#150 The Biggest Mistake Business Owners Make With Legals
It is my passion to share with you important information on all things legal, so that you can set yourself up for success in business. In this episode, I’m talking about a topic that I believe is crucial for business owners to have an understanding around: properly tailored legal documents. The biggest mistake I see business owners make is either not having them, or not understanding how to utilise them well.
Today, I take you through the 3 main errors people make with their legals, leaving their businesses vulnerable to disputes, financial loss and liability issues:
NOT HAVING LEGAL DOCUMENTS IN PLACE
I sometimes have business owners reach out to me and say they just didn’t realise they needed to have legal documents in place. They’ve always done things on a handshake or relied on good faith. The truth is, they are plain lucky to not have ended up in hot water somewhere along the line. However, we know that anything can happen in business. If this is you, it’s high time you swiftly get set up with the help of a lawyer so things are watertight should an issue arise. You can rest easy knowing that it won’t even be a blip on the radar.
PUTTING TOGETHER YOUR OWN DOCUMENTS
I often come across business owners who have put something together by taking bits and pieces from others’ terms and conditions. Perhaps they’ve used a template, or just Googled what to include in their documents. While there’s no criticism here, I do know that there’s danger in setting your legals up this way. You don’t know if they’re up to date, relevant to your business or even compliant. As I’ve talked about before, legislation changes regularly and therefore your business may not be protected. I encourage you to reach out to a legal professional and ensure your documents are done the right way.
NOT KNOWING HOW TO USE LEGAL DOCUMENTS
Having properly tailored documents in place is one thing. But if you don't know how to use them, they're essentially useless. You're just as exposed as if you didn't have them at all. So believe it or not, your processes and systems around the legal documents that you have are just as important as the documents themselves. How is it that you onboard clients? How is it that you deliver your services? How do you issue your invoices, and when? These things need to be incorporated into your documents, and then into your processes and systems. Get the sequence of events right, and you’ll ensure you remain protected by your tailored terms and conditions.
If you need help getting your legals set up in the right way, I encourage you to reach out to me or any other legal professional you might know. Because as I alway say: prevention is better than cure.
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[00:00:00] Hello everyone. Welcome back to another episode of the Rise Up in Business podcast. If you're joining us for the first time, welcome. Thank you for tuning into this podcast. And if you're a long time listener, welcome back. So happy that you have chosen to pop me in your ears today. I'm going to talk today about something that comes up over and over and over again, and that is the mistakes that I see business owners make when it comes to their legals.
There are a lot of episodes on this podcast and I write a lot of material on the resources page on our website around the importance of legal documents, [00:01:00] why you need them, why it is that this is a passion of mine to share this information. Today though, I'm going to share with you the mistakes that I see business owners make when it comes to the legals. So if you've been listening to me for a while, or if you're familiar with my work, you'll know that I very much stand for prevention being better than cure in business. And the reason for that is because when it comes to what can go wrong in business, there is nothing I haven't seen. And I hand on heart say that, because I spent the first just over 12 years of my legal career in litigation and dispute resolution. So what that means is for that 12 years, just over 12 years, my time was spent acting for business owners who were suing someone else or being sued. Most of the time it was over money. And so they were in dispute resolution or litigation. So litigation means court, dispute resolution means just that, trying to resolve [00:02:00] disputes.
So over all of that time, much of what I saw could have been avoided. And I share that so openly and so frequently here and over on Instagram where I'm very active. But I share stories and I share with you the context so you know why it is that this has become a passion point for me and why it is that I'm determined to help educate business owners so that they understand exactly what it is that you need in your business and why and how to get it all done properly so that you can avoid being one of those clients that I acted for for more than a decade. That's why I do what I do. So I'm drawing from that experience and I'm drawing from the experience that I have running my own business and the previous law firm that I ran and acting for business owners.
So let's dive in. There are three main mistakes, three biggies, three big ones, when it comes to the mistakes business owners make when it [00:03:00] comes to legals. And the first two won't come as a surprise. The third one might, but they are not having any legal documents at all, or using templates or putting something together yourself or Googling or copying someone else's and three, not knowing how to use them when you do have them.
So I want to explain those to you so you can understand why I'm saying this and what I mean. So the first mistake that I see business owners make when it comes to their legals is they don't have them. So that can come about either because we're sticking our head in the sand and thinking, Oh gosh, it's all too complicated.
Legals, scary, overwhelming, expensive, off putting, but I'm not going to have them because it's not going to happen to me. And I just don't want to go there. That's one reason that I see business owners share with me that they don't have them. And the second is because they don't know. And let's be honest, we don't know what we don't know, and that's fine.
