Law, Real Estate, and Small Business & Startups

Top 3 legal issues of working in a co-working space

December 30, 2016
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Working in a co-working space has a lot of advantages for startup entrepreneurs and members of the freelance economy: free coffee; shared services; professional meeting space; and collaborative discussions. Did I mention free coffee?

But there are certain things about a small business owner working in a shared space with other people who are not part of your company that give me pause. Following are three legal issues to think about when deciding whether a co-working space is right for your business:

Confidentiality

What happens if you print a client proposal or a confidential email to the shared printer/copier and your competitor makes a copy of it and puts it back in the print tray without you realizing?

What happens if you step away for an unexpected phone call, forget to lock your laptop screen and someone reads all of your emails?

As an attorney, everything I do with client communication is confidential. It gives me heartburn just thinking about using a shared space to conduct business, where anyone can overhear my conversations or read over my shoulder.

Working in a collaborative space with other entrepreneurs can be a great experience when it comes to shared ideas and community support. But you have to always be mindful of the fact you are running a small business with very valuable confidential information that your competitors would love to get their hands on.

Insurance

What happens if you go to the bathroom and come back to find your laptop has been stolen?

What happens if someone hacks into your laptop through the shared Wi-Fi and copies all of your client files?

Owning a law firm that rents a physical office means I am required by my landlord to have liability insurance for personal injury and property damage. On top of that, I also have the contents of my office insured, worker’s compensation insurance for my employee, legal malpractice insurance and cyber liability coverage.

Even though you are only a member of a co-working space, and not a tenant, you still need to think of insurance in terms of being a small business. At a bare minimum, make sure that any equipment you use in the space is covered from theft — which can likely be handled inexpensively as part of a renter’s insurance policy. Also make sure that the co-working company has adequate liability insurance covering the space.

Building ownership

What happens if the owner of the building changes and doesn’t want a co-working space anymore?

As a tenant with exclusive rights to a defined space in a commercial building, the law protects me from my landlord kicking me out for no reason. But I have seen a number of shared working spaces in West Michigan come and go over the years, with the co-working members suddenly homeless.

A lot of the co-working spaces also have private small offices to use. If you are going to take the next step and have your own private space on a more permanent basis, make sure that you are comfortable with the fact the building owner may be an unrelated entity from the company with which you have a co-working membership. Don’t be afraid to ask to see a copy of the lease with the building owner.

As an attorney, I’m trained to think in terms of how to mitigate risk. There can certainly be a lot of advantages in co-working space, but never forget that you are running your own business. A few simple measures and precautions can mean the difference between taking your business to the next growth stage and losing everything.

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