What Does a Corporate Lawyer Do?
There are several types of corporate lawyers. For some, their job is in-house, as they advise corporate bosses of specific issues related to corporate law, from initial public offerings to merger and acquisition processes, harassment suits, and liability matters on a daily basis. A second type of corporate lawyer is a consultant, offering business advice to companies of all sizes. Of all attorney specialties, corporate lawyers are most aligned with the business world, and corporate lawyers typically need to be just as comfortable in a boardroom as in a courtroom. Here is a closer look at what corporate lawyers do.
What Is a Corporate Lawyer?
A corporate lawyer deals mainly in business transactions and contracts. These lawyers specialize in multiple aspects of the law and how it pertains to business operations. This can include contract negotiations, securities and tax law, code compliance, intellectual property, bankruptcy, financial reporting, and a whole host of other specializations.
The corporate lawyer tends to be more collaborative than trial lawyers. They often work with lawyers from other companies to broker deals and ensure that everyone is complying with all local, state and federal applicable laws. Corporate lawyers work closely with their clients to ensure that business risks are minimized and corporate functions conform to the law on every level.
Corporate lawyers also study and draft contracts, facilitate mergers, and handle human resources issues when they reach the judicial level. While television shows often portray corporate lawyers as always in court or out rubbing elbows with the social elite, a vast portion of a corporate lawyer’s job involves studying laws and drafting necessary documents. While corporate lawyers do enjoy the benefits of specializing in commerce, there also is a great deal of hard work involved.
Corporate Lawyers and Small Businesses
You don’t need to be a corporate giant to take advantage of a corporate attorney. For example, a corporate attorney can provide valuable advice for an entrepreneur ready to open a small business. The choice of the best legal entity for a business is crucial, and corporate lawyers have the ability to consider issues such as simplicity, tax consequences and liability. There are four basic choices:
- Sole proprietorship. This is the most common choice for new companies, particularly for home-based businesses in which a single person offers a service to others. A sole proprietorship is not the only choice an individual starting a company can make – a limited liability corporation is another possibility. However, a corporate lawyer can explain and compare the benefits. The sole proprietorship is the easiest of the legal formats to set up and maintain over time. That’s a big advantage for many small companies worried about finances and other issues. From a liability standpoint, there is no way to separate you and your sole proprietorship. If you are sued, all of your personal assets are at risk.
- Partnership. The partnership indicates there is more than one owner, but as a legal entity, there is no separation of liability from the company and the partners. There are some other benefits to partnerships – for example, it’s possible to create guaranteed payments for a partner, and taxes are generally paid quarterly. There are general and limited partners. An investor who wanted to share in the company’s profits but not worry with the day-to-day details is a limited partner. The rights and limits on limited partners are generally spelled out in a partnership agreement that can be drafted by a corporate attorney.
- Corporation. Setting up a corporation is a much more complicated process than either the sole proprietorship or partnership, whether the choice is a C-Corp or an S-Corp. C-Corps require that taxes be paid on profits. C-Corps also must pay taxes on the money paid out to shareholders. S-Corps are similar but allow the profits of the company to pass through to the individual owners. That means there is no separate tax on the corporation. One advantage of both corporation types is that they exist in perpetuity. Even if one or all owners die, their stock can be transferred to others and the corporation continues.
- Limited Liability Corporation. What happens if your young business is hit with a big lawsuit shortly after opening for business? In a sole proprietorship or partnership, the owner remains liable for the company. A key feature in an LLC is that profits and losses pass through to the members – all members of an LLC are considered owners. While corporations have limited liability, there is no requirement for LLC’s to have board meetings and there is no double taxation concern, seen with C-Corps.
Other Ways to Benefit from a Corporate Lawyer
Getting advice to choose the legal entity for a new company is a benefit that corporate lawyers provide to all entrepreneurs. There are many other ways in which a corporate attorney can help a company, depending on the industry involved and the particular issue. Employment agreements, exit strategies and contracts are fairly common examples of areas in which corporate lawyers can assist a wide range of businesses.
- Employment agreement. In some industries, particularly those in which a high level of technology is involved, new workers may learn the trade secrets that allow their new company to be successful. That becomes a concern when the worker leaves the company. An employment agreement can include a non-disclosure clause or a non-compete clause so a departing employee can’t deliver all of the company’s secrets to a competitor.
- Exit strategies. This is often an issue with small companies. If an owner or partner dies or leaves the company, how will that business continue? In some cases that means including buy-back agreements for all partners or owners. That agreement sets out a procedure and price for the owner to be compensated if he or she ever leaves the company.
- Contracts, leases. Interested in expanding your business or perhaps taking over another company? An experienced corporate attorney can ensure your company’s best interests are represented in the contract that outlines the rights and benefits for both parties. Also, if the issue is a real estate purchase or lease, a corporate attorney will know to determine if there are any zoning or environmental issues that should be investigated before moving forward.