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When you first started your business, getting your legals sorted probably felt like something you could deal with later. Maybe you used a basic template, borrowed a contract from a friend, or relied on a handshake and good intentions because it felt easier, friendlier and more ‘you’.
That approach can work for a little while, especially when you’re doing small jobs, working with people you trust and figuring things out as you go. The problem is, businesses don’t stay still. Your offers evolve, your clients change, your team grows and suddenly the documents you started with are trying to hold up a business they were never designed for.
A contract can be ‘fine’ and still be wrong for where you are now. That’s usually how issues start: with small gaps that only show up once the business has momentum.
How To Tell If Your Business Has Outgrown Its Legals
Here are some clear signs it’s time to refresh your documents.
Client agreements. Your client agreement should match how you deliver your services today, not how you delivered them in year one. If you’ve added retainers, subscriptions, digital products or new deliverables, your agreement needs to reflect that. Clarity protects you from scope creep and protects the client from confusion.
Employment agreements. Workplace laws change and your obligations change as your team grows. Your employment agreements should keep pace with entitlements, policies and insurance requirements and they should set expectations from the start. You can be kind and still be clear, but your documents must protect the business.
Contractor arrangements. Contractors can drift into employee territory over time, especially if the working relationship changes. Regular reviews help you stay on top of classification, expectations and what the relationship actually looks like in practice, not just what you intended at the beginning.
Business partnerships. If you’ve brought on a partner or shareholder, you need documentation that reflects the reality of the arrangement. Misaligned expectations here can be brutal, because the stakes are higher, emotions run deeper and the fallout can touch every part of the business.
Intellectual property. As your business grows, your work becomes more valuable and so does your need to protect it. Be clear on whether you’re assigning IP to clients, licensing it for a specific purpose, or retaining ownership of your background IP (frameworks, methods and processes). If it’s not written clearly, you’re relying on assumptions.
Website terms and privacy policies. If your website has evolved, your website documents need to evolve too. New offers like digital products, subscriptions, lead magnets or online bookings can change what you collect, what you promise and what you’re responsible for. Your terms and privacy policy should match what you’re actually doing.
Contract reviews. Bigger clients usually come with bigger contracts and those contracts are rarely written for your benefit. Before you sign, make sure you understand the scope, deliverables, payment terms, risk clauses and what happens if things go wrong. A quick review can save you months of headaches later.
What To Do Next
Growth is exciting, but it can expose the weak spots in your foundations. If your documents feel out of step with how your business runs now, take that as your nudge. A legal health check isn’t about being dramatic or overcomplicating things. It’s about making sure your legals support the business you have today and the business you’re building next.
If you recognised yourself in any of the points above, start by pulling out your key documents and reading them with fresh eyes. If they no longer fit, it might be time to update them so you can keep growing with confidence.
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[00:00:47] Tracey: Has anyone ever told you that the contract that got you your first 10 clients in business could be the contract that loses you your biggest client? When you started your business, you used a template, you used an informal email, or even just an agreement. You wanted to feel approachable, casual. You didn't want to scare people off.
[00:01:07] Since then, though, you've grown. You have a team. You've got contractors. You deliver your services differently. You've got a bigger vision. The projects are bigger. The clients are bigger. And guess what? The legal documents that you've got, if any, no longer serve. This is exactly what happens when a business grows and the legal documents don't keep up, and it's not the sort of fun, sexy topic that business owners tend to carve out time to sit down and immerse themselves into.
[00:01:40] It's not the sort of thing that business owners sit down and go, "Great, I can't wait to think about the legal side of my business this morning when I've got so much else happening." The reality is it just doesn't happen. I'm gonna go through in this episode today why businesses outgrow their legals, what to look for so you can easily and quickly tell whether that's [00:02:00] you, and then what to do about it.
[00:02:02] I had a conversation with a client recently, and she came to me because she had a consulting agreement. She left corporate. She set up her own consulting business, and it was going great, but like all things, growth. She had a vision. She grew, and she wanted the bigger clients, and she wanted the bigger projects.
