Business Law

4 critical points to consider in a non-disclosure agreement [before you sign it]

4 critical items to consider in a non-disclosure agreement [before you sign it].

1.      Is the definition of “confidential information” specific enough to be workable?  For the non-disclosure agreement to have any value, both sides must understand what is being protected.  I routinely see non-disclosure agreements that have wonderfully frightening all-inclusive definitions of “Confidential Information.”  For example, consider this definition:

 The parties acknowledge and agree that all practices, procedures, business models, documents, photographs, marketing and sales plans, financial information, costs, pricing information, customer information, customer lists, and all methods, concepts, know-how or ideas in or reasonably related to the business of [redacted]

Wow, that covers just about everything ever created by the business or which the business even thought about creating.  This type of definition has the potential to allow the disclosing party to use the non-disclosure agreement as a battering ram for years into the future.  The definition should be limited to the information and area in which the parties are collaborating.  Protect what is actually private, which leads to the next point.

2.       Is the material being protected actually worthy of protection?  Although technically parties to a non-disclosure agreement can designate anything they choose as “confidential”, it makes practical sense to only protect the items that are actually private and proprietary.  It is material that a business protects through reasonable means and that actually adds value to the business.  Protecting material that is quasi-public or ancillary to your primary business interest leads to precisely the type of murky non-disclosure agreements discussed above.

3.      Which state’s law is the agreement going to be controlled by?  While there may be some common legal principles shared by most states, if you think your agreement is covered by Oklahoma law and it is actually covered by New York, you are probably in for some surprises.  A given state’s law on contracts is the product of value judgments made by the legislative and executive branches of state government.  The values Oklahoma holds dear may be quite distinct from those cherished in New York.

4.      Who is allowed to see the confidential information?  It is standard for executives and employees who are directly involved in the project to be included.  However, if you have consultants who need access to the material, make they are included.  Also, don’t forget about your attorney:  he or she may be involved in drafting future agreements between the parties to the non-disclosure agreement and will need to be included.

Get a handle on these points before you sign the non-disclosure agreement because mistakes in these areas have painfully long lives.

 

Posted by Shawn Roberts in Blogposts, Business Law

Name search – its now live on Legal Alerts

Legal Alerts is all about helping our users be more efficient and effective using the publicly-available data on the Oklahoma State Courts Network. Today we are announcing an awesome feature to further those purposes:

Name Search.

Type a name, any person’s name and find out the cases the person is involved with right now. Then, save the search and each day Legal Alerts will scour the system to determine if any new cases were filed involving the person. If there are updates or new cases then – BOOM – you receive an email notification. The new case is added to your case list automatically and tracked daily.

There are many uses for this new feature, let me list a few:

A reporter tracking newsworthy people (such as a mayor, coach or developer)
An attorney tracking another attorney’s case load and legal activities
Tracking a particular class of cases such as probate cases filed in the last six months

This feature is available immediately for current Legal Alerts subscribers at no additional charge.

If you are not a Legal Alerts subscribers you can sign up here for our two week free trial.

Posted by Shawn Roberts in Blogposts, Business Law

Non compete Agreements are still not OK in Oklahoma

I wrote a few months ago about how Oklahoma law prohibits non compete agreements for former employees and touch on exceptions here.  Yesterday, the Oklahoma Court of Civil Appeals reiterated that any agreement which restricts a former employee’s ability to work in the same field as the former employer is void under Oklahoma law.

The case is Scanline Medical, L.L.C. v. Brooks.  The restrictive agreement in question absolutely prohibited the former employee from “sell[ing] any medical device product competitive with any of the Spinal Concepts [or Orthovita] Products, or in any way [possessing] a financial interest . . . in any business engaged in the distribution, solicitation, promotion or sale of any medical device product competitive with any of the Spinal Concepts [or Orthovita] Products.”

By completely preventing the former employee from working in his “chosen profession” the noncompete agreement violated Oklahoma law and the Court would not enforce it.  Competition is allowed but an employer can protects it confidential and proprietary information with the right agreements in place.

