The importance of a written contract, as opposed to agreeing or relying on a written agreement or a non verbal agreement – Radio Guesting August 25, 2020

Click Play to Listen to our Aug 25 Radio Show Guesting

00:26

Welcome to networking Arizona with host Carol Blonder. You’ll hear interviews with businesses located throughout the Valley. Networking, it makes a difference. 

00:38

Welcome to the show everyone. I am excited about networking with everybody. I made it possible for everybody to talk within three feet about themselves right on the radio and that’s what we’re doing here. Check me out at networkingarizona.net maybe you would like to get yourself heard on the show. I’m gonna go in with networking right away. My first guest is Scott Ryan and he’s one of the principles of FR Law Group. You gotta tell everybody a little bit about yourself and what you do because you’re the other half. And you do something a little different. So welcome to the show and tell everybody a little bit about what you do and what we’re going to talk about today. 

Thanks, Carol. I’m definitely the younger and better-looking half of it for a Law Group.

01:14

I’m taking the fifth.

01:16

My law partner Troy Froderman and I, we formed FR Law Group about three years ago. Our backgrounds both are in, I came from a very large corporation as a general counsel of one of their building, one of the groups within the publicly traded company. And Troy was, for his career was at very large national and international law firms. We decided a few years ago to go out on our own, open up a boutique law firm that focuses on representing business clients here in the valley and across the country. Go ahead. My background predominantly is construction, I’m an engineer by training. I have two engineering degrees, worked in the field. Constructing very large projects around the Southwest before going to law school, and then spent the next number of years at a large national firm in their construction practice group. And then subsequently, back at the same company I was an engineer for as their general counsel for about the good, the next 13 years.

02:19

So contracts?

02:20

Contracts. Yeah, that is the main driver in that business. And that’s one of the things we want to talk about today was the importance of a written contract, as opposed to agreeing or relying on a written agreement or a non verbal agreement,

02:34

Right. You never want to rely on a verbal agreement that is for sure.

02:38

Yes, that’s true, memories fade, people have different understandings, understandings of what was said. So it makes sense to definitely take the time reduce it to writing, so that you have a captured for, you know, the term of the agreement between parties and instead of future.

02:57

So let me get some information about your firm. Okay, you’re located right here at Seventh Street in Camelback but across from Xavier high school. That’s right. You’re rated with the Better Business Bureau. But you can help anybody nationwide.

03:10

That’s correct. Yeah. Okay. I have a number of clients who are large national contractors, a couple that are international contractors that I represent them on matters wherever they do business from sea, the sea to shining sea.

03:22

You do free consultations, and you have 31 years of experience with this. Yes, that’s amazing. Now, the phone number to call them at 602-566-7425, the website is frlawgroup.com. And I know everybody hears me say this, every show, every segment all the time, but I have to say it again. And that is because I love my show. Why do I love my show? Because it’s information, you know, for people out there, and it’s not always who you’re talking to, but also who they know. Right? And so you never know. Maybe it’s you, maybe it’s someone that you know, might be involved in a contract. And we’re going to talk about some of this right now. And who it pertains to, and tell them about it. That’s what it’s all about. So check them out on their website, it is frlawgroup.com. Okay, so you see the importance of a contract? I want to talk about it. Because today, what you know, years and years and years ago, let’s say my father’s generation, you could have a handshake, and it was, you know, you could count on that. We live in a way different world today.

04:31

We do, yes. With, with I think how many interactions people have with different people around the world, how easy it is now. You people tend to do business with a lot of different people around, it’s not the people that they have grown up with or have lived in the same community with where you are able to establish that, that sense of trust and, and a solid relationship. So I think we’re, when you’re entering in a business relationship, not only with, with you people you’ve known for a long time, but with new people, it’s really important to get that understanding reduced to a writing. It really will come, come back and help throughout the perform set agreement. It is the basis where you can, you can measure each other’s performance and hold each other accountable. So that you do what you’re what you have promised you’re going to do.

