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

 I often tell clients it is important to establish relationships with at least four individuals when they start a business:

• Lawyer
• Accountant
• Banker
• Insurance Agent

But in order to have a starting five we need to add a fifth professional.  Who would I add?  How about a marketer? 

But the real reason I wrote this post was so I could shamelessly plug the best team in Iowa.  The Drake Bulldogs basketball team has now moved to 19-1 with a hard fought win over Creighton last night.  The 16th-ranked Bulldogs are clutch this year and have found ways to win at the end of the close games.  Excellent free throw shooting never hurts and last night was no different.  It was a great crowd and great fun.  If you get a chance be sure to catch a game this magical season.

It's been a long time Drake fans had this much to cheer about.  Go Bulldogs!

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When searching my feed reader last night I ran into this distressful thread on BlueMauMau.org, a pro-franchisee Web site.  In the comments below the initial post, franchise lawyer Richard Solomon says he is giving up on trying to help franchisees.  Richard says,

I'm about ready to climb down off the due diligence cross and go do something less stressful, like crisis management counseling. In crisis management, people really do want help and are willing to provide a budget for it.

I'll admit it.  There have been times where I have felt the same way as Richard when trying to assist franchisees in reviewing their franchise agreement and conducting due diligence.  There are times when a franchisee is going to do the deal come hell or high water.  But at this point I am not willing to stop trying to help these people. 

I think Richard's point is simple.  Isn't it unbelievable that people would be willing to invest their life savings in a franchise business but refuse to spend a little time and small expense to properly conduct due diligence?

The purpose of a franchise agreement and disclosure document review is not for the lawyer to talk the client out of their franchise business opportunity.  An appropriate review will help point out the legal and business risks and possible areas of negotiation.  After the review, the client must still  make their own decision about whether to proceed forward.  I have been told by more than one client that a review opened their eyes to help them better understand the franchise opportunity.  Some moved forward while others backed away from their deal.

I have been very fortunate to work with prospective franchisees that are serious about their due diligence.   Recently I had a prospective franchisee client that encountered all the classic warning signs from a franchisor.  I know this client felt disappointed the deal didn't go through but I was sure proud they were willing to walk away.  Only someone serious about their business would have done so.   

So don't give up Richard (and other franchisee lawyers).  It takes just one client to make you see this is all worthwhile and they definitely need our help.

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Under a new Iowa immigration bill, employers that repeatedly employ illegal aliens would face civil penalties of up to $10,000 and up to a year in jail under legislation being proposed in the legislature.  Employers would be exempt from penalties if they seek verification of a worker's citizenship status through the Department of Homeland Security's verification system.  But many employers complain that system is dreadfully slow.

House File 2026 has sparked significant debate.  Democrats claim it is a human rights issue.  Republicans claim it is pure politics in an election year and intended to protect unions while harming non-unionized independent contractors.   The Hispanic community in particular has great fears that jobs will no longer be available in Iowa under the new law.

This bill may have the biggest impact on Iowa businesses this legislative season.  Read  House File 2026 here.

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Employee lawsuits are continually on the rise.  So how do you keep your employees happy and stay out of court?

While it is technically not a "legal requirement" I have long suggested that treating employees with respect is the best way to avoid employee lawsuits.  Building on this thought I recently saw a couple of excellent posts from employment lawyers John Phillips and Jon Hyman concerning fairness as the Golden Rule of Employee Relations.

Treating others as you want to be treated is a concept that even young children understand.  But while the concept is easily understandable employers still have a difficult time being fair.  To this end, Phillips offers five areas of fairness where employers should concentrate their efforts:

1. Appearance: does an employment action appear fair to an outside observer?
2. Counseling: except in the most egregious of cases, was the employee told of a deficiency and given a chance to correct it?
3. Consistency: are similar disciplinary problems handled similarly and to the same degree?
4. Documentation: can you point to a performance review, written warning, a note in a personnel file, or some other contemporaneous piece of paper that supports the personnel decision?
5. Rationale: was the employee given a reason for the decision, and was it the real reason?

As Hyman points out, juries are big on fairness.  It is critical to remember that in a jury trial your jurors are likely to be employees rather than employers.  Being fair will not only reduce the employment claims against you but increase your chances of success if you are sued.

So next time you deal with an employee disciplinary situation be sure to remember the Golden Rule of Employee Relations.  It will make a difference.