I work with employers and employees to address non compete agreement issues and put reasonable protections in place to protect both sides.  Please feel free to contact me at sjr@shawnjroberts.com if you have any questions.

Posted by Shawn Roberts in Blogposts, Business Law, Oklahoma Employment Law, Oklahoma non-compete

Flat fees rout the hourly attorney fee in grudge match

Who would have suspected?  People prefer certainty and stability in their attorney fee payment.  I am not surprised by the answer but I appreciate all the responses to my Linkedin question:

When using an attorney, would you prefer to pay a flat rate for the project or an hourly rate? (and *why*)

The responses were consistent but interesting to see how people explained their thinking.  12 out of 13 responses voted in favor of the flat rate fee.  The responses are below or can you can view them on Linkedin (account required).

Flat rate….no doubt!

fixed fee project rate that is set upfront

If fair to both parties for services rendered it is certainly a lot easier to get ones head around a set figure than imagining the cash register to just keep rolling and rolling and not really know time spent for a period until you get a bill.
If you could be fair to client and to yourself I would think Flat Fee options could be very beneficial.

Flat rate- because I have been killed the other way.
Flat rate – I know the amount that I’m paying. Especially when it is for what I would call “regular and customary” kinds of projects. Now, if I know there is a lot of research or my issue is complex, then hourly might be the way.Actually, for an attorney, doing flat rate for “regular” work, you can build in a phone call or email or two. There is nothing more infuriating than to know that a short email or phone call contact is X amount of dollars. One can specify that in the flat rate as well.
I prefer a flat rate. That way the client knows what the budget is. For example, i charge a percentage, but yet the client knows upfront through disclosure what my fee will be.I think when you are being paid on service and the only product you actually market is your abilities, flat rate is the best. That way there is no incentive to prolong a clients problem because of the hourly wage. Extenuating circumstances should be renegotiated.An example would be when my lawn gets mowed. if the vendor does not know how long it will take to mow, I need a new vendor. your incentive is to come in quickly, under budget with a valuable service.

I’m personally a big fan of pricing by projects. It sets clear expectations for the client and the attorney and most people can grasp that well (and it also helps everyone in the longrun). I also think there’s situations when priving by the hour works well or even doing a little bit of both.
Just the opinion of a startup guy. Take it for what you while. Hope you’re well. Talk soon and take care.

I would prefer to pay a flat rate when possible for services that lend themselves to that model. It helps to know how much something is going to be before buying it because it removes an unknown, which makes a purchase easier.

Prefer the flat rate. Can make a informed decision if I want to pursue the matter.

Flat rate. It gives clients peace of mind to know what they’ll be paying. 99% of my clients choose flat rate on projects I do for them.

Flat Rate – because then you know how to budget if necessary. And right or wrong there’s a perception that lawyers will drag stuff out.

Shawn, I prefer a flat rate in most cases. I know there are some times when an hourly fee will be more economical, but in general I like the flat fee approach that is priced on “value” versus the amount of hours spent.

I prefer the set rate for services. In my business I have graphic designers. I know that sometimes a task can be accomplished in 30 minutes, but they may spend 2 hours after distractions, playing with different designs, etc. I want to know that the time I am paying for is dedicated to me only. I want to know the up front cost so there aren’t any surprises in the end.

The “contract” or whatever quote form is used could have a clause for adjustments once the task has begun – for more difficulty or less.

 

Posted by Shawn Roberts in Blogposts, Business Law

Choosing either a corporation or an LLC under Oklahoma business law

I talk about this issue with clients regularly and it is one of the fundamental decisions that many small business owners are faced with when thinking about Oklahoma business law:

Do I operate my business as a corporation or a limited liability company?

A few months ago I posted my Entity Explanation Table which provides an overview of the factors to consider in choosing between a corporation and a limited liability company.  To add to this discussion, take a look at this recent article To C or LLC, that is the question from Brad McCarty at The Next Web

The carries out the corporation vs. LLC discussion in a bit more detail.

