18 Jun 2009 @ 11:21 PM 

June 18th! Has it really been two whole weeks since my last post? Er, well, one year and two weeks to be exact. That’s a serious case of writer’s block… We can blame that on ramping up at the new job, some time consuming responsibilities with my church group, some new responsibilities with the UVU Alumni Association, and me just liking to spend the little free time that is left over with my family. However, the kids are in bed, my wife is in the other room painting, and I decided that there was no time like the present to try and make an effort to jump back in the saddle.

I have read/am reading some very interesting books over the last year. I finished Atlas Shrugged, which just blows your mind these days if you chase each reading session of the book with a session of the national news. Scary in its accuracy. I’ll try to put together a post on the book later like I have done for my other reviews, but it is a pretty long and complicated book, so I’m not sure how it’s going to come out. I’ve also been reading The E-Myth and the 5000 Year Leap. I’ll do separate posts on each of them when I’ve finished. I also think I’m going to dare to delve just a little into the political realm here as a means of exploring to refine my own philosophy and viewpoints, hopefully through a little interaction and discussion with readers.

I think I’ll close out today’s post with a little nugget on lawyering as a corporate attorney. Educate your business people on the ins and outs of contracts. Challenge them on their understanding and take time to explain the impact of specific language, provisions, and terms. Most importantly, find a way to do this in a way that is very relevant and clearly valuable to them. Even though you are in-house, you still have a client and you’ll get less resistance from them if they are confident that you fully understand their pressures and objectives, and if they fully understand the value of what you are protecting with your changes. Often the value you are preserving is only visible in the medium to long term, so it takes a kind of constant dialogue to help keep that notion in the forefront of the business mind. If you are a small business owner dealing with attorneys, take the time to really own your agreements by going over them until you understand the anatomy of an agreement and the effect of each part. Don’t be afraid to ask your attorney questions. As much as you can, try to compile and/or use use standard agreements from your attorney. That will not only decrease review time for your agreements, it will also help ensure that you are bound by terms you feel comfortanble with.

Posted By: TJ
Last Edit: 22 Jun 2009 @ 02:41 PM

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 16 Apr 2008 @ 11:24 PM 

Part II

My last post set the stage for some discussion on the utility of bulky agreements when papering up deals. There are lots of reasons to do this. Attorneys wouldn’t be able to charge what they do if there wasn’t some real value in their work. Let’s first recognize that attorneys set themselves to the task of identifying potential risks and preparing a defense against that risk. That preparation takes the form of a written agreement between the parties to a transaction. Agreements also have the salutary effect of defining key terms that each party can refer to in future discussions as they clarify how the deal is evolving. One might think of agreements as being in some ways similar to body armor. Experts have studied the body’s form and function and identified which areas of human physiognomy are most critical to the body’s functioning and are most vulnerable to attack. They looked at the different forms of attack that are most likely. Then these experts then set about devising a product that would protect the most vital areas of the body from the most likely forms of attack. The more risk you perceive, the more you will want body armor that is strong and comprehensive. So why would you ever want anything less than maximum protection? If you know a police officer, ask him to let you try on his riot gear. In addition to being expensive, it’s heavy, hot and uncomfortable. Its bulk, required to protect you, also impedes your movement, slowing you down and making you less nimble. In some situations, having too much body armor could actually work against you and become a disadvantage.

Papering up collaborations and transactions reflects many of the same dynamics. Preparing a “bulletproof” agreement requires a lot of time familiarizing the attorney with the transaction and then a lot of attorney time thinking through the specific risks that could arise in this particular transaction. The language used to describe precautions for certain risks may be complex, bulky and difficult to understand. Agreements themselves may grow to include hundreds of pages, including often confusing cross references to other sections and definitions of terms. Presenting such an agreement to a potential business partner may cause quite a reaction. First, it makes the deal more expensive – it will communicate to the other side that they will have to incur some substantial legal expense to have their own attorneys review the document to look for areas that they find to be unfavorable to their interests. If the partner is not accustomed to dealing with attorneys or complicated agreements, he or she may decide not to proceed with the deal. I have seen this a number of times with international parties whose local business customs are based more on codified laws than on agreements between the parties. Second, it may introduce something of an adversarial spirit to the deal and detract from the collegial enthusiasm that accompanied the deal up to that point. I would say that this development, in proper bounds, is somewhat healthy, as it helps business partners remember that each actually does have many opposing interests and that deals can go bad. Finally, you may end up making the relationship so rigid and guarded that it becomes difficult to function.

