Legal ease

Published in Restaurant Business newsletter

No matter whether you’re an experienced restaurateur or just starting up, it’s smart to have ready access to a lawyer—or lawyers, especially as your business grows. Whether facing an employment dispute, lease negotiations, partnership agreements or tax and licensing issues, no single barrister can boil down every nuance to mere basics, says David Jordan, an attorney with Houston-based Littler Mendelson. You’ll likely need multiple experts—in labor, real estate and more—who are able to navigate the narrow channels of a choppy legal system and who are well versed in restaurant industry issues.

Expertise is everything

A general business lawyer can be helpful for getting a business set up, but they won’t necessarily know anything about dealing with the Equal Employment Opportunity Commission or the Department of Labor, Jordan says. His advice: “Seek referrals for lawyers who spend a lot of time in the area you’re concerned with. … Specialists know what to look for.”

The real estate lawyer who  prepared the legal documents for John Currence’s first restaurant, City Grocery in Oxford, Miss., didn’t advertise “restaurant specialist” on his shingle. But the attorney’s past experience as a bar and restaurant manager and foodservice distributor rep lent him the industry expertise Currence sought. “He knew the business, the system of it all,” says Currence. “He made it simple for me.”

However, by the time Currence and his business partner began the paperwork on their fourth restaurant, Bouré, their legal needs grew considerably. “We had a real estate attorney, a general counsel for the negotiation, a labor law attorney and another to make sure we had an iron-clad partnership agreement,” Currence says. They later added a tax attorney to advise on appropriations for the revenue flowing through those restaurants and their parent corporations. “There were lots of questions we had as grown-ups with a bigger business that we didn’t have when we set up that first deal. We needed all those guys.”

Though most start-ups don’t require such large legal teams, Currence warns that overlooking a legal specialist’s help at the outset is foolish. “If you’re small and just getting started, right out of the gate you’ve got to get someone who knows the restaurant business,” he says.

Restaurateur Jeff Tunks says finding the right lawyer starts with talking to other local restaurant operators. “Even though we compete with each other, we’re still a pretty close-knit community of chefs, so we all have to network with each other,” says Tunks, whose company, Passion Food LLC, owns seven restaurants in the Washington, D.C. area.

Uncommon knowledge

For property leases, Tunks uses a real estate attorney who’s also an expert on contract details and understands the peculiarities of restaurant facilities. “He knows how to determine whether the exhaust will work correctly, whether the gas line will
support what’s needed, not just whether the contract’s good,” Tunks says.

A combination of restaurant knowledge and a solid background in real estate is important in an advisor says Artie McLaughlin, an attorney for the Louisville, Ky.-based McLaughlin Group. He says restaurateurs are most at risk in “real estate screw-ups,” such as zoning mistakes made by attorneys who assume restaurants are like any other business. “They’re not,” says McLaughlin. “Just look at the fight some neighborhoods put up when a restaurant wants to move in. The lawyer you get has to know the language of the industry.”

Cost of doing business

Jordan suggests that once you find a potential lawyer, interview him over coffee with the meter off. Gauge his experience, learn about restaurants he’s helped and request to talk to his past and current clients.

Since attorneys don’t come cheap, Louisville, Ky. restaurateur Dean Corbett suggests bartering, if they’re amenable. “Both of our attorneys work on a barter system with us, and they have house accounts [in the restaurants],” says Corbett, owner of Corbett’s: An American Place and Equus. Corbett’s attorneys—one oversees labor and the other handles licensing—like it like that, he says. “We treat them like VIPs, so they don’t get a check. If there are any overages, we bill them monthly. It’s convenient for all of us.” 

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