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The How-To: Overcoming Lawyerphobia Here is a list of the top things that can, and do, go wrong for entrepreneurs without proper legal support.

By Ahmed Arif

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The UAE startup ecosystem has developed significantly in the last couple of years and is leading the MENA region in terms of investments. In 2017, US$560 million was invested in 260 startups, according to research from community platform MAGNiTT. With the UAE committed to strengthening its non-oil sector through diversification, startups and SMEs are rightly being recognized for the crucial role they can play in achieving this goal. This makes the case for access to proactive and sound legal advice for startups even stronger.

We know that lawyers often get a bad rap, and that many entrepreneurs are fearful of engaging with them. Many entrepreneurs think that lawyers are prohibitively expensive and are not financially viable, and therefore put them at the bottom of their priority list. Entrepreneurs can be so focused on the development and growth of their startups, and so sure of their product or service, that they tend to address the more immediate issues of funding or product development, while overlooking the legal risks that their organization may face down the track.

The failure statistics are alarming and access to quality legal services is often a key factor in a startup's failure. When money is tight, entrepreneurs may resort to Dr. Google (downloading unsuitable contract templates off the internet), or avoid spending precious cash on expensive lawyers. With early legal decisions having a significant impact on the safeguarding of a business as it scales, overcoming "lawyerphobia" early on in a company's development can prove crucial to the success of a startup or SME. Don't become another statistic. Here is a list of the top things that can, and do, go wrong for entrepreneurs without proper legal support.

A common mistake made by entrepreneurs early on is failing to choose the right legal entity to operate their business. There are multiple organizational structures available and using the correct one can be critical to ensuring that your business is successful. With so many alternatives, and without seeking legal advice, the choice can be overwhelming, and the temptation strong, to choose the cheapest or fastest form and location. Failing to choose the right structure can be extremely costly –both in terms of money and time– if you make the wrong choice and need to rearrange your company structuring later during an investment round or exit.

Many new companies fail to establish a well-written Founders' Agreement that explicitly outlines duties and obligations of each partner. When there is more than one founder, a Founders' Agreement is crucial for solving issues that may arise in the future. It is normal to believe nothing could possibly go wrong and you and your fellow founders will be friends forever. Entrepreneurs often wait too long to ask themselves the tough questions, and to think about how they will deal with the challenges that may arise in the life of their business. It is easier to discuss worst-case scenarios while the going is good than to be unprepared if the relationships go sour. Discussions between founders must be both objective and honest, and consider the current situation and future scenarios for the business and its founders. What are the roles and responsibilities of each of the founders? What happens if one of the founders wants to leave?

If you have developed a unique product, a worldchanging idea, or an eyecatching name for your business, you should consider taking appropriate steps to protect your intellectual property. It is important to ensure that your company obtains all the legal rights to own or license the intellectual property the founders have created and which are vital to running the business. It is relatively easy and inexpensive to assign this IP to the company at the time it is incorporated. The assignment process can then be built into your employment agreements as you move forward, allowing employees to transfer the ownership of any IP they create during their employment, to the company. Intellectual property rights will be a key area of focus for any investor doing due diligence on your company, so it is important to get it right from the start. Entrepreneurs should continue conducting regular reviews to ensure that the company's business is not exposed to infringement claims and force them into costly changes to the business.

Related: An Introduction To The Legal Landscape Of The UAE

As your team grows, you'll want to have a solid foundation of employment documents. Business startups often encounter employeerelated problems, but this can be avoided with a comprehensive set of employment documents, giving everyone a clear view of the rules, regulations and expectations in your workplace. Examples of essential employee documents are the following:

  • Offer Letter (basis on which employment is offered and addresses immigration procedures)
  • Employment Agreement (compensation, role responsibilities, working hours, grounds for termination, ownership of IP)
  • Company policies (policies, procedures and expectations on various matters e.g. annual leave, social media, dress code)
  • Record-keeping (including emergency contact details, annual leave, sick days, days in lieu, length of service, permission to make deductions from salary, such as housing loan, etc.)
  • Pay slips
  • End-of-employment/termination letters (including calculation of end of service gratuity and any other deductions)

This task may not be your first priority, but these parts of your website come under a surprising level of attention, especially given the recent global focus on General Data Protection Regulation (GDPR). For most businesses, launching a website will follow shortly after the incorporation process is complete. While most websites seem to have one, there's actually no legal requirement for defining Terms and Conditions. These may not be required by law, but it's still a smart thing to include. Your Website Terms of Use is the legal agreement between a user and your business. Users of your website or app agree to the terms and conditions they will follow when accessing that website or app, regardless of whether they purchase your products or services, and is designed to protect you from misuse of your website by users.

It can also limit your liability if something goes wrong and your website or app doesn't function as you intended. A Website Privacy Policy sets out the terms on which your business collects, manages, stores and uses personal information users share with you through your website. GDPR or other privacy laws may not directly apply to your business but you can set your business apart from your competitors by following global best practice and showing respect for your users' privacy by having a Website Privacy Policy.


A common cost-cutting measure by new entrepreneurs is having a poorly-drafted set of terms and conditions which don't accurately reflect how the business operates or none at all. Your Business Terms are essentially a contract governing your relationship with each of your customers. Think carefully about how your business operates, and how it may operate in future, when drafting your Business Terms. Review them regularly as your business grows or changes. The key provisions in your Business Terms will be dictated by commercial decisions (e.g. your company's sales process, variations to the scope of work, delivery, warranties and payment options). Involve employees from across your business when drafting your Business Terms and ensure that they follow them in day-to-day operations.

Related: Legal Advice Middle East Wants To Help Startups Get Legal Help Easier

Ahmed Arif

Principal at Support Legal

Ahmed Arif is a Principal at Support Legal, a NewLaw provider of world class legal advice, delivered by expert lawyers with more than 10 years’ experience gained at the world’s top firms, at an accessible, fixed price point and deployed using cutting-edge legal technology. Ahmed spent over 10 years with Freshfields Bruckhaus Deringer in Dubai, specializing in mergers and acquisitions and advising on some of the largest transactions in the region. Whilst there, he was also involved in, and is passionate about, deploying new legal technology to help lawyers work in the way that clients want, not the way that lawyers are used to. Advising both strategic and financial investors across the Middle East, Africa, Turkey and Southeast Asia, he has been involved with a number of precedent-setting deals. These include the first bank merger in Abu Dhabi, the first bank disposal in Jordan, one of the largest technology investments in the region and the first acquisitions by international private equity houses into the region. He also spent almost a year on a secondment to HSBC’s Global Group mergers and acquisitions function.

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