The good thing is, it does not have to be all or nothing. As military and law enforcement personnel select body armor that is appropriate for their particular activity and situation, small business owners can develop a strategy for papering up deals that matches the needs and dynamics of their industry, management style and legal environment. You do not have to provide for every conceivable misfortune in each agreement. Over time you will develop a feel for the protection you want and the flexibility your deals demand. And hey, if you really want absolute protection, you can still wear your full body armor to Church on Sunday, but don’t be surprised if you have the whole row to yourself more often than you like.

Posted By: TJ
Last Edit: 16 Apr 2008 @ 11:27 PM

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 01 Apr 2008 @ 10:58 PM 

The Scene: A small town saloon in the wild west, in the late 1800s. A rancher and a farmer sit around a table discussing their businesses – the rancher’s herd is growing and he needs more grazing land. The farmer has been unhappy with some spots of his acreage that haven’t performed well and agrees to let the rancher’s herd graze there for a fee. The matter discussed, the partners stand, look each other in the eye and shake hands. Agreement.

Fast forward about a hundred years to the same location to now find a bar in the place of that saloon. Once again, we find a couple of potential business partners discussing matters around a table. One has a brilliant idea and a lot of enthusiasm, the other has money and connections. They get along well and each see merit in what the other can bring to the venture. The matter discussed, the partners stand and look each other in the eye. Then the investor turns, delves into a bag, and produces a small library’s worth of documents. “These are the standard forms and agreements I require when I invest. My attorney has already filled in the basic details of this deal. Have your people look over them and let’s try to get this settled as soon as possible.” The partners shake hands on leaving, but it’s not the same.

I probably didn’t really have to hark back to a simpler time to find a deal done on a handshake – to find an agreement based on honor, trust and mutual reliance between partners. One of the points of friction in many companies, large and small, is that “legal” or “accounting” are holding the deal up. Randy Komisar, in his book The Monk and the Riddle, describes how it felt to be the attorney in a side room going over papers, verifying all technicalities, while the management players were in the board room after an acquisition, shaking hands and celebrating. Many yearn for a simpler time, when deals could be done on a handshake, but the evolution of experience and a complex legal liability landscape have changed the rules of the game. That said, for the intents and purposes of many entrepreneurs and small business owners, agreements often may not need to be as long or incomprehensible as our attorneys may advise in order to be effective.

Nearly everyone who has ever needed to review a business contract has become familiar with the term “boilerplate“. It refers to language which is considered to be more or less universal in its application and non-negotiable. Although in many applications, it is universally applicable, much of the boilerplate is drafted to favor one party’s position. As I mentioned in a previous post, lawyers are paid to be pessimists, and to plan for when the deal goes bad, not if it goes bad. And where Sales and Marketing think through where they want to drive a deal, lawyers are asked to think of all the places a deal could go off into uncharted territory and provide for a safety net. That safety net takes the form of an agreement with a whole host of “What ifs,” including the ever-popular what happens in the event of an Act of God, an unforeseeable and unpreventable natural disaster? In the event that particular crisis does hit, you’ll be glad that language is there, but it does make agreements bulky, imposing and harder to understand. Luckily, it can be minimized as you develop a legal strategy for your company. I want to break this up in an effort to make my posts less long and more readable, so I’ll continue to explore this over my next post or two, which should also help me post more often.