[00:02:21] She worked hard. From everything she was telling me, she was putting in the work in relation to networking, connections, having conversations, and she landed what she thought was going to be her first really big project. It was a $60,000 revenue project for her. However, when she sent her agreement, the client came back with a lot of questions, the two biggest areas being intellectual property and her warranties.
[00:02:44] She didn't understand either, which meant when she responded, they lost confidence in her ability to deliver a project of this size, and they left. They left the negotiation. They went elsewhere, and she lost the client. She lost the client because her documents didn't keep up with where her business was at.
[00:03:02] That's a classic story that I hear fairly frequently where a business has set up with all of the hopes and dreams and ambition and passion and energy and drive, and they've bootstrapped together, no judgment here, they've bootstrapped together their processes and their legal documents. Then the business grows.
[00:03:22] The business grows, the team grows, the vision grows, but the one thing that's not being given any attention because the business owner simply doesn't have the capacity and no one told them. No one told them that every step of the way, the legal documents need to be revisited. They're not set and forget.
[00:03:42] We've all heard the saying, "What got you here won't get you there," and that could not be truer when it comes to your legals. Let's talk about the warning signs. So as you're listening, you can do a mental audit of whether or not these apply to you, and if they [00:04:00] do, we can do something about it.
[00:04:02] The first thing to look at is your client agreement. Does your client agreement serve how you're delivering your client services now? Often, what happens is that the client agreements no longer match what's being delivered or how it's being delivered. So legally, what tends to happen is the smaller projects are usually a one-off project with the hope of repeat work for a business owner. They don't cover things like retainers, repeat work, add-ons. If the business evolves into a subscription offering, they don't cover subscriptions. They don't cover digital products and what happens to the IP when a business owner is sharing digital products with a business in the course of service delivery.
[00:04:49] Those are the sorts of areas that leave a business owner exposed when the documents haven't kept up, because the documents either don't cover those types of offerings, or what they do include is inconsistent with either the discussions that the parties have had or the intention that the parties have shared.
[00:05:08] From a business perspective, we want to make sure that there is no scope creep. We want to make sure that businesses aren't working for free. We want to make sure intellectual property is protected. We want to make sure the clients are really clear what they're getting, how they're getting it, what they're paying, and what they're paying for.
[00:05:23] So if the documents haven't kept up with what you're delivering and how you're delivering it, those areas aren't going to be covered. So question number one, do your client agreements reflect what you're offering and how you're offering it? Number one. The next one I want to talk about is teams. I want to talk about employees and contractors.
[00:05:41] So employees. Have your employment agreements kept up with changes to workplace laws, changes to the award, changes to insurance obligations, changes to leave entitlements, changes to the right to request conversion [00:06:00] from casual employment to a part-time or full-time arrangement. When we bring on our team members, particularly early on, we're excited and we want to be the flexible, easygoing, fun person to work with, someone who's really supportive of the team member.
[00:06:14] But the business lens says that we really need to be making decisions that are in the best interest of the business. Often, the short and brief friendly documents that we have with our very first employee no longer serve the business, if they ever did. So the question we have to ask ourself as business owners when it comes to our team is, do our employment agreements reflect the law as it is today, and do they reflect the way the employment arrangement is working today? Often things change over time, arrangements evolve and grow. It's important the documents keep up. So ask yourself that.
[00:06:50] The third is contractors. There have been so many changes on the legal landscape in relation to contractors and classifications over the recent years. Often what happens is a contractor comes on board with some type of service agreement which no longer serves the business or the contractor because it actually doesn't do anything to support either party to substantiate that genuine contractor arrangement.
[00:07:15] That's the first part. The second thing to say is sometimes when we engage contractors, the way we work with them evolves over time. So whilst we may have engaged them as a contractor at the beginning, it may be that because of the way the relationship's evolved, that the contractor has now stepped into the space of being an employee and we have to reclassify.