Posted by Shawn Roberts in Blogposts, Business Law

Two scenarios where a non compete agreement is enforceable

 

In an article from a few months ago, I wrote about how Oklahoma law categorically invalidates non compete agreements. Oklahoma has made a public policy decision that with a couple of exceptions employees will not be barred from competing. Below are the exceptions to the rule:

1. When you sell goodwill. When a business sells their interest in the business including the goodwill, Oklahoma law allows a non compete agreement between the seller and buyer. While “goodwill” is an intangible assets and often difficult to define, in Oklahoma it generally means the “custom or patronage of any established trade or business; the benefit or advantage of having established a business and secured its patronage by the public.”

2. Business Partners splitting up. A non compete agreement is also allowed when a business with multiple owners or partners dissolves.  In anticipation of a dissolution of the partnership, the partners may agree that none of them will carry on a similar business within a specified county and any county or counties contiguous thereto, or a specified city or town or any part thereof.

If you have any questions about non compete agreements, please feel free to contact me anytime at sjr@shawnjroberts.com.

Posted by Shawn Roberts in Blogposts, Business Law, Oklahoma Employment Law

Do lawyers cause lawsuits?

It is a topic that is stated expressly or implicitly all the time:

Lawsuits happen (too frequently in many people’s opinions) because lawyers are riling up people to sue and then paving the road to court.

When an apparently silly lawsuit is filed by a business I often hear “well, I guess the lawyers had too much time on their hands.” The tone of the comments about lawsuit-creating-lawyers is that society would be better off without lawyers.

I must admit when I started thinking about this topic it was difficult to get beyond the advertisements by lawyers that seek people harmed by prescription drugs, vasectomies and weight loss scams. Frequently seen during daytime TV and on billboards, these advertisements appear to be plaintiff-trolling – putting the idea of a lawsuit in people’s heads who might not otherwise have thought of it.

Lawyers do not cause lawsuits any more than doctors cause arthritis.

Do lawyers tell people about claims they might not know they had? Do corporate lawyers agitate in favor of litigation when a company’s rights are at stake? YES and YES. And it’s not a bad thing. Let me tell you why it is okay.

Attorneys advise, clients decide.

It is the lawyer’s role to advise their client, including advice on what the client’s rights are and how to protect them. This advice comes in the form of one-on-one consultations between high-powered corporate attorneys and the CEOs of companies. It also comes in the form of an advertisement by an attorney about the chance for victims of a defective prescription drug to be compensated for the harm they suffered. The principal is the same: the attorney provides the advice, discusses the alternatives and the client makes the decision about whether to file a lawsuit. Solid, reliable information is a positive thing.

There is power in numbers.

The mass-advertised lawsuit based on prescription drug defects provides a chance for people to recover for harm that they probably would never have had (due to a lack of resources). A lone individual has little chance to ever pay for or prevail against a giant prescription drug company, mortgage company or other mega-corporation.  The corporation has the resources and experience to make the process so difficult for the individual, that pursuing a lawsuit simply isn’t possible.  Of course, this statement is based on the assumption of two conclusions: (1) lawyers are only seeking and accepting clients who have a legitimate legal claim; and (2) clients are only seeking to be part of lawsuits where they sincerely and in good faith believe they have been harmed.

 

Our legal system is the worst one in the history of the world, except for all the others.

In other words, our legal system is the best thing going – it provides structure for people to settle disputes civilly, without violence and with a decent amount of predictability. It is not our legal system that is the problem, it is relatively infrequent cases of abuse of the system that are the problem. These few instances (think the grossly distorted McDonald’s coffee burn case from many years ago) receive all the attention rather than the infinitely larger number of times cases are resolved reasonably.

Do you think lawyers in general are the problem or are you willing to consider my position?  Let me know in the comments.

 

 

Posted by Shawn Roberts in Blogposts, Business Law

The Preventative Law Program (PLP)

Several years ago I came out with the Prevenative Law Program, which I cleverly nicknamed the “PLP.”  The goal was to increase people’s and business’s access to early legal help with a fixed costs and structure.  It wasn’t PrePaid Legal, my PLP was a direct relationship with my law firm and all the service someone would need in a variety of areas.  Prevention is favored in many other segments but not so much with law where the prevailing thinking is often “let’s deal with it when forced to deal with.”  One of the problems with this approach is that in many cases dealing with it when forced to is to late.

