More Than a Mistake: Business Blunders to Avoid [312]

June 16, 2021

Covered in this episode of Legally Sound Smart Business are some typical business mistakes blunders small businesses often make and how to avoid them.

Blunder #1: Copying and pasting agreements

It may sound like a good idea at the time, but this blunder comes with hidden pitfalls. Having an attorney draft terms that are specific to your company’s products and needs can actually save your company substantial time, money, and avoidable liability.

If you choose to forego an attorney, at the least, read the terms line-by-line, to ensure that you understand everything. If there is something you don’t understand, you should not be using it.

Blunder #2: Creating a brand without doing research on the name

One of the worst things that can happen to a new business is for the owners to spend a substantial amount of time and money promoting a certain name, only to find out it’s already being used. Even if they haven’t registered a trademark, someone might own the rights simply because they were using it first.

At the very least, a Google search is an absolute must. A recommended search engine that does a worldwide search can be found here: https://www3.wipo.int/branddb/en/.

Blunder #3: Misclassification of workforce

It is one of the most common blunders, yet the negative effects of misclassification can be staggering. One worker claim can trigger an audit of your entire workforce by any number of state and federal agencies. These agencies have the right to issue heavy penalties and interest on taxes and wages, liens, and even injunctions. Businesses can still be subject to crippling class-action suits with multi-million dollar consequences.

Err on the side of classifying as an employee and assume the employee is non-exempt.

Blunder #4: Partnership agreement not signed by all parties

After spending time discussing the terms of your partnerships, make sure you get in writing–and do not commit blunder #1 by just copying and pasting an operating agreement found online.

Blunder #5: Not documenting employee performance

Documentation provides evidence that supports management decisions to take unfavorable action such as discipline or termination with an employee. This was discussed in our previous episode 311.

Transcript:

Full Podcast Transcript

NASIR: Today, we are covering blunders in the business world. We’re not just talking about a mere mistake.

MATT: It’s a matter of cost and time.

NASIR: To me, a blunder in business can result in substantial liability or exposure or cost or time.

MATT: That’s when the target on your back gets a lot bigger.

NASIR: Don’t do it.

[INTRO SONG]

This is Legally Sound Smart Business where your hosts Nasir Pasha and Matt Staub cover business in the news and add their awesome legal twist. Legally Sound Smart Business is a podcast brought to you by Pasha Law PC – a law firm representing your business in California, Illinois, New York, and Texas. Here are your hosts, Nasir Pasha and Matt Staub.

NASIR: All right. Welcome to our podcast! Today, we are covering blunders in the business world. This is where businesses make huge mistakes – blunders if you will – that can really cost their business in more ways than one.

MATT: Yeah, and I didn’t tell you about this beforehand, but I actually reached out to Bob Saget to see if we could have our own separate episode.

NASIR: Bob Saget?

MATT: Top blunders.

NASIR: That’s bloopers! Oh. You mean, America’s Funniest Home Videos.

MATT: Yeah.

NASIR: Of course, a classic.

MATT: I mean, to me, that’s a form of blunders, but maybe you disagree.

NASIR: Well, I would say it’s just as entertaining. Maybe from our perspective, perhaps our clients or other businesses may not agree, but I think, if we had everything on recording – well, we have it recording now. We could talk about it and submit this tape to Bob. What about that?

MATT: Yeah. I mean, I think it’s been, like, two decades since the show has been aired. They actually might have brought it back recently.

NASIR: Yeah, it’s called YouTube.

MATT: Okay. That is true. You’re right. That is what it is. I think that’s cannibalized the entire blooper industry at this point.

NASIR: Right.

So, we’re talking about blunders. I do want to take a distinction of what we’re talking about here because, Matt, do you play chess by chance?

MATT: I can.

NASIR: Okay. Well, I guess that’s a yes. Anyway, I’m horrible at chess, but I play a lot of chess. In fact, every time I talk about with people, people keep asking me, “Hey, have you watched Queen’s Gambit?” For the months, I’ve been saying no. I finally watched it, but I don’t know why I went to that. Anyway, in chess, there’s a difference between a blunder and a mistake and an inaccuracy. These are all terms in the chess world. I think it applies here in the sense that we’re not just talking about a mere mistake. A mistake in chess is where you make a bad move. Of all the good moves and best moves out there, you make the one that’s not good. A blunder is one where not only is it a bad move but somehow you lose some major position or you lose a piece even or even sacrifice the game, possibly, and actually cause a loss. That’s a blunder. To me, a blunder in business can result in substantial liability or exposure or cost or time, and these are things that are not just a mistake but really need to be avoided at all costs.

MATT: I think that’s a good clarification. A mistake is maybe misreading a word in a contract, right?

NASIR: Right.

MATT: A blunder is something that’s undiscovered. Maybe it was looked at, maybe it wasn’t.

NASIR: Avoidable.

MATT: But it can submarine everything.

NASIR: Right.

MATT: Like you said, it’s just a matter of cost and time. It’s both of those. That’s where the blunder is going to be.

NASIR: Completely avoidable. These are things that really, with enough diligence – I think that’s going to be the theme of the episode – with enough diligence, there is no reason you guys should be making this mistake, so that’s why we’re going to go over it. These are blunders that, even though they’re avoidable, we see them all the time. We have about five of them, so let’s get right into it with Blunder #1. Should I count down five, four, three, two, one? Or no?

