Be Calmly Strategic, Not Reactive

The response to COVID-19 of quarantining and social isolation has begun to impact virtually every aspect of global commerce – and it has not taken that long! Fast-changing business environments have brought a number of new challenges to virtually all business owners and managers. They may include a newly observed lack of integrity amongst partners, unaccustomed challenges with customer acquisition and retention, not to mention the most obvious and unprecedented supply chain interruptions all are seeing. Uncertainty has a lot of business owners reacting in a panic to the situation their operations are facing rather than more calmly analyzing, strategizing and acting for the longer term. And make no mistake about it: This global situation will not resolve back to ‘business as usual’ within just a week or a month. The ramifications will be long term.

There are a few strategic things that business owners can do right now in a calm response to this situation. One of them is to identify and assess the risks and develop a clear plan of mitigation related to the existing contracts. ‘Mitigation’ in law means that a party who has suffered a loss takes steps to reduce the loss – to minimize the losses incurred.

The best way to start this mitigation process is to review all the existing contracts your business has entered into. It is time to assess the parties’ legal rights and obligations by taking these four steps:

1.) assessing contractual provisions that have been or may be affected as events unfold.

2.) identifying and abiding by any relevant notice requirements: A ‘notice clause’ of a contract defines how the parties will communicate with each other in written form; following the directives makes sure the other party won’t claim you did not communicate.

3.
) analyzing the risks and consequences of a default or breach under the agreement, and

4.)
determining alternative (‘work-around’) means of performance under the contract, or proactively (re)negotiating where possible.

Such a thorough contract analysis will make it clearer if you have an opportunity to be excused from the performance of the contract. Will performance be possible – but tardy or partial for a period of time? Is performance impossible in all foreseeable cases?

Events seen to block execution of a contractual obligation might include ‘frustration of purpose’ or ‘commercial impracticability’. In civil law jurisdictions, doctrines like ‘hardship’ and ‘changed circumstances’ may be invoked.

While reviewing agreements, business owners should keep in mind that a party may be excused from performing under ‘force majeure’ doctrine and other legal doctrines dependent on the governing law of the contract.

In every business transaction, extreme events commonly referred to as ‘force majeure events’ – those beyond the control of the obligor – may arise to prevent the impacted party from performing the contract. The general rule is that a force majeure clause must include the event in question in order to excuse performance or, in some cases, merely suspend performance.

However, some force majeure provisions include a reference to an ‘action’ or ‘order’ from the government, while another group of force majeure clauses are highly generalized and only refer to “any Act of God or other circumstance beyond the control of the parties.” Still, other clauses list specific examples (“fires, floods, earthquakes, tsunamis, wars, terrorist attacks, strikes, civil unrest…”) but then conclude with a catch-all phrase such as “or any other circumstance beyond the control of the parties which they cannot overcome through reasonable and diligent efforts.”

Therefore, while analyzing the agreement, the business owner has to find out if the language of the provision captures COVID-19-related disruptions and if so, whether performance is excused, suspended or call for further evaluation.

Most force majeure clauses require the side seeking to avoid performance to give notice or otherwise inform its counterparty that it will not be able to satisfy its obligations under the contract. NOTE: Please strategize and act rather than react without preparation. Companies should resist the urge to issue a rote or terse notice. They should instead layout in some detail exactly why they cannot perform and why they have not been able to find some way over, around or through the problem. Write it all up and submit it to the other party. Then, if the other side should sue over the contract, that force majeure notice you have carefully thought through and wisely drafted becomes a crucial piece of evidence that the court will closely scrutinize. Telling a convincing and thorough story upfront will go a long way in any eventual dispute.

If COVID-19 clearly doesn’t qualify as force majeure because of some combination of your specific situation, the words of the contract, and relevant law, that is not the end of the line. Performance by one or both sides may still be excused under other legal doctrines like ‘frustration of purpose’. And for contracts that are governed by the laws of a civil law jurisdiction, other doctrines like ‘hardship’ or ‘changed circumstances’ may apply.

