by Tega AkuruliNavigating Legal Considerations for New Strategies
With the fast-evolving business landscape of today, innovation and strategy development are necessary to stay competitive. However, initiating new strategies—entering a new market, employing a new technology, or restructuring a business model—has a tendency to be surrounded by a multi-dimensional web of legal concerns. To businesses, especially start-ups and firms entering new markets, legal information is as crucial as the strategy itself. This article analyzes the most important legal issues that organizations must address while implementing new strategies, ranging from intellectual property to compliance and risk management.
1. Acquainting Yourself with the Regulatory Framework
Every strategy is influenced by the legal environment in which it is shaped. Local or international, laws can enable or restrict your strategic purposes.
Most Important Considerations
- Jurisdictional Regulations: Procedures vary country to country, state to state, and city to city. What approach is adopted in Lagos may not be acceptable in London.
- Industry Regulations: Finance, healthcare, pharma, and technology industries are strictly regulated. Venturing into these sectors without careful legal checks can lead to compliance issues.
- Trade and Sanctions Legislations: Expansion in foreign countries must consider export-import laws, sanctions, and trade controls.
Action Tip: Prior to implementing a strategy, perform a complete legal review to know the regulatory environment of the target industry or country.
2. Intellectual Property (IP) Protection
If innovation is part of your strategy e.g., introducing a new product, software, or brand protecting your intellectual property is important.
Types of IP to Consider:
- Trademarks: For logos, slogans, and brand names.
- Patents: For inventions or novel processes.
- Copyrights: For content, designs, and software.
- Trade Secrets: For proprietary processes or recipes.
Not protecting IP rights results in theft, imitation, or loss of market dominance.
Action Tip: Get your IP attorney to file the required protections in all markets where you will be conducting business.
3. Contractual Clarity
New initiatives include service providers, suppliers, distributors, or partners. Clear, enforceable contracts are essential to avoiding disputes.
Contents for Contracts:
- Scope of Work and Deliverables
- Payment Terms
- Confidentiality and non-disclosure
- Termination Clauses
- Jurisdiction and Dispute Resolution
Poorly drafted contracts can lead to lawsuits, destroyed partnerships, or loss of assets.
Action Tip: Seek legal advice to review and draft contracts consistent with the goals of your strategy.
4. Data Privacy and Data Protection Compliance
Digital strategies are more and more common, and data are an asset and liability. Data collection, analysis, or user interaction-based strategies must meet data protection law requirements.
Key Laws to Consider:
- GDPR (Europe)
- NDPR (Nigeria)
- CCPA (California)
Non-compliance can result in substantial fines and reputational damage.
Action Tip: Integrate data protection and user consent procedures into the very fabric of your strategy, rather than as an afterthought.
5. Employment and Labor Compliance
If your strategy involves hiring, outsourcing, or restructuring your labor force, you will have to comply with local labor law.
Legal Considerations to Watch Out For:
- Employment Contracts and Benefits
- Termination and Severance Policies
- Workplace Safety Laws
- Remote Work and Cross-border Employment Rules
Mismanagement of employment law can lead to lawsuits or regulatory fines.
Action Tip: Work with local HR and legal experts when growing or adjusting workforce arrangements.
6. Tax Consequences
Structural shifts, new models of business, or international operations will inevitably have tax consequences.
Tax Considerations:
- Corporate Taxes by Jurisdiction
- Transfer Pricing Regulations
- Double Taxation Treaties
- Indirect Taxes (VAT, GST)
Lack of synchronizing tax planning with strategic plans can reduce profitability or attract audits.
Action Tip: Seek advice from tax experts to plan your strategy for maximum legality and financial effectiveness.
7. Licensing and Permits
Some strategies need formal sanction prior to implementation. These could include:
- Business operation permits
- Industry-specific licenses (e.g., food handling, medical practice)
- Environmental approvals
- Operating without valid licenses can close your business or put your plans on hold.
Action Tip: Research and obtain all the necessary permits beforehand.
8. Risk Mitigation and Legal Insurance
All plans involve risk. The legal risks liability through to violations of compliance can derail even the best plans.
Risk Management Steps:
- Perform a Legal Risk Analysis
- Develop a Compliance Program
- Purchase Liability Insurance
- Regularly Train Employees in Legal Processes
Action Tip: Make legal risk management part of your strategic planning process.
9. Corporate Governance and Ethics
As companies expand or change direction, ethical standards and sound corporate governance are essential to maintain credibility and investor trust.
Governance Must-Haves:
- Clear leadership structure
- Defined roles and responsibilities
- Transparent decision-making
- Ethical codes of conduct
Action Tip: Make sure your new direction meets your corporate mission and stakeholder expectations.
Legal problems are not obstacles legal problems are strategic tools. By taking an active role in legal issues, organizations can avoid costly mistakes, gain competitive advantages, and ensure the longevity of their strategies. Whether you’re a start-up, a growing business, or an incumbent venturing into new terrain, integrating legal counsel into the heart of your strategy will be the key to its success.
Next Steps for Businesses:
- Perform a Legal Strategy Check-up before implementing any major change.
- Establish a Legal Compliance Team or appoint a chief legal officer (CLO).
- Stay current with new regulations and refine your strategy.