In this episode of the Main Street Business Podcast, hosts Mark J Kohler and Mat Sorensen delve into 3 potential legal liabilities for individuals and small business owners. They offer valuable insights into the process of reducing liability through effective planning and documentation.
Here's what you can anticipate:
This episode is a must-listen for anyone operating a small business or engaging in any form of agreement, seeking expert advice on avoiding lawsuits, and looking to maximize their protection against potential legal issues.
In this episode of the Main Street Business Podcast, hosts Mark J Kohler and Mat Sorensen delve into 3 potential legal liabilities for individuals and small business owners. They offer valuable insights into the process of reducing liability through effective planning and documentation.
Here's what you can anticipate:
This episode is a must-listen for anyone operating a small business or engaging in any form of agreement, seeking expert advice on avoiding lawsuits, and looking to maximize their protection against potential legal issues.
Welcome, everybody, to another episode of the Main Street Business podcast. Excited to be here with you. My name is Mark Kohler. I'm here with the illustrious Matt Sorensen talking legal today. We are not in the pigeonhole niche of just taxes. We're lawyers too, for crying out loud. We have to remind people that all the time.
Mark J Kohler:Yeah, tax lawyers. But Mark and I have done a lot of legal work in lots of different areas, from real estate, small business, I mean, helping clients buy and sell companies. People do some lawsuits, although it's not our forte, it's not what we do. But we want to hit today the three most common ways you may get sued in America. And I don't care whether you're a business owner, self employed, just person walking around in great old USA. Let's face it, we got a litigious society. And there are three common ways people get sued. We're going to go over three examples along with some tips on what to do if you're in one of those scenarios, how to kind of reduce your liability or protect yourself from getting sued in the first place.
Mat Sorensen:Yeah. And for those listening, if this is a new podcast for you and you're looking at this topic, please know our topics range from building your business and growing your business and tax planning and wealth building. We're here for the main street american and so many main street small town folks, middle income Americans can't afford a tax lawyer that are kind offered in the big city arena. We've really tried to tailor our practice around the country to taking calls and Zoom meetings for clients all over the country with tax lawyers that are affordable and make sense for the average business owner. So this is a good one because we get those calls, clients calling up going, I might get in a suit, I might need to sue someone. Wow. But there's a lot. But the three most common, should I throw down the three most common?
Mark J Kohler:Throw them out.
Mat Sorensen:All right, so we've got the three most common in different lists around the country or resources. We'll put these in different orders. We might not tackle them in this particular order, but we've got personal injury claims. Obviously, you've seen the billboards on the side of the road. Did you get in an accident? Did someone get in an accident that you caused or was caused upon you? It could be out and about recreating traveling. It could be any sort of personal injury. Scenario. Number two. Now, by the way, we're not talking about employment getting hurt on the job. That's not in the top three common, but not as common as out just being active. Number two are contract disputes. Just shaking hands, doing a deal, whether it's in your business, or maybe you just have someone coming by your house to work on your home or some sort of idea that you're embarking on. We got some good examples there. And then number three, property disputes. Someone gets hurt on your property, your home, or a rental property, or you get hurt at someone's party at a place. But whenever you're somewhere and at someone's home or even a rental property, that's a property dispute in the greater sense, because it's related to what happened on that property.
Mark J Kohler:And we got three awesome examples out there. We've brought in some celebrity stories to know entertain us here, and they are some actual cases that have happened. So we're going to be talking about Demi Moore, Gwyneth Paltrow, and flow Ryder. Okay. Those three people had one of these three lawsuits, and there's lots more celebrities. We're like, man, there's so many to choose from. But I think these are really helpful to illustrate some things that happen out in the real world and also what you can do to help protect yourself if you're in one of these situations.
Mat Sorensen:Well, I'll give you a dealer's choice which one you want to hit first.
Mark J Kohler:I want to hit Demi more.
Mat Sorensen:Okay.
Mark J Kohler:Demi. Demi. Sound right? Demi, I think Demi.
