1. When Should a Growing Company Seek Legal Review?
Seek review before issuing equity, signing important commercial terms, or changing how the business operates. Counsel can identify which commitments require approval, supporting documents, or specialist advice.
Review Terms before Signing
A term sheet or letter of intent deserves attention even if the proposed deal is nonbinding. Confidentiality, exclusivity, and expense provisions may still bind the parties. The document’s wording determines those obligations.
Revisit Templates When Services Change
Existing templates also need review when the service changes. An agreement written for consulting may leave unanswered questions about software licensing, customer data, or ongoing support.
2. Confirm Ownership and Authority before Accepting Investment
Entity structure, tax status, and decision-making authority raise separate questions. A corporation or LLC is a legal form; S corporation status is a federal tax election available to qualifying entities. Shareholder restrictions and the one-class-of-stock requirement can affect whether a proposed investment is compatible with that election.
Check Investment Terms against Tax Status
Before accepting funds, check whether the proposed investor and ownership rights fit the company’s tax election. Counsel and tax advisors should review the same terms; an agreement that works commercially may require changes to preserve the intended tax treatment.
Verify Required Approvals
An executive’s title does not establish every approval needed for a financing or sale. Review governing documents, equity records, and investor agreements to determine who must consent.
Document Member Rights in an Operating Agreement
For LLCs formed under New York law, LLC Law §417 requires members to adopt a written operating agreement before, at formation, or within 90 days after filing the articles of organization. The agreement can address voting, management, distributions, and departures, subject to statutory limits. That formation requirement does not automatically apply to LLCs organized elsewhere.
3. Check Contract Restrictions and Intellectual Property Rights
Before signing a major agreement, confirm that the company can meet its delivery, insurance, security, and service obligations. Review indemnities, liability limits, termination rights, and dispute procedures against the actual transaction.
Identify Transfer and Consent Requirements
Assignment and change-of-control clauses matter when buying or selling a business. An asset transfer and an ownership sale may trigger different requirements, including a need for the other contracting party’s consent.
Confirm Copyright Ownership
Payment alone does not establish copyright ownership. Under federal law, 17 U.S.C. §204(a) generally requires a signed writing for a copyright ownership transfer, except for transfers by operation of law. Work made for hire follows separate rules: commissioned work must meet statutory conditions, including a qualifying category and an express written agreement. A contractor’s work-for-hire clause alone may be insufficient.
Distinguish Confidentiality from Ownership
An NDA addresses confidentiality; it does not necessarily transfer ownership. If a founder or contractor created important work before the company existed, review how the company obtained rights to use, modify, and transfer that work.
Check assignments alongside third-party licenses. The company may own its original work while having limited rights to incorporated code or content.
4. Resolve Gaps before They Delay a Transaction
Compare ownership schedules with signed equity documents, and confirm that material contracts, IP assignments, and required approvals are available. Investigate inconsistencies before making representations to an investor or buyer.
Decide Which Gaps Must Be Resolved before Closing
Missing documents may require corrective agreements, third-party consents, revised terms, or closing conditions. A purchase agreement does not eliminate every liability; the significance of each issue depends on the transaction structure and applicable law.
Prioritize gaps by their effect on the deal. A missing consent may prevent closing, while an outdated template may call for a later update. Identify who must provide each document and allow time for negotiation. A former contractor or commercial counterparty may seek payment or revised terms before signing.
Understand the Limits of Attorney-Client Privilege
Keep sensitive reviews focused. Attorney-client privilege protects qualifying confidential legal communications, not every business record sent to counsel. Ordinary commercial advice and preexisting documents do not become privileged merely because a lawyer receives them.
5. What to Prepare for a Corporate Legal Review
Bring the proposed terms, governing documents, ownership records, and relevant existing agreements. Identify the signing deadline, decision-makers, and any missing or disputed information. These materials help counsel separate issues requiring resolution before signing from work that can follow afterward.
Include Negotiations and Side Agreements
Explain which terms remain open and which have already been accepted. Include relevant emails or side letters so the review reflects the full agreement, rather than only the latest draft.
Define the Scope of Counsel’S Review
For company-specific assistance, SJKP’s Corporate and Business practice can review the proposed commitment, required approvals, and supporting documentation.
23 Mar, 2026
