Have you ever walked out in a daze after meeting with a lawyer?  Was it English they were speaking?  What was it they actually said about your problem?  Was the only thing you understood, “Don’t worry, we will take care of it for you”, and then with confused relief you left your legal problem in their hands. 
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A few weeks later you get the bill but you still don’t really understand what work has been done AND why are you paying for photocopying and meetings and phone calls?

Well, the law is pretty complicated.  There’s no doubt about that.  It’s not always easy to navigate, and often only an experienced lawyer will know the best strategy to help you reach your goal.  And, yes, paperwork is generated, even in my paperless office there is photocopying to be done. Meetings, research, reviewing documents and phonecalls are also vital tools of our trade.   

And, yes, the traditional model is we do take care of you and you pay us to do that - we can try to keep our fees down but the analogy might be, you are flying first class, with all the tinsel and trimmings and not a care in the world (but for the bill).

But can’t there be a different way?  What about those who prefer to, or simply have to, fly economy so to speak.

​​In my article of 7 December 2018 I talked about preventative law. This article is about an approach to law that is equally exciting.  Around the world, it's called “Unbundled Law”, also known as limited scope or discrete task representation.  Unbundled Law is where the lawyer and the client make an agreement to limit the scope of the lawyer's involvement in a legal matter down to specific tasks.

The New Zealand Law Society* explains the potential benefits to clients in using Unbundled Law as: 

• Increased access to justice. Many people can afford to pay something, but cannot afford the full representation approach.
• Expert legal assistance that can help a client navigate a system that is often complex and difficult for a lay person to understand.
• Clients are empowered. They have more control over their own legal affairs, and can exercise control over those parts of the file they feel comfortable handling.
• Price predictability.
• Greater ability for a wider section of civil society to access the justice system to resolve their legal disputes or issues.

Apart from cost savings, which can be significant, the biggest benefit I have seen is that  people are actually empowered.
 
It simply stuns me the number of people who do not know what their legal documents say or do - and in some cases don’t even have a copy! 

As for court cases, if you don’t know what your legal case is about how can you possibly make decisions about what to do next in it when you are asked by your lawyer for “instructions”?

An important point to make is you don't have to compromise quality with Unbundled Law, because ALL lawyers have professional obligations to their clients that are closely monitored and nowadays it's easy to do some homework and find out about your lawyer's experience and skills - just as you would with any other potential service provider.

There’s no doubt some people will always prefer the traditional legal model and thank goodness there are some great law firms in the region providing those services but more and more people are taking on assisted “DIY Law”.  

At Comer Legal, we have developed a fixed fee framework so that clients can get the assistance they require as they require it.  When work is completed, the client takes home all their own original documents for safekeeping or lodging – thus keeping control over their own legal matter.  Electronic copies are kept by us and also provided by email to the client if requested.  If we decide that a client might not be the right fit for Unbundled Law, quality referrals are made to traditional lawyers.  

The key to the success of professional services is YOU the client.

More and more your choices matter when it comes to how  services are delivered and that’s why Unbundled Law has a very important role to play right now and in the future in helping people access justice.

In my November 2018 blog article, one of the 6 key Legal Tips I listed was to “Put it in Writing”.  This article tells you why having great Terms and Conditions documented is so important.

Protecting You
When starting up a business, the last thing you want to think about is the worst case scenario but if you don’t put terms and conditions into writing you put yourself at risk of uncertainty and misunderstandings.  You need to cover yourself.

Your Business Transparency 
Having terms and conditions protects your business but other parties such as customers also need to know where they stand in dealing with you.  Terms and conditions have a vital role to play when it comes to two parties (customer/supplier, partners) understanding their duties, rights, roles and responsibilities.

Terms and conditions can save a lot of money by addressing all issues at the outset. This in turn avoids disputes later on about what might or might not have been agreed. Apart from the cost, disputes damage business relationships and your valuable reputation.

What To Include In Terms And Conditions
Well-drafted terms should act like a manual for doing business and provide absolute clarity on what should happen in a given situation. They should set out what the agreed terms are between parties and what happens if things go wrong or one party wants to leave or is unable to continue.

