A good fraction of small businesses in Nigeria don't consult lawyers before starting their businesses, mainly because it's a service many people consider expensive. You are liable to many risks as a business owner, from contract fraud to fraudulent rental agreements and business partnerships. And so, to disregard the importance of legal advice is reckless.
We can't possibly tell you legal advice and consultation is essential to small businesses without bidding the question;
"Why do small businesses need a lawyer?"
We had a chat with Nigerian Commercial Lawyer Koforowola Toriola with over 5 years of practising experience to give us some insight into what she does in her job, how it helps businesses and general advice for small businesses.
How important would you say obtaining good legal advice is from the outset as a business owner?
In my experience, I've found that many small businesses relegate the importance of legal advice to the bottom pit of their budgets; sometimes, it's even nonexistent in some small businesses' budgets.
However, many of these businesses don't realize that you need a lawyer from the beginning of your business venture. Therefore, the importance of obtaining good legal advice cannot be overemphasized, and a lawyer is more important to you than just helping you register your business or company.
How affordable is getting a piece of legal advice?
Everyone puts a price on their service. If you can't afford a particular lawyer doesn't mean you can't find the one you can't afford; in my opinion, it is affordable and accessible; if you check around well, you will get an affordable one.
When a shareholder or partnership agreement is in place as a small business owner, what to consider?
When starting a partnership, you should consider getting a lawyer; why? First, you need to help you put the business structure in place.
For instance, in a partnership agreement, many things need to be considered to govern the relationship among the partners and their agreement. Because the Federal Republic of Nigeria has laws in place with respect to establishing business partnerships. In executing a partnership agreement, there are some general considerations you should have in mind, like;
Capital contributions and profit ratio, the decision-making process, dissolution of the partnership etc
What red flags should a business owner look for when signing contracts?
Red flag 1- Unclear and ambiguous terms in the contract. If you do not understand the wordings of a contract, consult your lawyers.
The considerations may differ depending on the type of contract. For example, what to look out for in a rental contract might differ from loan or employee contracts, etc. This is why it is necessary to consult your lawyers. The red flag you should be looking out for varies depending on the field.
- High pressure and little time to review and sign
- Ownership of your work
- One way liability and indemnity clauses
- Non-Competition Agreements
- Contracted Parties (ensure it is the correct/proper party's authorized representative signing)
- Unreasonable penalty clauses
- Unclear Payment Terms
- Automatic renewal clauses
- Termination for convenience clauses
What legal advice can you give a business owner concerning obtaining funding to jumpstart my business?
I know I have said this a lot but get yourself a lawyer. Then ensuring you have a solid business plan alongside all the Incorporation documents is essential to show the business is well established and structured.
Make sure that you have complied with all regulatory compliance requirements, e.g. tax payments up to date. Finally, you should have written the agreements and all the terms depending on the type of funding obtained.
What are some of the terms and conditions of trading a business owner should focus on?
This may differ from business to business. But generally, payment terms, obligations of the parties to the contract, clear definition of the products or services to be provided, any guarantees or warranties to be offered business, governing law etc.
How can businesses protect their interests when negotiating with third parties, such as buying goods and services.
Get a lawyer – it is simple, honestly, for reasons I have stated earlier. Consider different options
- Don't take standard contracts at face value
- Communicate your preferences without any hesitation
How can business owners, especially creatives, protect their ideas and intellectual property?
I see this a lot where creative people get duped of their intellectual property when working with big-time lawyers. A lot of these things can be avoided if you have a lawyer looking after your interests. On your own, ensure you register your intellectual property. Many people don't know this but you can also include many specifications into your contracts with clients.
So, when entering into any contracts which possibly involve the use of rights or ideas, include IP protection clauses. If a client is also just in the preliminary stage of an idea, maybe you are brainstorming, you can ensure they sign a Non Disclosure Agreement and non-compete.
What legal tips would you give the average small business owner looking to employ new employees?
Put out a clear job description to ensure the employees know what they would be doing in their roles. Then make sure you execute employee contracts for all hires with clear terms on compensation, leave allowances, obligations, job roles, insurance, etc. Finally, consult a lawyer to understand what the law says are the employer's obligations.
These days businesses are so afraid of compliance and regulatory issues, what can they do?
Regulations change often and as a business owner, it's not your job to know when they do. Can you guess whose job it is? Yup, a lawyer. So, I can advise you to know your product and know your industry but the most important thing to do especially when you are playing in a space like this is to consult a lawyer