Rush on Business : Iowa Corporate Lawyer & Attorney : Rush Nigut of Brick Gentry Law Firm : Serving Des Moines, Cedar Rapids, Davenport, & Sioux City

Iowa patent and information technology lawyer Brett Trout recently completed his series of posts on the new federal rules concerning electronic discovery.  Brett and I also recently completed a podcast interview discussing the new electronic discovery rules.  I encourage you to check it out.  Brett has a lot of great information to share on the topic.

One way to prepare your business for the new electronic discovery rules is to have a solid document retention policy.  I found this helpful white paper from LexisNexis Applied Discovery regarding the elements of a good document retention policy.   Some of the key elements include:

• A written document retention policy must be actively enforced and audited;
• the policy should include the name of the custodian of the information;
• the policy should list the types of servers and back up tapes used;
• a lawyer needs to be familiar with the company's IT system;
• companies must educate employees about the policy and stress implications of not following it;
• the policy must be easy to follow, periodically updated and state how often it will be updated;
• the policy must address the different ways employees save information;
• the policy should also address the litigation hold including email back up tapes.

I am interested in hearing from you if you have other document retention recommendations.  In the end, a solid document retention policy could help you avoid substantial sanctions and/or judgments for mismanaging or willfully destroying documents. 

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The Iowa legislature is now considering amendments to Iowa's right-to-work law.  This is a hot button political issue - the merits of which I am not discussing in this blog post.  What I am addressing is the confusion many people express over the Iowa right-to-work law.  Many individuals confuse the law with the belief that non-compete agreements are not enforceable in Iowa.  I have heard many times, "Iowa is a right-to-work state so this non-compete is not enforceable, right?"

Wrong.  Right-to-work has nothing to do with it.  As I discussed in a previous blog post on the topic, non-compete agreements are enforceable in Iowa under certain circumstances.  Iowa's right-to-work issue generally involves the prohibition of a union from making membership or payment of dues or fees a condition of employment, either before or after hire.  Iowans are free to work and join a union and Iowans are also free not to join a union.  The right-to-work law does not involve the issue of non-compete agreements.

If you are looking for a discussion on the political issues of Iowa's right-to-work law check out Mark Ingebretsen's article on IAbiz Online.  IAbiz Online, launched in January of 2007, is the companion Website to the new IA.biz Magazine.  Both projects are communication tools of the Iowa Association of Business and Industry.  (And yes, you might even catch some of my articles re-published on the Web site).

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Drake University Law School had some exciting news this morning.  Former Governor and Presidential hopeful Tom Vilsack will serve as a visiting professor of law during the 2007 calendar year.  Before his election as Governor, Vilsack practiced law in Mt. Pleasant, Iowa.  He will teach a May interim course focusing on legal issues relating to rural development and renewable energies with help from Professor Neil Hamilton.

A nice feather in the cap for Drake Law School.  Way to go Bulldogs!

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I listened to an insightful podcast from Becky McCray of Small Biz Survival called Nothing New.  She also quotes Dr. Samuel Johnson who once said, "People need to be reminded more often than they need to be instructed." 

That is so true when it comes to helping businesses recognize legal issues.  So often what I say on a topic is nothing new, but the reminders don't hurt.  Some examples:

• Seven Ways to Avoid Employee Lawsuits
• Corporate Officers Need to Use Care When Signing Agreements
• The Secret of Negotiation: Care Less, Get More
• Five Ways to Avoid Lawsuits Against Your Business
• Small Business Corporate Governance
• Formation of Iowa Business Should Include Buy-Sell Agreement

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I have added podcasts to Rush on Business through BlogTalkRadio.  The first podcast is an interview with Iowa patent and information technology lawyer Brett Trout concerning the important federal rule changes regarding electronic discovery and how it impacts your business.  Brett is the author of Internet Laws Affecting Your Company.  As Brett says, bury your head in the sand regarding electronic discovery and you may pay a hefty price.  All companies, large and small, must familiarize themselves with the new rules and plan accordingly.  If you wait until you get sued, it's too late.

Listen to the electronic discovery podcast by going directly to my BlogTalkRadio Host Page.  The podcast is free.

Another upcoming podcast includes an interview with Matthew Ashburn from Sunbelt Business Brokers in Ankeny and Cedar Rapids.  Matt has a lot of interesting information regarding how to prepare your business for an eventual sale.  The key is good advance planning and it makes a big difference.

