How Should a Company Lawyer Work? Managing Board Decisions, Contracts and Legal Risks

What Work Does a Company Lawyer Undertake?

The work of a company lawyer should clarify what decision the business will take, with what information and under what legal conditions. A new supply contract, a manager’s authority to represent or an information request from shareholders may look like separate files, but they are tied to the same question: how will the company’s rights, obligations and decision-making order be protected? The value of legal assistance is assessed not only by the text prepared but also by the options presented to management and the follow-up in practice.

The Attorneyship Law requires a lawyer to carry out the tasks undertaken with care and accuracy; the Turkish Code of Obligations requires an agent to work with loyalty and care, protecting the principal’s legitimate interests. The concrete scope of these obligations is determined by the work undertaken, the facts known and the professional review required. It cannot be promised that every commercial decision will turn out well or that every dispute will be prevented.[1][3]

Ongoing advisory work, a specific transaction and litigation engagement

In ongoing advisory work, contracts, management decisions and continuing legal needs are handled within the working arrangement set. In an engagement for a specific transaction, the review may be limited to, for example, a share transfer, a financing agreement or a new distribution relationship. Litigation and enforcement proceedings are representation work whose scope must be determined separately. The existence of a monthly advisory agreement does not mean that every case of every group company is undertaken for the same fee. In an attorney engagement agreement, the legal assistance and the fee must be specified.[1]

At the start of the work, it should be put in writing which of the company’s activities will be reviewed, who may submit requests, how priorities will be set and how work outside the scope will be assigned. The document tables and follow-up recommendations in this article are not a single organizational model required by law for every company; they are recommended practices for reflecting professional care in the business’s daily operation.

Must every company retain a contracted lawyer?

Article 35 of the Attorneyship Law regulates an obligation to retain a contracted lawyer for joint-stock companies meeting a certain capital requirement and building cooperatives reaching the number of members in the provision. This provision cannot be interpreted as subjecting all companies to the same obligation. No general obligation arises from this article for all limited companies. The type of company and the statutory conditions must be assessed separately.[1]

Reviewing whether there is an obligation and the business’s need for legal assistance are different assessments. A single long-term contract of a small company can create significant obligations. The way of working should be set not only by the amount of capital but by transaction volume, shareholding structure, field of activity and the effect of decisions.

Who Is the Client? The Distinction Between Company, Shareholder and Manager

A commercial company has legal personality. In a legal assistance relationship established on behalf of the company, who the client is, the persons authorized to represent the company and the scope of the engagement are determined together. A company shareholder, a manager and the company as a legal entity are not the same legal person. It does not automatically follow that a person who chooses the company’s lawyer or attends the meeting is the lawyer’s client in all their personal affairs as well.[1][2]

This distinction should be made concrete especially in family companies. The same person may be a shareholder, a member of the board of directors and a creditor of the company. When they give information on behalf of the company, a corporate matter is being discussed; when they want their personal claim paid, their interests may differ from the company’s. The lawyer should not behave as if undertaking personal representation without understanding in what capacity which request is being made. The prohibition in Article 38 of the Attorneyship Law on providing legal assistance to parties with opposing interests in the same matter applies separately.[1]

In group companies as well, the legal entities to be served should be named individually. It should be investigated whether a request from the parent company rests on a declaration of will authorized to represent the subsidiary, and on what grounds one company’s document will be passed to another. Designating a single contact person can make operations easier; but that person should not be turned into an information gateway that removes the powers of the company’s organs and the statutory rights of shareholders.[2]

The opening letter should state the client’s trade name, the scope of the work, the persons authorized to give instructions and the addressees to whom reports will be sent. It should also be explained that if a dispute over responsibility later arises between the company and a manager, the representation arrangement will be reviewed again.

Which Documents Are Reviewed When Starting Work with a Company?

The initial review should begin with documents sufficient to understand the company’s decision-making order and its priority legal matters. The documents should be assessed for currency and for consistency with one another. An old signature circular may not show a representation arrangement that has since changed. The first page of a contract alone, or an unsigned draft, may also not suffice to understand the existing obligation.

These six groups are a recommended framework for the initial review. Depending on the nature of the activity, licenses, processes concerning employees, intellectual property rights or correspondence with regulatory bodies may also come up. In every file, it should be explained which question a requested document will clarify.

Missing documents should be visible in the result of the review. A note such as “because the additional protocol was not provided, no definite assessment could be made on the termination condition” conveys the uncertainty to management. The company, for its part, should state who holds the document and when it will be obtained. For preparing the first meeting, the documents and questions needed at the first meeting with a lawyer can be reviewed separately.

