Ethos Business Law

When was the last time you looked at your company’s standard form documents.  Whether it is a Nondisclosure Agreement, Offer Letter, Employee Agreement, Purchase Order, Terms and Conditions, Product Agreement or any other document you regularly use with customers, suppliers, contractors or employees, today is a good time to take a look at what you are sending.

If it has been a while, you should look at the following items:

1. Does your form agreement still match your business purpose? If your business has evolved since your form was initially drafted, chances are that your business form no longer does what your business needs.  This can place your business in a precarious position when you need to enforce the agreement — or what you thought the agreement provided!
2. Do your form agreements contradict each other? If you are like most businesses, your form agreements have developed one at a time.  Unfortunately, this means there may be inconsistent provisions in agreements that relate to each other.  For example, the terms and conditions in your Proposal may not match the terms and conditions in your Invoice.  In this case, which provisions govern.  When a  problem arises, you can bet that will be an important question!
3. Did you just use Google to get a form?  If so, it is VERY important to carefully review the document.  There are a lot of documents out on the Web, but that does not mean they are good or that they fit your purpose at all.  In fact, many forms on the Web are examples of what not to use!
4. Do you not have any forms? Although this may be OK while you are a start-up, once you grow beyond a start-up, contract management becomes very important.  Effective contract management will save your business considerable time and energy.  A basic set of forms tailored to your business is a perfect way to start.

For more information on reviewing or preparing business forms, please contact attorney David Baer at david.baer@ethoslaw.com or 612.767.3311.

Recently, a number of my clients have outsourced manufacturing to international companies.  While this is a multi-faceted decision involving price, security, expertise, logistics, convenience and many other factors, I put together a brief list of items you should consider when evaluating an international manufacturing relationship:

• Know your manufacturer
• Know the culture
• Compare similar metrics between manufacturers (apples to apples)
• Independently research the manufacturer’s reputation
• Carefully review the manufacturer’s financial performance
• Visit the facilities
• Conduct a factory audit
• Consider intellectual property rights and protections
• Determine responsibility for product specifications, changes and improvements
• Agree to detailed commercial terms
• Understand and apportion currency risks
• Understand “hidden” costs, such as transportation, import duties, VAT and other incidental costs
• Consider independent testing of your products
• Know the legal and regulatory landscape that affects your manufacturing and importing
• Have a back-up plan or second source — avoid single-source situations
• Have a reverse logistics plan from the start
• Be sure to negotiate a solid warranty and indemnification
• Consider recall and product liability exposure
• Consider how to best approach a dispute in another country
• Execute a detailed Manufacturing Agreement BEFORE you start to source products

If you have any thoughts to add to this post, please provide comments below.

For more information or help with an international manufacturing relationship, please contact attorney David Baer at david.baer@ethoslaw.com or 612.767.3311.

“50% of all marriages end in divorce.”  We have all heard about the divorce rate in America.  But, did you realize that many business relationships end in divorce as well?  Business partners often have ties to each other that are as significant (or more significant) than those of married couples.  Thought and planning as you structure your business relationship can save you from significant stress and expense in the event of a business divorce.  Moreover, thoughtful planning on these issues will help flush out potential problems in advance and allow you to resolve them before they lead to a business divorce.

Here are a few items to think about so that your business can avoid a business divorce:

• Have you worked with an attorney to formalize the relationship with your business partners?
• Do you have a Shareholder Agreement or Member Control Agreement?  Is is current and up to date?
• Do you have a buy-sell arrangement?  Is is current and up to date?
• Have you agreed upon transfers of equity and succession plans?
• Do you have a current valuation for the business?
• Have you been keeping accurate corporate records?
• Have you considered life insurance for the business owners?
• Do you have a dispute resolution process in place?

If you are thinking about a business venture with another person, or currently have one or more business partners, you really need to address these items as well as others so that you are prepared for your business partnership and mitigate the possibility of a business divorce.

For more information, please contact attorney David Baer at david.baer@ethoslaw.com or 612.767.3311.