Mat Sorensen:Yeah, Demi.
Mark J Kohler:Demi's like, Demi.
Mat Sorensen:I just feel so bad for Bruce right now. Bruce Willis and his dementia and hanging his head on, acting so sad. He was, man, a guy from the 80s till now. I would just loved his shows. He's part of my generation.
Mark J Kohler:Yeah, I did love diehard from everywhere. Yeah. American classic.
Mat Sorensen:Okay.
Mark J Kohler:But demi moore. Let's go over what happened in her scenario. This is in the category of something happened at your home. There's a liability that arose at your home. All right, so Demi Moore had an assistant, and this assistant would use her home a lot. She would sometimes stay there. And this assistant threw a party at Demi Moore's house. Now, Demi was not there at the time, but during this party, someone fell into the pool, drowned, and died. Now, of course, what happens after this? I mean, it's a very sad story for that person, that family. And who do they sue? Demi Moore's assistant.
Mat Sorensen:She's loaded. She's loaded. They had to go after her.
Mark J Kohler:No, they sue the person who owned the property, who's responsible for the property, to make sure it's safe for any of her guests or anyone she allowed to be an agent of I'm giving out some facts that are important so you understand the legal issues, such as her assistant to invite others. So of course they sued Demi Moore. Okay. All right. Now the lawsuit happens. They sue demi Moore. Well, the first issue here in the case is, well, demi Moore wasn't even there. How can she be liable? Well, her assistant was an agent for Demi Moore and allowed these people onto the property. It's not like they were trespassing or anything like that, and they get hurt. They were allowed to enter the property and were invited guests of demimore through her assistant that was an agent for her and had ability to do that on the property. Now this is something really unique to swimming pools. And there's lots of different liability here. This is why there's millions of lawyers in the US, unfortunately, or hundreds of thousands. I don't know. There's a lot is pools in a lot of states have what's called strict liability. If something happens in a pool at your home, you can be strictly liable.
Mat Sorensen:For that no matter what.
Mark J Kohler:If you didn't follow certain laws and precautions that are typically applicable in your city or state. For example, did you have a fence around the pool? Was the pool properly fenced?
Mat Sorensen:Yeah.
Mark J Kohler:You rental property owners right now are like, oh, man, I got a pool at one of my rentals. And I remember when this case came out, my brain went, uhoh, I've got some rental properties that have pools in them. Do I have those fenced property? Am I following the state rules? And then there's also some issues with insurance for you landlords, for example, or any of you that have a home. Does your insurance know that you have a pool on the property? Are you protected if something happens on the property with the pool? If it's not on your policy, you ain't getting protected. You need to make sure your insurance.
Mat Sorensen:Agent knew that and we could do a whole show, literally, on swimming pool liability. Probably do a three part series because it is so common. Regrettably, another big one. Trampolines, man, those are lawsuits waiting to happen. I'll say that.
Mark J Kohler:Just a liability making machine.
Mat Sorensen:They're even more than pools because with a pool, it's either they drowned, all right, but with a trampoline, we got like 20 other injuries that can occur.
Mark J Kohler:You think all the neighbor kids that come over and do that? What's funny on that is serious is people will be, I remember this as a kid. Some family got a trampoline in their backyard and the parents wouldn't let you come jump on the tramp. Unless your parents signed a waiver, like a liability waiver. I'm like, whose parents are these? Sign a waiver. But I can see what their concern was. They decided that, well, we're going to just go for it and do the tramp. But anybody else's kids over here, you got to sign a waiver. And so now that could sometimes help, actually. I mean, there's legitimacy to waivers and that you can reduce your liability by having people sign a waiver. For example, let's say when the party happened, Demi morn made everybody sign a waiver that entered on our property that said, you agree to accept the risks of the property and then you could be absolved to the liability if something happened on it because they agreed to the risks on the property. For any of you landlords that have a property with a swimming pool, you should say that in the lease, the property has a swimming pool. You agree as a tenant that you will only have your tenants, your family, or invited guests that know how to swim, that you will monitor the pool, that you will take the necessary precautions to keep it safe. And now you're pushing the liability back on that tenant to say, no, you're the one here that's got to make sure that it's safe for your kids, and guests that may enter the property. And if you're silent on it, guess who's liable?
