June is the Month of Dads!
Companies regularly make promises, like promises to pay back the money they borrow, and those promises are then personally guaranteed by the business owners or sometimes friends of the business owner. This is the situation that forms the basis of William Shakespeare’s Merchant of Venice.
Antonio’s friend, Bassanio, wants to borrow three thousand ducats. Shylock agrees to make the loan but requires a personal guarantee from Antonio. Shylock’s terms are that if the 3,000 ducats are not repaid, Antonio must give Shylock a pound of Antonio’s flesh. Of course, neither Bassanio nor Antonio ends up paying the ducats, so Shylock insists on getting his pound of flesh. To get it, Shylock sues Antonio. The court scene is a real master class for every lawyer and anyone who conducts their business or personal lives with contracts.
Sometimes, people are surprised to learn that my undergraduate major was in theatre. The art background isn’t an obvious choice for subsequent legal training. But in fact, I learned an incredible amount about conflict, conflict resolution, and conflict avoidance by studying great theatre.
In the trial, Antonio admits that he owes Shylock his bond, but an offer of 6,000 ducats–twice the amount owed to Shylock as an offer of compromise instead of Shylock taking his pound of flesh from Antonio.
As a judge, before the ruling, Portia attempts to convince Shylock to take the deal. She offers one of the most famous arguments in all of literature, explain to Shylock that justice will give him his pound of flesh, but mercy would be better than justice.
But Portia fails, and Shylock continues to insist on getting his justice. So Portia proceeds to render the ruling. She gives Shylock what his contract gives him: the pound of flesh. Before Shylock can take his pound of flesh, however, Portia also points out a legal drafting flaw in the contract. She warns that the contract does not say anything about Shylock getting any blood. And under the laws of Venice, if Shylock spills one drop of Antonio’s blood in taking the pound of flesh, Shylock will lose all of his estates.
Recognizing his predicament, Shylock tries to take the 6,000 ducats offer of compromise, but now it’s too late. All he gets is the right to collect his penalty pound of flesh. In today’s legal, poetic terms, Shylock is screwed.
So what are the lessons to take away?
First, choose mercy over justice. In the Gordillo Law Firm office, the first thing you will see when you walk in the door is a picture of Abraham Lincoln with this quote from him: “Discourage litigation. Persuade your neighbors to compromise whenever you can. As a peacemaker, the lawyer has superior opportunity of being a good man.” In my own experience as a trial lawyer, getting “justice” from a judge or a jury who doesn’t know you, your business, or your family was rarely the kind of result that was satisfying or worth the cost that to be paid to get it. Shylock should have taken the 6,000 ducats and shown mercy instead of insisting on justice.
Second, drafting documents with clarity and precision upfront requires seeing the pitfalls before they happen. That’s what smart clients pay lawyers for. Taking chances with form documents, scribbled deals on napkins or emails work fine until they don’t. You want things like loans, contracts, and instructions on what to do on your behalf when you can’t do it because you have died or become incapacitated to be written in terms so clear and unmistakable that there will be no pitfalls when things go in ways that you don’t anticipate. If you are owed your pound of flesh, make sure you don’t have to worry about spilling blood when you take it.
Each year, between 35% to 53% of small businesses are hit with a lawsuit, according to the Small Business Administration (SBA). With statistics like these, it may not be a matter of if your company gets sued, but when. To make matters worse, if you get sued, even if you win the case, you may still be on the hook for lawyer’s fees and court costs, not to mention the time you spend defending yourself. But by understanding the causes of potential legal trouble, you can take steps to prevent disputes before they occur. So here are three of the most common sources of litigation.
1. Lawsuits By Employees
Although you may not like to think that one of your team would ever sue you,
your employees (and independent contractors) are one of the most likely sources for litigation. In fact, nearly one in every five small businesses will get sued by a team member. The most common lawsuits arise when a team member needs to be let go, and he or she feels mistreated in the process. If you operate like many business owners, without clear employment agreements and without formal processes for hiring and firing, you may find out when it’s too late that you weren’t the great boss you thought you were.