05:22

Absolutely. Doesn’t matter how big or how small, whatever it is that you’re doing. If you’re going to do it with somebody else, you got to make sure that you do have all your T’s crossed and your eyes dotted. Correct. Okay, so let’s, uh, after the contract is executed, what should a contract party, what do they do then?

05:44

Well, the smart ones do a lot of education in house. They make sure that all the different individuals within your organization who are going to deal with this contract, understand what is required of them, and what is required of the other party to the contract. And then do some continually, continuing education on that to make sure everyone’s on the same page and understands what’s expected of them.

06:05

So let’s say someone’s listening right now. And they had a contract. That was long time ago, you know. Do you do second, like second opinions on something? When can something be changed and updated on that?

06:18

Oh, absolutely. Yeah, that happens all the time. You know, when, when the, the party who drafts the contract a lot of times is not the party who helps the client through any subsequent issues. So we get involved a lot of times when, when a party has a question with respect to what they had agreed to in the contract, and what they may be facing at that point in time and how that may not jive with, with what they were they agreed to a year ago.

06:47

So here’s the problem too, with that probably comes up and I want to know how often you see something like this. So sometimes we do get into business with our friends. And you know you’re going along, things are okay. And then something happens. And now that person doesn’t know how to handle the fact that they’re now having issues with, let’s say, the contract that they had even put together, or what have you, and now they’re going to fight. I mean, do you find that they will hesitate to call you or what do you suggest for people that are in business and may, might have gone in with their friends or their family members?

07:24

And, and that is that adds a new that adds a certain dynamic to it that is different certainly

07:29

Bad twist.

07:29

It is, but there are ways to deal with it. You know, just because you get a lawyer involved in an issue doesn’t mean that the gloves are off, and you’re gonna start throwing punches at each other. We take that at FR Law group, we take a very pragmatic approach to it. We look at what the business goals of our client is or are, and then strategize with them on how best to navigate that issue so as we don’t cause an unnecessary, unnecessary blow up later on. Am the work, the last thing that we want to do is to end up in court or in arbitration, we would like to get the parties to come to a reasonable resolution, remain friends, remain business partners and continue with life. This is not the end of it all. There is more things out life that are more worth worth doing than fighting with someone over a contract. And we try to help the parties get through that efficiently and economically.

08:21

So obviously the best time to call you is before, as you’re just forming your business. Right? Yes, best time to call. But sometimes somebody, let’s say, has already started a business and they didn’t sign, do a contract, but they can still come to you, let’s say and sit down and say we didn’t do one or we want to redo one or what have you. So you can do that. Yeah, absolutely. Their phone number to call. It is area code. Where is it? It is, I can’t find it right now. Where is it? 602-566-7425. They do free consultations. They’re rated with a better business bureau. They are located at Seventh Street and Camelback, right across from Xavier High School, but they can help anyone nationwide. They have 31 years of experience. We’re gonna go to a break. But when we come back, I want to talk further about this. One of the things that I’m in my mind that I keep on thinking about is, maybe somebody might want to hear some type of a story, right? Sure. Because sometimes those kind of, they, that a story trigger trigger something in their mind. They love to hear things like that. So we’ll come back and talk. Maybe you have one that you can think about. So we’re going to go to a break when we come back. We’re going to talk further. We’re live on Facebook, so everybody out there. Hi, we’re going to be sharing this show, like us and follow us. We’re going to share the show just afterwards. Check them out on the website. It’s frlawgroup.com, the number is 602-566-7425. They do free consultations. This is pretty important stuff guys. Listen up.

13:02

So welcome back, everyone. We’re talking with Scott Ryan. And he is one of the principals of FR Law Group. We’re talking contracts, super important, guys. So listen up and all this, especially now, a lot of people are forming businesses. Maybe you’re forming a business with somebody that’s a family member or friend or someone that’s not so important for you guys to listen up to this information. Because now’s the time to do it before it’s better than later. But you can do it either way. And like I said, because so many people right now who are dealing with this COVID and what has happened to them, they might have decided, I want to do something different than what I was or I lost my job. I’m going to do this or that or the other thing.

