Could you get sued?

Hi, everyone. I'm Katie McManus, business strategist and leadership coach. I'm here with a very special guest this evening, someone who you've probably been afraid to call, but he's really essential to the success of your business. His name is David Fryman. He's a litigation attorney out of New York State, and he is here to talk about how to protect yourself in your business with legal stuff. David, how are you doing?

Great. Thanks for having me. It's really exciting. It's my first. My first LinkedIn Live.

Awesome. Well, welcome. We don't bite. Everyone seems to be pretty friendly. And just for those of you who are watching, so you know, we're streaming this through Streamyard, to the Facebooks, to LinkedIn and to YouTube. So if you comment and your comment doesn't come through, meaning I don't call you out, it's not you. I'm not mad at you. It's just the technology has failed us. But anyway, we're going to be diving in today and talking about different things that you can do in your business to protect yourself from being sued, which is everyone's worst nightmare, I think. Oh, we just got a thumbs up on that one. And if you have any questions as we're talking, please pop them in the chat. This is meant to be interactive and we're going to go a little longer than I normally do my lives for when I'm solo and just talking at the camera. So, David, as you know, I have our mock clip client here who just started his very first, let's call him a health coach and fitness coach. This is George, and George is actually not a hot mic right now, but this is George, if you can see his little face. So what advice would you have for George here if he's just started getting, making like 2,000amonth, working with a few clients and is advising them on, like, how to lose weight and be healthier in their life.

Hey, George, you look great. The color is really perfect. You know, I think that the first thing that you want to do if you're thinking about any kind of legal protection, especially if you're a service provider and especially if you're working with individuals contracts. Contracts are always going to be first, you have to have a contract, and a contract protects you very broadly and somewhat oversimplifying in two general ways. First way is it's going to prevent you from being sued because it's going to provide clarity and it's going to state very clearly the services you provide and what the obligations are on both sides. At the end of the day, that's what a contract is. It's an exchange of obligations and rights. I'm going to do these things for you, you're going to do these things for me. Here's the conditions of how we're going to do our things. Here's how it could be terminated, and here's who gets paid and when. That's basically every contract is some version of that. And so even before you get into being sued, contract provides that clarity. If you're thinking along those lines, there's. It's a lot less likely if there'll be a misunderstanding. It's less likely for there to be some kind of mismatch in expectations.

Yeah. So like George here advises on what people should eat if they want to lose weight, and if this is like an unhappy client, and that unhappy client, because they didn't have a contract, comes and says, well, you were supposed to build a porch on the side of my house and you didn't do it, I'm going to sue you. Then, like, if there's no contract like that could be stated. I'm just making a silly example here, but, like, you're really describing the scope of the work that George is willing to do for his clients.

Right. So if you don't have a contract and you just have, let's say, a phone call and you work out what you're going to do, maybe have a few emails and texts that you can string together, it's a lot easier for somebody to come along in a credible way and say, no, this was really part of the deal. I'm telling you, we spoke about on this date. And, you know, this text that I'm going to misconstrue and take out of context, this is what you were going to do, and I'm going to say no. That was never part of the deal. But now we're already fighting. It's not a clean way to deal with any dispute. So right off the bat, having that clarity is huge. Even without getting to the technical provisions of what happens in a lawsuit, just having the clarity of, here's what I'm doing, here's what you're doing, here's what. Here's my job. Here's your job. And we all sign. Okay, great. Now we can work together. We don't have to think about it.

Right. And I imagine also this. This outlines how George expects to be paid and sets a schedule for the client so that they have agreed to it. And then they can. They can hold their client to that schedule.

Right. I mean, the payment term is obviously essential. And payment terms sometimes are awkward. You know, it's, here's the work I'm going to do, here's the price, you know, you'll pay me, I'll deal with it after. I'll send you a link or you'll send me a check or a credit card. It's really simple. If you just have a standard contract that you send to your clients, payment terms can be crystal clear. You know, if it's a monthly payment on the 1st, 15th, 20th of the month, this is what you're going to do. You're going to pay me and you're going to pay me exactly in this way. And it's easy, it's not awkward, and it doesn't have to be talked about over and over and over again. Makes it really simple.