I hope you enjoy this new added feature to Rush on Business.

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Wiggin and Dana's Franchise Law Blog has a discussion about the amended FTC rules for franchises.  The new rules require franchisors to provide all potential franchisees with a disclosure document containing 23 specific items of information about the offered franchise, its officers, and other franchisees.

Required disclosure topics include, for example: the franchise's litigation history, past and current franchisees and their contact information, any exclusive territory that comes with the franchise, assistance the franchisor provides franchisees, and the cost of purchasing and starting up a franchise. If a franchisor makes representations about the financial performance of the franchise, this topic also must be covered, as well as the material basis backing up those representations.  The new rules are designed to require more extensive disclosures in certain aspects of the franchisor-franchisee relationship.

The amended rules have a phased-in effective date: as of July 1, 2007, franchisors may follow the amended rules, or they may continue their current practice of complying with the original rule or individual state franchise disclosure laws that require an Uniform Franchise Offering Circular ("UFOC"); but by July 1, 2008, they will be required to follow the amended rules only.

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New York small business lawyer Imke Ratschko wrote an excellent blog post on Web incorporation services.  She found a blog post by a California business lawyer who described a certain Web incorporation service as almost a scam.

Imke also shares her reasons why people are better off choosing business lawyers to perform incorporation and LLC formation services.  Her list:

• Many business attorneys make it easy for you by offering flat fee business entity formations and initial free consultations;
• a real person with a law degree takes responsibility for your business entity formation;
• a real person with a law degree is available to answer questions and help you decide what business entity is right for you;
• a real person with a law degree can help you draft an operating agreement or shareholder agreement.  Web services do not usually draft these agreements for you.  If they do, you will get a "one size fits all" agreement that can be worse than not having one at all.
• a real person with a law degree will remember you and your business and remind you of follow up legal issues in running a corporation or LLC, maybe even years later.

I couldn't agree more with Imke.  Many business lawyers, including myself, provide incorporation and LLC formation services on a flat fee basis.  The major difference is that when you see a business lawyer for your services you will actually receive legal advice.  You just don't get that from a Web incorporation service.  Don't take my word for it - just read their disclaimers.

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A couple of months ago I received Sirius satellite radio as a gift.  I love it except for one constant ad that drives me absolutely bonkers.  About every fifteen minutes I hear an ad from LegalZoom, a legal document company.  LegalZoom touts that its fees are 85% less than those of lawyers. 

First, with most Iowa lawyers the fee comparison is just not accurate.  Second, while LegalZoom's ad says it is not a law firm it fails to highlight an important part of its disclaimer pointing out that the legal information on their site is not legal advice and is not guaranteed to be correct, complete or up-to-date.  But as they say, it is experience you can trust.  Or is it?  Be sure to check out this post from a Colorado lawyer who loves LegalZoom because he has landed more business fixing mistakes from LegalZoom than he would have earned had he done the work in the first place. 

One of the craziest things LegalZoom offers is a prenuptial agreement.  First, if you have enough money for a prenuptial agreement you can afford a lawyer.  Second, a prenuptial agreement is one area of law that if a mistake is made it could cost you - I'd say approximately half your assets.  Let's just say I have trouble believing any attorney worth his or her salt - including those "top attorneys" who founded LegalZoom - could in good conscience recommend a person use a legal forms company for a prenuptial agreement.  I also wonder what my friend Brett Trout thinks about their offers on patents, trademarks and copyrights.

Use LegalZoom if you must but I highly recommend talking to an attorney before you go that route.  You might be surprised by the expense comparison, and even if the cost is slightly more, the legal advice is usually worth it.  As the saying goes, you can pay now or pay later.  The choice is up to you.

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The U.S. Supreme Court has decided to hear an important employment discrimination case in which a Coca-Cola bottling company fired a black employee.  The case involves allegations that a supervisor was motivated by racial bias and influenced a human resources manager to fire the worker.  The human resources person was located elsewhere and did not know the employee's race.  Such circumstances are sometimes referred to as "cat's paw" liability.

The Court will be asked to consider whether an employer can be held liable for intentional discrimination when the person who fired the employee harbored no discriminatory bias.

See also the Tennessee Business Litigation Blog for a discussion on the case.