That's why I have this platform to share with you what it is you need to know, because I get it. We don't know what we don't know. When it comes [00:04:00] to legal documents, sometimes I have business owners reach out to me, and they've been trading, operating their beautiful business for 10, 20 years sometimes. And they say, I just didn't realise I needed these.
I've always done things on a handshake. I've always relied on good faith, or I just operate on the basis of trust. And those business owners have been fortunate or just plain lucky to have not ended up in hot water and to have not ended up in a tricky situation with a client where there's liability issues, payment issues, warranty issues, someone's being sued over negligence or whatever it might be.
They just haven't had that situation. So that's good that they haven't encountered that, but it's high time that we dive in and we do fairly swiftly to get things set up for them so that if anything did happen, they're protected. Often though clients will come along and they'll say to me, I'm in this tricky situation, Tracey. I've got this issue with an unhappy client or I've got this issue with payment, or I've got this refund request.
And sometimes they're really [00:05:00] hefty refund requests. What do I do? And then once I help dig them out of that hole that they've got themselves into, which is often unpleasant, it's not pleasant working with stressful situations for clients or when they're in situations where they really did think that they poured their heart and soul into a work with a client only to have this disgruntled client turn around later and make some sort of complaint or lodge some sort of application or claim against them.
But once we work through that and we sort that part out, we then sit down and work out what do we need to have in place here, depending on what your business is doing, what industry you're operating in, how you actually operate, what do we need to do here? Let's do it. Let's get it set up. So things are watertight so that next time an issue arises, you can deal with it really swiftly and it's not even a blip on the radar.
Because you've got your documents set up and your processes and systems in place. So that's a little bit of context around why I say the biggest mistake is not having them and how it [00:06:00] is that people end up not having them. And you might be listening to this and thinking, yeah, that's me. That's me, Tracey, because I don't have them because I didn't know I needed them, or I think it won't happen to me, or I don't know where to start, or the whole process is overwhelming, or I don't even know how to find a lawyer or approach a lawyer to get help, and I just don't know what to do.
Yes, you're not alone. If any of that's you, you're not alone. The best thing to do in that situation though, is not continue to think it won't happen to me, not continue to think I'm going to stick my head in the sand, this is all too hard. Tackle it head on, reach out either to us or to another lawyer that you know, or that you can work with.
Ask the questions, can you help me? What do I need? Get a plan in place, get it done. The second mistake that business owners make is putting something together themselves because they've seen how other people do it. And so they've been in an industry for many years and they've seen other people's terms and they've just taken bits and pieces from all of it and they've put them together in a document [00:07:00] and they're using that.
And no, there's no judgment and no criticism here. What I will say to that is though, when we know better, we do better. So if you're listening to this and this is resonating with you, because that's what you've done, no criticism, no judgment, but you now know better. So now is the time to reach out and get them done properly.
The reason that doesn't work is because you don't know what the documents are supposed to be doing. So we don't know what we don't know, but you don't know what the documents are supposed to be doing. So you don't know if they're going to protect you. You don't know if they're compliant with your particular industry or any specific legislation.
You don't know if they are up to date. There's lots of changes in the law regularly, uh, in relation to contracts in particular. There were changes in November last year. I've talked about that on here. Reach out if you want to know more, but there's been lots of changes. So you don't know if what you're putting together or if what you're copying from somebody else, because they seem really professional and they seem like they're really good business owners.
And I'm sure they know what they're doing. You don't know if those documents are okay, [00:08:00] current up to date, and you don't know if they work for your business. The big thing here, to have proper documents that work, they need to be tailored to how you do business. And everyone does business differently, as they should.
Everyone does business differently, which means everybody's documents need to be tailored accordingly. It's not one size fits all. So that's the second mistake. And the third mistake, and this is one that you probably weren't expecting, is once you've got your documents, you don't know how to use them.
Having Having documents in place, properly tailored documents in place, is one thing. But if you don't know how to use them, they're essentially useless and you're just as exposed as if you didn't have them at all. So believe it or not, your processes and systems around the legal documents that you have are just as important as the legal documents themselves.
How is it that you onboard clients? How is it that you deliver your services? How is it that you issue your invoices? And when? And when is payment required? How do you deal with scope creep? How do [00:09:00] you deal with variations? How many revisions do people get? All of those things are unique to you. They need to be incorporated into your documents, but then they need to be incorporated into your processes and systems.
