Do-It-Yourself Legal Agreements
I just got a new client that needs a forensic investigation, primarily because he had an inadequate shareholders’ agreement. It seems he and his partner wanted to save the initial legal fees and used something they found on a web search. Well, you know the simple expression: “Pay for it now or pay more later to fix it.” These partners will be paying much more, along with the consternation and uncertainty of the protracted legal process they will be subject to.
I believe the purpose of any legal agreement is to assert rights in the event the activity does not work out or a problem develops or one of the parties is unable to speak for themselves. Hopefully most agreements are never looked at after they are executed, and those for people unable to speak for themselves will be long delayed (such as with a will or trust).
There are numerous types of agreements and contracts businesses need. These provide clarity and define specific rights in times of distress and discord. Poorly drawn agreements do not accomplish this. My advice is to get it done right the first time. Go to a knowledgeable attorney, have a draft reviewed by your accountant for tax, valuation and business issues, and execute a contract that will reflect what you really want to accomplish…and protect. The best agreements occasionally have problems; the inadequate ones almost always cause problems. Do not do-it-yourself.
Even worse is neglecting to execute any agreement at all. When problems arise the dissonances and costs increase exponentially from the poorly drawn agreements. Disregarding sound practices is like going to a gun fight without a gun.
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