An Interview With Chad Silverstein
Using templated contracts for the specific business needs. It’s often easier (and cheaper!) to come by templated contracts for a business. While those may work in some instances, they’re not tailored to each specific business. Each business and business relationship is unique and important nuances might be missed with generic templates. Templates may also have outdated language and not include jurisdiction specific clauses, which could lead to compliance issues or in worst case scenarios, unenforceable contracts.
In today’s fast-paced business world, the complexity of legal matters can often be overlooked, leading to significant repercussions for businesses of all sizes. From startup ventures to established corporations, the absence of legal guidance can result in critical errors that affect growth, operations, and sustainability. These mistakes range from issues with contracts and intellectual property to compliance and employment law, each carrying the potential for financial loss and reputational damage. I had the pleasure of interviewing Shefali Lakhani.
Shefali Lakhani is the founder and managing attorney of Lakhani Legal PLLC in New York City. Lakhani Legal is a business and IP law firm, working with businesses, startups, and entrepreneurs, providing them legal advice through the lifecycle of their business. Through her nearly ten years as an attorney, she’s worked at law firms and in the tech and innovation spaces, leveraging her skills and expertise to provide tailored and forward-thinking legal solutions to her clients.
Thank you for joining us. To start, could you share your “origin story” with our readers? How did you begin your career? What challenges did you face in the early days? How did you overcome them?
I started my legal career in a fairly traditional fashion — practicing corporate law at a couple of law firms. At the law firms, I worked with private equity funds, start-ups, and businesses at different stages of their growth, providing general legal business advice, drafting and negotiating commercial contracts, and assisting with fundraising and complex M&A transactions.
There was something there that didn’t quite fit, something that didn’t quite light up my curious, innovation-driven, and entrepreneurial mind. Something that didn’t quite fulfill my desire for purpose-driven work.
So I stepped away from the traditional law firm setting and went to work in the innovation, fintech, and legal tech spaces, solving big problems. Working on this side of the table provided me with an entirely new perspective on building a business, solving problems, listening to customers and clients, and creating impact.
In due time, I realized that I could merge my skills and experiences. I could start my own company, leveraging my background in innovation, tech, and legal. I could create an impact by using my skills to support my clients and setting them up for success by helping them build a strong legal foundation. I could create an impact by building a space for myself and for my clients to show up authentically, without feeling stuffy or overwhelmed by legal challenges.
So, that’s what I did. I started Lakhani Legal, a business and IP law firm. I work with cutting edge startups, impactful businesses, and creatives in an era of expansion, helping them build a strong legal foundation.
Is there a particular book that made a significant impact on you? Can you share a story or explain why it resonated with you so much?
There are rarely individual books, movies, podcasts, or songs that make a significant impact on me, but with each piece of information I gather from these sources, I’m able to create a clearer picture of and better understand the world and people around me. With that, each book, article, podcast, song, or story I’ve encountered has impacted how I have thought about building a career, building relationships, building community, and building a life.
As the great Maya Angelou once said, “Do the best you can until you know better. Then when you know better, do better.” For me, reading and collecting information provide me with the knowledge and understanding to know better and then do better.
Do you have a favorite “Life Lesson Quote”? Do you have a story about how that was relevant in your life or your work?
Cliche, but the quote “In the end, we only regret the chances we didn’t take,” by Lewis Carroll has always resonated with me. The quote is constantly relevant to my life and pushes me to take chances on myself in my career and personal life because, as they say, we only regret the chances we didn’t take.
It can be really easy to get caught up in what you should be doing, how you should be doing it, and what others might think of you for going off the beaten path, but at the end of the day, none of those things matter if you’re not happy with the decisions you’ve made in life.
This quote has allowed me to confidently make the decisions to explore more non-traditional career paths, start multiple businesses, move to new cities, meet new people, and make space for myself in this chaotic world.
How have you used your success to make the world a better place?
I use my legal knowledge and expertise to make complex legal issues more accessible and digestible for my clients. Simplifying issues to make legal matters less daunting can help ensure that my clients are well informed and can use that information to make decisions and stay well protected in their businesses.
As a law firm owner, I constantly work to create a space of inclusivity and authenticity, allowing myself and my clients to show up exactly as we are and without fear of judgment or overwhelm, especially as they’re looking to rectify legal mistakes.
I’m also constantly looking for ways to give back to the community — whether it’s through pro bono legal work, providing free education and workshops where I can, or by speaking with and assisting others considering a career in law or a job post-graduation.
Ok, let’s now turn to the central part of our interview. What is the most common legal mistake you see businesses make due to the lack of proper legal counsel, and what are its potential consequences?
One of the most common legal mistakes I see businesses make is failing to enter into written agreements for business transactions or arrangements. This is especially common when people enter into business partnerships with friends or family, but by no means uncommon in other situations.
