Legal Issues and Small Business | Street Smarts | B2B Vault - The Biz To Biz Podcast | Episode 258

You are now watching the Biz to Biz Podcast with Allen and Justin. Hey everybody, welcome to B2B Vault Street Smarts Edition, and we're gonna have a couple of guests today. We're going to be talking about, um, legal stuff that agents need to know about, and we have two industry attorneys joining us on the show today. And you know, Street Smarts is brought to you by The Green Sheet, and I write a column in there called Street Smarts, and I hope everybody checks it out and enjoys the content. So welcome to the podcast. Today we have Christopher Dryden from Global Legal Law Firm in California. We have Adam Atlas from the Adam Atlas Law Firm, attorneys at law. We're— so let you guys do a little intro. On yourselves. Chris, go first.

Yeah, my name is Chris Dryden. Uh, I've been in the payments industry since roughly 2007 as an attorney. My only experience in the payments industry has been as an attorney. Our law firm, Global Legal Law Firm, has been in it since then, and we pretty much do everything payments. So contract review, transactions, litigation if you're unfortunately involved. But we have about 13 attorneys on staff and we're just payment-centric.

Adam.

Thanks a lot, Allen. I'm licensed in New York. We're a small firm of 3 attorneys and we've been doing payments for 20 years and started out with a very strong focus on payment processing, ISO agreements, agent agreements, processing agreements, and have grown our practice to cover other areas of payments as well— prepaid issuing, money transmission, cryptocurrency, uh, etc. So that's where we come from, and it's always good to talk about the agent space, the ISO space. There's a lot to, to cover in that space?

Oh, there's definitely a lot to cover, you know. So one of the things, you know, I get asked a lot of questions from, you know, people that are new to the industry all the time. And one of the things I think a lot of agents, you know, they answer ads from, you know, job boards— make $50,000 to $100,000 a year— and then they get sent a DocuSign, they sign it, and they don't know anything about the company, and they don't know what they're signing. They don't even read it most of the time, I can tell you that, because we'll send out like referral agreements and people never read it, they just sign it. And once in a while somebody will question something, but I would say 99% of people probably sign the agreements without reading them. And then they run into a problem. And a lot of times I think that people don't know that there's resources available or they think it's going to cost them $5,000, $10,000 a month, you know, to get an agreement, you know, looked at and things like that. So what kind of, you know, what kind of advice would you give a new agent or somebody that's maybe newish in the business You know, let's say they signed a contract and this happens a lot and there's a 4 deal minimum in there and now they realize they did that and it's a big mistake. Like, is there a way to like go back to those companies and try to get the contract renegotiated? Or what do you guys find about— that's like a question that comes up a lot from new people. Chris, you want to weigh in on that?

Yeah, in my experience, I wouldn't sign any— well, I'm a lawyer, but I wouldn't sign any contract in my life without reviewing it. Um, but yeah, I mean, I agree with you. I think, well, for your example, the, the, you know, if you sign an agreement and you produce, and ultimately you have a potential of having to sacrifice whatever revenue you've you bargained for and then performed to receive. Yeah, I mean, I, I think it— I think in good faith, if you're working with a good company and you didn't realize something in particular about the contract, you can go back to the company and try to renegotiate the terms of it. I think if you work with somebody like Allen, he's going to listen to you. And, you know, where there's like good faith involved, you'll probably get a receptive response. I would say from my experience on the ISO level, you would get a decent response if you're working with a good— so upstream, uh, much ability to go back and, and change things. But generally, I think that at a minimum, um, when you get a contract, you should read it, and if there's anything that you don't understand about it, you should probably ask some questions. If not, to an attorney, at least to the person that you're bargaining with. I mean, that, that would be, uh, kind of the lowest bar that I would put out there.

Yeah. And one thing I always tell people is just when somebody tells you something verbally, like, oh, don't worry about the 4-deal minimum, you know, you got to get it in writing, because what's in writing is what counts.

It's all that matters.