Yeah. And I think so. Whoever is commenting, you're showing up as LinkedIn user, you just commented communication, setting pricing expectation and not shying away from it. And I imagine that answered the question. But if it didn't, I would love a clarification from you as to what you meant. Okay, so, David, contract is number one. That is the first thing that someone has to do when they're starting a business. They have to have a contract.

Yes. Especially in service businesses, really, any kind of business. But if you're a coach or consultant and, and, and you're seeing clients, step number one, it's just going to, it's going to make your life easier. Yeah, just your life easier.

Now, where have you seen this go wrong? Like where, like have you tried a case where someone didn't have a contract and they got sued for it and what happened?

Yeah, so I've seen this go wrong. That's usually when I step in. I've had clients who have kind of a broad contract. You know, here's the service I'm providing. And then they'll get on the phone or they'll be in emails, text messages that will kind of amplify change, make all kinds of conditions that don't always make their way into the contract. And then you have, well, this is what the contract says, but I have this text message. So obviously you agree there were some other parts of the contract and you got a mess. The other thing is that the litigation is expensive. The most expensive part of litigation is the part where you're fighting about the facts. Right. If you. It's one thing where we all agree on what happened, but we disagree what the contract means. Okay, well, you can litigate that. But where litigation gets really messy and expensive is where we can agree on what happened. And we start with text messages and depositions and discovery. It's messy and expensive. It's not worth it. It's never going to be worth it. Every single time. It's going to make more sense in advance to get a standard contract.

Right. And I just want to say hi to Karam. Thank you so much. I'm glad you're enjoying this conversation. And I hope for those of you who are listening to this, you know it's not sending you into a shame spiral. That is not the point. The point of this is to educate you. Because I know starting a business is brave ass work. And also there are some aspects to it that are scary, like hiring a lawyer and making sure that you're covered. Because then you do have to kind of look at the gremlins in the closet and recognize that you're really putting yourself out there and there is some liability and risk and no one likes to think about that.

Right. And I hope I'm not too scary. I don't think I've intimidated too many clients. But I get it. I get it. It's not something, it's not exciting. Or when you're starting a business or any kind of transaction, any kind of starting a business, you're, you're bringing in a partner, you're making an investment, you really excited about the thing. All you want to do is do the work for the thing. And you know, here's your lawyer, remember your contract, right? It's like, you know, an annoying mother. So I'm sure my mother is going to love that part of this, but.

She had one too. It's fine.

But you know, I think that, that it's about setting yourself up for success. If you have the right foundations for your business, you're just going to be more successful, you're going to be happier, you're going to be less frustrated as things come up. You're not going to do everything at once. You know, I could talk to you about your LLC and your trademarks and all the different ways that we can protect you. But the first thing is you're doing business with a client. Figure out what exactly you're providing, what you want in return. What do you need from the client? If it's, if you're consulting and you need access to accounting information, you need access to other business information, you figure out, you figure it out at the beginning, all at once. You make it clear in your contract and Then you don't have to worry about it again.

Yeah, it sounds like magic not having to worry about it again. Now I want to go back to George here because George, this health coach, sees a lot of people in his industry creating websites and writing very exciting claims on those websites. Like guaranteeing that their clients are going to lose a certain amount of weight.

Or.

Posting other things that haven't been fact checked by scientists or doctors or anything. What advice would you have for George, our health coach? Slash post it Note.

Here's a surprising thing. If you guarantee that something's going to work and it doesn't, you're going to get in trouble. Surprises more people than you think. Because when you're marketing and when you're in the marketing mindset, right, you're thinking, how can I make this? How can I make it sexy? How can I make it really appealing? How can I make it pop? All important questions. But you also want to put on your list of questions, is it true? And can I back it up? Because if you start making all kinds of promises, first of all, it's not good for just for business.

Right?

Because people even forget, you know, your, your, your liability, people are going to hold it to you and you're, you're setting expectations for your client that are end up going to hurt you. Yeah, but, but weekly speaking, I mean, you know, know the first thing to do is just be honest. Right. But it's easier said than done because there's claims that you make you might really believe. Like this really works. I know it works. I promise it works. So. And that might be true. Right. The problem is, is that you have to take a step back and read your words really carefully and make sure you're not over promising.