The exact items your terms and conditions should include depend on your individual business but you should consider including:

• A clear description of what products or services will be provided
• Details of the payment terms – when is payment due, how it is to be made, and any terms for non-payment
• Any guarantees or warranties offered
• Clarification regarding insurances
• Who retains ownership of partly installed products or equipment
• Timelines for delivery of products or services and any queries
• An explanation of what happens if either party doesn’t deliver or pay or wants to end the relationship
• The term of the agreement and what notice is required to get out of it

Many businesses include their terms and conditions on the back of their invoice, but arguably by then, it’s too late.  Payment Terms can certainly be re-stated on an invoice but Terms and Conditions should be provided at the outset of a business relationship.  This can be done in a fairly brief, easy to adapt, format.  It’s also a good idea to display your general terms and conditions on your website.
 
What Happens If Terms And Conditions Are Not Clear?
Failing to specify terms can have a serious impact on your cashflow and your business relationships.  You may end up in a situation where the customer thinks they will pay at the end of service delivery and you think you are being paid at the beginning or in stages, so you could end up having to pay for materials and staff before you have received the money from the customer.  Another common example is a misunderstanding can occur as to what is being supplied and when.

Also, if you do not specify your payment terms very clearly, customers may be confused as to when payment is due or you have will have no right to charge interest for late payment.

One Size Does Not Fit All
It’s important to make sure your terms are specifically written for your business – you can’t assume another business will have the same needs as yours. 

Consult a lawyer and avoid the temptation to copy someone else’s terms as their business is different and they may not have consulted a lawyer themselves.  Consider it an investment.  If well drawn in the beginning, terms and conditions should need very little modification as time goes by.

4 Tips For Working Out What You Need To Include In Your Terms And Conditions

1. Draw up a list of the key commercial terms that you are offering your customers (use the pointers above as a guide).
2. Think of all the scenarios of what could possibly go wrong and then set out what you would do in each case.
3. Imagine the most difficult customer or supplier possible in doing this exercise.
4. Put yourself in the shoes of your customers and make sure the language is at their level and user friendly. Hiding everything on one page in the smallest font possible will not endear you to your customers.

When in doubt, seek help. Ask for advice from your mentor, fellow business owners, your accountant and your lawyer.

What if basic Terms and Conditions are not enough?
Most businesses will be able to get by with short form standard contracts (Terms and Conditions) for the supply of goods and services.  However, in some cases it may be preferable to have a more detailed and traditional contract in place.  A lawyer will be able to advise you what would be the best approach for your business.

​Over my years as a lawyer, I have spent quite a number of those years helping clients as a litigator.  But I found that there were many parts of the litigation business which seemed to be unhelpful and dissatisfying to clients (and me!!) 
These dissatisfaction points included:

• The need to have a cost-prohibitive costs agreements before even speaking with a lawyer;
• Lawyers overusing legal terminology when speaking to their clients;
• Lawyers not providing realistic fee estimates, especially for litigation services;
•  Runaway billing that left clients feeling out of control about the costs of dealing with their legal matter; and
• An adversarial and conflict-filled process that was usually devastating for the clients, even if the outcome was successful.

But fortunately those times have changed, and over the past years I have shaped my practice more and more towards "Preventative Law". 

I think of Preventative Law as a kinder, gentler law practice, where my role as a lawyer is more as an educator, coach and resource to my clients. I often talk to people about Preventative Law but I am not always sure that people understand what it is that I mean by it.  Hopefully, this article will assist.

Preventative Law in Action

When a client calls me and asks for a Will to be prepared, the chances are high that a Will is exactly what they want. However, after looking into it more, my client might say: “I am going in for an operation next week and I want to make sure my family is looked after in case something happens to me.”

Knowing the reasons behind my client’s request allows me to address more fully the “root” concern that prompts that request. It opens up the possibility of a discussion on the practicalities of other tools that my client may consider and we can then implement those tools together to more completely and effectively resolve the concern. Some of these tools may be legal solutions, such as making a gift, preparing an enduring power of attorney, establishing a trust, or developing a business succession plan. Also, non-legal solutions may require implementation by other professionals such as an accountant or personal organiser.

