Posts Tagged ‘FreeStyleFriday’
5 critical elements to consider before signing a business contract
I have drafted, reviewed and analyzed hundreds of business contracts through working as an attorney with small business clients. Below are some of critical points which emerge time and again in my work.
1. Is the compensation clearly defined? Not surprisingly, this is often the key element in a business contract. Whether it is an employment agreement, creative design agreement or for shared services, each party is critically concerned about how it will be compensated. A fuzzy definition or incomplete description of the compensation structure often leaps up to cause problem during the agreement.
2. How could this contract affect me or my business after it is over? Although the end may be far off, it will likely come at some point sooner or later. When it does, your business will need to continue to operate without the agreement in place and without the assistance of the party to the agreement. Clauses in a business contract that restrict the use of the not sure of this word?, who you can contact, or that require your business to come up with a large sum of money at the end of the contract are often onerous. I have found it very valuable to run contract provisions through the filter of “how would this affect my business if I had to live with it for five years?” Will any fee be required from either party in the contract? Will property have to be returned by one party to another under the contract? Will there need to be services provided following the contract termination to allow a smooth transition?
3. Is the method to end the contract clear and subject to execution? If circumstances, other opportunities or simply the passage of time required that the contract end, it is critical for both parties to be clear about how the termination will occur. The contract needs to contain clear standards for how it can be terminated and what the consequences of termination will be. I have seen far too many contractual relationships end up in court because there was not a clearly defined method of terminating the agreement when one side felt the need to do so.
4. Are you legally capable of doing what the contract requires? You would be amazed how often I have seen businesses or individuals run into contractual issues because they were required to do things they simply could not do. For instance, providing a certain product in a specific quantity, paying certain sums of money at certain times and completing design and development work in a fixed time frame. While the excitement of getting the “big contract” is understandable, take a few minutes before signing the agreement to make sure you can realistically perform the contractual obligations.
5. Does the contract contain performance milestones that can be quantified and measured? Clear and specific milestones for what each party has to do to perform under a contract are essential. When obligations are not clear, it allows for a party with bad intentions to create trouble and also simply creates issues even with parties that have good intentions. In those situations where payment is conditional upon performance, it is critical that both performance and measurement of performance are written into the contract. In construction contracts clear deadlines and performance milestones are generally included, however, it is my experience that these types of guidelines do not end up in many other contracts.
Do you have any good stories where one of these items played out in your business?
The Definitive Legal Guide to Business Selection
Considerations when starting your business (prior to world domination). These are the thoughts and accompanying concepts that one should consider when starting a business.
- Be an entity. You may have been called worse things, but this is actually not a slam. An entity, in this context, is structure that provides separation between you, your assets and your business. For example, a corporation and a limited liability company are both entities. In contrast, someone doing business under their name, with nothing more formal, is operating as a “sole proprietor”; there is no separation between personal and business.
- What type of entity should I be? Surprisingly, for legal purposes there is not a huge difference. Both a corporation and a limited liability company provide a wall of separation between their owners and the business. A corporation has shareholders, a limited liability company typically has members.
- Have your organizational documents in place. For a corporation, it is written minutes of the organizational meeting of the shareholders and board of directors, plus bylaws. For a limited liability company, it is an operating agreement.
- Protect your Intellectual Property. If you have words, pictures, symbols, code, software or an invention, take the proper steps to legally and officially claim ownership to it. It might be registering a trademark, securing a trade name, seeking copyright or even patent protection.
- Know who your employees are or are not. One of the easiest ways for a business to create a mountain of liability is to treat individuals who are actually employees as independent contractors. That means failing to withhold and do payroll properly and to secure worker’s compensation insurance. If you have any doubt about whether an individual is an employee or independent contract, talk to an attorney. You do not want to get caught in the Independent Contractor Trap.
- Maintain the regular records that are required. For a corporation, it is at least the written records of shareholders and directors meetings and other major actions. Treat the entity like it is a separate and distinct entity (separate records, separate bank accounts, etc. . .)
What other issues have you considered when starting a business?
Should we know as much about Steve Jobs’s health as Gabrielle Giffords?
I came across an article from Kathleen Pender on The Chronicle with Bloomberg today, Giffords’ detailed updates, Jobs’ nondisclosure, comparing Representative Gabrielle Giffords and Apple CEO Steve Jobs approaches about how much information to release when there is a health issue. The title of the article and, to some extent, the article’s tone suggests that Mr. Jobs should be releasing more information about his health condition because we know so much about Rep. Giffords condition. Any comparison between the two scenarios is facially appealing but functionally bunk. Mr. Jobs and Rep. Giffords are public figures who have suffered or are suffering serious health issues. It is at this point that the comparison crashes:
- Different health situations. The circumstances of the injuries/health issues are drastically different. Rep. Giffords survived a cold-blooded assassination attempt and know, thankfully, appears to be making a phenominal recovery. Mr. Jobs appears (although we cannot be certain) to be in a downward spiral of health due to natural illnesses. Ms. Giffords is rightfully viewed as a hero by most people. It seems to me that Mr. Jobs’ condition is viewed with more sadness than anything else.