Yeah. One of my favorite things is when, uh, a large, uh, super ISO or a processor says Well, we've never done that. We would never do that, right? And it's something that the contract allows, and that might be very unpleasant for an agent or an ISO. And they just say, you know, they're all very nice people, right? And they say, well, we would never do that. Well, then down the road, guess what? It happens. And the lawyers that some of these processors or supervisors retain stand behind what is written in the contract. Not what someone who used to work there 2 years ago said to them, either in spoken word or even in an email. And, uh, you know, we learned back, you know, way back when in law school that contracts are the law for the people who write them. It is your own private law between you and your counterparty. And so to your question, Allen Kopelman, you have every right And I take Chris's point, not everyone's going to be open to it, but you have every right to write into that contract elements that both parties are in agreement with. And by the way, if you look at an agent agreement, the offending clauses— there might be a lot of them, but there might be only a handful that really need to be fixed, like your, your 4-deal minimum. Or your, you know, your residuals that survive 30 days following termination or something, you know, some kind of cliff like that. And those can be fixed with a 2-paragraph amendment. You know, the parties come together and they say, well, this here clause that says there's a 4-deal minimum, that 4-deal minimum is struck out. And right, the termination residuals after 30 days is struck out or amended something. It's quite easy to accomplish with the advice of a lawyer, of course.

Yeah, I think, you know, like now we've seen over the last few years a lot of consolidation in our business. I mean, I think we can all agree companies are getting gobbled up daily, right? And I mean, I have one portfolio that's literally— it's gone through since 2001. It was at Comerica Bank. It was at Imperial Bank of California, who got bought by Comerica, who then the processing got bought by Global Payments. They told us to leave. We ended up going to Comdata. Then we went to— they, they sold the PAI, and then PAI sold out to Clearant. So over the last— since 2001, 23 years, it's been at 6 different places. And, you know, along the, the way of that, you know, there's always bumps in the road. And I think, you know, I've talked to agents now where all of a sudden, you know, Company A sells to Company B and there's no survivor, no, no clause in there to cover they sold the company that you're still going to get paid. And I think that's a huge problem going on right now. What do you— do you guys see that going on?

I haven't really seen that, but I do, I do know there's always that clause in most of these agreements where the upstream vendor will say, if we don't receive the residual revenue, we don't have an obligation to pay you. And right, you know, I see most of them have like a successor in interest language. I think the problem is, is that, you know, for the small agent— and again, this would probably go back to the front end of if you don't get the contract reviewed, at least reach out to an attorney like Adam or myself. Because if, if you read the contract and there's particular provisions, I think Adam was spot on when he said there's usually only about 4 or 5 real key paragraphs that you want to— clauses that you want to look at. And the first thing is, is you need to understand how those operate. And like Adam also said, I hear from attorneys at you know, super ISOs or processors when I'm negotiating language, they're like, oh, well, you know, not that that would never happen, but they think particular language is benign. And I've been in a litigation case where the language would center exactly on the language that we're discussing. And you don't— when it's unclear or a little bit ambiguous, you don't know how a judge or a jury is going to find that language. And you are, you, you know, you're trapped within this, in the four corners of the document. So, you know, or you could be if it's not ambiguous enough necessarily. So I think having an understanding of how everything operates, even if you haven't— don't have an entire agreement reviewed, is really important. And this is one of those things are, hey, can they assign their rights under this agreement? And what happens if they do, right? I mean, and sometimes there's a, you know, uh, some sort of provision that'll talk about inuring to the benefit of successors and assigns, and sometimes it doesn't. And you don't know whether or not those obligations are going to tag along in some sort of sale. Um, it's always nice to, you know, be able to discuss those things on the front end, because the one clause that you're always going to want to look at is, uh, compensation, right? I mean, that's the whole reason you're working, is to get paid. So you're going to want to know how that's going to operate in particular situations.

And what do you think, Adam?

