How should business owners manage their risks and minimize liabilities to third parties – Radio Guesting Sept 23, 2020

How should business owners manage their risks and minimize liabilities to third parties – Radio Guesting Sept 23, 2020

| Blog Business Litigation News & Updates



Welcome back, everyone. I just go from one thing to the next in here. It’s like a ping pong ball with different people and things that, that, you know, they want to talk about what they do. We’re live on Facebook. So hi to everybody out there. Like us and follow us we’re going to be sharing the show in just a little bit here. I have my next guest spin on with me now several times. I have with me Troy Froderman, and he is one of the principals of FR Law Group. Tell everybody a little bit about yourself, and about what FR Law Group does. 


Good afternoon, Carol. So I have been practicing law in the metro area for 30 plus years. Have really been associated with very large national and international law firms responsible for their trial work. Few years ago, my next door neighbor at Moon Valley, we decided that it made sense to kind of slow things down and concentrate really on the areas of law that we’re passionate about. So we started FR Law Group in 2017. There are five of us now. And we specialize in construction litigation, as well as insurance litigation. And I can talk a little bit more about that as we go on 


business law though. Yes. Right. And so everything comes into play with that, right. But what I love with what you’ve done is that you bring it to the, the middle, you know, the average person instead of it, you know, because there’s a lot of people that would look that might need an attorney, and they can’t even afford it. So they don’t even think about doing anything about it, or they try and do it themselves. Right? 


That’s not a good idea. So what we’re able to do is my partner has been practicing, practicing for over 20 years. So as well as some of the other lawyers, we bring extensive experience. We’ve been trained by national experts over the course of our years. And so what we do is we bring very extensive experience representing large corporations, and we’re now able to bring that to I don’t want to say mom and pop shops but to businesses that necessarily would never look to a large national law firm because it’s expensive. And because, you know, they’re not really in the bandwidth of what those firms are looking for. 


Now, today, you said that you wanted to talk a little bit about as a business owner? How do they manage their risk to minimize their liabilities to third parties? First of all, talk in layman terms, tell us exactly what that means. And then what you can do, 


I knew you wouldn’t like the way I phrased it. So they’re really, think of it in three different ways. So every venture that you embark on, has upsides and downsides. And so what we advise our clients on is, you know, look, you, you manage the upside, because that’s what you do, you know, you decided you were going to be in construction, or you are going to be doing whatever business segment you’re interested in, you focus on the upside, let us bring to you how to manage the downside. And there are multiple ways to do that, from a legal perspective. So I want to talk generally about three different areas, the first one will be pretty quick, and the other two a little bit longer. So just like everything in life, you have to figure out what is the risk benefit of doing something? And so if you are going to be building bridges, use that as an example. The what’s the obvious risk that the bridge will collapse? And so how do you go about making sure that you build the best possible bridge, and that is taking into account all the various different factors that, that go into building the bridge and keeping it relatively simple. And, obviously, one, one area for that is to hire the best engineer that you could possibly bring into your fold. So those types of things, you know, don’t cut corners, because if you cut corners at the end of the day, it maximizes your risk and minimizes the benefit. There are really two different ways to legally minimize your risk. And both are rooted in contract. 


I had a feeling you were gonna say that, yeah, go ahead.  


And so one contract is an insurance policy. And the insurance policy, as we tell our clients is nothing more, nothing less than a written contract between the policyholder, and the insurance company. The second type of contract that I’ll talk about after the break, is the contract that you enter into with your customer. And there are ways to minimize the risks by putting in important Terms and Conditions in the contract between you and the customer. 


When somebody is listening to this, should, when should they call you? Is it? I mean, a lot of people are starting businesses right? Now, obviously, that’s a great time to you know, but even can if they already have contracts, can you look at them, can you say, look, you know, you don’t have this in there, and help them out even afterwards, we do that all the time, right. 


And so particularly if you’re going to be entering into recurring contracts, you know, it’s just like everything else, the first time you do something, you do it a certain way. And the second time you’ve learned and you do it a little differently, and the third time and the fourth time. So when we review a contract that has been already been entered into, we essentially, you know, boring here, but we we red line that contract and look at terms and conditions that might be better suited for your particular risks, and what you’re doing. And so that’s done by us all the time, in fact, did it this morning. But let’s first talk about the insurance policy. And the reason why that’s important that you have more control over that then you do the written contract with your customer to a certain extent, because you’re doing the purchasing when you buy an insurance policy. So every business has insurance. And depending on the nature of your business, you might need special insurance. Most businesses have general liability coverage, they have property coverage. If they have a fleet, they have auto coverage. So certain businesses need different types of policies on top of those. So if you’re in a construction business field, you’ll need a multi-risk policy potentially. If you’re involved in advising people, let’s say you’re professional and you’re advising your customers, you’d likely need some type of professional liability policy. There are various different lines of coverage, not all lines apply to every business. And so it’s very important when you are procuring insurance, that you know, to ask the right questions of your insurance agent. 