The practical applications of “Preventative Law” range from regular legal health checks for an individual client to detailed, systematic legal compliance programs being implemented on a business or corporate scale. 

What does Preventative Law really mean?

Stated simply, Preventative Law is about acting “proactively” by taking appropriate steps to prevent a problem from occurring. This is opposed to acting “reactively” in dealing with a client’s problem once it has occurred. 

To be truly effective, lawyers should try to understand their client’s “real problem”, not just their legal problem so that can proactively work with their client to achieve great results.

The Benefits
The evidence shows that Preventative Law contributes to the life and business success of clients. A client is likely to be saved stress, harm and cost.   Preventative Law can also ensure that a client is not misguided about issues that may have a substantial impact on them in the future.

Why wouldn’t a client act proactively or welcome a lawyer’s advice to do so?

Many clients do not:

• • Understand or know the risk of inaction; or
• • consider the risk is severe enough to require action.

If a client appreciates the risk – money and time spent now is viewed in perspective of what it may cost or how much time it may take if left unchecked. Remember the common proverb “an ounce of prevention is better than a pound of cure”? Sadly, many people don’t realise this until after the fact, when they say something like this,  “if only I had known”.

The preventative lawyer is like a “designer”. The designer role is the dimension of legal practice that is often overlooked because of the “reactive” pressures of legal practice.

The designer works proactively with clients to identify potential legal trouble spots and designs tools to prevent those risks from occurring. In comparison, the “problem solver” deals with problems as they erupt, notwithstanding the best preventative efforts. Failing that, or where justice concerns otherwise seem to warrant it, the “fighter” initiates a court based resolution for the problem. All three dimensions in a lawyer are important. To be only one dimensional would be to put at risk obtaining the best solution for a client.

Where to Start?

Preventative Law starts with an attitude towards the practice of law. Time and effort is made to go beyond a client’s current “problem”.  As lawyers we should aim to build strong bonds with our clients. It’s important for a client to feel that they can talk confidentially to their lawyer about anything that may directly or even indirectly relate to their legal affairs. Without this bond, a client will be more reluctant to tell the lawyer everything. Sometimes, a client will innocently fail to pass on information because they don’t see its relevance. In order to overcome this obstacle, communication is essential.

If a rapport of this nature can be established, it is likely that lawyers will be much better equipped to prevent legal problems occurring. By understanding the client’s individual needs, their business, industry and goals, we are better placed to determine what the future issues are, as well as the underlying cause of existing issues.

The Tools of Preventative Law

A lawyer applying the skills of Preventative Law will focus on:

• Predicting human behavior - to anticipate and account for what people will do, and by doing so, prevent litigation.  This improves personal and business relationships, and constitutes an essential part of preventative law.
• Conflict management—preventative law draws parallels from the medical world, e.g., successful medical treatment is prophylactic.
• Embracing the full range of risks - instead of focusing solely on reducing one or a few risks to zero, the preventative law approach strives to reduce the overall sum of risk.
• Preventative service - lawyers and in-house counsels participate with others in multi-disciplinary teams in the planning of business ventures. Bringing legal expertise in earlier helps detect and prevent legal problems.

It’s for the reasons expressed in this article that my primary focus is on taking the law to my clients’ homes and businesses.  What better way to get to understand your clients’ needs and issues than to be there with them where those needs and issues arise! 
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If you have thoughts you would like to share about preventative law, I would love to hear them!  It’s a very important discussion to have.

​​If you are starting or operating a small business by following the tips in this article you will have a solid legal framework for your business success.

I am assuming you’ve already done your homework and worked out there is a need for the product or services you are going to provide and that you have the skills to do the job.  If you haven’t then bookmark this article and undertake Due Diligence before you commit.    “What the....” you say? 

“Due diligence” is a fancy legal term for undertaking a detailed assessment of the risks and benefits of setting up your business.  It is particularly important if you are looking at buying an existing business, renting premises, or taking on a franchise, because in those cases you will want to look very closely at what you will be getting and who from.

A thorough analysis of pros and cons is always recommended.  See a lawyer, see an accountant, take advice wherever you can get it, but ultimately it is your business so you need to know and understand the risks in it. 

