Square One DSM Startup Stories to Feature iEmergent

Laird Hedlund Nossuli, CEO, and Bernard Nossuli, COO will join Mike Colwell for the September edition of Square One DSM Startup Stories to share the tale of a vision conceived and brought to life by company founder and Laird’s late father Dennis Hedlund.

I have had the good fortune of working with this company and its executives. Their story is good one.

Here is an excerpt from the Square One DSM press release:

A fairly circuitous path led to the creation of iEmergent and its cloud based tool, Mortgage Market Smart. Dennis Hedlund, after many years as an executive in telecommunications and mortgage companies, saw an opportunity to apply the forecasting methods he had developed for large call centers to quantifying future market opportunities for mortgage lenders. Taking the entrepreneurial leap, he left Wells Fargo and began studying decades of data from a wide variety of public and private sources. He identified unique patterns that would ultimately lead to the development of the iEmergent forecasting model…

Diversifying over the years through product development and service offerings, they have penetrated not only the large national businesses and regional lenders but are now targeting the smaller community institutions with data, products and resources that are tailored to each institution’s size and complexity…

Laird, along with her sister and mother initially joined her father in his pursuit of growing the company. Although both sisters would step away for a while to continue their educations, circumstances called Laird to take the helm as CEO, with the illness and untimely passing of her father. “I had to take the reins in a way I was not at all prepared to do,” confesses this Swarthmore graduate in Religion, who also holds a Masters in Social Work. As she reflected on those challenging times, Laird states “you just keep moving forward, staying true to your goals and your visions,” foreshadowing some of the insights she can share with the Startup Stories audience…

Laird’s husband Bernard came on board as COO at the time of her father’s illness, taking his own entrepreneurial leap leaving a position at DuPont, to help the company continue. “While it is something of a double edged sword, being small and nimble has served us well,” he adds, anxious to share the value they have found in augmenting their in-house skills as needed through outsourcing, consulting and contracting.

Details on the event:

$15 admission fee (includes lunch) or free (if you don’t want lunch).

11: 30 a.m.
September 21st 2016
Greater Des Moines Partnership

700 Locust Street, Suite 100

Conference Center (street level)

Purchase your tickets/make reservations – http://members.desmoinesmetro.com/events/details/september-startup-stories-53786

Contact at info@squareonedsm.com for more information.

Coaches Beware! Lawsuits to Become New Norm?

It was reported that Iowa State women’s basketball coach Bill Fennelly and ISU have been sued by former player Nikki Moody. Fennelly is known as a “passionate” and “demanding” coach. In other words, he isn’t afraid to “get after” players in order to motivate them. Moody obviously took exception to his techniques and has alleged the coach caused a “hostile” work environment because of “racial harassment.” Moody alleges that Fennelly treated black women and other minorities differently than white players because of their race. Much of the complaint focuses on the fact that Fennelly allegedly referred to Moody (and another black player) as “thugs.” Many former players in particular have spoken out in support of Fennelly.

The lawsuit should be a wake up call for all coaches. Many coaches are considered “passionate” and “demanding” by players and parents. Often these coaches may use “colorful” language when talking with their players. Some players may be able to handle it and others may not. Some players may be more of a target than others in practice and games for various reasons, whether it relates to performance, attention span, hustle, desire, respectfulness or dozens of other reasons. And sometimes coaches may simply go too far in the manner with their passionate and demanding approach.

Does that mean coaches need to be soft on players? I don’t think so. Coaches can still demand much of their players. But coaches also need to be aware of what they say and how they say it. Cursing by coaches has long been generally accepted (particularly at the college and pro levels), but it is a bad idea. So is calling your players derogatory names and making threats to them (whether it relates to playing time, expulsion from the team or other issues). I am not saying Bill Fennelly engaged in that type of behavior. I don’t know the facts. But I have been around the fields and courts enough to know that coaches engage in that sort of behavior frequently. Coaches get upset and emotional. It happens. But insulting and berating players shouldn’t be accepted and all too often that is what happens.

Lawsuits like Moody’s are not new. The University of Illinois was also sued this past year for allegedly creating a racially hostile environment. The players initially demanded $10 million but eventually settle the case for $375,000. An assistant coach was fired as a result. Many coaches will need to adjust their behavior or else they will become targets. I also expect these lawsuits to continue to trickle down from the college and high school ranks down into AAU and other youth related programs. (Programs better make sure their insurance covers them for these sorts of lawsuits). In the end, the Moody v. ISU case will likely resolve itself with a settlement short of trial. It seems too risky for a collegiate coach to have their dirty laundry aired in a public setting. It would be horrible for recruiting. And that’s exactly why these cases will become the new norm.

Read the entire Moody petition here.