Right.

And that's something really important to, to check before you go live with any kind of marketing campaign.

Right, Right. It's so exciting to go on and say because you're so convinced as a service provider that what you have to offer is incredible. It's going to be so effective for everyone. But you really do have to, you know, edit it so that there is, you know, like if you do the work and if you're committed to this, then these are some results that I've, that past clients have seen in the past. You could have something similar.

Right. That's a great way to put. It's not like they're hedging, right. Because nobody likes to sound like they're hedging. Here's what I believe. And if you put in the work here's the kind of results that other people have seen. It feels a lot more realistic. It's a lot smarter. Because when somebody is unhappy, but a client is unhappy, this is just the point of human psychology. They're going to look for reasons to be more unhappy, because that's how we work. So if a client is upset because they didn't meet the goals that they were supposed to meet, and you were supposed to coach them and help them help meet these goals, and they just fell short, now they're unhappy, and now they're going to look for other things that you were supposed to do, and they might stretch their imagination to put it nicely to come up with those things. So it's not like, well, who's going to take this literally? Right. It's more that if somebody is primed to be upset because they're upset didn't go well, you have to take that into consideration. And when they get aggressive and they hire a lawyer on their end and one of the things they're going to tell their lawyer is, how can I get my money back? Or I lost a lot of money here. How can I recover as much as possible? And the lawyer is going to then start pulling out his dictionary and his resources and being like, what's the absolute worst way that I can get use these words?

Right.

And you avoid all of that if you take a step back at the very beginning when you're first starting and say, okay, let's just read this slowly like a robot and see if it sounds ridiculous.

Right. If it sounds ridiculous, I love that.

You might realize that after the hype wears off, sound like a robot and read it. And I was like, it's just, there's no way you're guaranteeing they're going to lose a certain amount of weight. There's no way I've seen guaranteed happiness.

Yeah, right. How do you guarantee that? Yeah, right. And so, okay, so what we're talking about is like someone suing for their money back and maybe for some damages. So that's you're losing the money that they paid you that you had already counted as in your pocket. And then because they hired a lawyer, you're going to have to hire a lawyer that gets pretty expensive. And it's so. It sounds like it's really easy just to have your contract in place and have someone look over the language on your website to make sure that you're saying everything that's compliant with what works for your business. Yeah.

I mean, there's nothing perfect. There's no Perfect form of protection. And if you're going to be in business and if you're going to scale and grow and successful, having a dispute is just part of the course. No different than, you know, if somebody told you that they've, you know, an adult, they went through life and they've never had any kind of falling out with a friend or relationship ever. No one's going to believe that because if you deal with enough people, you're going to sometimes not get along. And that can happen in just like that happens in all kinds of personal relationships. It happens in business too. If you go into with that mindset, I think it's a lot easier to wrap your head around.

Right, right. Okay, cool. So we've covered contracts, we've covered some like, marketing, website stuff. When should someone start thinking about getting an LLC, trademarking terms and names and stuff like that?

LLCs and corporations are great. A big fan. It's a great way to protect you. I emphasize contracts only because I've seen a lot of business people, all kinds of businesses and all kinds of industries, they'll start their business, they'll register an LLC right away, sometimes by doing themselves, sometimes hiring a lawyer to do it or having their accountant do it, and then they'll just put together a contract based on some template they found and put in their to do list. I should get a real contract. For now, I'll just do it this way. It's the wrong order for a couple reasons. First of all, the LLC doesn't stop you from getting sued. It just makes it potentially less painful. Contract can actually prevent you from getting sued by clearly putting the terms out there. The way an LLC protects you, just to get like a teeny bit technical here, is that it creates a separate legal person, your llc. So if your LLC that's performing services, that's not you. So your LLC has money in it. Your LLC has a bank account, your LLC could own some assets, and then if that LLC provides poor services, then you sue the company and your house is protected, your savings account is protected, your name is protected. And that's, that's great. It's important again, especially as you start scaling because you want to, you want to protect your personal assets, but without having a contract that works in the llc, knowing how to use your LLC properly and complying with whatever formalities or requirements are necessary in your state, it's just not going to do very much.