Mat Sorensen:You. We could, again, go through a number of other stories that are out there in the media, but let's talk about takeaways. The big one that Matt just said right out of the gate is with your property. It could be a ranch, a cabin, raw land. It could be a rental property, short term rental, long term rental, or your own home. You have to make sure if you have any dangerous situations that could occur on your property. It could be a ditch, it could be a canal, it could be, again, a trampoline, a pool, a swing. One of those metal slides that are about 14, look like aluminum. Oh, man, those are death traps. I love those. Or that swingy thing that you hold on for dear life, that's metal and there's a trench around it. Where are all these good 80s toys now? They're all protected. But anyway, any of those things on your property, rental or home or vacation property, you've got to make sure there's a fence or some sort of secure perimeter. The average child, teenager, or just wanderer cannot trespass and get hurt. And it could be a pond, it could be all sorts of things. So you got to have proper signage or hopefully even security around the property. The second thing I would say is just the waiver possibility. If can you have people, obviously, when they rent short term, long term midterm, you're going to have it in the lease agreements. It's hard when you're having a party. You have a swimming pool party. You have kids over. Okay, everybody sign a liability at the door. Oh, my gosh.
Mark J Kohler:But if there was a pool at the party, presumably they should have been monitoring that better, let's be honest. And I think that's why she was on the hook and had to pay out on this, is. It's like, how did someone die in the pool? Was no one being responsible to monitor that? And again, if you don't push the responsibility to the other party, then it's going to be on you at your home. And this is where it's whether you own a business, your home, your rental, you have responsibility and liability for things that happen on that property. Now, if someone just slips and falls and there's nothing you could have done about it, or they trip on their own dang feet, that's their fault. You're not liable. But if they can find any responsibility, and this is where negligence comes in, this is the legal claim, where you should have been, where they can say, you should have done this, you should have had someone monitoring the pool. You should have had it covered. You should have had it fenced out to make sure it was safe for people. Because also, of course, what was happening at that party, in the facts that I didn't mention, they were drinking.
Mat Sorensen:Really?
Mark J Kohler:And you're serving drinks to people around a pool and no one's paying attention. Some guy gets drunk, falls in there and never gets out. It's like crazy sad. But that's the. So I think sometimes just your actions and being a little more responsible, maybe the right word, being a little more careful in the things happening at your property will reduce liability in the first place.
Mat Sorensen:Well, and I want to come back to the waiver option. Okay. So were living in Orange county about 510 years ago, when housewives of Orange county was the big craze. Now there's housewives of everywhere. Duluth, Minnesota. Anyway, so were in Orange county, and my daughters, who are twins, got invited to a party in the area, la. And one of the moms was on the show, but to go to the party, they had to all sign a waiver that they might be on video. Well, that was kind of shocking back then, but now it's even more common, though, when I go to events. And when I hold my events, attendees have to sign a waiver that they may be caught on camera. It could be social media. It could be a video of the event. That's a great opportunity to sneak in something like this. So if you're going to have a party, you might tell all the kids that are coming. There will be photos taken. There will be posts on social media. If you're not comfortable with that, don't come. And then at the door, you're going to sign a waiver that I could be. And then, by the way, there's another bullet point. There's a swimming pool, there's a this, there's this. All of a sudden you can sneak in some of these other risks that could be at a party.
Mark J Kohler:All those sneaky lawyers.
Mat Sorensen:Now I want to throw this out, too. Some of you are like, well, I don't have a pool. Are your kids throwing a party this weekend? Okay, let's get serious. Someone gets raped, someone gets hurt, someone gets fall, someone falls. How many stories do we hear of kids showing up with a gun? Drugs?
