Legally Speaking: Not Fun, Definitely Necessary. Avoiding Legal Issues with Guest Heather Macklin

Most home improvement operators don't think about their legal exposure until a problem lands on the desk. A customer who wants a free house over a cracked tile. A cold call that turns into a lawsuit. A contract they copied off the internet that falls apart the first time it's tested. Attorney Heather Macklin spends her days on the other side of those problems. Macklin runs Macklin Law and acts as outside general counsel to home improvement companies across the country. She and her husband Rob also co-own a concrete coating company and a one-day bath business, so she reads KPIs, backlog, and a labor shortage the same way her clients do. On The TruCoach Podcast, she joins Brian Gottlieb for a working tour of the legal issues that catch contractors off guard. Some of them might surprise you. There’s the customer who threatens to sue over a defect, and why the damages you're on the hook for are usually far smaller than the threat sounds. Macklin makes the case that a few negative reviews can actually read as more credible than a wall of five stars, and that how you respond counts for more than the rating itself. She walks through consent and the Telephone Consumer Protection Act: why buying lists and rehashing old leads can carry real risk, and what an internal do-not-call policy needs before it protects you. And she gets into the paperwork most contractors get wrong, from terms and conditions to state-specific rules like Wisconsin's Home Improvement Practices Act and its right-to-cure notice. Plus, she and Brian talk through whether non-competes still hold up after the federal ban that never took effect.

The TruCoach Podcast with Brian Gottlieb is where you’ll find industry-specific, actionable methods to help you build a supercharged home improvement or home services business. From leads to leadership, we exist to help you and your team successfully grow. TruCoach is your single source of truth for organizations looking to scale. Brought to you by Truvolv, you’ll get exclusive access to leaders who have been there and done that - and the wisdom that only comes from experience. No fluff, no noise. Just proven strategies for you and your team to implement. Learn more and have your lightbulb moment at truvolv.com.

Transcript

SPEAKER_01 0:01

Welcome to the TrueCoach podcast, where you'll find industry-specific actionable methods to help you build a supercharged home improvement for home services business. From leads to leadership, we exist to help you and your team successfully grow. TrueCoach is your single source of truth for organizations looking to scale. Brought to you by TrueVology. You'll get exclusive access to leaders who have been there and done that. And the wisdom that only comes from experience. Proven strategies for you and your team to implement.

SPEAKER_02 0:31

I'm my friend Brian Gottlieb here, and welcome to another episode of TrueCoach. You know, as I was thinking about this episode this morning, I had to I'm just really grateful because we have so many fantastic guests that that join us in TrueCoach, and today is no exception. I want to introduce you to somebody that I've used for many, many years and most of my friends use. She's a real powerhouse in the industry, and she can really make a big difference in your company. We're talking about Heather Macklin with Macklin Law. Heather, thanks so much for joining us.

SPEAKER_00 1:00

Thanks for having me, Brian. Always, always happy to join you for a conversation.

SPEAKER_02 1:04

For for those that might not realize, you're not only my attorney, but when things go sideways, you're also my therapist. And I really appreciate it about you. So it's good. Just trying to keep it even, Keel. Maybe you can share people. Macklin Law does a few things, and maybe you can talk about what Macklin Law does and then what you really focus on.

SPEAKER_00 1:21

Sure. So Macklin Law is myself and my husband, Rob Macklin, uh, and our paralegal Tina Pansy. Um, we're we're located in Appleton, Wisconsin, but we have clients nationwide. Um, my background is is in litigation, although I spend probably 85% of my time these days advising home improvement clients, um, sort of acting as their outside general counsel when needed. Uh Rob's background is in corporate securities, mergers and acquisitions. Um, you know, he he was your lawyer, Brian, obviously, when uh when you sold Tunderland. Um, so yeah, I mean, we we're just a small boutique firm here. Um, coming out of both of us are approaching in the next couple of years, 30 years of practicing law. So um it's been a long time. Um, but uh yeah, no, we just we represent a lot of smaller companies, mom and pops, but we represent some of the big ones too in the in the home improvement world.

