Thomas Green here with Ethical Marketing Service. On the podcast today we have Mitch Beinhaker. Mitch, welcome.
Thanks tom I appreciate it.
Would you like to take a moment and tell the audience a little bit about yourself and what you do?
Yeah, sure. I am a small business attorney in the United States in New Jersey. Mostly practice in New Jersey and do some federal tax planning for people that are looking to shelter taxes, save money in taxes, things like that. But for the most part it’s in New Jersey. I am a transactional and drafting attorney. I call myself so I draft and write agreements for people to start to grow and merge their businesses. You know client agreements, partnership agreements, employment agreements, anything in those realms um and as well as transactional work, so somebody’s purchasing a new location or leasing space or on boarding a new, you know, merging their practice, um selling their business, transferring it to the next generation, all that kind of transactional stuff I do as well.
I don’t go to court. So if I can’t avoid court for people, I do negotiate things if we can’t things don’t come together to well then I bring in a colleague to uh to handle it and I run a pretty much virtual practice. I work out of coworking space now. I used to have a larger firm but I don’t anymore and I’ve kind of simplified my life um and I try to be as virtual as I can now with Zoom and everything like that, it’s a little bit easier but there are sometimes where people have to actually sign documents in front of me so I have to get together with them and and so forth.
Okay, thank you for the introduction. I mentioned beforehand about the fact that I haven’t spoken to anyone in the legal profession on my podcast and I think that law and accounting, the two areas where business owners or perhaps entrepreneurs, know the least. Um that is applicable to business owners or business activity. What do you think about that concept?
Yeah, I think that as entrepreneurs and I’m, you know, an entrepreneur at heart and I love building businesses and helping people build business. I think we’re very right brain um when it comes to that stuff, we like the creative side of it, and we kind of shy away from, you know, the numbers and the legal stuff and putting things in writing, which I’ll talk about in a minute. Um and so we shy away from that stuff, but that’s what gets us in trouble, you know, not having a written signed agreement, um not knowing our numbers and finances in terms of what our profitability is, and, you know, where are our pain points are from? Uh the risk standpoint as markets change and and you know, so we don’t really know that stuff and I find business owners all the time that are struggling or going out of business because they didn’t pay attention to that stuff. And some of it you can outsource, but you know, you can outsource your bookkeeping for example, but you can’t outsource your understanding of the finances of your business, you know what your cost of goods sold or what, you know what your actual operating costs are, and you certainly can’t farm out the way you run your business and stuff you get.
I’m not suggesting you should write your own agreements, but you have to do things in writing. A lot of people don’t, you know, and don’t do that. And I think that’s a lot of it is that we’re more interested in the marketing stuff and you know, building a cool website, putting together our product and getting all that cool stands fun. I enjoy it too. But you gotta put time aside to, you know, create habits. I would say that protects you as you’re moving forward with all this stuff. I mean even from a marketing standpoint, right, you don’t put up a website and they have no privacy disclaimers and you know, terms and conditions on your website now people do it, I’m sure right, you’ve seen it, but it’s not good practice. So I think that’s something that is business owners. If we want to be successful or improve our chances that we’ve got to have to kind of suck it up and pay attention to, you know, accounting and legal stuff. So based on my own question, I do have a follow up which is what you like with the with the accounting side of things. What do I do? Well like how how’s your knowledge based on the fact that you’ve got the legal stuff sorted you you kind of okay with the accounting stuff or is it I am, I mean I’ve gotten to the point where because I have a simplified practice, I don’t really need a bookkeeper anymore.
So I have, you know, one day a month on my calendar that I set aside on a Monday and I do all of the bookkeeping and stuff like that. So it’s pretty simple. But yeah, I mean over the years I’ve also had to learn how to you know, properly account for things because I want to take the maximum advantage of the tax law. That’s one of the advantages of being in business. You know, we have all these stresses and difficulties of success, but you want to certainly maximize your income and and minimize your taxes. Taxes are voluntary allowed to do planning. So I’ve learned over the years from other colleagues of mine who R.C.P.A.S what you can and cannot deduct how to keep track of things and and follow your systems. I have a system of how I, you know, money comes in, puts tied for taxes, puts aside for other things, goes in the operating campaign for this, pay for that. Um, and I, you know, I’ve made it a part of my business. I used a bit of a modified version of profit. First, if you’ve heard of it, mike McCalla wits has been on my podcast and he’s a great guy. So I use a modified version of his of his system. But yeah, you got to find something that works for you and learn enough that you can be a little dangerous about it.
What would you say that you see regularly like as a repeat incident? Where is something that should be avoided in the legal profession?
Business owners or businesses, they typically do it over and over again as a mistake. Yeah. Well, the number one like to call it a trend or a theme is that business owners tend not to put things in writing. They’re so busy, you know, running around shaking hands, doing this, agreeing to this, what you do this. Okay, well, and they don’t sit down and say, ok, I need a client agreement. I need to have an agreement with my partner. I should have a written business plan, not just in my head and sticky notes all over my office, but I should have at least put together. So it’s a working, you know, document that I can use on a regular basis and that leads to conflicts. It leads to terrible misunderstandings. Because our our memory right is very imperfect.