Important Reminder: Review Your Estate Plan

There is a really good article in the Des Moines Register today written by Frank Mokosak discussing how a periodic review of your estate plan will alert you to any necessary changes. It seems to come in waves in my legal practice but recently I have had a number of clients need to change their Wills and estate planning documents for one reason or another.

According to the article, events leading to a review include:

  • Change in your marital status
  • Addition to your family through birth, adoption or marriage (stepchildren)
  • Death or incapacitation of spouse or family member
  • Spouse, parents or other family member has become dependent on you
  • Substantial change in the value of your assets or your plans for their use
  • Receipt of a sizable inheritance or gift
  • Change in income level or income requirements
  • Retirement
  • You have plans to change any part of your estate plan

The article also discusses some specific provisions to review including, but not limited to:

  • Who are your family members and friends? How do you feel about them?
  • Do you have a valid will? Does it reflect your current goals and wishes? Does your choice of an executor or a guardian for your minor children remain appropriate?
  • In the event you become incapacitated, do you have a living will, durable power of attorney for health care or Do Not Resuscitate order to manage medical decisions?
  • What property do you own and how is it titled?
  • Have you reviewed your beneficiary designations for your retirement plans and life insurance policies?
  • Do you have any trusts, living or testamentary?
  • Do you plan to make any lifetime gifts to family members or friends?
  • Do you have plans for charitable gifts or bequests?
  • If you own or co-own a business, have provisions been made to transfer your business interest? Is there a buy-sell agreement with adequate funding? Would lifetime gifts be appropriate?
  • Do you own sufficient life insurance to meet your needs at death?
  • Have you considered the impact of gift, estate, generation-skipping and income taxes, both federal and state?

We have all seen circumstances where the unexpected has occurred. It’s just a super idea to take a look at your Will and estate planning documents periodically, preferably annually. If changes need to be made, don’t sit on it. Usually people think most about their estate documents around the holidays when family is together. But for some reason it’s human nature to put off the completion of documents even after engaging a lawyer to draft them. And get comfortable with the idea of discussing your estate. It is understandable that people do not want to talk about issues surrounding death but as one person I met recently pointed out in a somewhat joking, but truthful way, “Ain’t none of us getting out of this alive.”

Individual Liability for Employer Wage and Hour Violations? Be Careful in California

I read an article this past weekend indicating that INDIVIDUALS in California may have liability for wage and hour violations of employers. A scary thought for employee managers indeed.

“…Enterprising members of the plaintiffs’ bar have recently sought to read the new law as authorizing a private right of action against individual managers. These lawyers have seized upon a legislative oversight. Although 12 of the 13 bill’s enactments refer to the Labor Commissioner, the 13th provision—Section 558.1 of the Labor Code—does not expressly mention “Labor Commissioner.” These lawyers have seized upon this obvious oversight to argue that Section 558.1 goes further than its 12 companion provisions and somehow creates a private right of action against individuals.”

That means potential personal liability for managers in California relating to  unpaid overtime, unpaid minimum wage, denied meal/rest breaks, untimely termination pay, inadequate wage statements, and failure to reimburse for employee business expenses.

Fortunately for Iowa based managers within companies, there are not currently provisions under Iowa law that would hold a manager personally liable for such violations as the language in the Iowa wage payment collection statute is limited to an “employer”. But if you are an employer from Iowa with California operations and employees, this is something to put on your radar screen. The author of the article warns employers would be well-advised to take proactive measures to ensure compliance with California’s unique wage and hour landscape, such as auditing current pay practices and policies. It is expected the courts will remedy the interpretation in California but you just never know about the courts so this will be an interesting issue to follow.



Former Franchisee Defeats Non-Compete Claim

In a recent case decided against AAMCO, a former franchisee and his spouse defeated a non-compete claim. The Florida franchisee had sold his AAMCO franchise after 21 years and opened a new business more than 90 miles from his former franchise location. The non-compete prohibited the franchisee from opening up a competing business within 10 miles of the former franchise location OR within 10 miles of ANY other franchise location. The former franchisee’s new business location was 1.4 miles from another AAMCO franchise location.

The franchisee argued that the non-compete effectively prevented them from opening anywhere on the Florida Gulf Coast. The franchisee had not taken any of their former AAMCO clients with them and there was no evidence the franchisee used the AAMCO name, mark or goodwill in any manner.

The judge agreed with the franchisee and ruled that the non-compete was overly broad and unduly burdensome because the agreement was not narrowly tailored to protect AAMCO’s business interests. The judge modified the non-compete to read that the franchisee could not compete within 10 miles of its former location for a period of two years.

This favorable decision is significant for franchisees. Many Iowa franchisees sign franchise agreements that contain similar non-compete restrictions. The arguments in this case provides some good ammunition for trying to defeat similar franchise non-competes here in Iowa. Iowa judges are permitted to revise non-competes if they believe the restrictions are not reasonable to protect the necessary business interests of the franchise. I could see a similar result happening in Iowa courts under the right circumstances.


