‘Til Death Do Us Part…Maybe Earlier

I got a call earlier this week from a prospective client looking to start a business with a friend.  They had a great idea and wanted to work together.  After talking about the business and what may be appropriate structures, I asked them the following questions:

  1. What happens if one of you dies?
  2. What happens if one of you becomes incapacitated?
  3. Who makes the decision if you both disagree?
  4. What happens if one of you gets a divorce?
  5. What happens if one of you hates the business and wants to leave?

As I asked these questions, the answer was the same:  we are friends and neither of us would do anything to harm the other.  Almost universally, across the board, whenever I hear that, I am positive that it won’t play out that way.  It’s kind of like, well it is exactly like a marriage that ends in divorce.  Noone ever gets married thinking that they will eventually get divorced (unless you have an ungodly amount of money and you want to protect it with a prenup).

So, how do you address these matters if you have partners or other shareholders in your business?  A buy-sell agreement can certainly help.  It will deal with situations like buy-outs, deaths, incapacitations, divorces, and so on.

Below are some good articles detailing these critical, but often ignored documents:

Here are a few other things that may be of interest:

Helpful Resource Pages

MPL General Counsel Corner – Marketing Spend is the Easy Choice to Cut in a Downturn

As the year rapidly comes to a close, many are in the planning stages for 2023.  Most, if not all, of the economic prognosticators that I talk with or listen to expect a pull-back in conditions next year.  In my conversations with clients, I ask about their plans over the next 12 months.  Most are prepping for a downturn, but don’t see tangible signs of it yet.  Specifically, if the downturn happens, many mention the usual cost cutting methods of reductions in workforce and marketing as two of the first spending cuts to consider.

I know that this recommendation may seem counterintuitive, but the one thing that a business should not do in a downturn is cut its marketing efforts.  If your business is healthy and steady, it may be an opportunity for you to take market share.  If you don’t believe me, check out some of the articles below from experts:

Here are a few other things that may be of interest:

Helpful Resource Pages

As always, please don’t hesitate to email myself (jsanders@mpl-law.com), Andy Miller (amiller@mpl-law.com), Christian Miller (cmiller@mpl-law.com), Erik Spurlin (espurlin@mpl-law.com), Brad Leber (bleber@mpl-law.com) or anyone in our office with questions or comments.  

Please see all of our prior updates at this link or if you would like to be added to our email list, please click here.  

MPL General Counsel Corner – The Gig is Up, At Least For Those Subject to the FLSA

This past week, the Biden Administration’s Department of Labor proposed a new rule that makes it more difficult for companies to classify workers as independent contractors.  Under this proposed rule, workers would be considered employees (i.e., entitled to more benefits and legal protections….read minimum wage, overtime, unemployment insurance and social security) when they are economically dependent on a company.  This would be in stark contrast to the less restrictive test implemented by the Trump Administration.  

What does that really mean?  The DOL said it would consider the following factors:

  • Opportunity for profit or loss depending on managerial skill;
  • Investments by the worker and employer;
  • Degree of permanence of the work relationship;
  • Nature and degree of control by the employer over the worker;
  • Whether the work is an integral part of the employer’s business; and
  • Skills and initiative

The usual suspects (Uber, Lyft and Doordash) are the clear targets of this new, more restrictive rule.  However, on a more local level, this will likely impact contractors, truck drivers, landscapers and building maintenance companies.

For companies desperate to find help, payroll costs will increase.  This added financial burden would be on top of the already existing inflation headwinds and the prospect of a significant economic slowdown looming.  For “Gig Workers” and existing employees looking to make some money on the side, the availability of job choices will likely decline.  Only time will tell.  The final rule is expected to be implemented in 2023.

The bottom line is that the Gig is up on Gig Workers and the companies that use them, or at least those subject to the Federal Fair Labor Standard Act.

