Wisconsin Business Law and Litigation
A blog dedicated to Wisconsin business law and business litigation matters, authored by Chris Moander of the Moander Law Firm.

Dear Readers,

I want to give some much-deserved credit to my fellow attorney and friend Jon Groth, author of Jon Groth’s Personal Injury Weblog, which focuses on personal injury law in Wisconsin. His blog effectively address personal injury matters in light of local events - two good examples are his posts on the recent Burkosky family tragedy in Oconomowoc. Please check out his blog and drop him a line.

Jon also is a member of the Wisconsin Solo and Small Firm Conference Planning Committee. He has been and will continue to work tireless on one of the great bar events in Wisconsin.

Dear Readers:

I will be attending the Small Business Times BizTech Expo for the next few days. If you have not had a chance to sign up, come on down. I’m very excited about this event because it’s drawing some major national speakers and some quality local speakers. Aside from the usual expo set up of booths and chit-chat, there well over ten individual business strategy seminars that are free to people attending the event!

If you do come on down, I will be the guy likely having a great time meeting new folks, learning about new technologies, and talking shop with everyone and anyone.

I came across a link that I think outlines the basics of how venture capital works. The slideshow shows key elements of the financing process. What I find particularly important and useful is the explanation of why VC firms need and, frankly, deserve preferred stock in companies in which they invest - I love the fact the author uses the term “mischief” to describe the alternative of giving VC’s common stock.

I also think the author has the right idea in emphasizing that both investors and entrepreneurs have something to gain from transparency in the financing process - if everyone understands the terms, a true “meeting-of-the-minds” occurs and each side is happy with the deal.

No, I’m not kidding. Bullying is not just for junior and senior high. John Philips notes that we should expect legislation on workplace bullying in the near future because of the pervasive nature of the problem. The trend has begun in Wisconsin (starting with the schools).

The reality is that (1) bullying hurts morale and productivity and (2) there is a likelihood it could cost your company dearly now and in the future. As with most business legal matters, prevention is preferable to cure - lesson: if you know you have a bully (or are one), act now.

It looks like commercial bankruptcies are on the rise, according to Richard Feferman. The commercial credit market is not eager to hand out funds and Uncle Sam is sticking his hand in the mess. As with any hostile market, yesterday (or six months ago) was a good time to tighten the belt and re-evaluate business plans, but today is still a good time to do the same.

Even after posting a bit on the matter of e-discovery, I think that further clarification as to what the business owner really needs to do regarding the relationship between litigation and digital information is in order. Thankfully, RenewData has provided me (and you) with a handy little booklet on the practical aspects of e-discovery. Just fill out the form and you’ll get your free copy in a few weeks.

While I am certainly not stumping for RenewData’s services (I have not used them and so cannot attest to the quality), I can say this book skillfully reveals the abstract nature and intimidating scale of e-discovery. Specifically, the book outlines some of the various locations data can be found (such as PDA’s and flash drives) and the so-called “technobabble” that business owners may hear coming from tech folks handling e-discovery materials.

One also finds general recommendations on how to prepare digital information, on a daily basis, for potential litigation - I believe that the sections addressing anticipatory preparation of digital information are the most important. Ensuring that your digital materials are properly labeled, filed, and backed-up with regularity will save an untold amount of money should litigation erupt and you will sleep better at night knowing that you are prepared. Much of this preparation can be automated, further reducing the front-end costs.

I am a moderately geeky attorney and I learned quite a bit from this book. Business owners ranging from sole proprietors to corporate executives could benefit from this wisdom. I recommend ordering your free copy today and educating yourself on some quality CYA information.

Small businesses have to leverage each dollar spent to maximize return and software is often one of the major expenditures. Traditionally, software was based on the individual computer or on a server. For example, Microsoft Word is installed on each individual computer in the company and creates documents on that specific computer. Things have changed. Software as a Service (SaaS) is showing its might in areas ranging from document creation to customer relationship management. Examples include Google Docs, 37signals tools, and Linked-In.

There is no doubt these tools are useful, mainly because they are affordable (or free), there are no pure setup costs, and software downtime is rare. Instead of paying for a license per computer, you can buy access based on the number of users, usually totally a far cheaper pricetag. Many companies that offer SaaS have developed simple and easily understood graphical user interfaces - drag-n-drop, tabs with obvious names, and other tools. These are great reasons to use SaaS and I agree, they are compelling. Nothing sounds better than using software that appears to level the playing field by a wide margin between small business and behemoth corporations.

However, there are some downsides to consider and they are quite real and quite problematic for small companies. One is the matter of proprietary and confidential information. Almost anything can be considered proprietary (client lists, schematics, etc); the same applies to confidential information. Does your SaaS provider have quality security? Do they also effectively back up whatever information you’ve given them? Is there any way for you to do an independent backup for your information (aside from paper printoffs)?

What happens if there is a billing tiff? And the SaaS company cuts you off from your information?Any service agreement needs to be examined closely with a mind for these matters.

Another issue is the customization capability of SaaS. Most vanilla modification abilities are available, but what if you need to cater software to extremely specific uses? The other side of this issue is that money saved on basic services can be reallocated to area-specific and customizable software.

Finally, one area that should probably be avoided for SaaS is the company’s financials. It is very much in your best interest to maintain ownership of your financial and economic information.

The moral here: evaluate SaaS for your own needs. If the service fits and you trust the provider and the agreement, by all means use it.

John Phillips at The Word on Employment blog explains, with simplicity, the difference between and independent contractor and an employee.

It is absolutely imperative that an employer understand the differences because the tax implications are massive. Mere agreements labeling a person or business as an “independent contractor” is far from sufficient. As Mr. Phillips simply states, “The fact that you have an “independent contractor agreement” with the worker isn’t determinative. If a worker is doing what other employees do, he/she is likely to be an employee irrespective of an agreement that says otherwise. If the worker performs work only for you, as opposed to performing work for multiple companies, he/she is likely to be an employee. ”

IRS tools provided in the article can be found here, here, and here.

Y Combinator and The Business Association of Stanford Entrepreneurial Students are sponsoring a Startup School for programmers out there eager to make their mark on the business world.

Y Combinator is a venture capital firm specializing in tech/web funding and based in both San Francisco and Cambridge, MA. I learned about them when they started up and they have certainly grown in size and influence since then. The Business Association of Stanford Entrepreneurial Students is a Stanford student group dedicated to boots-on-the-ground approaches to business creation.

If you are really into technology and startups, you’ll notice that Mark Zuckerberg graces the School’s homepage, hinting at the kinds of minds and attitudes the School hopes to assist. Marc Andreesen is set to speak at the event, hearkening back to the days of Netscape domination in the browser wars (and my first appreciation of just how cool the web could be). Also, David Heinemeier Hansson, a partner at 37Signals, a company that produces tools many business currently use for project management, client/customer management, and real-time chatting.

If you can justify the associated costs (the School itself is free), I would highly recommend attending - you could discover your funding angel or meet your future business partner.

Hat tip - Ryan Roberts at The Startup Lawyer

As a follow-up to my post on cultural barriers to contract formation, the Small Business Times reported that Wisconsin officially topped a billion dollars of exports to China. Well done! Further, out of the top five nations to which exports are sent, three of those nations are non-english speaking - 3.8 billion dollars of exports in Wisconsin are affected by significant language and cultural barriers. Perhaps it is time for all of us Wisconsin business attorneys to buy some language software and diversify our tongues?