Category: Business Law

This will be a short one.  I just read a great blog post by my colleague Gina Madsen in Nevada on this very topic.  I recommend you read it here (http://www.madsenlawoffice.com/Blog/tabid/59/ID/25/Why-Every-Business-Needs-a-Lawyer.aspx).  Gina is very good at being short and to the point.  I won’t add much to her article other than a personal example.  I recently had a new client join one of my business membership programs, and boy is he glad he did.  The first matter I worked on for him was a negotiation that resulted in him saving $3,000!  And beyond that – and more importantly – he had the peace of mind of knowing I was taking care of the issue for him.  He expressed many times how he “just didn’t have to worry about it, or think about it . . . I have a business to run,” and “I just want it taken care of. ” And take care of it I did.

Gina also had a followup post on How to Choose the Right Lawyer for Your Business.  You can read it here (http://www.madsenlawoffice.com/Blog/tabid/59/ID/26/How-to-Choose-the-Right-Lawyer-for-Your-Business.aspx).  Gina and I have the same approach to serving our clients – a relationship model built on service.  A trusted adviser that you can turn to without having to worry about getting a bill in the mail every time you do.  Being proactive rather than reactive (and saving serious $$ by doing so).  And she brings up some very important additional considerations.  I particularly agree with her suggestion to work with a business lawyer who has practical business experience.  I think many business owners overlook the beneficial insight such a lawyer can bring to the table.  I know that my business degree and practical experience helping operate a commercial equipment leasing company help me be a legal adviser AND business adviser to my clients.  And their feedback let’s me know they appreciate that added benefit.

After reading those posts (and my comments) you likely find yourself looking for “that type” of lawyer.  Well, if you are in West Michigan, look no further and call our office for a Small Business Review to see if you qualify to work with our firm.  And if you are in Nevada, I recommend that you call Gina.

This thought came to me during a recent conversation with a good friend.  He mentioned how he currently was in a real struggle in his business yet could see the amazing potential of what could be in the very near future.  He wasn’t fully fearful and he wasn’t fully excited.  He was somewhere in between . . . actually a rapid seesaw back and forth between the two.

This “in between” area seems to be a common hang out for many small business owners and entrepreneurs that I know and work with.  It is a place that every small business owner has visited and likely will visit, however briefly, throughout the growing life of their business.  I’ve been there myself and can relate to what an “odd” feeling it is to be gripped by fear – whether financial, time constraints, marketing, work-life balance, health, etc. – and excited by the continued growth and success of the business . . . all at the same time!  What an emotional ride.

And that is the key!  The emotion is what I see keeping business owners in the “stuck” phase.  Fear . . . excitement . . . they are emotions, and as such they can swing wildly one way or the other and cause irrationality.  I’m not saying to completely take the emotion out of being a business owner . . . no way!  That’s what makes “the ride” so fun.  I believe the key is to temper both sides, be more “even keeled,” or whatever other cliche phrase you feel fits best.  It is key to recognize the emotion, what is causing the emotion, and to address what is causing it in a level-headed and pragmatic way.  People who know me well know that a constant gripe of mine is how “the law” (politics, court decisions, etc.) is a pendulum that seems to always swing too far one way or the other – it never settles in the middle ground.  Fear and excitement are the same way.  The oddity with these emotions is that you can have both at the same time!

In addition to my faith (the most important factor!), I found several books to be helpful in guiding me through recognizing the situation and dealing with it appropriately (eventually).

Have you been there?  Know someone who has?  Have useful advice for other blog readers?  I would love to hear from you!

In my previous post I shared how, as a Creative Business Lawyer™, my approach to practicing law is different from the traditional experience.  And now I want to share how the “rubber meets the road.”  So I have a different approach, but what does it mean to you, the business owner?  I think the Creative Business Lawyer™ Client Pledge sums it up nicely.  Let me know your thoughts!

Creative Business Lawyer™ Client Pledge

As your Creative Business Lawyer, I pledge to:

• Learn as much about you, as a person, as you are willing to share.
• Encourage and support your greater good.
• Never surprise you with an invoice.
• Tell you if I don’t know the answer to your question and then find the answer you need.
• Bring in help if and when I need it.
• Return calls and emails promptly and proactively keep you informed on issues relevant to our relationship.
• Recognize we are all human and can make mistakes.
• Introduce you to people I think might be able to help you.
• Have your back if you’re ever threatened.
• Celebrate your successes as if they were my own.
• Love you like a member of the family.

See the difference?  And there’s so much more.  I’m excited about this new approach and I enjoy any opportunity I get to share more about it and learn more about business owners.  If you would like to learn more, contact us to setup a LIFT Small Business Review.