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The Iowa Farm Bureau is sponsoring a business development seminar on February 7, 2008 at the Iowa Farm Bureau Auditorium in West Des Moines, Iowa.  (I didn't see a start time on the Web site but for further information you should contact 1-800-254-9670).

The Renew Rural Iowa is an Iowa Farm Bureau program that combines an innovative mentoring model for entrepreneurs with a rural vitality investment fund.  The program is designed to enhance the enterprise value of existing or new small town businesses to encourage their reinvestment within the community, thereby increasing the overall wealth of that community.  The program combines the relationships, network and resources of IFBF with the business mentoring muscle of Cedar Rapids-based Entrepreneurial Development Center, Inc. (EDC).

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Read this post from Indiana lawyer Sam Hasler to find out why it is so important to respond promptly and appropriately to sexual harassment complaints. 

In the case mentioned by Sam, Chili's Grill and Bar escaped liability even though the employee established a prima facie case of harassment in her lawsuit.

Sam also has some great advice:  "Having a harassment policy is not enough. Having a that policy in an employee handbook is not enough. Having the policy and enforcing the policy is the key to success."

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I've said it before (and also here) but it bears repeating that wage and hour class actions are booming.  Just this past week Iowa's Casey's General Stores was hit with a wage and hour lawsuit with allegedly more than $5 million at stake.  If that isn't enough to convince you to examine whether your company has vulnerabilities you better read this informative blog post from Mark Toth of Manpower.

The 4th Annual Workplace Class Action report from Seyfarth Shaw shows the volume of wage and hour class action continues to grow exponentially.  As the report's editor says, “identifying, addressing, and remediating class action vulnerabilities” should be at the top of every employer’s list of 2008 priorities. 

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This post from the New York Business Divorce Blog will make you think twice before becoming involved in a business with your romantic partner.

I recently wrote on the firm's Iowa Law Blog that one way to avoid a volatile business divorce is to draft and enter into an effective buy-sell agreement with your partner(s).  This is true whether you are entering into a business arrangement with your spouse, significant other or friend down the street.  Rarely do partner spouses enter into buy-sell agreements.  Like prenuptial agreements, it may not always be comfortable to form a buy-sell agreement  with a spouse.  But it is advisable nonetheless.

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Today I'll be pinch hitting for Brett Trout at the Des Moines Partnership's Biz Networking Luncheon.  I will cover how to stop doing things online that will land you into court.  The best part of this presentation is I get Brett's material.  I hope to see you there today.

This event will be held in the Arthur Davis room at the Greater Des Moines Partnership on January 15th. The luncheon will begin at noon and will conclude at 1:30. The cost of the event is $10 for members and $12 for non-members.  To RSVP for the event, please email Cathy Spenceri at caspenceri@dmacc.edu . We hope to see you there!

photo on flickr by jimcchou

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This Wednesday morning (Jan. 16th) I will speak at the IowaBiz breakfast series on the How To Avoid Legal Surprises for Your Company.  The presentation begins at 7:30 a.m. at the Professional Solutions Insurance Services' Building, 14001 University Avenue, Clive, Iowa.

Thanks to our hosts from Professional Solutions Insurance Services.  So far, the series has been fantastic including talks from Drew McLellan, Shirley Poertner, Brian Honnold and Mitch Matthews.

I hope to see you there.

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The Pennsylvania Employment Law Blog posts on how Lockheed's failure to take discrimination complaints seriously led to liability. 

Want to know how to avoid employment lawsuits?  See one of my more popular posts: 

 Seven ways to avoid employment lawsuits. 

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If you are looking at a franchise opportunity perhaps you should beware if your prospective franchisor says the following:

1. You don't need a lawyer to review the agreement. 
2. I would prefer you don't talk with the other franchisees.  You should only talk with me.
3. We won't negotiate any terms.
4. Trust us, we can't (and won't) change the agreement but we won't really hold you to that provision anyway.

Like many people you may be considering an investment of your retirement savings in a franchise.  You owe it to yourself to do the best job possible investigating that franchise and performing the most due diligence possible.  That includes hiring franchisee counsel to review the franchise agreement and disclosure document and talking with as many franchisees as possible.  Some franchisors won't negotiate but many will consider your needs.  And never, I mean NEVER, believe the franchisor that tells you they won't hold you to the terms of their written agreement.  You can be assured that the franchisor's lawyer in any lawsuit will never acknowledge that statement was ever made and most franchise agreements are written so that any such statement could not be used as evidence anyway.

Trust your gut.  Don't believe the hype.  Be willing to walk.

photo on flickr by Picture Perfect Pose.

