El Laithy & Associates Lawyers


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The Importance of Legal Advisor for Companies and Investors

The Importance of Legal Advisor for Companies and Investors

If we considered what is happening in the economic or commercial world as a movie, we find that the investor or the partner are the Actors, and his legal advisor is the director. There is no way to implement what the investors or partners want without the need for the legal advisor, who represents the first role in advising and guiding regarding the implementation of what they want. There is a major company, startup, or even investor that does not need a special legal advisor. In the next few lines, we will review the importance of the legal advisor for the following:

  1. Large Companies
  2. Start-up Companies
  3. Investors

The Importance of Legal Advisor for Large Companies

The role of the legal advisor is at its greatest in large companies in particular, because these companies go through many complex and interconnected legal processes. His role is to maintain the company’s regular compliance with various laws and to prevent and mitigate the risks to which the company may be exposed. He also has an effective role in setting the company’s growth strategies and achieving its goals, in addition to many matters that we will briefly explain below:

The Company’s Compliance with Various Laws:

Large companies operate in a highly regulated environment. Each type of company and each activity it engages in may have its own legal requirements that differ from one company to another. For example, there are some companies that must adhere to some industry standards, and there are some other companies that must comply with different commercial laws. Every company has an intertwined legal system linked to each other, and the company cannot comply with that system without seeking the help of a legal advisor who helps it manage its legal affairs.

Risk Management:

The main role of the company’s legal advisor lies in managing the risks that it may be exposed to, and here we mean the legal risks that may sometimes lead to the company’s liquidation and demise. From drafting and reviewing the contracts that the company may conclude with third parties to employment relationships. He can identify potential risks and develop plans to confront those problems if they arise in the future, and thus the company’s legal advisor is one step ahead of the risks.

Strategic Planning for The Company’s Transactions:

Here, the role of the company’s legal advisor extends beyond drafting and reviewing contracts, such as the acquisition of another company, or merging with another one, and of course, it extends to joint transactions that may take place between two different companies, it even extends to financing activities that may achieve its goals, and all of this can only be achieved with the presence of an expert in these legal matters who helps in implementing these innovative ideas on the ground and preserves the company’s rights.

Intellectual Property Protection:

Companies with activities that depend on innovation cannot do without their own legal advisor. The company’s reputation and the quality of its product cannot be preserved without registering its trademark, patents or copyrights that helped the company in maintaining its reputation and product quality. The role of the legal advisor is to take legal measures that preserve the company’s rights and help it to pursue legal action against unauthorized use.

Dispute Resolution and Litigation:

As most people believe, the first role of the legal advisor is to defend the company against any problems that may arise during the company’s work, so an experienced legal advisor is considered as the first line of defense for it, whether before courts, arbitral tribunals, or even through… negotiations, he is the only one who knows what is legal and what preserves the company’s rights and duties towards third parties.

The Importance of a Legal Advisor for Startups

The need for legal advisors for startup companies is greater than for any other company. Overcoming the complexities of establishing the company and forming it as a sound legal entity are the most important steps in the life of the company later on. It is like the birth of the company, which needs an expert in legal matters in order to avoid mistakes. The legal advisor for the startup company puts it on the right path step by step, as we mentioned in detail in our previous article entitled “Establishing Companies in Egypt” The role of the legal advisor in startup companies is as follows:

Organizing The Company’s Shares and Working on The Shareholders’’ Legal Relationship:

Ownership of shares in the company often represents the first obstacle in any startup company. for instance, it helps us determine who has the right to carry out certain transactions and who can deal with banks, and thus organizing this complex relationship between partners (even if they are two partners only) requires a legal advisor to explain what is permissible and what might put one of the partners at risk, so a legal advisor can help the startup avoid common risks resulting from that process.

Intellectual Property Protection:

In the fast-paced world of startups, protecting a company’s intellectual property is essential, as legal advisors can help startups secure trademarks, patents, and copyrights, ensuring their innovations are protected from competitors.

Recruitment and Human Resources Issues:

As startups grow, formulating the company’s bylaws and the processes for hiring and terminating employees can become increasingly complex. A single mistake in terminating an employee’s contract can cost the company huge compensation, and here lies the role of the legal advisor in keeping the company in compliance with labor laws and helping to establish strong human resources policies.

The Importance of Legal Advisor for Investors

The investor also benefits from the presence of a legal advisor, whether the investor is looking for a company to invest his money in, or financing a startup company waiting for a return on his investment. The role of the legal advisor is to do the required due diligence and to ensure that there are no legal problems with it serving the goal to be achieved by the investor.

Then the legal advisor moves to the second stage, which is formulating or determining the form of the transaction that the investor will enter into. He states all his rights and duties and ensures that his interests are protected and that risks that may arise against the investor are avoided later. In the event of legal disputes between the investor and the company, the legal advisor can represent the investor’s interests and work to reach an appropriate solution.

How can I take full advantage of my legal advisor?

To take full advantage of your legal advisor, which provides you with strong legal cover, you must do the following:

  1. Early Involvement: Choosing and involving a specialized legal advisor or corporate lawyer early in the decision-making process can help prevent potential legal problems and allow for proactive rather than reactive solutions.
  2. Build a strong relationship with your advisor: Developing a strong relationship with your legal advisor ensures that he has a deep understanding of the company or investor’s goals and industry-specific challenges, which enables him to provide more detailed and effective advice.
  3. Keeping pace with continuous changes: The legal system in each country is constantly evolving, and companies and investors must stay informed of new laws and regulations, and adapt their strategies accordingly, and the company’s or investor’s legal advisor can provide valuable updates to maintain the company’s compliance with various laws and regulations.

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In conclusion, corporate legal advisors are indispensable partners to companies and investors. Their experience in dealing with complex laws and regulations, mitigating risks, and seizing strategic opportunities can make the difference between success and failure. By engaging with corporate legal advisors early and building strong relationships, companies and investors can put themselves on the right track for long-term growth and prosperity.

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