Understanding How
The Legal Process Works in
Business
PROF. ‘YEMI OSINBAJO, SAN
WHAT IS THE LEGAL PROCESS?
• THE LAWS OF THE COUNTRY, STATES AND LOCAL
GOVERNMENTS
• LAW ENFORCEMENT
• ADJUDICATION: THE COURT SYSTEM, ALTERNATIVE
DISPUTE RESOLUTION.
• THE RULE OF LAW
WE OPERATE A FEDERAL STRUCTURE
IMPLICATIONS OF FEDERAL STRUCTURE FOR BUSINESS REGULATION.
• DIFFERENT FEDERAL AND STATE TAX REGIMES
• FEDERAL AND STATE COURTS
• PLANNING APPROVALS
• COMPANY LAW IS UNIFORM
WHY IS THE LEGAL PROCESS OR THE
RULE OF LAW IMPORTANT?
Practically every aspect of
life is regulated by law
: e.g. marriage (place& time)
even death : e.g. burial sites,
suicide
Most actions carry a legal
consequence. Ignorance of the
law is usually not an excuse
Why is the legal process important for business?
The State of the administration
of justice system affects local
and foreign investments
Legal Vehicles For Business
• For Profit:
▫ Partnership: General Or Ltd Liability
▫ Business Name
▫ Limited Liability Company
• Not –For-profit
▫ Company Limited By Guarantee .
▫ Trustees
BEWARE!!
• AGREEMENTS/ CONTRACTS SHOULD BE WRITTEN—
EMAILS, SMS
• WATCH OUT FOR COUNTER- OFFERS
• PURPOSE OF AGREEMENTS/CONTRACTS MUST BE
LEGAL
ALTERNATIVE DISPUTE RESOLUTION PREFERABLE- MULTIDOOR COURTHOUSE, CITIZENS MEDIATION CENTRE
Risk Factors In The Legal Process
Foreign and local investors assess ‘risk’ factors which
include:
•The time it takes to resolve disputes in court,
•Security of lives and property,
•Protection of the rights of individuals
The justice administration system plays a critical
part in substantially reducing these risks
Is there a problem with the legal process?
DELAY!!!
NATIONAL AVERAGE OF TIME TAKEN TO
CONCLUDE CASES ACROSS THE COUNTRY (2001-2006)
LAND CASES
HIGH COURT:
COURT OF APPEAL:
SUPREME COURT:
TOTAL :
FROM HIGH COURT TO SUPREME COURT:
6.2YEARS
4 YEARS
6 YEARS
16. 2 YEARS
16.2 YEARS
GENERAL CIVIL CASES
HIGH COURT
COURT OF APPEAL
SUPREME COURT
3.4 YEARS
2.5 YEARS
4.5 YEARS
TOTAL
10.4 YEARS
FROM HIGH COURT TO SUPREME COURT: 10.5 YEARS
CRIMINAL CASES
HIGH COURT
COURT OF APPEAL
SUPREME COURT
TOTAL
1.5 YEARS
3.5 YEARS
2.0 YEARS
7 YEARS
FROM HIGH COURT TO SUPREME COURT: 7 YEARS
Comparative Population/Prison Figures
Country and Population
No. of Convicted Prisoners
Nigeria (140
million)
U.S (298.2 million)
Russia (143 million)
South Africa (47.4 million)
39,011
2, 198, 798
871,693
160,198
United Kingdom (59.7
88,197
million)
Prison –show a stark difference from other
jurisdictions- (Slide comparative prison figures)
CASUALTIES OF DELAY IN THE
LEGAL PROCESS
 Surveys done as part of the Lagos justice
sector reform project – show that 3 areas of
commerce and industry and the economy
are worst hit by delays in the legal process:
(i) Housing
(ii) Mortgage Lending
(iii) Land Transactions.
Security of lives and property: unresolved
homicides, frauds etc
Mediation, conciliation and arbitration provide
quicker alternative to conventional litigation
Must be by agreement
specified in contract
regulating relationship.
ADR
May have a long term
benefit of offering a
cheaper alternative in terms
of cost and time to
litigation. However, it may
have overwhelming upfront
costs.
Model Arbitration Agreements
for modest business operations
should have a single arbitrator
and be location-prudent. E.g.
LMDC administrative costs are
generally affordable.
Entrepreneurial Start-Up Legal Issues
Challenges are typically lack of capital and
governance issues
Informal financing from wealthy individuals
provides a useful means of funding.
In Nigeria generally, investors are skeptical
because of transparency and integrity issues
Business owners must demonstrate they are
willing to confront these issues adequately.
.
Legal Devices Could Assist In
Solving these Issues
• Robust Provisions in either Shareholders
Agreement or Loan Agreement that provide
periodic
reporting
and
disclosure
requirements regarding the business flow.
• More important is the trustworthiness of the
business owner.
LAND TRANSACTIONS
• SEARCHES : Govt Acquisition, Caveats,
• Purchasing Inherited Property
• Governor’s Consent: Lack of it may invalidate
transfer of title.
• Zoning Policies And Real Estate Investments
Staying Out Of Trouble
• POTENTIAL MONEY LAUNDERING
VIOLATIONS.
• EFCC/ICPC : GIVERS AND TAKERS
• DUD CHEQUES
• L IABILITY OF DIRECTORS
THE BUSINESS LAWS THAT
CHANGED THE WORLD.
• GREATNESS IS NOT BY VIRTUE OF WEALTH BUT
THE WEALTH OF VIRTUES, INTEGRITY BEING THE
FATHER OF VIRTUES.
• ULTIMATELY SUBMISSION TO A HIGHER MORAL
CODE THAN SECULAR LAW IS WHAT LEADS TO
ENDURING SUCCESS
• THE PRINCIPLES OF THE PROTESTANT
REFORMATION / THE PURITANIC WORK ETHIC
UNDERLIE THE WEALTH OF NATIONS AND
INDIVIDUALS.
THE PRINCIPLES
INTEGRITYFIDUCIARY ISSUES
RESPECT FOR CREDIT
AND OBLIGATION
FAIR PAY
ADHERENCE TO THE
RULE OF LAW