Your Accountant Is Great With Numbers. But Who’s Managing Your Legal Risk?

 

When a business decision feels complex, most owners do one of two things: they call their accountant, or they try to work it out themselves. It’s a natural instinct. Accountants are trusted advisors — familiar faces who understand the business and speak in practical terms.

But there’s a gap between financial advice and legal advice that catches business owners out, often at the worst possible moment. And it’s a gap that Samantha Cohen, Principal Lawyer at Cohen Legal in Townsville, sees play out in practice with striking regularity.

“Accountants are very good at numbers, whereas lawyers are better at risk.”

— Sam Cohen, Principal Lawyer, Cohen Legal

That distinction — numbers versus risk — is not a slight on accountants. It’s a fundamental difference in what each profession is trained to do. Understanding it could save your business from a dispute that costs far more than you’d expect.

 

Two Different Experts. Two Different Jobs.

Every well-run business needs both a good accountant and access to a good lawyer. The mistake isn’t relying on one — it’s expecting either one to do both jobs.

What your accountant does well

Accountants are trained in financial analysis, tax compliance, business structuring, and reporting. They help you understand how your business is performing, structure it efficiently from a tax perspective, and plan for growth. That expertise is genuinely valuable, and a good accountant is one of the most important advisors a business owner can have.

But accounting training does not cover contract law, dispute resolution, the enforceability of agreements, or what happens when a business relationship breaks down. When those questions arise — and at some point, in most businesses, they do — you need someone trained specifically in legal risk.

Sam Cohen, Principal Lawyer at Cohen Legal Townsville, in consultation with a business client — commercial legal advice North Queensland

Where legal risk lives — and why it’s a lawyer’s job

Legal risk lives in the documents that govern your business relationships: partnership agreements, shareholders agreements, commercial contracts, leases, and subcontracts. It lives in what those documents say, what they don’t say, and what happens when one party decides they want to exit, or stops doing what they agreed to do.

Identifying that risk — and structuring documents to manage it — is what lawyers are trained for. Sam’s practice spans both commercial advice and litigation, which gives her a perspective that shapes every document her firm touches.

“A commercial lawyer will draft you a contract. A litigator will tell you what happens when that contract breaks down.”

— Sam Cohen

That litigator’s lens is what makes front-end legal advice genuinely protective. Sam has seen where agreements fail in practice. She drafts documents with those failure points in mind.

 

The Contract Mistakes That Cost Business Owners

The most common and costly contract mistakes aren’t complicated. They don’t usually involve obscure legal technicalities. They happen because agreements weren’t put in place at all — or because no lawyer was involved when they should have been.

Sam has worked on disputes that trace back to one of three recurring scenarios.

Starting a business without a partnership or shareholders agreement

Business Partners In North Queensland Reviewing Shareholders Agreement

Most business relationships start well. People go into business together because they share a vision and they trust each other. In those early days, formal agreements can feel unnecessary — even awkward. Why introduce paperwork into something that feels so natural?

“Put agreements in place that are like the rules of play. And if you do that when everybody’s happy, it’s easy to put fair and equitable terms in place. If you try to impose them later on down the track, you may find that there’s been a slight deviation in the way that people think.”

— Sam Cohen

Without documented rules — how decisions are made, how profits are distributed, how someone exits — a business has no framework for what happens when things change. And things always change. Without an agreement, the only fallback is whatever the relevant legislation provides, which rarely reflects what either party actually intended.

For more on partnership and shareholders agreements, see https://cohenlegal.com.au/areas-of-law/business/.

When a divorce becomes your problem too

One of the most confronting examples Sam shares — de-identified to protect those involved — involves brothers who inherited a family cane farm. They’d worked the land together for years. No formal partnership agreement existed because they were family, and the arrangement felt self-evident.

When one brother went through a divorce, his share of the farming partnership formed part of the marital asset pool. The other brother — who had nothing to do with the marriage breakdown — suddenly found himself a party to family law proceedings in the Federal Circuit Court.

“Life changes along the way and a partnership agreement provides protection for everybody. It gives certainty to everybody about, you know, in the event of death, what’s going to happen? In the event of separation, how are we going to deal with that? In the event of insolvency, how are we going to deal with that?”

— Sam Cohen

A well-drafted partnership agreement could have included a first right of refusal — giving the other partner the option to buy out the departing partner’s share in the event of a separation, rather than having that share drawn into family law proceedings. Without one, there was no framework, and no protection for the partner who had done nothing wrong.

The same risk applies to shareholders agreements. Shares in a company are also commonly treated as assets in family law property settlements. Without a shareholders agreement in place, there may be little to prevent a co-owner’s spouse — or the family court — from having a say in who ends up holding equity in your business.

The 50% shareholder who owned nothing

Sam’s second example is starker still. A person had spent years working hard — and without reservation — to help build a business. Eventually, he negotiated a 50% shareholding as recognition of his contribution. He was told, by the other party, not to worry about becoming a director, as that would expose him to liabilities such as insolvent trading.

He accepted that arrangement. No shareholders agreement was ever put in place.