Analyzing the contract is about doing a strategic analysis that helps businesses understand the scope of risks related to the termination or nonperformance of the agreement by other parties. Getting clear on the nonperformance risks of the other party helps business owners be proactive about initiating the mutual renegotiation or termination of these agreements.

It is important to note that while analyzing the contract governing business operations, it is not just about trying to get out the contractual obligations that are not beneficial to the business specifically in these weeks of global quarantining and distancing. It is about planning for the future, maintaining good relationships and protecting the business in all its interactions.

What I Learned About Visuals While Serving On a Jury

Have you ever wondered whether the advice you give to clients is always as sound in practice as it is in theory? Recently I was selected to serve as a juror on a 3-week medical malpractice trial. I had always wanted to serve on a jury. I felt it would be a golden opportunity to see what the visual presentation of a case looks like from the perspective of a juror – as opposed to the creator. Somewhat like a doctor who suffers injury or illness might experience treatment from the point of view of a patient, instead of their usual mindset as a medical professional.

Both the plaintiff’s attorney and defense attorney were experienced trial lawyers with excellent oratory and tactical skills. Their visual presentations could have been significantly improved, however, by adhering to the basic principles we preach as visual presentation experts. These include:

LESS IS MORE
Both lawyers packed too much information into each slide. On their timelines and document slides, the text was too small, so the jury couldn’t read it. In addition to rendering these visuals useless, a number of my fellow jurors expressed irritation with the lawyers. Some wondered if they might be trying to hide something. In general, we felt burdened by information overload. Strive to include on a slide the minimum amount of information needed to convey the intended point.

CHOOSE YOUR MEDIA WISELY
One of the attorneys used a PowerPoint slide deck for all of his visuals. When experts were on the stand, he would cycle back and forth until he landed on the desired slide, sometimes taking a minute or two. While PowerPoint is sequential and appropriate for a step-by-step opening or closing, it is not nimble enough for direct or cross-examination. TrialDirector software is the way to go (if your budget allows, hire a courtroom technician to run it for you). Neither attorney used poster-boards. Key graphics should be printed on them and left displayed on an easel while the PowerPoint is also displayed. The combination can be an effective way to mix media and keep jurors’ attention.

WELL-DESIGNED GRAPHICS BEST TELL YOUR STORY
During the trial, we were inundated with documents, with just a few images from anatomy books sprinkled in between. A handful of well-conceived, understandable graphics using icons or illustrations would have been considerably more impactful and persuasive than what we saw. Neither attorney was effectively able to focus and communicate his case themes. Both sides would have benefitted from using use text callout graphics – aka “text pulls” – where the key language is enlarged, instead of highlighted document pages, whenever possible.

USE HIGHLIGHTING JUDICIOUSLY
On a typical document page shown by the plaintiff’s attorney, he had highlighted in yellow numerous lines. On top of that, he had underlined in red some of that already highlighted text, presumably to add additional emphasis. The result was that we didn’t know where to direct our attention. Ask yourself what the key point of an excerpt is and highlight only the text that is truly necessary to make the point. Consider using red bold text instead of yellow highlighting. Avoid using both at the same time.

COLOR CHOICE IS IMPORTANT
The plaintiff’s attorney used a style template with a black and red background. While black can be associated with power and strength, more often than not it carries a negative connotation (fear, death, the unknown). Similarly, while red may be used to attract attention, it is often associated with bad, evil, or danger. A better choice might have been the use of blue tones, which project trust, strength, and confidence. Color subconsciously influences our thinking and is a subtle yet powerful thing. Either rely on a professional designer for appropriate color choices or familiarize yourself with basic color psychology.

DON’T FORGET ABOUT CLOSING
One of the lawyers used no demonstratives during his lengthy closing, and the other had a standard bullet point PowerPoint presentation. As good as their arguments may have been, it was difficult to focus without having visuals. Closing arguments are the perfect time to illustrate analogies, use comparison charts, summary graphics, etc. In your last opportunity to sell your case to the jury, why not place it in an attractive package that jurors will want to buy?