You know, Allen, consolidation— I don't know, you, you said this goes for half an hour, 45 minutes. I could drone on for hours. For better, for worse, I've been around long enough to see the ups and downs of consolidation. And, uh, I guess a few, a few random thoughts. One is you have sometimes a buyer that buys a portfolio portfolio of merchants and a business with agents, etc., and they don't always bother to read the agent agreements that they've just purchased, and they just figure, well, I'm just going to change their splits, I'm just gonna eliminate one of the fee items that I pay them on because I feel like it, and they have no loyalty, if you will, to the wording that was negotiated or not negotiated, but in any case signed a couple generations back when the contract was under different management.

That actually happened to me.

Yeah, it's very frustrating because, uh, for— I don't understand why, but some of these portfolio and business purchasers come from a mindset of, well, I can just do whatever I want, and You know, that's where a trial attorney like Chris becomes very, very helpful, where you can, you can really hold their feet to the fire. Another comment I have about the, the big huge processors in our industry, many of whom have themselves acquired all kinds of businesses and are the result of various consolidations. My experience is that the spirit of give and take in contract negotiation is not what it used to be. And, and I'm not talking about them that they should give up on things that are important to them. I'm talking about them being sensitive to the needs of an ISO who needs to earn revenue, protect that revenue, protect their business, their agents and their personnel from wrongful solicitation, etc.. And I am shocked right now about how hard it is. I don't know if you're having the same experience, Chris, but getting some sort of basic motherhood and apple pie clauses agreed to, uh, by some of these large processors and the people who are working there. And they're great. They're, they're excellent, highly competent professional business people and lawyers. They, they've never known it any other way. They're often from a new generation, which is great. I think it's, you know, it's excellent that new talent is in the industry, but they think, well, this is just how it is. There is no give and take on these types of clauses. And of course, you know, Chris, I'm sure, can, can speak to the idea that, you know, we come out of many, many years of, of ISOs having healthy and productive negotiations with their processors. And by the way, that builds value in the ISO business. When you go to sell your ISO business, if your contracts are terrible, your valuation is down and terrible. And so there's a, there's a mutual interest in having these contracts have a certain value to them.

So another thing that happens with— another thing that happens with consolidation is, you know, ISO A buys ISO B right? So they buy this ISO and they don't look— again, they don't look at the agents, they're not looking at the portfolio. And all of a sudden they discover, hey, there's a whole bunch of merchants that are high risk and, and their risk appetite is not even close, right, for this. And then they just flip out on the, on the agent. I actually had that happen to me. I think that's, you know, I don't know how, how somebody's buying a company and not looking at like, where's the money coming from?

Well, dude, I mean, like, don't get started on due diligence and transactions because it gets— that's, that's— it gets ugly. But I wanted to like dovetail on something that Adam said about consolidation and about processors and negotiation right now. So we have a client that— and they, they— I think they kind of backed into payments because they do a lot of sale of business services, and they've kind of come to negotiation in a way that is far more detailed than I've ever seen. And these guys are sophisticated, and they do a bunch of other business services that they're selling, and so they've got a roll-up strategy. They've actually kind of changed the way that I look at a lot of contracts these days, because whenever they're entering a contract, they're always considering the roll-up strategy. And I will tell you, there are super ISOs that are, are giving, and then there are other super ISOs that are not. And processors— I recently had a processor that told me that in the contract that I was negotiating for a fairly decent-sized ISO that if they wanted to sell their residual revenue, it could only be in a sale where the purchaser assumes the contract. And I was like, whoa, whoa, whoa, whoa, whoa. I said, have you ever looked at case law at all about free alienation of your assets? Like, they have a residual revenue right here, and you're basically saying that they can't sell that right off to whoever they want. I understand that maybe you have somebody different that you want to to service, but a purchaser is a purchaser. All I'm asking you to do is, is sell me the revenue. And this processor would not give in no matter what. They would not allow just a straight residual sale with a redirection of the revenue, even if the ISO was going to stay on for the contract term for servicing, or, or even longer, or enter a servicing agreement and do it. They said, no, the purchaser has to be somebody that we qualify, which I thought, wow, that's really kind of crazy that they would restrict them so much. But now with consolidation, because I think you're seeing consolidation with ISOs as well, like Allen just said, there's a lot of people that are fairly sophisticated walking into these contracts. So, you know, I've actually started to look at, oh, and when I'm talking to somebody, what's your ultimate outcome? What do you want it to be? Like, let's talk 10 years from now, 15 years from now. It's not just make money today. Like, this is what you could ultimately do with what you're going to make and what you build. And so I've even sort of changed the way that I'm looking at these agreements and trying to not only, you know, bargain for the best terms on the front end, but also on the back end with an idea of, you know, how do you want to exit out. And, you know, the more sophisticated that you get with people And because I think consolidation and the money in payment processing, that because it's residual, it's bringing in more sophisticated people in, and they're actually kind of tying payment processing in with other items. I just think that, you know, from the standpoint of, you know, what's in the four corners, and I think it's really good to be as proactive as possible when you're coming into a contract negotiation to think about, you know, not just performance, but how do I want to end this.

