I think it?s safe to say that no one actually enjoys going to the doctor for a checkup. Yet the benefits so far outweigh the negative that most of us, perhaps grudgingly, go. As Ben Franklin commented, ?an ounce of prevention is worth a pound of cure.? This adage rings equally true with a medical checkup as it does with an annual legal checkup for your business.
What is a legal checkup? It is a thorough review of your company?s records, policies, contracts, agreements, and procedures before any errors or omissions result in liability to your company, or its owners, directors or officers. Has your company filed the annual reports in the states in which it operates? Were shareholder votes documented and recorded? Do your contracts actually protect your company under the new laws? Are the new FMLA, ADA, and FLSA regulations incorporated into your policies? Are the new independent contractor laws reflected in your agreements? Do your insurance policies reflect accurately who the named insureds are, and are they up to date? These are only some of the questions that will be asked and answered during an annual legal checkup.
Why should you have a legal checkup? Simply put, because not having one is dangerous. It only takes one oversight to create an expensive, damaging and possibly embarrassing situation that the company has to fix, and fix fast. And if you wait until there is a problem to fix, the company will have little or no negotiating power. From a? practical standpoint, laws are enacted and amended and repealed daily. And every week the courts, from the United States Supreme Court down to your local state court, announce cases that interpret those laws, and change how employers are required to run their business, manage their employees, and enforce their policies.
Who needs an annual legal checkup? Every company, regardless of your industry, the size of your business or where you are located. Or maybe it?s more accurate to say, every company, because of ?your industry, the size of your business and where you are located.? Ignorance of the law is no defense. So if a new law or regulation was enacted that should have changed how you do business, your company is on the hook for it whether you know about it or not.
Almost every corporate emergency that I have seen over the years could have either been detected or fixed earlier by having a legal checkup. Like a medical checkup, it is not anyone?s favorite activity, but it will save the company money and reduce liability in the long run.
SMARTTIP: The earlier an annual legal checkup is performed, the less painful it is; potential issues are detected before they turn into problems, and in so doing, owners, officers and directors reduce their personal liability exposure.