It is no good having one thing in your terms and conditions. Let's take, for example, payment terms. I'm going to issue you with invoices at each of these milestones. That's what you say in your terms and conditions or your client service agreement or your design agreement, whatever you call it. But then once you get into it, you don't actually issue invoices in accordance with those milestones.
Either you issue them at different times or you forget, you issue them later. All of that causes a mess for you. And what it means is you're not using your documents properly because they're not consistent with your processes and systems. They need to be consistent because the second you start acting in a way that's not outlined in your terms and conditions or in a way that's inconsistent, you're in murky water [00:10:00] because you're fudging lines.
That's where things become blurred. That's when expectations are difficult to manage, and that's when business owners get into trouble. Payment terms is a really common one. Another one is variations in scope creep. And another one is how you're delivering the services and when, so you're doing it one way, but your documents say another way.
And when you're in a situation where you've just put something together yourself, or you've copied someone else's, it's not necessarily consistent with how you do business and you didn't take the time to sit down and read them and get to know the documents intimately, which you need to, if they're to serve you.
It means that you just don't know, and you're just hoping for the best. So if that's the case, you may as well not have them. The other really common scenario that I see is when people aren't issuing or business owners aren't issuing their client service agreement or their terms and conditions before the client chooses to engage them.
So there's a [00:11:00] really fine line here, with onboarding, issuing proposals and scope of work, saying yes, accepting, onboarding, depositing, invoices, all those sorts of things. They all need to be in the right order. So everything's issued at the right time because the law says if it's not, if it's not done in a particular way, in a particular sequence, if push comes to shove and you need to rely on those terms, there's every chance that they won't be enforceable because you didn't have the sequence right.
And that's a nuance. And this is something that not a lot of business owners know. And you wouldn't know if you were buying a template or if you were copying someone else's or putting something together from a Google search you did, or taking bits and pieces from other people's terms and conditions that you've seen. You wouldn't know anything about the importance of the nuance in the sequence.
So when someone comes to me and says, Hey, Tracey, I've got an issue here with a client who thought this was included, but it's not, or I've got an issue with a client who's not paying an invoice because they're unhappy about something, when I ask you, where's your terms? And they say, Oh, [00:12:00] sorry, look, I forgot to issue them this time.
Or yeah, here they are. Here's the emails. And I issued my terms to them after they'd signed on, they're not enforceable. Just in a very general broad brush way, just so you know, they're not enforceable. So if you want to be protected, you need to know how to use them. And it's really important to spend the time understanding the documents, understanding how they're going to integrate into your existing processes and systems. It doesn't need to be hard, but that's a mistake that I see bring business owners unstuck So they're the three biggest mistakes I see people make when it comes to legals. Not having any, having some that are inadequate, i. e. templates or copying someone else's or putting something together yourself. Or third, having something in place but not knowing how to use it. And as you can tell, all of that can be avoided.
It can all be avoided if you work with the right legal team or the right lawyer who can support you and share [00:13:00] with you and explain to you what you need, why you need it, how to do it. Here it is. This is what it means. Show me your processes and systems. Let's have a look at it. What processes have you got?
What CRM have you got? How do you issue your proposals and quotes? All of those things, having someone to work with to get all of that right on a really holistic level is what is going to set you up for success. And that's the point of difference often from business owners that come to me with an issue that they need help with from being a really seamless, straightforward process or being a really drawn out long and expensive process.
It's the front end stuff. So again, it'll come as no surprise to you, my friends that yes, that is how I operate. So supporting clients in that holistic way from go to woe, like I've just touched on, that is what we do. That's what sets us apart because that's a passion of ours and we like to take the time to support the client right from start to finish with this, to make sure everything's implemented in your business with your processes and [00:14:00] systems and that it works to set you up for success. So there you have it. That's what I wanted to share with you today. I hope that's been helpful. I hope that's been helpful. Not only as a refresher for you to bring back front and center, why you need these legals in place, but secondly, the biggest mistakes I see people make, why they make them and how they end up there.
And importantly, sharing with you how that can be avoided. As always. Thank you so much for listening. If any of this is resonating, if any of this is jumping out for you, and you're thinking to yourself, gosh, Tracey, we really need to have a conversation, please take this as a sign to reach out.
Please don't hesitate. You can contact us via the website. We're very active on Instagram. I respond to all the DM's on my Instagram. So reach out there as well, or send me an email. All the links you need are in the show notes and I would love to hear from you because that's what I'm here for. Thanks for joining me.
I'll catch you next week. [00:15:00]
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