Q2 Legal Foundations: What Growing Wisconsin Businesses Should Address Now

Here's a conversation I have fairly often, usually with a business owner who's in their second or third year of real growth.

The business is doing well. Revenue is up. The team has grown. They've landed bigger customers, taken on more complex vendor relationships, maybe added a location or a new line of business. Things are working.

And then something happens — a vendor dispute, a partner disagreement, a customer who won't pay — and they pull out whatever contract or agreement governs the situation, and they discover that it was written for a different version of their business. Smaller stakes. Simpler relationships. Less to lose.

The legal infrastructure didn't grow with the company. It rarely does, unless someone is paying attention.

That's what this post is about. Not a crisis — most growing businesses aren't in one. It's about the quieter problem: the gap between how sophisticated your business has become and how well your legal foundation reflects that. Q2 is a good moment to look at this. The first-quarter sprint is behind you. The year is real now. And the next growth phase is coming.

I want to focus on two areas that I see growing Wisconsin businesses consistently under-address: contracts and governance. They're related in ways that aren't always obvious, and together they form the foundation that either holds up under pressure or doesn't.

The Contract Problem — Your Agreements Were Written for a Smaller Business

Most businesses have contracts. What they often lack are contracts that reflect how the business actually operates today — and more importantly, what happens when something goes wrong.

The gap usually isn't obvious. The agreements are signed, the relationships are functioning, and nobody is thinking much about the documents sitting in a folder somewhere. The problem surfaces when a relationship changes — a key vendor misses critical deadlines, a customer disputes scope, a supplier raises prices and claims the contract allows it — and the language that everyone assumed protected them doesn't actually do what they thought.

There are three contract gaps I see repeatedly in businesses at the $5M to $50M stage.

The first is vendor and supplier agreements that were signed early and never revisited. These often predate the company's current scale, which means they were negotiated when the business had less leverage and less to protect. The limitation of liability provisions — or the absence of them — that made sense on a $50,000 relationship look very different on a $500,000 one. Indemnification language. Data and IP ownership. What happens when performance falls short and the contract is silent on remedies. These details get glossed over when the relationship is new and the stakes feel manageable. They become critical when the relationship breaks down.

The second gap is on the customer side. A surprising number of growing businesses are either using contracts drafted by the other party — which means the terms were written for the other party's benefit — or using their own agreements that haven't been updated as the complexity of their customer relationships has increased. Ambiguous scope of work language is the most common problem I see. When both parties have different understandings of what was agreed to, and the contract doesn't resolve that ambiguity clearly, the dispute becomes about intent rather than language. That's an expensive place to be.

The third gap is master service agreements and recurring service contracts that have auto-renewed for years without anyone looking at them. The business has changed. The vendor relationship has evolved. But the agreement still reflects the terms from the original negotiation, which may no longer reflect the actual nature of the relationship at all.

Here's the thing about contracts that I think about differently than most attorneys: I've spent a significant part of my career on the back end of these agreements — in litigation, arbitration, and mediation, watching what happens when business relationships go sideways. The language that seems unimportant when you're signing — "commercially reasonable efforts," how notice has to be given, what triggers an indemnification obligation — becomes the entire dispute when something goes wrong. I draft agreements with that experience in mind, because I've seen which provisions actually matter under pressure and which ones are just paper.

A contract review isn't about finding problems for the sake of finding them. It's about asking whether your agreements reflect your current risk tolerance, your actual business relationships, and how you'd want disputes resolved if it came to that. For most growing businesses, that question hasn't been asked in a few years. Q2 is a reasonable time to ask it.

A practical place to start: identify your five most significant vendor and supplier relationships and ask when those agreements were last reviewed. Pull your standard customer contract and ask whether it was drafted for you or whether you signed theirs. Flag any agreements that have been auto-renewing without review. That inventory alone usually surfaces the two or three things most worth addressing.

The Governance Gap — What Happens If Something Changes?

Governance is the word that makes business owners' eyes glaze over, and I understand why. It sounds like something for large corporations with boards of directors and formal committees, not for a Wisconsin manufacturer or a healthcare practice with four physician partners.

But strip away the terminology and governance is really just one question: if something important changes — a partner wants out, a key person leaves, someone dies, the business gets acquisition interest, or you want to bring in outside capital — does your business have a clear, written plan for how that gets handled?

