Empowering your attorney
Your Lawyer: An Owner’s Manual
By Henry C. Krasnow
Agate Publishing, Evanston, Ill., 2006
188 pp., $14
Reviewed by Barbara Spector
Don’t waste your time telling lawyer jokes to Henry Krasnow. In his nearly 40 years as an attorney for small and mid-sized businesses, he’s heard plenty. “Shakespeare’s suggestion, ‘First, let’s kill all the lawyers,’ is, of course, funny,” Krasnow writes in his new book, Your Lawyer: An Owner’s Manual. “But if you are ever sued for breach of contract, or want to merge your company with another, you will still call a lawyer and not a playwright.”
Krasnow, senior partner at the Chicago firm of Krasnow Saunders Cornblath LLP, can tell some funny stories about clients, too—such as the business owner who says, “I will not settle! I’d rather pay you than pay those liars!” but then complains about the high legal bills; or the client who says he wants to fight a claim “to the death“ and then later asks if all the legal work done was “really necessary.”
If business owners recognized how lawyers work—or, more to the point, how the best lawyers work—they would understand how to get the most value for their legal fees and be able to spot bad legal advice before they’re committed to taking it, Krasnow contends. “Ultimately, you want lawyers to add value to your business,” he writes, “but they need your help.” He explains that what clients say to their attorneys (for example, “I want to fire my business partner” rather than “I really want to tell you how angry I am at my business partner so that I can get it off my chest”) affects the advice they receive from those attorneys. “[T]he problem with many lawyers is not their lack of skill, nor their lack of talent, nor their lack of integrity, nor their lack of tenacity,” Krasnow asserts. “It’s the fact that clients do not clearly communicate their goals, or they do not set realistic goals, or they do not listen when they’re told their goals are not realistic.”
Your Lawyer: An Owner’s Manual is written clearly, in layman’s terms, and includes an appendix entitled “The Lawyer’s Language: A Common English Guide to Basic Legal Terms and Concepts.” As Krasnow notes, “Just because an agreement is written by an attorney doesn’t mean that it needs to be written in complicated legal language. In fact, the goal of a good lawyer should always be the opposite.”
Even so, he notes, a good lawyer will be meticulous about the wording of legal documents, steering clear of language that raises emotional issues. As an example, he offers, “Junior must get the approval of his father before he decides to sell the company, issue new stock, refinance the company’s debt, or make expenditures of more than the amount set out in an annual budget, which his father must approve each year,” compared with a more palatable version, “Decisions with regard to the sale of the company, the issuance of new stock, the refinancing of the company’s debt, or expenditures of more than the annual budget shall be made unanimously by the president and chairman of the board.”
The first section of the book, entitled “Dealing with Lawyers,” presents advice on finding the right lawyer, handling a “problem lawyer,” the merits of settling a case vs. going to trial and the do’s and don’ts of contract negotiations, as well as a chapter on “Ten great ways to get more from your lawyer for less” (example: “Avoid small lawyers, not small law firms”).
This section also includes Krasnow’s thoughts on legal fees. “The real issue should never be about what you’re paying,” he writes. “It should be about what you’re getting. You’re being charged for a lawyer’s time, and for that you should receive substantial results.”
Krasnow devotes the second section of his book to family business issues. In this section the reader will find suggested alternatives to prenuptial agreements “that are emotionally neutral,” 12 reasons to have an advisory board (and six types of board members to avoid), chapters on buyouts of minority owners and estate planning, and a glossary of terms related to trusts.
“When you try to measure love, respect, or appreciation using money (always a bad idea),” Krasnow cautions, “it’s hard to negotiate a good resolution.”
Krasnow’s book is a practical, commonsense guide that can help readers understand the legal system and save money, aggravation and time. But at certain points the author takes an overly harsh tone in making his case for lawyers. “Unless you commit a crime for which the death penalty is a possibility,” he writes, “you can probably live your life without ever hiring a lawyer…. Similarly, if you think doctors are too expensive, or scare you, you are perfectly free to ignore your high temperature, your severe headaches, or the strange lump under your skin, and many people do.”
With all those lawyer jokes going around, Krasnow may have reason to be defensive. Yet it’s clear from his text that the author enjoys his profession, understands family businesses and genuinely wants to help business owners work more effectively with their legal advisers. “Ultimately,” he notes, “the more you control the legal process (and the less you try to control the uncontrollable), the more you are likely to be satisfied, both emotionally and financially, with the outcome.”
A high-tech time card alternative
Need to monitor employee attendance? Consider Timecard Monitor, a software application from Count Me In LLC, a family company in Mount Prospect, Ill. An edition of this biometric time clock replacement was named one of Small Business Technology Magazine’s Ñ»Products of the Year” for 2005 and was a finalist in the Software & Information Industry Association’s 2005 Codie Awards competition.
The fingerprint-recognition software is available in seven versions, ranging from a simple time clock to solutions that allow supervisors to edit time cards and pull reports, as well as multiple-station network editions for companies with more than 100 employees. The software accommodates employee breaks, overtime and pay periods and includes a connection to QuickBooks. Costs start at $299.99 for the “Lite” (simplified time clock) edition. Fingerprint recognition eliminates the problem of employees “punching in” for one another, says company CEO and president Judith Katz, 60.
Katz started out as an educator and in 1974 founded a storefront child-care center in Buffalo Grove, Ill., called Minee Subee. In 1988, when she heard on the news that a woman had shot several children in a Winnetka, Ill., elementary school, she called her husband, Norman, who then owned a company that developed computerized forms. “I said, ‘The children are at risk, my staff is at risk and I’m at risk. We have to do something,’” she recalls.
