Lawyers... Do they matter?

Question

I have had several interesting conversations with other investors on the importance or lack thereof finding a good lawyer when establishing an LLC.

When are you considered "safely behind" a legal entity should a lawsuit occur? What must you do? What are the benefits of the different types of corp? Is it worth hiring a lawyer to cross your t's and dot your i's? Is there risk in not hiring a lawyer?

Bob Floss II · Answer

The money you save not hiring a lawyer in the beginning will cost you 10x more when everything goes wrong.

Rob K. · Answer

As Donald Rumsfeld famously said:  "...there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns—the ones we don't know we don't know. And if one looks throughout the history of our country and other free countries, it is the latter category that tend to be the difficult ones..."

With a competent lawyer, there should be fewer "unknown unknowns".

Eric Mayer · Answer

Save your money and get an umbrella policy.

Michael Plaks · Answer

Me too! I have had several interesting conversations with:- other drivers on the importance of wearing seat belts- other contractors on the importance of being insured and bonded- other cheaters on the importance of keeping my phone away from my wife- etc.:)In case my sarcasm was not transparent - everything is optional until the stuff hits the fan.

Justin Abdilla · Answer

I think it's best to have an LLC if you're going to hold tenants, but the vast majority of what I see people requesting on BP is a lawyer to set up limited liability organizations because they're underinsured against major losses or they have uneasy partnerships.  If you have proper insurance, it's usually not a huge benefit to hire a lawyer for your enterprise.  I would, however, hire a lawyer if there are other investors besides myself because the conflict at the managerial level is something that should be addressed and prevented ahead of time.

Lawyers... Do they matter?

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