In a previous post, here, I discussed the importance of a board of directors for private companies.  I want to dig a bit deeper into the specific issue of who you should invite to be on your board of directors.  While at first thought this might be a resting spot for executives, friends and family, thinking more strategically about your board composition will provide significant advantages to your business. (more…)

I recently came across this video that discusses the basic topic of motivating people.  I think you will be very surprised at what the research actually shows.  Next time you need to motivate your employees, think about these simple concepts.

(Hat Tip:  Darin Lynch — Thanks!)

“One really good attorney essentially takes the place of three outside counsel.”

This view was expressed by the Vice President, Associate General Counsel and Chief Compliance Officer at Best Buy Enterprise Services Inc. in the May 2010 issue of Inside Counsel.  “Their ability to triage, to understand an issue as it’s coming in, can save me immense amounts of outside counsel fees and in-house resources.”  But why is this approach reserved only for in-house counsel — it is not.

Perhaps the distinction is not whether an attorney works in-house or outside, but whether the company has found the right attorney.  Companies must seek out counsel that understand what it is like to live with decisions in a business environment — not those who just make insulated and unpractical recommendations.  The difference between a really good attorney that can triage issues and solve problems and “outside counsel” is not the location of the attorney, but their skill, experience and approach.

The General Counsel Hotline provides a business-centric, proactive tool to allow clients the luxury of in-house counsel at a fraction of the cost.  See how this program can turn three of your outside counsel into one.

Here is a follow-up report by CBS News on the hidden dangers of digital copiers.  The original report is here.  Massachusetts Congressman Ed Markey called for an investigation by the Federal Trade Commission — concerned most Americans don’t know their information can be compromised.  “We have to do a lot more to insure that the public and corporations know this,” Rep. Markey said, “and that absolute security is applied to copy machines across our country.”

What do you think?

(Hat Tip: Michael Mason Norman, ED.D. — Thanks!)

Did you know that most digital copiers have a hard drive?  Did you know that every copy on these machines is recorded and stored on that hard drive.  So, what happens when that copier (and hard drive) leaves your office?  Take a look at this CBS News report:

Bottom line:  make sure you take appropriate precautions to erase the hard drive when you get rid of your digital copier.

Ethos Business Law is continuing its quest to evolve business legal services by launching a new program aimed at providing businesses with a strategic and efficient tool to reduce legal risk and costs.  The General Counsel Hotline is a new, innovative solution for companies that do not have internal legal resources.  It allows clients to sign up for a low-cost, monthly fixed-fee package and receive the following benefits:

• As needed telephone consultations regarding legal and strategic business issues;
• Monthly strategic legal planning sessions in your office;
• A trusted, objective advisor available when you need it; and
• Freedom from the billable hour.

How many times have you experienced the following:

• Been reluctant to call your attorney to ask what you believe is a simple question because you are worried that you will get a $1,000 bill.
• Decided that instead of proactively consulting your attorney, you would just “wait and see” and call your attorney if or when you have problems.
• Wished you had predictability in your budget for legal expenses.
• Needed a strategic, business-minded lawyer that could help you evaluate your business in an objective manner without trying to bill hours.
• Been frustrated because your attorney doesn’t really understand your business and only speaks legalese!

The General Counsel Hotline is the solution.  Clients are embracing this new model and it just might be a perfect tool to augment your legal practices.  Contact Ethos Business Law today to find out how the General Counsel Hotline can decrease your legal risk and increase your bottom line.

I recently saw yet another example of why building and maintain relationships is one of the most important skills you must master in order to become a successful business person.  While working with a client through a complex and tricky loan restructure, one of the participating lenders was experiencing significant pressure on its business from bank regulators, unrelated to my client.  This pressure caused that lender to create problems in the loan workout.  However, the lead lender and the borrower had developed a strong relationship over many years and were able to leverage that relationship built on trust and proven execution to allow all participants to come to a workable solution.  Had it not been for the strong relationship between the lead lender and the borrower, the result would have been drastically different. (more…)