Legal Mistakes That Cost Businesses Big: What to Watch For

Small business owners have a lot on their plates. But if there’s one thing you can’t afford to ignore — literally — it’s your legal structure, contracts, and compliance. In this conversation, we talk with Aron Phillips, a business attorney who’s saved his clients millions by catching problems before they become disasters.

 This blog is based on a video interview between Shane Bender, Founder of Bender CFO Services, and Aron Phillips, Founder of Aron Phillips Law.

Why Aron Phillips Started His Own Law Firm

Some professionals are great at their craft but struggle with leadership. Aron saw this firsthand while working at law firms that lacked direction and accountability. Despite being capable attorneys, they weren’t investing in their people, clients, or long-term vision.

Frustrated by the status quo, Aron made the leap in 2018 and launched Aron Phillips Law — a firm focused on both legal excellence and a people-first approach to business. His goal: help entrepreneurs and business owners make smart, informed legal decisions with a partner they trust.

The Hidden Dangers in LLC Setup and Agreements

Aron emphasizes the importance of getting foundational legal structures right, especially with LLCs and operating agreements. He shared one example where a properly executed buy-sell agreement enabled business owners to exit a non-performing partner — cleanly and legally. Without it, the situation could have turned litigious and expensive.

“Setting up an LLC the wrong way could ruin your business. It’s inexpensive to do it right, but very costly to fix later.”

Mergers, Acquisitions, and Due Diligence Risks

One of the most overlooked areas? M&A due diligence.

Aron shared a story where a client nearly bought a business with repeated health code violations — something hidden in the footnotes of due diligence documents. Thanks to Aron’s review, the buyer walked away from a bad deal.

Another major issue is document timing. Sellers don’t always know when or how much to disclose. Buyers don’t always know what’s normal to ask for. An experienced attorney bridges that gap and keeps both sides protected.

The Truth About Commercial Loan Documents

According to Aron, every commercial loan he’s reviewed has contained default triggers — often on Day 1 — that would surprise the average borrower.

“Banks use boilerplate docs that work for them, not you. I’ve seen terms that allow them to foreclose without notice and sell your property back to themselves for $1.”

Many business owners don’t realize that commercial loans are not regulated like personal mortgages. Without legal review, you might sign away critical rights like redemption, offset, or notice of foreclosure.

When Is It Worth Getting Legal Help?

Aron breaks it down by cost-benefit:

• Under $500K:
  For loans or deals below half a million dollars, it may not make financial sense to hire an attorney for a full document review. The legal fees can outweigh the potential savings or protection, especially for simple transactions. That said, if the paperwork seems overly complex or high-risk, a quick consult may still be worth it.
• $500K–$1M:
  This is the gray zone. Aron recommends legal review if the documents are unusually detailed, the terms seem aggressive, or the transaction includes property, partners, or unusual clauses. It really depends on the size of the business and how sensitive the terms are.
• Over $1M:
  At this level, the stakes are simply too high. A commercial real estate loan, business acquisition, or other high-value transaction should always be reviewed by a business attorney. As Aron puts it, many loan agreements are designed to protect the lender — not you — and “every single one” he’s seen had terms that would have put the borrower in default on Day 1 without revisions.

“Ideally, people would get an attorney for everything. But the higher the amount, the harder it is to justify not doing it.”

Trends in Business Law You Should Know

While legal trends move slowly, Aron highlighted two recent changes business owners should watch:

• Decline of Series LLCs: Once popular in real estate, recent changes in Texas law have made them less appealing.
• Corporate Transparency Act: With back-and-forth legal rulings, many business owners are now out of compliance. Aron is actively helping clients navigate new deadlines and avoid penalties.

The Power of Collaboration Between Legal and Financial Advisors

Aron regularly works alongside fractional CFOs, CPAs, and other financial pros. Whether it’s helping value a business for sale or ensuring contracts are airtight, legal-finance collaboration is crucial — especially in M&A scenarios.

“A good attorney helps clients understand complex legal terms in plain English so they can make informed decisions.”

Why It Matters to Get Help Early

It’s easy to assume that legal help is too expensive or only for “big” businesses. But many of Aron’s clients are exactly the kind of small businesses Bender CFO Services works with — marketing agencies, service firms, and fast-growing startups.

In Aron’s experience, many legal issues don’t surface right away — they bubble up over time, compounding until they become costly or irreversible.

Final Thoughts: What Drives a Great Attorney

Aron’s motivation? His family — and a strong desire to ensure his clients make smart, informed decisions. He believes in proactive service, not just responsive legal help. Whether reviewing a commercial lease, structuring a deal, or flagging red flags, Aron works to explain legal risks in plain language and help clients avoid financial landmines.

Ready to Build a Stronger Business Foundation?

Legal pitfalls can cost businesses thousands — or even derail major deals. But with the right financial advisor at your side, you don’t have to navigate these risks alone.

At Bender CFO Services, we help you proactively identify issues, ask the right questions, and bring the right advisors to the table — from legal counsel to tax professionals. Whether you're preparing for a merger, reviewing financial documents, or just trying to improve your profitability, we’re here to help you make smarter, more informed decisions.

👉 Let’s talk about how Bender CFO Services can help you grow with clarity and confidence.
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