MATT: Oh, we didn’t rank them. Maybe we can rank them at the end. I don’t think these are in any particular order.

NASIR: Yeah, we won’t.

Blunder #1 – this is where you’re entering into a transaction, and you need to find an agreement. This agreement could be something that you find on the internet. It could be something that maybe even an attorney prepared for you prior. But what you do is you copy and paste it for your suit and start using it for that transaction. That could result in a major blunder. Don’t do it.

MATT: Right. You know, I can’t count the number of times we’ve seen this. Like you said, it’s one of two things, typically. It’s either something that was prepared by an attorney. Maybe your attorney. Maybe somebody else’s that was just shared with you. Or you’re just pulling something offline. Sometimes, that’s fine. Sometimes, it can work. I mean, to me, there’s always going to be at least one but most likely multiple provisions in there that aren’t going to be applicable to what you’re trying to do and meet your objectives. You can’t just do that and sight and seen, passed along because you really have to go line by line which nobody wants to do. That’s what we have to do to make sure that it does meet the needs that you’re trying to accomplish.

NASIR: Most of the time, it doesn’t work.

MATT: Right.

NASIR: I remember we had a client that actually took a PPM and copied and pasted it to suit. To give some background, a PPM stands for private placement memorandum. It is a pretty relatively thick document. It’s understandable why someone would want to copy and paste that thing because there’s a lot of time that goes into it from a legal perspective and it’s expensive, but people tend to think that this is all boilerplate and template and so forth. It’s not to say that attorneys don’t use templates. Of course, they do! But I think many people would be surprised with how much subtleties are in those templates from case to case in the sense that most attorneys will actually read the entire contract every single time they use the same template because, again, unless they know that exactly this situation applies appropriately, it’s just too much, too risky to not go through that. Let’s just say this – in that particular situation – I don’t know if you remember this, Matt – we caught it in time. In a sense, we were able to amend the provisions that we could. Unfortunately, once they publish it, you have to do a formal amendment. If you’re amending a partnership agreement or something like that where people have already subscribed, it’s actually quite cumbersome to do that. And so, don’t do that – ever. Please.

MATT: I think that’s the big thing. You look at an agreement. It looks fine, but you don’t know what kind of intricacies have been added or removed from that agreement. If it’s a template that you or I have created, we have some familiarity with it, but if you’re coming in cold, there’s got to be something in there where you’re just not going to know. Something might have slipped in, or something might have been removed that you want to have in. It is a starting point, I suppose, but it’s not an ending point.

NASIR: Right. So, what should they do instead? Besides hire an attorney, I think, at the least, read every single line. I mean, it sounds obvious. Again, a lot of these blunders are avoidable, but you have to actually read every single line. If you don’t understand it, then you probably shouldn’t be using it and should probably get some help.

MATT: Right. We’ve been on the opposite side of that many times. Or I guess the after-the-fact side of it many times. It’s like, “Well, we have this issue – this dispute. Send us a contract.” “Yeah, I never really looked at it. Here it is.” At that point, there’s not much that can be done. You just try to do your best to resolve it in their favor.

NASIR: Right.

Blunder #2 – I like this one because I think it’s something that again I see all the time. Easily avoidable. Sometimes, it’s a little funny when it happens. Maybe in a sick way because what it is, basically, you create a brand. You don’t do any trademark search or even a Google search. And then, you realize after you’ve put all this money into a brand, you get some kind of cease-and-desist letter saying, “Hey, you’re infringing on our trademark.” Again, in a sick way, it’s a little funny. It’s like you’ve spent all this time and money, but if you would have just took maybe a few minutes in the beginning to make sure that the brand was actually trademarkable or unique, that it wouldn’t infringe on another mark that you could still be using it.

MATT: Yeah. You know, it’s 2021. At this point, it’s pretty difficult to come up with any sort of unique brand.

NASIR: Extremely.

MATT: If you’re the person that falls asleep and dreams of some brand name, whatever the name is, and they wake up and they said, “I have exactly what I need!” and they’re going to go with it. Well, I mean, most likely, at this point, it’s probably something that’s already taken, but step one – like you said – should be a basic search in Google or whatever search engine. Just type it in and something should surface up right there. I mean, that’s not the end all, be all from a trademark standpoint. You need to do a full-on search with the USPTO, but to me that’s step one just to see if it’s something that’s being used in any capacity. What I also like to do is do a URL search to see if the URL is taken.

NASIR: The domain, yeah.

MATT: If it’s not, it’s usually a pretty good sign that it’s a good brand because, at this point, someone would have gotten it by now, but there’s a lot that goes into it.

NASIR: It’s funny that you mentioned it’s hard to come up with something unique. Remember we had that one client that came to us. They were – how do I put this? – in real estate. We’ll leave it at that. They had a name for their brand that I thought was pretty unique. But, of course, as the story goes and we’re mentioning it, they received not only a cease-and-desist letter but from another brand in the exact same industry with the exact same name on the other side of the country. Unfortunately, our client was actually pretty successful – and it’s relative – compared to this other company on the other side of the country. It’s like you spend all this money now. Because that other party had – did the other party have a trademark or not? I can’t remember.

MATT: It was worst-case scenario because the other party had trademarked it. Their first use was prior to our clients. I think our client had even dumped in a lot of money in marketing. It was a no-win situation for sure.