At What Stage of the Decision Process Should Legal Review Take Place?

Legal review should begin while the company’s options are still open. An offer sent to the other side, a letter of acceptance or an order confirmation may produce binding consequences depending on its content and the specific circumstances. The Turkish Code of Obligations bases the formation of a contract on reciprocal and corresponding declarations of will; unless the law provides otherwise, it does not require a general form for contracts. It is therefore not safe to assume that every transaction will arise only when the final contract is signed.[3]

The company lawyer should be able to take part in the process while the price and commercial objective are being set and before the delivery model or the allocation of liability is finalized. If only the final draft will be sent for review, earlier offers, correspondence and commitments given should also be shared. Otherwise, a correction made in the text may not change all the consequences of a relationship already formed.

Conducting a review of the same length for each small purchase of a business may not be practical. For this reason, approved texts for standard transactions, a separate review for unusual terms and a designated channel of communication for urgent matters are recommended. At what stage terms such as high-value security, long-term exclusivity, personal suretyship or a unilateral right of termination are to be sent to the lawyer can be decided in advance.

Even in an urgent opinion, the limit of the information should be shown. If the version reviewed, the question answered, the documents not yet seen and the facts that could change the opinion are stated, management will decide in a more informed way. A short written confirmation after an oral opinion reduces the chance of later practice resting on different recollections.

Authority, Approval and Documentation in Management Decisions

Management and representation in a joint-stock company and the duties of managers in a limited company are assessed under the rules of the respective company type. The board of directors and managers have non-transferable duties listed in the law. Engaging a legal adviser does not remove the company organs’ responsibility of management and supervision. The duty of care and loyalty of board members is regulated in TTK Article 369, and the duty of managers of a limited company in Article 626.[2]

Internal approval and authority to represent against third parties

Who will approve a transaction inside the company and who will bind the company externally must be examined separately. Internal limits placed on representation authority in joint-stock companies cannot in every case be asserted against third parties acting in good faith. TTK Article 371 regulates the scope of representation and the effect of limiting it; for limited companies, the reference in Article 629 is also taken into account. Failure to obtain an in-budget approval therefore does not by itself lead to the conclusion that the contract signed definitely does not bind the company.[2]

The decision file the lawyer recommends should bring together the subject of the decision, the documents reviewed, the competent organ, the required approvals and the action to be taken. The version of the contract to be signed should be tied to the decision; if the representation arrangement is changing, the necessary registration and announcement steps should be tracked separately. Marking a document “legally reviewed” should not lead to different versions later being treated as covered by the same opinion.

Where a board member’s personal interest conflicts with the company’s interest, the prohibition on taking part in the deliberation is assessed separately; under TTK Article 393, the relevant reason and transactions are recorded in the decision. The conditions of Article 395 require a separate review with regard to dealing with the company. It is not right to use the same approval template for every related-party transaction.[2]

A manager’s possible liability is addressed together with the duty, the breach and the concrete event. For a separate assessment of this subject, see the article on the liability of the company manager and board of directors.

What Results Should a Contract Review Present to Management?

The output of a contract review should be clear enough for management to understand which obligation it will be accepting. When a file with only tracked changes is sent, it may be unclear which change relates to a mandatory legal problem and which is regarded as a bargaining preference. In the opinion, the validity of the transaction, the parties’ obligations, practical difficulties and negotiation options should be linked together.

The parties may determine the content of the contract within statutory limits; situations such as violation of mandatory provisions or public order may bring invalidity into question. In standard terms prepared in advance, the provisions on general terms and conditions are also important. A term’s being written into the text does not mean that it is valid and enforceable in every case.[3]

What options should be presented at the end of the review?

The opinion should explain the concrete problem and its possible effect. For example, if it is unclear by what record delivery will be accepted, payment and defect disputes may be affected. The solution may be to prepare a technical acceptance record, determine the authorized signatory and link payment to the acceptance stages. Whether this suits the business’s production and finance arrangements should be discussed with the relevant units.

The possibility that the other side will not accept the change should also be considered. Shortening the term, splitting orders into stages, obtaining security or proceeding with an alternative supplier are different commercial options. The lawyer explains the legal consequences of these options; the financial and operational choice is made by the competent management. In the final text, it should be recorded which risk remains and which measure has been applied.