Mark J Kohler:These cases are in every courthouse right now across America. I'm just saying it sounds a little. Oh, my gosh. What are you talking about? This is out there every.
Mat Sorensen:Just now. So does that mean, oh, we never throw a party or whatever? No, you just think through it. And one of the thoughts, and I love that you said, is that, was there someone watching? This is what you parents, more and more should be doing. If they tell their team, if you want to throw a party, let's throw a party. But don't wait till I leave town. You want to throw a party? I'll have a security person here. We'll have some parameters. We'll stay out of the way or whatever, but I want security. I want waiver signed. Throw a party now. I don't know. I'm just saying my teeters are like.
Mark J Kohler:I just think there's levels of this, of course, of like, do you need security and waiver sign? Maybe you should just be present and paying attention and prepare the home when there's a bunch of people coming over, particularly you have a dangerous area where someone could get hurt or drown in a swimming pool. And then there's like, no, we're going to be out and all. Let the kids just have at her. Let my assistant have her party and go. So there's obviously different layers to this, and I don't want to over lawyer this, but we want to say this is one of the three most common ways you will be sued. Something happens at your house, and guess who's responsible? The owner of the property.
Mat Sorensen:Now, I can't remember if it was Goldfinger or Moonraker, but I really felt concerned for the homeowner there when he had that pool of sharks right there in his front. Mean, anybody could have fallen.
Mark J Kohler:That is right there into that. That's a lawsuit waiting to happen.
Mat Sorensen:It was. And, you know, luckily, James, he was attuned to the careful. But I mean, I wonder if people had to sign a waiver before they came in. I have sharks right by the couch. If you slip off the couch and fallen, it could be over for you. Okay. All right. So again, we could keep talking about this, but be aware, notice that lawsuits could happen at any time at your home, at your rental properties. What are you doing to protect that? I'd like to secure perimeter waivers in contracts possible, again, supervision. And even if it's just you're paying a security guy, some big football player, $25 an hour to float around and have a telephone cord out of his ear to nowhere, just provide some intimidation. Be careful with your parties. Okay, number two, can we bring up, we're going to save with contracts. Contracts are so common for all of our business owner listeners. We're going to save that for the third one. Let's go to personal injury claims. Gwyneth Paltrow, many of you thought were going to talk car accident. Now we're talking ski resort. Okay, I'll give the facts real quick and I'll let you comment first. So, Gwyneth Paltrow, this is good. Five years or so. This took a while to get to court. Last year it was a court in downtown Park City, Utah. But Gwyneth Paltrow about five years ago was skiing at Deer Valley, one of the resorts in Park City. And were in Park City during the trial, and I wanted to go so bad. It was like you had to have credentials, press, get in. But anyway, I wanted to ski the run that she was on, that she got hurt. And then there's this other guy. And so they're skiing down this run and there's a collision and the guy breaks like three ribs, gets a concussion. So he says it was really bad, apparently, and Gwyneth gets scraped up, but they have this collision. Now we're going to talk about takeaways here in a minute. But it could be a car accident. It could be, again, out and about on bikes. It could be any sort of situation. You could be on a boat. Who knows what could be going on where an injury occurs. But this happened to be on the ski resort, and the lawsuit begins now. The big issue in this case was who has right away. And in skiing, it's kind of funny. The right of way is the person below you. Like, if you're up above, you got to watch out for what this crazy person in front of you might doing. Heaven forbid it's a snowboarder or a new skier. They're the worst. Like turn at any moment, the worst. But anyway, so was he up above her coming down the hill or was she above him? So then it started to come to witnesses statements looking at the injuries. How could that injury occur if they were above or below? He filed a suit for a million dollars that immediately was rejected. So then he came back with 300 grand and the court said, all right, and she countersued for one dollars and pay for my attorney fees. This guy just wanted his day of fame. He wanted to be in the limelight and maybe seek some big money. Gwyneth won the case. It was great.