Right, right. And I actually you just said something that I want to touch upon because I know people are going to watch this they're going to think, oh shit, I need a contract. And they, I've just announced that you live in New York. Are you able to write contracts for anyone in any state or do your clients only have to come from New York?

It's a great question. It's actually becoming a big issue these days, especially with COVID and everyone working from home. Kind of sped up discussions on these issues. I was talking to another, another attorney I met last week about, about this exact issue. I generally provide. My area focus is New York. That's, that's where I'm an expert in on matters of contract. I have clients all over the country. If it's a litigation, then typically what I do is I use my network of local counsel in different cities around the country to file the initial paperwork and then allow me to change temporarily be admitted to the court. The only areas where I shy away from that is if there's any state, state specific issues outside of New Jersey and New York, I stay away from that. And any regulatory issues that, that may come up, depending on your business, I shy away from that as well. But generally on general contract issues that are not, don't require any state specific matter, I'm happy to, happy to handle. And then if it involves federal trademark or copyrights, because they're federal also, that can be done by any, anyone who's licensed in the country.

Okay, awesome. And then I know, you know, you do contracts for, you know, clients to help protect them. But where you spend a lot of your time is in litigation and in dealing with problems after they've become a problem. So when, so imagine a problem arises in your business. When should someone call you soon, like after they get served, or when they sense that like a client's really unhappy or you know, anywhere in there.

So if you're served with a lawsuit, you know, call a lawyer. Because depending on how the, how you got the paperwork and depending on your state, you only have probably a few weeks to respond. So you want to make sure you get an attorney pretty quickly if you have trouble getting attorney for whatever reason. Most courts from my experience are pretty generous about giving more time if you say, I'm hiring an attorney, but it's really a better idea to have somebody in your corner sooner rather than later. If you have like a demand letter, which is a letter usually from a lawyer, sometimes from the company, says, I'm unhappy, I want money, I want my money back, you caused me damage, I want some amount, I want you to do something, or I demand that you cease and desist doing this thing. I recommend calling me before you get the lawsuit because you could probably have. I don't want to say probably. You can often avoid it. You often avoid it either. Negotiating. And it's really helpful. I. Clients call me in a panic because they got a demand letter. And sometimes there's something to worry about, but sometimes there isn't. Sometimes it's just bluster, and I could see through it pretty easily. And so you get that demand letter and you're just like, in a sweat and you're panicking. I mean, call a lawyer, because if there is something to worry about, then worry about it, but do it productively. There might not be or might be somewhere in between.

Right, Cool. You know, and I love how you talk about it because it just takes the charge out of it. Like, it sounds like it's such a skill. Scary topic. And you're like, yeah, it can be negotiated, it can be handled. Like, here's how you approach it. And it's, you know, whatever. Obviously it's not whatever, but it's, you know, there's. There's not that emotion to it because you deal with this every day.

Right. I think that's important because the vast majority of. Of lawsuits are negotiated away, especially in commercial. In the personal injury context. Trials are more common in the commercial context for business. For businesses, the vast majority of lawsuits are end in some form of settlement. Right. And so. And the sooner you do that, the cheaper it is for everyone.

Right.

But when you're doing a settlement or when you're thinking about negotiating a settlement, you want to make sure that you're not missing anything. You want to make sure that a big part of that is, I'm going to tell a client, look, there's something to worry about here. You have some liability. I don't want you to have to go through a trial. There's a lot of risk. So let's figure out a way to negotiate it. If you're thinking, I don't have the money, so I'm not gonna be able to negotiate anything. I'm freaking out. I don't know what to do. Should I call a lawyer? So if you don't, you're still not gonna be able to pay for it and you're gonna have a problem. It's gonna be a default. Right. Believe it or not, I have had clients that, you know, come to me, there's real liability that they can't pay. And so we figure it out and we come up with a strategy that makes sense and A strategy that's affordable and that I can sell to the other side.

Yeah. You know, it's so funny because, you know, I work with business owners trying to get their business off the ground. And the way you're describing this is obviously not as exciting as starting a business, because, you know, when you're starting a business, like, you have this big vision that you're going towards. You're not running from, like, scary gremlins in the closet, but you break it down in a very similar way. Like every. Everything is Deal with a bull.