SPEAKER_02 2:18

Yeah. So Rob and you helped me not just sell three of my businesses, but also acquire another one. And you've helped a bunch of my friends that the large companies help them transition and and have an have a great exit. What I also really appreciate about you is you understand the industry because you're also in the industry. Maybe we could chat about that for a minute.

SPEAKER_00 2:36

Yeah, so a couple of years ago, we uh apparently thought it was a good idea to dip our toe into being home improvement contractors. Uh, so we are part owners of a concrete coating company uh here in based out of Appleton, but we have locations now in uh Texas and Iowa as well. And um, we also are part owners of a one-day bath company here in Appleton that has started to spread around the state of Wisconsin and I think is gonna have some more expansion here uh in the near future. So um we get to see it from both sides, both advising our clients, but also, you know, being the ones that have to look at those KPIs and looking at the checkbook and trying to figure out what we've what we're gonna do when we've got a backlog that we've got to fill and we can't find good labor and you know, all of all of those issues that that all of our clients deal with on a day-to-day basis.

SPEAKER_02 3:28

Yeah, I think it I think it gives you a fresh perspective on how to help your clients because you can relate to them because you're quick, because you're you're in the same grind that we all are, and that's really cool. I I have a question for you. You know, home improvements, home services, when we're in some, when we're in somebody's home, things don't always go as planned. I mean, let's just say we try to make it go as planned all the time, but every once in a while it doesn't go as planned. And then every every once in a while we have that one customer where when something goes sideways, they don't just want a discount, they they want a free house, right? You gotta now buy them a free house because we broke their house. You're an attorney. How how should I think about that as a business owner?

SPEAKER_00 4:07

You know, I think that you know, if you're if you're a good contractor, and you know, I know as you were, Brian, when when you owned Hundreland, you know, you want to make the customer happy. And so there's this, there's this immediate reaction of, you know, the customer's always right. We need to make them happy, we don't want any bad reviews out there. Um, you know, I think that's the first visceral reaction, right? It's like we stand behind our product, somebody's unhappy, we can fix it. Um, and then secondarily, we don't want any bad reviews because people will look at those reviews and we don't want to turn away other customers or clients because of this one problem. Um, and then beyond that, I think is is another layer, which is um, you know, well, what are what are we potentially liable for? Right. And this person's thrown all these terms at us, and oh, I talked to my lawyer and I did this and that, and you owe me all this money. And in the moment, it seems like, oh gosh, we have a huge liability here. And and you know, look, sometimes there might be, but um, number one, the customer isn't always right. You know, customers, they get it wrong. Um, there are bad people out there, unfortunately. Sometimes we all get caught up with somebody who's just a bad person and you got to deal with that. Bad reviews, you know, I don't think a few bad reviews are all that bad, right? I mean, if I see a business that's got nothing but five stars, you know, 300 five-star reviews and not a single negative review, I'm thinking to myself, those are either manufactured reviews or they're somehow managing their reviews in a way that they're able to knock out any negative ones, right? And it doesn't feel real because in today's world, there's always going to be somebody who's gonna give you a ding here or there. It's it's how you respond to those negative reviews that I think is to the reasonable, rational consumer is more important than the review itself. And sometimes those negative reviews, honestly, you read them and you kind of laugh and go, really? That's what you're complaining about? Like, okay, right. So then you you tend to have a more positive view of the company, anyways. And then finally, you know, what you're liable for. Um, you know, a lot of my home improvement clients don't know the measure of damages that they're potentially liable for. Um, and you know, here in Wisconsin, for instance, the measure of damages is is pretty simple for a construction defect. Um, generally speaking, the measure of damages is the cost to repair the defect or the diminished value of the property if the defect remains in place, which, as you can imagine, is usually about the cost to repair the defect. Um, you know, you're not usually entitled to all of these grandiose things that people throw, oh, my time and my, you know, this has been so emotional for me and my wife. And I had to go to the hospital because my heart was just beating so fast. I thought I was having a heart attack. Like that kind of stuff, that's not that's not something that a home improvement contractor is going to be liable for um because they maybe missed a connection on a on a plumbing line or something.