NASIR: Right, and there are solutions to that. I don’t even remember what we did in that situation, but there are solutions besides rebranding, but sometimes you don’t have a choice. Now, all the money that you spent on a brand that most business owners have fallen in love with their brand, they don’t want to go back, especially if they’ve had success in reputation from it. That’s a big blunder. Avoid that.

MATT: Like you said, it definitely is a blunder, but it’s a preventable one. In the scenario that we were talking about, if they would have come to us beforehand at the beginning and said they were trying to build this whole thing around a brand, we would have done a search and looked into it and we would have uncovered this other company that was doing essentially the exact same thing with the exact same name. The point is you can’t just blindly pick something and go with it, run with it, and hope that everything works out because once you become successful – in this case, with our client, they did – that’s when the target on your back gets a lot bigger.

NASIR: Yeah, of course. That’s how they found them, of course. They started to get successful.

MATT: Yeah.

NASIR: What to do instead? There is a site. I have a bookmark, and we’re going to have to put it in the show notes, but I like directing people to that because it not only searches the USPTO database but also other databases as well and it’s faster and easier to use. USPTO’s website, unless you’re to it, it’s actually not as intuitive as you may think. There are some basic searches that are available to you but, if you don’t have a trademark attorney or your counsel to kind of go through it with you, of course, all the answers to these blunders is seek legal counsel, but in case you don’t, we’ll post this website. I just can’t remember what it is, but it basically searches all the marks worldwide and sees if there’s anything similar to what you have in mind as well.

MATT: Yeah, definitely. It’s at least a good starting point. A short fix.

NASIR: All right. Blunder #3 – misclassification of the workforce. Now, if you’ve been following us and listening to our podcast which I think most of you have been this past 50 years since we’ve been doing this or seven or so, if you’ve been listening, you know that misclassification of a workforce is a recurring theme because it just comes up so often. What do we mean by that? We mean you’re classifying an employee as an independent contractor or you’re classifying an exempt employee – or I should say a non-exempt employee as an exempt employee. These blunders have huge ramifications, especially if your workforce is big and you make that mistake over and over again with multiple people, then the repercussions are that much bigger as well.

MATT: Yeah, I think, of all the blunders we talked about today, this is probably the most prevalent one. It’s very, very commonplace. I think it happens pretty frequently. I would even go out to say that we can even advise companies that they shouldn’t do this and they’re still going to do it which arguably is a worst blunder, but the reason behind it is you bring somebody on the team, they should be an employee, and everything points to them being an employee, and the company wants to make them an independent contractor because it’s easier and it’s cheaper which is fine until it comes back the other way and they bring some sort of claim that they should have been an employee and then it opens up a whole gamut of things you have to deal with. Like I said, it’s a blunder that I think a lot of companies have experienced. But, when you hit the wrath of it, that’s when it becomes a problem.

NASIR: Right. But I do think this is a blunder in which people are definitely learning. I feel like the amount of issues that we used to deal with this before is not as much as it is now. I think in part that has to do with, besides just general education on this particular topic, probably mostly due to our podcast and our educational resources that we’ve been providing to the public – you’re welcome – besides that, also, companies like Uber and Lyft have really brought this issue to the forefront. It’s precisely why, in California, they changed the law and the proposition passed to reverse some of the law as to how you classify independent contractors versus employees. It used to be this really wide grey area, but in some states like California, now that grey area is really razor-thin to the extent that it’s much more clear as to which side of the fence your workers are at.

MATT: Right. You know, there’s federal law, obviously, but it is a very state-by-state issue. Like you mentioned, California being probably the most aggressive in that sense of it’s almost impossible to classify somebody as an independent contractor these days. Like you said, Uber and Lyft, they have been the ones driving this – no pun intended. Just trying to get the whole misclassification issue in their favor but, yes, I think – like you said, we’ve seen this from a lot of our clients, but in the last five years or so, there’s definitely been a lot less conversation about it because companies have just been kind of going towards the safety – the precautionary side – and saying, “Look, if it’s kind of a middle of the ground decision, let’s just make them an employee and not have to deal with it and not even have to worry about it.” I think that’s definitely a trend that’s been happening the last however many years. Whether that’s good or bad, you know, I guess it’s up to the business, but it is still a very big issue. We still see it quite a bit.

NASIR: Yeah, I remember this was such an issue for us that we would actually keep track of the numbers with clients. First of all, as soon as we had a new onboarding client – whether we’re offering our general counsel services through Pasha Law Select or some kind of limited scope model, we would check to see what the workforce like and how they’re classified. This will be one of the first things that we would do. And then, we would also record the results. I think at one point, when we were tracked for about two years or so, a majority of our new clients had misclassification issues. I think it was something like six out of nine or something like that. I guess that would be two-thirds, but something to that effect. It’s just incredible that so many of these clients had issues because they weren’t advised properly or they didn’t think to ask the question or they were kind of forcing it because some of this law was not as intuitive as maybe some people may think.

MATT: Yes, definitely. A lot of times, it’s not even intentional. Sometimes, it is, but it’s just like, “Look, I understand the cost that comes with having an employee. I don’t want to go that route.” How many times have we had this conversation? The person is fine with being an independent contractor. They prefer that. It’s like, “Well, it’s all good and great, but—”

NASIR: Until they don’t.

MATT: Yeah, exactly. That’s always a conversation. Whenever you get rid of them or whatever it may be, that’s when it becomes the issue. Like I said, I’ve lost track of how many times I’ve had that conversation. Most of the time, we’ve been pretty fortunate, I guess, with clients. But, yes, like you said, it’s good until it’s not.