Posted By: TJ
Last Edit: 02 Apr 2008 @ 12:06 PM

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 19 Mar 2008 @ 10:11 PM 

When I checked out my Google Analytics page recently, I discovered that someone had found their way to the site by means of the following search: “explain how a small business owner might apply critical thinking skills to a non-legal problem.” I have no idea what particular non-legal problem that reader was wrestling with. Frankly, I was pretty amazed by the number of words that Google search contained! That reader probably didn’t find what they were looking for here (yet!), and probably won’t find their way back. However, it gives me an interesting subject on which to opine for a couple of lines, so here we go.

Now, let’s start off on the right foot. The word critic has been defined as: “one who expresses a reasoned opinion on any matter especially involving a judgment of its value, truth, righteousness, beauty, or technique” and comes from the Latin criticus, or Greek kritikos, meaning “able to discern or judge.” The first step in successfully implementing critical thought in your small business is learning to think critically about it. It is important here not to fall into the trap of thinking of criticism as principally negative – it is never helpful or productive to think negatively about your business, hence the definition given above. The key is reasoning, discernment and making correct judgments – those are all positive things and best done in a positive mindset.

In a previous post, I summarized a presentation I gave to some law students at BYU. One piece of advice I gave them was that a Juris Doctor degree is very versatile because in addition to the valuable subject matter, law students more importantly learn to think critically about actions and transactions. In first year law classes this takes the shape of learning to interpret the law from court decisions. Ultimately, people expect lawyers to be able to anticipate what the likely outcome will be of a dispute under the law and given their particular circumstances. To begin to do this, law students have to learn to identify the key principles in a published legal decision so that, when faced with a similar but different fact scenario, they can reliably determine how the judge is likely to apply the law. A deep familiarity with the published text of the law is helpful, but unless a lawyer has a strong ability to think critically about that text and relate it to the facts, he or she is not going to be able to discern what the outcome of the case should be, which is the lawyer’s role.

I think a neat little summary for effective critical thinking is the following: think broadly, think deeply, but don’t forget to act. 

Think broadly 

Perhaps one of the most important aspects of thinking critically about a problem, legal or non-legal, is being aware of one’s surroundings, or thinking broadly. Much like players on a sports team need to be aware of the location and actions of their fellow players, lawyers and managers need to be sure to actively account for peripheral issues when thinking about a challenge their business is facing. A common temptation for law students, especially in this age of digital search tools, is to go right to the sought-after word or reference in a decision, read the text there, and base their assumptions on that excerpt. The danger in this approach is that, although it saves time and will often give you some reliable direction, there are often many other factors that may affect the importance or interpretation of that principle in the final decision.

By the same token, successful managers and critical thinkers keep their eyes open for peripheral issues that may affect the outcome of what they are trying to achieve, even though the relationship between the two may not be readily apparent at the outset. Many times, significant opportunities and threats for an organization lurk in this periphery. The tech giants have certainly shown that they know how to do this as they seem to have expanded in every direction along the value chain. Thomas Friedman, in The World is Flat, describes how UPS has thought broadly about its business opportunities and has gotten involved much more deeply in its clients’ operations than merely delivering packages. It has developed facilities where it repairs electronics; stores, selects and ships warehoused goods; and operates branded delivery trucks for its clients. Even when successful businesses do not engage in activities from the periphery of their industry, their broad perspectives make them acutely aware of what is going on around them and how they will be affected.

So, how can you widen your perspective? Look through trade magazines from related industries (start with your suppliers, customers and competitors) keeping an eye out for synergies and conflicts. Join a trade association for your industry. Go out for lunch for a change, and take someone with you, such as your primary outside lawyer, accountant, business consultant, or a client or supplier. For the price of a meal and with a few appropriately inquisitive questions, you can often get valuable insights into what issues are on the minds of others in your field (for more on this, check out this post).

Critical thinking does not preclude the ability to act on on intangible evidence, such as a “gut feeling” about a decision. Such intuitive impulses may be instinctual or may in fact be the result of alot of “behind the scenes” analysis your subconscious has conducted based on your perceptions. In fact, such intangibles are very valuable and such innate skills are often possessed by great managers. However, good critical thinkers know how to put that intuition in its proper perspective, consider it in light of the other facts they have gathered and make a reasoned decision – resisting the temptation to simply always follow one’s gut feeling because it is easier. Indeed, one of the hallmarks of effective critical thought is the ability to properly gauge the importance and relevance of each factor affecting a decision.