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Roger Clemens has sued his former trainer for defamation in an attempt to regain his Hall of Fame reputation.  The WSJ Law Blog has a great story on the lawsuit.

The interesting question will be whether the trainer will file a counterclaim for defamation.  Why not?  McNamee now has to protect his reputation and Clemens has the deeper pockets.  At this point McNamee won't have anything to lose either.  Public opinion for baseball players after the Mitchell Report is perhaps only a little higher than the public's views of lawyers.

See my thoughts on the Mitchell Report here.

Photo on flickr by dethtrip99

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Iowa trial lawyer Joe Gunderson was featured this past week during the Iowa Caucus on the Wall Street Journal Law Blog.   Joe had the following comments regarding what it's like to have Iowa in the national spotlight:

It’s fabulous because we get a rejuvenated civics lesson every four years. Our newspapers for the past few months have been filled with the political process and the issues of the day. The candidates get asked questions in Osceola about the Iraq war. In Orange City, they get asked about ethanol. In Fort Madison, they get asked about Social Security and Medicare. Just this morning, I was driving in downtown Des Moines and there were college students standing outside, underdressed in 10 degree weather, smiling and waving Obama signs. How could you be cynical about politics when you see that in the morning while driving to work.

It was kind of funny that the Law Blog expressed surprise Gunderson was a trial lawyer AND chaired President Bush's Iowa campaign.  Only in Iowa, right?  Republican trial lawyers and Democrat defense lawyers like Gordon Fischer.   On the Iowa lawyer-advisor side, Joe mentioned Iowa lawyers Doug Gross (Romney) and Jerry Crawford (Clinton) in the story but apparently forgot about the younger Fischer and his advisor role on the Obama campaign.  Gordon accurately projected the huge turnout, which no one expected other than Ann Selzer, and helped lead the Obama campaign to victory. 

There's change happening here in Iowa too.

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Is your business in need of a buy-sell agreement?  Don't know how to get started? 

An excellent resource worth considering is a book from Z. Christopher Mercer called Buy-Sell Agreements:  Ticking Time Bombs or Reasonable Solutions?   A blog post from Mercer worth reading also raises an excellent point regarding buy-sell agreements:

If you are in the process of creating a buy-sell agreement, be sure that the document actually reflects the agreement of the parties to the critical business and valuation issues that relate to the particular situation.  If you have an existing buy sell agreement, review it to insure that it reflects agreement of the parties on key business and valuation issues that currently pertain to your situation (and not to the situation fifteen years ago when you first signed it!).  In both cases, be sure through review by competent legal counsel, that the agreement appropriately considers legal issues that pertain to your situation.

Seems like common sense but I recently learned of a situation where two owners had drafted their own agreement. (Kudos for at least recognizing the need for it).  The owners agreed upon a valuation.  The problem that arose is that neither owner really understood the valuation they had agreed upon and as their business progressed the valuation did not reflect the realities of their business.  The failure to review and implement an agreement with competent counsel has now resulted in litigation. 

It's also wise to get advice from an accountant or other business valuation expert when creating the buy-sell agreement.  A team approach is often very helpful.

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Iowans turned out in record numbers for the caucus!  My precinct almost doubled the turnout from 2004.  The energy was infectious and everyone could feel something special was happening.

Congratulations to the winning candidates but the real winners are Iowans.

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Today is the day.  The Iowa caucus is finally here.  I saw this report fromYahoo that approximately 2.75 million Iowans won't caucus today.  That means only approximately 10 percent  (or less) of Iowans are expected to caucus.  Let's hope we blow that figure away.

I was a little surprised when one of my friends told me he would not be participating in the caucus.  He thinks his vote doesn't matter.  Hogwash!  When I hear things like that my blood boils.

Recent elections for President have demonstrated that every vote counts.  If the electorate doesn't turn out we most assuredly get the government we deserve.  Do yourself a favor and exercise your vote.  By this November it may be too late.

P.S.  I will get back to business law very soon but first things first.

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Tomorrow is the Iowa caucus.  As my friend Michael Libbie pointed out in a recent comment on this blog, we are so lucky here in Iowa.  We get to meet the candidates, ask questions and receive hundreds and hundreds of phone calls.  (Well, two out of three isn't bad).

Caucus locations and information for Democrats can be found at www.iowafirstcaucus.org.

Caucus locations and information for Republicans can be found here. 

I encourage all Iowans to participate.  If you are in Precinct 70 in Des Moines, I'll see you there.

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