NASIR: The easy solution for this is you can always air on the side of classifying them as employees.

MATT: Exactly.

NASIR: There’s an additional cost to it. But, from a risk management perspective, that’s the side that you go. Same with whether they’re exempt or not exempt. You assume that they’re not exempt unless proven otherwise.

MATT: Yeah.

NASIR: Again, seeking legal counsel to help you on this because some of this can be really complicated. It just depends upon the scenario.

MATT: Right. Unfortunately, that’s the advice, and that’s the same advice that I’d give, too. If you’re able to foot the bill on making them employee, if it’s a questionable decision, that’s the easiest route because it’s the path of least resistance from a legal perspective.

NASIR: Right. okay.

Blunder #4 – four out of five, we have two more to go, let’s just take a break here just to reflect about the universe and the different blunders that exist, but number four I think is an interesting one where – well, they’re all interesting, but this is unique in the sense that people definitely make efforts to avoid this blunder, but always seem to fall short. What I mean by this is, when you have a new business with multiple partners, you’ve got to get the terms between the partnership however the entity is formed. Whether it’s a corporation or LLC, you have to get that in writing, and don’t do Blunder #1 where you’re copying and pasting another operating agreement. Spend some time to get it done correctly. What I mean by people make efforts to do this but fall short is, for some reason – Matt, you see this too, right? For some reason, how many times have we had scenarios where clients will come to us and they’ll say, “Oh, yeah, our deals were 50-50 or 60-40 or whatever and we had some agreements, but we never signed them.” I don’t know why they spend all this time getting the agreements done, but for some reason they avoid the confrontation, or they avoid being direct with each other to just sign the documents.

MATT: You’re right. I do find it odd. Maybe it’s because we’re attorneys and we would think, if you had something prepared and everyone agreed to it, and everyone agreed to the terms, you would just sign it, but there’s been many instances where that’s not the case. You know, with these, it’s a scenario where I think everybody – or a lot of people – have just been like, “Oh, you know, I want to start this business with somebody. We’re on good terms. Just start it up kind of informally.” Even if you get going, start making money, and everything’s good, like you said, if there’s nothing written in place, at some point, there’s going to be some sort of dispute. It could be big. It could be small. It doesn’t matter because, when there’s a dispute, there needs to be something that needs to be looked to. If there’s no signed agreement in place – for example, a partnership agreement, operating agreement, by-laws, et cetera – then what are you supposed to do? It becomes a huge ordeal. It’s much easier when there’s a dispute if you can look at something in writing and say, “Look, this is what governs and this is how we’re going to decide this issue which, unfortunately – and we’ve dealt with this many times – that’s not always the case.

NASIR: I think it’s very common when the closer you are with your partner, it’s almost as if the less likely you are to get it in writing.

MATT: Yeah.

NASIR: Look, we’re human too – despite what people think about lawyers. Especially our firm. We’re very big on relationships, about trust, about looking eye-to-eye with somebody and making a deal. To me, that’s important. Whatever is in writing is not going to protect you from someone that is not honest or out to get you.

MATT: True.

NASIR: Relationships are important, but it’s also part of forcing the conversations that need to be done in order to contemplate these different scenarios that really just should be addressed in the beginning before it’s an issue. One thing that we’d like to advise – in fact, we’ll also link this to our show notes here today – we wrote an article. It’s an old article now. It’s not outdated, but it’s kind of held true a little bit. It’s a list of things that you as partners have to talk about in order to draft up your operating agreement in this case in an LLC. It forces you to have the conversation like, “What if you need more capital? Are people required to put capital in? Or are they not? What happens if not everyone puts in their fair share? What happens if one of the partners passes away? What if one of the partners wants out? These kinds of questions are, again, relatively basic. It’s a blunder – easily avoidable – but we often just have our clients. We say, “Hey, go through this list. Have the conversation. Come back to us and we’ll draft it for you,” but you need to have these conversations. We facilitate sometimes as well.

MATT: Yeah, it’s good to have those things agreed to beforehand because, like I said, if there’s any sort of argument or dispute, at least you have something to look to. If we had a client – two partners – would you rather have Blunder #4 or Blunder #1 in terms of would you rather have nothing in place or an agreement that was just stripped from somewhere else and that’s what they’ve agreed to?

NASIR: Hmm. I think Blunder #1 because my assumption is that they copied some kind of agreement that has some basic terms. Even if they didn’t think about it, at least it’s something that we can fall back to. If, for some reason, neither party likes it, they can always agree to change it, or all the parties, I should say, if there’s more than two. What would you say?

MATT: That was my answer as well.

NASIR: Well, you didn’t write it down, so I don’t know if I believe you.

MATT: It’s true.

NASIR: All right. So, that was Blunder #4 if you’re keeping track. I’m not, so I hope you are.

Blunder #5 – now, this is a good callback to our previous episode about how to fire an employee. A blunder that we actually referenced in that episode was lacking documentation, especially when you’re terminating for performance reasons. This is something that I think is hard to do because I think, especially in what the perceived culture of how a workplace should be, people tend to think – maybe for legal reasons – they kind of step on tippy toes. Is that the right phrase? With each other. I don’t know. Matt, okay, great. People will think, because they’re concerned about even getting sued or the environment that we’re in, they try to be very sensitive to everybody’s sensitivities. There’s nothing wrong with that, but when it comes to performance, it’s incredibly important to give direct constructive feedback – both positive and negative. Not only that, document it. That combination of things, sometimes, if you don’t have that and you terminate, it can really backfire in a huge way.

