solid plan in place to ensure we are in the best position to face the future, writes Lesley Purveur, of Larken & Co.
A quick legal health check can be an invaluable way for getting you and your business in good shape to face the new normal.
It can prioritise areas that need attention, highlighting where costs savings could be made, and where strengths need to be focused.
It can also help identify areas of weakness and exposure to risk and potential liabilities.
Something that may have been right for you or your business at a time it was put in place may no longer be relevant to your needs.
Areas that should be typically covered include:
Shareholder agreements, partnership agreements and incorporation documents:
These should be updated following incorporation or where new shareholders or parties come on board or leave a business.
Out-of-date agreements can have unfortunate consequences and potentially lead to deadlock and acrimony.
With the right documentation in place, costly solutions and settlements can be avoided and the business able to move forward, preserving its finances.
Customer and key supplier contracts:
Dealings with key customers and suppliers should be on the best possible and enforceable terms to protect your business and to optimise debt collection options.
A review of existing terms may reveal opportunities for savings and growth and identify any vulnerabilities and over-dependency.
Reviewing and updating existing or putting in place new terms and conditions or written contracts will allow business to stay ahead.
A legal health check can also highlight areas where it may be sensible to diversify as businesses look at other avenues of revenue and income streams.
Employment law is ever-changing. Care should be taken to ensure employees have their employment obligations formalised, and to ensure compliance with all employment laws.
Identify key employees, examine terms and benefits, and if the necessary restrictive covenants are in place to protect your business. Gaps in employment and HR policies should be rectified and all employment terms, staff handbooks, grievance and disciplinary procedures should be up-to-date and correct.
If you are tied into a lease, a review can identify key areas for renegotiation.
Current times have been tough for both landlords and tenants, and landlords are keen to hold on to good tenants. This can be used as a bargaining tool to fix the rent for a longer period, extend the term, and agree any appropriate break clauses or permission for subletting if the property has become superfluous to needs.
Be aware of all break options and notices to terminate as it can be all too easy to miss a vital “trigger” date, which can result in significant financial consequence.
Where the business holds the freehold, spending time examining the terms of any property mortgage may highlight opportunities to explore the market for refinancing and more competitive terms.
Credit management and disputes:
Check procedures are in place, and are effective, so you are paid quickly and efficiently. Consider recovery action and enforcement to aid cash flow.
A review can also uncover any outstanding litigation, investigations, disputes or complaints, and offer you the opportunity of considering the best and most cost effective course of action to deal with these efficiently and with as little disruption to the business as possible.
A legal health check can help your business by offering you peace of mind that your company is compliant across the board, from employment contracts to legal business structures.
It will help dispel any liabilities, which could prove damaging or costly, and offer a fresh perspective on business operations which may have become unproductive.
After what has been a challenging year, we all need some peace of mind and a roadmap to a secure future.
For more information, contact Larken & Co on 01636 703333.