For most people are memories are like a one big box and everything gets thrown in the box and they’re sticking out, sticking on the wrong things and we get confused about stuff. It’s not that we, you know, people are gonna let’s assume that people are going to take advantage of you. That’s not their intention, right? When you’re dealing with customers and you’re dealing with vendors and you’re dealing with partners, we just remember things differently. That’s just the way things work now, ironically the law treats us as if we have perfect memories, right? Witness testimony, depositions. Um you know, agreements as to what you know, you said, he said, she said so you got to have it in writing. And that’s like the biggest mistake that I see businesses continue to make is that they, you know, they don’t for example they don’t deal with customers. And and look there are retail operations, whatever. You can’t have a signed contract. But for the most part, if you have an ongoing relationship with clients or customers, you should have a written agreement and some people aren’t so comfortable with that. So they you know, they say um you know, I don’t know how do I like you know, whip out an agreement in front of somebody.
Like it’s all formal and it makes them uncomfortable. I said well if you do it that way they’re gonna be uncomfortable. And so are you? So you gotta figure a way to make it part of the way you do business because then when the person says, I don’t think that’s what we agreed to. You can go, I don’t remember it either. Let me pull out the agreement and you pull out the agreement and it says exactly what you agreed to when they can cancel, when they can’t cancel what they get charged for all those types of things. Because I find that even relationships if you don’t have any writing, they’re just all over the place, it starts here and you know, it starts going off track because you’re dealing, you know, your course of dealing. So that’s that’s the biggest mistake that business owners make learn to put things in writing. I’ve seen a trend at least over the internet anyway where the concept of a contract is essentially agreeing to terms and conditions so tick here and you agree to all these terms and conditions. Is that a work around or is that perhaps a, I would say it’s a workaround in certain situations, you don’t have much of a choice if you’re doing ecommerce.
Uh, you know, and people are buying things through your website or signing up through your website. I would just make sure that it’s clear that you have things in capitals that are important to read that you don’t make it too long and convoluted because people just, you know, they go through quick license and they, you know, they just agree and they said, well, I didn’t know, I just had to do that. Well, you know, maybe you should say at the top these are our terms and conditions and you’re gonna be held responsible for those. Please read them. If you’d like a copy, we can send you a copy. I think a lot of people over overlook that stuff, but if you have a regular dealings with customers and they’re not really through your website, you know what’s wrong with having a retainer agreement generated and sent to them and have them sign it can do that electronically. It is an extra step. It’s gotta add some additional features to your web site. But I look on my website, I do have some document preparation where people can add a discount because it’s simplified will simplified agreements for people that are just getting started in business there.
I do have a click license where it says that you know you’re agreeing to these terms and make sure you read them because this is going to be your retainer agreement and I don’t send it to them, they can request it um because I’m required to, you know by law. Um But it’s not it’s not necessarily work and it just depends on the situation and what you’re what they’re doing, what they’re green too. But I would make sure some of these terms because you’ve seen them there right there just reams of digital paper, you can just scroll through to the bottom and then they make the except but not work until you scroll through the bottom. So people just scroll through real quickly. I don’t read anything. So you know, I don’t know uh work around but I think in court of law it’s going to uphold its gonna hold up. You know I think people are not stupid. They’re clicking it says you accept the terms so The fact that you didn’t read them is more your problem. Especially B. two b. You know the courts are going to hold business owners more to the terms of the agreements and you know you you got to read what you sign this B to C. Maybe the judges are gonna give him a little bit of leeway but it’s not like it’s so uncommon click licensing anymore.
Do you read those long terms and conditions? Yeah. I mean I might peruse them a little bit, but a lot of them are very standard if you read, you know, one set because what happens is they don’t get a lawyer so they get their terms and conditions from being passed around the internet and you see a lot I once got an agreement, forget who it came from that somebody said send it to me to review and I’m looking at him like this is my agreement like where the hell? So you know, I must have done a deal with a colleague and he used some of the language or used all the language whatever, don’t copyright our stuff we share all over the place. And somehow we’re just waiting for this client. He thinks he can you just take a look at this. I’m like, yeah, it’s my agreement. And it’s like, really? And yeah, so that, that happens. What’s that phrase – it’s the ultimate compliment. Right? Exactly. And if you use one or two agreements, it’s not plagiarism, it’s research. So Use more than one. But I don’t care that much about that. I don’t mind colleagues always sharing stuff.
So in terms of business size, it’s my perception that at least when you’re smaller, the chances of having to get involved in legal, let’s say, multiple legal legal transactions are probably, it’s not going to be that frequent. But as you reach a particular size for your business, it’s going to be more of a necessity. So what sort of size business do you think where you really start having to pay attention to where it becomes more mandatory than bad habit, if you know what I mean? Yeah, I mean in all honesty, this probably doesn’t really tie the size. I think it’s a good habit to develop at the beginning, but you know, everything is a cost, right? So if you’re starting up your business, you’re just getting started. You you um, you may not have the money to go out and spend a few $1000 on an attorney to get a basic agreement. You know, my minimum fees $1500. I don’t really touch anything for less than that because as you start working, it becomes time. That’s just what happens. People like how come it’s so much money, you find out it’s a couple hours go real fast.