Seeing visuals through the eyes of a juror was a valuable opportunity. As expected, I learned that the core principles that guide trial graphics experts are as true in practice as they are in theory.

Digital Afterlife: An Estate Plan for Your Facebook Account

Did you ever wonder what happens to your digital footprint when you pass away? Well you should, particularly if you are part of the 77 percent of Americans who go online every day. As the internet has become more of an integral part of our lives, our information — pictures, videos, financial, emails, social media accounts, and other personal information — is constantly being stored online. All of this information is known as your “digital assets.” While the internet has made our lives easier by allowing us to access our information with the simple push of a button, it may be difficult for our loved ones to do the same once we are gone.

Digital Estate Planning

Digital assets encompass any of your information that you store or use online – this includes social media accounts such as Facebook. While you may not consider these digital assets as having much monetary value, they store critical information or have sentimental value. Consequently, when you plan for your estate you should include your digital assets because they are an asset owned by you. Indeed, when it comes to your digital assets you will have to make special advanced arrangements so your executor – the person in charge of your estate when you pass away – can access them upon your passing. Many online providers, such as Facebook, Google, and Yahoo!, have specific procedures for handling your account upon your passing. In order to ensure that your wishes are carried out, you must follow their rules. Strictly speaking, providing usernames and passwords to another person, even your executor or successor trustee, may be a violation of the terms of service for many online accounts, and could cause trouble for your executor or successor trustee. You should also consider access to your computer and back-up hard drives, tablets, and smartphones. Being proactive is key when it comes to your digital assets so that they may be accessed when needed. And, as with any estate plan, regularly revisiting your plan for your digital assets is key.

Coordinating Your Digital Assets With Your Estate Plans

Depending on where you live your digital estate plan may need to be formalized into a legal document. You can then name an executor specifically for your digital assets or, alternatively, name someone with whom your traditional executor can work with in order to settle your digital estate. Make sure to instruct your executor as to the location of your digital asset inventory for easy access. Keep in mind that because your will becomes a public document upon your death due to probate, you should never put any of your username or password information in your will. Instead, have your will refer to an outside document that contains all the needed information regarding your digital assets.

If you have questions about handling your digital assets and how they fit in with your existing estate plan, please give me a call. As with any estate plan, make sure to keep me and any financial advisors you have up to date on the status of your digital assets so that I can ensure your overall plan properly handles them and adapts to any changes in the law or circumstances.

Successor to Your Family’s Business? What You Need to Know!

Baby Boomers are retiring in ever-increasing numbers—10,000 per day by one estimate! Many of these Boomers are retiring from a business they have carefully and lovingly built over many years of sweat, tears, and much fulfillment. And as the child of a Boomer, you’re now faced with the possibility of succeeding your parents in owning and managing that business. Or perhaps your interests and careers are elsewhere, and you want to see that business successfully transferred to someone outside the family who will continue to serve the business’s clients as well as your parents have. Or, realistically, you and your parents want to reap the full value of that business when it is dispositioned.

So, how can you and your parents ensure that transition is successful? What do you need to know, and who do you need to consult? Business exit planning does not have to be overly complicated. But it does have to be thoroughly planned and executed, ensuring the critical aspects are adequately addressed.

As the daughter or son of a retiring family business founder/owner, you will want to ensure your parents are well-prepared for a life of retirement and perhaps of travel, volunteering, time with grandchildren, and worry-free leisure. Your discussion with your parents about their retirement often begins with: What are they going to do now that they’re retired? How will they ensure they have meaning and purpose in their lives since these are so closely related to living a long, healthy, fulfilling life as they enter their later years. See “I’m Retired! Now What?” for more on leading a long and fulfilling life after retirement.

The second topic of discussion with your parents usually revolves around the question of what to do with the business when they leave. Will you or your siblings want to take over leadership of their business? Are you ready to do so? These are often very difficult discussions to have, yet very necessary. Has your family had open, frank discussions about what will happen to the family business—especially if it’s not clear who should manage the business when more than one of you wants to take on that role?