SPEAKER_02 7:03

Yeah, I mean, that's that's comforting to know because it we know when we have a problematic customer, look, this business robs sleep from you in many, many ways, but problematic customers is another way to rob sleep. I remember when I had my business in early days, the first negative review I got, I couldn't sleep that night. I was like, so and but but your your point is valid. It's how you respond that really matters. I want to jump to some other potential liability concerns out there, uh, one of which is the do not call list. And how can how do you think about that and what can companies do about that?

SPEAKER_00 7:37

I mean, I've I've made it no secret, in my view, of the TCPA. Um, I think it's a horrible piece of of legislation that was passed in the early 90s before we uh had the the technological advances in communication that we have today. Um and and I think so, I think it's a bit of a dinosaur that is being um just jammed into um a world that it doesn't really fit in anymore. And it and it's done in such a way that it really puts so much onus on the home improvement contractor and without a lot of grace, um, you could you could be doing everything right or think you're doing everything right. And, you know, if you again meet up with a bad person, I do believe there are people out there who are actively manipulating the system and trying to manufacture claims under the TCPA. Um, or you know, you get a wrong number and you the number you call happens to be a you know a crotchy old person on the do not call list, right? Um you could end up with potential significant liability for for those wrongs. Um, and and I think, you know, it's funny, just you asked that question. Literally 15 minutes ago, I got a text message on my phone. Um, you know, hey, this is Bob at So-and-So Solutions. Uh, there's been storms in your area. Would you like us to come out and give you a free quote on roofing and siding? Well, I don't have a relationship with them. I didn't inquire about their services, and I certainly haven't filled out any forms giving them consent to contact me. Even if my phone number was not on the do not call list here in Wisconsin and in most states, that phone call is going to be problematic for them unless they're registered as a telemarketer in their state. Um, so you know, in this industry, we have to be thinking about both federal laws like the TCPA, and you also have to be thinking about your local state laws, the statutes and rules that are in place in your state governing telemarketing.

SPEAKER_02 9:35

So, so what can companies do to protect themselves and what's some low-hanging fruit they can do just to make sure that they're not opening themselves up for a for a real big lawsuit?

SPEAKER_00 9:46

Yeah, I mean, so first off, just don't call people out of the blue if you don't know if you have a relationship with them, right? Um, that that's that would be the first thing. Um, you know, somebody says, Oh, you should call my cousin. I he'd love this product. Don't do it because you don't have the cousin's consent to contact him. And it's not enough that somebody you do know gave you the guy's name. You know, in that instance, I would say to the guy, hey, if you think your cousin would love to hear about us, please here give here's my card, have him give me a call, and and then we'll, you know, we can reach out to him. But you know, beyond that, it's it's educating yourself on the TCPA and what is required under it. Um, you know, if you have uh a form on your website, you want some very specific, clear consent language. It's it's almost like a checklist test to make sure you've got all the elements you need in that couple of sentence consent paragraph. That by clicking here and providing this information, I consent to have, you know, this company contact me. And there's there's some certain things that need to be in there that are required. And if you have that, you you put yourself in a better position. Um, making sure that your call center or anybody who's going to be answering the phone and dealing with customers on the phone, um, that you have an internal do-not call policy that is written and posted and that your people are trained on, and that your CRM or whatever system you're using to manage your customers and your leads has a feature that if somebody says, please stop contacting me, you immediately put them on your internal do-not-call list. And there's no way anybody can have that number come up without it, you know, saying do not contact. Um, you know, educating yourself on your local state laws and understanding what the telemarketing rules are, because that's where it starts to differentiate a little bit. You know, TCPA is is nationwide, but each state has different laws. Um, and so contacting legal counsel who can who can provide you some guidance in that area is is a really smart investment.

SPEAKER_02 11:50

Yeah. So I used to get these emails that said, hey, you at the I can sell you all the names and phone numbers for people that went to the local home show. And look, I if we're not a telemarketing company, we can't be buying lists and just doing outbound calling. Buying lists is very, very risky. But I think also the other risk is that it's not so much the one violation if you do something wrong, it's the 1-800 lawyers that get a hold of it and then they want to turn it into some kind of a class action lawsuit. I how does having a written policy in place help help maybe limit that risk a little bit?