[00:07:36] That's a really important consideration that businesses need to turn their mind to regularly, because if that relationship does evolve and not only have the documents not kept up, but the relationship has changed into something else, it's actually not a defense to say later, "Oh, but I just didn't turn my mind to it. We've been too busy. I didn't realize. It wasn't intentional." So if there's a claim made against your business at Fair Work, for [00:08:00] example, seeking entitlements, it's not going to serve you to say, "Oh gosh, just didn't turn my mind to it. Sorry, it wasn't intentional," because the law doesn't work like that. So when we're talking about our contractors in our business, one, we have to make sure that the agreement reflects the current law and that it reflects how the arrangement's working.
[00:08:18] But two, we have to make sure that when we classify that contractor, that they actually are still genuinely an independent contractor, and that they haven't morphed into an employee without us realizing.
[00:08:30] The fourth warning sign I want to share is when the business has grown and the vision has changed or developed, and we now have a business partner, and we bandy around the term partner not realizing that it has ramifications at law because there is a traditional partnership arrangement where two parties are coming together for the purpose of carrying on a business to make a profit, or we're bringing somebody in as a shareholder to our business and we're treating them that way.
[00:08:59] We need to be really clear on the distinction. So the warning sign is have you brought on, air quotes, "a partner" in your business? If you have, what is the classification for that relationship and where is the documentation to support it? Either a traditional partnership agreement or most commonly a shareholder agreement if you've actually brought another shareholder into your business.
[00:09:24] This is one of the areas of disputes that can blow up a business so quickly it will make your head spin. I kid you not. When we're in partnership with somebody or we've, we've brought in a, a shareholder to our business, if we don't have crystal clear clarity on who's doing what, who's being paid what, what the expectations are, what the exit strategy is, and what we're going to do if misaligned expectations arise or if something goes wrong, very quickly the value of that business can plummet whilst the two parties, or sometimes more, are in dispute [00:10:00] focusing their time and energy on dealing with that because no one's focusing on the business or revenue-generating activities or driving the business forward.
[00:10:07] The value often plummets. Then we're in dispute about who wants to leave, why they want to leave, and what we're going to do about it, and sometimes a stalemate can be a position that parties get into very quickly with a significantly negative consequence to the business.
[00:10:22] So if you are in some form of partnership with somebody or others in your business, ask yourself, " Have we properly classified it and have we properly documented it?" Now, warning sign number five, let's talk about intellectual property. Often, as I shared at the beginning, intellectual property is a very live consideration.
[00:10:44] The business has grown, brand assets exist, there is collateral, there are frameworks, methodologies, concepts, designs. Whatever it is that you're creating or producing in your business needs to have clarity around who owns the IP in that and what they can and can't do with it. When a business starts, it's often not something that business owners think about too much at the beginning because they think, "I just want to focus on getting clients, and I'll come back to that later."
[00:11:13] However, like all things legal, it tends to fall to the bottom of the ever-revolving to-do list. It doesn't get the attention it deserves, which means the documentation that's being used later, whilst, usually inadequate as a whole, most certainly is inadequate when it comes to considering intellectual property. Intellectual property deserves your time and attention. It is an asset of the business, and if there's no clarity around who owns it and who can do what with it, or what the boundaries and guardrails are with that use, relationships can fracture, and the business can lose that asset very quickly. Most of the time, template documents, or the ones that I've seen, either have a blanket, "Yes, we assign the whole thing to you by way of intellectual property," Or it's [00:12:00] silent on dealing with intellectual property, which is just as bad. It's just as problematic for the business owner. So when we are considering the services that we're offering now, and how we're delivering them, and what we're producing, think about, does your client agreement deal with intellectual property in the way you intend?
[00:12:17] And by that I mean, are you intending to assign the intellectual property in full to the client once they've paid you, so that you therefore have no rights over it whatsoever? Or are you wanting to retain ownership of that intellectual property because it's your original creative work, and you're granting the client a license to use that intellectual property for a certain purpose?