Or will you want to see the business successfully sold to a key employee or other third-party? Are you prepared to help your parents make that choice if they seek your advice? Is this a family decision, or one to be left solely up to your parents?

These are only the beginning discussions and actions that need to be undertaken as part of business retirement exit planning. We’ve covered this topic much more extensively in “Business Retirement Planning: It’s a Team Effort!” and suggested that an exit planning coach can be of much value in guiding a retiring business owner through the process.

Business succession planning requires allowing enough time to consider all the choices to be made and enough time to implement those choices. It’s important to start your planning early and to put the plan in writing. Whether you choose to work with an exit or succession planning coach, a business coach or consultant, or do it yourself, start early. Starting to plan too late or failing to plan at all are the two primary reasons so many business transitions fail, an outcome which is totally avoidable. So, start planning now!

Planning Your Summer Vacation? 5 Things to Consider Now

In many states, winter has thawed and now flowers are budding. This can only mean one thing: summer vacation planning season is here now. As vacation planning kicks into high gear, here are a few important things to add to your vacation readiness checklist.

Guardian nomination

If it’s just you and a spouse leaving for a getaway this summer, who is going to take care of the kids while you’re gone? And, heaven forbid, who will care for them if you don’t return? Double check your guardian nomination for your minor children so you know that if, on the very slight chance something goes wrong, your children will be in the right hands.

If you have not completed or updated a guardian nomination, now is the time to do so. Without this nomination, the court will determine who will raise your child if something were to happen to you, and it may not be the person you want.

For example, Sally has two boys. She’s concerned about who will raise them if she is not able to do so. Sally’s younger sister, Carey, is fairly wealthy (thanks to a favorable divorce settlement), is unemployed, and lives a life of leisure. Her carefully curated social media would have you believe she’s a well-off, stable jetsetter. On the other hand, Sally’s older sister Tracy is the total opposite. She recently adopted a boy with special needs from the foster system, and although she works incredibly hard at a museum, she does not earn much income. If a court were to look compare them, Carey could very well be the clear winner for guardianship. But, Carey is the last person Sally would ever want raising her kids because Carey does not share the same values or respect for hard work. Sally is also concerned that Carey would fight hard to win custody of the boys just so she would gain access to the boy’s inheritance.

Unfortunately, situations like Sally’s are a common occurrence for parents who haven’t named a guardian, and the courts do not have the resources to do a deep-dive into everyone’s background. This is why the nominations are so important. The guardianship nominations give you the opportunity to make your wishes known to the court. By having the guardianship nomination prepared, Sally can ensure that Tracy, who shares her values, will be the one raising her boys.

Beneficiary designations and other funding issues

Many people have an out-of-date beneficiary designation, or, at the very least, one that hasn’t been looked at in a while. Taking 10-15 minutes to log into your IRA, 401(k), and life insurance company’s website to double check your beneficiary designations is an easy way to put your mind at ease so you can relax on a tropical beach or explore the sights of a brand new city stress-free.

Beyond beneficiary designations, other funding issues with trust-based plans are sadly common. But many can be easily and quickly fixed. If you’ve opened a new bank or investment account, or bought a different home, let us know so we can work with you to update the funding of your trust. This type of work is just like touching up the paint at your house – quick and painless if you do it on a regular schedule – but a much bigger project if you let it wait. The great news is that you’ll rest easy on your vacation, knowing everything is in order back home.

Advance directive and powers of attorney

Getting sick or injured while traveling is stressful enough without the added worry of not having advance directives and powers of attorney in place. Knowing that your care will be handled according to your wishes makes travel easier. If you need a fresh copy of these documents, give me a call so we can make sure you have a readily accessible copy.

Signatures

Are your will, trust, and other documents still unsigned? Maybe you’ve been reviewing them. It’s better to have a plan in place that addresses your big issues and concerns before leaving rather than waiting until it’s “perfect.” If you haven’t yet signed, give us a call so we can make sure your documents get signed properly. Remember, with a will or revocable trust you can always make changes in the future.

