Five Warning Signs Business Owners Miss Before Legal Trouble Starts

Frank Lauletta, an attorney and founding member of Lauletta Birnbaum, LLC, based in Sewell, New Jersey and Philadelphia, Pennsylvania, has identified five warning signs that business owners often overlook before legal trouble starts. These signs, according to Lauletta, can be addressed early to prevent costly and time-consuming legal issues.

One of the most common issues is the use of contracts that were never built to repeat. He advises that standardized sales agreements, licensing terms, and terms of use should be in place to remove ambiguity before a negotiation starts.

Another warning sign is the lack of a succession plan. He warns that companies that wait until a transition is already underway tend to make rushed decisions, which are harder to unwind than the ones made early.

Disagreements among owners that get smoothed over instead of resolved is another sign. He notes that shareholder disputes rarely start as disputes. They start as disagreements that two partners decide not to put in writing because the relationship feels fine for now. Frank has represented clients on both sides of these situations, including in litigation when a disagreement could not be resolved another way.

Lauletta also points out that outside counsel who only hear from a company after a problem has already happened is a sign of poor legal risk management. He emphasizes that these signs are not dramatic on their own.

Finally, Lauletta warns that growth that outpaces the agreements behind it can create real exposure. "That gap is where problems start." He notes that this is a sign that gets missed often, because growth itself feels like proof that everything is working.

These insights come as Frank Lauletta continues to advise companies across various industries, including software, technology, healthcare, telecommunications, manufacturing, energy, and professional services. His practice includes outside general counsel work, business transitions, succession planning, and shareholder disputes. Lauletta earned his undergraduate degree from the University of Delaware and his Juris Doctor with Tax Honors from Rutgers Law School.

The release also mentions that Lauletta was named one of the top attorneys in the 2009 edition of Texas’ Best Lawyers. The 2009 edition marks the 23rd consecutive year that Mr. Lauletta has been included in the prestigious listing of the country’s top lawyers. This recognition underscores his expertise and experience in the legal field.

In addition to his legal work, Lauletta is involved in various community and professional organizations. He frequently serves as outside general counsel to companies, working alongside executive teams on decisions that shape where a business is headed. He notes that one sign a company is managing legal risk poorly is simple: its lawyer only hears from them after a problem has already happened.

Lauletta's advice is particularly relevant as businesses navigate the complexities of growth and change. His insights highlight the importance of proactive legal planning and the potential consequences of neglecting these critical areas. By addressing these warning signs early, business owners can avoid costly legal battles and ensure the smooth operation of their enterprises.

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