Since becoming an attorney, I have witnessed many real life examples of people getting into business deals without the benefit of legal advice and suffering serious consequences Often, people let their hopes and dreams cloud their judgment.  They see what they think is a great opportunity to acquire or start a business and do not take the time nor incur the expense to get professional legal (or financial) advice regarding their planned venture.  The results are usually bad and sometimes catastrophic.

For example, over the past few years, I have met with a good number of well-intentioned individuals who have leased or purchased gas stations without first seeking a lawyer’s input on the structure and terms of the transaction.  A gas station is a pretty complex business for a first-time business owner to acquire.  It involves, at a minimum, a real estate transaction (buy or lease), a product supply agreement (the terms of which are a foreign language to people who don’t regularly deal with them), environmental considerations and insurance considerations to name a few.  These are some items that need to be addressed just to know what the structure of the business will be.  

To assess profitability takes a significant amount of due diligence.  It is alarming how many potential first-time gas station purchasers have no idea that $50,000.00 of cash reserves is nothing when starting this type of business.

I have also run into people who, fortunately for them, had not yet closed the deal on a business purchase, but had signed some preliminary paperwork – such as a purchase agreement or memorandum of understanding.  They came to me usually with a simple-sounding request such as “I need you to look at this lease.”  Requests like this usually prompt me to start asking many questions.  At first, the clients appear visibly annoyed.  But, after peeling back the layers of the proposed transaction, and showing them just how bad of a decision they would be making by purchasing the business on those terms, they usually end the meeting very appreciative that they might only be losing a small deposit and a little bit of time rather than their life savings.

It sounds self-serving for a lawyer to advise people to see a lawyer before buying a business.  But, the reality is, when people fail to take this advice, they often forego spending a few hundred or a few thousand dollars up front and end up spending many thousands in litigation costs or losing everything later.  g

— Kassem Dakhlallah is a senior partner with At Law Group, PLLC.  His practice focuses on complex litigation, including class actions, representative actions, commercial litigation, civil forfeiture and personal injury. He can be reached at (313) 406-7606 and kd@atlawgroup.com.