Think deeply

Chess, at least with the rules one typically plays with in the US and Western Europe, has been around since the 1500s, and some others have been around much longer. One reason this pastime is so persistent is that it helps teach and train the mind in thinking deeply. In chess, success depends on much more than your familiarity with the rules of the game and the ability to perceive what your opponents are doing with their current actions. Players will very quickly and consistently end up in check and mate if they only focus on the present state of the game. The essence of chess is to play the game out in your mind far in advance, looking for trends in your opponent’s movements that will give you the chance to think many moves ahead, which is the key to winning. Chess master Garry Kasparov is reported to have said that chess champions generally think 5 or more moves ahead in the game, and are capable of much deeper thought than that.

Thinking deeply about business problems should be approached in much the same way. We ought to pause just a second before making decisions in our business relationships. Leaning on the wider perspective you have developed by thinking broadly, think through your action. How will your clients perceive this action? Your suppliers and competitors? How are they likely to react? What impact will their reaction have on you, your industry, or other you do business with? You also need to look at such questions over the short, medium and long term. What will be the short vs. long term effects of your decision? If the short term is positive, but the long term potentially negative, are there additional actions you can take to minimize the negative impact so that you can preserve the benefit you get in the short term?

This kind of thought, practiced regularly, leads to the development of a master plan for your small business. It will become less of a “I wonder what will happen today” and more of a “I’m on schedule to realize my goals and desires” type of venture. Of course, you cannot predict every twist and turn in the development of your business, but thinking deeply about it and charting its course out several steps ahead gives you a map to follow. Much as a ship on the sea can be blown off course by strong winds and find its way again with the aid of a map and navigational tools, you will be better prepared to re-orient your business processes in the facing of a changing, industry, economy or regulatory environment if you have thought through a path to where you want to go. On a smaller scale, you will also be able to more easily handle more limited issues, such as simple conversations that could become confrontations, if you think through the conversation beforehand for a few minutes, try to anticipate the reaction of the other person, and plan your questions and comments accordingly. Much of the most painful regret felt in this world could have certainly have been avoided if one or more of the persons involved would have thought things through more thoroughly.

Don’t forget to act 

But won’t all this thought and analysis paralyze my business decision making? Aren’t complicated decision-making processes one of the factors that tend to slow down big organizations and make them less nimble? And won’t that tend to keep an enterprise from being able to effectively seize the advantage of being a first-mover in an industry? These are all valid concerns, and my final thought on critical thinking is to remember that it is but one part of your business process. As too much of any good thing can be unhealthy when it precludes you from taking part in other good things, it is often very easy to fall in the trap of over-analyzing issues. This over-concentration leads to paralysis and indecision. As with all parts of our lives, we have to learn to find the approprate balance for our organizations between analysis and action.

The first key is to remember that we generally cannot and will not uncover all relevant factors to our business decisions. This is a limitation in such wonderful and time-tested concepts as the scientific method. It is impossible for us to anticipate or perceive all relevant factors, and the law of diminishing returns teaches us that, at any rate, after a certain point it becomes less worthwhile to continue looking for hidden factors and risks. So, we have to develop a sense of when we have sufficiently “done our homework” so that we can feel confident that we are getting the big picture. Experience will help you develop a sense for this, as a function of your industry, your company’s culture and your own skill set. You may also continue your analysis while taking primary steps in the direction you think is right to test the waters.

Another reason to remember to act is that things can change, and quickly, especially with today’s technology and global economy. If you try to analyze until you are certain you have examined every possible new development, you may find yourself mapping sand dunes in the desert, with the landscape constantly shifting as the wind blows. In such situations, you may need to select the issues you think are most important, take some probing steps to test your initial reactions, or a combination of these or some other actions and then just roll with the punches that still com through as best you can. What is certain is that you will nonetheless be better off than if you had not made a full effort to analyze the situation in the first place. By the same token, being human, we can also misperceive threats and opportunities. Some of our fears or envisioned roadblocks may never materialize.