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On December 31, 2006, I wrote a post on how Blog Monitoring is a Top Trend for 2007.  Today's Des Moines Business Record cover story is Exhibit A.  The story recounts how smart companies are listening to bloggers and dealing quite effectively with negative publicity.  It seems Central Iowa blogger Tom Vander Well recounted on his blog about an unfortunate customer service experience he had with the Geek Squad, a subsidiary of Best Buy.  Needless to say, Tom didn't have good things to say about Best Buy or the Geek Squad. 

So what happened next?

Geek Squad founder, Robert Stephens, emails Tom and tells him, "We shall not rest until your problem is addressed."  Now that is service!  But also very resourceful.  If Robert Stephens had not been monitoring RSS feeds that never could have happened. 

Why should lawyers care?  First, monitoring blogs and Web sites through RSS feeds give you INSTANT KNOWLEDGE.  Now you are able to know when someone has said something good or bad about your law firm, your competitors, your clients and legal developments.  Smart companies involved in litigation or disputes (i.e. Mediacom and Microsoft) are monitoring blogs and better understand how to deal with public opinion. 

But here is the best part (this is where YOU may earn a client for life and you don't even need to be a geek).  You have the perfect opportunity to show that you CARE.  If something appears on the Web about your client or if there is something that interests or impacts them you have the opportunity to forward it to them in a record amount of time.  It is conceivable that you may know your client has been sued before the client knows.  Do you think that would help you to keep a client for life? 

You don't need to blog - just start reading feeds.

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I ran across an excellent article by employment law litigator Jason Storipan of Stark & Stark on issues involving electronic discovery and employment law.  Storipan cautions that employers must be aware and plan for the new electronic discovery rules:

". . . [e]mployment law is an area of the law that the increases in the use of technology in the business world increases the risk of a lawsuit.  As any employer is aware, technology has changed the workplace, and its use can create a host of problems in the workplace that can lead to litigation.  The new Rules on electronic discovery potentially can lead to even more problems for the unprepared employer.  In this instance, the best way for the employer to prepare is to plan as if it is involved in litigation and meet with its counsel." 

I agree with Storipan.  Early preparation for electronic discovery by companies is crucial.  The duty to preserve electronic materials begins when a company reasonably anticipates litigation, not once litigation begins.  Spoilation is the destruction of of evidence.  There are significant consequences for destroying evidence.  Employers must be aware of how to preserve this evidence and comply with the new electronic discovery rules.  Waiting until you get into litigation is not the answer.

FYI:  Patent and information technology lawyer Brett Trout of Des Moines is also planning a series of posts on electronic discovery issues.  Be sure to check those out.

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Jeff Mathias is the author of a new law blog called Bankruptcy Cafe.  He already has some nice posts including 8 Tips to Rebuild Your Credit After Bankruptcy and 10 Common Bankruptcy Mistakes.  His writing style is very straight-forward and informative. 

Jeff is savvy when it comes to providing information to the public through the Internet and other publications.  If you need bankruptcy information this blog will be a great resource.

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Microsoft has renewed its attacks against Roxanne Conlin in the Iowa consumer class action case.  This time Microsoft wants the right to question the named plaintiffs about their connections to Conlin before the lawsuit.  Apparently Microsoft believes Conlin recruited these plaintiffs to file the lawsuit.  According to the Des Moines Register, Conlin acknowledges she was friends with some of the plaintiffs before the lawsuit began.

Judge Rosenberg had previously ruled that Microsoft could not ask the individual plaintiffs about their connections to Conlin.  Microsoft now claims Conlin and her co-counsel opened the door when they told the jury the plaintiffs were "just regular people".  A ruling on this issue is expected soon.

Earlier in the case Microsoft attempted to disqualify Conlin alleging she had engaged in misconduct while obtaining certain documents.  Judge Rosenberg said there was no misconduct by Conlin and allowed her to stay in the case.

Recruitment by plaintiffs' counsel would be inappropriate and could raise questions about whether the class is properly certified.  On the other hand, there is nothing that prevents a lawyer from representing a friend.  Many lawyers represent friends or acquaintances.  But rarely do cases involve $300 million in damages.  The stakes are high and Microsoft is pulling out all the stops.   

UPDATE:  Judge Rosenberg ruled in favor of Conlin and the plaintiffs.  Microsoft is not allowed to question the named plaintiffs about their connections to Conlin before this lawsuit.  That's strike two in misconduct allegations against Conlin.