My marketing description of the PLP is at the bottom of this post.  I have not signed anyone up for the PLP and, probably due to this, I have not mentioned in years.  I would really appreciate your feedback on this idea.  What do you:

  1. like about it,
  2. not like about it,
  3. don’t understand about it?
  4. How could I improve it?

 

Posted by Shawn Roberts in Blogposts, Business Law

Starting a new Oklahoma business? Here are 6 critical legal issues to consider

Amidst the adrenaline rush of creating a new business, there are several legal items I regularly discuss with people who are starting a business.

Below are six (6) critical items you need to consider before getting your business up and running:

  • Be an entity. You may have been called worse things, but this is not a slam. An entity, in this context, is a structure that provides separation between you, your assets and your business. For example, a corporation and a limited liability company are both entities. In contrast, someone doing business under their name, with nothing more formal, is operating as a “sole proprietor”; there is no separation between personal and business.
  • What type of entity should I be? Surprisingly, for legal purposes, there is not a huge difference. Both a corporation and a limited liability company provide a wall of separation between their owners and the business. A corporation has shareholders; a limited liability company typically has members.
  • Have your organizational documents in place. For a corporation, it is written minutes of the organizational meeting of the shareholders and board of directors, plus bylaws. For a limited liability company, it is an operating agreement.
  • Know who your employees are or are not. One of the easiest ways for a business to create a mountain of liability is to treat individuals who are employees as independent contractors. That means failing to withhold and do payroll properly and to secure worker’s compensation insurance. If you have any doubt about whether an individual is an employee or independent contract, talk to an attorney. You do not want to get caught in the Independent Contractor Trap.
  • Protect your Intellectual Property. If you have words, pictures, symbols, code, software or an invention, take the proper steps to legally and officially claim ownership to it. It might be registering a trademark, securing a trade name, seeking copyright or even patent protection.
  • Maintain the regular records that are required. For a corporation, it is at least the written records of shareholders and directors meetings and other major actions. Treat the entity like it is a separate and distinct entity (separate records, separate bank accounts, etc. . .)

What other issues have you considered when starting a business?

 

Posted by Shawn Roberts in Blogposts, Business Law

What an attorney thinks of Legal Zoom – Part II: The bad

In my last post I discussed the circumstances that led to the creation of Legal Zoom services and why its creation was a good thing for attorneys.  Today, I describe that downside of the commoditization of legal services.

Legal Zoom is less than good because it offers an incomplete solution.

For the low, low price of $$$, you can have a Will, form a corporation or secure a basic trademark.  You get the bare minimun:  existence as a corporation, a functioning Will or a simple trademark.  What is missing?  The counseling element, knowledge and experience that all good attorneys provide.  The question should not be “Can I get incorporated?”, the questions should be:  “Do I need a corporation or limited liability company?”, “How should the entity be structured?”, “How do I develop a structure for recordkeeping and legal documents?”  

These are the questions that when answered properly help lay a solid foundation for any business or estate planning document.  The acts of incorporation, drafting and executing a Will or bringing a limited liability company into existence is a part of the process, not the whole process.  It is like fixing a leaky faucet with a do-it-yourself kit from Home Depot only to discover later when your kitchen floods that all your plumbing is bad.  

Legal Zoom and similar sites provide access to the system but do not completely equip users for flourishing within the system.  In “3 easy steps” a business has addressed all the necessary legal issues and built a solid foundation.  If you check all the boxes you have addressed all the issues.  Law is a commodity that can be bought and sold in bulk.  My experience teaches me that none of those statements are correct.

With the creation of your business or your Will you want a relationship with your attorney not a one-click stand.

What are your experiences with Legal Zoom and related products?

 

 

Posted by Shawn Roberts in Blogposts, Business Law