I mean, you just bring up a huge, really, people really ought to call, I had no idea that you can kind of have your own say into what those words are. I didn’t know that. So let’s say somebody is looking for that insurance, they call and they’re talking, they should have you do the talking for them. How does that work? 


Yeah. So when you’re actually purchasing insurance, you don’t really need the lawyer to be doing the negotiating. What you should do is have a very good relationship with either your insurance agent or your insurance broker. And depending on the experience and your importance to that particular broker, they will maybe look for the right coverage for you when I say they’re always looking for the right coverage. But you need to be very specific with your broker in terms of, hey, I want you to know my business. And when you know my business, you know what different types of coverages would benefit me, 


right? That’s and also maybe having a conversation with you to make sure that they do have the right coverage. They might not even know what that would be. Correct. Yes. So the phone number to call them directly at 602-566-7425. They do free consultations. And you’re located here but I know you can help people anywhere. Rated with the Better Business Bureau. Super important information. Hang tight. We’re going to be back in just a minute.


So welcome back everyone. We’re talking with Troy Froderman. And he is one of the principals of FR Law Group. We’re talking business here and we’re talking about contracts and your insurance is a contract between you and the insurance company. You have a written contract, and we were talking at the break a little bit about, you know, when should someone call you, sir set. And usually it’s when someone has had something happen? Well, the reality is this, businesses like to move forward. They like to make pretty quick decisions and get on to the revenue generating side of things. So we typically, almost always, our role is there’s been a loss. And they find out that there’s a gap in coverage, or they’re being told that the policies that they purchased, don’t cover a specific loss. So that’s when we get involved. We review the policies, we look at the loss, and then we make a determination. advising the client, here’s the best way to go back to the insurance carrier, and present it such that the policies you have covered that loss, what we also do is we look prospectively and say, This is likely to happen again. And you’re likely to follow your, you know, fall in the same footsteps. So look at these other coverages that might help you in the future, 


right? And, of course, you’re going to want to make sure it’s just like anything else, like you said before, when some, you do something once, then you learn what not to do the next time, right? Correct, sort of safely. Hopefully. Now, your phone number to call 602-566-7425, they do free consultations, they want to help the business owners out there that are not the big, big, big people out there. Right, correct. And that’s what they’re here for, go ahead. 


So the other area of contracts that help to minimize a business’s risk, are the contracts that you enter into as a business with your customer. And so that’s where you really need to pay particular attention to the terms and conditions in the contract. So if your customer is, let’s say, General Motors, you’re probably not going to have a whole lot of negotiating power. 


Correct? Right, even though I wish I did. But anyway, go ahead. 


And so they already have a standardized contract for their vendors and people they contract with. And so it’s very unlikely that you’ll be able to do much negotiating with the terms and conditions. However, there are many other contracts with much smaller customers, where you do have the opportunity to either create a contract that’s brand new with terms and conditions that are fully negotiated between the two parties, or you have an existing contract, either that you have or that your customer has that needs to be modified to the specific engagement that you have. So there are a few things that FR Law Group that we would recommend that you pay close attention to. One is, is there a provision in the contract that should there be a dispute between the parties that it is subject to mediation or arbitration? Most contracts today do have that provision because people want to avoid the courthouse because it’s so expensive. That may or may not be right for your particular issue and your particular engagement. So if, if your engagement is such that maybe you don’t want to be stuck with one person, making the ultimate decision who you don’t know, because you’re giving up your right to your trial by jury. So you’ve got to be very careful about whether that is a provision that you want to live with. And if it’s something that can be negotiated, and you have a law firm that you can go to and ask them, it’s a very simple proposition. Sometimes that clause helps, sometimes it doesn’t. Likewise, I think if you’re doing business in Arizona, there should be a choice of law provision in the contract between you and the customer that says, if there’s a dispute between us that Arizona law is going to be binding in terms of the ultimate outcome of that dispute. You don’t want some other law applying. And it’s particularly if the customers are from out of state, but the workspace.. Make sense.. works down here, right? Do you really want to pick out California for a second? Do you want California law to govern the terms of your contract? Most likely no, also, be careful about entering into a contract that does not have what we refer to as an integration clause. All contracts should have an integration clause. So let’s say that you and I’ve been negotiating, to go back to my bridge example. We’re building a bridge for you. And we’ve been negotiating the terms for three months. Then we decide okay, I think we’ve come up with all the terms. We’re going to put them into a contract. Well Maybe on day one of those negotiations, you wanted to have the bridge be a specific height. But by the time we finally nail down the negotiations in the contract, it doesn’t have the height that you want it. If you don’t have an integration clause, there’s going to be a dispute. Well, was a bridge going to be 20 feet tall? Or is it going to be 15 feet tall? The terms of the contract have to govern that. And if there’s not an integration clause, then it’s going to be a dispute between the parties as to what the intent was. 