Stay organized

Where do you keep your hard copy and digital copy of your estate planning documents? Choose a safe location in your home to store at least one printed hard copy, and create a folder on your hard drive or personal cloud storage site so that you’ll always have access to a backup digital copy as well. Checking this to-do off your list before your vacations means one less thing to keep track of later. If you need a fresh copy because you’ve misplaced yours, give me a call. I am happy to help.

Client Communication Best Practices

By Alice Shikina

As a mediator, people come to me when their avenues of communication have completely broken down and they can no longer express ideas and be heard by the other side. Before you get to a place of impasse, you may want to revisit some common-sense ground rules during conflicts in your own clients. Use these guidelines early on in the relationship, so that you get plenty of practice and become a skilled communicator. When you do come to difficult moments in your client and personal relationships, your diligent practice will serve you well.

DON’T interrupt.

Interrupting is one of the biggest causes of conflict. When people are constantly being interrupted, they don’t feel heard and the channels of communication begin to break down. Have a sheet of paper and a pen to write down your thoughts during emotional conversations. When it is your turn to talk, refer to your notes.

DON’T call names.

Sometimes people resort to name calling to belittle the other person and make them feel small. No one likes to be called names. It isn’t conducive to solving problems, so just refrain from doing this.

DON’T yell.

When in conflict, some people yell as an intimidation tactic or because they do not feel heard by the other side. Unfortunately, yelling does not achieve the goal of being heard. It frequently results in escalating the situation.

DON’T be judgmental.

When couples have been together for some time, they develop filters through which they hear their partner. They begin to expect a certain viewpoint from the other side and don’t necessarily hear what is being said. Clients also develop judgment against their attorneys. As a relationship deteriorates, judgment grows, and defensiveness does as well. The less judgmental you can remain, the more information you will be able to elicit from your client during high conflict conversations. No one wants to be vulnerable and open if someone is going to be judging them. Keep this in mind when you are listening to your client’s side of the story.

DO actively listen to your client.

Active listening means you are purely listening to your client, and not simply waiting for your turn to speak. You are not judging what they are saying, but just listening. Practice active listening on a regular basis when not in conflict. If your client has a tendency to ramble, set time limits to how long they are allowed to talk. For instance, you can say, “Give me a brief description, about five-minutes’ worth, of what happened.” This will accomplish two things: 1. It will give your client an idea of how long they have to say their piece. 2. It gives you permission to interrupt them if they are going much past five minutes.

DO mirror your client

Once your client speaks, make sure you understand what was said by restating what you heard them say. Use phrases such as, “This is what I heard you say” or “If I understand you correctly, you are saying…”

DO approach issues from an interest-based stance instead of a position-based stance.

Position-based refers to each person’s position, such as “I want to go to Hawaii for vacation.” Interest-based stance refers to the underlying needs of each party. If you start from here, you may be able to come to a win-win agreement instead of a win-lose agreement. Instead of arguing about where you will go for vacation, consider that both parties want to go somewhere warm, not too far away and where there are beaches. Once you uncover what both sides’ interests are, you are better able to solve the problem for everyone.

DO ask questions…MANY questions.

Instead of asking questions that lead your client to agree with your side, ask genuinely curious questions about why they feel a certain way or what about your side of the argument makes them uncomfortable. Allow them to explore their thoughts and values through thought-provoking questions. Good questions to ask are, “What about this solution makes you uncomfortable?” “What are some of your reasons for declining this offer?”

DO keep issues separate.

Don’t start an argument about one thing and then add multiple issues to the conversation. Get through one issue at a time. If the argument is about who whether or not your client wants to settle the case, do not add the issue of how they have been a difficult client up to this point to this same argument. Discuss them separately.

DO be willing to compromise.

Relationships take compromise and if you are not open to both parties compromising, you won’t get very far. Be creative when it comes to what you can offer to the other side to get them to compromise.