Norman Katz responded by developing an access-control system called Door Monitor based on then-nascent fingerprint recognition technology. The program debuted in 1990. In the mid-’90s, he launched Timecard Monitor in response to concerns about whether Minee Subee employees were being fairly compensated for the hours they worked. Count Me In LLC opened for business in 2001. Today, the company’s two programs, which are compatible with each other, are used by organizations in the child care, health care, manufacturing and retail sectors, Judith Katz says.
Since Norman Katz’s death in 2002, Count Me In has been led by Judith with her son Neal, 38, vice president of sales and marketing. Daughters Michele, 36, and Beth, 34, run Minee Subee (which now consists of four child-care facilities in Chicag’s northwestern suburbs) and serve on Count Me In’s board.
“Our sales are constantly growing,” Judith Katz says. “What the awards have done is give us credibility.”
For more information, see www.countmeinllc.com.
— Barbara Spector
Family business ‘deadly sins’
The secret to family business profitability and perpetuation is a willingness to deal professionally with business and family issues, advises South Carolina consultant Bill Lee, president of Lee Resources Inc.
Lee notes that many family firms are plagued by three “deadly sins”:
Deadly sin #1: “Daddy” dominance. In many family businesses, the leader is reluctant to let go of the reins. The “kids” (even in their 40s and 50s) are little more than “hired hands” because only “Daddy” (or “Mommy”) is considered qualified to make important decisions.
Solution: The leader will never be assured that the business will survive him or that his offspring will be ready to succeed him unless he begins to delegate key projects or duties. The next-generation members will never approach his level of expertise unless he allows them to make a mistake now and then.
Deadly sin #2: No retirement date. If the CEO strongly resists establishing a retirement date, there’s a good chance he will never retire.
Solution: Any business leader age 55 or older should set a retirement date as soon as possible. Those younger than 55 should set a date now if they plan to retire before 65.
Of course, just setting a date is not enough. The CEO must take proactive steps so it’s clear to all concerned that management changes are imminent, though not immediate.
Just about all employees suffer some degree of fear that when the “old man” dies the business will go down the tubes. And it’s difficult to recruit top talent into a company without a succession plan in place. When a successor is named, a lot of apprehension is lifted.
Deadly sin #3: Embarrassment about naming a non-family member as successor. If the leader does not believe any of his offspring has the “right stuff,” he owes it to the family and employees to tap a qualified successor from outside the family or even from another company.
Why would family business leaders risk the future of the company by failing to appoint a qualified outsider as successor? Perhaps they feel it reflects badly on the family name if no family successor can step up.
Solution: Swallow family pride and recruit an outsider to run the business—either indefinitely or as an interim leader until a family member can be developed.
For more information, see www.billleeonline.com.
Deciding to make a move
What’s a family to do when the successor generation is qualified and wants to perpetuate the family business, but would prefer to leave the region where the founder started the company?
Over the past 15 years, some 66 family-owned companies have relocated to the Inland Northwest region between eastern Washington and northern Idaho, reports Bob Potter, business recruitment director for the Inland Northwest Economic Alliance, a collaborative group of nine regional economic-development organizations. Among the immigrants to the area are Buck Knives, a 104-year-old knife manufacturer that moved to Post Falls, Idaho, from El Cajon, Calif., in 2005, just as successor C.J. Buck was taking the helm. Another family company—Lloyd Industries, a manufacturer of pizza and bakery equipment—moved from Southern California to Spokane, Wash., in the mid-1990s, when second-generation member Rob Crow joined his father, John, in the business.
Relocation requires emotional as well as a practical preparations, Potter notes. He suggests five steps to determine how a move or expansion might affect your business:
1. Compare business costs. Invite regions, states or communities to prepare a confidential cost comparison study showing how the cost of doing business in their areas compares with costs in your base of operation. Study operational expenses such as utility and worker’s compensation rates, real estate costs and tax structures.
2. Consider your business situation. The best candidates for a move are companies that are not location-dependent. Where are your customers? If you serve customers around the nation and around the world, you can operate from virtually anywhere with quality transportation infrastructure.
3. Evaluate your succession plan. What are the interests and lifestyle desires of your children or grandchildren, who will eventually run the family business?
4. Weigh employee opportunities. Most family-owned businesses have key employees they don’t want to lose. Think about who they are and the impact of a move on their lifestyles. How many of your employees own their homes? How long do they commute to your operation? Would your valued employees make the move along with you and your family members?
5. Take action. Visit regions, tour promising areas and talk to family business owners who have made the decision to relocate. Invite an expert to talk with you and your family about key relocation or expansion issues facing your company.
Ethical will writer’s guide
Many family business owners and high-net-worth individuals are crafting an ethical will—a letter or video addressed to descendants that communicates the author’s values, feelings and memories—as part of the estate-planning process (see “Bequeathing your most important assets” by Alan G. Weinstein and Scott E. Friedman and “A wealth of resources” by Barbara Spector, FB, Winter 2006). To aid in the creation process, Susan Turnbull of Professional Legacy Advisors LLC in Wenham, Mass., offers The Wealth of Your Life: A Step-by-Step Guide for Creating Your Ethical Will.
This 40-page, illustrated guidebook ($19.95) features checklists and worksheets that prompt users to identify their audience, consider their intentions, draft opening lines, make notes for reference, create an outline and finally draft the ethical will.
Turnbull, whose firm provides guidance and writing support for the private clients of estate planning attorneys and financial planners, also suggests sample phrases and offers questions to consider at the various stages of the creative process. For more information, see www.yourethicalwill.com.