Mark J Kohler:So I think there's risks even out know. You're like, oh, I'm out recreating. I'm doing the thing I love. And this is where you could have liability because there's other people out and about that could get. So now where those things typically happen, car accidents is going to be the most common. I think many of us have already always been in a car accident. I've been in car accidents. I've actually made claims for being in a car accident. I got to settle it for insurance companies. Back in the day, we helped some clients do that.
Mat Sorensen:Number two, golf carts.
Mark J Kohler:Golf carts?
Mat Sorensen:Yeah, airplanes. You're going down in planes.
Mark J Kohler:Those are a little less common.
Mat Sorensen:Okay.
Mark J Kohler:We did have an airplane case that went down and people died. Actually, we had one of those, too. But guys, this stuff happens out there in the world. We're just talking about this stuff. We don't mean to be too. Like, the world is coming to an end and you can't go get out of your house and do anything. But I think in that case, I think the important takeaway we want to talk about is what do you do when that happens? Like, okay, I was in an accident. I don't care if this is on the road or on boat, on a lake diamond at Deer Valley. Okay, on the lake. Whatever it is it's going to come down to. This is what it's going to come down to.
Mat Sorensen:Are you going to quote Tom Cruise?
Mark J Kohler:I'm going to quote Tom Cruise.
Mat Sorensen:I knew it. I knew you were going there. Okay.
Mark J Kohler:It's an important lesson. This is from a few good men. And Tom Cruise, there's a scene in the movie where the defendant he's representing is trying to tell him the facts. And Tom Cruise is like, I don't care what you say. He's like, it doesn't matter what the fuck happened. It only matters what I can prove. So you have to have evidence to go in to prove your case. So if something happens, don't just think, well, I'll just be able to get up on the stand and say, what happened. Well, you know what the other person's going to be saying something else happened and then the judge and jury is going to be, what do we believe here? You know what I mean? So how do you prove your case? What Tom Cruise would say is you're going to get witnesses, you're going to get statements, you're going to take pictures, you're going to take videos of what happened. That is how you're going to prove your case. That that is the evidence that you're going to go to court to actually prove your case.
Mat Sorensen:But what happens if you can't handle it? If you can't handle the truth?
Mark J Kohler:You want me on this wall? You need me on this wall.
Mat Sorensen:I love it. Okay, now let's go some takeaways here as we unpack this. Number one. Okay, we've got seven, six or seven here. Number one, always call the police if possible, a third party verification.
Mark J Kohler:What if you were at fault?
Mat Sorensen:Okay, you know what?
Mark J Kohler:Let's back up.
Mat Sorensen:I knew you were going to go there. Actually, I wanted to say this. Okay. When we go through this list of take pictures and videos and identify any witnesses ASAP, let's say you are the one at fault. You know what's going to happen? An attorney's going to get a hold of that and want to blow it out of proportion. So the reason why you're calling the police is to protect yourself from them claiming more than happened did happen. Meanwhile, if you're the victim, what's the other side going to do? They're going to downplay what happened. They're going to say, oh, that's not what happened. And so you want third party official, whether it's paramedics and you're calling for help. So number one is call police. And if it's medical, if there's an.
Mark J Kohler:Injury, that's a great point. No matter what side of the fault you're on is document and get evidence of what really happens. So that if you are at fault for something, I mean, you should have some responsibility there, but not more. And what a plaintiff's lawyer is going to try to do, make it, blow it way out of proportion to try and get more than it is really worth.
Mat Sorensen:Yeah. And some of you be like, I don't want to call the police. I don't want to be in trouble. You're already in trouble. Yeah. S actually could be your best friend, and there's so much here. So always call the police, seek medical attention. Obvious.
Mark J Kohler:Let me say this on seek medical attention. I don't know that's always obvious. And I remember, this is back in 2007, you guys remember the real estate market crashed. All of our business and tax and real estate work went down the tubes. I started doing some personal injury cases.
Mat Sorensen:Yeah, I love it.
