3 Things Every Business Should Talk to Their Lawyer About

An Interview with Josh Green from Green Legal Group

Transcript

Overview

Josh Green has been offering his legal services for the last ten years. He has seen a lot when it comes to business. In this episode, Josh talks about three of the most common issues he comes across with business owners. There is a lot that goes into starting a business. With the proper planning, many issues can be mitigated long before they become potential problems.

Michael Sayre

This is In Your Business with Michael Sayre, a production of CUI Wealth Management. In this episode, we interviewed Josh Green with Green Legal Group. He went over three items he believes are essential for every business owner to consider. Josh, go ahead and introduce yourself. 

Josh Green

Josh Green. I started the law firm Green Legal Group. I started in 2013. It's been the greatest decision I ever made, to be totally honest. We do a lot of things, but I primarily focus on small businesses and related issues. Really anything from starting a business to closing it down and everything in between. Just some background about me. I did my undergrad at BYU and got a degree in English. I went to Gonzaga and got a degree in law.

Michael Sayre

So, what drove you to start in law?

Josh Green

While still getting my undergraduate degree, I loved reading, writing, and persuasive writing. But as a career path, I needed to find a way to support myself and my family, so I started taking classes. There was a development class I took, and they go through tests and different ways of determining your strengths. I settled on law. I realized the things I love have to do with business, entrepreneurship, and intellectual property. Making business and helping businesses thrive. I am focused on helping others realize whatever dream they're having. That is the exciting thing: having someone come and tell me about their business and how excited they are, whether it is a food truck, software, or service-based. It's interesting because I may not be passionate about these things, but I'm glad others are. All these different, diverse people doing diverse types of businesses are so inspiring. It is the American dream unfolding in front of me.

Michael Sayre

That is awesome. So, what would you say drives you? What values get you up in the morning and get you excited?

Josh Green

Yeah. So, there are two things—my family. Like many people, my family is the main reason I went out and into business for myself, right? Because if you know many attorneys, most attorneys that work for big firms, they work long hours and burn themselves out, in my opinion. And so, in starting my own business as an attorney. Legal service is [a] business I realized I could do it differently. I could create an environment for those people who don't want to do the 90-hour weeks. They want to work 60, maybe you know, which is probably my average workweek and work hard. But go home and enjoy a quality of life. The life-work balance is really important for me.  

But the other thing is to create an environment where other people can come into my business, and, whether it's a client or an employee, they could do the same thing for themselves. And so for my employees, I give them the same type of options I've created for myself, so they can make it into whatever they want. Another thing that brings me to the office is ensuring those people are cared for. I mean, I believe the way that I could make the world a better place is very local. I'm not going to have any influence on the whole United States or even the whole state of Utah until I can make a difference in my community and here at my workplace.  

If I could make a difference in the eight people that work for me and make a difference in their lives, and then they pay it forward in the lives of my clients and help them get their business off the ground, they can then, In turn, do that for their employees and teaching them the same things that I've learned over the years over the last ten years of doing this. How best to run businesses, what things work, what things do not work. And it's things that I use in my own business. Things that I have seen others do in their businesses. I believe that business can be done correctly and, when run right, make a difference in people's lives and the community.

Michael Sayre

Thanks for sharing that. What are some of the main things businesses need to know and understand when they go into business?

Josh Green

There are three main things when a new person comes into my office: we touch on three main points, usually in the beginning. Most of my clients, business clients, the new ones that come to me. They come for my free audit. I tell people, "Hey, you can come in. I'll go through your entire business, and I'll just audit everything. And I will say, "Here are some things that I would change or the use of things that you should be doing."  

When they come in, I talk about three things. The three things are the way you structure business, especially if you have partners, making sure that contracts govern your relationships, and

So, we will talk about number one. I can't tell you how many times I've had a person come in, and it's two years into this business agreement that they've got with some other person that's not in writing, and they're trying to figure out how to get out. And there is a problem now, but there's nothing to protect them. There is nothing that governs the relationship. Nothing even tells a court or another third party what the ownership interest is. I would say sometimes it is people who are doing business with family. They think, "Oh, it's my brother. It's my dad," or, "It's my cousin. Someone I know and like, and we'll never have a business disagreement." [It] doesn't usually work out that way on the back end, right? So, you know, for whatever reason. Obviously, there are some people who could be in business with their family, or they could be in business and never have a problem.