Don’t commit to anything until you have seriously examined and understand contracts, leases, local authority and government requirements/restrictions, financial records (if you are buying into a business or franchise), product security, upcoming zoning issues. 

There is a heap of public information available to help with your research.  If you need to see private commercial information from the seller or franchiser there’s a good chance you will need to sign a confidentiality agreement.  READ IT before you do.  Feel free to message me for more hints on this. 

Well, that issue dealt with, back to my tips on operating a successful small business:

​Starting at the very beginning, you need to make sure you set up the right type of business structure.  You have three main choices: sole trader, partnership or company.  Each choice has pros and cons.  What will work best for you, may not work best for someone else. 

Sole Trader
A big con for sole trading is, if you personally own assets then operating a business as a sole trader may involve risk of personal financial loss if the business is not successful.  

Partnership
If you intend to operate a business with one or more other people you really, really (can I say 'really' a couple of more times??) need to document your partnership agreement.  The Partnership Act does provide protection for partnerships but its a one size fits all approach and we know how that can look!  Besides, documenting your agreement helps you to discuss some of the key issues about going into a business together.

Company
Setting up a company can protect individual assets (so long as you are not signing bank guarantees) and can ensure there is a way to work cooperatively with others.  If you do choose to set up a company, then there are many other considerations and I strongly recommend you don’t just grab standard documents.  Sure, I get that they are much cheaper, but I can tell you from years of  commercial litigation experience that its the standard “simple” and “cheap” documents that get people into trouble - (don’t let me get started on home made documents!! What a nightmare!!)

So, decide on business structure as early as possible (and don't forget to talk to your accountant about tax implications!)

Oh I know this sounds obvious, but during the Due Diligence phase you should have identified key licence and permit obligations for your business and one of the first things you need to do as a business is make sure that you hold the correct licences and permits.  As soon as you have done that, record the expiry dates in your calendar if applicable - you do not want to find yourself in a position where you realise your food preparation licence is due for immediate renewal and you are booked out solid for the week and have to squeeze in time to attend to it.

Contracts in writing are an absolute must!  Whatever terms and conditions you agree to with your customers and suppliers, you need to make sure that these are in writing.  It doesn’t mean you have to spend hours in contract negotiations with a suite of lawyers on each team to work through a basic supply agreement, but there needs to be something in writing, it's as plain as that.

A lot of businesses selling or leasing products and services have standard terms and conditions which are attached to their quote.  These terms and conditions don’t have to be the size of a book, but there are some basics that need to be included  to protect YOU and to give your customer or supplier certainty.  So, if you want a ‘for instance’ read on... 

How about, what happens if you offer a product by a certain date but you have to get it in from a third party supplier? Or, what happens if you install materials for a builder in a new property and the builder goes into administration?  What if you offer a specific service working cooperatively with other service providers - how is your liability dealt with when the ‘you know what’ hits the fan? Its contracts,  terms and conditions which will give you a leg to stand on and you need advisers who have been in the trenches to give you the worst case scenario when preparing those documents.  Invest in good paperwork.  Believe me you will reap rewards in the long run, or at the very least protect yourself from a lot of pain,  as a result.

Whats your IP?  It’s that logo you spent weeks designing, the catchphrase, the jingle, the recipe/ formula only you use, the marketing strategy unique to your business, the e-book you wrote.  Intellectual property is the intangible thing that comes from your creativity, and you absolutely want to protect that, because it forms the very basis for what makes your business unique.  There’s no real shortcut.  Trying to do this on your own will cost more than time in the end.  You will need specialised IP assistance (spoiler alert:  Not me!!  But I can refer you to someone I trust).

​Small business is more often than not operating at the whim of big business.  Payment terms are stipulated by primary contractors, and you just need to go with the flow. But fortunately some of that is changing.  One thing you can do is ensure that where you do have control of payment terms you exercise that control.

Insisting on a significant deposit or payment first is very unlikely to be possible in most cases.  Payment on delivery of goods and services is obviously the most effective alternative way to ensure payment is received.  You should set up everything you can to try to achieve this. Portable EFTPOS, for example, means you have immediate cash flow even though it costs to obtain it. 