Mark J Kohler:We even put a billboard up for it. It was a hard time. We're making money. We were adapting. We were shifting. We're doing what it took. And it was actually kind of fun, but wasn't our thing. So I remember people would come and they'd be like, I got in a car accident and be like, okay, did you go to the doctor? No. But you're hurt. Yeah, I'm hurt. Okay, so I'm going to go file a lawsuit in court and be like, they got hurt in an accident? And then what's the first response? It's like, oh, what happened at the doctor? Did you get ride in the ambulance? Did you go to the emergency room? What's it, did you even go to the damn chiropractor? You know what you like, do I have a receipt from Walgreens for some band Aids that weekend or something? Like maybe some baby aspirin? Like, did you do something? There's nothing. We have nothing to go prove. And I remember I went and talked to an experienced personal injury lawyer, and I'm like, what should I be doing in this scenario? And you know what he said? He said, you know what? Medical and documenting that is one of the most important things when you're in an accident, because typically your settlement, if you're not going to go to trial, typically your settlement is a factor of how much medical you have. Oh, you had 5000 in medical. We'll settle for three or five times that. Whatever. We'll give you 15 or 25 grand.
Mat Sorensen:Well, you know, that was number six. Keep receipts. But it's highly related to the records of being hurt. I love it. And I think it justifies another Tom Cruise quote. Let's go with a rainmaker.
Mark J Kohler:That was Matt Damon.
Mat Sorensen:We could go with the firm. I can pull out some firm. But no, this was in Jerry Maguire. And Kuba Gooding Jr. Was wanting Jerry to represent him and win in the case. And in this case, when you go to your attorney and go, I got hurt. He's like, where's your receipts? Would you go to the Doctor? And you want to say, help me help you? Yeah, help me help you. And Cuba gooding Jr. Is like, I am helping you, Jerry. Okay, so seek, get the police there, get medical attention. And number seven was seek medical attention for latent injuries. So things are going to happen later. You get hurt. You're documenting the chiropractic, therapy, the emotional distress, whatever. Number three, right out of the gate, take as many pictures and video as possible. Gwyneth Paltrow's husband was on the mountain with her. And there was video and photography taken, but not enough. It was so hard because no one envisions a lawsuit five years later when a little fender bender happens or this or that. But you never know in today's technology with your phones, it is so easy to just pull out the phone, start videoing, and we're talking, take video of pictures of cars around you, get their license plate, which is going to come to identifying any witnesses ASAP. Talk to people. What's your name and address and phone? I may need to call you. And those pictures are going to be absolutely critical again, no matter what the injury could be.
Mark J Kohler:Yeah. And I think even if you've been a witness and you've seen something happen where you can, like, I know what happened there, go to that scene and let them know, I know what happened. And here's my contact information. Not that anybody wants to be deposed or have to come in and testify, but it's kind of like this. We're living in this system and we're out there to help each other. I've seen that happen. And you see that in cases of people coming like, hey, I saw what happened. And giving a statement or giving contact information.
Mat Sorensen:Yeah. Okay, so police medical, take pictures and video. Number four, identify any witnesses as soon as possible. And number five, do an audio or a written summary yourself of what happened, down to the time, down to the exact sequences of everything happened as soon as possible. Because especially if you're one of the ones injured, your memory could be you're in shock. Who knows what your memory is going to be like a week later or two weeks later or two months later. And so it is so helpful for you to write down what you experienced minute by minute, as soon as possible, just pull out your phone, doing notes. I was going here, even if you're crying, whatever, record it as soon as possible. Or number six was keeping receipts of any expenses you incur. And number seven, continuing that medical attention and documenting it. So those are some. I'm sure the list could be longer, but those are some big ones, I think, that really help right out of the gate.
Mark J Kohler:All right, something's happened at your house. Maybe something happens while you're out and about, living in the world, driving, skiing, whatever it may be. And the third one that could happen is a way you might get sued is for a breach of contract. Or you might be on the side claiming someone else breached a contract and bringing the case, such as flowrider.