Michael Sayre

I have talked to many people in handshake agreements and have yet to get anything in writing.

Josh Green

Well, for sure. The thing about Utah that is unique is there's a lot of good, trusting people here. What I honestly think happens is when problems arise. If the agreement is not in writing, it's human nature to have selective memory. We tend to remember the things that benefit us. We tend to forget the things that don't. When you're in a situation where now the business is struggling, and we agreed to do this together, and now I need you, business partner, to come and put in some money that you don't have. Now, it becomes a hard thing, you know, or I took out this loan so that we could start this business. But now this business is not doing so well, "I need your help paying the payment." Well, that's not what we agreed."But we did."  

I don't actually think that it's because people are inherently dishonest that you need contracts that govern a partnership arrangement. People just over time forget, and they have selective memory about what the agreement actually was. So, when structuring your business, especially if you have a partner, get an operating or business agreement together. If you don't know the person, it's even more important. If you do know the person and it's your best friend or your family, I would say it's even more important than if it's just someone you don't know. And the reason for that is it bleeds into your personal life.  

You have a partner that you don't really know that well, and it was a partnership of convenience if that business relationship just sours. You don't have to see that person ever again if you don't want to. But it's really hard to do that. It is hard to do that with your brother. If you don't want to blow up everything else in your life, just get it in writing, get an agreement together, and it's really not that expensive. I typically don't advise people to just go online and grab something online that they can have. There are things in there that sometimes don't apply to your business. Because most people don't have a background in the law, they'll go and agree to something that they didn't understand what it meant. But it was written into this agreement that they just pulled off the Internet. Now, that's what you're bound by.  

Get what you want in the agreement, put it in bullet points, and you could bring it to someone like me. You can have a partnership agreement that will govern that relationship moving forward so that if there is a dispute, you say, "OK, what does the agreement say? How do we figure this out?" In addition to looking at what you want that agreement to say, I'll go back, and I'll say, "What did you think about this? Did you think about that?" And I can help you put together an agreement that's going to protect both sides. It can doom your business from the beginning if you don't get it in place. Because once your business is running, it's hard to go back and now fill in the gaps with an agreement, people, especially if a dispute is already arisen  

The second thing I alluded to was just having a contract govern your relationships. A lot of people, like you, said we live in the handshake world. A lot of people believe, "Hey, my word is my bond. That's how I do business." And there's nothing wrong with that. Like I said, most people here in Utah, especially, have a lot of integrity. They wanted to be right; they tried to do right every day. They are very honest, but we have a short memory sometimes as people, and I think that's a human nature thing. But I think what contracts do is keep people honest. Anytime you are going into a relationship, you need to be thinking about, "How is this going to affect the rest of my business?"  

I will just give you a quick example that will seem innocuous at first, but the implications are huge, and that relates to my third point, which is intellectual property. I had a client who came to me a few years ago, and they said, "We're just trying to get things organized," so I started doing the audit. I just audited everything. And I said, "Who is this person?", "Oh, it is our web developer. They did do all our software and web development stuff." I said, "OK, are they an employee or are they..." "No. They have their own business, but he's been with us since the beginning." "Oh, where's the contract that governs that relationship? I mean, you know, it started a long time ago. He's just kind of always been around. There is no contract." And I said, "What exactly is he doing for you?" And what we came to realize is that he had done all of this work for them, which was the backbone of their software product. And according to current copyright law, pretty much was a 50/50 owner of all their product.  

The way that you protect yourself in that situation, when you're hiring an outside party to come in and do your work for you, is to have them sign a contract. At the very least, that says this is a work for hire so that anything that you produce for us belongs to us. Well, they never did that. And so we ended up having to spend a lot of money trying to get him to agree to basically assign over all the copyrights so that they could be the sole owner of their tech. Luckily, in that situation, I was able to negotiate some kind of arrangement. It could have gone a lot differently if he had been maybe a little bit savvier or a little bit more dishonest or, thinking to himself, "Hey, I've been here for a long time. I deserve more. I want more." And there's still some wiggle room there it is, right that lawyers are good at parsing words, and making them try to meet means something else.  

