Your chances of dodging a costly trip, not to mention the additional legal fees, to deal with a suit filed by a formerly friendly client in, say, Montana are likely to be better if your contract contains the proper protective language.
That means you may need a lawyer today, partly so you can avoid needing one tomorrow: Lawsuits happen, and language that is, or isn’t, in your contract can make a difference.
If, for example, there’s a dispute that winds up in court, “Where would a lawsuit occur?” asks Oak Brook attorney Jim Poznak. “What law will govern?”
The answers matter. Will the suit be heard in Montana, where the client in our example is based, or Illinois, assuming your business is headquartered here?
Unless your contract specifies the exclusive jurisdiction, “You could spend a fortune litigating the jurisdiction and choice of law before getting to the suit itself,” Poznak says.
Consequently, the contracts my companies use stipulate that our client “hereby submits to the exclusive jurisdiction and the exclusive venue of the state courts located in DuPage County and the federal courts located in Cook County, state of Illinois.” (Disclosure: The Poznak Law Firm Ltd., is our business attorney.)
Similarly, you could wind up paying attorney fees even when you win the case — unless your contract specifies that the prevailing party shall recover its costs, the fees of expert witnesses and attorneys.
Most small business legal needs are simpler, though ultimately equally important. Carmen Lynas, who turned to Poznak to draw up incorporation papers for her business, Advanced Therapeutic Solutions, is typical.
Lynas, an Oak Brook-based clinical psychologist, specializes in intensive treatment for selective mutism, a condition in which children, often chatterboxes at home, have an “extreme social phobia of speaking in public, especially in school.
“I had been trying to get (my own) information on incorporation because I wanted to keep costs low,” Lynas says. “But I realized I can’t wear every hat.”
A search led her to Poznak.
In addition to incorporation details, Poznak has drawn up specialized contracts for counselors working at Lynas’ Adventure Camp, a weeklong day camp that mimics the school environment.
Because Adventure Camp features a 1:1 treatment protocol — each camper has an assigned counselor — each counselor’s commitment is important. Consequently, the contract’s stipulations include a financial penalty should a counselor back out.
Parents also sign a camp contract and a video release form.
Whatever the specific need, the goal, Poznak says, should be “a contract that is the best way to structure a situation.”
There are do-it-yourself forms out there, but Poznak says, “They often have limited utility. There can be subtitles you don’t want to miss.”
Otherwise you could wind up in Montana — on a business trip with your lawyer, not a sightseeing excursion with your family.
ź Jim Kendall welcomes comments at JKendall@121MarketingResources.com. @ 2012 121 Marketing Resources Inc.Copyright © 2013 Paddock Publications, Inc. All rights reserved.