Mat Sorensen:Now, what I love about this most common lawsuit, what is ironic about this, is this is the one lawsuit that you see coming. All the others are like this act of God, some accident, whatever. The contract breach. There should be so many fewer. There should be so much fewer. How can you say that? Fewer contract cases in America. Because if everybody just did some decent planning on the front end of these contracts, there wouldn't be a dispute. Yes.
Mark J Kohler:Yeah.
Mat Sorensen:Now, people are going to breach. We get that. They're just, like, not going to follow through. But you know how many lawsuits are based on a host it, the quality of contracts.
Mark J Kohler:So this is one text message and email, not a contract, guys. All right, there's something called the statute of frauds that a lot of things, contracts over certain values or anything regarding real estate. It has to be in writing to be enforceable.
Mat Sorensen:Is there a statue of frauds or is it statute of fraud? I don't know which one it is.
Mark J Kohler:Jerry, it's not a statue of frauds. It's not a statue.
Mat Sorensen:Statue.
Mark J Kohler:Hey, Elaine, you're smart. Is it statue of fraud? All the quotes we're trying to rip out today. So flow Rida in 2014 and then again in 2016 and 2018, signed contracts for royalties and sheriffs and some stock options with the energy drink maker Celsius. And basically the premise was, hey, you, go promote our brand on all your social profiles, at your concerts, whatever it may be. Go promote Celsius. Be a Celsius drinker, and we will give you revenue from sales, and we will give you some stock ownership. They documented this. This was in contracts in writing. Flowrita did the work. And, well, seven or eight years later, Flowrida's like, I ain't getting paid. No one's been paying me. So he sued Celsius in 2021, went all the way through court. They went all the way to trial. He had to go all the way to a jury trial.
Mat Sorensen:Wow.
Mark J Kohler:And he won in trial, and I mean won over $50 million. I think it was 80 million or something like that he won. Now, the important takeaways from that case is the first and foremost is that it was in writing. He had this thing in writing, and he had them. He produced on his end. He did his part, and Celsius was forced. They were not going to volunteer to pay him. And I hate to say it, some companies out there are like that. They're going to try and get out of paying for things, even though they got the benefit of what you may have needed to do. But he had the contract, and the deal went and enforced it got the jury verdict in his favor. So that was takeaway. One is just have those agreements in writing. If you're going to spend your time, effort, or money to do something for another person in a business or investment arrangement, put it in frickin'writing so that you get your side of the deal. Yeah.
Mat Sorensen:And this first takeaway is so interesting because Flowrider is an example of what to do, not what not to do. We were debating some other types of contract cases in the media that were salacious, but what was interesting about this one is he did it right. And now I want to give another point just on this, on a practical level. I had two family members in the last month, literally in the last month, that were building their small business, and they're doing service work as a consultant in these two different, very different industries, but they're out there doing it. And they called me and said, hey, do you have a service agreement or a service contract? Which, first of all, I applauded them, and I kind of talked to them previously, make sure you have anything you do with people in writing. So I sent over drafts, and they spent a good two weeks. I was proud of both of them, like, thinking of every possible situation. When do they pay me? Do they do a deposit? How do I perform? When do I perform? When do I bill them? What happens if there's a problem outside of both of our control? Who pays for this? What venue? If there's a fight? In both instances, it was about a three page agreement. They both dumped it into docusign so they can send it to clients, they can sign it digitally, and they're good to go. But so many business owners don't go to that extent to have a good contract and make sure it's signed by both parties in advance.