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I tell clients they need to establish relationships with at least four professionals when starting a business including:

• Lawyer
• Banker
• Insurance Agent
• Accountant

As tax season kicks into full force many business owners may be considering hiring an accountant to complete their business taxes.  I always get worried when a business person tells me he or she does not have an accountant for their business.  In my view, a good accountant for your business is absolutely essential.

This article from About.com talks about how to hire the right accountant.  One of the best pieces of advice from the article is that you should make sure your accountant works on business tax returns.  Not all accountants specialize in business tax returns.  The article points out that big tax preparation chains such as H & R Block and Jackson Hewitt generally cater toward individuals and you may want to consider going elsewhere for business tax returns.

I wonder if fellow Iowa blogger and accountant, Joe Kristan could weigh in with some sage advice on this topic.

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Big news today.  A federal grand jury has indicted four people on fraud and conspiracy charges in the CIETC scandal and the former CIETC Chief Operating Officer, John Bargman, apparently pleaded guilty to charges in exchange for testimony in the case.

The four indicted include:

• Former Des Moines City Councilman and CIETC Board President, Archie Brooks
• Former CIETC CEO Ramona Cunningham
• CIETC's former accountant, Karen Tesdell
• Former Deputy Director of the Iowa Workforce Development, Jane Barto

The indictments come 10 months after the scandal at the job training agency broke.  The income received by CIETC management is staggering and according to one of my criminal defense buddies it is no surprise federal authorities filed charges.  This has been brewing for months.

If you are a volunteer board member of a state or other agency you better make sure you pay attention and provide appropriate oversight.  Volunteer board members can no longer serve only as a rubber stamp.  Will indictments like this have a chilling effect on the willingness of people to volunteer for these boards? 

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Join the Public Defender Stuff Blog and its Blawg Review #91 in honoring Dr. Martin Luther King, Jr.  You can also check out the "I Have Dream" speech courtesy of YouTube and the Volokh Conspiracy.

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In Iowa, the sole owner of a business generally has the following choices for type of business entity:

• Sole Proprietorship
• S Corporation
• C Corporation
• Single-Member Limited Liability Company

Some of the factors you may want to consider include:

• Do you need limited liability protection?
• How will profits be taxed?
• Can you take advantage of certain fringe benefits?
• Will you be seeking additional investors?

A sole proprietorship is the easiest to set up.  No formal legal documentation is required.  But a sole proprietorship does not provide you with limited liability protection.  The S Corporation, C Corporation and LLC provide limited liability protection.

Business profits with the S corporation, single-member LLC, and sole proprietorship are taxed at the individual level and you avoid double taxation.  The C Corporation can allow you to take advantage of certain fringe benefits but it also requires appropriate tax planning to reduce your corporate tax liability. 

A C corporation may be necessary if you want to attract additional investors, especially venture capital.

Keep in mind there is nothing to prevent you from changing business entities as your business grows.  Many businesses start out as sole proprietorships and then incorporate later. 

For more information see these posts on Small Business Incorporation in Iowa and Forming an LLC in Iowa. 

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Tim Johnson of Carpe Factum recently challenged Iowa patent lawyer Brett Trout and me to show how we "thin-slice" clients and cases. Brett posted first and did a great job with how he thin-slices clients.  That leaves thin-slicing cases to me.  Thin-slicing is a concept from Malcom Gladwell's book, Blink, and is about how we as human beings are capable of making sense of situations on the thinnest slice of experience.

So, what five things do I look for to quickly size up a litigation case?

1)  Do I like the client?  I generally see the good in people.  If I don't like someone there is a significant possibility a jury or judge won't like them either.  That is not to say the client must be perfect.  No case is perfect and the client won't be either. (Just as lawyers are not perfect).  But I ask myself about whether I am willing to sit next to this person at trial.  It also doesn't hurt if the other side wears a black hat.  But experience tells me a client is never as good and the other side is never as bad as you initially think.

2)   What's the law?  You can have huge damages and a wonderful client but if the law is not on your side - forget about it.  I turned down the largest damage case that ever walked into my office because it could not be won.  You must have a reasonable chance of winning.

3)  Am I familiar with the subject matter?  Preparation of a case in an unfamiliar area of law costs more time and increases the risk.  Plus, I need to be qualified to handle it. 

4)  Will the recovery be worth the effort?  This is true for both the client and lawyer.  If it is an hourly case, I consider the likelihood the client will recover significantly more than they have paid in legal fees and expenses.  If it is a contingency case, the risk is on my shoulders.  So, I consider the likelihood of recovery, the potential amount of recovery, and how much I will need to invest (in time and money) in order to complete the case.  It is also important to know whether the judgment is collectible. 