Yeah, that's a great way to put it. One of my favorite parts of a new client call is, you know, typically new client calls, it's a lot of the client talking and giving a lot of information. It's not always so organized, and that's a little chaotic, a little emotional, but at some point towards the end of the call, there's that sigh. It's just like, okay, there's. There's a way to deal with this. There's a way to figure it out. And on either side, if you're. If you're being sued and you don't know what to do, you probably have more options than you realize. If you're on the plaintiff side, somebody owes you money, you had a vendor that isn't living up to their end of the bargain, a partner, a client that's not paying you, and you're thinking, I don't have to do. I can't afford to sue them. We can come up with a strategy that makes sense. Yeah, you probably have more options. This is what I do. This is what I do all day. And clients are often surprised that I give them options and, you know, they can choose. Which of these do I like better? Not necessarily. Which of these is less terrible.

Yeah. Yeah. And it's so funny when I imagine, you know, and I plan on being big, right. So I plan on getting sued a lot. You know, hopefully. No, just kidding. But when I imagine this, I think one of the most emotional things about getting sued or even, like, just opening yourself up to it, is that idea of being backed into a corner and being trapped and not having choice.

Right. And I totally hear that, and that's why it's really important at the beginning to give yourself that choice. If you're watching this and you're thinking, oh, my God, I've done all of this wrong, I have an llc, but not a contract. So the good news is, if you're not currently being sued or having a client threatening you, like, right now, you can fix it. You can still do it up until the point where it goes bad.

You hear that, George?

Listen, George, I have that beautiful smile. I would hate to see you stressed out about a lawsuit.

This is a sad face.

Oh, no. Server just came up and served him with a lawsuit.

Okay, cool. Any last words of advice for our audience?

I think that the, the way to think about a lawyer in your business is a little bit like an insurance policy and a little bit like a day planner. It's an insurance policy because at the end of the day, everyone hopes that their insurance premiums aren't profitable. Right. You have insurance. You still hope that your house doesn't burn down, but you're still going to, you know, you still have an insurance policy. And it's a day planner in the sense that having a contract, for example, forces you to do things to your business model that it's just not going to necessarily think about. I've had clients call me and my question is, tell me, tell me what you do. Tell me how you serve clients. Give me a sense your business model and their first reactions. Start giving me their pitch. Right where they're talking about, well, I disrupt this market and I, you know, when I, I bring confidence and value, I was like, I got the buzzwords, but I'm actually trying to figure out what you do because I, I don't know what you do. Right. And sometimes forcing yourself to, to try and be really clear, like in, in like two or three sentences. Here's the actual service I'm providing. There's a lot of clarity. Helps you in your sales. It helps you in your own confidence. And it's a lot easier for your client because now I'm on the receiving end. I really appreciate a clean contract. And this is what I'm paying money for. Here's what I'm getting. That's really nice. Even as a consumer of contracts of sorts, it's nice when I know my service providers are providing that. It sends a message of professionalism, competence. Feel like you've done this before. You have a standard contract. This is what you do. It's not like scribbling this together, you know, during our sales call.

Yeah. Which I mean, for those of you who go through your first sales call and get to the end, you're like, oh, my God, I have a client. What do I do with this person? And you do scribble to together a contract of sorts, that is totally fine, like, we've all done it. But your next client, you're gonna call someone Like David. And you're gonna make sure that you're actually covered.

Well, I just want to qualify that for a second. Not supposed to do it right by yourself. Right. Like, that's not a reasonable expectation. So if you're beating yourself, if you're hearing this and being like, I am going to get sued, like, all the time now, this is it. This is the end. This is the end of me. I'm going to lose my house. I mean, if you, if you, if you did it by yourself, of course you didn't do it properly. Like, that's not what you trained to do.

Right.

That's not. You provide the service. You're a marketer, you're a coach, you're a consultant. George, you. What do you do again? Oh, fitness health. Right. That's your.

Just Katie's like, post it puppets over here. Hi.

Yeah, it would be like. It would be like feeling bad about myself because the. The workout that I put together, watching random YouTube videos, turns out isn't the best way to get the results I want.

