The Tao of California Non-Competes

I'll bet you've heard the oft-repeated refrain that "non-competes" aren't enforceable in California, and for the most part it's very true. California Business and Professions Code Section 16600 states:

Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.
It then goes on to give the two exceptions to this simple rule, but in that short and sweet sentence, the State of California forbid nearly all non-compete agreements. Of course the rule is defined by its exceptions, so I won't keep you waiting to find out what they are. The statutory version lists them (in relevant part) as:

16601. Any person who sells the goodwill of a business, or any owner of a business entity selling or otherwise disposing of all of his or her ownership interest in the business entity, or any owner of a business entity that sells (a) all or substantially all of its operating assets together with the goodwill of the business entity, (b) all or substantially all of the operating assets of a division or a subsidiary of the business entity together with the goodwill of that division or subsidiary, or (c) all of the ownership interest of any subsidiary, may agree with the buyer to refrain from carrying on a similar business within a specified geographic area in which the business so sold, or that of the business entity, division, or subsidiary has been carried on, so long as the buyer, or any person deriving title to the goodwill or ownership interest from the buyer, carries on a like business therein.

and

16602. (a) Any partner may, upon or in anticipation of any of the circumstances described in subdivision (b), agree that he or she will not carry on a similar business within a specified geographic area where the partnership business has been transacted, so long as any other member of the partnership, or any person deriving title to the business or its goodwill from any such other member of the partnership, carries on a like business therein.

And if you're anything like I used be before law school - you stopped reading those as soon as your eyes began to glaze over and you started to feel inexplicably sleepy. So what can you really take away from this rule and these exceptions? A few very simple points:

1. Neither of the exceptions has anything to do with employees, which is to say, if you're an employee (who doesn't own any substantial part or piece of a business) then a non-compete agreement can not be enforced against you.

2. You can't be given a nominal amount of stock or ownership of a company to get you into one of the exceptions.

3. It is still illegal to steal trade secrets, and most California companies will use very robust versions of this prohibition to construct a de facto non-compete. Be very cautious about employment agreements that include lengthy and sweeping definitions of what constitutes trade secrets for a new employer.

4. If you do own all or part of a company and it's sold - you will likely be signing a non-compete; but it still must be reasonable in geographic scope and term. E.g. if you sell a business that was selling widgets in California, a non-compete that forbids you from selling widgets in West Virginia isn't enforceable, nor is one that forbids you from doing it for twenty years. If you're not certain what "reasonable" is - ask your lawyer; if you're selling a company without a lawyer, then you've likely got a whole lot more problems than the scope of your non-compete.

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The California protection against non-compete agreements is the most robust in the nation, and likely the world. As a matter of public policy, California has decided that of paramount importance is a citizen's right to earn a living free of restriction. This gives the state's employees a great deal of power in deciding where to work and for how much. Despite the creative and valiant attempts to circumvent and thwart this prohibition, the state's jurists have affirmed it over and over again. This isn't a substitute for your own vigilance when entering into a new employment agreement, but can offer some peace of mind as you do so.

As always, when in doubt, consult an attorney when signing any new employment agreement, especially if it includes non-compete provisions which just don't sound right.

Transformers - More To Your Organizational Form Than Meets The Eye

If you're forming up a new organization, you've probably wondered what form to use. Corporation? Limited liability company? Limited Partnership? S-Corporation? General Partnership? It can be a confusing landscape to try and navigate. Each has their pros and cons and though I often tell entrepreneurs to uses the LLC form, there are some up front costs with an LLC that may make it prohibitive. This is especially true for entertainment groups, especially musical bands. The good news is, however, that you don't have to choose up front. In fact, most entertainment working groups can get most of the protection and structure that they'll need up front by simply forming a general partnership, and then later transforming that organization into a more formal business form once there's adequate financing and reason to do so.

General partnership do not actually require any legal action with the state to exist. In fact, any group doing business together is presumed under the law to be a general partnership if no other structure or form exists. So, even if you've done nothing, congratulations, you have a general partnership. This comes with a whole set of default provisions which will govern partnership activities, but they're extremely broad and general, and will to do little to reflect your actual business relationship. So one of the the most important things you can do is to draft a Partnership Agreement which actually is customized for your business group. This can address everything and anything you can imagine, from profit distribution to dissolution and from ownership of partnership assets to voting procedures. There are forms available online - but if you've been reading this blog long enough, you know that those are typically not a good idea. You can often get one drafted by an attorney for a fraction of the cost of setting up an LLC or corporation - and you won't have to worry about one-size-fits-all forms that you overpay for online or the mostly useless default provisions provided by law.

So what's the big deal about incorporating or forming an LLC, if you can set up all the business provisions with the partnership? Well, limited liability is the biggest difference perhaps the most important. One of the biggest reasons for forming a company is to insulate the owners of that company from liability for actions of the company or its employees - and with a general partnership you simply don't get that protection. Of course, when you're starting a band, you really don't need liability protection; you don't have employees, you don't do much besides make your music and there's really not many ways the group even generate liability - outside of how they'd be doing it as individuals.

The other good news: transformation is easy; like single form and fee easy. The Secretary of State has actually compiled all the information about applicable forms and fees into an easy to read chart:

California Secretary of State Conversion Information

To go from a general partnership to a California LLC will cost you $70 (in addition to any filing service fees) and will require you to fill out the LLC-1A form. Of course, there are the other matters that normally accompany forming an LLC (including drafting the Articles, Operating Agreement and other ancillary documents as well as the payment of minimum tax [$400]), but the conversion part is no more painful than if you were simply forming the LLC from scratch. As always, it's best to get an attorney to help with these formations - especially with the drafting of those documents that will govern the operation and management of the company. But if you're ready to finally make the move from a GP to a more formal entity, legal fees are probably the least of your worries.

So remember, transformation/conversion is always an available option and can save you a ton of money up front.

Putting the Work into Social NetWORKs

An old friend and trusted colleague forwarded me an article by Greg Rickey, an east coast attorney with both military and federal experience, that warned of the potential threats to your security clearance if you use Facebook and/or Twitter. Having a security clearance myself, I have many professionals in my network who depend on their active clearance for continuing employment, so allegations that the increasingly pervasive presence of social networking sites and services in both professional and personal life may cause them to lose that clearance are obviously cause for alarm. Unfortunately, this needless fear-mongering adopts the sort of attitude towards technology that has tolled the death knell for many aging businesses and senior executives and employees. Rest assured that your security clearance (no matter how high it is) and your social networking can peacefully coexist provided that you can follow a few simple principles, and what's more, you will likely find that these powerful new communication tools may actually make you (and your clearance) more effective.

As a threshold matter, you ought to look at anyone who spurns technology that is in the throes of nearly global penetration and relevance with a measure of skepticism. Obviously, it's the role of your lawyer to help you to be careful, but he/she should also be a trusted business advisor who doesn't simply identify risk but also helps you manage it (and not simply avoid it). If anyone serious about a career that doesn't involve a name-tag or a hairnet asked me if they should avoid social networks, the short answer I'd give them is "NO!" Social networks have gone from being pastimes and distractions to fully functional business tools with many of the world's largest corporations advocating their use by employees (e.g. Accenture) and mid and small market companies following suit. The legal business is no exception; large firms and solo practitioners alike are leveraging the latest technologies to reach out to and communicate with clients and colleagues. The legal community has as many confidentiality obligations as any, and the only lawyers who are avoiding the social networking phenomenon are those either not interested in new clients or so afraid of their computers that they still insist on dictating letters.