So um I find that it’s kind of the kind of thing where people put off because of cost and it’s not necessarily the sides. Because what happens is tom is that you, you get started in business, right? You start dealing with customers and those relationships start growing, right? So at what point do you go back to your original customers and say, hey, we now do things formally. Can you sign this agreement just to formalise what we do? So it’s probably, it probably has nothing to do it. I mean, unless you’re just getting started, you’re like, listen, we’re testing this out. We don’t know what’s going to happen in the next six months. So these are just test clients. But I would say it’s probably less. I mean, does it become more important as you grow? Sure. Because you have assets. Um, I would make sure from the get go if you’re not doing things in writing that, yeah, let’s have insurance, right. If you get sued or whatever. But the problem is this right? Even in simple situations, if you don’t have it in writing and you have a misunderstood, let’s call misunderstandings right? You have a misunderstanding.
They think that they agreed to this. You think that they agreed to something else and you have this problem. It’s not necessarily that you can that it’s going to go to court, right. If it’s a small misunderstanding, it’s not worth it for them to sue you, but they may go and post something online. So if they’re going to be less likely to do that, if you have an agreement in front of you that said this was what we this is the terms of what we decide and then they’re putting some B s on the internet that’s not accurate. You know, your agreement could also say that you there’s a non disparagement clause meaning if things don’t work out with it, you’re not allowed to go and say bad things about me, then you have some teeth to what you’re gonna do. So I don’t know if it’s necessarily the size of your business, I think you want to address it as early on as possible, you can do it, it doesn’t have to be a 40 page agreement. But as transactions get larger you find the documents get contracts get bigger because they have more things are concerned about. That would be my my piece of advice to people like, you know, you want to start as early as possible because it’s very hard to change the way you’re doing business with somebody midstream and you don’t know which relationships are going to blow up.
I’ve had clients deal with things that are posted online from the little list, you know, relationships with people and then I’m anything in writing and then persons as well as part of their steals your money and doesn’t do this and and you just kinda stuck with, you know, kind of forcing those reviews down the list as you get better if you’re on top of them because you didn’t, you didn’t do that. So I don’t know if it really, it’s a size issue. I think it’s more of a, you know, you don’t know what you need to protect and I would do it as soon as you can, you can just do it simpler gets more complicated as you grow in size. That makes sense. Perfect sense. Yeah. To what degree is a lot of the, let’s say legal um relationship between one business and another hostile and um, you know, just normal business function. How much, how much would you say that is a an aspect to it, you mean in terms of how businesses interact and so forth through, through your services. Yeah. How many my experience, I think that for the most part, if you’re, if you’re doing things the way I encourage people to do it, that, um, you know, it’s more just ongoing business.
The problem is, is that like you said, when people come to me and they probably come to me were more often than not nowadays after the fact because it’s not writing or because they didn’t formalize it. It it is more confrontational, you know, because it’s broken down at this point. We went to the lawyer because we can’t agree on our own as to what we want to do to solve the situation if their business owners that I’m working with from the beginning or before they have a conflict and we’re putting things in writing, I’m usually pretty good at at teaching the business owner how to, uh, you know, approach your customer, approach your client and do it on an amicable basis. Hey, you know, we’re just trying to dot our I’s and cross our teas here. This is what our understanding is of our relationship. We’ve been doing this, this and this for four years for you, we’re just trying to get everything in writing with everybody that becomes less confrontational. It’s the, it’s the, you know, it’s the people that come and say I’m having problems and I need to shut down my business. So I gotta, I gotta negotiate with my landlord. Those tend to not be too good. But sometimes when there’s attorneys involved, it’s a lot less confrontational.
At least, let’s forget about court, right? If if my client is dealing with the other guys client directly, there probably butting heads and not, you know, they’re pissed about it. But the attorneys usually have more of a level head. That’s not always true. Once in a while I run into a crazy lawyer who’s, you know, I’m like, is this personal for you? It’s not your business, but professionals usually have a level or head When it comes to when it comes to this stuff. So I would say it’s probably 60 40 In terms of the 60 being more confrontational in the 40 being less. Sometimes it’s 70, 30. But I’ve had some crazy situations like you’re like, how did it come to this? But usually when it comes to me, if something’s going awry down the road, you know, can you elaborate or is that India stuff? Um, yeah, it’s a little bit harder. I mean I’ve had business owners, I can’t give you specifics, but you know, they opened a business and and we negotiate a lot of stuff and between a landlord and a franchisor and this and that and then the business didn’t make it. And then, you know, it comes down to um negotiating them out of the obligations that they’ve created through the business.
And as a lawyer. And as a separated party I can kind of hide behind the fact of you know, boo hoo my clients having this problem, it’s not working and I just keep going and going going stringing along the other party from a negotiating standpoint to the point where they just finally give up, they finally break. All right, fine, we’ll do this um and day and I get it, you know, and I get it settled and I get them out as unscathed as possible, you know? So that’s definitely a a technique I guess, of negotiation. You want to kind of where the other party down, you know, before. But that, you know, that’s what happened. So I’m trying to think some other I’ve had, I’ll give you some examples that are more generic. So I’ve had a lot of small businesses, especially due to Covid right where they come to me and they said, listen, I was talking to my partner, the two partners come to me and said, listen, we’re done. I want to go and be with my family and I don’t want to run the business anymore. It’s been too hard. Covid’s killed death and they don’t have an agreement or they have a very poorly drafted agreement.