Right.

Surprise. I mean, I could beat myself up about that, but that'd be pretty silly.

Right? Right. There's a reason why law school is a thing. Right?

Yeah.

It's not just a hobby that people do that because they're bored in their mid to mid to late 20s. Right.

Yeah. I do think we have value as a profession and, you know, as exhibits. I can give you, like, you know, all of my clients that would have preferred calling me beforehand and maybe spend a few thousand dollars on the right contract, corporate structure, trademarks, depending on the needs, rather than shelling out 20, 30, $70,000 on litigation that, you know, I hope we can win. But it's not a. It's not an enjoyable experience from the client's perspective.

Right. Yeah, I can imagine. Well, thank you so much, David. Any. Any final words you want to leave? I know those were your final words, but anything else.

I'll leave it to you.

So. So the main lesson I'm taking away from this is spend a little bit of money when you start out. It's an investment in your peace of mind, in your business going well so that you are covered from those big expenses that pop up and are the big ugly demons that jump out at you in your work that no one wants to deal with. So let's just mitigate that right there.

And the nice thing is, if you do have to deal with it, you don't deal with it by yourself. It'll be my headache and I can worry about it you go about doing your business and growing your business and, you know, and you have a lawyer who's figuring out the best way to position you legally, the best positions to take, the best arguments to make, and also the best ways to redo your contracts to avoid that kind of dispute in the future.

Right. I also want to stress, like, just like you wouldn't hire a fitness coach for help with your business or a business coach for help with your fitness. Like, you don't want to hire me to help you get thin. I'm. I'm potato chips all day. But, you know, we all have, we all have lawyers in our lives. You know, like my mom works for an attorney who does wills, trusts, and estates. You know, that's what he specializes in. And I'm not going to go to him for like, if I ever get divorced, he's not handling that. There's a specialization in law that I imagine is similar to that in coaching.

Yeah. And that's important to include in your messaging as well, both in your marketing to make it clear. And that's good business advice. Also. I will say, though, since you brought it up, the reverse is true. And you don't want to come to me for help coming up with your business model, which is something I actually get asked surprisingly frequently. And it makes sense to hire a business coach or a consultant first. Because if you come to me on the, for, for advice on your business structure, and what you tell me is I'm gonna provide, I'm gonna help new businesses target their ideal audience. Well, I can give you a really vague sounding contract and tell you to form an llc and then, you know, call me if you need anything. Right. But if you come to me and say, well, I'm projecting this revenue, here's the size, I see this. I'm going to hire two employees and probably use a couple freelancers, maybe a va. I'm looking specifically in the tech industry. My business is focused in Europe. That's where my contacts are. I'm hoping to work there. I don't know if there's any tax issues I have to worry about. Right. Well, now I can do something. And now I can reverse engineer all the ways that I think you can get into trouble, which is essentially what you're doing on the business structuring side. Right. Is coming up with trying to imagine ways and not just imagining, you know, using research tools to look at previous cases, figure out all the ways you can get into trouble, and then work backwards and give you those, give you those, those contracts. The right kind of entities deal with the tax issues.

Right.

So the more information that you have, the more you've worked out your business model, the more I can do to help you, the more any lawyer can do to help you.

Right. Awesome. Cool. Well, we're coming up on our 40 minutes. Thank you. For those of you who've tuned in, I hope this is useful to you. To you. I know this is useful to me and I know this will be useful to a lot of my clients. Thank you so much for spending time with me tonight, David.

A pleasure. Thanks for having me, Katie.

Yeah, also, if anyone wants to get in touch with David, he's on LinkedIn. And David, do you mind handing me. I think I have your email, but do you mind? Oh, I'll just post it in the comments when everything's done. Yeah. If anyone wants to talk to David, I'm sure you're open to being reached out to, right?

Absolutely. I'm tagged in the post. You can connect with me. My DMs are open and I'll put my email and calendar link in the comments.

Okay, awesome. Thank you so much for that and everyone. I'm Katie McManus, Business Strategist, Leadership coach. You've joined me this evening with David Fryman, litigation attorney and contract lawyer out of New York State. Thank you for joining us. I hope it was useful and we'll see you again later this week.