As an additional note - for those who will insist that LinkedIn is for professional and the rest are for kids, note that LinkedIn and Twitter are currently implementing an unprecedented integration of their separate technologies.

With that in mind, if you can follow a few simple rules, go boldly forth with your Twitter, Facebook and LinkedIn accounts:

1. Don't post private information in public spaces. Each of these services has both "public" and "private" sections for each user. There are dozens of both humorous and horrifying examples of users that have failed to understand this distinction - but for the moderately savvy professional, this should be no problem. Some examples: Don't post your personal phone number or address in any public area - and avoid listing them at all if you can. Don't post the exact location of your family's vacation until after you get back from it. If you hold a sensitive position, like a federal judge, don't post photos of your workspace, commentary on your work, or detailed itineraries of your whereabouts. (These things may seem obvious, but they're only listed as examples because someone has already done them)

2. Know your "friends". For the majority of these networks, you are in complete control of who you allow to see your information through a "friend request" process. This usually means that someone has to know you, and then send you an electronic "request" that you must affirmatively "approve" before they have access to you on the network. One of the best ways you can keep your network secure is to avoid allowing anyone into your network that you have not met or do not know personally. Accepting these requests automatically is just plain stupid - and if you're that desperate for attention then you don't need security clearance, you need counseling. Additionally, if any of your "friends" begins to act erratically online, their account many have been compromised and you should eliminate your connection to them (they'll understand). And if you happen to have or make friends overseas - be exceptionally cautious when allowing them into your network, and if you can avoid including them, do.

3. The Privacy Myth. The reality of any online activity is that none of it is completely secure or private. These networks all go to great lengths to keep your privacy to the maximum extent they can - but there's only so much they can do. If there is something you need to keep private, the best advice anyone can give you is to keep it offline. There a number of technologies in development capable of combing through all the world's social networking data, mining for information, intelligence, etc. If that knowledge scares you about what you put online, it should.

* * *

There has been a great deal written by both early adopters and even conventional media outlets about the importance and utility of social networking sites and services in the workplace, so I won't bother weighing in here. If you haven't figured out by now that making strong connections is essential to professional success you don't need to wonder any longer why you're still washing dishes at the restaurant you'd like to own. Many people have come to expect the nearly effortless connectivity to professional contacts that these services provide, and a failure to do so may quickly label you as a dinosaur and not desirable to work with.

In the end, as with any new technology, it's really only dangerous if don't know or won't learn how to use it.

Top 5 Reasons to Avoid the Hollywood Lease

Ah, the Hollywood Lease. You know the type of arrangement I'm talking about. It's that situation where a large group of young hopefuls with more dreams than income and more good intentions rather than good credit get together to share a large rental property to mitigate some of the high costs of rent in the big city. Sometimes these groups are as small as three or four, and sometimes there are over a dozen. It's certainly not unique to Hollywood, California - but it happens there more often than it happens anywhere, and with much higher stakes and greater consequences.

But while on it's face, it seems like a great way to live in a great property at a much lower cost, it turns out to usually be a very bad idea. Here are the top 5 reasons why:

5. You don't really want five (or more) roommates. You've had bad roommate experiences before, and it always starts out great - everyone's being nice and considerate and fun, and then all those problems you always start to have begin, except now they're multiplied by each new person. Turns out there is actually something to be learned from watching The Real World - putting a bunch of twenty-somethings in a house together always ends badly.

4. You're jointly and severally liable for the lease if your name is on it. In most Hollywood Lease situations, the landlord demands that all the tenants' names are on the lease. This is not just so he/she will know who's there. There is likely a provision which makes each tenant responsible jointly and severally liable for the rent. What does this mean? Well, let's just say that the rent is $2,000/month. Legally, each of the tenants owes that $2,000 monthly... and you work out how it actually gets paid amongst yourselves. This actually makes sense, the landlord shouldn't be responsible for that one guy who is always late with his rent. But it also means that if all your new friends move out without telling you, guess who owes rent on their own next month?

3. There's no legal agreement between the tenants. Sounds silly, right? I mean, you're just roommates! You're not starting a company or opening a restaurant. Why would you need some sort of documentation governing the relationship between all of you for business purposes? How do utilities get divided? What if you don't watch the cable? And if someone wants to move out early? Well, when these things start to drive things south (and they will) because there's no agreement it's jungle law: survival of the fittest, or more likely, victory by those with the least to lose. If you're the person with the best credit, most stable job and richest parents, guess who will end up giving in? Oh, and guess who has little or no legal recourse?

2. You don't want that landlord. Listen, renting to a rag-tag, unrelated group of good-looking hipsters is maybe the worst thing you can do for your property if you're an owner, so there's a reason he/she is renting it to your group. Maybe the price is higher than they can get from a single family, maybe it's in a terrible part of town, or maybe the property isn't quite as nice as it appears. The insulation might be terrible and the utilities insane; the neighbors might be loud and crazy; there might be black mold in the walls. Or maybe the landlord has a history of scamming tenants or using the property to hide drugs/other contraband (all things that have happened in these types of houses).

and

1. Beware being the "last one". Often times these groups are groups of friends that are one or two people short of the property they're looking to get into, and they go looking for the perfect "mark" to bring in to help them complete the transaction. They even tell you they're looking more for a new friend to bring into the fold than another roommate. But when things get bad (and they will) guess who will be the first one thrown under the bus? When there's a plan to move out without telling the landlord, guess who won't get told? Guess who will be out of town for the weekend when it happens? These people are not your friends and they know that better than you do. In renting, just like in fighting, if you're way outnumbered you're way screwed.

* * *

Like most things: if something sounds too good to be true, it probably is. Such is the case with the Hollywood Lease. It's an amazingly bad idea that masquerades as an amazingly good one. It preys on our desire to believe that our peers are inherently good people, especially if they're good-looking, similarly interested as us and initially charming. Unfortunately, these are usually much better indicators that we won't get along with someone.

In the end, I can't think of a good reason to get into a Hollywood Lease. Socially and legally, it's a disaster waiting to happen. If you want to live with a large group of people, move back in with your family. If you want cheaper rent, move into a smaller and older place by yourself. And if you want to live around vibrant, interesting people who you can befriend and enjoy, stay as far from Hollywood as you possibly can.

The E in E-mail

There's a saying that lawyers have about the "E" in e-mail, and it says quite simply that the "E" stands for "evidence". So what does this mean for you? Well, if you haven't figured it out by now there's nothing private or temporary about e-mail. No matter how good your password is or how secretly you keep your account, your e-mail is more public and more permanent than almost anything else about you. So that's the bad news. The good news is, it's easier to get things "in writing" than it's ever been before.

I'm certainly not the first lawyer (or any type of professional) to tell you to "get it in writing". As anyone who works with contracts will tell you, you don't need a writing to have a contract, but it sure makes things a lot easier. The same goes for almost any type of evidence you might need: a conversation you're having with a contractor, a discussion between business partners, or the negotiation of a large transaction. E-mail has become as ubiquitous as phone calls and face-to-face conversations, and for many of us (me included) the preferred method for professional communications. As a result, it can seem just as informal and the other forms listed - but unlike the others, there is an exact record of the conversation.