So, so another thing that's going on on the consolidation side is a little bit on what Chris is talking about. One of the things that we're seeing now is like all these agnostic point-of-sale systems, right? And so they're no longer agnostic. There's companies out there— I don't want to name any of them— there's one that's probably gobbled up, I don't know, a dozen of these right? And now what was agnostic is no longer agnostic. And then the— so ISO A buys out, you know, POS company, you know, XYZ. And the next thing they do is they go, okay, uh, the new version of the software is coming out, everybody's got to do credit cards through our system. And they start switching all the merchants. And then the agents are out there going, you know, I mean, I can't even— I don't even want to talk about the tens of thousands of dollars I've lost over that, okay, to— of, of monthly income over the last few years of somebody— and I, uh, an agnostic solution gets bought out, and then the, the new company goes out, and within a year they start signing up all the merchants, and then you start seeing people drop off your book of business. And recently I spoke to somebody who lost $80,000 a month in residual to that. I was like, I don't think you have a leg to stand on from a legal standpoint to try to sue anybody because there's a new owner of that point-of-sale company. They could do whatever they want.

And I disagree, but I disagree with that, but I'm gonna let Adam take it.

Well, no, but I'm just saying like there's a lot of agents that are suffering with this right now. Okay, where, where you have a point of sale company that went out and they just go, yeah, you like— I'll name one because it's public information. Lightspeed, right, was completely agnostic. They partnered up with Stripe. They sell— they tell all the merchants, you either switch to us or you pay us $400 a month or 50 basis points, whichever is greater. And then all of a sudden, all your merchants who have Lightspeed that you've had on the books for years poop, poop, poop, they're all gone. What can you do?

Well, you know, that's one example. Yeah, 2020 is, uh, hindsight is perfect, right? You know, but, um, when you start reselling one of these, you know, agnostic point-of-sale systems, you want to try and get them to promise not to steal your processing. You know, if you're relying on the processing. I mean, it's easy to say, and a lot of agents don't think two wits about it. There's definitely a lot of curious things going on with the kinds of facts that you describe, Allen. There's another dimension to these point-of-sale systems that I think a lot of people are overlooking right now, and it is their weakness. And there have been one or two of them, that have completely failed.

Oh, we just saw one of the biggest failures. CVX went down and took out 90% of the car dealers in the US.

So when you're signing up a merchant, or when you're signing up to sell one of these platforms as an ISO, you probably want to do a little bit of due diligence on that platform to see what kind of disaster recovery what kind of source code escrow, the kinds of things you want to be able to continue operating the business if they are out of business. Uh, it's not always easy to get, and it's technically complicated. A lot of people don't have the sort of technical wherewithal to deal with stuff like that. But you've got to plan for a scenario where that system crashes, and you need a Plan B, and you need a migration plan that's going to work through a crisis.