Mostly, acting engenders energy, passion and impetus which can often help compensate in overcoming inevitable or unforeseeable obstacles. With the combination of broad perspective and deep analysis, and balancing planning with the need to act, you will soon find greater comfort in your decisions and greater success in your ventures.

Posted By: TJ
Last Edit: 19 Mar 2008 @ 10:13 PM

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 16 Feb 2008 @ 2:51 PM 

I recently gave a lecture at BYU law school to a group of students who are interested in pursuing careers in international law. The presentation was intended to give them advice on successfully planning and getting into their legal careers. I’ll summarize it here for future reference.

Personal Preparation 

  • Aim High – Doors can close quickly in the development of a legal career. Key among these are grades and journal participation in law school. It takes a lot of effort and time, but it keeps the door open in case you decide to pursue an opportunity that requires them.
  • Have a 10 year plan – Looking long term at your career helps you make sense of the daily decisions. If you only consider the short term implications, you may make decisions that will lead you away from your long term objectives. 
  • Develop a specialty – People want to pay lawyers because they know their area of law, not to do the research into a new area of law. Figure out what subjects interest you and develop a specialty you will stay on top of.
  • Lay a foundation – Take chances. If you want to have an international practice, seek out and take opportunities to work abroad. It will differentiate your resume and will give you real insights into working with clients and attorneys from different cultures.

Career Development

  • Know the business – Get to know your industry so that you can help anticipate needs. Better yet, get into an industry that you are personally interested in so that when you pick up a trade magazine that interests you personaly, it will also be professionally relevant.
  • Take ownership – In-house, constantly look for ways to improve your processes and legal strategy. In a firm, think about your clients and their needs off the clock. Communicate to them ideas that will help protect them or refine their legal strategy.
  • Understand your role – Remember that your clients and corporate executives are considering yoru advice as one element of the multiple factors they are weighing in making their decisions. Don’t take offense or get upset if your ideas are not always implemented in the manner you have presented them, even if they seem primarily legal in nature.
  • Grow your influence – Over time, consistently giving good legal advice to your clients or corporate team will help them have confidence in you and will likely lead to more of your ideas being implemented as you have presented them. In addition, legal analysis skills are useful in non-legal applications, and you may be asked for your opinion on a broader spectrum of issues.
Posted By: TJ
Last Edit: 03 Mar 2008 @ 11:59 AM

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Categories: International, Legal
 07 Feb 2008 @ 11:15 AM 

I have been thinking about putting a post together on IP for the last few days. Having an effective IP strategy is more and more important for small businesses, but all too often entrepreneurs put off protecting their brands or ideas because of the expense involved. This can be a fatal mistake to your business. While, on one hand, there is expense involved in protecting intellectual property, much of this expense can be managed by educating oneself on IP. There are a number of helpful resources available to small businesses that will help you get up to speed.

First, one from the US Patent and Trademark Office (IP central in the United States’ government) geared toward small businesses: http://www.uspto.gov/smallbusiness/. This site has very introductory information that will help entrepreneurs and small business owners understand the different types of IP and help them identify how and what to protect. The site includes links to tools, documents and online forms that will educate you on IP and, in some cases, begin or complete some registration activities online.

A second government site that has some useful information on IP strategy development is http://www.sba.gov/tools/resourcelibrary/publications/serv_pub_prods.html. This page has links to documents that, although not written recently, cover some good general principles of IP protection and exploitation.

You can read those resources on your own, but let’s summarize quickly some of the different types of intellectual property you may need to protect. 

First, you’ll want to protect ideas that are embodied in inventions or significant improvements to existing products. This type of protection is called a patent and requires that the inventor have come up with some truly remarkable differentiation from industry and product practices of the past (prior art). Patents also generally require a level of innovation and insight that would not be readily evident to your average industry participant. Getting effective patent protection for your innovation really requires the assistance of a good IP attorney. He or she will help you make sure that your work is not infringing on (i.e., resembles too closely in form or function) the work of someone else who has registered a patent application. The patent attorney will then help you craft statements on your patent application that will be specific enough to help your patent withstand future scrutiny yet broad enough to give you effective protection against copycats.

