This month InternetLitigators has seen a significant increase in membership applications from new Internet businesses. Given the current state of the economy, this development seems contrary to the common understanding of good business practice; however, upon closer examination this development is more closely tied to a shift in focus than an economic barrier to entry into the Internet business.

Many of the applications that we have received for our membership program over the past month have had a common thread. The applicants are primarily businesses focused on addressing the needs of those affected by the current economy. We have seen an increase in applicants with businesses targeting consumers seeking assistance with job hunting, consumer debt, self employment, and consumer loans, among other areas.

In general, the legal issues involved in starting an Internet business do not change significantly with the economy. In addition to the business issues one must consider when starting a new business, some of the legal issues that any potential Internet business owner must consider include the following:

1 Business Name
This may or may not be the same as your domain name. Consider any prior use of the name nationwide and for Internet operations, world-wide. You must also consider the use of product names, trademarks, trade names, and logos related to the name of your business, and their use and protection. Commencement of your operations is an excellent time to consider these details because it is typically the time when it is easiest to make changes in strategy.

2 Business Form
Corporation, LLC, Partnership, or Sole Proprietorship? Not making a conscious decision about the form of your business is making a decision in itself. You should not only include legal analysis in the decision but also consult your tax professional, as your choice can have significant tax effect down the road.

3 Insurance / Risk Evaluation
Insurance is often left off the list. Difficult economic times can lead to an increased likelihood of litigation. Be sure that you consult with a business insurance agent that is familiar with the type of coverages that you may need for your particular operations. Also, speak with your attorney about ways in which you can potentially reduce your risk of liability.

4 Contracts
Consider the agreements that you will need for your designers, developers, programmers, service providers, employees and customers. Written agreements take on increasing importance in down economic times because businesses are less likely to take write-offs or waive their rights. Often clients are so excited in the initial stages of a new business that taking the time to consider the nature of the documents that are being signed, or even whether there are documents being signed at all, seems to be a luxury. Disagreements about expectations in relation to these documents are one of the common and largest sources of litigation we encounter. A little time spent up front can help you understand your obligations and avoid problems down the road.

5 Financing
Financing your new business in the current economy raises issues that are unique and in many ways unprecedented. Down economic times makes financing new internet companies a more creative process. Consider how your potential investors will be impacted by the economy and focus on the aspects of your business that speak loudest to potential investors about why your business is well positioned to weather the down times. Consider innovative financing options such as www.gobignetwork.com and www.breadstreet.com.

Based upon the number and nature of new client applications the current economy may not be as daunting as some economists would have you believe. Consider how you can use the current perception of the economy to your advantage and adjust your business strategy and marketing accordingly.

About: Jeffrey A. Cohen is a partner in the El Segundo, California office of Cohen & Richardson, LLP. Mr. Cohen can be reached at JCohen [at] InternetLitigators.com. The reader is cautioned that the information contained herein is not legal advice and is not a substitute for legal advice. There is no attorney client relationship created by this information.