And they are arguing about everything right? If they’re a florist arguing about the website, the social media account, the pictures that went on the site, you know, all the stuff and it becomes very costly because, you know, they got a lawyer and I’m the the other party’s lawyer and then maybe there and sometimes they’re younger people in their twenties and thirties. So there’s parents involved because the parents funded the business and the and the dads like, you know, let’s say, uh, there’s a guy and a girl, I can think of a couple of examples, but I see it more common with dads and daughters. So the dad is like, you know, don’t screw with my daughter. I don’t care how much it costs me. He doesn’t really feel that way, but he’s just kind of posturing and it leads to a lot of hard a confrontation that the people are trying to restart new businesses and get move on with their life, but it’s so intrusive and they just can’t separate. So I find that a lot of that where business owners don’t have the kind of things in writing, like what if we want to split up? One of the, one of us getting sued?
One of those, if one of us dies, I did have a situation where someone died. They had a business had an agreement with their partner. If I die, you buy out my share and then paid my wife right? But and it’s all in writing, there was a formula for the value. So we got into an argument about the value of the business and he says, well, I don’t care what the value is, I can’t afford to do this. And if you don’t, I’m not going to do enough to assume me. And then the wife had to basically make a decision. We’ll do I fight this person and spend on maybe a lot of lot of money on legal fees. And at the end of the day, may end up close to the offer that he’s giving me now because I wasted it on time and aggravation. Aly and in the meantime she just needed to move on with her life. So we negotiate a little bit but she she settled and that’s you know, that’s the reality of it. But and that was with an agreement, right? You can imagine people die and the family said, well I want you to buy me out. He’s like I’m not buying you out. What do you mean by that? I don’t have your your husband now and I gotta run this business and you know and it’s a lot of uh it gets it gets to be crazy. So yeah and that’s what I do for a living.
I take things apart and try and put them back together. You know you enjoy your work. I like helping people. I mean if if I could go back 2030 years what I still practice law, I don’t know, but I’ve kind of found my way to the entrepreneurial world, the small business world through as a lawyer. Um And I like working on deals and helping people you know advise them on you know their business structure and creating their business plan and uh some of its marketing but a lot of it from a legal standpoint. Um And yeah I mean I enjoy that but you know if I moves to a beach in Key West but I do that. Yeah I probably do that too. I don’t think, I think there’s a lot of ways to help people so it doesn’t have to be a lawyer. I do think that law is a good education for people if you you know, if you don’t want to go get your NBA for example and you’re coming out of college and you feel you want to get an advanced degree or more of an education for business. I think going to law school is very good. It’s a good exercise and thinking and you learn how to analyse things better and how to research the law and how to understand the law and how to interact with governments and the taxing authorities and things like that.
Having said that though, tom I get a lot of situations where I have a business owner who was an attorney, didn’t practice and he has another partner and he drafted their agreements and they’re terrible. So I’ve had dozens of those. So just because you’re a lawyer, if you don’t, most of our practicing lawyers, all of us know when we should and should not be handling something. So don’t do your own agreements. Get you know get a colleague to take a look cause it’s always missing something that we put in agreements because I’ve done hundreds of thousands of them, you know? Yeah. So I guess that’s a round about way of answering your question of yeah, maybe I would practice law but I’m not sure. It’s a lot of ways to get to where I am now. Well um I think a lot of the things that you mentioned so far, a lot of the and those scenarios that turns sour. The advice of getting more things in writing is major prevention for that. So yeah, I’m actually working on a book, it’s called 10 ways to get sued by anyone and everyone Because my colleague who’s my co author is writing this like 10 ways kind of series, it’s not about how to get sued.
Obviously, it’s about how do not get sued. And a lot of the trend in the book is about you know, doing things in the writing, having a business plan of partnership agreement, an employee handbook, you know the rules and procedures or your business to avoid problems like that. So a lot of it is about documenting things and and like you said, we’re just not good at that. We would rather do other things. No fun to deal with law. It’s not fun to deal with accounting. Let’s go do the fun stuff. Your stuff marketing, that’s fun. You know, business development. I mean you highlighted something which I wanted to talk to you about and that is the actual knowing of the law is not all of the job. Like some of it is kind of like the negotiating um side of it. And you know I have my education in that from a program called suits. So you know, very highly realistic, I’m sure. So what what have you what have you got to know on the actual nonlegal side of it?
So perhaps the and no bluffing a bit for lack of a better term negotiating. And then also what your thoughts are on suits. If you’ve watched any. I watched every episode of Suits, all nine seasons. It is so unrealistic relative to the practice of law that it’s ridiculous because it’s just drama the way these partners get along and treat each other, the way they make these deals. They close these deals that are you know, hundreds of millions of dollars in three days. The guy goes and he threatens this and that. And it’s done. It’s not the real world, not even close um negotiating. Yeah. There is some posturing when it comes to negotiating. Uh, there’s certainly a, you know, a certain techniques like when I’m dealing with somebody, I want to know more about what their position is and what their thoughts are. Then I want to share what my position and my thoughts are, right, because I’m gonna work around what it is that they’re trying to accomplish. So everyone feels like they’re getting their pound of flesh, so to speak, right? And a good attorney, even litigators, right?
