To Serve and Protect

Despite the complexity of the case and severity of the allegations, Potter, a former lawyer, is representing himself – and he’s won many of the cases he’s appeared in. A major victory came in 2005, when the presiding judge banned three National Bank lawyers from the case after finding that they improperly acquired and read hundreds of emails that belonged to Potter or his company and may have contained privileged solicitor-client communications. A second significant win came in 2008, when Potter and other opponents of National Bank blocked the institution from amending some of its previous pleadings.

But progress on the case is slow – almost a full decade after the company folded, the litigation drags on. “I can’t imagine the legal fees that have been incurred in this case by the various litigants involved,” says Steven Enman, who teaches business law at Acadia University and is the co-author of Canadian Business and the Law, published in 2010. “I think it’s fair to say that the whole Knowledge House case is a finger pointing exercise by the various actors involved.”

“The basic issue is that lots of people invested money in this company and, for whatever reason, it failed and people lost their investment. That’s the reality of the situation and now the investors and the lawyers and the banks and the accountants and all the constituencies in that litigation are trying to recover money from each other.”

Although Knowledge House is an extreme example, it illustrates some of the major problems a business can encounter – bankruptcy, becoming delisted from a stock exchange, and litigation. It can also serve as a cautionary tale about how time consuming, expensive and complex litigation can become if a business owner ever sees the inside of a courtroom. Unfortunately, there are plenty of legal pitfalls out there – from tax laws to shareholders’ agreements to safeguarding a company’s intellectual property, businesspeople must grapple with a wide range of complicated laws and legal issues.

Enman says finding a good lawyer early is one of the safest ways for business owners to protect their company from future problems, but adds that it’s also important for entrepreneurs to have a general awareness of the major legal issues and potential pitfalls that can affect whatever type of business they’re engaged in. This in turn may help them to decide when to call a lawyer, when to seek advice from another source, and when to proceed alone.

Five Areas of Law All Businesspeople Should Know There are a few key areas of law that will likely impact most businesses, according to Enman. First and foremost is contracts. A knowledge of contract law is vital because almost every businessperson will have to sign or draft one at some point in his or her career. Sign one you don’t understand and you could wind up in future disputes with your clients and partners, or, like the manufacturing company at the start of this article, you could lose you business entirely.

If a business has employees, it must also be aware of a host of labour laws that relate to human rights, the hiring and firing of workers, and the safeguarding of employees’ private information. Ryan says the way employers deal with staff can impact them years down the road if they don’t handle the situation properly from the beginning. “Sometimes in the employment law context, people – because they don’t get advice early on in terms of dealing with an employee who might be a problem – they don’t realize that as time goes by they’re probably incurring greater obligations to the employee than if they’d dealt with something early.”

A third area of law that affects many businesspeople is property law. This may mean real property, such as land, or intellectual property, such as inventions and artistic works that may need to be patented or trademarked. Roddy Awad, co-owner of Moncton-based IT firm Tech Knowledge Solutions, says protecting intellectual property that belongs either to his company or the clients he represents is crucial to remaining profitable. “It is certainly a topic for us being in a technology field and providing professional services. We typically provide a service for some of our clients and allow them to keep their intellectual property, so it’s important from a legal perspective that they are well covered. That’s a piece where legal counsel is very important.”