Legal mentor speaks on why legal awareness is essential for entrepreneurs

Guwahati: With 7 years of experience in corporate law, including roles in law firms, litigation, and in-house counsel, Shradhanjali Sarma currently works as an Independent Legal Counsel with Your Virtual Legal Counsel (YVLC), providing strategic legal advice to startups in India and abroad. Her expertise includes contract management, corporate advisory, policy consulting, and technology law. She has led high-value projects and practiced as a commercial litigator in Bombay before joining Dunzo Digital Private Limited.

Business North East conducted an exclusive interview with Shradhanjali Sarma to discuss the necessity of legal awareness for entrepreneurs and many other things.

Excerpts from the interview are as under:

Business North East: Why is legal awareness essential for entrepreneurs?  
Shradhanjali Sarma: Legal awareness is important for entrepreneurs to safeguard their business. We often think that legal awareness is only for established companies and that not every entrepreneur needs to be legally aware. In my experience, legal awareness is crucial for entrepreneurs as it helps them navigate the complexities of starting and running a business. Understanding legal requirements ensures compliance with regulations, avoiding fines, lawsuits, or other legal issues. It aids in protecting intellectual property, drafting enforceable contracts, and managing risks. Legal knowledge also empowers entrepreneurs to make informed decisions, from structuring their business to handling employment law and tax obligations.

Additionally, legal awareness also enables entrepreneurs to prioritize issues that require immediate attention and understand the legal implications of their business decisions. This knowledge helps them anticipate how different decisions might impact their business, allowing for better risk management and more informed strategic planning.

Explaining it illustratively, culturally, we are a community that places immense trust in each other for any transactional relationship, and we often do not believe in entering into contracts. But unless we have a sense of legal awareness of why we need contracts and their significance, we will not be able to understand the impact that the absence of contracts will have on a business. Additionally, many believe that legal assistance is only necessary when an issue arises, leading to a reactive approach where help is sought only after a major obstacle occurs.

However, legal awareness is more than just handling court cases; it's about understanding the importance of corporate legal advice before disputes escalate. Litigation and corporate law are distinct areas, and entrepreneurs must recognize this distinction. Proactive legal guidance is essential for preventing issues and supporting business growth.

Therefore, I believe legal awareness is crucial for building a healthy and sustainable business. We often see the legal essentials of a business as a short-term expense, but in the long run, they can actually save significant costs by helping businesses avoid financial pitfalls.

BNE: Please let us know your association with Assam Start-Up and NEHHDC.  
Sarma: I am a legal mentor both at Assam Startup and NEHHDC. For Assam Startup, I hold legal awareness sessions on different legal aspects to help entrepreneurs understand the legalities around a business. For NEHHDC, I am a legal mentor for one of their initiatives termed as Tejaswini.

Assam Ideathon 2024 is a business idea contest to promote and identify women from Assam with an entrepreneurial mindset providing solutions to local problems. An undertaking of the Women’s Cell, Industries, and Commerce Department, Govt. of Assam, along with the North Eastern Handicrafts and Handlooms Development Corporation Ltd. (NEHHDC), as the implementing agency, Tejaswini has been ideated to be an innovative way to give a platform to the entrepreneurial women of Assam, aged between 18 yrs to 50 yrs, to pitch their ideas and earn recognition in a wider network.

As a legal mentor for both Assam Startup and NEHHDC, I assist startups and entrepreneurs in understanding the legal aspects of running a business. My role involves guiding them to create legally compliant businesses by navigating the complexities of business law, ensuring they are aware of the necessary legal requirements, and helping them prioritize legal issues effectively.

BNE: What kind of advice do startups take from you?  
Sarma: Every startup, based on its business structure, has different legal needs. Legal advice is mostly around registration, conversion of one business structure into another, contractual work, protection of intellectual property rights, procurement of different licenses, and the impact of different regulations/legislations on businesses, fundraising, etc.

BNE: What kind of legal support is your organization providing to entrepreneurs?  
Sarma: I am currently associated with Your Virtual Legal Counsel (YVLC), a legal tech consultancy providing virtual legal counsel services to clients while being fully remote. Our aim at YVLC is to provide comprehensive legal support that navigates regulatory complexities and drives business success. Another important point to mention is that YVLC comprises seasoned lawyers who have previously served as in-house counsels for companies like Airbnb, Google, Walt Disney, Wipro, and CultFit. Having worked within these organizations, we possess a deep understanding of business operations, enabling us to offer practical and effective legal advice tailored to startups. This insight allows us to contribute meaningfully to the business growth of the startups we support.

YVLC helps startups by providing the following services:
- Business Formation and Structuring: We advise on the best legal structure (e.g., LLC, corporation) for the startup and assist in incorporation. We also help in the conversion of one business structure into another - such as sole proprietorship into an LLP, LLP into a private limited.
- Intellectual Property Protection: We help secure patents, trademarks, and copyrights, and also draft IP agreements.
- Contract Drafting and Review: Draft and review key contracts, including NDAs, employment agreements, service agreements, and vendor contracts. We draft contracts based on the requirements of each business and also negotiate with other parties if required.
- Legal Advisory: We advise startups on their day-to-day legal hurdles depending on each business type.
- Fundraising: We assist with fundraising efforts, including drafting investment agreements and term sheets.

In addition to these, we also have specific plans for women-led startups.

BNE: What legal problems can entrepreneurs fall into?  
Sarma: I wouldn't call them legal problems, but rather legal hurdles that can impede business growth and incur costs. If you're not legally aware, several issues might arise, such as choosing the wrong business structure, failing to protect intellectual property, not securing your rights and obligations through contracts, poorly drafted agreements, non-compliance with industry-specific regulations, and violations of labor laws. These hurdles can create significant challenges for your business, emphasizing the importance of legal awareness and also the need to legally safeguard your business for sustainability.