[00:12:39] Boundaries and guardrails are really important and set both parties up for success here. So intellectual property is most certainly warning sign number five that your legals have outgrown where your business is. I've got two more. Your website terms and conditions and your privacy policy. These belong on your website.
[00:12:57] Often, clients reach out to me and say, "Look, I've bought a template," or, "I've just copied somebody else's," which means that the website T&Cs and the privacy policy haven't been developed to accommodate or suit how that business operates now. First of all, please don't copy. Please don't copy other people's documents.
[00:13:14] I know it happens. I just want to say here, again, please don't do that, because one, you don't know what you don't know, and you don't know if they're any good. Two, you're infringing their copyright. Don't do it. It's not worth it. You're a professional business owner with a professional business on a positive trajectory.
[00:13:31] It deserves love, care, attention, and respect. Therefore, having your legal documents tailored, including your website terms and conditions and your privacy policy, is really, really important. Your website terms and conditions need to reflect what's happening on your website now. And often through periods of growth, things change.
[00:13:49] We've now got PDF downloads for sale, or we now have a subscription, or I now have a mastermind that people can subscribe to, or I now have bookings where [00:14:00] people can book in for a session with me and they can pay. All of those types of things are fabulous signs of growth and I encourage it. But importantly, the terms and conditions need to align with what's happening on the website so that it's really clear what the website's doing, what it's offering, what users can do with it, what they can't, what you're promising with your content, what you're not.
[00:14:22] And then we need to make sure that each time we're selling something on the website, subscription, a booking, an e-product, whatever it might be, that there are Clickwrap purchase terms set up for the user or the consumer to tick, "I accept these terms and conditions," before they click Buy Now. Those purchase terms and conditions are very separate to the website terms and conditions, and this is a really common area of confusion for business owners because they think, "Huh, I'm just going to link to my website T's and C's at the checkout."
[00:14:52] So at the checkout we see something like, "By proceeding with this purchase, I agree to the website terms and conditions." So much wrong with that, but let me say legally, doesn't hold, means nothing. It's wrong. But secondly, from a business perspective, you're actually sending the message that either you don't know what needs to be here or that you don't care, and both are negative, not professional.
[00:15:15] It's not going to help build trust and credibility with your audience. So that's what I say about that. So with our website terms and conditions, ask yourself as you're listening, "Do they reflect what's happening on the website now?" Then ask yourself, "Am I selling anything on the website, and do I have sufficiently tailored Clickwrap terms and conditions for that?"
[00:15:37] And when it comes to privacy, the privacy law changes and it's in the midst of a very big overhaul at the moment, and you've probably heard me talk about that on several episodes of the podcast if you're a longtime listener. We need to make sure that the privacy policy is compliant with where the law is at now and that it addresses the points that are relevant to how you operate your business now, [00:16:00] particularly if you're using AI in your business. So that is warning sign number six. And then finally, number seven, contracts that you're entering into without having anyone review them. Ask yourself, when was the last time I was presented with a contract? Usually because we're going through a trajectory of growth, our clients are bigger, the projects are bigger, and what can happen is that the larger client has sent you a contract to sign and they've said, "No, no, we don't want yours. You have to sign ours."
[00:16:31] So first of all, there's only ever one contract. Business owners do reach out to me to ask if they then send theirs as well. No, you don't. There's only ever one. And if the client says to you, "No, no, we don't engage you on yours. You have to sign up to ours," fine, that's no problem, provided that you have it reviewed and you know what you're signing.
[00:16:50] So question, has this happened to you and did you sign it without getting it reviewed? That's a big warning sign that the business is growing so rapidly and the legal side of things and compliance aren't keeping up. What tends to happen is things like deliverables, extension of time, scope creep, payment terms, variations aren't aligned necessarily in that client contract that you've been given with the way you like to do business.