Business Succession Planning In The Internet Age

This article first appeared on Forbes.

Many business owners build their businesses hoping that they will continue to generate income for their heirs after they pass away. However, businesses often die or lose significant value when the owner dies.

When strategizing how to make sure your business continues to thrive, it is important to know that if you do nothing, your business already has a default game plan in place. If no additional planning is done, your business is an asset of your estate and will be subject to probate.

There are four problems with this default game plan. First, it can take years for a court to probate your estate. In the meantime, your business can wither on the vine until the probate has been finalized. Second, if you do not have an estate plan, your heirs can fight over who will inherit the business. Third, whoever inherits the business under defaults in the law (intestate succession) might not be the best person to make sure your business will continue to grow and be successful. Lastly, if you have co-owners, they might not like the heir to your estate and could quickly get into disputes with the new owner that harm the business.

Estate Planning Attorney Megan Yip contributed insights regarding business succession, as our law offices are collaborating to provide the best insights into this emerging issue. There are two legal tools to consider when evaluating your options:

1. Buy-Sell Agreement

A buy-sell agreement is a legal contract between the co-owners of a company that addresses a variety of business-changing events, including when an owner dies. Instead of the deceased owner’s equity being a part of the assets that are distributed during probate, the buy-sell agreement can include an agreed-upon amount that will be paid to the estate in exchange for the business repurchasing the equity. Often, the purchase amount is financed with a life insurance policy on each owner of the business.

2. Proper Estate Planning

Instead of allowing your business to be subject to probate, the business owner can work with an estate planning attorney to have the business be an asset of the owner’s trust. This replaces a probate process that can take years with a more seamless transition from the deceased beneficiary to their heirs.

Whether you choose a buy-sell agreement or to include your business interests strategically in your estate plan, make sure you pay attention to the digital assets that are important to the continued operation of your business. Your business’s digital assets may include client lists and data stored in software systems, primary communication channels like email addresses, intellectual property or creative products, and even revenue streams like online stores or websites.

Here are my top three tips on considering your digital assets.

1. Know the policies that affect your tools.

Most of our businesses today depend on software for managing client data, communicating with clients and keeping track of productivity. As part of your plan and regular course of business, review your software provider’s policies on what happens if your company needs to name a new point of contact, pay bills in a different way or be transferred to a different company in case the unexpected happens.

2. Balance security with redundancy.

Many business owners focus on the security and safety of information and digital assets used in their business, and rightly so. A business’s success demands that owners and employees alike keep proprietary information and client information secure. However, that concern for safety needs to be balanced with a sort of redundancy that considers which trusted individual or team of people will have access to digital assets and an understanding of what to do with them if the owner or main management team is unable to tend to business as usual for any reason, including death.

3. Include digital assets in your legal documents.

Don’t just discuss digital assets; include an inventory of digital assets in your buy-sell agreement or estate plan. Get specific about who should get access to digital assets, how and at what juncture in case of emergency. Make a plan to review digital assets on a regular basis with your other assets, and keep in mind that they might change more often than traditional assets.

Making a detailed plan about who should have access and who should not have access to your business’s digital assets in the case of you becoming incapacitated or passing away is an important part of succession planning today. No matter what legal structure you employ to ensure your wishes for the continued success of your business come to fruition, developing a strategy for what should happen to the digital assets your company relies on needs to be a part of the process.

No one likes to think about dying. But taking the time to work on your business succession plan now can help ensure your heirs get the most value possible from the business you spent years of your life building long after you are gone.

The information provided here is not legal advice and does not purport to be a substitute for advice of counsel on any specific matter. For legal advice, you should consult with an attorney concerning your specific situation.

Why Becoming More Argumentative Will Make You Smarter

When I saw that headline, I thought  “Gosh, that’s not what my folks and teachers told me!”  I read the BBC on my computer every morning.  Obviously, the title caught my eye. It certainly wasn’t what I was taught when I was young–which was, admittedly  a very long time ago.  I was always told “Don’t argue!”  It’s rude, disrespectful   It was specially not okay for girls/ women to argue.  Arguing was usually looked at as being loud and threatening.  Raised voices were definitely not acceptable.  In fact, sometimes it was not okay to even disagree quietly.

