General business information

I do read business related blogs. After all, I am also in business. I want to pass along what I find useful or interesting. I figure that if you find the business information helpful then you will take a look at the legal information. I also hope that the information creates a stronger business for you. With a stronger business, the more need for a lawyer.

MSNBC has a rather lively business blog, YOUR BIZ. What I like is it has a good tone - no business professor lecturing - and it is directly targeted towards small businesses. Here are the recent posts as of today:

• Take my blog, please
• Home-based entrepreneurs get their 15 minutes
• Size 2 is better for you
• Santa's looking for a few good American elves
• E-mail made me stupid

I think the Internet can do one thing very well if we know how to use it. That thing is getting us together with like-minded people from different places. We learn there are others like us out there doing what we want to do or what we are doing. Then it lets us communicate with those people. I think anyone who is wanting to start their own business, is starting their own business or has their own business can learn something at The Indie Business Blog. I cannot copy and past their latest posts, but I do suggest this as a good start: The Power Of One.

Or does your business have one? What about your own personal computer? Are you sure that you have not violated the law? If you have any doubts, take a look at Rise of the armchair thieves - web - Technology - theage.com.au:

"Hew Griffiths, a 44-year-old NSW man is serving a 15-month sentence in a US jail for software piracy. Griffiths had never set foot in the US before he was indicted there. Indeed he had never owned a passport. Yet he was convicted under US law for copyright breaches he committed while in Australia. And the Australian Government agreed to extradite Griffiths to the US to be sentenced and jailed there. Surely Griffiths must have been some sort of software piracy godfather to warrant an international extradition and High Court challenge? Here's a sobering thought: rather than making any money out of his piracy activities, Griffiths cracked security codes on proprietary software and made that software available free on the internet. He wasn't raking in bundles of cash for his activities but he allowed thousands of people to get free software that otherwise would have been protected."

Or the limited liability company's operating agreement? Or a partnership agreement?

First and foremost, these documents set out how the legal entity will operate internally. Think of them as a blueprint or like a disk operating system. I used the analogy to tailor made goods in an earlier post. The by-laws set out the rights and responsibilities of the owners to one another and to the business. The by-laws need to meet the needs of the owners and the business.

Secondly, the agreement - if it is any good - sets out the process for splitting up the business. For a bit more on this topic you might want to read Like a marriage, a new business partnership needs a 'pre-nup' written by an Illinois attorney and published in The Napierville Sun.

I usually discuss prenuptial agreements on my Indiana Divorce and Family Law Blog. I use Google news alerts to keep track of news on prenuptial agreements and that is why I am writing about them on this blog. The latest alert came laden with references to stories from the business page. This might be a trend as an earlier post here mentioned. Certainly, it is good for the business writers to acknowledge the importance (and impact) of family law on businesses.

The New Hampshire Business Resource has a fairly good article Protecting your business assets with a ‘prenup’. I do take issue with part of the following paragraph, though:

Stock in a family business owned by one spouse is marital property, and absent a valid prenuptial agreement would technically be subject to division under New Hampshire’s statutes. As a practical matter, however, it is unlikely that a court would order one spouse to transfer shares in a closely held business to the other spouse upon divorce, since judges and marital masters are mindful that post-divorce joint ownership of a business venture is unlikely to succeed. Accordingly, the court is likely to award all shares of stock in a closely owned family business to the spouse related to that family.

After nineteen years, I think that anyone can say what any judge will do about any matter in any particular case. Judges in divorce cases think that if both parties are equally angry then they have done a good job. What makes a prenuptial so useful is removing the surprise inherent in any judge's decision of what makes an equitable division of property.

The Small Business Administration has courses on starting a business and business plans here.

Small Business Lending Corporation has a page on Developing a Business Plan.

Check out Competitive Intelligence - A Selective Resource Guide on LLRX. com. Geared for the legal profession but also having uses for the layperson. I spend so much time online that I forget that not everyone knows even what is Google. If you want to learn a bit about online searching, then you need to check out this page.

If you have an employees, you got to worry about withholding taxes. The IRS has a page on this subject that ought to be read by anyone starting a business who will have employees.

Does your business rely on any of these things:

1. Your ability to write good, enforceable contracts?
2. Your ability to understand contracts from those you do business with?
3. Knowing and meeting state and federal regulations affecting your business?

If you answered "YES" to any of these questions, then ask yourself how much money you are losing doing all this by yourself? If your time can better be spent doing something else for the business, then why does your business not have a lawyer?

Okay, that explains half of the question, but a business needs a lawyer for objective advice as much as it does for the preparing of documents. That makes the whole answer as to why a business needs a lawyer.

