Unexpected Legal Risks Your Agency Can Encounter

Many entrepreneurs – especially startup founders such as digital marketing agencies trying their hand at business for the first time – are way too excited about all the possibilities opening in front of them to think that the most difficult problems they will have to deal with can originate not from poor market analysis or imperfect product, but from legal missteps. Also, even if they consider this possibility, risks often come from completely unexpected directions. Here are some tips for minimizing legal risks in marketing agency business!

1. Not having website Terms and Conditions or copying them

Some business owners consider website Terms and Conditions to be little more than an empty formality that should be done in the fastest way possible or ignored altogether. It is an unhealthy approach to the problem. Because you are required by law to have them. Besides, legal risks and fines for lacking clearly defined Terms and Conditions can be quite significant, especially for a small business.

As for copying them from another website, it is even worse in some respects. Because it constitutes a form of plagiarism and violates their owner’s copyright. In addition to that, if you don’t read them carefully, you are at risk of using Terms and Conditions that are irrelevant to your business or contain clauses that can cause you additional harm.

2. Employees using torrents

Of course, torrents have a number of legal applications. But we all know and understand that they constitute but a drop in the ocean. This makes them a legally grey area.

The problem is, when a person downloads torrents individually, he alone faces potential legal issues. But when he does it using corporate hardware, he puts an entire company at risk of being accused of copyright infringement.

Using VPN alleviates the danger somewhat. However, it is still better to keep an eye on what your employees are using it for. In addition to copyright issues, torrents downloaded from some shadier websites occasionally contain malware. Again, it is unpleasant when a private computer gets infected. But when it happens to your entire corporate network it is nothing short of a catastrophe.

3. Anti-bullying laws

Many states have laws protecting employees from bullying in the workplace. Although bullying accusations are usually directed against managers and not business owners, associated legal procedures, financial expenses, negative influence on the staff’s morale and time necessary to deal with the problem can be very costly.

To prevent this from happening, make sure that all your employees have an opportunity to come to you or your representative to report bullying and that you deal with these situations in a meaningful and sensitive fashion.


4. Job titles

As they grow, businesses naturally create new departments for different functions (sales, marketing, etc.). Some companies tend to create a number of impressively sounding positions, generally for reputational purposes, to reflect that they are growing fast and need numerous senior managers. However, it can lead to problems.

Firstly, if you overdo it, it has the opposite effect. It is hard to take a company seriously when half of its staff are senior executives and vice presidents. Secondly, it can lead to legal risks in the marketing agency business.

For example, if a glorified salesman called a Sales Executive commits to a contract, and your company finds itself incapable of fulfilling its conditions. Your client can file a lawsuit claiming that he dealt with a senior executive and therefore was led to believe that he had the necessary authority to make promises.

5. Privacy laws and regulations

If your website collects any kind of personal information about your customers, you should make sure you comply with all relevant laws and regulations, especially after recent law changes in this sphere. This should also be reflected in your Terms and Conditions. This means it is yet another reason to have it custom written for you by an experienced lawyer.

Make sure they fully comply with the current legislature dealing with the matter. If you are going to work internationally, also check for compliance with the local laws of all the countries your business will operate.

6. Wrong ownership structure

This is the first and most important decision you have to take when you found a marketing agency business. No matter how eager you are to start out, you should give it much thought.

Choose the wrong ownership structure, and not only will you have to pay more taxes than you potentially could have, but you will also meet unlimited personal liabilities for any debts incurred by your company.

Consult a lawyer specializing in corporate law. Describe your situation and he/she will recommend a structure that would be optimal in your case.

7. Immigration audits

Are you sure all your employees can legally work in the United States? Of course, illegal immigrants are often ready to work for lower than average salaries. Also, you can sometimes find a specialist who doesn’t have a full official right to live and work in the country.

Although hiring such people or pretending you know nothing about their situation may look like a good idea at the time, it can have very serious consequences. It is especially bad if your company ends up heavily relying on illegal labor – an extensive surprise immigration audit can leave your business utterly crippled.

So, make it your own job to identify illegal immigrants with forged documents. Make background checks prior to hiring a person and top-down sweeps of your current staff to identify illegal workers before they create trouble for you and your business.

Running a business is difficult enough without having to deal with legal issues. So, it is best to cover your bases and prevent the risks from the outset – or at least to minimize their potential impact before something actually happens.

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