MATT: I think you were talking about stepping on eggshells maybe is the phrase.

NASIR: Eggshells?

MATT: Isn’t that right?

NASIR: Tiptoeing around? I don’t know. We need an expert.

MATT: Either way, you’re right. How many times have we had the conversation with a client of “I want to terminate this employee for poor performance”? Okay, that’s fine. It’s like, “What do you have? Have you had any conversations with them?” “Oh, yeah, plenty.” “What’s documented?” “Nothing. Well, that’s not ideal because, if the terminated employee decides to file some sort of wrongful termination lawsuit or what-have-you, the first thing they’re going to ask for is “give me my performance reviews.” If you have nothing in place, then it becomes an issue, and that’s something you have to deal with. I think we’ve always said it – do everything on the front end so you don’t have to worry about it on the back end.

NASIR: Right. Yes, this happens all the time. In fact, to be honest. I think there’s very few clients that do this completely perfectly because there’s always room for improvement in this area. At the least, there should be some kind of annual performance review. At that review, you need to be honest. This is a key factor too. This is kind of Blunder #5A or #5B. You document, but you only document the positive things and not the negative things because maybe you want to avoid putting something in writing and the employee is going to see it or someone else is going to see it and so forth. This can also backfire even worse in the sense that, what if – and we’ve seen it many times – someone’s not performing well but they’re exceling in other areas but it’s only documenting the positives. And then, eventually, something comes to head. You have to terminate them for bad performance. You get sued because of wrongful termination for whatever reason. Now, they look at their personal file with all these reviews. They’re all positive – ten out of ten. Now what are you going to do? This goes to your question. Again, would you rather have the documentation that is all good with no negatives when in actuality that person had poor performance? Or no documentation at all? I’m going to write my answer down. I’m recording this. I don’t have a pen here. Okay. What’s your answer?

MATT: Well, I’m trying to think. I don’t like either one.

NASIR: Let’s just throw away the rules and just make up your own scenario. That’s fine. Pick the lesser of two evils.

MATT: I don’t know what we’re doing here. I guess I would rather have the non-documented bad performance because at least that way I could say something that it was bad performance as opposed to having everything in writing. Like you said, ten out of ten across the board. It’s like, “Well, we’re firing you because you’re bad.” “Well, this says otherwise.” That’s all discoverable if there’s a claim.

NASIR: Yeah, that’s the correct answer. Two points for you. Absolutely! Not only that, I also thought of another reason to document is what is the people or persons that are actually the direct report of that hire are no longer working with the company for whatever reason? Or what if that employee goes from subject to termination is being supervised by one party but then, a year later, by another party and that previous supervisor or manager is no longer with the company? This happens all the time. If you don’t have that history and so forth, in fact, not too long ago, I was just reviewing a particular case where there was a lot of movement of this employee and I asked the question, “Hey, was there any history of X with this particular employee?” and the person I talked to said no. I’m like, “Okay.” I started digging into the personnel files and I realized the complete opposite. In actuality, they had a long history of this, but they’ve only been working with that particular person for a short period of time. And so, of course, they weren’t aware of it.

MATT: Yeah, that’s a good point, too. There’s obviously a lot of good reasons to document these sorts of things. I guess it goes back to my answer a little bit ago, too. I guess at least if you have a second person in there who was witness to some sort of performance, at least you could possibly lean on that. It’s still not ideal.

NASIR: Yeah.

MATT: Best case is document and then document accurately. Not everything has to be a positive thing. If you have negative comments or constructive criticism, those need to be documented a as well.

NASIR: I was just about to go wrap up the episode, but I’ve got to mention one more thing, too. I forgot about this. You have to document the things that are not comfortable to document, too. What I mean by that is, what if someone in the office uses some kind of racial (0:34:38 unclear) or they make some kind of off-colored joke inappropriately, obviously. Now, you don’t ignore that. You have to address it, but you also have to document. You document that, but also document the training and the disciplinary actions that you take afterwards, especially if they’re in a managerial or supervisory position. Again, this is a means for you to protect yourself as an employer. If a person has a history of this according to other employees, and you’re not documenting it and then you’re not doing anything about it, that could also hurt you in the long run.

MATT: Yeah, I think that’s the Michael Scott—

NASIR: Yeah, I learned that from Michael Scott, actually. That is our one Office reference for the episode. Congratulations to us.

MATT: We met our quota.

NASIR: We met our quota. I think we’re about 300-something episodes in a row for that. Okay. So, we have five blunders. There’s more and we can come up with more, but those are kind of the highlights that we see quite a bit. I think the big takeaway from each of these things, and hopefully this resonates with everybody, it just requires mere diligence – care. Look, I’m a business owner. We all spend a lot of time on our business, right? But sometimes it’s harder to focus on the things that are going to try to protect your business from growth rather than just growing the business itself. And so, reading contracts, documenting these things for terminations, reading every line of these agreements that you’re signing, these are things that require time, diligence, and effort. Look, if you want to kind of drive blindly and do that, you’re welcome to do so, but hire an attorney. Have some counsel with you or drive a Tesla. Do you like that? Auto drive. Auto pilot.

MATT: Well, maybe.