But how is the business to afford a lawyer and the lawyer to afford providing services? My solution involves getting away from hourly billing and move to varying my costs according to the job and client. Hourly billing remains for the unique document preparation and for some defense litigation. It also means that the client understand that a little cost for prevention saves a lot when faced with litigation. I provide consultations on a monthly fee that slides from $400.00 per month for nothing more than the client being able to call me up with any questions to $1,500.00 per month where there is advice and document drafting. In between lies the variances - some will need less consistent document drafting, others will have simple documents but not very often, and others will complicated documents drafted every so often - and the fees should also vary from slightly higher monthly fee to just adding the contracts on a la carte or a reduction in the hourly fee for complicated document drafting.

With the costs known upfront, businesses get fewer surprises and can budget accordingly. Even litigation can be handled on something besides an hourly rate. Where failing to prevent legal problems - and there are a myriad of those pitfalls for any business - can mean the end of the business, the business owner needs an attorney. Lawyers need to educate their business clients how lawyers can help their businesses. Both lawyers and clients need to talk about what services they need and how to provide them.

The Australian newspaper The Age published a a report under its Tech section with the headline Fit for business. The headline interested me enough to read the article - which was mostly about a local gym franchise and how it used mapping software to divide its territory.

I am not aware of a similar program in the United States but I will assume that the Pitney-Bowes program is a proprietary program. I can see something similar for the United States as being useful for both franchisors and franchisees - as well as other business dependent upon demographics.

I got to admit that I have an aversion against partnerships. I think most attorneys do not like them. Why? Liability. Law school beats us over the head to avoid liability for our clients as much as possible.

Partnerships ooze with liability issues. From your partner's creditors seizing business assets for his debts to your assets being on the line for business creditors, partnerships just scare lawyers. Maybe a partnership between corporations or limited liability companies or between a corporation and a limited liability company.

With all these problems with partnerships why have one with a spouse? Because partnerships can be implied by actions as well as by a formal agreement. Two spouses start a business and even without a formal agreement, a partnership can be created by their acts. Of course, the husband and wife have probably not even thought of talking to a lawyer about the kind of problems they might be getting themselves into. Why spend good money that could go into the business?

If anything goes wrong with the business, then business creditors can go after all the joint assets. Since most businesses fail, what do you think now of not talking to a lawyer?

What would chatting with an attorney accomplish? I repeat that most attorneys would get the business set up as a corporation or a limited liability company. If the clients were adamantly committed to a partnership, then there would need to be a partnership agreement.

If the clients want to keep the business running as long as possible, they need to consider all of the problems including divorce. I think the equivalent of a prenuptial agreement (or a post-nuptial agreement, if already married) needs to be considered regardless of the business type used by the husband and wife. With a partnership and limited liability company having a written document (and a LLC requiring a written operating agreement) setting out how the business shall be run, incorporating some of the prenuptial/post-nuptial's terms does not seem out of place. Based upon that reasoning, they need a separate prenuptial/post-nuptial agreement if the business is to be set up as a corporation.

Then they need to consider their retirement and estate planning objectives. If the business entity is a partnership or a limited liability company, these objectives need expression in the partnership agreement or the LLC operating agreement and for corporations in a separate document.

The latest Harvard Business School's Working Knowledge newsletter shows a new article entitled Five Steps to Better Family Negotiations. Worth reading by anyone with a family-run business or representing one. The steps are:

1. Analyze the negotiation space
2. Don't try to beat the other side
3. Understand the other party's interests, constraints, and perspective
4. Avoid single-issue negotiations: identify and negotiate multiple issues simultaneously
5. Negotiate over interests, not positions

Frankly, these steps ought to have a place in most negotiations.

Does a restaurant need trademarks? Do most businesses need trademarks?

The New York Times' coverage of the Pearl Oyster Bar litigation got me thinking about how its points would apply here. I made some comments within the original post and others have occurred to me since then.

First, I want to be clear that I am not addressing all restaurants. Franchise restaurants have franchisors eager to protect their trademarks and trade secrets. Nor am I addressing those restaurateurs who do want to expend the money to protect their intellectual property. I specifically exclude them on the assumption that they have made the decision that any infringement has not or will not cost them any money. A civil suit requires damages and that will be measured in dollars. No damages means no lawsuit.

I remain convinced that trademarks are the most cost effective intellectual property for any small business. The name must be unique and used in connection with the business. This could include the business' name or items on the menu or both. Trademarking the business' name provides protection against the competitor with the same or a similar name moving into the same area. While bringing menu items under a trademark provides protection from a competitor using your business' success with a menu item for their own purposes. You can see the government's fees for trademarking here.

