The New Year energizes us to plan for success in the coming months. To increase the odds of meeting your business goals, we suggest taking a quick inventory of legal risks and brainstorming corrective actions for 2023. While important, legal risks may not seem urgent until a related problem impacts your business (i.e., you are subject to litigation, a business dispute erupts over unclear contract terms, an insurer or Medicare Administrative Contractor notifies you of billing/coding problems, or an employee makes a claim). Once present, legal risks can take a significant amount of time, expense, and energy to resolve that could be spent elsewhere in your business. We recommend taking a few minutes today to ask yourself the following questions:
- What Caused Problems in 2022? Often, past problems are the best predictor of future issues. What caused issues that you did not expect, or did not expect would take so much time and energy to resolve, in 2022? For example, did you spend more time and energy than you expected dealing with employee complaints or claims? If so, consider what might have prevented or reduced those issues, like updating employee contracts, updating your employee handbook, or changing the way that you communicate around key business decisions that impact your employees.
- What’s on Deck for 2023? Revisit your business plan for the coming year and ask if any steps require legal compliance or input. For example, are you considering a strategic transaction involving the sale of your business or a new third-party relationship? If so, that will require additional planning and effort beyond the hard work that you devote to running your business already. If you’re contemplating a transaction involving a California-based business, it’s worth noting that, effective April 1, 2024, the California Health Care Quality and Affordability Act (HCQAA) will impose new regulatory notice and approval requirements for health care entities that may substantially delay or preclude certain transactions. To the extent contemplated transactions can be completed prior to that date, it would behoove you to make every effort to do so. It is worth reaching out to counsel on a preliminary basis to talk about those plans and see what pieces of the puzzle you may be able to work on in advance. Anything you can tackle early will make the transaction process more manageable for you and your staff later on.
- What’s Lurking? We all have concerns that need to be addressed but continually get postponed to a later date. Think about that home-improvement project you know needs to get done, but never makes the top of your weekend to-do list. Your business has those latent legal concerns too. Often, these tasks are important, but do not seem urgent. For example, are you a corporation that has out-of-date bylaws or missing records, or that has not had a board or shareholder meeting in recent memory? Having up-to-date corporate records matters for tax purposes (i.e., satisfying an s-corporation election), preserving limited liability protections, and reducing legal risks related to corporate decision-making and ownership. Calendaring reminders for things like annual meetings and a review of the document retention policy are simple ways to stay up-to-date.
As you plan for 2023, carving out a few minutes for legal issues will help you reduce risk, avoid unexpected problems, and preserve time to focus on critical financial and operational issues in your business. Often, being well-organized, reflecting on past concerns and thinking ahead about creative solutions is all it takes to reduce legal risks, as well as your time and cost spent dealing with them. We believe this approach is achievable and easy to fit into your goal-setting process for 2023. Good luck!