Never ask a question without knowing what the answer is ahead of time. So if I’m coming into a situation, I want to kind of feel, feel out what’s, you know, what’s important to the landlord, what’s important to the the company that has your leases on, all your equipment, What do they really want? You know, they’re going to take the, you know, the, the landlord have another 10. He really just wants to move on and he’s willing to, you know, let you out for less money in order to re rent the space or is he going to be uh, use the expression but a dick about it. Um, you know, so that’s a lot of it. Just the whole suits things. I mean, I love suits. It was fun to watch the whole series, especially on streaming because you just binge watch the whole thing. Uh but it’s pretty funny about, and by the way that, yeah, the, the guys, um, what was, what was the attorney’s name with the, the lead character with the uh, perfect memory Mike. Ross. Yeah. Mike Ross. Yeah. Those people don’t exist. Yeah. Well, the photographic memory thing, yeah. Right. He could like literally, you know, and and and they would have these briefs or these these complaints, these complex legal things that overnight they would stay up, wouldn’t sleep and they would have it already the next morning to go.
And I mean come on, it does just doesn’t happen. But it was fun, you know, louis and all those guys who was the guy who was Mike’s boss was Harvey, right, Harvey and Jessica and then all the other characters that came on later on. So it’s pretty funny. You have a favourite character. Oh yeah, definitely. Like Harvey, he didn’t put up with shit from anybody, he would take on everybody. Well, that tells me something about your negotiating style anyway, I’m definitely not a Harvey I’m not that good at negotiating. But you know, I think um it’s pretty funny because I think if you if you are a Harvey right, if you take that approach that’s going to come back to really, really haunt you. People don’t roll over, you know, because of whatever move you made, you know, well we put a bid in this morning and we bought the company out from under you. Like that doesn’t happen. And uh you know, so I think you have to you can get good results from your clients if you have amicable relationships with the professionals that you’re dealing with and you build a rapport with people.
And I think a lot of and that’s why using a lawyer is advantageous to the business owner, right? Because you are personally invested in this. You’re probably emotional about it. Maybe you’re losing your business or you feel you’re being taken advantage of. I don’t have those feelings, right? So I can talk to the business owner, talk to their attorney and kind of, you know, make them feel a little bit better about everything, calm the situation down. Kind of dissipate the tension in the room, so to speak. And we can get the job done and keep your client focused on my client focused on, hey, this is better for you to get this resolved and to move on. You know, now you’re working with me going forward. So we’ll have things in writing, will have a contract, will do things purposefully, uh, and you didn’t do it in the past. So let’s wrap this up. It’s not going to go the way you want it to go. Maybe it will, but I don’t want them to have that expectation. And let’s see if we can get you out of this as easy as we can so we can move on with your life and spend time with your family and your kids and and building your new location business, whatever it happens to be, as opposed to just pouring all of your energy into this problem and basically destroying your whole situation.
You know, um nobody wins from that. You know, you go to court at least in the United States, there are no winners in court. There are judgments that are rewarded two people from a judge or a jury, but you’re always suffering from the impact both financially and emotionally and whatever that it has on you and your family and your business and both sides of the transaction, even if it is resolved, so it’s always better to, you know, be the good guy and you know, I don’t know, wave the white flag is not the right word, but you know what I mean? Have report with people and find a way to find common ground even if you’re never gonna talk again and just move on with your life. Like that’s I think the biggest problem that business owners have when they’re dealing with that in the run, they’re just so emotionally invested in the fact that they feel like they’re being taken advantage of. So what, let’s just figure this out and move on. Well, yeah, it’s a good point and I think that most people learn um well I don’t know where this, this is, advice from someone.
I don’t know this to be true myself. But if you go through the process of actually going through a lawsuit and you know the pain of that and the financial, like you say, implications of that, you learn not to do it again. Would you say that right? For sure? I don’t find a lot of people that are jumping into new lawsuits every time. They’re just like, especially if they had to go into a lawsuit the second time they want to do everything they can to avoid it, you know, and look sometimes the threat of a lawsuit does force things to settle. Um but and that’s why sometimes you agree to go to mediation or arbitration. So you have something out of court with an arbitrator that separates the two of you and put you in one room, puts me in another room and says tom you know, this is what’s going to happen if you don’t do this and this and this is a bad ramifications of it and there’s a good ramifications of coming to an agreement and that’s the purpose of those types of of exercises. Um But yeah, I would definitely agree that, you know, once you’ve been there maybe reluctantly because you were defendant for example, um you try at all costs to avoid it, but look now you learn do things in writing, be professional about it up front, communicate with your clients.
If the client says, hey, when you do this, you say sure you follow it up in an email or an amendment to the contract. I just want to make sure that you understand we are changing our agreement and you have that in writing now, preferably signed by both parties. But if you can at least you have a trail to show your course of dealing um and you learn real quick to get good habits. You know, it’s the one people that like, oh come on, everything’s fine. I’ve never had a lawsuit problem. Like for example, uh I get a lot of people that come with their parents, the parents have developed a real estate portfolio over the years, two family homes, whatever. It’s all owned in the parents names personally. I know they have insurance or whatever. They’ve never been sued, but we live in a different world than when they were starting to buy their insurance that they buy their properties when probably they were told not to put in their name then and you get a lot of that. So that doesn’t mean you shouldn’t move it and fix it just because it never happened in the past. You know, because you survived your car crash doesn’t mean that you should have air bags in your car moving forward. You know, I mean it’s safety is a good thing.