Yeah, I think that would be kind of hard for an agent to kind of even begin to tackle that. I think they're more worried about what happens when these companies sell and then they just start poaching my business. Now I've taken a completely different approach. When we saw that happen, we started to do a lot of research. Okay, which companies own the point of sale and the credit card processing together, right? And we only sell those solutions now. Now, a lot of people will say that's— they don't agree with me, and I don't care. Do what I want. Everybody can do what they want. But I feel like that's a safer, a safer path because, one, they own the point-of-sale company, right? They're not just a reseller of it. They own the point-of-sale company, and they're the ISO. So I feel like that's a very— I'm on solid footing as far as like nothing can go on where I'm going to lose the bit, the residual stream. Now I'm taking less money on the POS side, right? But I don't really, you know, but I think it's a fair trade-off to take less money on the POS side, less profit, right, and get a decent residual split, and I think I have a much safer, um, a much safer platform that I'm using to process payments.

Yeah, I agree with what you're saying. What Adam was just talking about, even from a legal aspect, is very technical. What he was just describing with having like a migration plan, disaster recovery— I mean, these are really like, for an agent, I don't think that they would really come out. But I agree, in part, Allen, I agree with what you're saying about how you're doing your acquisition with a combined solution because, you know, CDX is a good example. They have a huge market share. They have maybe like, maybe two, I think they only have one embedded payment solution in there. But the thing that I see is that in addition to this idea of consolidation—

It wasn't even their payment solution that got attacked. It was their basically their complete infrastructure got attacked.

Yeah, yeah, their CRM. But like the— The interesting part is, is that, you know, for a long time, you— a lot of times you would take a POS solution or CRM to a payments company and you would bargain for your residual split. But then the software companies got smarter and they realized, well, hold on, I'm the one that's driving all of this processing. Why am I only getting 10%? And then you just saw whittling away of whatever your residual share was over time. I think the idea of having both sides of it, you can have a much better arm's-length negotiation where you won't see that happen either. But I don't disagree with how you want to do your acquisition with that because you will run the risk of consolidation. I mean, I go back to— I mean, here's another problem that I've seen, and you guys are both aware of this one. When Mercury was acquired by Vantiv, and, you know, way back. It was really interesting to me because Vantiv was payments and Mercury was tech, and they thought, oh, we got this grand idea that we're going to go like this, right? But the culture of the companies and the operation, they never were able to actually consolidate the operations of those two entities, and they remain standalone, I think, to today. Like, they, they still run as two completely different entities. So a lot of times you'll have this consolidation and you'll get this marriage, and then, yeah, I mean, the, the one I see all the time is, uh, purchase of a POS system that the acquirer has for about 5, 6 months and goes, this thing's garbage, we don't even want it. And then you're, you know, it's a forced migration. What are you supposed to do, tell them that they're, you know, they're not allowed to do that as the owner of the, of the software. Good luck with that, you know. I mean, so I think not necessarily the technical side that Adam was describing, but at least some, some con— you know, if the sales agent or the ISO knows that they're going to be doing this type of business and acquiring, to understand, hey, you know, if you guys sell this, I need to know what's going to happen. I need to know how I'm going to be able to operate. And I think the most important thing that Adam said was the migration plan, because what I see is, you know, this happened a few years ago with Clarent. Clarent acquired a POS system and they had no idea how to do token migration. And our guys were like, look, all of these people are going to leave. I don't want them to go somewhere else or have to re-app them. The thing that they're most concerned with, these customers, are the tokens. We'll pay you whatever it costs. Technically, they didn't even know how to do it at the time. So, and we're not talking about that long ago, this is maybe like 3 or 4 years ago. I don't know how much they really even think about this stuff as they're doing their acquisitions and what sort of impact it's gonna have. They just know that, you know, everything rolls downhill and they're standing at the top, so they're not worried about it.