Contracts are the cornerstone of every business relationship and help set clear expectations around that relationship. They contemplate what happens when the relationship ends or doesn’t work out. Contracts are necessary no matter what the transaction, how big or small the transaction, or with whom you might be entering into the transaction. This might include a one-off consulting engagement, a long term business partnership, or an agreement with a supplier to provide raw materials. Operating without valid written agreements can have significant consequences, including lack of legal protections, financial losses, loss of intellectual property, and damage to business and personal relationships.
The job of a trusted legal advisor is ultimately to manage and mitigate risk in business and business relationships. A good business attorney has likely contemplated the ways in which a business relationship may go south and has likely seen situations where a valid contract may have protected the parties, their time, and funds. A trusted legal advisor can support businesses in these situations.
Can you share an example where early legal intervention could have significantly altered the outcome of a business dispute or challenge?
Early legal intervention may be some of the most important in resolving or preventing disputes in the long term. Consider two friends looking to start a business. Given their friendship and personal relationship, they decide to forgo the legal formalities, assuming that there won’t be any issues in their partnership. They grow quickly and soon get an investor interested in investing in their company. The two friends can’t agree on whether to accept the investment or not and decide instead to part ways. In parting ways, they also can’t agree on who should own the intellectual property and who owns what percentage of the company.
Early legal intervention could’ve helped in several ways. First, governance documents (i.e., operating agreement, partnership agreement, etc.) would’ve helped clarify ownership and contribution amounts, roles and responsibilities, decision making, and dissolution of the company. Intellectual property would’ve been properly assigned to the company. Early legal intervention may have also pushed the two to discuss and decide their short and long term goals, including when and how to scale and accept outside investment.
Ultimately, early legal intervention could’ve helped the two build a stronger and longer-lasting company, helped identify and account for any issues, and prevented large legal fees in untangling these disputes.
How do changes in digital technology and online business practices complicate legal issues for businesses without dedicated legal advice?
The evolution of digital business practices, changing data privacy laws, emergence of new technology, and an almost *requirement* for every business to be online has created several complex and new legal challenges. For example —
AI allows us to quickly and sometimes more comprehensively create content or work product. It may also create issues in copyright infringement as your AI-produced output may be infringing on others’ work or may not have any intellectual property rights in the work created.
With social media, it’s much easier to infringe on or have others infringe on your intellectual property rights — whether it’s incorporating third-party music into your posts or having your content copied. Each social media platform has its own terms of use, so what may be permissible on one platform may not be on another.
Changing regulations like the California Consumer Protection Act or the General Data Protection Regulation require companies to have privacy policies and implement appropriate security measures and data handling policies for customer data. Without proper legal guidance, it can be really easy to miss a crucial requirement as to how these should be structured.
As a business attorney, it’s my job to be aware of and inform my clients of the changing legal landscapes and requirements. The speed at which technology changes and creates new challenges makes it difficult for business owners to keep track of such changing requirements and ever-evolving legal challenges. This can lead to increased legal risk, potential fines and lawsuits, and even missed opportunities in leveraging new technologies. It’s crucial to have a trusted business attorney and advisor guide businesses through some of these challenges so that business owners can focus on just that — building and growing their business at ease.
In your experience, how does the absence of legal counsel impact a business’s approach to contracts and negotiations, and what advice would you give to mitigate these risks?
Contracts are the cornerstone of any and every business relationship. They help create an understanding of what each of the parties is to bring to the table, the terms of their relationship, how long the relationship will last, and what happens in the event something goes wrong.
Oftentimes, businesses may view contracts as an annoying legal formality, but contracts are crucial risk mitigation devices. As such, when entering into contracts, businesses may focus on just the business terms and pay less attention to important legal concepts such as termination rights, indemnification and risk allocation, intellectual property rights, and dispute resolution, potentially putting their business at risk.
Legal counsel can be instrumental in helping businesses understand and negotiate some of these important provisions. Legal counsel can also consider and account for each and every aspect of that business relationship. To mitigate any risks, businesses should work with legal counsel to help create and enter into comprehensive and enforceable contracts to stay well protected.
What legal pitfalls do new businesses often overlook during their initial setup and growth phases, and how can they proactively address these issues?
Understandably, new businesses may not want to spend much on legal fees at the onset of their business, and may use online legal platforms (won’t take any names here) to create their business entities, set up initial governance documents like operating agreements, or file trademarks. While such services may work for some businesses, they have many limitations. Given that they don’t have a full picture of each business or its needs, they’re not specifically tailored to any business. They provide generic templates that may not be fit for many businesses. At the end of the day, they’re document preparation services and don’t provide the detailed review and advice an attorney would.
A number of issues may arise in using these services, for example –
A tech business may create an LLC as their entity structure, only to realize that a Delaware corporation is much more aligned with their long term needs.
A simple, short form operating agreement may be created for a business, which may not account for business specific needs such as intellectual property or exit strategies.
A business creating an entity in one state but operating in another may not realize that they need to make the requisite filings in the state where they’re actually running their business, leading to potential fines and legal issues.