SPEAKER_00 12:25

Well, look, if you have a written policy in place and people are trained on it, you can show that. You can also show that you're working with lead aggregators who are following the rules that are getting, you know, a trusted certificate or are are maintaining that consent that they that prior express written consent that they received from the consumer. Um, it it sometimes goes a long way towards at least heading off those big lawsuits because if they can see that, oh, wait, this was a one-off mistake, I'm not gonna get a class action lawsuit out of this, then the money for them, right, the upside for them just drops drastically. And so you'll you'll probably be able to settle for a reasonably limited amount on the one that was a problem. You know, I had a client that that happened, um, legitimately got a lead, but somebody in entering the information transposed two digits in the phone number. And unfortunately, the number that they then called was not that lead. It was somebody who happened to be a serial litigant in the TCPA world. It was really an unfortunate turn of events. Um, and uh he did get an attorney who is a class action, known class action attorney, plaintiff's side for TCPA litigation. But when we were able to demonstrate that the company actually does do everything by the book, they've got the policies, they've got the training, they don't call unless they have consent, that we had, you know, the information from the canvasser right there that we could demonstrate and show. And then we even went as far as going back to the lead and getting their confirmation that yes, indeed, we did ask for them to contact us, and that's our phone number with two digits transposed. We were able to get it resolved for a lot less than might have otherwise been the case if they had come in and started finding out that, you know, we were just flying by the seat of our pants and weren't following any of the rules.

SPEAKER_02 14:16

Yeah, I think a lot of companies are exposed. They don't realize that maybe you're at a home show and you're setting appointments at a home show and you're capturing somebody's information. You know, are you able to prove consent if if if you're called out on it or you're canvassing and are you able to prove consent? And all the, I mean, those are some of the those are the more difficult things to because it's almost like a changing the language on your website is easy. Changing behaviors with face-to-face marketing is a little more challenging, isn't it?

SPEAKER_00 14:44

Yeah, I mean, you've got to have the same language on your face-to-face forms, right? It's not enough that you're just getting their name and phone number and you respond and say, Well, I wouldn't have had their phone number unless they gave it to me. Clearly, they wanted me to call them. Like, unfortunately, that's not how the laws work. Um, you know, they're making an inquiry of you, of your services. And so arguably you fall within an exemption for a 90-day period under the TCPA there, where you've never done business with this person in the past, they may or may not be on a do not call list, you don't have prior express written consent, but they inquired of your services on that day. As long as you contact them within that first 90 days and you never contact them again after that first 90 days, you fall within a little bit of a safe harbor provision. Um, and a lot of people don't understand that. So, one of the big things that I see, and it really like weren't conferences, you know, in the industry, or I watch a podcast or you know, I see an article come through and um I see people talking about rehashing old leads. And I'm immediately like, wait, what are we talking about here? Like, where did this lead come from? How did you get this lead? What, you know, are you distinguishing between prior express written consent if it satisfies the TCPA, unless it is revoked by the consumer, it's good into the future with no expiration. It's good until they revoke that consent. But if you don't have prior express written consent, and that is, I'm gonna say that's illegal under the TCPA, then you might still be able to contact them because they've inquired of you of your business services products, right? And that's where you get this 90-day period that you can reach back to them again, unless they say to you, stop calling me. They revoked any consent that that gives you. Um, if it's a prior customer that you did some work for, you sold products to or did services for, then you have 18 months from the time of the last product or service that you sold them to be able to contact them and follow up. So, you know, when people press like, hey, you know, leads are so expensive these days and it's really hard and it's really tough, and there's so competitive. And so, you know, low-hanging fruit, really easy money is go rehash all your old leads that you didn't close on. Not don't just go call everybody in your CRM.

SPEAKER_02 17:05

Yeah, I think that's really good advice. Uh, and and that's the natural tendency, right? And and I think look, more and more companies are putting the right language on their website, but if that right language wasn't on the website two years ago and you're calling data from two, three, four years ago, there there's some liability there.