For most growing businesses I work with, the honest answer is no. Or the answer is some version of "we have an operating agreement from when we formed the company" — which is a different thing than having governance documents that reflect the business as it actually exists today.

There are three governance questions I think every growing business should be able to answer clearly.

The first is the ownership transition question. If a partner or shareholder wants to exit the business — for any reason — how does that work? How is the business valued? Who can buy them out, and on what terms? What happens if the remaining owners can't agree on price? A well-drafted buy-sell agreement answers these questions in advance, when everyone is still aligned and thinking clearly. Most businesses don't have one. Or they have one that was drafted when the company was worth a fraction of what it is today, with valuation mechanics that no longer reflect the current reality.

The reason this matters so much is that ownership transitions are almost never planned. They happen when a partner gets a health scare, when a marriage ends, when someone decides they want to do something different, when a key person dies unexpectedly. In those moments, the question of how the business handles the transition either has a clear answer — or it becomes a negotiation under duress, which is often where litigation starts.

The second question is about decision-making authority. Who actually runs the business, and is that written down? I don't mean the org chart — I mean the governance structure. What decisions require unanimous owner consent? What requires a majority? What can a single managing partner or CEO make unilaterally? When those lines aren't defined, routine business decisions become points of contention between partners who have different assumptions about how authority works. I've seen partnerships fracture over exactly this — not because anyone acted in bad faith, but because two people built a business together on a handshake understanding of their respective roles, and that understanding turned out to be two different understandings.

The third question is about future growth. If the business is on a trajectory toward outside investment, a sale, or bringing in a new key executive as an equity partner, is the governance structure ready for that conversation? Businesses that haven't thought through this often discover the friction in the middle of a deal — when the potential buyer or investor finds that the ownership structure is ambiguous, or that there's no clean mechanism for the existing partners to agree on terms. That's a costly moment to be retrofitting governance documents.

None of this requires anticipating every possible future. It requires being intentional about the most likely scenarios and making sure there's a written framework for handling them. The cases I've seen resolve well — where a partnership transition or an ownership dispute got worked out without destroying the business or the relationships — almost always had governance documents that gave the parties a structure to work within. The cases that went badly almost always had the opposite.

Why These Two Things Are More Connected Than They Look

Contracts define your business's relationships with the outside world. Governance defines the relationships within it. Those feel like separate issues, and most businesses treat them that way — they get some attention to contracts when a new relationship starts, and almost no attention to governance until something forces the conversation.

But at the $5M to $50M stage, they're connected in an important way: both are infrastructure that was probably built for a smaller, simpler version of the business, and both are being tested by growth in ways that aren't always visible until they fail.

Here's why this stage is the critical window. The business is now large enough that the gaps are genuinely costly — a contract dispute at this scale can absorb real time and real money. The ownership stakes are high enough that governance ambiguity creates real risk. But the business still has the flexibility to address these things proactively, before they become problems that have to be managed reactively.

What businesses at this stage actually benefit from isn't a lawyer they call when something breaks. It's someone who knows the business well enough to see where the foundation needs reinforcing — and who can look at contracts, governance, employment agreements, and everything else as a connected picture rather than isolated issues that each get addressed in a vacuum.

That's what outside general counsel actually means in practice. Not unlimited legal hours on retainer. Not a lawyer who handles everything. A trusted advisor who understands what you're building, knows where the structural gaps are, and helps you address them before they become the thing you're dealing with at the worst possible time.

Q2 Is the Right Moment for a Foundation Check

The best time to look at your legal infrastructure isn't when something has gone wrong. It's in a relatively quiet moment — when the business is running well, growth is happening, and you have the clarity to think about what you're building and how it's protected.

That's Q2. The urgency of Q1 has passed. The second half of the year — and whatever it brings — is still ahead.

This isn't about overhauling everything. Most growing businesses find that when they actually look at their foundation, a few things need real attention and the rest are in reasonably good shape. The value is in knowing the difference — not in creating work for its own sake.

A focused conversation about where your business stands on contracts and governance usually takes an hour. It surfaces what needs attention, confirms what doesn't, and gives you a clearer picture of where you're exposed and where you're not.

If that's a conversation worth having, let's find time to talk.

Adam Witkov is a business attorney and litigator at Michael Best in Milwaukee, Wisconsin. He serves as outside general counsel to growing businesses, healthcare practices, and manufacturers throughout Wisconsin and nationally.