At the heart of it, the heart of the agreement should still be found in your contract. People always ask me, "Well, when should I be doing a contract? When is it overkill?" And I say, "Look, any time you have a situation where you're not going to be able to function or your business is going to be severely impacted. If that person does not keep their obligations, then you probably need a contract." Let me give a couple of quick examples, and then we could move to the third point.  

If you have a vendor agreement and this vendor is supposed to supply 500 units a week or whatever so that you can keep up your current demand for your customers well, if they stop producing well, then you have to scramble to find another vendor. It causes delays. It makes customers angry. It's going to cause a lot of headaches and potentially thousands or more dollars. Suppose there are delays in production. That is when you probably need a contract. You also need to talk about risk in that situation. Who bears the risk of loss once they ship the product? Who is responsible if that shipment gets destroyed or lost? Is it your responsibility to pay on delivery, or is it from the time that they ship? There are lots of things in those types of arrangements that can really impact your business. You need to play that out, and you need to have a contract that governs that.

Conversely, a customer transaction, you know, someone comes in, and they are spending 20 bucks. Is it worth having a contract for the $20 transaction? Probably not, unless, like you, I know all these trampoline parks are shut down right now. But all the trampoline parts, what is the first thing you do when you go into this trampoline park? You sign a waiver. You sign an agreement saying, If you don't get if you get hurt and it's not due to their gross negligence, you know their product is faulty or something. But you fall, and you break your arm; you are acknowledging it's a dangerous activity and that that could happen, and so you can't sue them. Even though people tried, and then some of them were successful. But generally, that is what the waiver is for to say you're engaging in an inherently dangerous activity. It's because the resulting liability that could come from that activity is too high. And that's what I do with clients. I'll sit down, and I'll say, "OK, well, do you need a contract for this?" Well, maybe you do, but let's let's analyze it. Let's see what you are out for if they don't keep their obligations, or is there a liability reason why we need a contract? If not, then you probably don't need one. That's what I do in my audit.

Michael Sayre

Well, there's that saying, "You know what you know, and you know what you don't know, but you don't know that you don't know what you don't know." And so sometimes it's a good thing to have another professional just take another set of eyes and take a look at things, and experience can mean a lot.

Josh Green

There is a huge benefit to someone who has worked with businesses. They can open your eyes to a lot of different issues that, like you said, they are not even thinking about right now. They are not even thinking about it, right? My client, in the example before, was with the contractor who did all that software work for them. They have been in business for over 20 years. And this guy had been with them for 15 of that 20 years, and so, you know, they were not new to the business. But once again, they just had no idea that that is what the laws were, and that's how the law plays out. There were things that we could have done, expensive things that maybe would have still protected them. But luckily, as I said, we were able to just settle out just to take care of that. But, I mean, who wants a big legal battle? Who wants a lawsuit? That's what you're avoiding. The contract is to avoid expensive lawsuits somewhere down the road.

Michael Sayre

Yeah, that makes sense.

Josh Green

Yeah, so on, and then I just know we're probably limited on time. So, let me just briefly touch on the third saying, Intellectual property. One of the huge mistakes I see most business owners ignore is their intellectual property or doing it in a way that doesn't really give them a lot of protection.  

Intellectual property is kind of four main things, maybe a there, but really four main things that the first thing is patents. Everybody is familiar with patents. Apple probably has 1,000 patents pending right now as we speak. Trademarks are a common thing that most people know about. They are like names or logos that you use to define your business, your products, your goods, and your services. And then copyrights, right? Those are the big three. Copyrights are pretty much artistic works, things that you render or create in a tangible medium. A lot of times, we associate it with movies. That's probably the biggest association most people have with copyright. But it could be artwork, and it can also be text that you put on your website. It's pictures you take and advertisements that you create or have someone create on your behalf. The fourth thing that I talked about touching along with my clients is trade secrets. Those are things that don't really fit into those categories or are not protected by those kinds of big three the-: patents, trademarks, and copyrights. But you still want to keep a secret. You do not want people to know. And so, you know. Let me just kind of touch on those.  