The moral of the story is, if you're dealing with someone that you may end up in an adversarial action against, think carefully about how you use e-mail. If they're in an advantageous position to you - suggesting e-mail communication will allow you to have the evidence you need in case things go sideways. If you're in the catbird seat, you may want to stick to phone calls and live chats, whose evidenciary value is only as good as the he-said/she-said game used to find out what was really said.

And as always, when in doubt, ask a lawyer. We might even e-mail you the answer.

You Can't Say That! - Straight Talk on Libel and Slander

Sticks and stones... we all know how that old saw goes. But, at some point in our lives, we also learned that saying bad things about other people is also legally actionable. Unfortunately, just as it's not exactly true that "words can never hurt", it's similarly not true that you can successfully sue someone just for saying something mean.

The Definition

According to Black's Law Dictionary, libel is: "a defamatory statement, express in a fixed medium, esp. writing but also a picture, sign or electronic broadcast." and slander is "a defamatory statement expressed in a transitory form, esp. speech." Well that does a great job of distinguishing between the two (libel is in writing and slander is spoken), but doesn't really tell you what they are. So how about "defamatory statement"? According to Black's that is "a statement that tends to injure the reputation of a person referred to in it. The statement is likely to lower that person in the estimation of reasonable people and in particular to cause that person to be regarded with feelings of hatred, contempt, ridicule, fear or dislike." Wow. That's just broad enough to not really be helpful at all. In fact, nearly every word in each of those definitions has been litigated over in a court of law. So what it really means is a much more complex question; the kind that really does need to be determined in court.

Practical Application

There are some lessons from the law, however, that can be used by in the everyday determination of what sort of statements actually rise to an actionable level. The most important of which are defenses to libel and slander: truth and opinion. In most jurisdictions, a statement must be false in order to qualify as defamatory. This is often spoken as the legal axiom: truth is an absolute defense to libel and slander. While this is a bit of an oversimplification, it's still a good rule of thumb. If you're telling the truth, or someone is telling the truth about you, no matter how damaging the information is, there likely isn't a case. In addition to being false, a statement must also be able to be proven as false. This is often stated as another legal axiom: opinion cannot be defamatory. And again, while this is a little oversimplified, it's a handy guide. If someone is clearly making a statement of opinion, it's not likely what they're saying/writing is something actionable.

A Reminder

As always, when wondering about whether you can sue or be sued for something, it's important to think about the money that's involved. First, it's not enough that you can prove a statement to be libel or slander, there must be actual measurable damages. There is no criminal version of these two concepts, they are civil claims only. If there are no damages, there is no case. And for the most part, having hurt feelings or being really, really mad are difficult to quantify. Second, as I've often said, litigation is expensive. It's actually more expensive than you think it is. If you want to know how much, try and think about how much you think it will cost you to take a civil case to trial. Now multiply that number by four... or maybe six. If the damages you think you can prove aren't pretty big money, it's likely that it's not worth it to try and take it to court.

* * *

For the most part, libel and slander cases really don't make much sense except for celebrities and large businesses. The good news is that if someone (who is neither a celebrity or the owner/CEO of a large business) tries to tell you they're going to sue you for either, they're probably all bark and no bite. The bad news is that if you've been using this as a threat against those who speak ill of you, you're probably better off with the old saw we started with: "but words will never hurt me."

It's the Law - And Other Lies People Tell You

There are a lot of good reasons to call attorney with a question, but the one that goes the most underused is simple vetting of someone's assertion that something is "the law". We can scarcely go through a day without being told this by someone either in defense of something they're doing, or something they're not. The problem is, this talismanic phrase usually has the desired effect on you, causing you to give validity to whatever is being asserted, because, hey, you don't know the relevant law well enough (if at all) to argue with what's being said and you don't want to look like an idiot for disagreeing.

But, now more than ever, you can call this bluff in one of two ways:

1. Look it up on your own. There are countless free legal resources on the web. For black-letter law (which is the actual statutes, codes, regulations themselves), most jurisdictions have fully searchable versions of the relevant law online either at their own sites or available at a third party site - and in both cases for free. For example, the California Business and Professions Code or the California Penal Code at Justia.com. The best place to search for this type of law is the best place to search for anything else: Google. The problem with this method is that it's a lot harder if you don't know what you're looking for. A good place to start is to ask the "legal expert" who confronted you. Sometimes nothing defuses them faster than asking for a citation to the law they're talking about. But, either way, this method requires you have a pretty good starting point.

2. Ask a lawyer. Well, of course I'll recommend this. After all, I'm a lawyer. But, there are a large number of places online to get your legal questions answered either for free or for a small fee. For example, Law Guru or FreeAdvice.com. These sites require you to post your question then wait - but provided you have a little time to spare before you need your answer, it's hard to beat the price. Additionally, this can be a great way to find a lawyer you might want to hire later on. If you need an answer quickly, your best bet is to directly ask a lawyer. Provided your answer is a simple one, most lawyers won't even charge you. Best to start with a lawyer you know, who if they don't know the answer, probably know someone who does - and have a good reason to help you for free. Either way, you'll have a real answer from a real lawyer, and it's hard to beat that when confronting your armchair attorney with their own misconceptions about the law.

In the end, no matter how accessible the law has become, the vast majority of people who want to tell you what the law is have gotten their information from rumor, innuendo or unverified commentary. Just like you don't let your waiter tell you what's wrong with your, or ask your pharmacist for stock tips - don't take legal advice from anyone whose only contact with the law is watching Law & Order.

Self-Help Legal Revisited - On The Quick and Dirty Trademark

Well, despite my pleas, Legal Zoom continues to make money in record amounts, as their marketing budget grows and the efficacy of their seldom-updated forms continues to dwindle. A little while ago I reproduced their lengthy disclaimer here (which is a lot easier than trying to find it on their site) and tried to point out some of the pitfalls in the “service” that Legal Zoom offers - but by preying on the public’s fear of overwhelming legal fees, general disdain for attorneys and unwillingness to read fine print they’re still able to sell an outdated and mostly useless forms library at an astonishing premium.

Additionally, I discovered that Legal Zoom does actually employ a surprisingly large number of actual lawyers. Unfortunately, these lawyers are not engaged in actually serving Legal Zoom’s clients - but rather are engaged in the full-time job of defending the company against lawsuits. I guess Bernie Madoff’s legal defense team needed something to do. Okay, okay, I’m obviously kidding. But if the disclaimer wasn’t enough to scare you off maybe the army of defense attorneys can do the trick. Those same attorneys are doing all they can to keep any bad press for LZ, well, from the presses.

After I sent out my original piece to my legal network, I received a note from an Intellectual Property (IP) attorney who specializes in trademarks that exposed yet another impossible promise that Legal Zoom is making in its advertising that is creating messes for real IP attorneys to clean up. He wrote:

I just had a discussion with a client about LegalZoom last week - he recently heard a LegalZoom ad on the radio saying, "Get a trademark in minutes." Talk about misleading. In addition to the points you raised nicely in your article (even a hair stylist asks the customer what they need), no one (not even me, an IP attorney) can get a 'trademark in minutes' because the Trademark Examiner won't even pick up the application file for months...

