August 14

Can You Use Your Employer’s Group Legal Insurance for Your Startup’s Legal Needs?

If you’re looking to turn your side hustle into your full-time career, you might be wondering if you can use your current employer’s group legal insurance for your startup’s legal needs. It's common to opt for group legal insurance offered through your workplace benefits. These group insurance plans provide free legal assistance for a variety of needs from law firms that have contracted with the insurance company to perform the legal work.

While group legal insurance might seem like an easy option to save on your startup’s legal documents, it’s likely inadequate to serve the specific needs of your business and provide the ongoing legal support you need to turn your side hustle into a successful business.

Here are the reasons why your startup needs the kind of legal expertise and attorney-client relationship that goes beyond the scope of group legal insurance coverage. I’ll explore the potential pitfalls of using group legal insurance for your startup and share suitable alternatives to ensure your young business is protected and prepared for every stage of its growth.

One Size Doesn't Fit All

When it comes to your startup’s legal needs, there is no such thing as a one-size-fits-all solution. While there are some documents that every business needs–articles of organization, an operating agreement, and a company handbook–there are additional legal documents that every business needs that are unique to that business’s operations and the owner’s aspirations and definition of success. Your business’s exit strategy, cash flow, expenses, and projected growth must be taken into account to provide comprehensive documents that will serve you and your business.

Your current employer’s group legal insurance plan may offer some business legal services, but a generic set of business documents simply isn’t enough to protect your business and set it up for long-term success. To create a successful business, the process needs to begin with an evaluation of your business goals, your exit plans, and your plans for financing the business and growing the business. This is why we don’t have a one-size fits all solution for business owners, but instead begin our work with you by looking holistically at everything that makes up your company.

Unfortunately, the type of cookie-cutter legal documents you are likely to receive through your group legal insurance plan simply won’t include the kind of comprehensive considerations and strategic counseling necessary to properly plan for and protect you and your startup from any issues that may arise in the future.

Legal Insurance Plans Nickel and Dime

Many group legal insurance plans boast free legal services after your deductible is paid, but what isn’t revealed is the limit of the coverage.

Only certain types of legal services are covered under group legal insurance plans. Business law is frequently covered, but the kind of work you will receive is a mere set of documents, similar to what you could create yourself online, and not a customized, well-counseled strategic plan that will be sure to work for your business and your life.

More importantly, most legal insurance plans have limits to the amount of claims you can file for each type of service each year. For example, you may only be covered to create your company’s operating agreement once a year, but won’t be covered if you need to edit the operating agreement mid-year due to changes in your company’s structure or processes. Business planning isn’t something you do once, as your goals in life will change, your business will change, and the law will change. Business documents created through a legal insurance plan will not keep up with those changes, so you may receive documents, but those documents aren’t likely to be what your business will need when something happens to you.

You Need a Heart-Centered, Counseling-Based Planning Approach

Owning your own business is far more than filing Articles of Incorporation or running payroll. It’s also about proactively avoiding issues for your business and creating strong systems that your business can leverage for planning and growth.

What’s more, the needs of your business and the challenges you’ll face as a business owner are constantly changing. That’s why it’s crucial to work with an attorney who has an ongoing relationship with you and your business and who can advise you strategically throughout your business journey, rather than just serving you one time with incorporation of your business, but with little understanding of your business needs.

As your dedicated Personal Family Lawyer® with a business law focus, I take a holistic approach by working closely with you to understand your business and the dreams and aspirations you have for your company and life as a whole.

To do this, I start by getting to know you and your desires for your business. I then walk you through my LIFT Business Breakthrough Session™ where we look at your Legal, Insurance, Financial, and Tax systems to assess which areas need attention and make sure your business is built on a strong foundation.

From there, I offer several service models to address your needs on a flat fee basis or through monthly meetings as your ongoing legal counselor. No matter which service model you choose, you always receive personalized service and can call on me at any time as an extension of your team.

Legal Insurance Plans Lack Long-Term Considerations

You may own your business for a short time or a lifetime, but no matter how long you own your business, it requires a continuum of proactive strategic legal planning in order to limit liabilities and run smoothly.

Your business may expand, team members may be hired and let go and tax laws change. Your business’s legal services need to keep up.

Sadly, group legal insurance makes it impossible for the attorneys it contracts with to get to know your business or provide the kind of ongoing strategic legal guidance that yields meaningful results.

Under group legal insurance, your choice of attorneys is limited to the firms that have contracts with the insurance company, and there is no guarantee that the attorney you worked with this year will be available to help with changes in your business next year.

Certain areas of business law, like negotiations and workers' compensation, may not even be included in your coverage at all. Time-sensitive legal work needed as a result of a filing deadline or an emergency that affects your business’s succession plan may be impossible to carry out when using an attorney through group legal insurance.

As a small business, you don’t have the time or resources to make legal mistakes or delays. And if you’re starting your business while still working for someone else, you really don’t have time to file insurance claims every time you need to meet with a business lawyer.

Instead, you want to work with an attorney who can pick up right where you left off, allowing them to quickly and effectively address your business’s legal needs with just a phone call.

Trusted Expertise in Business Legal Services

While group legal insurance may seem like the ultimate way to get your startup’s legal needs taken care of, the services available through these group insurance plans simply aren’t comprehensive or strategic enough to ensure you and your business get the support and guidance you need. Instead, it’s crucial to work with an experienced business attorney who gets to know you and your company on an intimate level.

You put your heart into your small business, and your business deserves personalized attention, technical expertise, and unwavering dedication of a Personal Family Lawyer with a business focus. That’s why I have dedicated my practice to mastering the intricacies of business law as well as providing strategic guidance, allowing me to guide you skillfully through the decision-making process while looking ahead to proactively avoid issues in the future.

If you want to feel like your business attorney is a part of your team and not just an insurance claim, schedule a phone call with me. I’ll share all the details of our LIFT Business Breakthrough Session™, which kicks off our business planning process. Together we can explore what an ongoing relationship as your Personal Family Lawyer® can do to turn your side hustle into a thriving business.

This article is a service of a Personal Family Lawyer®. We offer a complete spectrum of legal services for businesses and can help you make the wisest choices with your business throughout life and in the event of your death. We also offer a LIFT Business Breakthrough Session™, which includes a review of all the legal, financial, and tax systems you need for your business. Call us today to schedule.

The content is sourced from Personal Family Lawyer® for use by Personal Family Lawyer® firms, a source believed to be providing accurate information. This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking legal advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. If you’re ready to create a comprehensive estate plan, contact us to schedule your Family Wealth Planning Session. Even if you already have a plan in place, we will review it and help you bring it up to date to avoid heartache for your family. Schedule online today.


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