That's kind of, I think today when, you know, like I get, solicited by ISOs every week, especially after going to a show, right? I'm solicited all the time. So they're like, oh, sign up with us, send us business, blah blah blah blah blah, you know. So I was having a conversation with a couple of those guys who were hitting me up recently, and I go, you know, I just don't think like you guys get it in the ISO community. The ISO community doesn't get it. Some guys get it, but I don't think everybody gets it. I said, because being in this since 2001, in 2001 and the early 2000s, guys that were in this business, we used to go, man, what is going on with this PayPal, the Stripes, and the Square? Like, what, what's going on with that, right? And now today you, you come forward and you look, whatever, Stripe passed what, over a billion dollars a month? Payments recently, or some crazy number. And so when you look at the way payments work 20 years ago and the way payments work now, especially— I've been through so many iterations of the machines from, you know, we go— went all the way from plugging it into a telephone line to now you just turn on a machine and hook it up to the Wi-Fi and boom, in 5— in less than 5 minutes, the thing's downloaded and ready to go. You know, that's insane. Like, that's how far it's come. But now I think that merchants look at payments a lot differently. I think merchants look at payments from a technology standpoint first and payments second. And my proof of that is companies like Stripe who charge a premium to process payments. They— we could save somebody half a percent or 1% on their payment processing. Or you look at a company like Toast. Right? And they're charging 2.79%, I think, in a transaction fee for a card-present transaction in a restaurant. You could definitely get that for less from an ISO. And I think, you know, that the tech— not technology— need more ISOs need to become— that's why we're doing that, these partnerships. What technology do you have and you control the payments, and we want to sell that as a package. And I think that's where the business is going, you know. It's not going to change tomorrow and machines are going to disappear, but I think in the next 10 years, like, that's, that's what's gonna— everything's gonna be a platform. What do you guys think about that, how technology is changing this business?

Yeah, I, I think, you know, on the bright side, I'm kind of surprised by how little, in a way, the business has changed over the last few years. When PayPal came around, and particularly when Square came out with their dongle on phones and Google Wallet, et cetera, I remember walking around the trade shows in the acquiring industry and people were like, oh my goodness, it's the end of the world. We're completely out of business. We won't exist. Well, guess what? We're still here. And, um, uh, and there— however, I think, Allen, uh, I agree with your point. ISOs have to come to the table with technology. It's not necessarily something they develop themselves, but it's, it's something where they can make life easier for the merchant and, you know, get the merchant going more easily with technology. Um, and what I, I'm pleased— another thing I'm pleased about is these giant platforms, Stripe and PayPal, etc., they have not vacuumed up the entire market, which is, which is, I think, contrary to their own self-vision, you know. Like, and I don't act for any of them, so I can speak quite freely about them, but like, I think, you know, I think they see themselves as this sort of, you know, snowball is just going to accumulate more and more business until they have everyone. And I think that that's a false assumption. I think there is still room in the marketplace for the honest-to-goodness ISO sales organization that has a real invested relationship with the merchant and the success of the merchant, which is the classic model. It has to be augmented with the technology but it adds value in a way that these large platforms can't, I think, can't compete effectively.

Well, you know, I'll follow up from Adam because I agree with him in a lot of respects. I think the reason that Stripe will not kind of achieve what they believe that they should achieve is that their customer service is probably the most horrible I've ever seen. I mean, really, the ISO and they treat everyone the same. It doesn't matter if you're an agent, an ISO, a merchant. The merchants get treated the worst. And there— and, and there's this like weird event that takes place where one of the things about Stripe and PayPal is the ease of access, right? Oh look, I can get up and processing. But in the underwriting process, like, they'll underwrite you, they'll give you an account, they'll let you run transactions, everything's right on the merchant app. No red flags in processing, 4 weeks later they'll just go, oh, we're just gonna suspend your processing and hold whatever proceeds we haven't settled to you. And I see— I mean, and I would say— I would like to say that's an isolated incident. I've seen it a lot, and I don't know if it's intended or if it's not intended, but I agree with Adam. There is definitely always going to be a place for a great salesperson. That understands the product or look, I mean, payments has become commoditized. Everybody used to ask me, hey, what kind of a lawyer are you? And I, you know, I was, I'm in payment processing. Now I'm actually able to say I'm in fintech because I think it's moved to technology so much that we're fintech attorneys. And I'm like, okay, well, I'm a fintech lawyer. And like people like want to grab onto that buzzword. But I do believe that we've transitioned more into a world of tech. And as a salesperson, you're not selling just payments anymore. You're selling this infused technology with payments. And so you really do need to understand what— like, who you're selling to, what industry they're in, and what are the business software needs that they have that you can offer to them combined with a payment solution, whatever it is, right? I mean, It could be more of an omni where it's not just card processing. It's got some ACH functionality. It's got other functionality to it. And then along with the business efficiency software functions that it has. But I do believe as a salesperson today, it's not like you can just walk into any place of business and sell payment processing. I do believe that even as a sales agent, you got to kind of pick and choose who you're selling to. And then understand what's available to them and then provide it to them in that manner. I mean, it's— I, I'm still amazed that call centers are able to do business on payment processing because I would think you would need some, some something interactive with a bit— with a merchant that would give them some sort of example as to, hey, you know, here's the options that we have, here's the things that this can do, payment processing's embedded into it. We've got great rates because you're getting both services to go along with what Allen was saying about selling them together. I, you know, I, I just think that at the end of the day, even with the, the, uh, acceleration and how the industry sort of evolved, I do believe that a really good salesperson will always be needed. And that person is the one that's going to answer the phone at night when all of a sudden you tried to do something and it wasn't successful, and for some reason you need that attention, I think that's the person that's gonna pick up the phone, not some large organization's customer service line who doesn't know you and doesn't have a connection with you.