FYI, the definition of a Gig Work can be found here

A few things that may be of interest: 

Helpful Resource Pages

As always, please don’t hesitate to email myself (jsanders@mpl-law.com), Andy Miller (amiller@mpl-law.com), Christian Miller (cmiller@mpl-law.com), Erik Spurlin (espurlin@mpl-law.com), Brad Leber (bleber@mpl-law.com) or anyone in our office with questions or comments.  

Please see all of our prior updates at this link or if you would like to be added to our email list, please click here.  

MPL General Counsel Corner – A Little Bit of Buyer’s Remorse

This past week, Elon Musk tweeted he would in fact be following through on his purchase of Twitter.  One has to assume that he looked at his legal case and realized that a “Material Adverse Effect” argument was not a winning strategy.

By way of background, Musk notified Twitter that he wanted out of the deal back in July.  He claimed that Twitter misled him about the number of “bots” versus actual users of the system.  Twitter, as was expected, filed a suit against Musk to enforce the deal.

One of Musk’s key legal arguments was based on Material Adverse Effect, which essentially says that the underlying conditions which led to the deal have significantly changed and give him the right to terminate.  This argument is tough to prove because so many of the conditions that lead to it are negotiated and covered in the purchase agreement.  Moreover, he waived due diligence, which is where could have found out about the number of actual versus fake accounts.  Lastly, because there is so much time to negotiate the deal prior to signing the agreement, Courts in Delaware, which is where the case is being heard, set a very high bar for proving this type of claim.

So, what else was he be doing with this strategy?  One assumes that he tried to get a lower price.  Many of the conditions which allowed him to execute the agreement changed since he initially signed the deal.  Financing has become significantly more challenging with the rate increases, the outlook for the economy is certainly not positive and most importantly Tesla shares, like the rest of the market, have declined.  At least he tried, but I have to imagine there will be a period of buyer’s remorse for quite some time post-closing.

The bottom line is that its critical to understand what you negotiate when entering into a purchase/sale agreement.  The ability to get out of the deal as you get closer to the closing date becomes very limited.

Other items of interest:

Helpful Resource Pages

As always, please don’t hesitate to email myself (jsanders@mpl-law.com), Andy Miller (amiller@mpl-law.com), Christian Miller (cmiller@mpl-law.com), Erik Spurlin (espurlin@mpl-law.com), Brad Leber (bleber@mpl-law.com) or anyone in our office with questions or comments.  

Please see all of our prior updates at this link or if you would like to be added to our email list, please click here.  

MPL General Counsel Corner – Change is Constant & The New MPL

The one thing that is a constant in the business realm is change.  Every day, the best-laid plans are disrupted and leaders must be ready to adapt.  If you run an organization or own a business, you know that from the time you started to the present, things look vastly different.  Since the turn of the century, who would have predicted things like 9/11, the housing crisis, and a global pandemic?  However, look at the innovation and change that resulted.

Businesses that succeed over the long term are the ones that understand this concept and continue to embrace it.  With that being said, organizational change is not easy and requires leaders that are forward-thinking and flexible.  Below are some great articles on this concept:

Speaking of change, I have some news as well.  After many months of planning, we are thrilled to announce that the firms of Griest Himes Herrold Reynosa and Blakey, Yost, Bupp & Rausch have merged with MPL Law Firm. I am excited to begin the next chapter of our firm with my new partners and team.

Please check out our refreshed website and a nice article from Joel Berg at BiznewsPA for more information.

I will leave you with this quote:

“Change is inevitable.  Growth is optional.”  John Maxwell

Other items of interest:

Helpful Resource Pages

As always, please don’t hesitate to email myself (jsanders@mpl-law.com), Andy Miller (amiller@mpl-law.com), Christian Miller (cmiller@mpl-law.com), Erik Spurlin (espurlin@mpl-law.com), Brad Leber (bleber@mpl-law.com) or anyone in our office with questions or comments.  

Please see all of our prior updates at this link or if you would like to be added to our email list, please click here.