Archive for the 'Contracts' Category

How judicial empathy harmed one small business.

Upon the announcement of the retirement of Associate Supreme Court Justice, David Souter, President Obama announced that he wanted to replace Souter with someone who has “that quality of empathy, of understanding and identifying with people’s hopes and struggles.”

Days later, the president made good on that promise by nominating Sonia Sotomayor to replace Souter. Based on Sotomayor’s past rulings, as well as comments in speeches and participating on panels, Mr. Obama accomplished his “empathy” goal. In a speech at Berkeley, Judge Sotomayor said, “I would hope that a wise Latina woman with the richness of her experiences would more often than not reach a better conclusion as a judge than a white male who hasn’t lived that life.”

How does empathy, gender, race or experience reconcile with what is no less than the cornerstone of American jurisprudence, blind justice? What would empathetic justice look like? In my career as a business owner, I’ve had some experience with an empathetic judge who chose to peek under the blindfold she swore to wear when ruling on petitions brought before her. Here is that true story.

A salesperson was hired by me to call on prospects and customers of a company I owned. Since I knew I would be giving him proprietary pricing and sales strategies that were the intellectual property of my company, I asked him to sign a non-compete agreement when he was offered the job. By accepting, if he should leave my company for any reason, he would have to forgo operating in my industry within a reasonable geography and time frame. He signed and went to work.

Less than two years later, I discovered that he was making plans to quit, and in fact had already started his own new company which would compete directly with my business. Worse, he was actually telling my customers about his new venture in an attempt to subvert sales to him. Not only was his future behavior going to violate the non-compete agreement, but his disloyalty is against the law in our state. Immediately after he was fired for this infidelity, he opened his competing business with a storefront location.

In the subsequent non-jury lawsuit I brought to enforce the non-compete agreement, the District Court judge, who just happened to be a woman, listened to the facts, reviewed the evidence and ruled in my favor. The defendant should cease and desist operating his business for the period and geography he originally agreed to. Alas, he continued operating his business, in defiance of the court order.

Within six months, we were able to bring the man before the judge again with the evidence of his continued violation of the agreement and the court order. But instead of throwing the book at the defendant, incredibly, the judge instead dismissed her earlier ruling against him. Her reason? She had since discovered that her daughter knew a member of the defendant’s extended family who, as a teenager, had been killed in an automobile accident a few years earlier. The judge went on to say that she now felt the family had been through enough and, essentially, she didn’t want to place any more hardship on them.

Thus, I came face-to-face with judicial empathy and found it violated a valid contract, disregarded testimony, facts and evidence and preempted the constitutional right of this American citizen to petition the court with an expectation of receiving blind justice. My brush with touchy-feely justice cost me a few thousand dollars in damages and legal fees. But if empathy as a basis for deciding cases at the Supreme Court level becomes reality, I fear it will undermine two of the cornerstones of our nation: the sanctity of a contract and the judicial system that for more than 200 years has been the model for the rest of the world.

Recently, on my small business radio program, The Small Business Advocate Show, I talked about my experience with judicial empathy. Take a few minutes to listen, and be sure to leave your own thoughts and experiences.

How dear are your small business mistakes?

Mistakes are worth contemplating, and yet we often don’t. The reason, I think, is because it hurts a little to focus on them. It’s not fun to see ourselves that way. Mistakes are definitely not ego food.

But there is something very important to remember about mistakes: Not focusing on them can ultimately be more painful.

Sixteenth century French Renaissance writer, Michel de Montaigne, wrote, “Those things are dearest to us that have cost us the most.” Think he’s talking about mistakes? I do. Do you think of your mistakes as “dear”?

If you don’t contemplate your mistakes and learn from them, you are subjecting yourself to double jeopardy. Because today you will not only make the new mistakes we are all destined to make as we go through life, but you’re also doomed to repeat the old ones you should have learned from yesterday.

Whether your mistakes are valuable or expensive depends on whether you contemplate and learn from them, or deny them and keep on paying for them. I think paying for a mistake once is “dear” enough, don’t you?

Small business, the Obama administration and IP

As we approach the second decade of the 21st century, it’s clear that the strength of the American economy will come more from our ability to create and sell intellectual property (IP) than the tangible things we were so known for in most of our history. And as globalization – efficiently transporting goods, services and financial assets around the world – continues apace, our IP is also being delivered away from American shores and, therefore, the protection of U.S. intellectual property laws.

Our trading partners around the world have their own IP laws that dictate how our property will be treated there, but unfortunately, those laws often don’t provide adequate protection and, frankly, our innovations can get ripped off. This is where our federal government comes in.

The U.S. Department of Commerce (DOC) is the primary organization that negotiates our business relationships with other countries, including IP issues, and the leadership of that cabinet level department is changing. Barack Obama has chosen Bill Richardson to head up his DOC and since small businesses are creating more and more IP, and doing more and more international trade, this appointment bears watching. Richardson has an impressive resume as a governor and diplomat, but time will tell about his effectiveness as the head of the DOC.

Someone who will be watching the Richardson DOC is Dr. Mark Esper, with the U.S. Chamber of Commerce. Recently, Mike joined me on my small business radio program, The Small Business Advocate Show, to talk about IP, trade issues and the Richardson selection. Take a few minutes to meet Mike and listen to our conversation. And of course, comments are always welcome.

The Small Business Survival Song: Cash is KING!

You know how you will hear a song that you absolutely can’t stand – on the radio or someone whistling it? And for the rest of the day you can’t stop it from playing, over and over and over again in your head. It’s maddening, right?

Well, there is a song that I want to introduce you to which I call the “Small Business Survival Song.” I don’t care what melody you put under it, but for the foreseeable future, here are the lyrics that MUST by constantly playing in your head: Cash is KING!

These words are actually the second part of this short song, which goes like this: “Profit is the Queen of business, but Cash is KING!” But right now, and for some time to come, profit is not your prime motivator – your prime motivation is CASH!

For at least the next 12 months, you must live, eat, breathe, sleep and dream these most fundamental of all entrepreneurial survival lyrics: Cash is KING!

When you’re spending money on anything – and I mean ANYTHING: Cash is KING!

When you’re considering a new contract or renewing an old one: Cash is KING!

When you’re making a sale on terms, regardless of who the customer is: Cash is KING!

This week I interviewed two outstanding cash flow management experts on my small business radio program, The Small Business Advocate Show. The first one was Tom Markel- founder, chairman and CEO of who’s especially knowledgeable about cash and credit. The second interview was with Phil Holland, founder of My Own Business, Inc., who is an expert on small business start-up and growth strategies.

Both of these members of my Brain Trust offered several outstanding tips and best practices when it comes to that song I’m trying my best to get stuck in your head: Cash is KING! Invest a few minutes to learn what just might be the difference between surviving and, well, you know. And be sure to leave a comment, if you want.

Tom Markel’s interview: Phil Holland’s interview

By the way, did I mention that Cash is King?

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