Investigate Franchises Carefully Before Investing or Buying

In the Des Moines Register today there is an article about a food truck franchiser that allegedly got cross-wise with investors and franchisees. The article shows just how critical it is to perform due diligence when it relates to franchises (or any other business opportunity). I have a number of posts available I have written over the years on franchise due diligence.

But what’s interesting to me is that investors were actually asked for smaller sums of money (example $14,000) than what you might ordinarily expect for a national franchise operation. In my experience if someone is asking for you to “invest” in their business in smaller amounts such as $10,000 to $20,000, be very careful. This may be a sign of someone who is merely looking to meet a short-term cash deficit/problem rather than someone who is actually looking for a long-term investor. Business “investors” are typically asked for larger sums of money such as $100,000 and above. The individuals asked to “invest” the smaller sums of money almost always have a more difficult time getting their money back. To compound the problem agreements of this smaller nature are often not reviewed by lawyers (or sometimes lack a written agreement entirely) and almost always lack key terms to provide recourse and collateral for the investor.

Buyer beware!


Iowa Caucus Wrap Up

The Iowa caucus may be over but just so we wouldn’t lose all the media attention today we decided to have a snowstorm to keep media in our state for at least another day.

As I predicted last week Ted Cruz end up victorious on the Republican side. The Cruz ground game proved to be too much for Donald Trump and the other candidates. I expect Marco Rubio was pleased with his close third place finish that likely makes him a real contender moving forward. It is also interesting to me that the last caucus winner, Rick Santorum, finished dead last on the Republican side. What does a victory for Cruz in Iowa mean? He’ll obviously get a bit of momentum with the victory but Iowa hasn’t been too good at predicting the winners on the Republican side. Instead, I look for Marco Rubio to begin surging by beating expectations here in Iowa. More than any other Republican I see him as the candidate who can steal voters away from the Hillary Clinton base. Because they tend to be more devisive candidates, Cruz and Trump are more unlikely to sway democrats and independent voters in my opinion.

On the Democratic side, I am somewhat surprised Hillary Clinton managed to gain a narrow victory. She has to be relieved but given her massive party support network here in Iowa, it may be hard to call it a “real” victory. The numbers were a virtual tie and as one political operative said she had “pretty much every institutional advantage a candidate could dream of having.” In fact, Sanders managed to almost defeat Clinton despite no name recognition prior to the start of this campaign and with much less ground game support here in Iowa and fraction of the endorsements. There is NO question that Sanders’ supporters were by far the most enthusiastic supporters in Iowa. So can he win the nomination? That’s questionable because his support really has not appeared to go beyond “progressive” white voters. He will need African-American and Latino support if he intends to win. For her part, Clinton appears to have much more support nationally (particularly among African-Americans and Latinos) so it will be interesting to see whether Sanders can pick up momentum from his showing here in Iowa. Unlike 2008, we did not see the kind of overwhelming support for Sanders like we saw for Obama.

Should be an interesting race moving forward. In my opinion Marco Rubio may have had the best night of any candidate and I don’t think Trump is really interested in “buying a farm” after his second place showing. I am quite certain Hillary is very happy to move along to other states and Sanders has a lot of work to do if he intends to catch up. Even though Cruz won, he quite possibly gave one of the most dreadful victory speeches in recent history. His speech was interrupted by our local media not once, but twice, and he will need to improve his polish if he intends to sway mainstream voters.

Predicting Winners of the Iowa Caucuses

The Iowa Caucus is this coming Monday, February 1, 2016. Many in Iowa claim to be happy when the caucus is over but secretly we like all the attention because Iowa only receives this kind of attention every presidential election cycle. So who is going to win the Iowa caucuses this coming Monday? I am by no means a political prognosticator but here are my predictions:

Democrats – Bernie Sanders. Say what? Hillary just can’t seem to win in Iowa and I am doubtful she gets it done Monday. Eight years ago Hillary expected to win Iowa hands down. Obama was a big surprise and I see the same happening from Sanders this time.

Republicans – Ted Cruz. I am predicting his supporters are more organized. He’s got some big name grass roots organizers behind him. Will Trump’s supporters turn out for the caucus is really the big question mark in my mind?  Does Trump have fans or voters? It will be a great test.

Those are my thoughts. Yours?

See real experts predictions here.


Last Iowa Poll before caucus. (Ann Selzer is almost always right).

Last poll before caucus from Quinnipac University.


How Do Presidential Candidates Stack Up on Small Business Issues?