13:45

You find that happening very, a lot. Yes, we, we do represent all different types of companies, entrepreneurs who are starting their own businesses in various fields. We help them get those entities formed. We help put together their operating agreement or shareholder agreement and all those types of upfront documentation that’s smart to do. Because that governs how the organization is going to be managed into the future. What happens if somebody dies? What happens if somebody wants to sell their shares? Somebody gets divorced, you know it constantly, we, those agreements, typically contemplate all those different types of scenarios, so that you have a good solid set of baseline rules in place that people can then go back and consult with or consult on to help manage.

14:33

And each party then has a leg to stand on. Yes, absolutely. Yes. I want to also get out real quickly to that. It doesn’t matter what size, a matter of fact, I think you think you used to come from big company, corporate now you’re kind of helping that small burst business. Yes. Talk about that.

14:50

Yeah, absolutely. My client base is everything from the startup company through big international construction company that does billions of dollars a year in revenue. So you know, being a boutique firm, we have a lot of flexibility on, on what we can do and who we can help. And that that’s made it a lot of fun. You know, you’re not just pigeon holed in one in one area and kind of stuck there. We have a broad base of experience and help a broad base of clients.

15:15

Yeah. And again, I want people to understand how important all this information is that you’re hearing here, especially this right now, if you have anything that you’re doing with, with somebody else, you got to get it in writing and they are willing. And they’re,  what they do is they help the small guy. Yeah, I think that’s what’s really neat about that. And it doesn’t matter how small, they’re here to help. Their phone number to call 6025667425, they do free consultations with everybody, and they’re rated with the Better Business Bureau. Check them out on their website, it’s frlawgroup.com. They’re located right at Seventh Street and Camelback right across the street from Xavier High School, but guess what? They help people nationwide and we are heard nationwide. So FR Law Group, the  company has 31 years of experience. We were at the break, we were live on Facebook, and we were kind of talking about a story because I told you that they love stories. Let’s talk about one that you might want to bring up, you know,

16:14

so that they can hear, not just Facebook. Sure, a number of years ago, we had a client who was a construction company entered into an agreement with a developer to build a hotel. And the process to get to that was quite involved and they spent a lot of time a lot of money and getting to the point where they broke ground. The design was represented to be complete. And as we were in the beginnings of excavation and drilling case ons and pouring peers, it came out on the news that the structural engineer of record who we had on that project was indicted for bribing plant check officials in the the state that they that this engineer did business with and that precipitated a, the all the municipales required peer reviews done on all of them this engineers designs. And our design that we were going to build was found to be grossly inefficient or not sufficient and had to be completely redone. That caused a project that was going to be probably, if I remember correctly, a 14-16 month construction timeframe to exceed three years in length. And because our client did a really good job in negotiating a contract that had appropriate protections in it for them, they were able to recover 100% of the damages that they incurred plus their attorney’s fees and interest.

17:34

It’s all about the contract. All about the contract. I was thinking also you had mentioned too, that God forbid somebody passes away. What about somebody who’s even let’s say, people who are business with their spouses, right, and someone passes away is that also important for them as well? Or

17:55

it could be if, if the spouse if the shares of the company aren’t held and community trusts if it’s not a community property, you know, if they have

18:05

What happens if they’re like divorce, they’ve got children of different families, and they’re saying they want this half or whatever. I don’t know.

18:11

Well, that could come into play. Yeah. So, and those types of scenarios with if you have a blended family, you know, it’s really smart to have in operating agreements, what happens. That would be also, would be smart to have that go hand in hand with your estate plan.

