Legal representation is a very important thing for both individuals and companies. For individuals, lawyers are needed to help solve issues like personal injury, divorce, taxes, and property issues among others. This article will explain the main reasons why companies hire lawyers and why their use is becoming increasingly necessary these days.
In Mergers and Acquisitions
In recent years, the number of mergers and acquisition deals have been on the rise. In 2019, the number of deals that have been announced have been worth more than $2 trillion. These mergers will continue as investors start bracing for the weakening of the global economy. When these deals happen, there are many people who are involved. There are management consultants, investment banks, and corporate lawyers, who represent the two sides. Lawyers are important in drawing the terms of the deal and ensuring that everything is done in accordance to the law.
In Initial Public Offerings
The number of companies going public has been on an upward trend in the past few years. This year, major deals such as the Uber, Lyft, Beyond Meat, and Zoom Video have been made. In total, more than 467 companies have gone public this year. While the role of lawyers is not usually public during the IPO, their use is so important behind the scenes. The lawyers help the companies going public do everything in accordance to the law.
Every day, customers are filing class action suits against companies. The two most recent prominent class action suits were of Johnson & Johnson and Bayer. If these companies lose the suits, they will lose billions of dollars. Therefore, companies always need to have the best corporate lawyers to represent them when being attacked in class action lawsuits.
There are so many disputes today especially as many companies get attacked by their own employees. In the US, disputes like unions, employee dismissal, and gender-based issues have led to the need for quality lawyers. Therefore, to deal with these employee issues well, companies are in a constant need for having quality lawyers.
The number of regulations – especially in Europe – has continued to increase. This has happened as the regulators attempt to make the financial and corporate sector safe. In 2018, the region unveiled the sweeping MIFID II regulations. These were followed by the comprehensive General Data Protection Regulations (GDPR), which were created to promote privacy issues. In the US, under the Obama administration, many regulations were introduced. In all this, the role of lawyers in counselling the companies is so critical.
Foreign Company Registration
When companies venture into foreign jurisdictions, they must adhere to the local legal framework. This starts from the moment they register the companies to when they start operations. In this case, local lawyers are so important because they have a good understanding of the local market. They also have a good understanding of the local laws and the processes that are needed to register the companies legally. They also help their customers in the running of the joint ventures in the foreign countries.
Their use does not end at registration. Companies need lawyers to run the companies especially in the employee relations and product introductions.
At some point, companies need to divest some of their business divisions. They do this for a number of reasons. First, the company might need to divest a division that is not doing well. This means separating it and either selling it to another company or spinning it to be an independent company. Second, the company might want to exit a business line. For example, a few years ago, eBay decided to spin-off PayPal, which became a separate public entity. Therefore, when there are divestures, lawyers are needed to ensure that the process adheres to the law.
Companies require money all the time. They do this in a number of ways. They can borrow from banks or they can use the public methods. When companies are raising capital, lawyers are used to ensure that the terms and conditions of the loans have been followed.
Small and large companies rely on the services of lawyers. Large companies can easily afford to have their own legal divisions, which are tasked with handling everything related to the law. Others prefer having outside law firms representing them in all these. While the points listed are the most common reasons why companies need high quality professional lawyers, there are other reasons too.