NASIR: Yeah, maybe that’s going too far, but you get my point. I did an analogy that’s a little bit here in the sense that you have to drive with your eyes open. If you can get some assistance, even better, and leave it to the professionals, but you do have to spend the time. Look, some people don’t have the time, and that’s where we come in.

MATT: Right. I agree. It’s all preparation at the end of the day. You need to make sure that you make your decisions. You’re not a – what’s the phrase?

NASIR: Where’s the beef?

MATT: You don’t want to shoot the name, right? Is that the phrase? Something like that.

NASIR: Oh. You want to measure twice and cut once?

MATT: That works.

NASIR: I don’t know.

MATT: That works, too.

NASIR: I’m just throwing idioms out now. I don’t know if that fits or not.

MATT: But, yeah, at the end of the day, you want to do as much preparation and planning as you can because these are all blunders that are easily preventable if you put I the time and make sure that they don’t become an issue. Like I said, the easy answer is always just talk to competent counsel, too. That’s only one piece of the pie.

NASIR: Hmm. Pie. Sorry, I got distracted there. Before we end, I want to just give a quick reminder that you guys have to follow us on our different social media channels. This is where we have an opportunity to engage with you guys if you have suggestions on other topics, if you have some more blunders that you want us to have to talk about. We did five. There’s plenty more, so if you want to add anything to that, we are @pashalaw on Instagram and on Facebook and some other things, too. I just forgot the other social media channels, but pretty much all of them. LinkedIn – that’s right. We’re big on that as well. Also, don’t forget, there’s also opportunities there through our website or through the social media channels to actually subscribe to our newsletter. On our newsletter, we like to push out different updates in the news. Of course, if we have new content, we’ll also push that out. For example, especially last year, every single update when it came to PPP loans and these kinds of things, we were pushing out as it goes, and COVID, and these kinds of different restrictions and things like that as it applies to businesses, so we try to keep up to date as things go on.

MATT: Yeah, it’s all the ways to find us.

NASIR: Now, are you subscribed, Matt? You should definitely subscribe if you’re not.

MATT: I think I’m subscribed across all mediums. I’ll check though. I’ll confirm that.

NASIR: Well, I will make sure. I’ll follow up with you.

All right. Well, thank you so much and thanks for joining us.”

MATT: Keep it smart. Keep it sound. Oh, that’s a blunder for us.

NASIR: That’s a blunder.

MATT: Keep it sound and keep it smart.

NASIR: That’s a blooper, actually.

MATT: You’re right. That is a blooper. Sorry.

NASIR: That’s a blooper. Okay.

MATT: Keep it sound and keep it smart.

Legally Sound | Smart Business

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The Podcast Where Nasir Pasha and Matt Staub cover business in the news with their legal twist and answer business legal questions that you the listener can send it to info@legallysoundsmartbusiness.com.

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Legally Sound Smart Business

A business podcast with a legal twist

Legally Sound Smart Business is a podcast by Pasha Law PC covering different topics in business advice and news with a legal twist with attorneys Nasir Pasha and Matt Staub.
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Latest Episodes

October 12, 2021

In our latest episode, Nasir and Matt are covering the legal issues on Social Media. The average person spends most of their day on social media, whether they are scrolling for hours or publishing their own content. However, just because you publish your own content on Instagram does not equate to you owning that image….

September 28, 2021

What is a Non-Disclosure Agreement, and when do I need one? In this episode, Nasir and Matt shares why you need to use Non-Disclosure Agreements, basic facts about NDA’s, and discuss about the infamous Jenner-Woods story. Having the right Non-Disclosure Agreement in place not only protects you and your business, but it also makes the…

July 14, 2021

Through a five-round championship bout, Matt travels to Texas from California to determine which state is better for business. Will it be a knockout with a clear winner or will it go to the scorecards?

June 16, 2021

Covered in this episode of Legally Sound Smart Business are some typical business mistakes blunders small businesses often make and how to avoid them. Blunder #1: Copying and pasting agreements It may sound like a good idea at the time, but this blunder comes with hidden pitfalls. Having an attorney draft terms that are specific…

February 4, 2021

How you terminate an employee can make the difference between a graceful transition to avoidable negative outcomes like a dramatic exit or even a lawsuit. We gathered a panel of experts and asked them – is there a “right way” to fire an employee? We would like to thank our guests for this episode: Amr…

December 2, 2020

The COVID-19 pandemic has turned nearly every aspect of life on its head, and that certainly holds true for the business world. In this episode, Matt and Nasir explain how the early days of the pandemic felt like the Wild West and how the shifting legal playing field left a lot open to interpretation and…

November 16, 2020

After plenty of ups and downs, our buyer has finally closed on the purchase of their business. While we’re marking this down in the ‘wins’ column, it never hurts to review the game tape. In this final episode, our hosts, Matt Staub and Nasir Pasha, return to the deal almost a year later to reflect…

September 15, 2020

The ink is drying on the signature line and things are looking great for our buyer. After so much hard work, the finish line is in sight and the cheering within ear shot.   Though the landlord is still serving friction, things seem safe to move forward and for now, our buyer will be keeping…

July 31, 2020

Though things are coming along well, the journey would not be interesting if it was purely smooth sailing. After our buyer opens escrow, they are forced to push the closing date back when suddenly a letter from an attorney was received claiming the business, we are buying has a trade mark on the name!  Now…

June 12, 2020

With frustration at an all-time high and professionalism at an all-time low, our friend the Buyer has “had it” with the Seller and quite frankly their lack of knowledge. At present our Buyer is rightfully concerned that the latest misstep from our loose-lipped Seller will threaten not only the entire operation of the businesses but…

