Legal Assistance in Business

Legal Assistance in Business

Importance of legal assistance

When starting a business, it is essential to seek professional legal help. Usually, legal support is considered as a luxury unless the company is encountering a legal mess. In reality, legal aid is important, specifically at the startup phase of a new business. At this phase, businesses encounter various challenges in selecting the best entity type. Legal support can help the business navigate the entity requirements, the advantages, and debate on the best option in regards to the business future goals (James, 2019). The entity choice determines the future of the business, and therefore, it should fit long-term expectations. Legal support is not only necessary at the initial stage of a business. Effective legal help should add value throughout the business life.

Anti-compete employment contract

Every business has information that it considers vital and precious to its success. Restricting the employees from using this information after the end of their contract is essential for the protection of the business and the clients (Biashara et al., 2015). An ex-employee with the knowledge of the company’s activities can be an attractive asset to a competitor with the aim of invading upon the company’s market, and so is the case of Mr. Pang. However, employer can restrict use of the information within the organization and outside the organization through a restrictive covenant.

The restrictive covenant is clause in  contract that hinders  employees from competing with their ex-employer and prohibits the ex-employer from lobbying or dealing with the clients of the business for their self-interest. These restrictive covenants include, anti-compete promises, non-solicitation covenant, non-dealing covenant, and non-poaching covenant. For example, the ex-employer uses the anti-compete employment contract sue, Mr. Pang, after he was employed with the employer’s competitor. His employer fears that Mr. Pang might use the information of the business to benefit his competitor. However, Mr. Pang can challenge the claim by demanding for the signed copy of the anti-compete agreement. In addition, the court can factor the validity of his previous agreement when the agreement designed to protect the business interest.

Soliciting fellow employees

It is acceptable for the employee to resign and start their own business. The departing employee might decide to announce their new job or role to expand their business. While developing the business, the ex-employee may connect with other employees at the previous company. It is not an offense to communicate with the former team, but it is an offense to solicit the former colleagues or the customers of the old company. The solicitation is a violation of a business agreement known as Non-solicitation agreements. The agreement hinders the ex-employee from engaging in specific business-related conduct until a given period after the termination of the employment.  It also prevents the employee from soliciting other employees to quit after they resign. The agreement can be presented at any stage of the employment relationship. For instance, the employers might want the employees to sign the deal as one of the severance packages. Today, various businesses are using non-soliciting understanding while recruiting to prevent former employees from soliciting the existing employees.

The attorney-client privilege

The attorney-client privilege describes the confidential relationship between the attorney and their client. The connection is based on trust in that the clients confronting the attorney should be able to trust the attorney whose advice is needed (Sisk & Abbate, 2010). The attorney-client privilege means that the information shared privately with the lawyer seeking legal advice remains confidential. Therefore, the lawyer is legally prohibited from sharing or disclosing the information with other individuals without the client’s consent. The attorney-client privilege is extraordinary because it promotes ethical decision making. Although the attorney-client privilege is essential, the new rules established under the Sarbanes-Oxley challenges the confidential relationships of companies and the attorneys.  The Sarbanes-Oxley is a federal law that established advanced policies for the public company boards and management as well as the public accounting firms. The Sarbanes-Oxley offers protection for the snitches working for covered organizations in case they disclose the information which might violate the federal laws.

Forms of raising money

Starting a business needs a great deal of capital. Capital can take various types, such as human and labor capital, as well as economic capital. The traditional corporation form is a better way of raising money and calculating taxes. Debt and equity are a type of capital that corporations can use to raise capital. Debt capital, also known as debt funding, is a situation where the company borrows money and agrees to pay back at a given date. There are various types of debt used by companies. The major ones include loans and bonds.

In contrast, equity capital involves generating capital by selling some shares of the company. While the money is raised, the tax is also calculated to identify the expected interest. The traditional corporation forms of raising capital are essential because it helps the business to raise money as well as calculating taxes in the new business.

Part 2

California law

California law bans non-competition agreements preventing the employers from enforcing the contract even in critical circumstances such as the disclosure of confidential information. The law prohibits every restraint that might prevent individuals from engaging in lawful professions, trade, or businesses of any kind. Therefore, the law protects the employees from any abuse that might be influenced by the employer.

Protecting the business from unfair competition

Various laws protect businesses from unfair business practices. The courts have been challenging employers’ jurisdictions in terms of restricting unfair competition by ex-employees as well as protecting confidential trade information like in Ted’s case.  KGB sued Ted for wearing a chicken suit despite being an ex-employee (Downs, 1980). The station filed a petition accusing him of breach of employment contract, service infringement, and unfair competition. Even though KGB was granted a preliminary injunction, the court later exempts Ted stating that the orders restrain Ted’s right to pursue his calling. California law prohibits restraints that might hinder individuals from engaging in lawful business activities.

Non-compete laws

I believe that non-compete laws are fair and necessary for the business because individual employees might take the job of increasing their experience in another field. The employee might as well resign from the organization to start a similar business, which will influence unfair competition. However, it is essential to develop a non-compete contract that is fair to everyone. For example, specifying that the employees should avoid starting a similar business in the area or refrain from starting the business for at least two years. In addition, it will be fair if the employer also prohibits the employees from soliciting the customers after they resign from the business.

Reference

Biashara, N. D., Martin, K. J.m & Thomas, R. S. (2015). An empirical analysis of noncompetition clauses ad other restrictive post-employment covenants. Vand. L., Rev., 68, 1.

Down, K. C. ENTERTAINMENT LAW-AN INJUNCTION RESTRICTING AN ACTOR’S RIGHT OF PUBLICITY AND FIRST AMENDMENT RIGHT IS AGAINST PUBLIC POLICY- KGB, Inc. v. Giannoulas, 104 Cal. App. 3d 844, 164 Cal. Rptr.571 (1980).

James, M. (2019). Business Law. BVT Publishing

Sisk, G. C., &Abbate, P J.(2010). The Dynamic Attorney-client Privilege. Geo. J. Legal Ethics, 23,201.