How the legal strategy can help to successfully implement the business strategy?
A business strategy is a powerful tool for helping entrepreneurs to achieve their business goals. A good strategy includes plans in relation to the products or services, assets, customers, suppliers, employees, business partners, government organizations, financial institutions, trademarks, competitors and so on. If the businesspeople plan to successfully implement the firm’s strategy, then they need to consider legal aspects of the above matters. In other words, without having the proper legal strategy implementation of the business strategy will not be effective.
Before the businessmen make a decision as to which products and/or services they will provide to customers, they need to consult with a lawyer and the list of products and/or the scope of the services require a legal review.
For example, a company provides repair and maintenance services of equipment to be used in oil and gas industry. Depending on the type of the activity, the company may need to obtain a license. If the company fails to obtain a license where it is required and continues to carry out its operations, there can be adverse legal consequences such as penalty (depending on the amount of income from the illegal operations), imprisonment etc.
The status of the assets needs to be legally analyzed. What kind of assets does the business have? Are they movable or immovable? Have they been properly registered into the name of the company (whether applicable)? Have the trademarks been registered? How your legal interests over the premises, facilities are protected?
All these questions need to be addressed.
For example, an entrepreneur decides to start a taxi business. Will he/she own the vehicles or the vehicles will be leased from third parties? Why? What are the legal consequences of each option?
Relations with the employees and/or service providers need to be analyzed beforehand to avoid any future risks. Azerbaijani employment laws set out strict regulations and without local legal experts it is hard to manage employment processes. Depending on the nature of the breach, the legislation sets out administrative penalty, criminal liability and so on. For instance, a company provides delivery services and the management may think that staff may be hired based on the service agreements and not based on the employment agreements (what are the differences between the two?). Before making such crucial decisions, businessmen/managers need to consult with the local lawyers since the approach of the regulatory authority may be totally different.
All related risks should be considered in advance and need to be set out in the contracts. Never use template contracts. It is strongly recommended to use the contracts specifically drafted and tailored for the needs of your company. In case of any dispute, template (formal) contracts may put your company at risk and in an adverse situation. A document turnover of the company requires more legal attention for successful business.
Financial institutions/government organizations
With respect to financial transactions Azerbaijan has strict regulations. For cash flow management the businesspeople do not need only to consult with tax specialists and accountants, but also with the lawyers. For example, making an advance payment may impose both contractual and regulatory risks. When it comes to the relations with the state authorities, it is strongly advised to be represented with the lawyer (for instance, when a company needs to obtain a license/permit, or when a company participates in public procurement process, or when state authority carries out an inspection and in all other similar circumstances).
Engaging a lawyer/legal team to the implementation of the business strategy or even in an earlier stage, is the proactive approach which will always add value to the business.
About the author: Fuad Gashamov is a professional lawyer with over 12 years of experience in consulting industry. He mainly specializes in dispute resolution, real estate, contracts, regulatory, intellectual property and compliance. He is the founding partner at Legalize Law Firm. He is a member of the Bar Association since 2014. For more information about the author please see the following link:
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