May 11, 2020

As we go deeper into the buying process, we start to uncover more challenges from our seller and encounter some of the wrenches they are tossing our way. When we last left off in episode three our team was knee deep in due diligence for our buyer, had already penned and signed the Letter of…

April 4, 2020

One word–interloper! When a new mysterious broker enters the transaction and starts to kick up dust, Nasir and Matt take the reins. The seller signed off on the letter of intent (see episode 2), yet this “business broker” serves only friction and challenges by refusing to send financials, whilst demanding more of a firm commitment…

April 4, 2020

Just as most stories and deals start out, everyone is optimistic, idealistic and full of hope for clear skies. It’s a perfect outlook with a perfect setup for the ups and downs yet to come. Peek further behind the curtain and into the first steps of buying a business: the letter of intent. After the…

April 4, 2020

When a savvy buyer hears opportunity knocking to purchase a prime positioned business, she decides not to go it alone and taps in the professionals to help navigate what could potentially be a fruitful acquisition. “Behind the Buy” is a truly rare and exclusive peak into the actual process, dangers, pitfalls and achievements, that can…

August 7, 2019

GrubHub is subject to two “matters of controversy” that have likely become common knowledge to business owners: “fake” orders and unfriendly microsites.

May 28, 2019

In this podcast episode, Matt and Nasir breakdown the legal issues of the subscription industry’s business on the internet. Resources A good 50-state survey for data breach notifications as of July 2018. California Auto-Renewal Law (July 2018) Privacy Policies Law by State Why Users of Ashley Madison May Not Sue for Data Breach [e210] Ultimate…

March 12, 2019

In recording this episode’s topic on the business buying process, Matt’s metaphor, in comparing the process to getting married probably went too far, but they do resemble one another. Listen to the episode for legal advice on buying a business.

December 3, 2018

Nasir and Matt return to discuss the different options available to companies looking to raise funds through general solicitation and crowdfunding. They discuss the rules associated with the various offerings under SEC regulations and state laws, as well as more informal arrangements. The two also discuss the intriguing story about a couple who raised over…

July 24, 2018

Flight Sim Labs, a software add-on creator for flight simulators, stepped into a PR disaster and possibly some substantial legal issues when it allegedly included a Trojan horse of sorts as malware to combat pirating of its $100 Airbus A320 software. The hidden test.exe file triggered anti-virus software for good reason as it was actually…

April 17, 2018

Attorneys Matt Staub and Nasir Pasha examine Mark Zuckerberg’s congressional hearings about the state of Facebook. The two also discuss Cambridge Analytica and the series of events that led to the congressional hearings, the former and current versions of Facebook’s Terms of Service, and how businesses should be handling data privacy. Full Podcast Transcript NASIR:…

March 10, 2018

The Trump presidency has led to a major increase in ICE immigration enforcement. It’s critical for business owners to both comply with and know their rights when it comes to an ICE audit or raid. Nasir, Matt, and Pasha Law attorney Karen McConville discuss how businesses can prepare for potential ICE action and how to…

February 5, 2018

New years always bring new laws. Effective January 1, 2018, California has made general contractors jointly liable for the unpaid wages, fringe benefits, and other benefit payments of a subcontractor. Nasir and Matt discuss who the new law applies to and how this affects all tiers in the general contractor-subcontractor relationship. Click here to learn…

January 2, 2018

With a seemingly endless amount of new mattress options becoming available, it is unsurprising that the market has become increasingly aggressive. As companies invest in more innovative solutions to get in front of customers, review sites, blogs and YouTube videos have moved to the forefront of how customers are deciding on their mattresses and how…

December 7, 2017

In recent months explosive amounts of high profile allegations of sexual harassment, assault, and varying acts of inappropriate behavior have transcended every sector of our professional world. With a deluge from Hollywood and politics, and the private workforce, accusations have inundated our feeds and mass media. This harassment watershed has not only been felt within…

November 16, 2017

If you are not familiar with the EB-5 program started in 1990 to give green cards to certain qualified investors in the United States, then you may not have been alone a few years ago. Currently, the EB-5 program has since exploded since its inception and now hits its quotas consistently each year. The program…

October 10, 2017

Government requests come in multiple forms. They can come in as requests for client information or even in the form of investigating your company or your employees. Requests for Client Information General Rule to Follow Without understanding the nuances of criminal and constitutional law and having to cite Supreme Court cases, any government requests for…

August 24, 2017

Nasir and Matt suit up to talk about everything pertaining to employee dress codes. They discuss the Federal laws that govern many rules for employers, as well as state specific nuances in California and other states. The two also emphasize the difficulty in identifyingreligious expression in dress and appearance, how gender-related dress codes have evolved…

June 28, 2017

Nasir and Matt discuss the life cycle of a negative online review. They talk about how businesses should properly respond, how to determine if the review is defamatory, the options available to seek removal of the review, how to identify anonymous reviewers, whether businesses can require clients to agree not to write negative reviews, and…

June 7, 2017

On this episode of the Ultimate Legal Breakdown, Nasir and Mattbreak down social media marketing withguests Tyler Sickmeyer and Kyle Weberof Fidelitas Development. They first discuss contests and promotionsand talk about where social media promotions can go wrong,when businesses are actually running an illegal lottery, and the importance of a soundterms and conditions. Next, they…

