Prevention of unnecesary Risks and Costs for Businesses 

October 2, 2024

Arias - Andres Marroquin, lawyer in ARIAS Guatemala and expert in Commercia Law, shares the following article on the importance of lawyers as strategic allies in business legal compliance and risk prevention, helping business owners avoid unforeseen risks and costs.

Usually, lawyers are solicited when a situation that needs to be resolved arises; however, should this be lawyers’ only role? Not entirely.

Law professionals also have a role that all businesspeople should be aware of, if they wish to prevent risks and unnecessary costs in the future. Such a role could be resumed as: corporate legal compliance and prevention.

The latter refers to the role that lawyers have in the analysis and review of commercial operations, before any contingency may appear. This is, that the lawyer has an active role prior to commercial operations being involved in any litigation, claim, government sanction, or any other situation that involves unforeseen sanctions. The lawyer could make a prior analysis of the business in general terms, or, focus legal efforts in a specific division that entails a bigger economic interest (and therefore, risks).

For example, commonly through commercial operations, the following contingencies (which could have been prevented), could be:

Commercial contingencies — distributorships are carried out without any written contracts, for which, both parties of the relationship find themselves in a disadvantage in respect of the certainty of their rights and obligations.

Employment contingencies — certain actions or omissions, that may alter labor relationships, are carried out and therefore this may result in unnecessary litigation for both parties involved.

Regulatory contingencies — operations are initiated without considering any applicable regulations, which may be very specific, and therefore sanctions are applied by public offices (even business operations may be suspended).

Corporate contingencies — corporate aspects, for businesses structured under a legal person scheme, are not fully in compliance with local commercial laws or are outdated, which may have effects in the future, such as complicating access to credit.

To avoid such scenarios, from the beginning of, or even prior to carrying out business operations, businesspersons should receive appropriate legal advice. This may represent an additional cost, but in reality, good legal advice means avoiding complications in the day-to-day operations.

Finally, lawyers should represent a delay or interruption of business activities, but rather they should be a strategic ally, so that business operations are carried out with low risk and efficiency, from a legal standpoint.

At Arias, we have experienced professionals in legal compliance and risks prevention. Should you have any comments or queries on the aforementioned, let us know.

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