What’s more, a quick review of the Trademark services offered by LZ reveals that no matter how much you pay them, you’re still filling out the application yourself. Have you ever seen the trademark application? It’s daunting even for an attorney. And if you’ve got questions, you’ll be stuck reading the tutorials provided (for free) by the U.S. Patent & Trademark Office (USPTO). LZ does purport offer a LegalZoom Peace of Mind Review - a concept so amazing, they’ve actually trademarked it themselves! This service includes:

Complete information. Our document specialists will contact you by phone and email if additional information or clarification is needed.

Internal consistency.

Spelling, grammar and punctuation. We do not rely solely on software spell checkers. Every document is proofread by a document specialist.

Correct capitalization and lowercasing where required.

Proper pagination and blank space elimination.

Complete words. We spell out abbreviations or symbols in English.

Professional and consistent font usage.

Correct residency information. Indicating the proper state is critical to ensure the document conforms to your state's requirements.

Full names. We verify that full names are given (first and last) and that all names appear consistently throughout the document.

Correct shipping addresses and email addresses to ensure timely delivery.

Wow. Capitalization? Professional font usage? The use of full names? No wonder they can charge $170 bucks for this. That’s full-on proofreading! Does this list really give you any “peace of mind”? I sure hope not. The reality is that they’re holding this out as a review that’s just as good has having an IP attorney look at it, and it’s not. And when it comes back with errors, guess who has to do the fixing and the extra waiting? And guess who’s not getting their money back for their “Peace of Mind Review”? That’s right.

LegalZoom is right about one thing: intellectual property registration can be essential to the success or failure of your business, and it makes sense to invest in something so important. Unfortunately, they fail to mention that IP registration can often be a challenging and nuanced process that is both lengthy and difficult. As I always say: if it’s important enough for you to ask legal questions, it’s important enough to ask a lawyer. And the only person you should take the advice “you really don’t need an attorney” from, is an actual attorney.

The Uninvited Lawyer - Two Ways Your Lawyer Can Help in Negotiation WITHOUT Being There

Sometimes the best thing you can do with your lawyer in a negotiation is not to bring him/her along. There’s no doubt that when a planned meeting with a disgruntled partner, business associate or other individual gets a whole lot more adversarial once you let them know you're bringing your attorney. The chances for peaceful reconciliation plummet as the other party has to contemplate getting a lawyer of their own (if they don’t already have one), what sort of lawsuit they might have to defend against (or file) and begin to impute ulterior motives to everything you’ve done in recent memory. In short, it’s no way to resolve anything. In nearly every case I’ve heard of, a great deal more gets accomplished between parties when there aren’t lawyers present than when there are.

Which isn’t to say that a lawyer still can’t be helpful in a negotiation. We can. There are two things your lawyer can do which will greatly increase your chances for success in a negotiation that don't involve us showing up on your behalf:

1. Give you a plan of attack. By talking to an attorney with experience in your type of dispute, you can discover where the equities of your situation actually lie. You may think you have great legal standing where you have none, and vice versa. They will be able to help to craft opening arguments and positions, and counterpoints to common arguments against you. You can get talking points and an overall strategy which you can place in front of you during your meeting - like the good feeling of having your lawyer there with you, without the bad effect it may have your opponent. Winning negotiations demands prior planning. No matter how much the equities cut in your favor, or how charismatic you are - if you don’t prepare (and the other party does), you will come out with less than you could have otherwise.
   
   
2. Give you a scapegoat. No one likes to be the bad guy in a negotiation. In the end, there is some measure of conflict involved in the process and that’s something that most people don’t enjoy. But having a lawyer means you’ve got someone to blame all the bad news on. Because, in all honesty, lawyers have such a bad reputation that no one’s going to balk at the idea that your attorney is “making” you say all these bad things and gave you no choice in the matter. After all, you’re paying him and he’s supposed to know, right? Besides, what is your opponent really going to say? People may hate lawyers, but they also regard them as authorities - especially when they don’t know otherwise (and sometimes even when they do). Nothing gets you out of the “bad guy” role faster than preceding your point with “My lawyer said...” - and actually having a name a number to hand him if he calls your bluff is a solid idea. The other upside of this is that you don’t get charged by your lawyer to simply use his/her name in the negotiation. Although, I’d steer clear of making things up on the fly and attributing them to counsel - that may earn you the opportunity to find a substitute legal professional.

In the end, it’s always a good idea to have a lawyer in your corner if you’re involved in a dispute with high stakes - but you may save a whole ton of money, time and pain by not inviting him to the actual party.

Why the LLC? Flexibility

Like most corporate/business lawyers, I'm often asked by entrepreneurs what sort of format they should use when forming a new business entity. Corporation? LLC? Limited partnership? S-Corp? It's often a difficult question to answer amidst the excitement and confusion of getting a business started. What's more, it's not a question with a simple answer. It's not as though one of the options is "good" and the others are "bad" - like most lawyers, I'm given to starting my answer with the words you don't want to hear: "it depends..."

In fairness it really does depend on your situation. But I know that's not really what you came to hear, so here's my answer: the LLC. And why? Because of the flexibility.

Here's the worst kept secret in corporate law. No one likes corporate maintenance (you know, Board minutes, shareholder resolutions, etc.) not even corporate lawyers. Actually, especially corporate lawyers. It's not particularly challenging work, and you're often doing it as cleanup - meaning because your client company hasn't kept up with it for the past few years. What's more, keeping track of shares of stock, with certificates, classes, etc., is not fun and it's not flexible. Corporations have been around for a long time, and most of the matters surrounding ownership, allocation of profits and losses, etc, have been well settled for years. That means your new business model is the square peg trying to fit into the corporate round hole.

The LLC is a much "looser" organization. Membership interests (the LLC version of stock) are simpler, easier to give, take and move around, and don't even have to be tied to the allocation of profits and losses. That's right. You can have a business that's 90% owned by someone who only gets 10% of the profits. Which is not to say that you don't need to make sure you keep your accountant in the loop when it's tax time, because you do (read this as, do not file your own business tax returns if you form an LLC!). But if you're bringing in minor investors who you don't want to give equity to, but who you still want to participate directly in the company's upside, or if you need specific ownership for compliance or special taxation matters, you need to be an LLC - those things are nearly impossible with a corporation.

Those types of business needs are much more common today than they've ever been - and that's why the LLC is a much more attractive structure than it's ever been. Of course, you should always talk to attorney if you can before making this decision - but unless you've got a list of questions that's going to require hours of research, you shouldn't have to pay much, if anything, for the advice.

Even Schmeven - The Fiction of the 50/50 Partnership

One of the oldest and fairest sounding ideas in entrepreneurship is actually one of the most troublesome concepts in all of business law: the 50/50 partnership. It's a concept grounded in a fundamental lesson that most of us learned in kindergarten - sharing. When we get into a joint venture of any sort with another person, the simplest thing with regard to ownership is an even split. It's difficult to disagree with this distribution, and amidst the intoxicating haze of a blossoming business or even business idea, there seems to be little downside. Unfortunately, the business law landscape is littered with examples of just how poor of an idea this actually is in practice, especially when things start to go bad.