Can I ask you, if any, does it matter what kind of business said it is, when you have a contract involved? Should they have this kind of these kinds of absolutely 


matter? That’s the whole reason behind having a contract, 


Right. It’s not just about, okay, here, you bought this, 


Right, you have agreed to a certain set of terms and conditions. And those are all reflected in the contract. A very other simple one is that, and this is really to try to avoid a dispute is to say that there’s what we call a fee-shifting provision in the contract. In other words, the contract will say, if there’s a dispute between us, and we end up litigating it, the party who loses has to pay the other party has to pay the other party’s attorneys fees and calls. Yeah. 


There’s the Old English 


If they’re doing a divorce that got to do it here too. 


Well, that’s different. But 


Yes, so the old so hearkening back to our mother, England. English law, you don’t have fee-shifting, so you end up having to absorb your you’re actually into England, you pay the other party’s fees, the American rule is you don’t unless it’s put into writing. And that’s important, because it really makes the parties have to seriously consider, especially in modern times, whether they really want to risk losing, it used to be that trying a case in Arizona was the only legal form of gambling, because you didn’t know, you didn’t know the outcome. 


That’s kind of a funny way of putting them. 


And, you know, there’s the old joke too, that if you end up going to court, and you try your case, in front of a jury, you’re, you’re putting your fate in the hands of 12 people who couldn’t figure out how to get out of jury duty. Now, you know, that’s a crude way to set. But all that to say is when you are considering actually litigating, and you have the possibility of being wrong, and paying the other side’s fees. Oftentimes, the fees can be as much as what the original dispute was, right? 


It’s, it’s they’re exorbitant. So I think it’s really important for people to, that are listening to this information. It’s great information for business owners out there. And it’s important for you to take all this into here, maybe too that maybe you know someone says, you know, what, you might want to make sure that you have some of these things taken care of, especially if you are just starting, a lot of people are just starting businesses right now. But the second set of eyes, you do it all the time, we do it all the time. 


And I think it’s important when you’re going to have surgery. What’s the obviously you do? get a second opinion, right? The same thing with a legal contract. If not every contract, you’re going to want to set it second, the highs on if it’s, you know, a $5,000 contract, probably not gonna pay second, set a team to review the contract. But it does really help to make certain that whomever you’re going to, for your legal review, that they know your business, that’s the key. That’s why we FR Law Group, if that’s what we really pride ourselves on, we understand what our clients businesses do, and what they’re the issues that are confronting them. And we make sure that they are embodied, into the contracts that they enter into. 


So that starts with that conversation with you. And you get to know them, obviously, maybe not even just one time you’re going to talk to them and find out everything about them. 


Correct. And, you know, we spend a lot of time with our clients, getting to know their businesses going to their facilities, meeting with their representatives. All of that is we don’t bill for getting to know the client. It’s something that we really value is that when we take on a client at FR Law Group, they are a part of our team, and we want to be a part of their team. 


You know it having someone like that behind you and as they know, all of the things that you might get into what you need so that you don’t get into anything that is what’s important. And today, especially more so than ever because people are let’s face it, sue happy right? And that’s what’s really important that you are covered, make sure that you have that conversation with somebody, especially like them. He has 31 years or 32, how many years? 31.. 31 years of experience in this and he’s brought his experience to your level to the, you know, the smaller guys out there where you can afford something like this. And their phone number to call it’s 602-566-7425, the website is, they’re rated with the Better Business Bureau, it’s a free conversation and I think it’s important. What’s your final words? 


Look at the benefits of what you’re doing but also be measured in terms of what the risks are. You know what you don’t want to take any risk. It’s important that you don’t. Well-rested are okay just make sure you’re managing them. 6025667425.  


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