But COD can be a luxury.  If you have to provide goods and services on payment terms, make sure these terms are stipulated in your terms and conditions and on your quote and restated simply on your invoice. 

Follow through with debt management when you say you are going to.  Make it personal.  Don’t leave it to your office assistant to chase up debts.  Learn how to chase up debts without upsetting people.  (As an aside however, from my experience, the ones who get upset about you chasing up a debt, are in financial trouble, simply don’t treat your payment as a priority or have some problems with the goods or services you supplied.  Either way, you need to know.) 

​The longer a debt is outstanding the more likely it will not be paid. A firm and swift debt collection process is critical to keeping the cash flowing.

If your small business involves employees make sure you get your ducks in a row with employment law.  Make sure your employees or contractors have contracts.  Have a manual which outlines human resource policies (clear guidelines take time at the beginning but save thousands of dollars along the way).  Give your employees what they are entitled to, when they are entitled to it.  Make sure that you have poor staff performance issues dealt with promptly and lawfully following the manual you prepare.  

Every business adviser will tell you that, if you have employees, they are the backbone of the business so take care of your back!! The costs of recruitment and/or dealing with employee matters including down time are major.

​One of the common threads in all of the tips I have given is an overarching rule.   Avoid disputes and litigation as reasonably as you can.  Sometimes, disputes are unavoidable.  Downtime, costs of lawyers and compromised claims cause serious bleeds in your business.  By taking preventative steps you can minimise your exposure to these and those preventative steps include the tips above.
 
I am interested in a dialogue about the subject of business law tips.  I look forward to hearing your views.

My legal waiver statement:  Seriously, if you are relying on the above tips or anything you find on the internet as legal advice you have big problems already.  News and Views is definitely about sharing information and ideas.  The only legal advice you can rely on is advice given to you personally after your individual circumstances have been taken into account.

One of the questions I am asked in my travels, is "What is the best way to plan the gifting of our family bach?" and today it was on my mind as I made my way to the beach to visit the grandkids.

There's a whole range of issues to think about before answering that question.

The main issue is that, although the government treats a bach as an investment property, often it's either been in the family for generations or it is your intention that it becomes a gift to future generations. So it doesn't really hold investment value - it's more about heritage.

The sorts of considerations you might face in working out how to preserve the bach include:

1. Who is/are the registered owner(s) of the bach;
2. Who is the intended owner of the bach;
3. Who is intended to be able to use the bach;
4. Who will pay for the costs of maintenance and other property costs;
5. What are the financial risks to the bach arising from business (yours and future generations);
6. What if there are relationship breakdowns and, more positively, new relationships;
7. Could there be potential claims against your estate by family and others;
8. What happens if the property has to be sold; and
9. Any possible future capital gains or similar taxes.

The point  is that every family's circumstances are unique to that family and a one-size-fits-all approach, isn't going to necessarily be the right solution for your family.

One example that springs to mind is a recent case of mine where the family was struggling to work out what to do.   In that case, my client had promised Mum and Dad that he would keep the bach he had inherited for use by  future generations of the whole family (including his brothers and sisters) but my client owned the majority of the property,  so property ownership didn't quite reflect this promise. My client's accountant had advised him that he should  set up a family  trust  to own and manage the family bach. While it is one approach which can work, it was not quite the right fit for my client.

My client owned the majority of the property and wanted to continue to do so.  All he wanted to do was make sure that his parents'wishes that future generations of his and his siblings' families could enjoy the use of the property were documented appropriately, while retaining majority ownership by him or his children.  Working together with his accountant, and the other owners, I was able to achieve a  more suitable and more cost effective solution to the problem.

Ultimately in these sorts of situations, you do have to realise that your commitment to the future use of the bach may differ to the intentions of future generations and there really is only so much you can do. Ruling from the grave, so to speak, has its limitations.

But if your family sees the care and attention you put into the planning for the bach and your family's future, that often translates to a greater understanding of its significance. The same applies to all of the assets you have strived so hard to obtain.
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I'd love to hear your comments on the subject of preserving the bach for future generations.

​On that note, its time to get back to the beach with the grandkids for epic sandcastle building while the sun is out to play!



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