Stripe doesn't even have a phone number, so.

Oh, don't get me on that one. Like we know, even for legal queries, it just goes into a black hole. I just happen to know who their outside counsel is in San Francisco, so. We just email him, thankfully.

So for agents, let's just like kind of sum up, like when they're looking at their contracts, you know, so we can all agree, no month, no minimum deal count. What's your commission? Understand your Schedule A, you know, what's how the commission works, when you're going to get paid, does the contract carry on after they sell their company, because that's happening more often today than it has in the past. And what other things would you think? And also, the other, other thing I tell people is liability. I'm not accepting any liability because if you approve somebody and I'm just the agent, right, you're approving them. I didn't look at their credit report. I didn't look at their background report, whatever you got on them, right? You're approving them, you're monitoring them, and you know, you don't want to take— I've gotten contracts where it says, oh, if we take a loss, then you can lose up to 1 month of your residual. I'm like, I'm not signing that. So, you know, what other things beyond like those kind of things, or are those like the basic things that people need to look for?

Yeah, yeah, yeah. I, I think you actually hit the, the, the real, the real punch list. Um, we can lean into some of those a little bit. So when you say they got to understand their Schedule A, so, you know, a lot of agents off the street are being offered 50%. Oh, 50% of what, right?

Right.

And that's, uh, you know, Chris and I earn a living off of that delta, right? With it. Everyone earns their living off of that to a degree. But I think, I think agents— and listen, as long as they have no liability and no minimums, okay, and it's non-exclusive, right?

Non-exclusive, very important.

Yeah, your first-time agent off the street is not likely to sort of suffer terrible harm, you know, if they've caught those.

Another, another thing people been sneaking into contracts lately is they want first right of refusal on all your deals. I won't agree to that either.

It's effectively exclusivity, right?

I mean, right, exactly.

You know, and, and there's new laws coming on, uh, about, you know, uh, non-comp— non-competition clauses. And, you know, some of this exclusivity could be interpreted as a non-compete, as effectively a clause. Uh, so yeah, I— and, and, you know, I— in my experience ISOs that are reasonable in their agent agreements end up cultivating a group of agents who are in turn reasonable with them. Maybe it's just— maybe I'm just naive and optimistic, but because I'm not a trial lawyer, I don't know.

I know that it's true. Like, you want to have an ISO that's a good partner to you, but you also need to be a good partner to the ISO. It's, it's hand in hand.

Yeah.

Yeah.

So yeah, I think those are the big items.

And what do you think, Chris? Any last words?