It is also important that a provision in the contract can be applied inside the company. If it is not known who will perform a notification obligation or how a breach of delivery will be recorded, the protection in the text may in practice weaken. After signing, a short summary of obligations should be given to the relevant units. This summary should show the task to be done, the triggering event, the date and the document to be kept, and should be updated if the contract is renewed.

Hypothetical example: purchasing goods from a related supplier

Suppose a joint-stock company is considering making regular purchases from a supplier in which a board member’s spouse is a shareholder. This example does not describe an actual client matter. For the review, shareholding and representation information, comparisons of offers, the technical specification, the payment schedule, the draft contract and the decision documents are requested.

The lawyer first determines the person’s capacity in the transaction and the concrete conditions of the conflict of interest. The scheme of non-participation in the deliberation in TTK Article 393 and whether separate permission is needed under Article 395 are not the same question. It cannot be said, from the existence of the relationship alone, that the transaction is automatically prohibited or that a single general assembly resolution would cure all problems.[2]

Management can be offered options together with alternative offers and the reasons for the choice: a shorter-term contract, a trial order, staged payment or independent quality acceptance are among them. The decision of the authorized persons, the terms chosen and the acceptance records are kept together. The detailed legal distinction is addressed in the review of related-party transactions and conflicts of interest with the company.

How Are the Company’s Legal Risks Prioritized?

Prioritization should not be done only by the estimated monetary size of the risk. The time the transaction takes, its effect on operations, the possibility of reversal and the reliability of the information at hand should also be assessed. An automatic renewal clause in a low-value contract can create a long-term burden. A commercial dispute that looks large may be handled differently depending on the documents at hand and the room to negotiate.

The recommended method is to create a short record for each significant risk: Which document does the matter rest on, what does it affect if it materializes, when is action needed and how sufficient is the current information? The expression “high risk” alone does not guide management. An explanation such as “the security expires before delivery; renewal or a change to the payment plan is needed” makes the task visible.

When there are signs of financial difficulty, a division of tasks should be established between the lawyer and the certified public accountant or the relevant finance expert. Legal work should not give the impression that an independent audit of the accuracy of financial data has been carried out. The obligations of company organs under TTK Article 376, and for limited companies Article 633, concerning loss of capital and over-indebtedness are examined separately; concrete calculations and current application rules are verified according to the file.[2]

The risk record may change over time. A new warning letter, a delayed payment or a change of manager can make a matter previously regarded as ordinary a priority. Therefore the risk remaining after the recommended measure has been applied should also be reassessed.

Accepting a risk should not be confused with carrying out an unlawful transaction. Management may assume commercial uncertainty among the options permitted by law; but it cannot, by its own approval, disable a mandatory rule. The lawyer also has an obligation to decline work they find improper or unjust.[1][3] The legal opinion should clearly separate this limit from contract terms that can be altered through bargaining.

How Are Signs of Disputes Among Shareholders Assessed?

Unanswered document requests from shareholders, meetings that cannot be held, objections to the use of company resources or continuing disagreement over profit distribution are signs that call for review. These do not by themselves prove that a shareholder has acted unlawfully. The lawyer should first separate which events are confirmed by documents and which accounts are still at the level of allegation.

Rights to obtain information and to inspect are regulated differently according to the type of company. The right of a joint-stock company shareholder is in TTK Article 437, and that of a limited company partner in Article 614. Automatically rejecting all information requests on the ground of company secrecy, or assuming that shareholder status gives unlimited access to documents, is not right; the conditions of the relevant provision must be examined.[2]

If the company lawyer’s engagement is carried out on behalf of the company, whether they may take on one shareholder’s personal case preparation against another within the same representation relationship is assessed separately. Processing an information request properly, preparing the meeting agenda or recording decisions may be a legal need of the company. By contrast, personal bargaining over a particular shareholder’s terms of exit from the company may create a different representation relationship.[1][2]

The existing shareholders’ agreement, the company agreement and the decisions taken should be read together. Conflicting provisions and provisions not actually applied can be identified and solution options discussed. The right to obtain information and to inspect and the voting, tag-along and exit arrangements in a shareholders’ agreement are separate headings of review at this stage.

From Legal Opinion to Implementation: Responsible Person, Date and Follow-up

Sending a legal opinion does not complete implementation inside the company. A decision may need to be taken, the other side may need to be consulted, a document signed or records updated. For this reason it should be determined by whom and by what date each recommendation will be carried out. The follow-up undertaken by the lawyer and the company’s own internal tasks should be clearly separated.