Most of the issues would likely be more expensive to correct after the fact than if an attorney were used right from the start. It’s best to work with legal counsel that understands the business, its needs, and its long term goals, so that the attorney can provide tailored legal advice and help that business build a solid legal foundation.
Here is our main question. Could you list and briefly explain “Top 5 Mistakes Businesses Make Without Legal Counsel” based on your experiences and insights? If you can, please share a story or example for each.
1 . Selecting the wrong entity structure. Each of the different legal business entity structures (i.e., LLC, corporation, partnership, etc.) provides protection and benefits. The entity best suited for a business really depends on a number of different factors, including long term goals of the business, size, tax considerations, etc. For example, a tech company looking to eventually raise venture capital would do best to incorporate as a Delaware corporation, whereas a local mom and pop business may do best as an LLC. If a business selects the wrong entity, converting or reincorporating into a new entity can end up being more expensive and time consuming than working with legal counsel to determine the best entity structure from the start. It can also have unintended and expensive tax consequences.
2 . Not following corporate formalities. While it’s an important first step for owners to set up a legal business entity to protect their personal assets, to continue receiving the benefits of that entity, it’s also necessary to ensure that the business is an entity separate from the individual. This can be done by following corporate formalities including, among other things, having proper governance documents (i.e., operating agreement, bylaws, etc.) in place, obtaining a federal tax ID, opening a separate business bank account, not co-mingling funds, keeping records of all business decisions, etc. Not following corporate formalities can have detrimental consequences. For example, consider a tech startup that is looking to raise outside investments. A poorly run businesses without the formalities would likely be a red flag to investors. Worst case scenario would be a piercing of the shield provided by that legal business entity and personal liability against the owners’ assts in the event of judgement against the business.
3 . Using templated contracts for the specific business needs. It’s often easier (and cheaper!) to come by templated contracts for a business. While those may work in some instances, they’re not tailored to each specific business. Each business and business relationship is unique and important nuances might be missed with generic templates. Templates may also have outdated language and not include jurisdiction specific clauses, which could lead to compliance issues or in worst case scenarios, unenforceable contracts.
4 . Not trademarking their brand assets. A business’s brand is one of its most important assets. A trademark is a representation of that brand. Not obtaining federal registration means that a company doesn’t own the brand and potentially the customer recognition and goodwill it’s building using that brand. Dealing with claims of infringement or having to rebrand can cost exponentially more than the initial trademark registration itself. Once registered, a trademark can provide federal protection, deterrent against infringement, and an additional asset for business growth, through licensing, franchising, or sale of intellectual property assets.
5 . Getting advice online, from your friend’s uncle, or a fellow business owner. One common theme that I hope is clear through this entire article is that each business is unique, and so it needs legal advice that is tailored to that specific business’ needs and long term strategy. What may have worked in one situation or for a specific type of business may not work for another. Finding generic advice online or from a friend or relative that may not understand the nuances of that business won’t be helpful, and may in some circumstances even be detrimental to the business. Without effective legal counsel to understand the nuances and needs of a business, it’s hard to receive that tailored advice. Consider two similar businesses in two different states, California and Texas, which have different employment laws. The two businesses would provide different employment agreements to their employees, which may only be uncovered by speaking with an attorney.
You are a person of great influence. If you could inspire a movement that would bring the most amount of good for the greatest number of people, what would that be? You never know what your idea can trigger.
I’d love to use my influence and platform to provide accessible and affordable legal and business education and funding, empowering individuals across industries, cultures, and socioeconomic lines to explore their ideas and passions and turn them into sustainable businesses.
Funding is necessary to start and scale a business, whether it be to purchase raw materials, hire employees, or invest in R&D. Education is important in building business acumen, problem solving skills, and industry knowledge. Both work hand in hand to allow entrepreneurs to make informed decisions, plan for sustained growth, and implement their forward thinking ideas.
I hope this movement empowers people to build businesses, build community, and find creative solutions for problems in our community.
As we wrap up, how can our readers follow your work?
You can follow me on LinkedIn and Instagram.
Thank you for these fantastic insights. We greatly appreciate the time you spent on this.
About the Interviewer: Chad Silverstein, a seasoned entrepreneur with over two decades of experience as the Founder and CEO of multiple companies. He launched Choice Recovery, Inc., a healthcare collection agency, while going to The Ohio State University, His team earned national recognition, twice being ranked as the #1 business to work for in Central Ohio. In 2018, Chad launched [re]start, a career development platform connecting thousands of individuals in collections with meaningful employment opportunities, He sold Choice Recovery on his 25th anniversary and in 2023, sold the majority interest in [re]start so he can focus his transition to Built to Lead as an Executive Leadership Coach. Learn more at www.chadsilverstein.com
Shefali Lakhani Of Lakhani Legal On The Top 5 Mistakes Businesses Make Without Legal Counsel was originally published in Authority Magazine on Medium, where people are continuing the conversation by highlighting and responding to this story.