Protection is a good thing and I think that you learn sometimes the hard way, like you said fast doesn’t equal the future, right? Never. And hopefully it’s a better, a better future because you did learn, you mentioned the part of your skill set is the selling of businesses or those deals. I did have a really good conversation with, with someone regarding the the actual process there. But part of the legal stuff was missed out because that wasn’t his skill set. So have you got any thoughts or anything to add on the legal process of sending a business? Well, yeah, I mean I’ve and I have a bunch of them going on right now through usually through business brokers or you know, stuff like that. And everyone feels differently about it. So some of the attorneys are like, listen, let’s get through the due diligence, your client, look at the business if they want to move, let’s go forward the contract. But you need to have a contract in writing because there’s too much on the line, there’s too much going on the bank.
If you’re borrowing money is going to need a contract in New Jersey, at least you generally file what’s called a bulk sale notice with the division of taxation, which protects the buyer from any taxes of the seller mayo if they show up after the fact after closing. So there’s a lot of that stuff and the details of the contract is what’s going to control everything. It’s going to give you your period of due diligence to review anything of business. It’s going to give you right to whatever records you’re going to get. There’s going to be environmental requirements that depending on the state in which you’re in, or the country in which you are, that fall on the seller and fall on the buyer. Um In New Jersey, for example, there’s an industrial site Recovery Act that falls on a seller depending on the type of business you have, that’s the seller’s responsibility and then there are environmental responsibility on the buyer that if they don’t check them out, is going to become their problem after closing. So that sets up the game and I’m always, I have some transaction right now. We still haven’t signed a contract and it drives me nuts. But that sets the rules for the game when it comes to doing all these things and the attorneys start working on whatever comes with it, a non compete for the seller.
So he doesn’t go into business and compete with the guy just sold the business to. Um. You might have an employment agreement with the seller staying on for a while. Maybe he’s holding paper meeting is holding some of the sales price as a note where the buyers paying him out over time. So, you know, you’ve got to document that. There may be a security agreement that goes with that to give the person to sell or security some security against the assets of the business. Or maybe there’s real estate involved or whatever. And if you don’t pay for that, attorney got disbarred because he just didn’t file anything and you, you know, you want to protect those people. That’s all the legal stuff that goes on. And I’ve had people sell small businesses and I get lawyers involved and then they come to me go, well, this didn’t work. Okay, well what did you file? What? They don’t even know what I’m talking about? So there’s all kinds of different ways to put leans on assets to give yourself some protection. But an attorney has to do that because most people don’t know how to do it. I didn’t actually think it was possible to sell the business without an attorney or solicitor, but I guess, well, I do know some local businesses that they had asked me the question and the next thing and other businesses solved and I don’t think they went somewhere else.
So yeah, you don’t, you know, yeah, you don’t need to. Now look if I’m the seller and the seller has a lawyer, for example, especially in today’s environment, the lawyers are very reluctant to deal with a buyer, another party without a lawyer. Because there have been case rulings where the lawyer is deemed to be an attorney for both parties because he answered like one question that the buyer had at closing and then something blew up later on. And the attorneys in the middle of it because they’re like, well, you gave him the advice is, well, it’s not my client, he is now and they deemed it de facto that he was his lawyer um, with that regard, that’s why banks are like very, you want to borrow money commercial from a bank now because of those types of rulings are like, well, you got to get a lawyer, got to have counsel. You can’t do it on your own because our council not gonna talk to anybody. So yeah, that gets a little crazy. So you don’t have to use a lawyer, but you are exposing yourself to so many problems if you don’t the least of which is the taxes that you may inherit or environmental problems.
You may inherit from the cellar or things that are hidden. You know, I had somebody who provided a least once. They were transferring the least. Because it’s uh some sort of retail location. And it was, you know, everything is always pushed to close and they want to get closed. I’m like, listen, I gotta review this least for you. No, no, no. I’ll look at that. You do this. All right. You know, I make sure I follow up with an email saying that I just want you to make sure that we understand you’re reviewing the least and I’m doing this okay. No problem. He doesn’t really look at the least. The seller left out like three very important pages. That basically said that this is your rent. But in six months it goes to this and they in a year ago, it was a tiered rental system so that the buyer thought the rent was X. It was like three times Jackson two years. And the guy said, I didn’t mean to do that was an accident. I don’t know. But, but if I had gone through it and found out the pages 40 through, 44 were missing, I would have as for them and bingo, we would have figured it out. Now. Would we not have closed? Maybe we adjusted the price. Yeah.
You know, now it’s water under the bridge or whatever. But you know, sometimes everybody’s rush. I hate when people rushing a close, we’re gonna get close by next week. Why? Just because the rents do pay the rent will pro rate it, you know, whatever. But don’t, you know, do things like that to make precipitous decisions because it will come back to bite you. It always does everything you’re saying. Sounds completely typical. So I can just, that’s pretty much the default, isn’t it? People don’t do what they’re supposed to do. People don’t read the documents they’re supposed to read. No, they think it’s uh I even tell clients, listen, I’m sending you this agreement. I’m assuming that you’re reading it. Don’t assume that because I’m a lawyer because I’m your lawyer that everything is good. I got mitch, I’m human too. So you have to read it and then tell me, oh wait, we didn’t agree to that. You know? And I’ve had clients actually say to me after the fact, well, you know, I just assumed it was good because you reviewed it. But the bad assumption, you know, I do my work and I do my job and I’ll protect you and I had certain things. I look at it, I don’t know what’s in your head or what, you know, and maybe I missed something. I’m not perfect.