The table below is a recommended follow-up arrangement. The time periods are set for the specific transaction; the stages given in the table do not constitute statutory time limits.

A “completed” entry should show by which document the transaction was concluded. Closing the file on oral confirmation alone, without a signed contract, a dispatch record or a registration document, makes later review harder. For a recommendation not applied, the reason should also be recorded, and the risk left with management and the time of reassessment should be communicated.

How Should Company Management Be Informed?

The management report should carry the information the company needs in order to decide. Pending matters, upcoming dates, matters requiring management approval and risks changed since the previous period should be visible. Article 508 of the Turkish Code of Obligations regulates the agent’s obligation, on request, to account for the work carried out. The form and frequency of regular reporting can be agreed in line with the scope of the engagement.[3]

A monthly report of the same length is not needed for every company. In a business with few transactions a short status letter may suffice, while in a company running many contracts a review meeting with a task list may be useful. Before a long list of files in the report’s annex, it should be explained what decision falls to management. Where uncertainty continues, the lack of information should not be concealed.

The report should also show what new information caused the earlier opinion to change. The existence of an additional protocol or completion of a technical review may change the assessment. Keeping together the date of the opinion, the supporting documents and the reason for the change helps prevent management from acting on an explanation that has gone out of date. This record system also makes the file easier to understand if the adviser changes.

An urgent development should not wait for the ordinary reporting day. The channel to be used for a time-limited notification or significant new information affecting a transaction should be determined; whether the notification has reached the relevant person should be monitored. Where instructions from inside the company diverge, decision-making authority should also be clarified.

Information on fees and external expenses should be presented with the same transparency. When translation, expert review or another step not foreseen in advance becomes necessary, the reason and its estimated effect should be explained. Documenting expenditures and accounting for the work are addressed together with the accounting arrangement in the agency relationship.[3] The professional framework of the subject is detailed in the article on the lawyer’s duty to inform the client.

How Are Independence, Confidentiality and Conflicts of Interest Managed?

A lawyer’s serving a company on an ongoing basis does not remove their professional independence. The independence and care provisions of the Attorneyship Law and its rules on the obligation to decline work apply. Concealing negative legal possibilities in order to support the result management wants, or presenting an unlawful transaction as if it were proper, is incompatible with this approach to work.[1]

The conflict-of-interest review should not be done only at the first meeting. A new shareholder, a transfer of the company, a liability claim against a manager or a dispute among companies in the same group can affect the representation relationship. Having earlier acted as a lawyer, or given a legal opinion, for the party with an opposing interest in the same matter is a ground for declining the work under Article 38 of the Attorneyship Law. The parties’ wish to work together does not mean that the statutory prohibition disappears automatically.[1]

Confidentiality arrangements and sharing of information

The prohibition on disclosing matters the lawyer learns by reason of the profession is regulated in Article 36 of the Attorneyship Law. In the working arrangement with the company, this obligation should be made concrete as to whom documents are sent to, who attends meetings and how reports are stored.[1]

For documents containing personal data, the technical and administrative measures that prevent unlawful access and processing and ensure data security should also be assessed. The KVKK’s explanation on data security stresses that measures are to be determined according to the activity and the risks.[4] In practice, it is recommended not to send bulk files to persons unconnected with the task, to define access rights and to update them when staff change. Passing a document to the lawyer does not by itself resolve a legal problem concerning how the document was obtained.

If a situation arises in which representation cannot continue, the scope and consequences should be explained before any new work is undertaken. For a more detailed assessment, see the review of the lawyer’s conflict of interest and prohibition on representation.

What Questions Should Be Asked Before Starting Work with a Company Lawyer?

In the first meeting, the company’s need should be described through concrete work: What kinds of contracts are prepared each month, who takes decisions, which tasks are delayed and in which documents is there uncertainty? This information ensures that the working arrangement proposed fits the company’s real operations. What information the lawyer asks for before preparing an opinion and how they manage gaps should also be evaluated.

Scope of work, fees and external expenses

In the service proposal, it should be asked which companies are included, the scope of the advisory work, participation in contract negotiations and the position on litigation. Who will receive requests, which lawyer will handle the work, the usual turnaround arrangement and how urgent matters will be handled should be clarified. Vague wording such as “all legal matters” can create different expectations in a company with a high variety of transactions.