No Majority

The biggest problem with 50/50 partnerships is the most obvious one. There is no majority. There is only unanimity. Which is particularly difficult to obtain once there is any problem between partners. Because there's only two of you. So, neither of you can get anything outside the normal course of business done without the other. The moment you two stop seeing eye to eye, the company is paralyzed. So, when one of you is ready to go get some additional investors to move the company to the next level and the other isn't, you're not going anywhere. When you have an offer to sell the company and one of you doesn't want to sell, you're not selling to anyone. When you've got an internal dispute to resolve, there's no one else to mediate it, so you're got to pay a professional arbitrator/mediator. And if you do end up in court, the court will recognize the organization is at impasse and order a liquidation of the assets for the benefit of the stakeholders. Wow, right? In short, it's a bad scene.

Ownership

Another problem with the 50/50 partnership the lack of direction it gives on ownership in the case of a dissolution. Think of it like a marriage, because that's exactly what it becomes once you're in a even partners situation. All of the assets of the company, especially any intellectual property are not clearly owned by anyone, and ownership of the great idea you had when you started thing is now the subject of a messy contest. So maybe you can make a lot more with that idea than you partner, and it was mostly your idea to start with. It doesn't matter now, because now it's half his/hers and he/she likely knows how badly you'd like to own it.

The Myth of Equality

The reality of most partnership situations is that there really is a partner who is likely entitled to a controlling stake (i.e. 51% ownership). It could be the partner who put in most of the money or the partner who is bringing in the vital IP, or the partner who has the most business experience and is really more qualified to make the tough decisions, etc. In practice, the difference between 49/51 and 50/50 has a lot less to do with the money coming out than it has to do with control. And while this may be a difficult subject to tackle in the beginning, that may be the best time to leverage all the good energy and emotion to get this vital decision out of the way.

In the end, the 50/50 partnership ends up being neither fair nor equitable with the partners being able to hold one another hostage, and leaving the courts with only the Solomon's alternative to dispute resolution. In situation with more than two partners, equitable distributions can work, but when there's only two of you, it's best to work with an attorney to find out which one of you is going to have control - to avoid neither of you having it.

The Delicate Art of the "Big Time"

Every lawyer has experienced being "big timed"; mostly because laywers are intelligent and prideful people always looking for an edge on each other. So when you meet another lawyer who has either a lot less experience or who went to a much less prestigious school than you did - you're likely to immediately perceive them as less capable. Of course, not all lawyers act on this prejudice. Despite what you may think or have experienced, the legal community is not completely full of bloated and self-absorbed asses who if they got any further up their own behind would become an M.C. Escher sketch. That's just most of us. The way that kind of lawyer acts once they find out how long you've been practicing, or what firm you work or don't work for, or where you went to school is to talk to you as though you're an idiot and to act as though they have all the leverage in a matter (despite what the actual equities may be).

One of the reasons I decided to be a transactional attorney (as opposed to a litigator) was to avoid as much of this as possible. I have always had plenty of personal conflict and drama in my life, and didn't want to sign up for any extra. What's more, I didn't find the upscale legal community particularly awesome on a social level, and it's difficult for me not to take the sort of treatment I'm talking about personally, which was a recipe for disaster (or at least clinical depression). And for the most part, my dealings with opposing counsel have been much less vitriolic and full of posturing than my litigation colleagues experience.

For the most part, since I went to a decent law school, I get usually get "big timed" based on the fact that: 1. I've only been practicing for four years or 2. I don't work for a big law firm (or any law firm for that matter. And that's recently what I got from a Las Vegas attorney who was seller's counsel in an asset purchase. He was the consummate "big timing" lawyer, from editorializing the deal with his own vision of what the terms should be, to constantly talking about "in his experience". And for the most part, I accommodated him. There's usually little, if any, need to start a fight in a transactional setting; and in this case, the equities and leverage were so soundly in my client's favor, that there was little negotiating that going to take place. We were in the take-it-or-leave-it position. Which didn't give us the right to force unfair terms, but it certainly put us in the driver's seat.

At the eleventh hour, when we had taken documents to seller for their signature (despite being advised against it by their big time lawyer) we discovered that Mr. Big Shot had made one of the most rookie of rookie mistakes. Because as every transactional lawyer will tell you: STEP ONE in any document is making sure you've got the PARTIES' RIGHT at the start of it. I had incorrectly assumed that one of Seller's officers was also a shareholder and drafted the document to that effect (including the opening paragraph and the signature blocks). Both Seller and Seller's counsel were fully aware of who the shareholders were and weren't (made simple by the fact that there was only one) but after weeks of (ostensibly) reviewing the documents, they failed to notice my misunderstanding about the involved parties.

Despite a big office and a big firm partnership, Mr. Big had failed to carefully read even the first sentence of the document I had sent for his review. Yet, he had no problem advising his clients not to proceed with the transaction and to give me comments on that same document. It was a good lesson for me, because, just as inappropriately as he had assumed I was not a very good lawyer based on my experience and business card, I had assumed the opposite based on his. The truth of the matter is, what makes a good lawyer has little or nothing to do with the diploma on his/her wall, the letterhead on his/her correspondence, or the years he/she has logged in practice. It's all about who you are and how you practice. Especially if you're an ass who doesn't actually read the documents you get to review.

The Wrong Operating Agreement

There are a lot of places online who will sell you on the promise that an Operating Agreement for your new limited liability company (LLC) is something that you can do yourself just by filling in a few blanks and sending them a nominal fee. Legal Zoom calls this a "custom" Operating Agreement. Of course, by "custom" they mean that they'll install the name of your company and your members in it. They won't ask you any questions about your business, the nature of the ownership structure or anything else for that matter. You can even buy a prefab Operating Agreement at Office Depot - just fill in the blanks, and what could go wrong, right?

The problem with these agreements is that they assume a membership situation which was a lot more common when LLCs first became popular. At that time, it was common for LLCs to be much like other partnerships, where all of the members were contributing capital and would base their membership percentages based thereupon. In the Operating Agreements for those types of companies, the equities between members were fairly simple, and there was no need for preferential financial treatment for anyone. The problem is, that as LLCs have become more and more popular (based on their tax advantages, flexibility, and minimal corporate maintenance) another, more popular, structure emerged.

In most start-up cases when an LLC is used, there are both "money" members and "sweat equity" members. The "money" members mostly (if not wholly) contribute cash for their ownership position, and the "sweat equity" members contribute their services (both past and future) for their ownership positions. This is a great way for investors to get money to entrepreneurs they believe in, and for those with talent and vision (without a whole lot of cash) to get businesses started and successful. But, these members are in vastly different positions when it comes to the finances of the company, and how they would need to be compensated in the case where the LLC is dissolved.

Unfortunately, these prefab or marginally "custom" agreements don't cover that. Just because you have a common business arrangement doesn't mean you can use a "standard" document. For only a little bit more money than you'll pay for something useless from a huge company that is forbidden from actually offering legal advice, you can have a lawyer make a few small modifications to a "standard" agreement which will actually make it "custom" and will actually give you an Operating Agreement you can use.

The Release and the Catch

So you've finally gotten in touch with someone at the network and they like your two minute pitch... Congratulations! You've made it farther than most. But now the network guy tells you that he'd like you to send him your promo video/treatment/etc., and he sends over something for you to sign - just as a formality - so that you can send him your materials. He may even have told you that it's as much for your protection as it is for his. But that doesn't mean you shouldn't read it, and just because a document (like a release) is short, doesn't mean it can't hide some very nasty things in some very innocent language. And before you know it, you may have just signed your idea completely away.

