Help successfully maintain your company's growth--conduct a legal audit: conquering and embracing the changes that need to be made.

• Author: Saade, Renea I.
• Position: Legal Speak

Many management consultants will argue that the recipe for growth is essentially fail-proof. Just mix a little entrepreneurial spirit with some vision, lots of hard work, and a committed team, and your company's business will grow. Those same consultants usually agree that successfully maintaining that growth is where the real challenge begins. Most people cringe at the phrase "legal audit," but conducting one can help your company conquer and embrace the changes that need to come with growth. Conducting a legal audit helps identify which corporate formalities and company policies and procedures need to be modified or implemented so that your company can maintain and build upon its successful growth.

Review the Nuts and Bolts

To be effective, a legal audit does not need to be onerous or bring your company's progress to a screeching halt. But a productive audit does require owners, management, and key personnel to slow down and thoughtfully review the nuts and bolts of the business. The scope and path a legal audit takes will depend upon the company's size, industry, history, and geographic locations, but most legal audits include a review of the following issues:

1. Corporate Formation. As a company grows, the corporate formation it was created under may no longer be its best fit. A limited liability partnership or company, S corporation, or other corporate format may have been the right foundation for your company's origination, but it is worth reviewing to make sure the format suits its current state.

2. Board of Directors. The role of a company's board of directors often changes as a company grows. The composition of the board should reflect the needs of the growing company.

3. Corporate Recordkeeping. Growth is usually achieved by way of merger, acquisition, or financing, all of which generally require a review of the company's books and records. Auditing the corporate records allows such reviews to go more quickly and seamlessly.

4. Job Descriptions/Performance Reviews. Like the board, the roles and responsibilities of management and key personnel often change with a company's growth. A legal audit that includes a review and any necessary updates to job descriptions and the company's performance review process helps ensure that the company and its people are working from the same set of expectations and that the company's needs are being addressed by the right people.

5. HR Policies and Procedures. Many employment law obligations and best...