For which legal assistance the fee is set, and how approval will be obtained for changes in scope, additional work and external expenses, should be discussed. The contract and fee provisions in Articles 163–164 of the Attorneyship Law are taken into account. Comparing on the amount alone, without putting in writing which work the monthly fee covers, can lead to an incomplete assessment.[1]

Handover of the file when the engagement ends

It is useful to set the file handover arrangement at the start of the relationship as well. Open matters, upcoming dates, which version of a document is current, where the original documents are and the latest correspondence with external parties can be shown in the handover list. The arrangement for delivery and access should be built with regard to the provisions on statutory retention, confidentiality and the lawyer’s rights.[1]

In the company’s evaluation of the service, timely information, understandable legal options, the order of documents and the link between the opinion given and its implementation can serve as criteria. The number of pages written or files opened alone does not show the quality of the work.

Conclusion

Productive work with a company lawyer begins with a clear definition of the client and the task; it continues with review before decisions, understandable legal opinions and follow-up of implementation. Company management should be able to understand which transaction it will carry out with what authority, which risk continues and what decision is expected of it.

The first concrete step is to review the current company and representation documents, the important contracts and the open matters within the same working arrangement. Priorities, responsible persons and follow-up dates can then be set. In this way legal assistance becomes work that reaches the company’s decisions in time and whose result can be tracked through documents.

Frequently Asked Questions

Does working continuously with a company lawyer mean all cases are included in the fee?

The scope is determined by the attorney engagement agreement made. Ongoing advisory work, review of a specific transaction and litigation or enforcement may have separate engagement and fee arrangements. Which companies and matters fall within the scope, and how approval will be obtained when a new dispute arises, should be explained in writing. Article 163 of the Attorneyship Law provides that the agreement must contain specific legal assistance and a fee.[1]

Is the company’s lawyer also considered the shareholders’ personal lawyer?

Legal assistance given on behalf of the company does not automatically cover all the shareholders’ personal affairs. The company’s legal personality and the shareholders’ capacities are separate. Personal representation is assessed separately; if there is a conflict of interest between the company and a shareholder or among the shareholders themselves, the prohibition in Article 38 of the Attorneyship Law is observed. Who pays the fee is not by itself the criterion that determines who the client is.[1][2]

Is a limited company required to work with a lawyer on a continuing basis?

The obligation to retain a contracted lawyer in Article 35 of the Attorneyship Law is not a general rule covering all limited companies. For joint-stock companies and building cooperatives, the conditions stated in the article are examined separately. The absence of an obligation does not mean that the company does not need legal assistance in contract, management or dispute matters.[1]

When should a contract be sent to the lawyer?

It is useful to send it while the offer and negotiation options are still open. Because binding declarations of will or commitments may exist before the final signature, one should not be content with the final draft alone. Earlier correspondence, technical annexes, the payment plan and approvals given should be sent together. The formation and form of the contract are assessed according to the nature of the transaction and the provisions that apply.[3]

Does a lawyer’s favorable opinion remove the manager’s liability?

Obtaining a legal opinion does not automatically remove the manager’s statutory duties and duty of care. The duties, powers and liability of the board of directors of a joint-stock company and of the managers of a limited company are assessed under the relevant provisions. What information the opinion rested on, its relation to the transaction and what was done in practice matter; the result is examined separately in each concrete case.[2]

Is it necessary to bring the whole company archive to the first meeting?

First, the current company and representation documents, important contracts, open matters and time-limited notifications should be prepared. The lawyer may request additional documents according to the scope of the task. The date and version of documents should be stated, and gaps should be reported openly. When sharing files containing personal data or trade secrets, need and security should likewise be assessed together.[1][4]

Sources

1. Attorneyship Law No. 1136 (Avukatlık Kanunu) — text published by the Turkish Bar Association. Arts. 1, 34–39, 163–164: independence, care, retaining a contracted lawyer, professional secrecy, declining work, documents and fees.
2. Law No. 6102, Turkish Commercial Code (Türk Ticaret Kanunu) — Ministry of Justice UYAP Legislation. Arts. 125, 365–375, 376, 393, 395, 437, 553, 614, 623–626, 629, 633: legal personality, management, representation, care, information rights and financial difficulties.
3. Law No. 6098, Turkish Code of Obligations (Türk Borçlar Kanunu) — text published by the Ministry of Labor and Social Security. Arts. 1, 12, 20–27, 506 and 508: formation of contracts, form, standard terms, limits of contracts, loyalty, care and accounting.
4. Personal Data Protection Authority (Kişisel Verileri Koruma Kurumu) — Obligations Concerning Data Security. Authority explanation of the technical and administrative measures under Article 12 of Law No. 6698.