I recently had a client who was submitting his show idea to a major network, and got a release agreement with the following language:

... all results of Submitter's services, all materials contained in the Submission, and all uses thereof in connection with the [name omitted] production or project... belong to [name omitted] and shall, to the greatest extent possible, be considered "works-made-for-hire" within the meaning of the United States Copyright Act.

Now, you may have simply read over that and not even noticed that you just gave away all the rights to your work by signing a document with this in it and then submitting your idea. Yes, seriously. And this was not some fly-by-night start-up operation. This was a national network. Ultimately, when pressed on it, they deleted this language. But it leaves one to wonder, just how many suckers signed this thing, and gave it all away.

REMEMBER, ALWAYS READ BEFORE SIGNING, and if you have any questions, ASK A LAWYER.

The Art of Submission

No, no... not the MMA kind - although it would be cool to learn that. I'm afraid I can't me of much assistance there. But there are some submission issues that have come up recently. First, using lawyers to submit unsolicited scripts/screenplays/etc. and second, releases (which I'll discuss in a later posting).

Many large studios/production companies require you to have an attorney submit your unsolicited work to them. And in turn, countless aspiring writers have combed through their social networks to locate a lawyer who has practiced, at least in some minor part, "entertainment law". But the submission of scripts requires no more legal expertise than cooking a decent omelette, or more to the point, getting into a popular nightclub. These studios/companies are not trying to find creative ways to employ showbiz lawyers, and this is not a creative way to generate legal fees - these entities have simply shifted some of the burden of determining the legitimacy of submitted work to a group that can't really say "no" to the added workload.

Showbiz lawyers need showbiz, and if Hollywood says that this cadre of legal professionals will be the new gatekeeper for manuscripts and screenplays, then that's how it will be. And so it is. And now, with no additional cost to itself, the tv/movie industry has significantly reduced the number of ill-considered submissions that it has to review. The real purpose of requiring you to find a lawyer to submit your work, is to force you through this additional layer of scrutiny.

Most lawyers who don't work regularly in entertainment can't really even submit a script on your behalf, as most studios won't accept material from a lawyer or firm they don't already "know" - and for the lawyers that can get your stuff through, most of them aren't going to simply take the submission work if they don't already know you. From a colleague of mine who is a partner at an entertainment law firm:

I have had some luck in submitting projects to production companies that I have relationships with, but even then it's pretty spotty. I never feel right charging clients for script submission work, because I feel like I'm just getting the client's hopes up and they're going to be disappointed in the end. On the other hand, taking them on with a 5% deal is like doing charity work without the satisfaction of saving lives or trees.

Your best bet (although I know it's news that no writer wants to hear) is to continue to try and find an agent - who will already have a connection with an entertainment lawyer who submits work on their behalf. Besides, you don't really want a lawyer deciding on the viability of your creative efforts, do you?

State Bar Annual Meeting and Blog 2.0

Fresh off the finish of the State Bar of California's Annual meeting, I'm headed back to Burbank from points south with pages of full of insight information and ideas and re-energized on my practice. Most importantly, it's the use of Read Before Signing in a more substantive and more readable way. The entries will be shorter and more frequent. There will be an associated video blog (hosted on our own YouTube channel), and we'll even be on Twitter (which I've truly been trying to avoid). It's an exciting time to be a part of the new business models for the practice of law and MyContractsGuy intends to take advantage of this time by being on the forefront of these changes - bringing you the real help you need, how you need it.

One of the most important things I learned at the Annual Meeting was actually the most disappointing things about the event. I was hoping to run into many other lawyers who were like me: young, yet experienced and talented, and taking the opportunity generated by the widespread failure of the large law firm business model to create new value propositions for small to medium sized businesses and sole proprietors. I was looking forward to sharing ideas and lessons learned with these attorneys, and adding them to my network of service providers who I could refer when I got inquiries from clients that I was not going to handle. Unfortunately, I met less than five. Actually, I met three.

It was at first, disheartening (and made the few social events at the meeting unbearably awkward for your favorite contracts attorney), but then I realized that it's actually great news. So MyContractsGuy.com is still a trailblazer, and still able to create unprecedented value for its clients. The majority of lawyers still insist on outdated pricing and service models that can cost your dearly in a time when overpaying is the last thing you can afford to do. It will be fun to pass on the lessons learned at the meeting and including you in the new ways the blog will grow in the days and weeks to come!

STAY TUNED and welcome to Read Before Signing 2.0!

How to find a good lawyer online

Step 1: STOP LOOKING ONLINE.

No, seriously, stop. Let me guess, were you at Lawyers.com? Or even worse, the California Bar website? And I'm hoping against hope that you didn't use Google Maps. But it's a Google world, what are you supposed to do? If you can find good dentists at 1-800-Dentist.com and a good doctor at WebMD.com - shouldn't there be good lawyers at Lawyers.com? Well, you're half right - because there should be, but most of them are not. What's worse, no one has really stepped up to regulate the legal advertising that's being done online. So what you're really choosing when you choose a lawyer online is the lawyer who hired the best marketing people. Good luck with that.

There are a number of problems with the existing online services:

1. They don't help you find the right kind of lawyer. The California Bar website refuses to even list its lawyers by specialty, and Lawyers.com pulls its listings from the Martindale database - which allows lawyers to list everything they've ever done. After reviewing the profiles of those lawyers which came up when I went looking for "Contracts" lawyers in Burbank, CA, I found that the fewest number of specialties listed was 19, and some with well over 50. And did they have to do anything to get something listed as an area of expertise? Nope. Just had to write it down. Aren't you glad that doctors can't do that?

2. They offer no indication of value or quality. You would think that this brave new world of information would offer some peer evaluation or customer evaluations, like a Yelp for legal professionals. But you'll get none of that. The order in which search results are presented to you are driven either by alphabetical order, or worse still, the moneys paid to the site for "premium placement" in said results. So, ostensibly, you've got to go through all of them one at a time, visit their website and then decide who you're actually going to take the time to call? I ran a search for "Small Claims" lawyers in Los Angeles, and got 408 results. So, at five minutes apiece to do just a cursory review, you ought to be done (provided you don't take any breaks for eating or sleeping) in about a day and a half. Hey, at least they offer 1-click directions to the offices!

3. They don't have the real information you need. The traditional imprimaturs of legal skill and law school and experience - neither of which are available online. So even if a lawyer got their degree from Bob's College of Law and have been practicing law since earlier this month, they'll be listed alongside the folks who graduated top of their class from Harvard Law School and have twenty years experience arguing in front of the Supreme Court. That's equity for you. But it this one of those times you don't want things to be so fair? I'm certainly not advocating that you use those two metrics to make final decisions on who you'll hire to handle your most sensitive and important affairs - but it sure does make for a nice place to start from. And where can you find this information online? You can't.

Well then, what's a potential client to do? Well, I imagine you wouldn't be too pleased to have read this far just for me to tell you that you're screwed. Because, in fact, I do have an answer for you. Your best tool in finding the perfect lawyer for you is a lawyer.

Oh no, a chicken and egg conundrum! What are you to do? Not so fast. You don't need to start with a great lawyer, or even a lawyer that practices in remotely the same area where you need help. And I imagine there's not a single one of you that doesn't already personally know a lawyer. There are far too many of us around - and we're far too loud to not be noticed. The only real requirement for the lawyer you start with is that you trust him or her. Now have you got someone in mind?