You protect your brands through trademark protection. There are online resources from the USPTO that will allow you to search for use or registration of your desired name by others. Protection is limited to the class of products you will work in. Once you have ensured that the mark is clear, you can even register the mark yourself through the USPTO website, if you feel comfortable doing so. This will save money in many circumstances, but you should still obtain legal advice when developing your overall US and international trademark strategy. In the US, common law provides trademark protection for some use of unregistered trademarks as well, though reliance on common law only can be risky in some cases or limit the breadth of your protection. If you are going to rely on your brand and build value in it, you should consult with an attorney about your options. 

You protect your “written” ideas through copyright. Under US law, copyrighted works are generally protected from the moment of creation for a period of the life of the author plus 70 years. For works made “for hire” (made by one person on behalf of another for some kind of pay or other consideration) the protection lasts 95 years from the date of publication, or 120 years from the date of creation, whichever is shorter. “Written” ideas include not only text, but also images, music, motion pictures and other artistic works that are fixed in a tangible form. Copyrights are enforceable without any kind of government registration, though registration can also be beneficial. For more information, see http://www.copyright.gov/.

Finally, you can also protect your processes and inside knowledge just by keeping it secret. Trade secrets are a defensible form of IP protection. The key is to take adequate precautions to make sure that no one can readily discover your secret process without going to considerable lengths to circumvent your protection. Often, these protections take the form of tight physical security and Non-Disclosure Agreements (“NDAs”) Think Coca-Cola’s formula. It is kept in a bank vault, known only to a few people, and those people are bound by NDAs and their actions have some tight controls. In the information age, the use of a well-drafted NDA and strong discretion in the disclosure of mission critical information are keys to an effective Trade Secret protection strategy. If you have taken adequate precautions and an individual or competitor circumvents your efforts, you may be able to stop their infringing activities or be awarded compensatory damages by a court. 

Once you have an idea of what kind of IP you are trying to protect, you can find additional information readily available on the internet, though always do what you can to make sure your internet sources are reliable before relying on them too heavily.

Posted By: TJ
Last Edit: 11 Feb 2008 @ 11:30 AM

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Categories: Entrepreneurism, Legal
 22 Jan 2008 @ 10:00 PM 

In an effort to try and put up some content that might be useful to small businesses, I thought I’d write today about something close to home. Lawyers.

Are they really necessary? Do we really need them? The answer, I would say perhaps unfortunately, is yes. Lawyers help us anticipate and plan for problems in the future, and also help us sort out the messes we sometimes find ourselves mixed up with in the present. I have advised many friends and clients who found themselves on the receiving end of a legal matter without even quite being sure how they ended up there. And once someone has threatened or initiated legal action against you, justly or unjustly, you have to be prepared to take action to defend yourself, and that may end up costing you money out of pocket for attorney fees and expenses, even if you end up winning the legal battle!

What’s that, you say? I can end up being in the right and win in court and still have to end up paying some lousy lawyer out of pocket? Now I REALLY hate lawyers! And you wouldn’t be alone. Many lawyers are dissatisfied with our system of justice. For all its strength and effectiveness, it has weaknesses, and one of those weaknesses is its complexity. In order to be able to account for as many variables as possible, it has to be complex, but that also means that it requires an expert to help navigate it. And that expert, like an expert in any other field, needs to make a living. However, there are ways to manage that expense.

First, since you have to have a lawyer, get a good one, appropriate for your size and industry. Your primary counsel will likely be a transactional attorney. This attorney will help you make sure that you are organized correctly and performing all necessary corporate maintenance activities for your entity type. He or she will also help you review contracts, figure out how to hire and fire people, and act as a resource for finding specialist attorneys as necessary. If your industry relies heavily on intellectual property, you will also want to develop a strong personal repationship with an IP attorney. Both of these attorneys should know your organization and operations very well so that they can help anticipate your legal needs. A good attorney will usually be willing to invest some amount of his or her own time in getting to know your company at the outset, and your relationship will deepen over time.