SPEAKER_00 17:22

And I think it's well, I mean, and there's all the things that people don't think about. Like, let's say you buy a competitor of yours in the area, right? You're you're in business, you're doing well, you know, Joe Smith over there is struggling a little bit. He wants to retire, his kids don't want the business. And so you you buy his business for whatever amount. You get a truck, you get some some tools and equipment, maybe you take on the lease, and he has a CRM that has all these people in it. And you're like, great, this is a whole untapped treasure trove of potential leads for me. And and he got consent. So we're great. Look, he can show me he got prior written express consent from these people that they consented to have Joe Smith contact them and sell bath services or whatever, right? Um, you're not Joe Smith. They didn't give you consent, nor does that consent say that it's Joe Smith or his successors and assigns. That is probably not gonna hold up if ABC company calls somebody that gave Joe Smith consent simply because you bought Joe Smith's business. Another room people just don't think about it.

SPEAKER_02 18:29

Yeah, it's breaks up. I want to shift gears a little bit to terms and conditions, right? Because I was surprised. I thought I had some really great terms and conditions, and even you found holes in it where Brian, you're you're weak here, you need to fix that. How often do you see you work with so many home improvement companies? When is the last time you went into a home improvement company and you saw terms and conditions that you were satisfied with?

SPEAKER_00 18:52

Never. Um, no, I mean, you know, I don't work in guarantees and absolutes, but um, even my own companies, I will tell you from time to time, I go back and I look, and sometimes somebody goes in and changes something, and oh, we can change this, it doesn't matter. You know, it's something that even when we were doing it, like we didn't get something right, or it happens. But um, in terms of like somebody comes to me and says, Hey, would you look at my terms and conditions? I mean, it's almost always a total rewrite top to bottom. Yeah. Um, you know, oftentimes I'll ask, Hey, where'd you get these? Oh, you know, I used to work for a company and so they said I could use theirs, or I went on the internet, or Chat GPT, um none of which are lawyers, uh, none of which are really keeping up with the particular laws in a state. I mean, it could it could be a good starting point for sure. Um, but there's a lot of intricacies and nuances that you need to make sure you understand. I mean, big one here in Wisconsin that I all the time, the number of contractors here in Wisconsin, and this is this is construction, this is home improvement, this is home services. Anybody who is doing a home improvement to an existing home, residential home, we have a statute and code here, administrative code called the Home Improvement Practices Act. And the number of contractors who have no idea that that exists or what it says, and it very directly impacts what your written contract has to have in it and needs to have in it. And then part of that then too is um the right to cure law here in Wisconsin, right? If you're a contractor and you're doing work and you're giving a quote, there's a there's a one-page pamphlet you're supposed to give the homeowner at the time of contracting that is all about the right to cure law here in Wisconsin. And if you're not doing that, you're violating state law. Other states have similar laws. Um, the notice of cancellation is a big one. Um, people don't always understand what that means and how you enforce it and what can you keep if they cancel outside the rescission period. Again, here in Wisconsin, if if the consumer cancels outside the three-day rescission period where they have free reign to cancel, if they cancel within the first three days, you have to let them cancel and give them back their deposit. Period. End of story. That's true in pretty much every state. Um, but if it's outside that three days here in Wisconsin, you can't keep 50% of the deposit, you know, of the contract price as a liquidated damage. You can keep 10% of the contract price as a liquidated damages or actual damages, whichever is greater. Actual damage is meaning you had to buy materials, you had to pay a commission, you can't return those materials, you can't use them somewhere else, like all those costs that you've now eaten as a the service provider, you might be able to get a little more than 10% that you keep.

SPEAKER_02 21:46

Yeah. So it doesn't really matter what's written in terms and conditions, it's a matter what you can get.

SPEAKER_00 21:50

Well, I mean, sometimes you have a deposit, sometimes you don't. If you're financing the deals, then it's a hold. I mean, even though your contract says one thing, the financing companies are gonna say your client canceled. We've Sent them back the money, we've pulled it from your account, you deal with them like we're out of it. Because they don't want the liability either.