Well, I, yeah, I think you guys covered most of them. Um, I'll, I'll say two things. The one clause that I really try to focus on is the upstream vendor's limitation of liability. Um, it needs to omit certain things. Fraud, gross negligent, willful misconduct, payment obligations, covenant of good faith and fair dealing. If you do something that's not barred by the contract in the express language, but it deprives me of the benefit of the bargain, that's a problem. I try to carve some things out so that that limitation of liability isn't— you're not stuck with, oh, I can only get $10,000 or $5,000 or whatever it is. On the non-compete stuff, this is kind of an aside, but The FTC came down with a non-compete ban. A Texas court 2 days ago issued a ruling that actually upheld or struck that down, at least momentarily. And there's a ton of stuff on the Supreme Court that's been happening the last 2 to 3 weeks, and it's decisions that are basically dismantling the power of federal agencies to a large degree or providing more rights to people that are targets of federal agencies. I don't know how much a federal agency is going to be able to make rules like the one that the FTC tried to do with the non-compete ban. But yeah, I definitely think the other side is restrictive covenants. They should be reasonable. You know, I— there's just a lot of stuff that is in these agreements at times because what you'll find is that a lot of ISOs just sort of like recycle other agreements or an agent becomes an ISO and uses an agreement or, or there's a hodgepodge of 4 agreements melded into one. Sometimes not even all the clauses work together. But yeah, I think—

Yeah, one cancels out another, things like that.

Yeah.

So I think in that respect, that's the importance of contracts. But I definitely think restrictive covenants is another place to where— look, some— if I send you business as an agent, I don't take liability I get paid well, and for whatever reason we terminate our relationship, I shouldn't go rate it as an agent. I mean, you know, I, I believe that if somebody's worked in good faith, regardless if we continue to work together, I should adhere to what I've agreed to as an agent, as long as it's reasonable and I bargained for it. Why wouldn't you? I just think that some of the stuff that they try to put in there, like a 5-year non-solicit like, good luck with that, right? I mean, it's— I, I just think that some of them are overreaching, and I, and I think that those are clauses that you should look at as well.

All right, so if anybody wants to get in touch with you, how would they get in touch with you, Chris?

Uh, you can reach me at my email, which is my first initial and my last name at attorneygl.com. Or you can call our main line at 888-846-8901. We're located in beautiful sunny San Diego. Um, the rest of the country is melting currently, and we're at a balmy 72 according to my computer. Um, but yeah, you can hit us up and, and visit our website. It'll give you all the information about what we do. That's also attorneygl.com.

All right, and Adam?

To reach me, atlas@adamatlus.com. Really easy. Shoot us an email.

And you guys are both on LinkedIn, so people can check you out on LinkedIn too.

Yeah, my picture is much better, but yeah, your picture is much better. All right, I gotta update it, it's about 10 years old.

Well, I hope, uh, agents got some good information. And if you guys have some legal problems or questions about contracts, these are two great people who have been in the industry for a really long time, and they know the industry inside and out. And I think every agent should review, you know, because you learn after a while like what to look at in the contract. Like me, I've been doing this over 20 years and I see stuff and I go, I'm not agreeing to this and I'm not agreeing to that and I'm not agreeing to this. And I make them go rewrite like some of the main, the main points before I go engage with an attorney. But before you know all that, it's really important because you're, you know, you're, you're going to be making thousands or tens of thousands of dollars a month at some point from these companies. And you don't want to sign something that you just— it's gonna— could disappear on you like that. You want to make sure that you have a good solid agreement protecting your income and your residual income for years and years and years. And I can tell you it's money well spent. Any further final words, guys?

See you in Chicago if you're going to be there.

Okay, MWAA. Okay, wow.

I want to thank you, Allen, for, for having us.

I appreciate it.

Good to take it.

I appreciate it. And you know, this is just part of my thing I'm doing with the Green Sheet for Street Smarts to bring, because there's a lot of agents that don't know about the Green Sheet. So hopefully this makes them more aware of the Green Sheet. I know Adam writes in there, I right in there. And, um, it's a great publication. And everybody have a great day. Peace out. Thank you guys for joining us.

Good to see you. Take care.

All the best, Chris. All the best, Allen. Bye.

All right, thank you. Bye.