Because lawyers spend a lot of time with other lawyers (whether they want to or not), and know far more about how to spot a bad one than you do. What's more, we network like it's an intramural sport. For those of us who have practiced or are currently practicing at a mid-size to large firm, we already know hundreds of lawyers, who also know hundreds of lawyers. And that's before we even really think about it. We have friends from law school, friends from conferences, even people we've seen in court or worked with on transactions. The truth is, like it or not, a lawyer's life is full of other lawyers. And that's a resource you can use.

But remember, it's 2009 and we're busy, too. So the best thing you can do is condense the facts of your legal problem into about a paragraph and send it to the lawyer you already know in an e-mail. He/she can forward it to the trusted lawyers in his/her network, who will also do the same, and the responses will come flooding back into your "lawyer friend". He/She will then, most likely, (depending on how good of friends you are) vet the responses and send a final list to you. For my part, I usually check the lawyer list I get back to find out a little bit about their practice, where they went to school, how long they've been in the game, etc. I also check the lawyers who referred them (if they're not direct contacts of mine), to see if it's someone who I think is worth contacting. I'll also check out their firm, and be sure that the potential client is going to be able to afford the lawyer in question. Ultimately, they'll be getting a list of people that I, personally would call if I had the problem in question.

How's that compared to the list you got on the internet? And the best part of it is... it didn't cost you a dime.

Feel free to use me as your friend in the business! ...and good luck!

Can I Sue?

You would be amazed how many times I get asked this question. In fact, I would hazard a guess and say it's the question I get asked most often as an attorney. And the answer to this question is always yes. That's right - always. That was one of those things that our founding fathers insisted on: public access to the courts. So, yes, you can always sue someone and someone can always sue you. The real questions are: can you win a suit against someone, and more importantly, is it worth it?

Is it worth it?

The first thing you should know about lawsuits - or as lawyers like to call it, litigation - is expensive. And by "expensive" I mean, you cannot afford it. You can easily spend $100K-$250K on a business litigation matter before you even get to the courtroom. And that's using a mid-sized law firm. How good does your $10,000 claim look now?

And I know what you're thinking: well, I can get legal fees as part of my award. Except that it's usually not true. Only certain laws allow for the award of legal fees, and even when they do, your opponent's misconduct has to rise to a level high enough to be tantamount to accusing an innocent man of murder. Chances are you won't be getting legal fees in your award - which means it's coming out of your winnings if you win, and out of your pocket (in addition to the judgment you lost) if you don't. Well what about contingency fees? Well, you might be able to find an attorney who is willing to take your matter on "contingency" - meaning that they take a percentage of the court award rather than taking hourly fees. Sounds great, huh? Well it is, provided that you are looking for enough damages to make it worth their while - and for most decent attorneys who even take contingency, this number starts at $1,000,000.

But it's not all gloom and doom - there's still Small Claims Court. And in California the current limit for small claims is $7,500. If someone's taken you for that or less - it may very well be worth your time to file a small claims action. There you won't need an attorney, and are likely to get a default judgment (if the other party doesn't show up). The California Self-Help Legal Center for Small Claims is an excellent website, with forms, FAQs, and links that make the whole thing a lot easier - they even have information on collecting your judgment, which can often be the most difficult and daunting part of the process.

The bottom line answer to this question is: usually not. Litigation should be used (1) only as a last resort, and (2) only when there is a significant loss (e.g. six figures). Otherwise, you're best exploring other options. Most lawyers can still be a great resource for alternative dispute resolution. Chances are, they've seen their share of matters resolved before getting to court or even to litigation, and they have insights and ideas that you've likely never even thought of. What's more, most of them will give you these suggestions without charging you a penny.

Can you win it?

Well, I know you think you've got a "slam dunk", "can't lose" case. But, in reality, you probably don't. Here's the first thing you can throw out when considering your case: "fairness". If the majority of your legal opinion on a matter consists of "it's not fair" - you're wasting your time. There is no unwritten fairness code which dominates the practice of law - just like the lawyers and legal matters you see on TV. There are only rules and interpretations of those rules. That's it.

There are many things to consider when you evaluate whether or not you can win your lawsuit, a few of which include:

• The quality of your evidence: do you have it writing? how much of it?
• The quality of your opponent's evidence: what do they have in writing?
• Are there demonstrable damages? You've got to have more than hurt feelings.
• Does the misconduct rise to the appropriate level? If the law requires that someone have intent, you'll have to prove their state of mind
• How will it play out with a jury? Are you a sympathetic plaintiff? Are you suing a sympathetic defendant?
• Do you have enough resources to stick it out if the trial bogs down? As above, this stuff is expensive and cases rarely go exactly as planned.

As before, once you've convinced yourself that you can win, it's time to talk to a lawyer - but the one thing they will not give you is a guarantee of success (and if they do, they're lying and/or committing a massive ethics violations). They'll ask many of the questions above and give you an answer that likely includes as many pros as cons. Why? Because that's how we cover ourselves until we actually have some stake in the outcome - and even then, you won't get the reassurance you're looking for.

Read this carefully: Litigation is always risky. No matter how good your case is, no matter how much you spend, no matter how much the judge/jury likes you, you can still lose. So if you're looking for guarantees, buy a vacuum cleaner from Sears and stay out of the courtroom.

* * *

Often times the best advice I give to clients involves how to avoid litigation rather than how to win it. Talking to a lawyer can often help you answer some of the questions and inform you regarding some of the realities of lawsuits. At the very least, your decision will be an informed one. After all, when it comes to suing, it's not whether you win or lose, but how much you pay in the game.

Don't Hire Me

Here's a great way to distinguish between a good lawyer and a bad lawyer. A good lawyer will try to find a way to help you solve your problem without hiring him/her. And a bad lawyer will make it seem like you are completely screwed unless you do. Now, I'm also saying this as an introduction to writing about why you don't need to hire me - so, as a matter of course, I'm placing myself in the good lawyer category. But, in my training and experience I have found that the vast majority of situations are made more complex, difficult and painful by the inclusion of lawyers (although sometimes it cannot be helped), and that the best way to solve most problems is to not involve lawyers. So, if there are lawyers who either have not learned this, or refuse to acknowledge it, they are either very new or very ignorant.

I am often asked by clients if I will contact an opposing party on their behalf. And the answer I give them is always the same: I can do that, but you probably don't want me to. As an attorney, I'm licensed to represent them in a court of law, and in a legal dispute - but the one thing that they don't count on is what effect that bringing me in will have on the situation and the other party. Often times, they ask out of sense of frustration, and usually when discussions with the other party are at some sort of an impasse. And if that's the situation, bringing in an attorney is often the last thing that they should do. Here's why: once you bring an attorney (or even mention bringing in one) the other party will immediately turn defensive, because having a lawyer will signal to them that you're no longer willing to try and work something out, and that now you're going after them. What's more, now they'll feel pressure to get an attorney of their own - which is going to cost them, so now they're really not going to give an inch. So the time you save in having me call on your behalf may end up costing you a whole lot more than just my fees.

