Six Values Of Legal Affairs Based On Business Management
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Six Values Of Legal Affairs Based On Business Management

Many companies do not understand the value of legal affairs to business management. They believe that they do not need to hire legal affairs if they do not get into a lawsuit. This is actually a lack of market economy mind because the market economy is the legal economy. In the era of the market economy, enterprises must not only deal with customers and suppliers, but also with government management departments such as industry and commerce, taxation, and urban management. They must not only sign contracts but also establish and improve their own rules and regulations. Activities are inseparable from legal support.


Legal affairs are experts, consultants, and external brains in corporate legal affairs. They are good at handling corporate legal affairs, arranging disputes for enterprises, establishing regulations, avoiding risks, and increasing profits. A good corporate law is critical to a company's production and development, strategy and management, marketing and after-sales. At the beginning of its establishment, Alibaba paid special attention to legal risk control and introduced senior legal persons with commercial wisdom to the partners. Three of Ali's 30 partners are senior legal persons, which is called the three legal guards of Ali. As the most trustworthy friend of the entrepreneur, legal affairs not only tells you how to avoid risks, establish rules but also teaches you how to negotiate with investors, how to make more money legally and compliantly.


One of the core values of legal affairs: legal risk management

Legal risk is one of the most important risks facing a company. Legal risks can cover most of the company's risk categories, and most of the risks will eventually emerge in the form of disputes and litigation, which ultimately reflects legal risks. To effectively control possible risks, companies should establish a comprehensive corporate risk control system based on legal risks and entry points.


One of the most important goals of the company's legal work is to establish a corporate risk control system, which is a dynamic system of continuous change and continuous improvement. The system is not an isolated system, nor is it an additional management activity of the company. Instead, it infiltrates and embeds the management actions of the company's risk control into the company's various business processes, making risk control a natural part of each business management activity.


From the legal point of view, resolving the risks in the business process is mainly based on the following methods:


  1. Correctly correct matters that do not meet the statutory requirements

    This is mainly for legal risks within the company. For example, enterprises are not standardized in terms of employment, and they have not signed labor contracts on time. The signed labor contracts have not been issued to the workers in time; the legal representative of the enterprise, the place of residence, the changes of shareholders, etc. should be changed in time according to the law. Registration; the specific operation of the company is not implemented one by one in accordance with the provisions of the company's articles of association. For these matters, "internal error correction" can be carried out in a timely manner on the basis of legal risk assessment to meet statutory requirements.


  2. Supplement and improve related matters

    It is also a way to resolve the risks of supplementing and perfecting the matters that have been implemented but not standardized and not perfect. For example, in many enterprises, shareholders' meetings and boards of directors have never had meeting minutes; employee management relies solely on labor contracts, and there are no entry and exit procedures. The confidentiality agreement and the non-competition agreement are also"only agreements" and no"compensation standards". For these matters, some enterprises may take certain measures based on incomplete understanding, but these measures either have deviations from the understanding of laws and regulations or "only do half of them”... supplement and improve these matters, It can better demonstrate the professional knowledge and standards of legal affairs, and can better improve the level of corporate rule of law, thus effectively avoiding various legal risks.


  3. Correction and revision of relevant legal texts

    Legal texts are the most used way of working in legal affairs. In terms of prevention and control risks, the correction and revision of texts is undoubtedly an important aspect. The legal affairs require careful and detailed analysis and checks on various contracts and documents adopted by the company. In the case of contracts, the various contracts used by enterprises are subject to review and correction by lawyers. In many corporate contracts, either the statutory necessary clauses are missing, or the relevant provisions are in violation of the relevant provisions of laws and regulations, or there are major loopholes in the relevant provisions... For contract review, this is also the most common legality. Way of working. It should be pointed out that the review of texts by law does not only involve contracts, but also involves the formulation of internal rules and regulations, various internal and external texts among shareholders, corporate governance, and possibly even internal companies. Kinds of "notice", "penalties" and other matters.


  4. Resolve risks by means of mediation, arbitration, and litigation

    With mediation, arbitration, and litigation to resolve risks, legal affairs undoubtedly have many advantages. For many companies, it is hoped that legal affairs will participate in mediation, arbitration or litigation, thus solving various disputes in the enterprise. Through the dispute resolution model, safeguarding the legitimate rights and interests of enterprises, this is also the regular content of legal affairs as a corporate legal position, therefore, we are no longer here.


The business process, the risks are everywhere. Therefore, in the aspect of controlling the risk of enterprises, it is also a very important content to organize "risk reflection" regularly. On the one hand, we cannot guarantee that the risks that have occurred will not happen again; on the other hand, the new risks may be caused by the original risk. Gradually improve on the basis of reflection to better avoid and overcome risks.


