Top 5 Tips to Avoid Legal Mistakes During an Economic Downturn

July 19, 2011 - Legal Tips

Vanderpool, Frostick & Nishanian, P.C., Outlines Common Business Missteps in a Poor Economy

Businesses can suffer financially, particularly in an economic downturn, when they fail to understand legal missteps that can befall them.  Vanderpool, Frostick & Nishanian, P.C., suggests the following tips that can help avoid legal mistakes that businesses commonly make during an economic downturn.

1. Protect company business information prior to an employee’s termination – Many companies fail to proactively have employees sign agreements that protect their business information before a termination situation arises. It’s much more difficult to have employee’s agree to these terms upon termination.
2. Have employees sign non-compete agreements – Again, companies fail to have adequate non-compete agreements signed by their employees. They compromise their own company’s livelihood by not securing proper documentation.
3. Monitor company mortgage and account agreements – Companies can overlook the “fine print” in many account agreements, and therefore don’t foresee changes in account activity, putting themselves in a vulnerable situation when interest rates fluctuate or account terms change.
4. Collect payment from vendors regularly and timely – Companies can wait too long before filing suit to collect money from vendors, making it difficult to recoup monies owed to them. This can be a costly mistake, and easily remedied by managing past due account.
5. Keep track of loan agreements – Businesses should take time to review and manage loan agreements with their lending facility.

Last but certainly not least, businesses and corporations should not overlook the need to secure proper legal counsel before a financial crisis hits. Often companies try to save money by waiting to seek legal help until after the damage has been done, rather than being proactive to avoid legal problems before they occur. It is especially important in difficult economic times not to be “penny wise and pound foolish.”  A small sum invested for legal advice before entering into a legal transaction can avoid having to spend much greater amounts to solve legal problems after they occur.