But you're still at an impasse... what do you do? You may still want to talk to attorney on how best to proceed. I have counseled dozens of people on alternative approaches to their legal disputes that has either resolved the situation or made the need for an attorney an obvious one. More often than not, however, these folks do not end up as clients of any lawyer, let alone me. But the goal is not the assessing and collection of legal fees, it's the resolution of the matter. Most lawyers can listen to your situation and give you advice on how to approach subsequent communications with regard to substance, tone, theme, etc., without charging you a penny.

Some general advice:

1. Play dumb. I know this sounds trite - but no one likes a know-it-all, even if you actually are one. Maybe you've contacted at attorney and you do know the law in the matter and know that you have a slam-dunk case. Better to act as though you don't and to simply appeal to the other party's general good nature (if they have one).

2. Stay calm. Try to approach the matter from a conciliatory standpoint; a "what can we do to work this out" attitude. This will either cause the other party to also address the problem from a let-get-it-all-out-there approach or infuriate them to the point where they'll start making mistakes.

3. Work it out ahead of time. With the help of someone else go over what you will say and how they may respond. It helps to work with someone who is familiar with the situation, so they can react realistically.

4. Have an agenda. Write down all the points you want to talk about, and keep it in front of you during your conversation. It's fine to get off track, you don't want to seem like you're demanding control of the entire meeting, but be sure you can check all of it off before.

5. Keep a record. Write down your thoughts. Everything in writing when you can, which also includes e-mail. If you're having an important phone conversation, record it. You're not required to ask for permission as long as you're actually on the call - and if you do end up hiring a lawyer, he'll be happy you did.

I was once told by a very senior attorney that the perfect client is rich, angry and wrong. Which made sense from his point of view, but not so much from mine. In fact, the perfect client is someone who is coming to you as a last resort, and would still much rather use you to avoid the conflict they're in rather than escalate it to full scale war. Sure, it's not as good for billing rates, but it's a client I'm absolutely certain I can help. And I'll take that any day.

The Three Things You Need to Know about Trademarks

TM ... I'll bet you've seen that before. You probably also know that it stands for trademark. But does seeing the TM mean that that mark is registered? And what do you do when you're ready to establish a trademark? There are certainly no shortage of web profiteers who will offer to help you with the process, and tell you the last thing you need is an attorney - because after all, they'll cost a fortune, and they're only needed if you've got something really complex, right? Wrong.

Consulting an attorney is exactly what you should do when you're considering trademark registration. After helping a number of clients with intellectual property matters, I have come up with three things you must know about trademarks. And if after reading them, you've still got questions (or still want help), it's time to call that attorney.

1. A trademark might not really be what you're looking for.

Copyrights and trademarks are frequently confused, and many of the self-help legal services offered online are unable and/or unwilling to help people distinguish between the two - and happy to charge you for the mistake if you make the wrong filing. The information offered here is simply a basic explanation of the two types of intellectual property - but if you want a definitive answer, contact a lawyer with your facts. A distinction between the two with regard to your specific facts shouldn't cost you a dime. But as a starting point:

Copyright - refers to the rights that you have to "original works of authorship", including the rights to reproduce those works, prepare derivative works, distribute copies of that work, perform the work publicly, etc. Copyright protects only the form of expression and not the subject matter of it. For example, if you write a paragraph describing a building, your copyright protection does not extend to alternate descriptions of the same building, or someone actually building it based on your description.

Trademark - refers the use of words, names, symbols etc. in the trade of goods to identify the source of those goods and to distinguish them from other similar goods. A service mark is the same thing - except used for services rather than goods. The name and symbols for auto manufacturers are a good example. When you see the BMW blue and white field on a car, you know it was manufactured by Bavarian Motor Works, and not made by GM (thank goodness). Trademarks are used to prevent others from selling similar goods/services under the same or confusingly similar marks, but not from selling those same good/services under a clearly different mark.

So, for example, if you're planning a clothing line using a number of original designs, the name and logo of your clothing line is going to be a trademark and the designs themselves enjoy copyright protection.

2. Name searching and registration are not difficult and can be accomplished online - and are cheaper than you think.

As before, there are many willing to strip you of your money if you don't know how to perform a search of the US Patent and Trademark Office database to ensure your proposed trademark isn't already registered to somebody else for the same goods/services. For example, LegalZoom will charge you $199.00 for the search, which you can accomplish on your own, online in about 30 seconds. In fairness to LegalZoom, though, they do bind the results and send you a canned essay on how to interpret the results.

The USPTO maintains a free database of all of all trademark & service mark filings, and offers free, unlimited searching of that database online (the Trademark Electronic Search System - TESS) located at http://tess2.uspto.gov/bin/gate.exe?f=tess&state=4009:v6vk4q.1.1

You can use their Basic Search function, type in your proposed mark, and literally get results instantaneously. So, keep your 200 bucks, and save yourself the 5-7 business days LegalZoom will make you wait just to print your results out and staple them together.

Filing, while a little more difficult and not free, can also be accomplished online, via the TEAS or Trademark Electronic Application System (http://www.uspto.gov/teas/index.html). What's more, filing online will afford you an immediate serial number and an email copy of your application - whereas if you file by mail, it will take 2-3 weeks just to get a filing receipt and even longer to get a serial number. You can use the serial number of your application to track its progress online. The online application is a little more challenging than the name search - and may take you a couple of hours, but there is a free tutorial at the site which walks you through step-by-step (http://www.uspto.gov/teas/eTEAStutorial.htm). The fee for the filing is either $275 or $325 based on the nature of your filing and application. Many sites will gladly charge you $150-$250 on top of the filing fee to fill out the web form for you - and will require you to give them most of the same information - so how much time are you really saving?

3. You do not need a monitoring service, and not everything that looks official is official.

As you may have guessed, the USPTO records are public records - which is good because it means you have free access, but also bad because everyone else has access, too. So as soon as you file your mark for registration, everyone knows it. So who cares? Well, there are a lot of businesses who target new filers with ancillary services that they don't really need, and do so with very official looking papers.

A related note from the USPTO:

You may receive unsolicited communications from companies requesting fees for trademark related services, such as monitoring and document filing. Although solicitations from these companies frequently display customer-specific information, including USPTO serial number or registration number and owner name, companies who offer these services are not affiliated or associated with the USPTO or any other federal agency. The USPTO does not provide trademark monitoring or any similar services.

Such companies typically charge a service fee in addition to applicable USPTO fees. In many instances, applicants and registrants have mistakenly believed that the USPTO has issued these communications or that these companies are affiliated with the USPTO. Complaints about such companies or communications may be made to the Federal Trade Commission, at http://www.ftccomplaintassistant.gov/.

You can file documents electronically directly with the USPTO using forms available through the Trademark Electronic Application System (TEAS). Only applicable fees required by law, and no service fees, are charged. You can monitor status directly at no cost through Trademark Application Registration Retrieval (TARR). For general information on filing and maintenance requirements for trademark applications and registrations, including required fees, please consult the USPTO website.

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The marketplace has gotten a lot more entrepreneurial over the past year, and there are small businesses starting up everywhere. Now, more than ever, the protections offered by a small investment in registered trademark and copyright now can save you big later. Unfortunately, this reality can also cost you far too much up front, if you're not properly informed. The information above is a great place to start, but asking a few questions of an attorney, to find out whether or not it makes sense for you to use them, shouldn't cost you anything, and is the best thing to do if you're wondering about trademark.