So you gotta, you know participate in the process. And some people don’t. I had one time I think was a will though. I don’t think it was a business situation where I actually got to their houses, I was younger. So I used to travel, go to people, I get to their house and they start opening the package. So what I did was I said I think it was, well I sent them the wills because I don’t have email in those days. It was bigger pad. We picked and I sent them wills for them to review ahead of our meeting. Right? So then I go to the meeting thinking everything’s fine with the documents ready tag to sign. And they start opening the package that I had sent them like a month before and I go, what are you doing? Oh yeah, well we need to review that. Are you kidding? I don’t have like I couldn’t fix anything there. And it turns out that the town I was in, half the town was in one county and the other half the town was in another county and I had the wrong county. And the documents. Now did it mean the wills wouldn’t be valid? No there’s no address and it just says the county. So we we dealt with it but they would have picked up and they just looked at him ahead of time. So I was I’ve learned over the years to make sure people understand what their responsibilities are and what my responsibilities are.
Just because you have a lawyer doesn’t let you off the hook. It just makes it a little bit better because you have another party looking out for you. It is high stakes what you do though, isn’t it? It may be I mean you know even a small business purchases, a big thing to the person, you know if they’re paying 3 to $5 million for a business that may be huge to them, you know somebody’s doing a bit bigger deal, that’s a 51 $100 million just by more parties involved and more attorneys involved and all that. I don’t tend to do those bigger transactions but um it is it’s a big deal of them. And the funny thing is I think is that first they’ll come to you. So what do you think legal is going to be? I don’t know, 5 to $25,000. Why is such a big range? Because I don’t know what we’re getting into and that’s what it usually ends up being. It’s 3 to $4000 a month probably in work because they’re ongoing things, but they don’t realize how complex the correct way to do a transaction is. You know. Um And then you and then things pop up like you know the business hasn’t filed a tax return and I had 1 35 years ago.
So the guys selling that he’s very old, he’s now passed away. He’s selling this business and he’s on oxygen or whatever. And I go to, we do a search obviously ready to attack search and search on the corporation. It comes back that the corporation was revoked. So this corporation still owns this real estate and the business that we’re selling It was revoked for failure to pay something, I’m not sure 35 years ago, right? So and he’s still operating like he’s paying his fees to the state to renew his corporation. But the division of taxation and the corporate department, they don’t communicate, they call the guy from the division attacks and I explained to him and he was shot. He goes 35 years ago. Has this guy still in business? I said, I don’t know how you guys operate. So He we had to put together the tax returns for the business because they had filed tax returns in those many years. So we had basically negotiate, there was a minimum tax would end up paying $150,000. And and probably didn’t know that money either Thomas because his income probably wasn’t what you know, they didn’t make a lot of money wasn’t a big business.
So and to negotiate that out and had to go visit the guy and we had to sit down with attack and they came and got the money at at closing. And those things pop up all the time. And if you don’t do the searches, your client, who’s the buyer, I was, the seller is gonna get screwed because the division wants to get paid and they’re going to take your property to pay it even though you’re the guy who bought the property, good luck, you know, so people don’t realize that kind of, what kind of what do we need to do searches for? I’m sure it’s fine. You know those things pop up all the time in the records that are wrong. You know, maybe maybe maybe the business doesn’t know a half a million dollars into over the bank. It was paid off, but they never discharge the mortgage and you got to find the bank, the banks closed, it was sold three times over and there’s ways to search that clients don’t know that. Don’t do it yourself. Why the accidental entrepreneur about the podcast? Yeah, so it’s funny so all the stuff we’re talking about kind of is where the whole concept of the accident entrepreneur came from because they get these people that are some of them fall into into into practice, you know or whatever they’re doing accidentally but more so they accidentally fail is what happens because they say we’re gonna do this and they don’t take time to like even read something basic or listen to your podcast about marketing and about how they should do the business and whatever and they just kind of run towards whatever light they see at the end of the tunnel thinking it’s all going to be great and you know, you and I both know nine times out of 10 it’s not, they struggle so if they would take some time and learn some things and follow some basic principles, they wouldn’t, they wouldn’t do things by accident.
So the podcast came about and I guess we’re talking about today to to to meet with people that have become successful in business and have had their own failures along the way to share their ideas and help people. The tagline says to get a better hold of their business, hopefully avoid some of those mistakes. We all make mistakes anyway, you and I both know that, but you know, improve their chances of success. And that’s what the podcast is all about, discussions about the stories that people are sharing about their successes and their struggles and their failures in some cases and what they would do differently in advice they have for people. But you see, I’ve done 160 episodes, I’ve interviewed a lot of people from authors, social media, influencers, inventors, entrepreneurs, start up founders. There’s, you know, there’s themes, you know, generally it has to do with, you know, learning about business operations and being prepared and putting things in writing and writing down your ideas and things like that. And there’s a huge difference between like and you know this right one person that figured out a business in one industry and they’re doing well and then they sell their business or they change and they don’t do so well in the next industry because not really an entrepreneur, there’s just a business owner in that industry and they don’t have the skills that they can transfer two another industry as opposed to other people that have bought and sold and grown all kinds of businesses because they have spent the time developing the skills they need to improve their chances of success.