5)  Is the case interesting or a cause worth pursuing?  It helps to have passion for the case.  We often live with cases for years at a time.  I always ask whether I can make a difference and help someone.   

When I follow these factors it tends to lead to more success and happiness both on my part and the client.   

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If you are a lawyer representing an individual you better start asking your clients whether they have a MySpace, Facebook, or other social networking Web site.  A lawyer I know ended up on the short end of the stick in a pre-trial hearing when opposing counsel pulled out pictures and comments from a client's MySpace site during a hearing.  Needless to say, the pictures and comments were less than flattering for the client.

Whether you have a personal injury, employment, family law or other case be sure to ask the client in your initial interview whether they have a social networking Web site (or whether family members or friends may have posted about them on the Internet).  If so, be sure to visit the site to learn what has been posted.  If you are a client, be sure to tell your lawyer about any of your personal Web sites.  You may think you are safe because only your "friends" have access.  Keep in mind that your friends are one subpoena away from being forced to testify against you. 

Ignore MySpace, Facebook, and other similar sites at your peril.

See this related post on employer background checks.

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The Fifth Circuit Court of Appeals has ruled there is no private right of action for violations of HIPAA (Health Insurance Portability and Accountability Act of 1996).  To this point, every federal district court that has decided the issue has also ruled no private right of action exists.  No other federal circuit court has decided the issue.

A woman had sued filed suit against a doctor for disclosing medical information without her consent.  The Court based its decision on the fact that HIPAA provides both civil and criminal penalties for improper disclosure of medical information and limits enforcement to the Department of Health and Human Services.  The Court ruled that since HIPAA specifically delegates enforcement, there is a strong indication that Congress intended to preclude private enforcement.

Read the opinion.

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The Plaintiffs have now set up a Web site to post the public records in the Iowa consumer class action against Microsoft.  Just go to www.iowaconsumercase.com.  The site currently has transcripts available.  Exhibits and further information will be available later this week.  A permanent Web site is expected to be set up during the week of January 21st.  Judge Rosenberg has ruled that a document may be posted three days after it is admitted into evidence.

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Employment lawsuits are continually on the rise.  Here are seven things that may help you avoid employee lawsuits:

1.  Treat Employees with Respect:  Seems like a basic philosophy but it is amazing how many employers forget to treat their employees with respect.  Employees that are humilated or treated in a disrespectful way are much more likely to sue your company. 

2.  Communicate with Your Employees:  First, make sure you have an effective employee handbook with up-to-date employment policies and publicize your policies to employees.  Make sure you follow your policies.  One of the easiest ways to land in an employee lawsuit is the failure to follow your employment policies.  Also make sure you have an open door policy where employees are allowed to voice their concerns or complaints.  Do not let complaints fester.  Deal with them right away.

3.  Implement an Effective Unlawful Discrimination and Harassment Policy:  Your harassment policy should include more than just sexual harassment.  There may be other forms of harassment based upon race, religion, age or disability.  It is also critical to consistently train employees and supervisors regarding unlawful harassment and discrimination.  You should consider training employees on harassment and discrimination issues at least once every year.

4.  Document, Document, Document:  The importance of good record keeping cannot be overstated.  If you don't have something in writing, chances are a jury or judge may not believe it happened.  Be sure to document even verbal warnings and maintain an appropriate personnel file in order to make sure the documentation is not lost.

5.  Conduct Honest Employee Evaluations on a Regular Basis:  Unless your company is headquartered in Lake Wobegon every employee is probably not above average.  Evaluations can be valuable proof in an employment lawsuit.  Make sure poor performance is properly documented.  Otherwise, the judge or jury will not believe you when you say the employee performed poorly but all their evaluations are excellent.  You should conduct the evaluations on a regular basis, usually at least once per year.

6. Do Not Retaliate:  Employers are often blindsided by retaliation claims.  There are a number of proactive measures you can take in order to avoid liability for retaliation claims.  It is important to avoid retaliation because recent cases have lowered the burden for plaintiffs to prove their retaliation claims.

7.  Take Action and Investigate Promptly: If a complaint arises, make sure you take the complaint seriously and investigate promptly.  A quick and thorough investigation may help eliminate problems before you have a real mess.  You will need to consider who should conduct the internal investigation.

