Working independently for the last six years has led me to advising, on an almost exclusive basis, SMEs, start ups and entrepreneurs, who make up a significant portion of Dubai and the UAE’s business landscape. The problems faced by these businesses are often overlooked in the beginning, but present a real challenge as time goes on. Some of the top legal risks to watch out for (and their remedies) are:
- Put It In Writing
In the early stages of starting and running their new company, business owners often start dealing with vendors and clients without proper written agreements, believing that a handshake is adequate enough. Or they might be doing business with friends and family, and don’t want to appear formal and businesslike. This is a mistake. Verbal agreements are often misunderstood by one or both parties, and nearly impossible to uphold in a court. Not to mention the fact that a personal relationship will invariably be ruined, should the business relationship turn sour. An agreement, even a simple one, will prevent many later problems, including litigation, which can be very expensive.
- Use Protection
It’s not only tech-based businesses that need to think about protecting intellectual property. A new business may have an innovative idea or product that could be easily at risk. The name of the company or its product may need to be trademarked. Content may need to be copyrighted. What happens if a partner leaves the company? Who retains the intellectual property? While intellectual property protection can be a time consuming process, getting the right advice is a starting point, and can help the business owner learn about the potholes, take steps towards safeguarding the intellectual assets, and budget for such protection.
- Full Coverage
Recently a long-term client told me about one of her customers, whom she had just finished a project for. That same customer happened to meet a competitor, who asked about her experience in dealing with my client. Naturally, she praised her service provider and mentioned how easy the process was. Because this customer had gained some working knowledge of my client’s processes and contacts, she was recruited by the competitor company. I asked my client whether she made her customers sign a Non Disclosure Agreement. It hadn’t even occurred to her! Of course, this is an extreme example. But think about how many people there may be, whether employees, freelancers or consultants, who know about your business practices, your client list, your pricing methods, your marketing plans, etc. Would you be comfortable with this knowledge being given to competitors or used to become competition? If the answer is no, and it almost always is, then a Non Disclosure Agreement is a must have.
- Allowing Competition
I’m not advocating monopoly. Competition is healthy and can spur a small business owner to achieve bigger things. I’m referring to unfair competition, where a partner, employee or consultant may leave and use what they have learned from the business, and in the business to compete with the business. Most legal frameworks, including the UAE Labour Law make provisions for non competition, as long as such an agreement or clause is limited with respect to the place, time and nature of the work. Non disclosure and non competition often go hand in hand.
- Taking the Law into Your Own Hands
Business owners have to wear many hats. But the lawyer’s hat shouldn’t be one of them. In the beginning, the temptation is great to save costs by finding legal documents online and doing a cut and paste job. That will only save time now, and not time, money or possible litigation in the future. If you wouldn’t diagnose yourself medically, you certainly shouldn’t try to diagnose what your business needs legally! A downloaded document may seem fine to you, but the fact is you don’t know what it needs to cover, and documents found online are frequently from different jurisdictions, which may not apply to your business at all. Speak with other small business owners and find a good lawyer who advises small businesses. The money you spend now will save sleepless nights in the future.
Swati Khanna is a lawyer, strategy advisor and entrepreneur from Dubai, UAE. She has owned and operated a legal consultancy for the last 6 years, and has also been an independent business and strategy advisor for the last year. Swati has extensive experience with corporate and commercial law, and before working for herself, she worked as in-house counsel and with the government.
Swati has recently moved to the US from Dubai. Learn more about Swati here: https://ae.linkedin.com/in/swatigkhanna