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Starting or growing a technology company can be an exhilarating journey. The UK's burgeoning tech sector - with a combined market value of £1 trillion - makes it an even more attractive destination for entrepreneurs in this field. 

However, as you embark on this adventure, it’s essential to keep in mind the various legal issues that may arise. These legal concerns can significantly impact your business's success and must be addressed early to avoid potential setbacks. 

This article will dive into ten legal issues that technology companies should be aware of as they start and grow their business. 

Understanding and addressing these legal concerns can set your company up for success and focus on scaling your business to new heights.

1. Choosing the right legal structure

Choosing the right legal structure for your technology company will help facilitate your ability to attract investment, employ staff, and enter into contracts. You need to decide whether you wish your startup to be set up as a:

  • Sole trader
  • Traditional partnership
  • Limited liability partnership (LLP)
  • Limited liability company

If you’re unsure on which structure to choose, one of our commercial law solicitors can assist you with deciding the best legal structure for your tech company. 

2. Financing your tech company

Finding and securing finance is vital to scale up your venture. 

Before seeking a loan or investment, you need to have a sharp vision of where your business is heading regarding innovation, market penetration, and sales. 

You will also need to understand terms such as seed funding and Series A funding and the legalities of a loan agreement.


Learn how to draft a Loan Agreement


3. Drafting robust terms and conditions 

Your terms and conditions (T&Cs) set out how you do business. They set out matters such as your delivery and returns policy, payment terms, and cancellation policies. Depending on the type of services you’re offering (whether you’re supplying technololy or a digital service), you’ll need to ensure you have specific clauses that protect you.

Getting your T&Cs right can result in less client disputes, so it’s well worth having one of our expert contract lawyers draft and/or review your T&Cs. 

4. Having the necessary commercial contracts in place

All business relationships turn on contracts, and there are several essential agreements your startup needs to have in place. 

Having your commercial contracts drafted and/or reviewed by a specialist solicitor will protect your best interests. If a dispute develops, the contract has clear terms that can be interpreted and a solid dispute resolution regime.

5. Protecting your intellectual property

For tech companies, intellectual property (IP) is a precious asset. To protect your innovations, you must use patents, copyright, trade secrets and design rights and safeguard your brand through trademarks. 

The IP associated with software and apps requires specialist knowledge regarding the protection and dealing with an infringement depending on the license type. Hence, it’s essential you seek advice to inform you of the types of software licenses suitable for your software product. 

6. Employment Contracts and Staff Handbooks

If your’e looking to employee staff, you’ll need Employment Contracts to set out the rights and obligations of your employees. 

Although they are not required by employment laws (although all employees need to be given a Written Statement of Particulars on or before their first working day), having well-drafted Employment Contracts and a Staff Handbook in place will ensure your employees understand their duties and rights, thereby avoiding potential Employment Tribunal claims.

To get started, you can browse our legal template library and download free Employment Contract templates.


Free Employment Contract templates


7. Software licencing

A Software Agreement is a legal contract between the licensor of a piece of software and the purchaser. It includes terms such as warranties and indemnities, how long the software licence lasts, who can use the software application, the price of the licence, the numbers of users, and whether or not the source code will be included.

If you’re supplying software either directly or as a service, you should have this agreement in place to ensure that your product is protected. We have free Software Licence Agreement template you can use that covers the key clauses you should consider.


Free Software Licence Agreement template


8. Finding the adequate insurance cover

Having the right insurance cover is essential to protect your business from potential losses.

Not only do you need to consider the level of cover your technology business needs, but you must also review your insurance policies regularly to ensure the coverage you have is adequate. 

Types of insurance you need to consider are:

9. Having the right commercial property Tenancy Agreement

Outside of staffing costs, your commercial property is likely to be your most considerable overhead. It’s vital, therefore, to have negotiated a commercial property Tenancy Agreement that works landlord and tenant but as much in your favour as possible. 

For example, ensure one or two break clauses in your agreement so you can end your tenancy early if your premises become too large or small for your needs.

10. Working the right legal advisors

A good legal advisor is more than a lawyer; they can help you devise strategies to ensure your technology business can scale up and attract the talent required to produce financial results. 

A legal team that understands your business provides an immediate competitive advantage and will protect your commercial interests as you expand your organisation.

Get legal assistance from LawBite

In conclusion, starting, running and growing a technology company can be a thrilling and rewarding experience, but it's essential to be aware of the legal issues that may arise. 

At LawBite, we understand the unique challenges that technology companies face and are here to help. Our expert legal team can assist you in identifying and addressing these legal concerns, setting your company up for success and helping you focus on scaling your business to new heights. Contact us today for a free 15 minute consultation or call us on 020 3808 8314.

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In closing

Nothing in this article constitutes legal advice on which you should rely. The article is provided for general information purposes only. Professional legal advice should always be sought before taking any action relating to or relying on the content of this article. Our Platform Terms of Use apply to this article.

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