18:24

It does. A lot of people out there should be thinking about some of the things that we’re talking about here right now. And maybe it’s you or someone that you know, tell them about it. 6025667425, it’s frlawgroup.com. Okay, so issues, you know, when you say some of these things, I want to talk about the difference between mediation, arbitration and litigation.

18:48

Sure, there’s a lot of confusion with people on what the differences between those. A mediation is, is an agreement between parties to meet together with a third party to try to negotiate a resolution of the issue. A lot of times agreements require you to mediate the dispute prior to going to the next step, whether that’s litigation or arbitration. And the intent in doing that is to have the opportunity to do a layer, a level of analysis of the issues and sit down with somebody who’s really smart. And can, can help you bridge the gap between where you are and where he or she thinks you need to be to get a result. It is non binding, it is oftentimes required by your contract oftentimes required by the court if you’re in litigation, a court will order a mediation prior to trial to try to get two people to come together and and resolve it that way,

19:47

In an amicable way.

19:49

That’s the goal. Yes, sometimes it’s not, you know, no one’s happy coming out of a mediation, you’re never going to get 100% whatever you want when you mediate a case, but you want everybody to have a level of happiness, right?

20:02

A level of happiness, but it’s also less money, isn’t it?

20:05

It can be if you’re able to do it early enough in the process where you don’t spend a lot of money on attorneys fees and expert witness fees.

20:12

Yes, it’s certain. What are your thoughts about it? Do you like when that happens? Or do you like better when it has to go to arbitration or what happen?

20:19

No we really counsel our clients to be realistic about what their positions are, what their damages are, what the other side has been damaged. And and we really push them to get with a good mediator early in the process to see if we can resolve the issue, short of them spending six figures on attorneys fees and litigation,

20:43

So with the resources that these people have to them, I mean, what happens when they do they have had they they’re fighting and they come to you and they talk to you, I’ve got this issue. What are the resources?

20:55

They, their recourses to file. I meant I said resources I haven’t meant recourses. I think I got that as you need to look at your contract and see what, what is your dispute resolution methodology is an arbitration, which is a private process. arbitrations came about because people were concerned with the expensive litigation, and the time it took to get through litigation. So arbitration initially, was, was meant to be less expensive, quicker and private. It’s still private, but it has oftentimes not turned out to be less expensive or a quicker process. litigation. avi, I think everyone knows what that is when you file a lawsuit and you go and you have a trial in front of either a judge or in front of a jury, and then you have rights to appeal after that verdict.

21:47

Question in terms of someone’s listening, and they say, you know, I might want to have you take a look at mine, just to see what you think. Or they have a question about something that they’re dealing with. They don’t know whether or not the making fall back on something. They could talk to you, call you, have a consultation with you. Absolutely. You could take him through the steps.

22:05

Absolutely. Yeah, we do that a lot with. I wouldn’t I, we haven’t tracked to try to figure out how many folks that we give consultations with turn into clients. But we do, certainly do consultations with many more people than who turned into the clients.

22:22

And again, they want to make sure that you understand they work with small, big businesses. And you know, it doesn’t matter how small you are, they want to help you guys out there, that’s who they’re here to help, its the small business owners really. Yet they can do anything big or small, 6025667425, they do free consultations. They’re rated with the Better Business Bureau. Check them out. It’s frlawgroup.com. Real quickly, what are some of the key contract provisions people should include in their contracts as fast as you can.

22:51

Pay attention to your notice provisions, who you’re supposed to give notice to how you’re supposed to give it representation or representations and warranties that you’re making? In the agreement, make sure that what you’re putting out on papers is in fact, truthful and you can comply with it. Understand if there’s any limitations of liability and if there are limitations of liability in a contract, you need to understand what those are so that you can make a smart business decision as to whether or not to accept it or to increase that limitation. In today’s day and age force majeure provisions that came to bite a lot of people with the pandemic right now. So understanding what your rights and remedies are is really important.

23:29

Let me tell you something, what’s really important is to have a contract, the number to call them is 6025667425, it’s frlawgroup.com.