Legal Lessons with Four Friends

THE FOUR-FRIEND DISASTER

There are tons of legal issues in business that KILL businesses. Yes, there are plenty of business issues, leadership issues, and decision-making issues that can lead to the death of a business. But a legal problem is a different sort of creature. It can lay dormant in a perfectly healthy business, and then one day it wakes up, looks around, and in one fell swoop it destroys everything.

A few critical misunderstandings on business and asset protection can result in bankrupting surprises. Someone can think they did absolutely everything right. They can be so sure that their assets are perfectly safe. Then”¦ BOOM. It’s suddenly being threatened in ways that the smart business person thought were not possible. Sometimes safety is just an illusion and we have no idea that we’ve left ourselves wide open.

Discussion of legal issues is often dry and mind-numbing. So we’ll talk about “Wishful Contracting,” a business run by four friends: Mike, Olivia, Fred and Carl.

As you can guess, these are four fictional friends. However, their story is cobbled together from a collection of real-life stories. Some of the stories happened to clients. In too many cases, I was contacted only after things were a mess. In a few cases, I was contacted early in a new project because at least one of the new partners had a terrible experience in a previous project.

My hope is that you can learn from the Four Fictional Friends of Wishful Contracting and thus avoid some of the most common legal minefields that kill business and wipe out families.

WISHFUL CONTRACTING

The Four Friends decided to start a contracting firm specializing in commercial environmental control systems. They could do many other things, but their particular focus would be on the heating and air conditioning systems for business and developments.

“Wishful Contracting” was born.

Mike the Moneyman owned a home. He bought it cheap from a distressed seller and invested several years of labor fixing it up. After more than five years of consistent work and a lot of good financial decisions, he had more than half a million dollars of equity. Mike was also an experienced marketer with growing expertise in online marketing and understood how to find prospects and convert them to paying clients.

Olivia the Organizer had worked as an office manager and executive assistant for more than fifteen years. She knew how to run an office, and at her last job because the de facto CEO when her boss would leave town for weeks at a time. The company was recently sold and she was once again in the market for a job. She had enough savings and credit to be comfortable for a while.

Fred the Fixer was skilled at fixing things. He didn’t have nearly the breadth of skill that Carl had. Fred knew how to work on cars, heating and air conditioning systems, electrical systems, and a few related areas. He had worked for an air conditioning company until recently. The owner had made some bad decisions and had to shut down operations. Fred had acquired the truck and tools he used when he worked for the company with the idea that he would go independent. He had no idea how find customers, though, and he was living on his credit card.

Carl the Contractor had been fixing things since he was a kid. In his teen years, he worked as a handyman. Even while he was still in high school, his parents sent him to certification classes to learn a variety of skills. By his mid-20s, he was an exceptional tradesman with a wide variety of skills. Give him enough time, the right tools and equipment, and he could practically build a house from scratch. He had worked for Mike on several projects on fixing up Mike’s home. He had been working independently for a while, but he found new contracts hard to come by.

LESSONS LEARNED

In each blog article in our Wishful Contracting series will tell a slightly different story to help us understand a key legal issue. We’ll be changing up a few facts here and there as a we go. Sometimes the Four Friends will have done something one way ““ and sometimes they will have done it a different way.

Any good business person should already know at least some of the answers. Unless you’ve had some bad experiences in the past, chances are you won’t know all of them. In fact, most business lawyers don’t know all of them.

Then there’s “the terrible truth about lawyers.” They can “protect” you right out of business. There are standard things they’ve been taught that might be technically correct from a purely legal perspective, but toxic to your business if you try to operate that way. Too many people have had their own lawyers steer them wrong ““ not legally wrong ““ but “business wrong.”

Why? Because sometimes “good law” isn’t “good business.” In fact, sometimes the legally smart thing to do is fatal to business. With all these issues and balancing acts to take into account, how the heck do we handle it all? When should a business person second-guess his lawyer? When should the lawyer’s advice reign supreme? And how do you figure it all out without constantly running back to your lawyer and accumulating crazy fees?

We’ll dive into as much as we can in this series. It will be eye-opening! Enjoy.”