The Lawyer's Role in Advising Businesses and Entrepreneurs

We represent businesses and entrepreneurs in a multitude of different matters, including corporate setups and formations, contract negotiations and drafting, joint venture and business mergers and transactions, avoiding and defending overtime and wage claims, and a variety of other matters.   We also act as affordable in-house counsel for smaller companies that don't need full time services but do need the ability to get priority attention.  In all of these roles, our clients are surprised that our approach is different from many other lawyers.  A business that invests in evaluating and assessing risks before taking action is in a far better position to anticipate and respond to contingencies down the road.  A "look before you leap" approach saves business resources and money down the road.  An ounce of prevention is worth a pound of cure, and advising businesses is no exception.   

Businesses seek to avoid risk.  We hear from our clients that lawyers are nay-sayers, and want to be decision makers in the client's business.  They feel this over-steps the boundaries business clients want from their attorneys.  We believe that our role as lawyers is, instead, to identify and assess levels of risk for our clients.  How much risk a business or entrepreneur is willing to accept in moving forward is a business decision, not a legal decision.  We look for ways to accomplish the goals and objectives of our business clients, while assessing varying risks and contingencies for each possible path that can be taken forward.  In knowing what my lie ahead, and where pitfalls are, businesses can make good, informed decisions.  They can plan for contingencies before they arise, and in this way, be prepared to work to eliminate them quickly and with far less resources than would be required for unexpected liabilities. 

Risk cannot be eliminated completely.  Business leaders and entrepreneurs frequently tell us they want to move forward with a project and want to eliminate all risk.  For example, let's say one of our clients is creating a new position within the company, and wants this person to be an independent contractor.  The client wants an independent contractor agreement to ensure there are no wage/overtime claims down the road.  Legally, whether the person in this position will qualify as employee or independent contractor status is subject to a multitude of factors under the Federal Fair Labors Standards Act (FLSA), and other laws, none of which are by themselves dispositive.  An independent contractor agreement, by itself, may not provide the client with an acceptable level of risk in moving forward with making the new hire an independent contractor.  If the client desires to know what else can be done to enhance the likelihood this person would qualify for independent contractor status, we may suggest the client could refine or enhance the position's responsibilities and its job description to better accomplish the client's goals.  We would work with the client so the client is in a position to understand the factors that go into evaluation of independent contractor status.  The client would understand which factors are met by the current position, and whether the position's duties should be refined.  Ultimately the client will be in a position to decide how it wants to proceed, understanding risks and options available.   

Or, a client may present us with a proposed lease for some new space the client is looking to acquire.  The client wants to know if the lease is acceptable to sign.  Every lease agreement is different, and places obligations and duties upon both the landlord and the tenant.  Whether it is acceptable is a business decision the client makes once it understands the risks and contingencies the lease contains.  It may be acceptable to the client as is, or it may need some negotiation of the terms.  Whether to accept the lease, or negotiate the lease, is the client's decision once it understands the obligations and duties the current lease imposes. 

Lawyers serve and assist business leaders and entrepreneurs.  Decisions are left to the client, and lawyers that know their role and understand their client's needs can be valuable assets, saving the business substantial resources and funds over the long term.  Business clients generally tend not look to lawyers to be decision makers, business partners, or business advisers.  They look to lawyers to assess and advise regarding risk and possible paths to accomplish the business' goals.  I often tell my business clients that I am not the President, only the general.  I present the client with possibilities and options to accomplish the client's goals, and the risks and benefits of each.  The client is the President and makes the executive decisions.  We are honored to serve.       

Some Basic Information About Construction Contracts

A construction contract or agreement is actually made up of several instruments in addition to the contract.  Construction agreements are governed by the contract, written change orders, and the plans/specifications for the project.  It is important to know that these instruments are reviewed together in confirming all agreements between the contractor and the property owner.  The construction contract should have the basic understandings between the parties.  It should set out the contractor's scope of work, which describes the labor, materials, and services the contractor is to provide and perform.  It should set out the pay arrangements and draw schedules so there is no confusion about payment amounts and timing.  A well drafted contract may also contain provisions for dispute resolution, work stoppage in the event of a dispute, damage limitations, and other obligations/duties of the contractor and the owner.  For example, when we are retained to draft construction contracts, we typically recommend the contract include a provision that the contractor's warranty is not effective until all payments have been made by the property owner.  We also work to make sure the contract complies with Texas Property Code requirements so that the contractor has the ability to lien the property if necessary.  It is important that both parties read and understand their obligations, rights, and duties under a construction contract.

Change orders are also a part of the contract documents.  A change order is a written agreement between the contractor and the property owner that alters or adds to the construction project.  For example, let's say the property owner decides a wall needs to be moved, or decides to add a fountain to the construction project.  The contractor and property owner should draw up a written change order that will set out the added/changed work scope, added/changed material and labor costs and payment deadlines, as well as any deadlines and changes to the overall construction project/critical path changes.  A written change order is the industry standard for changes in construction, so that there is little to no confusion about what should be done, how much it will cost and when that will be paid, and how the changes will impact the project.

The plans and specifications detail specifically what work is to be done on the project.  They contain important information about the project.  By way of example, these documents will specifically show where walls are to be located, confirm that setbacks from property lines are correct, etc..  They vary widely depending upon the type of construction/improvements being made, and provide needed detail about where construction elements will be located. 

Construction projects, for both contractors and property owners, represent a substantial investment of both time and money.  It is well worth the investment in good, experienced counsel in drafting or reviewing construction contract documents.  It is also important to know what happens in the event of a dispute during or after construction.  A contractor may file a mechanic's and materialmens' lien (or M&M lien) against the owner's property if payment has not been made by the property owner, the deadlines to do so have not expired, and the requirements of the Texas Property Code have been met.  You can find a link to the Texas Property Code on the construction page of my website at http://www.drewmccallum.com/.   

Powers of Arbitrators

When parties agree to arbitrate disputes, the law is not settled as to what powers an arbitrator has.  For example, do arbitrators have the power to enforce witness subpoenas, compel parties to comply with the arbitrator's orders, issue injunctions, or hand down sanctions?  Additionally, if discovery is needed from third parties does the arbitrator have the authority to compel compliance with third party discovery requests or depositions?  An arbitrator's powers generally derive from the agreement to arbitrate, and the law is not settled on the powers parties may agree to bestow on arbitrators.  If the agreement is silent on these issues, many arbitrators will not rule on these types of issues.  How then do parties handle these issues?  We often suggest clients in this situation initiate a lawsuit in conjunction with demanding arbitration, and then seek to agree with the opposing party(s) to abate the lawsuit, save and except those issues the arbitrator does not have the power, authority, or jurisdiction to resolve.  This allows the parties to seek judicial relief on those issues the arbitrator's power or authority is questioned.  It also provides the needed avenue to reduce the arbitrator's award to judgment once arbitration is concluded.  Again, this also speaks to the importance of the arbitration agreement, and the critical importance of knowing what you're agreeing to when these provisions appear in contracts.  Experienced counsel in negotiating these agreements, and enforcing them, is well worth the investment.