The core value of legal affairs: commercial competition protection

Modern corporate law must fully participate in the company's competitive strategy formulation, decision-making and execution. Corporate legal affairs can use various effective legal means to crack down on competitors, re-divide the market, and strive for business opportunities for the company. There are many styles and methods of competition in corporate legal affairs. Commonly, there are trade secrets, intellectual property management, anti-monopoly investigations, and unfair competition. Large companies often use a single or several of these combinations to form a weapon for competition in the external market.


1. Trade secrets

Trade secrets refer to technical information and business information that is not known to the public, can bring economic benefits to the rights holder, are practical, and are subject to confidentiality measures by the right holder. According to China's criminal law, improper acquisition, disclosure and use of trade secrets constitute a crime of infringement of trade secrets.


Since commercial secret cases can use criminal means, the punishment is obviously greater than civil means. At present, more and more companies like to crack down on the company's trade secrets through commercial secret criminal cases to block the intelligence war of commercial competitors.


2. Intellectual property management

Due to changes in the global legal and business environment, intellectual property management has increasingly become an important part of business management. Accordingly, more and more companies set up specialized intellectual property departments to manage the intellectual property of the entire company, including ownership management, operational management and risk management of the intellectual property.


The ownership management of intellectual property refers to the purposeful application of the intellectual property generated in the business activities of the enterprise to the form of intellectual property protected by law and its unified maintenance. According to the type of intellectual property, ownership management includes trademark registration, patent registration, copyright registration, domain name registration, proprietary technology and trade secret protection. These tasks are legal professional, and the legal person has certain advantages in implementation, but at the same time, the cooperation of the corresponding business departments, such as the R&D department, the brand department, and the IT department.


The operation and management of intellectual property refer to the management behavior of the enterprise to use its legal and commercial means to license, transfer, pledge financing, price, share and securitize the intellectual property it holds. This requires corporate legal personnel to be familiar with the relevant policies and systems of intellectual property rights, and have a deep understanding of the legal characteristics and commercial application of intellectual property rights, and understand the structure and content of commonly used intellectual property licensing and transfer agreements. By laying out intellectual property rights and operating intellectual property rights, this work is typically a work of independent value creation compared to other work with the legal department.


Risk management of intellectual property rights, that is, prevention, evasion, monitoring and removal of possible intellectual property disputes. This work involves fact investigation, infringement determination, legal letter drafting, intellectual property litigation or arbitration, etc. It is a unshirkable task of the legal department.


3. Antitrust and unfair competition

In the past 100 years, anti-monopoly organizations and monopolies in various countries have waged arduous struggles. The anti-monopoly law is playing an increasingly important role in the economic laws of countries around the world. In order to oppose the monopolistic behavior in economic activities, AT&T, Microsoft, Intel [microblogging] and other giants have experienced anti-monopoly investigations, and they have paid a heavy price after losing the case.


In the company's participation in the global market competition, the company's legal application actively applies the anti-monopoly laws of various countries to crack down on the monopoly enterprises in the industry, through anti-monopoly investigations, splitting dismembered competitors, cracking down on mergers and acquisitions of competitors, or negotiating settlements. Try to fight for your own favorable conditions in exchange for your own development space.


The core value of corporate legal affairs: enterprise value-added management

One of the differences between corporate legal affairs and external lawyers is that corporate legal affairs must not only be proficient in the law, but also familiar with business operations, which requires the company's legal business to have a business concept and a business mind. The company's legal affairs should reduce the operating costs, protect the operating results and even directly create profits for the company through legal means.


1. Reduce operating costs

Contract review management is a good example. A good contract not only saves trouble, but also saves the company a lot of cost, and a poor contract is the beginning of a company's nightmare, often causing significant losses to the company. Through legal, professional and pragmatic contract negotiation and contract management, the company's legal affairs reduce the operating costs for enterprises and indirectly creates value for the company.


A contract is a carrier of the legitimate interests of an enterprise. The four stages of the establishment, operation, expansion, and liquidation of an enterprise are inseparable from the contract every moment. The signing and performance of contracts are the basic means for enterprises to make economic transactions with them. The Legal Department is a well-declared contract drafting, revision, and auditing department within the company and the company. Contract work is one of the most core tasks in the Legal Department's worklist.


