Business Attorney Mark D. Holmes talks about arranging your business relationships and the proper use of language in doing so.
Presenter: We’re going to talk about serious things at some point in this presentation. I assure you. I really do. One of the things that I like to talk about is language. I really do love language. I have a special affinity for language. I’ll give you an example. When I went to Germany, I had studied basically college German and then while I was over there, I took what they called an introductory course into German literature at the university level. And I was the only foreigner in the group. There were only about 200 people in this seminar. I took the final exam and I basically got the equivalent of a C+ and when we had our final class the professor called me up and says I want to show you a person who’s spoken your language for two years. And everybody goes yeah that’s nice. And he goes you should be ashamed of yourself, he got a better grade than half of you. And you’ve been speaking it your entire life.
So that was my big claim to fame in terms of language. I’m a business attorney. You probably won’t meet too many business attorneys who’ve studied at the college or graduate level ancient Greek, Latin, Old English, Old Icelandic, Middle English all this crazy stuff. And German. I like language and I think language has a lot of value because it’s a medium by which we communicate. And in the business arena, it’s the medium by which we arrange our relationships. And unfortunately for a lot of business people, they don’t arrange their relationships very well. And that causes them problems with their business. And to put it in the most finite and concrete terms, it means you loose a lot of money. And you lose it through transactions or you lose it through disputes. Neither one is good is it? And so, essentially what I try to beg people on my knees to do is to arrange their relationships. And probably the easiest way to do that is through a thing called important terms and conditions. Now, where do you think you could have terms and conditions appear?
Presenter: Contracts, right. Most people think of contracts as these big long 20 page things. Basically the expert is the real estate broker who trots out your 17 page California realtor approved form contract. And that is just, just so much deliciousness, I can tell you. Since I deal so much with those, they’re wonderful. And the reason why they’re wonderful is because they make it as clear as possible what the relationships between the parties and the brokers and all the stuff that’s going on with this piece of real estate are in this particular transaction. And since the California Realtor Board introduced these forms, the litigation over real property in the residential realm has dropped dramatically.
I’ll give you an example. Somebody who was from the east coast was trying to talk to me about how they do real estate transactions there. It is incomprehensible to us that anybody can buy a piece of real property in the east coast because you’ve got lawyers involved. You’ve got all these escrows and notaries and craziness. It’s just nuts. And when they see our system they go wow, that’s really cool. That’s the way it should be. Well, that happened because a bunch of people sat down and said, “Hey, this is the way these relationships should work. Can’t we just standardize it, make it clear so that we don’t have fights over stupid stuff?” And they did. And I’ll guarantee you that even in small transactions you can do this same thing.
How many people issue quotes? How many people do estimates? How many people send purchase orders? How many people have invoices? Those are all opportunities to arrange your relationships. Even if you hand someone a receipt, you can still arrange your relationship with that person through the receipt. Now, everybody’s familiar with the fact that credit card companies frequently have you sign up and you never see the terms and conditions. Do you know how they try to enforce the terms and conditions? Because you use their card. And it says on the statement by using the card you agree to our terms and conditions even though you have no idea what they are. Cuz you get this envelope in the mail and it has this jibberish and you go that’s going into the wastepaper basket. Cuz you look at it and it’s like miniscule little ant scribbles and you can’t even read it. They’ll trot it out when they need to enforce them. I’ll guarantee you that.
Now, the best way to do these things with your terms and conditions is put it on the back or have a second page. Because everybody has a computer, right. There are only a few people here who still don’t have a computer, right? I’m told that 95% of the people in the United States have computers now. So, you can do this and it’s a very simple thing. It only requires one small change in how you do business. And that is you basically bring these terms and conditions to the attention of the people you’re doing business with. And if possible, get them to sign and say yes, I agree to these terms and conditions.
Now, there are some people– there are a few companies in Southern California that use terms and conditions and they don’t use them very nicely. And they use them to trick people. And they use them to extort people into continuing with services and products even when they don’t want to. That’s why I always exhort people please, please, please read what you’re signing because you don’t have any idea sometimes what you’re signing and when you decide, “Oh I don’t like this service and I would like it to stop, someone brings it to your attention, Oh, you agreed to use it for a whole year. And if you don’t use it for a whole year then basically you have to pay us what we would have provided anyway.”
That’s basically a really nasty way of doing business. You’re going to loose a lot of customers that way. I’m not advocating that at all. What I’m advocating is that you basically use fair terms and conditions that most people would say, you know that’s okay, I think that’s fair. You don’t want to use terms and conditions to hurt people. You want to use terms and conditions to help you have a clear relationship and a very positive relationship with your clients and your customers.
And you’ll see I handed out this list of important terms and conditions. Am I actually going to give you the terms and conditions of the clauses here? No, it’s like basically giving a child a Ferrari and saying go out and drive it. Because you see, I have found in my practice – and this is sad – that a lot of attorneys I deal with don’t understand what the terms and conditions mean. This is sad. But if I work with you, I will explain it to you. And you will become educated and you will know what they mean and you will be able to articulate them to people who say, “What did that mean?” Because it’s important isn’t it? Because there are important things that go on in business transactions and there are important exposures and risks. And people need to understand what those are. And if you don’t understand what they are, someone, if they’re a good Samaritan, should explain them to you.
And you’ll see there are some very important things. The first one I do is the signatures. People do major transactions and they don’t get signatures on the contract or the terms and conditions. Yes ma’am.
Female 1: Two minutes.
Presenter: So, that’s the first thing I always beg people to do. If you’re going to do anything serious, make sure you get somebody’s signature. And you’ll see there’s a reference to the 500,000 no signature problem. That’s basically a litigation that involves not getting signatures. You spend $500,000 in attorney’s fees and costs on a multimillion dollar litigation because somebody didn’t get the signature. It’s sad.
Another point I like to bring up is what are you actually supposed to do? This fine lady that we brought in today, the dry cleaner. If she doesn’t specify that I only do dry cleaning on this order for you, someone could say she was going to do alterations or something else. Doesn’t it behoove you to say this is just for dry cleaning?
Female 2: She does alterations.
Presenter: I understand that but on this particular order, yes. That’s why you’re in the promotional industry dear. She does everything. I’ll bring a Ferrari and I’ll put your logo on it, right.
So the other thing I want to point out is there are things called releases, assumption of the risks, cold harmess, and indemnity. Those are important things that protect you. Also insurance and additional insurance. Those are also very important things that protect you. This is not for the uninitiated. You don’t want to step into that end of the pool because quite frankly, most attorneys don’t understand how to do this right. But it’s very important stuff.
Another thing. People, if they don’t pay you, don’t you want to have a provision that says I should be able to get my attorney’s fees and costs if I have to take you to court? That’s a good thing. And basically they have things like damage limitations. You don’t want to be sued for somebody’s house falling down just because you cleaned their carpet. But I guarantee you, if somebody’s house falls down and you just left the premises they’ll try to sue you. And you’d like to have something that says okay if I screw up your carpet, yeah I’m down for that, but that doesn’t mean I have to rebuild your house.
And again. These are just things I try to provide people to help them with their businesses so they can succeed. And I’m the only one you’ll probably meet in Southern California that does it on a flat fee basis. That means I tell you it’s going to cost $900. No more. No less. No matter what it takes to get a nice terms and conditions for you wherever you want to use it. The other thing is, once I set up terms and conditions, you can use it pretty much everywhere. You can use it in contracts. You can use it in invoices. Estimates. It’s really quite valuable. You can use it again and again and again. And so I hope this is helpful. I thank you very much.