I have sat across the table from hundreds of business owners who all say some version of the same thing: “I did not think this would become a problem.” That sentence usually comes right before a costly fix that could have been avoided with a little planning.
From the perspective of a business lawyer, most legal problems are not caused by bad intent. They are caused by growth, speed, optimism, and assumptions. Below are the five of the biggest legal issues I see businesses face, framed around the questions clients usually ask when it is already a little too late.
- “Do I really need a written agreement if we trust each other?”
Yes. Trust and clarity are not opposites. In fact, good agreements protect relationships by setting expectations before emotions get involved.
The most common problem I see is businesses operating on handshake deals, email threads that do not include clear, well-thought-out planning, or incomplete AI templates pulled from the internet. When something goes wrong, the question becomes whose version of the deal controls. Courts generally do not decide cases based on what seemed understood at the time. They usually decide based on what is written.
Key risk areas include unclear payment terms, missing termination rights, vague scopes of work, and no dispute resolution process. A well drafted agreement does not make things overly complicated. It makes expectations clear and problems easier to avoid. It makes you prepared.
- “We formed an LLC. Are we not protected personally?”
Forming an entity is a great first step. It is not the finish line.
Limited liability only works if the business is treated like a real business. That means separate bank accounts, proper capitalization, signed contracts in the company’s name, and basic corporate housekeeping. When those lines blur, personal assets can be pulled into business disputes.
I often tell clients that the entity is a shield, but only if you actually use it. Courts look at behavior. If the business and the owner are treated as the same thing, liability often follows the same path.
- “Can I terminate this employee?”
The answer often has less to do with the employee’s actual performance and more to do with what your own paperwork says.
One of the most common problems we see is a long history of positive or even glowing performance reviews for an employee who, in reality, has struggled for years. The business owner knows there have been issues, but the documentation tells a very different story. On paper, the employee looks successful. In practice, the company is frustrated.
When termination happens in that situation, the written record becomes a problem. The question is no longer whether the employee performed poorly. The question becomes why the company said everything was fine for so long and then suddenly decided otherwise.
Courts and attorneys focus heavily on documentation. Performance reviews, emails, and written evaluations are often treated as more reliable than after the fact explanations. If the record suggests there was no problem, it becomes much harder to justify a termination decision.
This does not mean you cannot terminate the employee. It means you should be careful and deliberate. Performance issues should be addressed early, documented accurately, and communicated clearly. Honest evaluations protect both the business and the employee by aligning expectations with reality.
Good documentation is not about building a case. It is about telling the truth consistently over time. When your records match your reality, termination decisions are far easier to defend and far less likely to turn into legal disputes.
- “What happens if a partner or owner wants out?”
This question usually surfaces during periods of stress, but I also see it when things are going great, because success can sometimes invite greed. There are disagreements. Life changes. Better opportunities arise.
Without a clear operating agreement or buy sell structure, exits become emotional and expensive. I have seen profitable businesses fall prey to these problems because owners never agreed on valuation methods, voting rights, or exit mechanics.
The best time to address this issue is when everyone is getting along up front. Clear rules for ownership changes, decision making, and dispute resolution protect both the business and the people behind it.
- “Do I really need to worry about compliance if I do not have any problems right now?”
Compliance often feels unnecessary until it is not.
Depending on the industry, this can involve licensing, data privacy, advertising rules, franchising laws, or industry specific regulations. The problem is that growth tends to outpace compliance. What was acceptable at one stage becomes risky at the next.
Regulators and plaintiffs do not care that you were busy building the business. They care whether the rules were followed. Periodic legal checkups help identify risk before it turns into enforcement or litigation.
A final thought
Most legal problems do not start as legal problems. They start as business decisions made quickly, informally, or without a full view of future consequences.
My role as a business lawyer is not to slow you down. It is to help you move forward with clarity and confidence. When you address problem areas early, you are not just reducing legal risk. You are building a stronger, more resilient business.
If you ever find yourself asking, “Is this something I should run by a lawyer?” the answer is usually yes. Not because something is wrong, but because you want to keep it that way.