I also thought about attorneys whose profession very often includes arguing–both in and out of court   That’s why I thought that I would share some of this article with you.  The author states that there are three reasons arguing can be valuable.

1.  You can test your ideas against different ideas.  This will

either help you strengthen your argument or you might

change your mind.

2.  Your egotistical (that’ not a bad word) side can be useful so

that you don’t have to deny it.  Author Jonathan Rauch

states that “Bias and dogmatism and stubbornness are fuel

for forging better ideas…”

3.  Traits in thinking that may seem like flaws can be useful.

What is labeled as “confirmation bias” drives us to look

more deeply for facts that will support our existing opinion.

Disagreeing with someone does not have to be done aggressively, as I’m sure you all know.  It can be done with respect and empathy.  It’s a way to test out the strength of your arguments and improve on any weaknesses.

There is much more to the article, of course.  If you would like a copy of the whole article, please let me know and I will be happy to send it to you.

All Wins, Great and Small

Everyone loves a winner, it’s been said. And who doesn’t like to win? Then again, are all wins created equal?

As an attorney, my goal is to help every client walk away from their experience with me feeling like a winner, even if that means all I did was help them stay out of more trouble than they were in when they came to me.

I recently obtained an Order for Final Discharge on behalf of the personal representatives of a Probate Estate in Marin county. Decedent was a medical doctor with a solo practice housed in a co-op clinic owned and operated by a well-regarded, successful medical corporation. Decedent had a relationship with the corporation for many years and operated out of the clinic without a signed lease or profit-sharing agreement, on nothing more than a handshake deal with the Doctor CEO of the corporation. The arrangement had apparently served all the parties well, as the decedent and the clinic each made good money and, by all accounts, enjoyed a friendly and trusted relationship.

Such arrangements are sometimes fine – until they are not. And often enough they go from fine to not-fine when someone dies.

Decedent died intestate, leaving only two heirs, his daughters, who, fortunately, got along – even if they didn’t quite trust each other completely. As a result, they petitioned the court for appointment as co-administrators of the estate, which was granted.

How much trouble were these two young women in when they came to me?

Their father was, without being too judgmental about it, eccentric. His medical practice generated well into the mid-six figures in revenue each year and his handshake deal with the clinic left him more than enough to contribute generously to his 401(k) retirement account and to enjoy a comfortable living filled with travel and fulfillment of his pleasurable appetites.

The problem for my clients was that, aside from the few thousand dollars he had in his checking account at death, the only real assets in his estate were the medical practice and the 401(k).

Well, that’s not completely accurate. The problem for my clients was that, when he died, the good doctor was in the midst of defending a multi-million dollar malpractice claim. With no malpractice liability coverage.

In a more perfect world, my clients would have been able to execute a small estate affidavit to gain control of the funds in the checking account, since their father owned no real estate and the amount in question (including his meager personal property) was under $150,000. California Probate Code §§ 13000-13210. Since the doctor had been smart (and perhaps kind) enough to designate his daughters named beneficiaries of his 401(k), the funds in that account passed to them outside of probate. California Probate Code §§ 5000-5048.

Since the world we live in is far from perfect, however, I counseled my clients to open a defensive probate action to get themselves appointed personal representatives of their father’s estate literally days before the creditor in the malpractice case filed one requesting that she be appointed administrator. Yes, you can do that. 

My clients’ greatest fear when they came to me was their potential personal liability in the light of the malpractice claim their father was battling when he died. To make matters worse, the clinic had cross-claimed against the decedent, alleging an indemnification clause in the unsigned lease agreement that formed the basis of the handshake agreement between them. For reasons far too complex to go into in this blog, I ended up spending over a year guiding my clients through the process of getting the malpractice claimant’s ultimately baseless lawsuit dismissed and negotiating a release of claims between the estate and the clinic.