Patents are important because there's a very short timeline from the time that you disclose it to when you can actually get patent protection. If it goes beyond a year, typically, you cannot get patent protection for the underlying inventions. Patents. Typically, we associate, like I said, with devices and the right electronics. But they could be medical. [You can get] pharmaceutical patents or design patents. It's an emerging area right now. The design of your product is something that can be protected. It becomes important that you move forward with getting those protected as soon as possible, even before you release the product. I mean, this is one of you if you're in product development; if you manufacture something, you're building something that's new and unique, and most of this is ours, right? Most new businesses, especially, are trying to solve a problem that's out there in the marketplace, right? And if you're solving it with a product, you may be able to get a patent on that, especially if you're doing something different from what everybody else is doing.  

The other thing you need to be worrying about is whether you're violating somebody's patent. You want to make sure that what you're doing is not violating or infringing somebody else's pants. Talking to somebody about your intellectual property, especially in patent, is important because you want to make sure that you get the protection if you can. At the very least, you're hopefully not violating somebody else's invention.

Trademarks are a little bit different. They are inherent in certain business activities. Suppose someone comes up with a name for a business, and in doing that business. In that case, they start selling their products or offering their services, and over time, people come to associate that name or logo or, you know, slogan or whatever it is with your business. As soon as that starts happening, you've established some pretty strong trademark rights.  

The problem that I see in trademarks is that some of the highlights are some people choose really generic or descriptive names for their business. And so, for example, We Fix It Plumbing, right? I mean, that would be something that would probably not fly. People come, and they say, "Look, I just want people to know what I'm doing," and I always tell them, "Look, come up with a unique name, and then put the generic description of what you do or what you sell underneath it." The other thing with trademarks that often does happen is being able to go in and register them. That gives you certain rights and gives you a lot more protection. You still have those protections, even if you don't register them. But there are some advantages to registering.   

I go through that with my clients while it's so, you know, having a plan with regards to intellectual property and securing those rights that formerly it is securing them, meaning go get registrations. What people don't realize is that it is an asset. I mean, if you have a bunch of trademarks, but nobody else can use them if they own the trademarks to a couple of different things, logo and maybe the name, and maybe have a slogan that you use, that's something you could put in a package to say. Well, in addition to getting this business that generates X amount of dollars in revenue every year, you also get all these trademarks. That's where something, and it's something that makes people feel good when they're purchasing a business. It's another asset that could be included in a visit.

Michael Sayre

I could imagine there may be an issue with, say, a business. It takes an idea and puts those protections on it where someone else maybe was there first but didn't put those protections in place,

Josh Green

Especially in trademarks. Patents, like I said, it's a little bit different. It's like a whole different scheme because of the time limits that are on it. But for trademarks, the main reason you want to register is to put people on notice. And whether they go look it up or not. If you put it on, if you put them on notice by registering it, it doesn't really matter. It doesn't really matter that they didn't look. I mean, you can pretty much shut it down. But if you don't, and let's say you're a local business now, that eventually, I mean, I think it's the hope of every small business to grow into a big business, right?  

You can have a situation where they didn't know because you didn't register and you were so small that you didn't have a following or any kind of presence, even in the same state. But you could have somebody who's doing the state business under the same name in, let's say, Utah County and another person is doing it in Davis County. And they haven't known about each other for years because neither is registered. And suddenly, they're crossing paths now because one of the businesses is growing into their market. And they're saying, "Hey, you can't do that. You can't come into my market." How would they know? Then it becomes well, is it fair if there was no presence in this area? Because it's really about who's using it, it's to avoid confusion among consumers, right?  

The point of trademarks is to avoid consumer confusion. But if you don't have that influence fast enough, it's possible that someone could create a pocket within a community where they associate that name with another person's business. And if that's happened and it happened prior or even at the same time, it gets messy. And so now you're involved in a big battle and use now spent, I don't know, maybe not a $1,000,000, but maybe you spent $10k or $20k or $30k or $100,000 branding your business as you've grown. Do you want to rename your business now at this point?  