So great podcast came from, you can find it on just like you apple google amazon, I don’t know, whatever seven or eight different uh directories. Well, we are part of the episode was going to be about, you know, what, what improves the chances of success for a typical business owner. I know, I haven’t given you really much time considering, but well we’ve covered a lot of them. I mean we kind of touched on them going through. So it’s not, you know, not an unanswered question. I would say people have to, I would say people should start with a business plan and it could be a lean canvas business plan. It could be, I would say that, you know, if I boil it down, there’s probably four areas you should focus on, right? You got your product or service. They’ve got your people. Maybe that’s just you, maybe you need other skills. A lot of people don’t realize that they don’t have the skills they need and they need other people. There’s the marketing side of it. How do you market the product? What is the marketplace look like? All that stuff? And then like you mentioned the financial and the legal stuff even, but the legal stuff aside for now, just the financials, you know, what does it take to produce this product?
What are the actual costs of running this business? You know, and, and the people that I know that are really successful really know their numbers. They know how many more customers they need and clients they need before they add new staff or add a new system or whatever. And, and you know, and they are pretty successful in that regard. So that’s the, The # one advice I would give to people is to create a business plan or a document or a journal. That’s a working thing that you can use to run your business. Don’t create a business plan and put a binder on it and charts and graphs and put it on your shelf and feel like, oh, I did that part. I’m all done. A real business plan is a working document which ultimately may develop into other documents. So you’re the people section of your business plan may develop into a personnel, you know, a handbook, an employee handbook. The marketing thing could become a whole strategic planning thing in itself and financials and you know, all that type of stuff. So that’s where I was. That’s where I would start. That’s the first thing you should put in writing and inform your company.
Don’t be a sole proprietor. That’s like the worst thing. You can do. Your company status now or your individual. No, I’m an LLC my business, but as a lawyer and this is probably true for accountants and other professionals. Were, and doctors too. We have professional associations, professional corporations, LLCS, things like that. We’re still personally liable for what we do just the nature of being a professional. And we have professional insurance because of it. So there is limited, you know, I don’t get as much protection as a as a typical business owner. We get using an LLC but yeah, you definitely want to have that wall in between you and the people that you do business with, you got to follow. So follow them. Well, I think even the advice has been great today. So thank you very much for all that. There are some things that maybe I do need to implement as a result of it. But is there anything that would be valuable to the audience regarding the legal advice which I should have asked that springs to mind? Um no, I don’t think beyond what we, what we said, I am available.
If anybody wants to have a consult and go to my website, I’m buying hacker law.com and there’s 20 minute consults. I’ll be happy to talk to anybody, even if it’s from a business advisory capacity, if you recognize that, I don’t practice wherever you are. Um and as part of also gonna be happy to give you give them a four part template to get started on their business plan. But if they’re not sure, you know where to start and what to do, and I’ll be happy to happy to talk to anybody if they if they want to, you know, take me up on it, what your goals for further, you know what this year? Yeah. Um Well, my goals is I want to I like the virtual nature of the practice and I’m continuing to do more virtual work so maybe I can have a little bit more flexibility on traveling and living arrangements and things like that with my wife. Um And I’m also kind of taking the personal, you know, podcasting, authoring, speaking stuff and breaking it off. So there will be a uh Mitchell Biden hacker dot com website and then they’ll be the law firm because a lot of that was getting lost in the law firm.
So, and and obviously only practice in New Jersey, so it gets a little complicated, so we’re kind of breaking those up and rebranding them um through a colleague of mine also, who’s a marketing guy here and he had the same experience after we talked, he’s like, oh my God, I like I can’t sleep at night, I got to do certain things I haven’t done. Like he didn’t even think about two things he needs. So I’m doing stuff for him and he’s doing stuff for me. Um, so that’s probably the biggest thing. And then my book also, I’ve been working on for a while and I want to get that out in the either, you know, like let’s say September or certainly in the fourth quarter of, of the year. Um, for people to actually use, it’s more of a primer. Like you have to read the whole thing. You know, if you can read whatever part or a chapter that you think applies to you. So, and that’s how to get sued. Was it 10 ways to get sued by anyone and everyone sounds like a read that um, lots of people should probably proves that. Yeah, Well we wanted to have a catchy, you needed a catchy title. You know, it’s too boring. Nobody’s going to read it. But you know, maybe the bathroom breed than it is a beach read.
So Mitch, where’s the best place for people to find you?
Certainly the website buyinghackerlaw.com, you can register for my newsletter. You’ll get notices of all the podcast episodes, blogs, any other things that we put out the books. I’m on social media. So LinkedIn, Facebook Instagram, Twitter, the podcast is also on, I think LinkedIn and Facebook. It’s always a good way to find me, LinkedIn especially, but I’m more tuned into that than Facebook. Facebook is more like personal stuff. And yeah, I think that’s the best way to go and follow the podcast.
Go and subscribe through whatever device you use, you’ll be having the new personal site coming out anytime now.
Yeah, probably in the fourth quarter of the year. Okay. But it’s really it kind of exists. It’s just part of the law firms that will be broken out and then kind of revamped a little bit.
Right, well, thank you very much for your time today. It’s been great.
All right, thanks, Tom.