2. Protecting business results

Take the accounts receivable collection as an example. The company has signed many projects and orders and has already shipped the goods, but the payment has not been recovered, and as the accounting period is longer and longer, the risk of bad debts is ultimately faced. Accounts receivable has become a headache for more and more companies. In the case of receivables with bad debt risk, the company should decisively ask the company to take legal action, protect the interests of the company through legal means, and minimize the risk of bad debts.


3. Create profit

As the manager and operator of the company's intangible assets, corporate legal affairs require professional legal technology and a keen business sense. The business of intangible assets always maintains a clear idea, that is, the use of innovation and acquisition to generate intangible assets, through clean-up and Investigate the list of intangible assets and value, and then find the business model that is most suitable for the operation of the company's intangible assets, such as setting up an independent legal service company or intellectual property company, and revitalizing the intangible assets owned by the company, such as patents, trademarks, lawyers, etc. Services to achieve the static profit goal of intangible assets. At the same time, through the management of excellent intangible assets, the company's innovation power and advantages are further promoted.


The fourth core value of corporate legal affairs: providing forward-looking legal services to enterprises

The so-called "forward-looking legal services" refers to the forward-looking prediction of the norms, spaces and directions that the law may breakthrough in the future from the perspective of legal development based on existing legal rules, thus providing such guidance to enterprises in advance. Do a good job of the layout. This kind of forward-looking legal service is entirely possible. Taking the company law as an example, the open structure of the company law means that the threshold for "founding a company" will gradually decrease, and the degree of autonomy of the company's shareholders will increase. This means that as long as the principle of "no freedom, no freedom" is upheld, it can provide forward-looking legal services for enterprises to open up new fields and new industries. This kind of forward-looking legal service is premised on the need for a legal knowledge of existing laws and regulations, and based on the needs of social reality and the need for legislative improvement, there are sufficient reasons to believe that the direction of laws and regulations is developing, thus Development provides forward-looking guidance. With such forward-looking legal guidance, enterprises will undoubtedly be able to quickly form competitive advantage, form an industry advantage, and may even become a leader in the industry.


The fifth core value of corporate legal affairs: standardizing governance structure and promoting overall value

The standardized governance structure has special significance for the development and growth of enterprises. This normative governance structure can be reflected in at least four different levels:

(1) It is internal normative governance, mainly the specific operation of shareholder relations, shareholders' meetings, a board of directors, and board of supervisors;

(2) It is the head office and branches, mainly the different functions undertaken by them, and the relationship between rights and obligations of each other;

(3) It is the relationship between the head office, subsidiaries and affiliates;

(4) The balance of interests between enterprises and agents, distributors and distributors.


As a corporate law, standardizing these four levels of legal relationships will undoubtedly greatly enhance the overall value of the company. Admittedly, many of these legal issues are based on routine risk prevention functions, but in the handling of these relationships, forward-looking legal services are often needed. Take the form of enterprise organization as an example. If you choose to use a limited liability company as an example, the number of its shareholders cannot exceed 200. However, the development and operation of many enterprises depend entirely on the expanding "fan base" and hopes to bring these "fans". When becoming a customer, it also becomes a "shareholder". Entrepreneurs will ask: How to do it? Generally speaking, laws and regulations always lag behind the actual development. What the legal system can do is to guide the entrepreneurs in the right direction in areas that are still unclear, thereby enhancing the overall value of the enterprise.


The core value of corporate legal affairs: equity allocation design

The shortcoming of equity allocation is a time bomb buried in the heart of the team, enough energy to make the team crash instantly. Moreover, the shortfall in equity allocation is very common, and one-third of the teams that the online legal department has seen have different levels of problems. In general, ask the founder's founding team equity allocation, if there are obvious defects, the conversation will come. One is because of the huge risks caused by the distribution of defects, and the other is because of doubts about the founder's own judgment. The issue of equity allocation occurred at the earliest stage of the formation of the founding team, so it is distressing like a congenital disability. There are many reasons for this. At that stage, the founders were busy developing, teaming, resigning, and finding financing, often ignorant of equity allocation. The most talked-about between the founders is the brotherhood, and the power of talk about the interests is hidden. Equity distribution can be a high-speed engine for the company, or it can be a time bomb buried in the heart. At this time, legal personnel is required to design the company's equity allocation. But only knowing these big principles is not enough. For example, how to design equity incentives, how to achieve the purpose of equity incentives, how to design agreements on behalf of each other can be mutually restrained, how can we not "marry for marriage"; how to share shares and voting rights Whether or not to differentiate the treatment; how to pay the equity and paid-in capital contribution to the equity; whether the share divorce allows the spouse to split the equity; whether the equity can be inherited, etc., requires careful prior arrangement.



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