Mark J Kohler:Yeah. And I think for any business owner or any real estate investor where you're a landlord, have your standard document done that outlines your standard terms. Don't feel like you'reinventing the will every time you got to do this dang thing. Have that set, and then you can modify that as you go and be quick and easy about the specific changes you might have. And I think that is, like, I put that on, like, a top ten to do list for any business owner or real estate investor is like, have your documents clear, concise, and protecting you in the situation so that you're getting what you need out of the deal. Because you know what? No one else is out there looking for you beside yourself. You got to rely on yourself here to make sure that this happens. And it's not that complicated. It's really not. And you know what I've even found sometimes, too, just in contracts, is sometimes I have people negotiate contracts in deals and then the deal doesn't happen. And you know what? I remember one client was, like, complaining because were negotiating this contract, and the guy was like, on the other side was like, well, no, I'm not doing that then. And the client I was representing, another dude, he was kind of like, man, what happened? He was kind of upset. And I'm like, you know what? I just saved you from doing a bunch of work for free because at the end of the day, this guy had some other expectation of what you were doing and how you're going to get paid. And it's a good exercise to get on the same page, literally, whether you put it in a contract or not. But just like, definitely put in a contract. Just like talking through that and the exercise of going through that, seeing it in writing, it's like, oh, we don't agree. We don't agree because I can freaking see it in writing.
Mat Sorensen:Yeah, this is such an important experience, too, in your business deals because you really weed the wheat from the tears. It's kind of a biblical concept of really sifting through it and finding out if this is a person you want to work with. Because when you start to talk in terms, problems that could occur, expectations not fulfilled, what happens? All of a sudden, you see the true colors of the person you're going to be working with. And yeah, you might spend two or three legal hours or more of your time, but the contract process shouldn't be. So many people think, okay, it's time to do the contract. No, the contract is part of your due diligence. I think more and more you should be like, am I still going to do this deal with someone? The contract will tell the tale. They think the handshake is the deal and the contract is follow. I think we need to put more emphasis on getting it and writing and understanding. Yeah, love it.
Mark J Kohler:Yeah. Your lawyers will love you for it.
Mat Sorensen:A couple of other little side notes when you're doing this. So you're getting in and writing. You're talking about all the terms and expectations. I like to always say, plan for the storm clouds. They will come, even though it's blue skies right now. And you're going to see the true colors of the person you're working with in that process. And also, don't forget the tax considerations. Today is the 1099 deadline. Many of you listening to this will be past that, January 31. But when you're sending out contracts to people be asking for the w nine because you're going to be stressing next year if you do pay them and hire them. Did I get a w nine? Where do I send my 1099? Or are they exempt? So get that piece. Make sure the agreement reflects how you're paying them. Are you sharing profits? Are you not? And this goes back to, again, just basic lease agreements. If you're a landlord, you should know your lease agreement better than anyone else, and you're going to modify it from time to time, even without calling the lawyer. When tenants screw you over, you're like, oop, got caught. Better have that in my next lease agreement. Let your agreements evolve. Use them over and over again, version ten, version eleven, version twelve. Because every time you do business, you're going to get better. You're going to learn.
Mark J Kohler:Yeah.
Mat Sorensen:All right.
Mark J Kohler:Well, we hope you don't get sued. If you don't maybe us.
Mat Sorensen:We don't want to sue you. We don't want you.
Mark J Kohler:Better call Saul. That's who you want in your corner fighting for you. But we hope some of these tips will be helpful in figuring out how to navigate that, maybe prevent you from being sued in the first place or putting you in a powerful position to advocate your case, whether that's documenting something properly, having a contract, getting the facts and evidence straight so you can go protect yourself if you do end up in a courtroom.
Mat Sorensen:Great show. We plan to do more of this, helping you navigate through the legal issues that are so critical for small business owners. And I think we're our own worst enemy because we think it's not going to happen. To me. It's just not. And then it does, and you're like, holy crap, I should have planned for that. And an ounce of prevention. Boy, there's all these great quotes.
Mark J Kohler:Yeah.
Mat Sorensen:Ounce of prevention poundicure.
Mark J Kohler:Help me help you throw them out today.
Mat Sorensen:It doesn't matter what is true. It matters only what I can prove. So many good quotes. Well, thanks, everybody, and we'll see you next week for another episode of the Main Street Business podcast.