As you may have read in my previous post here, I recently received the designation of Creative Business Lawyer™.  You may be wondering “what does that mean” and “why should I care?”  Well, I think you should care a LOT if you are a business owner or are looking to start a business – or if you know someone in either of those positions  Why?  Because it’s an approach to business formation and counsel that walks alongside you as the business owner to help you make the best decisions for your company – to help, not hinder, in a proactive way.  And, contrary to the typical relationship with a business lawyer, this relationship is not based on time.  No “billable hour.”  Hard to believe?  It shouldn’t be.  Why shouldn’t you get the same type of service from your lawyer as you get from suppliers and your other service providers?

In this post I’ll share what drives a Creative Business Lawyer’s™ passion for what we do.  And the best way to understand it is to share with you the Creative Business Lawyer™ manifesto.  I encourage you to share your thoughts here or email me and let me know if you have questions, comments, or suggestions.  The next post will explain the Creative Business Lawyer™ Client Pledge – a radical, and improved, way of viewing the lawyer-client relationship.

CREATIVE BUSINESS LAWYER™ MANIFESTO

Creative Business Lawyers™ believe:

1. Our job is to help business owners reach their goals, not stand in the way.
2. Our job is to help business owners understand and manage risk, not eliminate it.  Risk is what makes life and business fun and worth living.
3. People and relationships are ultimately more important to the success of a business than documents and numbers, but magic is made when they all work together.
4. Hourly fees impair relationships, service, and trust.
5. We must strive to earn the honored description of “Trusted Advisor.” It is better to be a “Trusted Advisor” than a “Hired Gun.”
6. People were not meant to live/work in cubicles.
7. The spark of creativity and entrepreneurism exists in every human.
8. Everyone is worthy of respect.
9. Our clients know more about themselves and their companies than we do.
10. The right Trusted Advisor can see and help people move through entrepreneurial and personal blocks.
11. People generally have a positive motivation for their actions and actions taken from this perspective add to the world.
12. There is more value in problem definition than in problem solution.
13. Creative micro-businesses are the future of the world.
14. Simple solutions are better than complex strategies.
15. All disputes and conflicts can be solved with creativity.

That’s a great question, isn’t it?  I’ve overheard and been a part of many conversations that ask just that question.  These are business owners who value the advice and counsel of an attorney and don’t think they can afford it.  Ideally, they would like to have an attorney on staff, whether as official “in-house counsel,” or as senior executive  where he or she can help with company operations and also keep a handle on the business’s day-to-day legal needs.  The cost to have in-house counsel is prohibitive for many . . . especially small businesses.  Better yet, what about the “micro business?”  Those with annual revenues from a few hundred thousand up to a few million (as defined by the government).  Having such advice at their fingertips is surely out of reach.  Or is it?

Well, if there is one thing I’ve learned, it is that being “small” or “micro” does not mean that the business is unsuccessful, easy to run, or without risks.  As a matter of fact, these businesses are the ones that most need  legal advice and are the least likely to get it.  In many cases, because the cost is too high as it relates to their revenues and other expenses.  This post, albeit slightly dated, is a great example of a new model for providing legal services to businesses.

After you read that, you are probably thinking, “oh, sure, there are five firms listed that provide that kind of service (although I’m sure there are more), and even so, it still seems geared toward a larger business than mine.”  I hear you.  Literally, I have heard that comment before.  And it is my goal to solve that quandary for many micro- and small-businesses.  My two passions in  the law are business planning/counsel and estate planning.  I really don’t seek out other practice areas because I know that I will provide the best service and product to my clients if I concentrate on my passion.  But the model I learned in law school and through the guidance of excellent mentors is broke . . . at least in my opinion.  I was taught two different billing models for having an ongoing “relationship” with business clients: (1) straight hourly billing, and (2) retainer/hourly billing.  The first is the traditional method to which everyone is accustom: you multiply your hourly rate by how many hours you worked for a client in a given month and that is the bill.  The second involves a monthly retainer (flat amount) that “buys” you a certain number of hours.  The latter is a way to exchange a fixed monthly rate (helps the law firm with cash flow) for a lower hourly rate (benefits the client), typically.  Anything over that is charged at the hourly rate (normal or discounted depending on the arrangement).  I didn’t like either option because I didn’t feel it allowed me to have the level of relationship with my clients that I wanted to have . . . to be the trusted advisor they turned to no matter what the issue.  It actually discouraged my clients from calling me – what kind of a lawyer/client relationship is that and how does it benefit the client or the lawyer??  Good question.