SPEAKER_02 22:06

So yeah, and and I've I've worked with you on lead-safe practices and audits that I've gone through, and it's been very successful. So I know you can help people with that. Also, employment agreements, right? Or non-competes. I just want to touch on that real quickly. There's is a non there, if you some people say, well, non-competes are no longer enforceable. Is that true? I mean, is that true? No.

SPEAKER_00 22:28

So a couple years ago, there was a rule that was put into place that was going to go into effect that basically was going to eviscerate non-competes nationwide, except for in very limited circumstances of like high-performing, highly paid executives or people who had one in place that was set to expire in the future, that would be kind of grandfathered in. And then once it expired, you couldn't, you couldn't have a new one. And a lot of people think, oh, that was all announced. It was, yeah, you non-competes aren't good anymore. The problem was that rule never went into effect. It was struck down before it went into effect, um, and it's never been revived. So a lot of people are working off of old information. So, yes, non-competes can be enforced in some states. There are some states who have passed state laws that say non-competes are void and you cannot have them in place. Um, but a lot of states you can still have um, you know, a non-compete, um, but it usually needs to be it's gonna be strictly construed by the courts and it has to be reasonable to protect your interests. So if you're giving your janitor a non-compete agreement and you're in the business of one-day baths, chances are that's gonna be struck down because it's not really reasonable to say you need to protect your janitor's services. Now, if you have an executive assistant who works in the office with you, has access to all the financials, all the marketing, all the customer information, you know, your pricing details with your vendors and suppliers, and that person doesn't have a non-compete and they go somewhere, and now you wouldn't be able to prevent them from going to work for your competitor right next door with all that information stored in their head. Um, so that would be one that a non-compete that says, hey, you know, for a period of one to two years, you can pick. Usually two years is considered reasonable. So, you know, on the outside, that's pretty much the limit that people go for is you know, two years after you leave my employment, you cannot work with a competitor maybe within a 50-mile radius, or you can't work with um maybe you're a sales guy. And it's like you cannot sell to any of our customers that you had a relationship with in the last year of your employment with us, right? So there are ways to structure it to make sure that it's reasonable. Again, depending on the jurisdiction that you're in and how you tailor it, but you want to be narrow with how you tailor it. You want to be very, very precise. You don't want to use sort of this overly broad language that tries to prevent them from doing everything and anything. Um, but yes, non-competes can be enforceable.

SPEAKER_02 25:05

Look, I think every business owner needs a great banker, a great accountant, and a great lawyer. And you are that great lawyer. So I have a question for you. How can people get a hold of you? You can I know you can talk to anybody across the country, but how can they get a hold of you? How should they reach you?

SPEAKER_00 25:20

Um, they can reach out to me directly, either by phone or email. My phone number is 920-209-4353. Um that comes to my cell phone. So that's you can call me, you can text me on that phone number. Uh, or you can email me at hmackklin at macklinlawlc.com. Um, we do have a website. It's it's pretty minimal, honestly. Like the word of mouth in the industry is enough for us to get business. Um, I I don't have like the the big, huge, fancy all the bells and whistles website, but um Macklinlawlc.com, you can find us and we have our contact information on there too.

SPEAKER_02 25:58

Yeah, and you can always message me too, and I can share her contact with info if you're looking forward. Heather, I really appreciate you joining us. I really I know that you helped educate some people and hopefully limited their exposure, but they really should pick up the phone and call you if they have any questions about their business. Thank you so much.

SPEAKER_00 26:15

You're so welcome, Brian. Every topic we touched on, there is just a well of information beyond what we discussed. So yeah.

SPEAKER_02 26:21

So all my friends, thank you so much for joining us on TrueCoach. And we'll see you on the next episode.

SPEAKER_01 26:26

You've been tapped into the True Coach podcast from TrueVolve, home improvement and home services experts, helping professionals like you get better results faster. Subscribe and follow on YouTube and wherever you get your podcasts for more expert insights. From digital marketing to business coaching, TrueVolve is dedicated to helping your business grow. Learn more and have your light bulb moment at TrueVolve.com.