These simple steps will go a long ways to reducing employee lawsuits.  To ensure that your company has done everything it can to avoid employee lawsuits, you should have your employment policies, training and practices reviewed by your employment lawyer.

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The Iowa consumer class action against Microsoft resumed this week with testimony from the first live witness in the trial, Ronald Alepin.  Alepin is a computer consultant and a technology advisor with MOFO in San Francisco.  Groklaw has some interesting information about Alepin and his past dealings with Microsoft.

Alepin has been called to describe the tactics allegedly used by Microsoft to thwart and crush competitors.  A potentially damaging part of Alepin's testimony is his accusation that Microsoft's "innovations" are really just Microsoft's attempts to copy others' programs and catch up with other developers. 

Judge Scott Rosenberg did limit Alepin's testimony in some regard.  Alepin could not offer opinions on whether Microsoft's conduct was anti-competitive, nor could he offer opinions on other legal matters involving antitrust cases against Microsoft.  Alepin also could not testify on "what would have been" had Microsoft acted differently.

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Yesterday, the Iowa Blogga Nostra had its initial family gathering at Panera in West Des Moines.  Talk about passion and enthusiasm for your work.  These Central Iowa bloggers certainly have it:

• Mike Sansone (Blog Coaching)
• Sandy Renshaw (Design)
• Brett Trout (Patent Attorney)
• Brett Rodgers (Strategy)
• Drew McLellan (Marketing)
• Tim Johnson (Project Management)
• Corey Garrison and Mark True (Stories)
• Sherry Borzo (Buy Local Network)
• Michael Libbie (Advertising)
• Adam and Hannah Steen (Venture Capital)
• Matt Owen ( US Rodeo Supply)
• Andy Brudtkuhl (Web Developer)
• If anyone is missing be sure to let me know.

If you are a Central Iowa blogger who did not attend (or just interested in blogging) please feel free to stop by.  The tips, success stories and discussions on future trends were flowing.  It would be great to see Nanette Rodriguez (Hispanic Marketer) Joe Kristan (accountant), Matt Gardner (wealth and estate planning) and Jennifer Jaskolka-Brown (family law) at Panera in WDM on the first Friday of every month at 8:00 a.m.

If you are a blogger it is truly "an offer you can't refuse".

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If you are starting a new business in Iowa it is important to know your registration and tax-related responsibilities.  The following is a list of helpful resources for the new business start-up in Iowa.

• Iowa Small Business Development Centers 
• Iowa Business License Information Center
• Iowa Business Tax Registration
• Iowa Retail Sales Tax Permit
• Iowa Department of Revenue
• Iowa Unemployment Insurance Account
• Iowa Workforce Development
• Iowa Workers Compensation Information
• Iowa Secretary of State
• Iowa Department of Economic Development
• Federal Internal Revenue Service

I have also placed these links on the right hand side of this Web site under the Resources section for future reference.

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When reviewing the franchise agreement a prospective franchisee should pay careful attention to the territorial provisions contained in the agreement.  It is important to protect yourself from territorial encroachment and competition from both the franchisor and other franchisees.

Territorial encroachment is a frequent complaint from franchisees.  Usually this involves the franchisor granting a new franchisee a territory "too close" to an existing franchisee.  Sometimes it involves an affiliate of the franchisor placing an affiliated franchise (selling similar products) too close to the existing franchisee.  Unless the franchise agreement creates express protection for the franchisee's defined territory, a court may be reluctant to find a franchisor encroached on the franchisee's territory.

Be sure to review the territory provisions of the franchise agreement to make sure you have a protected territory.  The Iowa Franchise Act (specifically Iowa Code section 523H.6) does provide some protections against encroachment.  The downside is that while these protections may help you in litigation the damage may already have been done when you get to that point.  Moreover, there never any guarantees of success in litigation.  Be proactive and discuss the territory provisions up front with the franchisor during the due diligence process. 

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Frank Felker of Radio Free Enterprise has an interesting take on what is in store for businesses in 2007.  His #1:

Downward pressure will continue on both your costs and your prices.
The Wal-Mart Effect has hit every segment of our economy. The world's largest retailer has taught every consumer to expect the very lowest prices and every vendor to find the most efficient processes. Your challenge is to take advantage of the lowered costs while resisting the urge to lower your prices. The former is relatively simple thanks to Sam Walton and your trusty Internet connection. The latter requires you to deliver an offering whose value is truly superior to your competitors.

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