And then, finally, trade secrets? Trade secrets are probably the most important of these. I mean, we have a federal trade secrets Act that's been written into law. The big thing with trade secrets is you go in, and you have things that you don't want people to know in the general public. You don't want people to know your customer list. But your employees have access to that every day. What's to prevent them from going and just taking that list and sharing it with a competitor or leaving, taking this with them, and then stealing your business? It happens all the time. There are certain ways that you do things that may be unique to your market, that aren't protectable by a patent, trademark, or copyright, but still very, very valuable. Business processes or manufacturing processes or business methods, anything that gives you a leg up that nobody else is doing.  

I had a person come and say that I have a unique way of doing eyebrow tattoos. They fill in your eyebrows with a tattoo, come to me saying, "I have this unique way of doing this, so it doesn't hurt as bad," or "It's more comfortable for them, for the customer, and it's blown up my business because people come because it's more comfortable for them to be there. How do I protect that?" One, you don't tell anybody about it. And two, you put all the people who do work for you and used the process under contract, right? There are lots of things that you could do.  

As I said, when a customer comes to me when a client comes to me and is looking for either a free audit or is just looking for advice about their business, I usually touch on three. How is the structure? And do they have partners? And if they have partners, let's make sure that whatever your agreement is, whatever your arrangement, your business arrangements with this part is written down and formalized and signed by both parties so that we know going into this new business venture, what is it that you're going to have to do? And what are the obligations of both parties so that there's no disputing it later? There's no ambiguity. Then, taking that idea of contracts further, apply it to every business relationship you have with your business.  

Whether that's with a vendor, with a customer, whether that's with a service provider, a contractor, an employee, or anything. Looking at that and saying, "Do I need a contract for this relationship?" I would say yes, a lot of times. The answer to that is yes, Sometimes no. We talked about if the liability isn't too high, or if the cost of them not fulfilling their obligations isn't too high, then maybe you don't need one. But I would say probably 75% of the time, the answer to that is probably.

Then, the third thing I go over with them is what kind of intellectual property you have and how we protect it. And let's create a plan for overtime because I realize, especially when you're a startup. Many people try to bootstrap a lot of people, just like costs are just... what we could spend money on is limited. Let's put a plan [in place]. Even if we just say, "Hey, let's do a trademark this quarter, let's look and see if you have any patent stuff, let's actually start with happens because that's got a time frame on it, right?" If there are patents involved, let's get a patent attorney involved. And there are some things we can do to slow the process down a little bit and slow the costs from being incurred a little bit. So you can kind of generate some income first. But there are certain things you must do within a certain time frame. And if you don't, you lose those rights forever. So, let's look at that. Let's come up with a plan to build your intellectual property portfolio that could then benefit you as you create assets for your business.  

Josh Green

And then the final thing is, when we look at all those things we look at, those of the total give you the peace of mind to know. Hey, these are all things that you could do to protect you. It's all about protecting your business. You're going to spend a lot of time, a lot of money, a lot of sweat and tears and blood and other things. It's true, the business becomes your baby, right? It becomes this thing that becomes personal to you, spending the time to look at all those things and protect [them]. It's so crucial because it's so sad to see someone come into my office. And now there they haven't done these things, and we're trying to get them out of a mess. And they're spending oodles and oodles of money just to get themselves out of this mess. And just want the terror of that. This business may fail now because of a mistake, or this business may slip through their fingers and become something that they never wanted it to become. So once again, I'm very passionate about business, you know. You know, some of these things can be done over time. Some of these things need to be done at the outset. We go through all of that, but, um, really, you know, hopefully, this has been helpful.

Michael Sayre

Josh, thanks again for your time. I appreciate it. This is excellent information. Hopefully, we can have you on this podcast again sometime soon.

Josh Green

Yeah, thank you very much. I really appreciate the opportunity. And, like I said, anything I can do to help business owners get a leg up. I think it's very important.