- Different purposes. Mr. Jobs is responsible for the day to day operation of one of world’s most valuable companies. Even a slight slip up or loss of momentum could have drastic consequences for Apple’s stock price and the company. Ms. Giffords is responsible for representing the people of Southern Arizona in the United States Congress. Her absence does not stop Congress from conducting its business or even have a major impact on the way Congress conducts its business. (Let me be clear here: I am not saying Rep. Giffords is unimportant, only recognizing her position as 1 of 435 members of the House).
- Institution vs. Company. Rep. Giffords is accountable to the people she represents while Mr. Jobs is primarily to his Board of Directors (indirectly to Apple shareholders).
- Downside. There is little downside to Rep. Giffords’s health condition being released, we are rooting for her recovery and the news has been overwhelming positive. As morbid as it may sound, Apple’s competitor’s benefit from negative information about Mr. Jobs. Reports on his health which are grave or concerning threaten and weaken Apple (even if only temporarily) giving competitors an edge. I am not saying Apple’s competitiors are wishing ill will to Mr. Jobs, only recognizing how the system typically works.
- Immediate vs. Future Threat. Ms. Giffords was perilously to death and survived injuries that 98% of people die from. It is not clear what Mr. Job’s health status is. While his health issues may be very serious, the grave threat to his life is not apparent from looking at him.
Is the comparison between the way the Giffords and Jobs situations have been handled valid?
What people look for in hiring an attorney
What are people looking for when they hire an attorney? What are the key characteristics? I was curious to hear from people on this since my experience has been primarily as the person being hired. I asked this question on Linkedin (you can view it on Linked, if you are a member, by clicking the link) earlier this week:
What are the most important one or two qualities for which you look when hiring an attorney?
The responses are listed below.
If I were to hire an attorney, I’d want someone I could rely on. For me that is a person that is well informed, honest, sincere, and practical.
1) Exceptional analytical skills
2) Problem solver mentality rather than antagonistic
Ability to bring new knowledge and insight that I didn’t already have or think about. If I’m trying to decide on which attorney to use, I’m more likely to choose one that makes me feel like he’s valuable for more than just filing paperwork.
When I was looking for an adoption attorney, the most important things was that he/she listened and answered my questions. Recommendations from others was also high on the list.
1) Do I know them and know them to be honest?
2) Do they pay it forward with their services?
3) – if I was able to give a third, it would be simply, do that have a clear pricing schedule listed where I can look it up.
Without knowing what type of law you practice it is hard for me to answer that question. I’d be more than happy to meet over coffee something & discuss with you.
A committment to customer service Ability to help clients make the best decisions that fit them and their situation Timeliness of response
Honesty and tenacity.
***What are the key characteristics to you when hiring an attorney?***
5 reasons you need a written agreement.
It is probably a mantra of most attorneys: get it in writing. However, it turns out there are some stellar reasons to “get your agreement” in writing at the start of the relationship:
1. All parties to the agreement know what the terms are.
2. The process of reducing the agreement to writing spurs conversation about the terms and usually helps clarify to what the parties are agreeing and issues that might exists.
3. It is much easier to enforce something that is written down. Enormous legal obstacles exist when trying to enforce an oral agreement.
4. People who were not part of making the agreement can know what the agreement is. This tremendously improves efficiency.
5. The written agreement provides a pathway to resolving disputes, without having to go to court.
5 considerations in naming your children’s guardian
Last week in FreeStyleFriday I reviewed the process of naming a guardian for your minor children. This week I cover the important considerations in determining the guardians:
1. The stage in life of the proposed guardian(s). Are the people at a place in their life or will they be in place where they want to have children? People who are finishing raising their children and moving on to another stage in life may not want to take on children.
2. The resources of the proposed guardians(s). Raising and supporting children can be expensive. When thinking about guardians consider whether the people who would be guardians generally have the resources to care for additional children. This is an area where life insurance (on the lives of the parents) can be helpful.
3. The religious beliefs of the proposed guardian(s). The guardians could end raising your children having a profound impact on their development both physical and spiritual. If it is important to you to have your children raised in the faith which you believe, this is something to consider.