April 3, 2017

On this episode of the Ultimate Legal Breakdown, Nasir and Matt go in depth with the subscription box business. They discuss where subscription box companies have gone wrong(4:30), the importance of a specifically tailored terms and conditions(6:30), how to structure return policies (11:45), product liability concerns (14:45),the offensive and defensive side of intellectual property (19:00),…

February 1, 2017

Nasir and Matt discuss the suit against Apple that resultedfrom a car crashed caused by the use of FaceTime while driving. They also discuss howforeseeable use of apps can increase liability for companies. Full Podcast Transcript NASIR: Hi and welcome to Legally Sound Smart Business! I’m Nasir Pasha. MATT: And I’m Matt Staub. Two attorneys…

January 5, 2017

The guys kick in the new year by first discussing Cinnabon’s portrayal of Carrie Fisher as Princess Leia soon after her death, as well as other gaffes involving Prince and David Bowie. They alsotalk about right of publicity claims companies could be held liable for based on using someone’s name or likeness for commercial gain.

December 22, 2016

Nasir and Matt discuss the recent incidentat a Victoria’s Secret store where the store manager kicked out all black women after one black woman was caught shoplifting. They then each present dueling steps businesses should take when employees are accused of harassment.

December 8, 2016

Nasir and Matt return to talk about the different types of clients that may have outstanding invoices and how businesses can convert unpaid bills to getting paid.

November 10, 2016

After a long break, Nasir and Matt are back to discuss a Milwaukee frozen custard stand that is now revising it’s English only policy for employees. The guys also discuss how similar policies could be grounds for discrimination and what employers can do to revise their policies.

October 6, 2016

The guys discuss the new California law that allows actors to request the removal of their date of birth and birthdays on their IMDB page and why they think the law won’t last. They also discuss how age discrimination claims arise for business owner.

September 29, 2016

Nasir and Matt discuss the racial discrimination claims surroundingAirbnb and how it’s handled the situation. They also discuss some practical tips for businesses experiencing similar issues.

September 8, 2016

Nasir and Matt discuss whyAmazon seller accounts are getting suspended and banned without notice and how business owners can rectify this situation through a Corrective Action Plan.

August 25, 2016

Nasir and Matt talk about the accusations surroundingfashion giant Zararipping off the designs of independent artists like Tuesday Bassen and howsmaller companies can battle the industry giants.

August 18, 2016

Nasir and Matt discuss Brave Software’s ad replacing technology that has caught the eye of almost every national newspaper and has a potential copyright infringement claim looming. They also welcome digital marketing expert Matt Michaelree to speak on the specifics of what Brave is attempting to do and whether it has the answers moving forward.

July 28, 2016

Nasir and Matt discuss the sexual harassment lawsuit filed by Gretchen Carlson against Fox CEO Roger Ailes. They also talk aboutthe importance of sexual harassment training and properly handling such allegations in the office.

July 15, 2016

Nasir and Matt talk about the changes at Starbucks that have led to many disgruntled employees and customers.

June 23, 2016

Nasir and Matt discuss the criminal charges facing FedExinvolving the alleged transportation of illegal drugs. They also talk about how business owners should address working with customers that may be breaking the law.

June 15, 2016

The guys return after a long break to discuss why Yahoo is auctioning off over 3,000 patents and how this decision will affect the longevity of the company.

May 25, 2016

Nasir and Matt discuss the increase in the salary thresholdfor exempt employees and how employerscan try to avoid paying overtime as a result.

May 18, 2016

Nasir and Matt discuss the Baltimore law that makes it very difficult to operate food trucks in the city. They also discuss all the legal restrictions tohaving a food truck.

May 11, 2016

Matt listens to Nasir recap the developing battle in his hometown of Vandalia, Ohio over whether a Dunkin Donuts can move into a location in close proximity to a local favorite donut shop. They then discusswhether the issue is more legal or personal.

May 9, 2016

The guys kick off the week by discussing a Nevada employee who is claiming she was fired for not supporting the Scientology beliefs of her employer.

April 27, 2016

The guys discuss the massive floods in Houston,how employers responded, and why one meteorologist became a local hero. They also discuss the steps businesses should take in preparing for storms outside the workplace.

April 20, 2016

The guys discuss the boycott of Amazon over the products of an unnamed presidential candidate. They also talkabout how a business should handle a boycott and whether it’s possible to exit one unscathed.

We represent businesses.
That’s all we do.

Oh, and we love it.

We love our work. We love reviewing that lease for your new location. We thrive on closing that acquisition that nearly fell through. We’re fulfilled when we structure a business to grow, raise capital, and be legally protected.

We focus on developing close relationships with our clients by being like business partners. A partner who provides essential, personalized, proactive legal support.

We do all of this without utilizing the traditional billable hour model. You pay for the value we bring, not the time spent on calls, emails, and meetings.

Our team is made up of attorneys and staff that share these values and we are retained by clients who want the same.

Pasha Law PC operates in the states of California, Illinois, New York, and Texas.

Meet Our Team

Fractional General Counsel Services

Pasha Law Select offers the expertise of a high-end general counsel legal team for every aspect of your business at a fixed monthly rate. Pasha Law Select is deliberately designed to allow our legal team to be proactive, to anticipate, and to be comprehensive in serving our clients. To be great lawyers, we need to know our clients. We can’t know our clients unless we represent a select number of clients in the long-term. This is Pasha Law Select.

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