Legal Audit

Legal Audit was developed by Bovarnick and Associates to help small businesses evaluate their legal health, risk, and litigation vulnerability. This comprehensive audit/check list covers the most relevant areas of a business and alerts the business owner what areas need to be addressed, improved and, most importantly, what steps should be taken to ensure legal protection. This is an invaluable process that keeps businesses strong, focused and protected.

Areas in the Legal Audit check include:

Company Contracts
This section addresses questions, both general and specific, about the state of the companies contracts.

There are 16 questions.

An example of this is, “Is there an attorney’s fee provision in each contract?”

Sales Documents
This section, addresses issues that come up with respect to sales of goods and services on credit.
There are 8 questions.

An example of this is, “Does the contract provide that a lawsuit can only be started in the county where the company has its principal place of business?”

Collection of Accounts Receivable
This section, addresses various issues relating to the process of collecting receivables.

There are 5 questions.

An example of this is, “Are unpaid invoices followed up with demand letters and telephone calls?”

Employee Liabilities
This section, addresses basic issues that need to be considered with the businesses employees.

There are 18 questions.

An example of this is, “Do you regularly document decisions made regarding employees in order to be able to support these decisions should they be challenged on the basis of discrimination?”

Personal Liability for Company Obligations
This section determines whether your business is incorporated and if you are personally protected from lawsuits.

There are 16 questions.

An example of this is, “If your business is an LLC, does the operating agreement contain those provisions which are required to be in writing?”

Another example of this is, “If your business is owned by more than one individual, do you have a shareholder (buy-sell) agreement or a limited liability company operating agreement which addresses the following points:”

Corporate Books and Records
This section addresses basic issues regarding the current and historical state of the corporate books and records.

There are 7 questions.

An example of this is, “Do the Articles of Incorporation provide for sufficient number of authorized shares?”

Stock Matters
This section addresses questions regarding the issued stock and stock certificates.

There are 8 questions.

An example of this is, “Has the company received the consideration for each sale of stock?”

Government Regulations Compliance
This section addresses whether the business has all of its basic state and federal information in place.

There are 5 questions.

An example of this is, “Has the company obtained its Federal Employer Tax ID number?”

Leases
This section addresses general issues relating to leases of real estate.

There are 3 questions.

An example of this is, “Does the lease have an option or renewal provision and do you know the date by which you have to exercise the option or notification of non-renewal?”

Loan Compliance Regulations
This section, addresses specific issues relating to the existing loan documents.

There are 8 questions.

An example of this is, “Are you in compliance with all non-monetary obligations?”

Obtaining Financing
This section addresses general questions to determine whether the business should investigate financing.

There are 3 questions.

An example of this is, “What steps have you taken to review and negotiate the terms of your loan documents?”

Intellectual Property Protection
This section addresses basic intellectual property issues, including trademarks and confidentiality agreements.

There are 17 questions.

An example of this is, “Have consultants and independent contractors signed appropriate confidentiality and invention assignment agreements?”

Record-keeping
This section addresses basic record keeping issues.

There are 3 questions.

An example of this is, “Is the company keeping track of all of its contracts?”

Laws
This section addresses compliance with various laws and regulations.

There are 11 questions.

An example of this is, “To the extent the company is attempting to collect its own outstanding receivables, is it in compliance with all laws and regulations?”

Insurance
This section addresses basic insurance issues.

There are 4 questions.

An example of this is, “Where are the insurance policies?”

Assets
This section addresses issues relating to the title to the companies assets.

There are 2 questions.

An example of this is, “Where are the titles to all of the assets?”