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Common Legal Myths That Lead Business Owners into Trouble

Business owners are often flying blind when it comes to the legal aspects of their businesses, or even worse, erroneously thinking they know how to protect themselves based on common legal myths.  These myths could all get you into trouble, if you didn’t know any better.

Myth: Personal assets are always protected by the right business entity.  Truth: Choosing a corporation or an LLC as a business entity provides some asset protection, but it isn’t ironclad. If someone is determined to go after you personally, it is possible for them to pierce that protection, and it is easier than you may think if you haven’t kept up on proper corporate and business procedures or if you have comingled business and personal funds.

Myth: Patents and Non-Disclosure Agreements protect intellectual property always and everywhere.  Truth: Registration is only the beginning. Enforcement is a whole different animal. It helps to have your idea protected, but if someone has more money than you do and can afford to outlast you in litigation, or if they are located overseas and are very hard for you to prosecute, in essence they can steal your ideas.

Myth: Conversations between lawyers and their clients are always confidential.   Truth: While the attorney-client privilege is very strong, it is not always absolute.  For certain circumstances, a judge can pierce this privilege and order that the attorney share confidential information and in other situations an attorney has a duty to reveal confidential information, like to prevent a crime from happening.

Myth: Good contracts are complicated.  Truth: Good contracts are clear and understandable. Complicated contracts often have contradicting provisions, and it’s hard to know what you are agreeing to when you can’t understand what the document says. The best contracts are simple and unambiguous, and that makes it possible for everyone to hold up their end of the bargain, since they know their obligations and the consequences of a breach.

Myth: Your online posts are protected from libel claims.  Truth: Even if you frame your post clearly as your own opinion, and not a statement of fact, you can be sued if someone thinks that you have libeled them. You will be stuck defending yourself, and with the costs of that defense, you lose even if you win the case.

Myth: If someone is injured on your property, you’re liable.  Truth: There are certain circumstances where you are not responsible if someone hurts themselves on your property, like if they were reckless or engaged in a criminal act. Keep in mind, though, that if you were negligent or intended to harm someone, your insurance will probably not cover any damages.

Myth: You can’t be sued if you did nothing wrong.  Truth: Anyone, anywhere, at any time, can sue you for any reason.  It’s called frivolous litigation, and even if you prevail, you can spend big money getting out of it.

Myth: Once you get a trademark, it’s yours forever.  Truth: On the contrary, getting a trademark is just the first step – the really important part is protecting that trademark. Your trademark protection can be erased by not enforcing your trademark when you learn of infringers, or if your trademark becomes so associated with a product or service as to become a generic word used to describe that thing. Did you know that Zipper used to be a brand? Market dominance can sometimes be dangerous territory for a brand to be in.

Myth: Lawyers are a necessary evil only to be used as a last resort.  Truth: It is amazing how many people won’t invest a few hundred dollars for solid legal advice that may save them a fortune and lots of pain in the future.  Providing the right advice at the right time, before a problem is allowed to arise, is the best value an attorney can provide to a business owner. Waiting to have your lawyer act as a legal crisis manager is a very expensive underutilization of your best resource.

Good legal strategy and planning begins when you start your business, not when you get into trouble.

If you’re a small or mid-size business owner, call us today at (612) 206-3701 or fill out our contact form to schedule a business consultation session.

Image courtesy of Victor Habbick / FreeDigitalPhotos.net

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There's a handful of legal topics that business owners should be familiar with, at least on a rudimentary level, to reduce the risk of having something horrible come out of left field.

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Do you have a cabin?

The first generation that buys a cabin enjoys it to the fullest and it’s a magical place where happy memories are made and families go for some much needed respite. Unfortunately, without thoughtful planning, the chances of the cabin staying a place of happiness and tranquility into successive generations is very, very slim.

If you haven’t done the planning in advance and made it legally binding, the family members (and their ex-spouses and new spouses) will have to work every detail out for themselves. If they can’t, what is likely to happen is a lawsuit called an action for partition that forces everyone to sell their interest. This lawsuit is expensive, and the costs of litigation will come out of the proceeds of the sale of the cabin, so to add insult to injury to those who wanted to keep the cabin but couldn’t afford to buy the others out, they are footing part of the legal bills in the lawsuit against them. Ouch!

It’s no wonder that family members stop speaking for years after the cabin conflict is “resolved.” You can’t make family relationships perfect, but you can take away much of the fuel for the family conflict fire. That’s what cabin planning does, and it has the nice side effect of giving you peace of mind now.

That’s why Kimberly wrote The Minnesota Cabin Planning Guide and Workbook, and you can get a free electronic copy of her book on our cabin planning website, or you can find it in many county libraries in Minnesota, or you can get it on amazon.com.

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