From creating sound employment agreements, advising you on the appropriate insurance, and helping you establish effective workplace policies and procedures, as your Family Business Lawyer™–especially one well experienced in employment law — I can work with you to dramatically reduce your chances of getting sued for employment-based claims.
Alright, let’s talk about a second common source of litigation:
2. Lawsuits By Clients or Customers
Every business owner has to deal with unhappy clients or customers. You can’t please all the people all the time—but you can establish your process for selling your products and services to minimize the risk of court and conflict when you do have an unhappy client or customer. The way you present your client or customer agreement, what it says, and how it says what it says, plus how you get paid and handle customer complaints can mean the difference between an unhappy customer, who you turn into a raving fan, and an unhappy customer, who sues you. We help our clients turn client or customer complaints into learning and growth opportunities and head off future problems by creating template agreements and offering training on presenting those agreements for the best possible outcomes.
A third common source of litigation is Lawsuits For Third-Party Injuries.
If one of your team members is injured on the job, that’s typically covered by worker’s compensation insurance. But if a client, vendor, or another third-party is involved in an accident in your place of business, you can be sued for negligence, often known as a “slip-and-fall” lawsuit. If you allow members of the public onto your property, and a visitor can prove that you didn’t take the proper precautions, and he or she is injured; as a result, that individual can sue your company to pay for their medical bills, lost wages, and even pain and suffering. Your primary defense against personal injury suits is adequate liability insurance. We can recommend the best types and amounts of liability insurance for your business. Contact us to discuss your specific coverage needs.
Your Very Own In-House Legal Counsel
At the Gordillo Law Firm, we focus on keeping our business owner clients out of court and out of conflict. If that interests you, contact us to discuss the specific legal safeguards you should have in place. Whether it’s investing in the right insurance, reviewing and updating your agreements, or helping you navigate our state’s employment law, as your Family Business Lawyer™, we always have your back.
Consider This Before You Create Your Will Online
A last will and testament is the most commonly thought-of document when it comes to an estate plan. But a will is only a very small part of an integrated plan that ensures your family stays out of court and out of conflict if and when something happens to you.
Do not think you can just write your own will, and that will help your family.
You have probably seen ads from services that tout the idea that you can write your own will quickly—maybe even while you are in the security line at the airport (seriously, we have seen those ads in our own Facebook feeds). And it’s true that in Nevada and Ohio, you could write your will on the back of a cocktail napkin and make it legally valid. But does legally valid mean it will work for you and your loved ones as you want it to work?
Instead, consider the reality that is trying to write your will on the cheap could create far more trouble for your loved ones down the road if you try to DIY it. Your family and loved ones need you to get professional support from someone who can help you look at what you own, who you love, and what would happen to you and everyone you love if and when something happens to you.
The facts are that 1) Death is unavoidable—and2) incapacity may happen before that. These are non-negotiables.
Facing these matters head-on leads you—and your loved ones—to having the best life possible. Otherwise, it’s the people you love who get stuck with everything you were not willing to take care of now.
Unfortunately, if you go it alone, you may miss important facets of what happens in the event of your incapacity or death. For example, you may think that a will is sufficient when you really need a probate-avoidance trust to keep your family out of court. A five-minute will won’t help you stay out of court.
Or you may think your kids are adequately protected because you have a will, but you may really need a full Kids Protection Plan®, and without it, your kids could end up in the care of strangers, even if just temporarily. Before you do anything, get educated and get empowered to do what’s right.
The right plan for you begins with knowing what you have and then being clear on exactly what’s necessary to keep your family out of court and conflict—and to keep your assets out of our state’s unclaimed property fund.
If you are ready to write your will, that’s great—but come see us first.
The biggest mistake you can make is not facing the reality of death; the second biggest mistake is facing it alone.
If you need help getting started, consult with us as your Family Business Lawyer™. We will be glad to help you through the process, so you can be absolutely certain that your loved ones are protected and your wishes are honored.
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