4. Special needs. Do any of your children have special needs? If so, are the proposed guardians prepared to meet those needs and care for the children in the way that is necessary?
5. Legal qualification. These requirements are usually minimal (e.g., not a convicted felon, non-US citizen etc. . .) but something to consider as a threshold requirement.
Oops, we lost your mortgage, now pay us!
Remember those documents you signed at your last loan closing? Your mortgage company sent you a copy or maybe, if your mortgage company was particularly efficient, it emailed you a copy. You probably assumed that your mortgage company was safely storing the originals. Not so fast, assume nothing with the chaos inherent in the home mortgage over the last few years.
Time Magazine chronicled the story of a Florida man who has stayed in his home for over two years without making a mortgage payment because his mortgage company could not find the original promissory and mortgage. The originals are typically required to convince a Court to grant foreclosure. In the process of investigating this particulary homeowner’s case, Time discovered something that is not surprising:
Just how bad is the problem? TIME dug into the mortgage of one troubled borrower. What we found suggests that many promissory notes are not lost. In an effort to rush homeowners to foreclosure, and hide damaging information, bankers’ have needlessly created a huge legal mess that once again questions the financial industry’s credibility and ethics. “They [banks] don’t comply with the law when they’re taking people’s homes,” says Michael Olenick, who owns Legalprise, a legal research firm.
It is not surprising to me because I have witnessed shoddy work by mortgage companies that want to enforce their legal right without providing the homeower with their rights. If it is documented in this case by Time, there are probably quite a few more cases where poor record-keeping leads to a breakdown in the process.
The lessons for homeowners? Keep copies of the documents you sign and know your rights in the foreclosure process.
You can read the entire Time article here.
The benefit and burden of being connected everywhere
I am connected to my work, family and friends to a degree that was unimaginable 10 years ago. It is not just calls on the cell phone, it is email, text, Twitter, IM, Facebook and an immnumerable number of other services. The opportunities this connectivity brings are tremendous; people collaberate, connect and achieve in amazing ways. In many ways, actual physical presence has become irrelevant.
This level of connectivity also means it is nearly impossible to disconnect, even for a brief period of time. The expectation is set that one will always be available, even it it is only a text message or email. This means lines between work and play are blurred and, if one is not careful, the quality of both work and play diminishes.
Occasionally I wonder if the benefit of being “connected” whereever and whenever is worth the burden of essentially being “on-call”, permanently. Do you ever have this concern? How do you address it? I am interested to hear your thoughts.
How does a power of attorney help protect my family?
A power of attorney is your act of giving another person (usually your spouse or other family member) the authority to handle your affairs, when you are not able to do it. The power of attorney usually allows the person you choose to make business, personal and financial decisions for you. The person you choose only acts for you after a doctor (or two in some cases) finds you incapacitated.
The power of attorney usually saves your family from going to a court and asking that a guardian be appointed for you. Without a power of attorney or a guardian, you usaully will not be able to act on behalf of your incapcitated family member, even if that person is your spouse. 
The “durable” part of the power of means that the power of attorney is effective when signed, becomes active upon a person’s disability and continues until revoked.
The power of attorney is another item that a person can put in place to help things run smoothly for their family when illness or disability come. If you have questions about this device or anything else, please feel to contact me.
You have an Oklahoma estate plan, whether you created it or not . . .
Whether you have created a will, trust, or even thought about creating one, there are plans for about what happens to your property when you die. An estate plan is the way to set out the who, what, when, where, and how:
• Your property will be transferred upon your death;
• The recipients of your property and in what amounts;
• The administrator of your estate and the division of your personal property;
• The person or persons who will be the guardians of your minor children, and what type of resources the guardians will have;
• Your caretaker if you become incapacitated and a power of attorney granting the authority to handle your affairs.
From where does this sophisticated Oklahoma estate plan come? The statutes of the State of Oklahoma (or the state in which you live if not Oklahoma) provide it. Within the thousands of words contained in the Oklahoma Statutes (whatever state in which you reside), all the decisions are made about what you have, what happens to it, and who takes care of you and your children upon your death. These laws set a rigid formula and make no exceptions for unusual or special needs. Without a will or trust in place, your estate will be administered by the court, according to these statutes. If this happens, the cost to your estate could be greater than if you have an estate plan.
Does this sound good? If not, there is an alternative: plan your own estate, determine who takes care of your family and who takes care of you, yourself. Talk to an attorney to find out how to plan your own estate (whether it is small, medium, or large), and to draft documents that fit you and you and your family’s unique needs – not the convenient one size fits all solution provided by the statutes. In the process, you are taking care of your family the way you know is best.
Feel free to contact me if you have any questions or if would like to discuss planning your estate.
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