In the end, we filed a Final Report with the Probate court showing a basically bankrupt estate and received our Final Discharge order without my clients ever having had to appear before a judge.

But what about the medical practice, one might ask. Surely it was worth more than $150,000? Again, that’s a matter far too complex to get into in this blog post but perhaps one day could be a case study example for a post on business valuations.

One of the daughters sent me a note after we got the discharge order, saying, “I know ours wasn’t a big important case as these things go but I can’t thank you enough for your support and counsel and for keeping us on the right path when our own fear and lack of legal knowledge would have led us into trouble.”

I replied in a note to them both, “Thank you for the kind words and gratitude. It was truly my honor to guide you through a difficult, confusing, and stressful process. And please don’t think yours was not “a big important case” in my eyes; it absolutely was, because I know it was big and important to you.”

No, Practice Management Software Is Not A Requirement

We all want to become more organized. It would be great if there were some sort of magic software that would allow us to organize our work and thoughts simply. Practice management software claims to be that magic.

There must be hundreds of software solutions on the market for law firms. Developers see that we have a definite need to become more efficient and they are all jumping in to try and create the perfect software.

But, it isn’t the all-in-one, easy to install, easy to learn, practice management software.

We have had a barrage of out-of-the box legal management software hit the market. They have excellent marketing and sales teams. They bombard us with information and tell us how efficient we will become because we put information in only one time and it flows from contact management to matter management to calendaring, etc.

What we aren’t told is:

– What they can’t do – print out a client/matter list by attorney, print out a conflicts report . . .

– What we will never use – the document management piece that requires us to upload our documents . . .

– How hard it is to get our information out of them if we decide we’ve made a mistake.

– What accommodations we will have to make to use their software — reports that aren’t useful, calling our clients contacts, using QuickBooks for AP and financial reporting, limiting how many parties can be involved in a case or how we bill them . . .

They essentially tell us what information is necessary, how we should communicate, how we should create our workflows, and more.

They are easy to implement. They have features that seem great. They provide quick training. Many integrate with other programs, but the majority don’t. They talk about being agile and responsive to customer needs, but make continuous changes to keep up with the competition or limiting us to only what they want us to use, not what we need.

When we demo the products, we see what they do well. When we begin to use them, we find out they lack many capabilities we assumed they would offer.

Have you tried to print a client/matter list or run a conflict check report? Have you seen their productivity reports?

No matter what size firm we are – the basic software needed is:

– Google Docs or Microsoft Suite.

– Time and billing software that allows us to track time anywhere we work, allows us to handle things like split billing, create a budget, print management reports that give us useable information, generates conflict reports, provides our accountant information that we need and is secure.

– Document and email management software that allows us to work anywhere and is secure.

– Workflow and/or project management software.

– Macro and/or template software.

– Legal research software.

– PDF software.

– Contact management software.

For some practice areas there are other things like litigation calendaring software that may be needed.

Does it make sense that one software program can do all of this well? Each firm works a bit differently. We have to have flexibility in how we do our work. An out-of-the box solution doesn’t offer us what we need, how we need it and when we need it.

We are better off getting what we need in each of the areas above and connecting those programs that need to be connected. We can have flexibility in customization to meet our individual styles.

We have been clicking on Word or WordPerfect to create our documents, WestLaw or Lexis for legal research, and a time program for our time entry since the beginning of the computer. Our computer homepage has been the dashboard. Why do we need to settle for substandard products just to put them in one dashboard?

The beauty of the Internet is that programs can talk to each other. Using programs that allow you to work efficiently while also incorporating your preferences and allowing you to connect to other programs. Even Microsoft is now letting software into their back-end to integrate.

Stop allowing software companies direct how you manage your information and service your clients. Outline your specific needs and find software that specifically handles them whether it is one solution, two or several. You’ll be less frustrated.

Diane L. Camacho, CLM
diane@dlccs.com