Take some time and interview a number of different attorneys to make sure you find one that you feel comfortable working with, and that has the right experience for your industry. It is also important to resist the urge to automatically select the attorney with the lowest per-hour billable rate. Often, low per-hour rates translate into larger bills because of extra time spent making up for a lack of expertise, or even worse, a poorly (but inexpensively) written contract exposes your organization to considerable liability. Some attorneys are also willing to offer flat fees for some services with long-term clients, or even enter into a retainer agreement where a certain suite of services are provided, some months more, some months less, for a set monthly fee. Feel free to explore creative options with the attorneys you are interviewing and set yourself up in a position you feel comfortable with.

Second, budget for legal expenses. I know nobody likes to pay the lawyers, but as you grow, so will your need for legal services. Getting this into your budget early on will help you keep legal concerns in your strategy, and that will ultimately help you keep legal costs to a minimum in the long run. Exploring some of the alternatives I’ve described above will help to put a relatively constant face to that figure.

Third, remember that an ounce of prevention is worth a pound of cure. It gets annoying paying five hundred dollars to review a contract that may only be bringing in to your company twenty or thirty thousand dollars worth of revenue. On the other hand, that five hundred dollar review will seem like a bargain when you are facing a lawsuit or regulatory agency action whose expense may outweigh the value of the contract itself. Contract reviews are definitely an investment worth making. The good news is that there are ways to reduce this expense as well. You can do much of the legwork yourself. You know the deal you want to make better than anyone. Start with a template agreement of the type you are entering into (e.g., product sales, trademark licensing, employment, etc.). You can get such templates from your attorney, or if he or she does not have any available, on internet sites (such as www.findlaw.com). Try filling in the blanks and putting in minor modifications to describe the arrangement you want. Try not to change sections that do not seem to deal directly with the terms of the deal you are making. These are usually “lawyerly” provisions, are necessary, and are best left to be amended by the lawyer who authored them. Once you have put in the terms you want, have your attorney review it and explain any changes he or she wants to make with you. This will let the attorney shore up any problems, and will make sure you are both on the same page. You will also have saved the expense of the attorney filling in the terms of the contract on billable time.   

Finally, and this hearkens back to a comment above, keep legal in your strategy. There are many ways to do this all along your path. The cheapest way to do this in the beginning is to have a lawyer friend. I know the risks that may run to your reputation, but they are generally considered more entertaining than accountants, and there is an inexhaustible supply of jokes to be told about them behind their backs, or even to their face! I often answer basic legal questions for friends and acquaintances. Short of having a lawyer “friend”, small businesses can develop relationships with attorneys interested in their industry through participation in industry associations. Lawyers often join these associations and attend their functions in order to further their industry knowledge and to network. This networking is an opportunity to develop a relationship with them and to get general advice and answers to basic questions. If you are a startup that is short on cash but long on value, you may consider asking an attorney to join your board and/or provide legal services in exchange for a percentage of ownership in the company. And finally, once the number of legal concerns your company is addressing accumulates to the point of becoming a real distraction from running the company, it may be time to consider hiring an attorney to work in-house. If you are still small but feel like you are on the edge, try finding one that can wear a couple of hats and perform additional functions for the company, or see if you can get a practicing attorney to dedicate a certain amount of his or her time to you for a flat fee. 

Most importantly, put your innovative spirit to work in establishing your relationship with legal counsel. Lawyers stand behind us and make sure that we can at least feel like we are doing business on a handshake and a smile in the boardroom, while they are tightening everything up behind the scenes. Legal counsel is a necessary, but minimizable, expense that will put a small business ahead of those who do not pay attention to it. Following these guidelines will help to ensure that you are always using the lawyers, and not the other way around…

Posted By: TJ
Last Edit: 23 Feb 2008 @ 07:44 AM

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  • WindWind
  • WaterWater
  • FireFire
  • LightLight


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