You have the ultimate decision as to trademark or not. Remember enforcement costs do exist. I suggest thinking of trademarks as a form of insurance. Like all insurance, you need to think about what will be your costs if you do not have the insurance.

4/26/08 update: Follow Up on "Restaurants and intellectual property" about settlement of this case.

I will try to make up with quality the lack of quantity for this installment of business resources.

First, the Indiana Chamber of Commerce. Getting away from the membership drive and the like, there is a page for Government Resources and Business Research. Ignore those pages. Go to the pages for publications and the page for seminars and the page for studies. Some things have a cost and there are no seminars at this time, but here is where you can find something useful.

Not every business has copyright issues. However, those that do should bookmark the Copyright and Fair Use page from Stanford University Libraries.

I learned of a new search engine to get at information from the federal government. It is in beta but may be some use and interest to you. Here is how the site describes itself:

Have you worried about the information out on the Internet or just gone blithely about your way? I know of a case where a young women got harassed through Myspace. Not the kind of problem with the most clear cut solution.

The Washington Post article, Teen Tests Internet's Lewd Track Record, from May 29 shows the problems of information getting onto the Internet and how it reproduces itself.

Today's Sunday Herald has an article that echoes and amplifies the Washington Post article.

Citing a litany of cases where people have found themselves surprised by the implications of what seemed like a harmless web posting, leading academic Dr Yaman Akdeniz has called for a massive public education programme aimed at combating what is set to become a key social issue.

"It may seem like harmless fun, but the social networking revolution is already becoming a major issue in real life. People are losing their jobs, relationships and in some extreme cases even their lives as a direct result of exposing so much of themselves to the world.

"They are leaving themselves wide-open to commercial, personal and physical harm without any apparent understanding of the potential results," said Akdeniz, founder of the watchdog organisation Cyber-Rights & Cyber-Liberties UK.

"People must learn that once information has been released in digital format, it is impossible to get it back. We are living steadily more transparent lives, and the consequences of that could prove to be extremely dangerous."

Increasingly, the 21st-century citizen is defined by data. The conglomeration of personal records, certificates, applications and financial transactions that form the flurry of information following everyone about like a small cloud is the basis on which commercial and administrative judgements are made.

We think the real problem is some stalker or identity thief, but that may not be so. Self destruction may be more of a danger:

In the US, companies are already springing up that promise to check out job applicants' digital reputations on other firms' behalf. In addition to combing blog space, YouTube and an array of online forums for evidence, they also promise to track down potential recruits' Amazon reading lists in an effort to unearth any unwelcome political views.

"Practically the first thing everybody does when meeting someone new is to Google them. It's a great way of picking up extra information on a contact, but people don't seem to realise this when they're logging on to services like MySpace and Facebook, so they put everything online from their job title to their favourite sexual position," said Peter Cunningham, Viadeo's UK head of operations.

"A well-managed NetRep can work in your favour but nobody in business wants to take unnecessary risks, so if there's anything questionable about you online it will almost certainly have an impact upon your career prospects.

Yes, that does sound a bit too much like 1984 and Big Brother, but one major difference lies between Orwell's nightmare and our world: we put this stuff out there to be found rather than Big Brother having to dig up the dirt.

What does this have to do with businesses? The Sunday Herald doe smake the securityh threat point.

The wealth of digital information growing on the back of the web 2.0 boom has given rise to a new form of crime known as social engineering, where hackers manipulate online relationships in order to get access to valuable data about themselves or their place of work.

"It's a type of attack that is becoming ever more sophisticated: the hacker can now gain substantial information on your employees remotely because more and more data is held in the public domain. Take, for example, social networking sites such as Linked In, Ecademy and Ryze or jobs websites which house curriculum vitaes.

"Both provide ample opportunity for the hacker to use our credentials to impersonate us or to launch an attack on our employers," says Ken Munro of SecureTest, the company responsible for vetting the security of installations such as GCHQ.

Substitute business for individual in the above articles and I think you will see other places where the Internet can affect businesses. Think about it.

Why list a bunch of websites for and about businesses? Because they are for and about businesses! Hopefully, they will be of use to someone's business. I cannot think of any better reason for passing along information.

Searching the federal government at USASearch.gov. Once upon a time, federal information was hard to find. Here is a site that uses what looks like a version of the Google search engine for finding federal information. Why include it? Two reasons for including this: 1) too many federal actions affect business and now you can go directly to the source to find out what you want to know about the federal government, and 2) there are business opportunities with the federal government and why should Indiana business not have access to that kind of information?