Over the years that followed, he worked and built — and noticed he never received a dividend. What he eventually discovered was that the director had been systematically funnelling the company’s revenue through to a separate entity. The company he held 50% of had grown to operate across multiple locations, but it owned nothing. It was a shell.

“There is absolutely no parameters on what that person can or can’t do, even though you’re a 50% shareholder.”

— Sam Cohen

Without a shareholders agreement, there were no restrictions on what the director could do — no requirement for shareholder meetings, no dividend policy, no restraints on related-party transactions. The 50% shareholding, in the absence of documented protections, was worth little in practice.

By the time the matter reached resolution, the legal costs had climbed to $160,000.

“He got accounting advice, but he didn’t get legal advice when he actually obtained his share. And I would never have recommended that he agree to what he ended up agreeing to. I just wouldn’t have.”

— Sam Cohen

For more on understanding your rights in business disputes: https://cohenlegal.com.au/areas-of-law/business/.

 

Commercial contract review and legal risk advice – Cohen Legal

What Good Legal Advice at the Start Actually Looks Like

The purpose of early legal advice isn’t to create paperwork. It’s to create certainty. Properly drafted agreements mean that when circumstances change — and they will — there is already an agreed framework for how those changes will be handled.

The cost of getting it right upfront

Setting up a shareholders agreement or partnership agreement is not a trivial exercise, but it is a proportionate one. Sam’s firm handles agreements ranging from around $3,000 for a straightforward partnership agreement to $5,000–$6,000 or more for a shareholders agreement with an accompanying buy-sell agreement for a larger business.

Compare that to the $160,000 cost of the dispute described above — a dispute that began because no shareholders agreement existed, and no lawyer was consulted before the arrangement was entered into.

“They’re not cheap. But if you’re making money, they’re cheaper. Let’s put it this way, they’re cheaper than litigating when it’s all over.”

— Sam Cohen

Front-end legal costs feel real and immediate. The risks they prevent can seem abstract until they aren’t. That asymmetry is precisely what makes early legal advice so consistently good value.

What to review — and when

Sam is pragmatic about the timing of legal reviews. She doesn’t suggest business owners engage a lawyer every year — but she does recommend a review every couple of years, and without exception before any change to the ownership structure.

“If you are considering bringing in an equity partner — whether it be a partner or a shareholder, it doesn’t matter — then you should review your documents before you do that. Because if you change them beforehand, they’re already in place when you bring somebody else in.”

— Sam Cohen

Tax time is a natural prompt. When your accountant tells you the business is performing well and starts discussing tax planning, that’s exactly the right moment to also ask whether your legal documents are still fit for purpose. The two conversations are complementary — and the accountant’s good news is often the best possible trigger for the legal one.

Related reading:  |  Tax Time Business Legal Health Check | Cohen Legal

 

When Should You Call a Lawyer Instead of Your Accountant?

This isn’t a question about loyalty to either profession. It’s about matching the right expertise to the right problem.

Call your accountant when you need to understand the financial or tax implications of a decision. Call a lawyer when the question involves a contract, a relationship structure, an agreement, a dispute, or anything that will be reduced to writing and signed.

In practice, the clearest signal that legal advice is needed — rather than accounting advice — is when the question involves what happens if things go wrong. Accountants are not trained to assess legal risk, draft enforceable clauses, or advise on what a court or tribunal would do with a document. Lawyers are.

Specific moments that should always prompt a conversation with a lawyer:

• Before signing any commercial contract, lease, or subcontract
• When starting a business with a co-owner, partner, or co-director
• Before bringing in a new equity partner or shareholder
• When any owner’s personal circumstances change — divorce, illness, financial difficulty
• When reviewing or updating your Will, particularly if you own a business
• When a business relationship starts to show signs of strain

That last point matters more than most people realise. You don’t need to wait until a dispute is formal or entrenched. Seeking legal advice at the point where a relationship is deteriorating — but hasn’t broken down — is when the most options remain available.

If you’ve been served with a formal claim or demand, see: https://cohenlegal.com.au/areas-of-law/disputes/.

 

Sam Cohen, Townsville Litigation Lawyer

Cohen Legal: Legal Advice That’s Built for the Real World

Cohen Legal is a boutique Townsville law firm with a clear identity: it is a litigation firm that also does commercial work. When Sam advises on a business agreement or reviews a contract, she does so as a litigator — someone who knows what happens when documents are tested under pressure, because she’s seen it in court.

That perspective produces commercial advice that is genuinely forward-looking. Agreements drafted at Cohen Legal are designed not just for when everything is going well, but for the moments when it isn’t. Clauses that seem theoretical at signing become the most important words in the document when a relationship fractures.

Across Townsville, Mt Isa, and North Queensland, Cohen Legal works with business owners, contractors, investors, and families who want legal advice that is honest, practical, and well-timed. If you have a contract you’re about to sign, an agreement that needs reviewing, or a business structure you’re not sure is still fit for purpose — getting clear legal advice early can make all the difference.

Explore Cohen Legal’s practice areas: cohenlegal.com.au/areas-of-law  |  Contact Cohen Legal: cohenlegal.com.au

 

Disclaimer: This article provides general information only and does not constitute legal advice. You should obtain advice specific to your circumstances before making any decisions.