[00:17:17] And so those things either need to be negotiated or if they can't, they need to be understood so you can make a decision as to whether or not you want to enter into this with this client for this project. Clarity is key, so understanding what you're signing before you sign it is crucial
[00:17:34] What I've seen happen two or three times this year is a beautiful business owner, fabulous growth trajectory, amazing opportunity, so excited, signed the contract, didn't have it reviewed, didn't fully understand it and some of the clauses meant that the way they operated was completely undermined, the deliverables were unclear, and the payment terms were such that [00:18:00] cash flow became a really painful cash crunch, and it impacted significantly other areas of the business.
[00:18:08] So we don't want that. Legal compliance, legal review, understanding what it is that you're locking yourself into before you do really is one of the most important preventative steps that you can take.
[00:18:21] They're the seven warning signs. They're the seven things that I really wanted to step you through today so that you can, as you're listening, get some clarity around whether or not your legals in your business need some love and attention First, your client agreement. Do they currently match the services you deliver and how you deliver them? The second was employees. Do your employment agreements reflect the law, where it's at today, and how your employees are working? Number three, contractors. Make sure you have revisited the classification with your independent contractors to make sure that, one, they're still independent contractors and that they're not employees, and two, to make sure that the documentation you have in place support that contractor arrangement.
[00:19:08] Number four, are you in partnership with anybody? And if you are, what classification is it? Partnership, shareholding, or other? And is there a proper written document in place for that? Number five is your IP. Do your client agreements and do your legals reflect how you would like your IP dealt with?
[00:19:25] Number six, your website terms and conditions and your privacy policy. Make sure these are reflective on how you're operating now and what's happening on that website. And if you're selling anything on the website, make sure you've got your purchase clickwraps all set up nicely. And the final one, number seven, your process for reviewing contracts before you enter into them. Make sure you have one.
[00:19:46] As with all things in business and growth, things change and needs change. And it's for that reason that the way you engage your lawyer or receive your legal support [00:20:00] changes over time. There are two ways I work with clients, particularly those on the growth trajectory. So first is the project-by-project basis, where a client reaches out, they need something in particular, such as contracts drafted, contracts reviewed or advice.
[00:20:14] They receive a proposal tailored to that scope of work. We do that scope of work, and we're finished. Clients are always welcome to come back to me, and there are ways that they can get into my calendar for ad hoc advice as they need it, for sure. But the second is the more ongoing embedded fractional arrangement, where businesses have grown to the point where they realize that pay as you go, as you need, for legal support is no longer working.
[00:20:40] So they need somebody who is able to act really quickly to give advice on a negotiation, to review a contract before they sign it, to talk to the team about the client complaint that came in. The needs change, and throughout the growth trajectory, often the need for the legal support changes too. But it doesn't usually reach the point where you need a full-time lawyer on the team, so that's the fractional arrangement that I offer.
[00:21:03] That's where we have an ongoing arrangement, weekly or monthly, where I'm in the business, I'm a phone call away, and because I only do two or three of these fractional arrangements at a time, I can hand on heart promise priority to those clients. And they're the clients going through growth who really need that attention as and when they need it.
[00:21:22] Can't necessarily plan every Friday I need you for four hours. I need you when I need you. So my business is structured to be able to support that, but as I say, only two or three at a time, depending on the complexity of each of those arrangements. So if you have been listening and if you've nodded along to my warning signs and you've realized that some areas of your business do need some attention and some love when it comes to the legal side of things, please feel free to reach out and we can have a conversation about how I can best support you, either on a project basis, where we've got a specific scope of work that you need assistance with, or an ongoing arrangement.
[00:21:59] [00:22:00] We can have that conversation. It looks different for everybody. Thank you so much for listening. If you have friends in business that you think would also benefit from listening to these warning signs, I would be so grateful if you would share this episode with them, because together, that's how we get the podcast into the ears of even more business owners.
[00:22:17] Thanks so much. I'll catch you next time.
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