For the past several months I’ve been working on a model much like what is talked about in the article mentioned above, with one key difference – it is geared toward micro- and small-businesses only.  Not only are these businesses desperately in need of sound legal and business counsel, they are the businesses I most enjoy working with.  This model is based on an affordable, monthly fixed-fee that encompasses the most commonly requested and needed legal items, as well as some additional benefits to make sure the business and the business owner are positioned to maximize growth based on what level of risk is acceptable for them.  Which monthly plan to pick is up to the client.  No more worrying about getting a bill every time you call; no more trying not to use up all of the retainer you have with your attorney.  And it is this approach that led to me be designated as a Creative Business Lawyer™.   I will explain what that is and what that means to business owners throughout the Grand Rapids and West Michigan area in a future blog post.

Remember, each business owner must make their own decision.  If a relationship-based model is not what you want, then this is likely not for you.  If it is, you owe it to yourself to learn more.

It could be a big “so what” or a little “so what.” Let me explain. I was recently given the privilege of working with a couple of great guys who started a new company to launch a quite remarkable product. The company was already formed as a Michigan Limited Liability Company (LLC). My job is to write a disclaimer/terms of use for the website. Consistent with my practice of bringing added value to my clients, I took it upon myself to look at their state filings to see how they were formed. While doing so, I noticed that their 2010 state filing listed the title of the filer as “Partner.” Hmmm . . . I wondered to myself what lawyer they worked with to form the company (more later on why that matters). Turns out they didn’t work with a lawyer – they formed the company via Legal Zoom (according to the Articles of Organization).

So, why does that matter? Well, as any business lawyer will tell you, one of the main benefits of forming a LLC (or a corporation) is the liability shield it provides (hence “limited liability” company). The idea being that the LLC members are not personally liable for the debts and other liabilities of the company. The liability shield doesn’t come without effort. There are certain things business owners should do to ensure maximum liability protection (a topic for another post). If they don’t, it may be possible for a creditor to “pierce the veil” – that is, bypass the business entity and go after the business owner’s personal assets.

And what does that have to do with listing your business title as “Partner?” Well, a partnership is not a LLC (or corporation) and typically has no liability protection. Generally, all partners are personally liable for the actions of all the other partners. You can quickly see why not many businesses form as partnerships. I sure wouldn’t want to be personally liable for what someone else did! But Mike, my CPA said that I am a partnership – that’s how the IRS will tax my business. Assuming you didn’t elect otherwise, you are correct . . . for tax purposes you are treated as a partnership. If you formed as a LLC, you do NOT want to be treated as a partnership for liability purposes – it would defeat the point of forming the LLC.

Now it may seem trivial or overly protective, but listing your title as Partner could be used as evidence (albeit small) to “pierce the veil” and go after the owner’s personal assets. How does Legal Zoom (and other companies like them) come into this? Well, they say themselves that they are not lawyers – they are a document preparation company. Because they provide documents based on a questionnaire and not counsel, they are able to offer it at a much lower price than you would likely get working with a qualified lawyer. But at what ultimate cost? Losing your personal assets? That’s why I mentioned earlier that I wondered what lawyer they worked with. Every business lawyer I know would counsel the business owner about what liability protection means and how to ensure it protects them. For example, listing yourself as a Member or Manager . . . not a Partner.

Now I’m not faulting the guys who formed the business . . . not at all. Just like me – you don’t know what you don’t know. I surely don’t have the knowledge they do about how to create their product. And I’m looking forward to helping them maximize their growth while minimizing their risk. We all have our roles, and I hope by sharing this information with them (and you) I’ve helped fulfill mine.

As any parent, teacher, school administrator, or child-focused activity center owner knows, field trips and recreational events are a common excursion for children of all ages.  An opportunity to get out of the classroom and experience learning at different venues or events, or to celebrate a birthday or other occasion.  A key legal aspect to these activities is the liability waiver and release.  These releases ask the parent to waive all right to sue if their child is injured – in effect, assuming the risk for their child’s injury.

The Michigan Supreme Court recently heard oral arguments in a case that, if upheld, may threaten the future of such fun-filled activities.  In Woodman v Kera, LLC, a mother rented an indoor play arena for her son’s birthday – he was 5 years old.  On the day of the party, the child’s father signed a release on his son’s behalf.  The boy broke his leg jumping off the top of a bouncy slide.  His mother, in turn, sued the facility owners.  The trial court dismissed the case based on the release.  The Court of Appeals, however, overturned the trial court, relying on the common law (court law) rule that a parent has no authority to release his or her child’s rights.

Will the business owner be held liable despite the release?  Only time will tell, as it may still be a little while before the Michigan Supreme Court releases it’s opinion (which should be available at http://coa.courts.mi.gov/resources/opinions.htm, when available).  As the father of two wonderful young children, you can be sure I will be keeping an idea on this one and will post anything I hear.