I normally try to avoid political issues and discussion because really it does me no good. I am sure to tick someone off because I have clients who are on both sides of the aisle and some that are not political at all. But since the Iowa Caucuses enjoy first-in-the-nation status, I’ve decided to join in to give a little political commentary limited solely to small business issues (the centerpiece of this blog). From my standpoint, when you think of business and the candidates, Donald Trump instantly comes to mind. But isn’t it interesting that several Iowa business leaders come out in support of Marco Rubio recently? And what about the other candidates?

So I decided to take a closer look to find out just what the candidates have to say on small business issues by looking solely at their own campaign websites. After all, what’s most important to candidates should actually appear on their campaign websites, correct?

What I found is that most candidates did have positions on taxes and the economy. They may have also mentioned issues impacting business such as US-China relations, immigration reform and health care reform. But what I was really looking for were candidates that directly mentioned small business on their sites. And surprisingly, I noted that only two major candidates, Marco Rubio and Hilary Clinton, mentioned small business as a part of their campaign platform on their websites.  Rubio and Clinton were also endorsed by the Des Moines Register this past weekend.

Are these really the best candidates on small business issues? I am not entirely sure because in reality there wasn’t much to read about their plans on their respective websites. But they did have more than the other candidates in my opinion and by at least mentioning small business they set themselves apart from the rest of the pack.

Read Rubio’s small business plan here.

Read Clinton’s small business plan here.

I am interested in hearing what you think. Please note though that all comments are monitored and only thoughtful comments on candidate positions relating to small business issues will be published. 

Should Non-Compete Agreements Be Enforceable in Iowa?

People often mistakenly believe that non-compete agreements are not enforceable in Iowa. Sometimes people think that because Iowa is a “right to work” state that means non-competes are not valid or other times people may have “heard” non-competes aren’t valid. Neither is correct. Non-competes in Iowa are enforceable in Iowa under appropriate circumstances.

But recently I was intrigued by some back-and-forth editorials published in the Des Moines Register questioning whether non-competes SHOULD be enforceable? One letter to the editor writer argued that Iowa should abolish enforceability of non-competes arguing that the Iowa economy would actually be enhanced by becoming a national leader in permitting employees to freely compete with their former employers. Another writer opined that non-competes are vital to the protection of business relationships and confidential information and should remain an important tool for businesses to protect their interests against employees who seek to benefit directly at the expense of the former employer.

Myself? I have been involved on both sides of the issue. I frequently draft and represent employers who seek to enforce non-competes. But almost just as frequently, I have also represented numerous employees who have sought to avoid such restrictions. So what gives? Should non-competes be enforceable or not?

I have never been a fan of non-compete agreements that prevent someone from working in the same industry as a former employer. In general, I believe that an employee should be permitted to leave an employer to compete FAIRLY against a former employer. After all, it really would be hypocritical of me to say otherwise. You see, non-competes are NOT enforceable against lawyers in Iowa. When I left my former firm about 8 years ago I took all the clients I had originated with me, except one which I voluntarily left with the firm at the time. I did not seek to take clients that were generated by other lawyers or “firm” clients which led to a very amicable parting. Neither party was harmed. I got to keep my clients and the firm and other lawyers kept their clients. Status quo.

That theory may work well for a law firm but the lines become much more blurred for many businesses. If clients left with a former employee it could significantly harm the business. That’s why in general I do believe that businesses should be able to protect their client base for a reasonable time period from walking out the door with a former employee by signing a non-compete.  And if someone is selling their business, the buyer should absolutely be able to obtain the benefit of the bargain by expecting that a seller will not immediately turn around and take back clients from a business the seller just sold. (Even in California non-competes against business sellers are enforceable).

But abuse occurs when employers attempt to overreach with the protections of a non-compete. Like businesses who attempt to enforce non-competes against lower-wage / level employees who have no client relationships. For example, let’s say a janitor wants to leave his employer for a company that will pay him a higher hourly wage. Is it really reasonable to enforce a non-compete when the janitor has never spoken to an actual client of the employer and does nothing but show up to perform his work? Opposed to a sales person has frequent client contact and could potentially take janitorial clients to another company?

And would it is really fair to prevent a former employee to work in an industry completely when they do not attempt to take any of the former employer’s clients whatsoever? Or, what about a franchisee who has given 10 years to a franchiser but decides not to renew a franchise agreement?

An alternative to non-compete agreements is to have agreements that protect the IP of your company without restricting the former employee’s ability to work in an industry. Use of IP agreements may adequately protect the business interests of an employer in certain circumstances without restricting the former employee’s ability to work in an industry. Problem solved?

So what do you think? Feel free to share your general thoughts on the issues involving non-compete issues. Should we keep them enforceable in Iowa or is the current non-compete law acceptable? Like me, do you think it varies upon the circumstances? Or, do you take a more bright-line approach?