California Small Business Blog says it is "designed for small business owners to provide insight into legal aspects, as well as other aspects, of their business." I say it has a great style presenting some useful information and ideas for small businesses - even those outside of California.

Public relations has come from the clouds to any size of business. Doing PR right is a difficult thing. The Bad Pitch Blog might give you some ideas of how not to do things for your business.

Workforce Development: what the Internet types call a portal. The website for the Workplace Development magazine. Good for employment news with more of a bent towards employers. News includes reporting on trends, legislation and forums to get new ideas and feedback on old ones. You can sign up for a weekly newsletter sent via e-mail. I have been doing this for years and it has been useful.

Harvard Business School's Working Knowledge. I hesitate putting this website on this list. Another you can get via e-mail for free and I do that. Sometimes the headlines lead to a quick delete and other times not. The articles are from research done at the Harvard Business School and the emphasis can be towards the policy side or the larger business side of things. However, the articles are spot on when they hit an interest of mine. Thankfully, it is not written for academics. The following is from the article Creating a Positive Professional Image:

As HBS professor Laura Morgan Roberts sees it, if you aren't managing your own professional image, others are.

"People are constantly observing your behavior and forming theories about your competence, character, and commitment, which are rapidly disseminated throughout your workplace," she says. "It is only wise to add your voice in framing others' theories about who you are and what you can accomplish."

There are plenty of books telling you how to "dress for success" and control your body language. But keeping on top of your personal traits is only part of the story of managing your professional image, says Roberts. You also belong to a social identity group—African American male, working mother—that brings its own stereotyping from the people you work with, especially in today's diverse workplaces. You can put on a suit and cut your hair to improve your appearance, but how do you manage something like skin color?

I will have more next Saturday.

I got notice about this report and read the summary. I certainly did not have time to read the full report. Here is the point of the summary:

A caution: these blogs interest me because they the qualities of good information being well-written and not because they have anything directly to say about Indiana law. I make this caution for the non-lawyers reading this blog who might not understand why a blog written by an attorney practicing in the State of Washington (such as Jill Pugh who runs two of the blogs below) does not mean much in Indiana. State law still controls a large swath of employment law and each state has its own local variations. Even with federal law, differences exist between the different federal circuit courts of appeal.

For example, Ms. Pugh's Employee Handbooks Blog does have several posts that are useful outside of Washington. The post FLSA Online Overtime Calculator has utility because the federal regulations apply nationally and the overtime calculator does not necessarily require a judge's interpretation. While the post When You Have to Fire An Employee - 10 Things to Keep In Mind has really good ideas, I must point out that Indiana law also says what cannot be withheld from an employee's paycheck. It is a lawyer thing, see? The point made by in the post still applies. Then there is,Handling Employee Personal Data, which deals with applying a specific Washington statute. However, this does give me an idea for a post of my own.

As I read her Employment Law Blog, I see as providing more general information for both employers and employees. I must admit to some muddling of the employment law part of my practice since leaving my in-house counsel job. Employment law for me has been employer oriented and that has had to change a bit. I think small businesses need access to counsel for employment issues but I am finding few in the area interested in my overtures to provide these services. If I do not scale down employment law as part of my practice, I find Ms. Pugh's blog has some inspirational ideas for this blog.

Taking a far broader scope than this blog is West Virginia Business Litigation. My aim here was to stay closer to home with more specifically Indiana focus. I am finding myself with plenty to write about, so much that posts planned have been postponed, and I find myself envious of this blog.

A question that never seems to die, sort of like Frankenstein's monster. An employer giving the wrong answer is looking at a variety of problems. I remember reading a few years ago about the IRS scrutinizing small businesses about whether subcontractors were actually subcontractors.

Workplace Prof Blog's post,More on Independent Contractors vs. Employees, makes me think that the problem still exists and may be even bigger than might the conventional wisdom. Workplace Prof Blog has a very succinct description of the problem:

I will point out two ares of law where the classification makes a difference: 1) as alluded to above, tax law; and 2) worker's compensation. From my experience, employers know about those two areas of law and are precisely the reason for miscategorizing workers. Employers cut their costs (employee withholding and workmen compensation premiums) by characterizing employees as subcontractors. This a risky and shortsighted plan.

I suggest any employer who thinks about labelling their employees as subcontractors read the post at Workplace Prof - including his links to other sites.

I discovered the Chilling Effects Clearinghouse this past Saturday. I get asked some simple questions about the Internet (such as will someone get in trouble for posting something stupid to a web page.), but I think this site has the credentials to be a starting point for researching Internet issues. The site describes its credentials and its purpose in the first two paragraphs on the site: