The Essential Need for Business Succession Planning for Business Owners

By: Marc Summers

One of the most overlooked and under planned aspect of business ownership is the critical importance of business succession planning. Succession Planning is a strategic approach that ensures the continuity and stability of your business during an ownership transition, especially after death. Despite its significance, many business owners tend to overlook this vital component of long-term planning.

The Importance of Succession Planning:

1. Continuity and Stability: A well-structured succession plan is essential for maintaining smooth operations during transitions, thereby minimizing disruptions to your business.
2. Preservation of Legacy: Such planning helps preserve the founder’s vision and values, ensuring that the business remains true to its original mission.
3. Financial Security: Proper planning secures the financial future of both the business and the outgoing owner, providing clarity on valuation and transfer terms.
4. Talent Retention: By identifying and preparing future leaders within your organization, you can retain top talent and maintain morale.
5. Compliance with Regulations: Some professions have requirements that must be met regarding client confidential information and the handling of that information when a primary professional passes away.

Key Components of a Succession Plan:

1. Assessment of Leadership Needs: It is crucial to evaluate the skills and qualities required for future leaders to ensure alignment with your business’s strategic goals, especially in a family run company.
2. Development of Successors: Investing in training and development programs is vital to prepare potential successors for leadership roles to continue a company or a family legacy.
3. Clear Transition Process: Establishing a timeline and process for the transition ensures a seamless handover of responsibilities; and having a plan in place for the unexpected helps those who need to come in and address the business situation after the fact.
4. Legal and Financial Considerations: Addressing legal and financial aspects, such as estate planning, tax implications, and ownership agreements, is essential.

Conclusion:

Business succession planning is not merely about preparing for the unexpected; it is about strategically positioning your business for future success. By implementing a comprehensive succession plan, you can ensure your legacy endures and your business thrives for generations to come. Regularly reviewing and updating the plan is essential to adapt to changing circumstances and maintain its effectiveness.

Contact us to schedule an appointment.

Horse Trainer Liability

By: Crystal McDonough

As a horse trainer you should consider several ways to protect yourself from liability exposure. Whether you are training horses (or their owners) at your own facility or training at other locations, you should always have liability insurance, a well-written contract, and waivers and/or releases as well as posting the standard liability signage per your state’s equine laws.  Consider setting up an LLC or corporation for the business so that all business activity falls under the business entity rather than the trainer personally.

Insurance
Types of insurance for horse trainers includes (but is not limited to) commercial equine general liability insurance, equine professional liability insurance, care, custody, or control insurance, and bodily injury and property damage to others which may be covered under the general liability.  It may also be a good idea to have an umbrella policy as well.  An insurance provider will be able to provide more comprehensive details regarding the types of insurance coverage needed depending on the types of training activities and training location.  In addition, trainers may want to require horse owners to carry sufficient insurance to cover their horses for potential liability arising from training, guests, riders, veterinary care, barn/stable rules, safety, and state specific equine laws.

Boarding Contract
Let’s face it, there are no guarantees when training a horse.  If your horses are anything like mine, they have a mind of their own no matter how sweet and talented (or not so sweet or a bit feisty as mine can sometimes be).  Clearly defining expectations in the beginning can help to reduce conflict down the road.  A well-written trainer contract should cover more than just payment terms.  There should be a description of the training methods and services, who will perform the training and services, and the frequency and/or length of training time and schedule.  It should allow the trainer to use their best judgement in her sole discretion in accordance with generally accepted professional standards as each horse is unique and may require the trainer to alter her training methods from time to time.

It is also important to include terms of indemnification and limitations on liability of the trainer.  The contract should also include terms for default and the trainer’s remedies in the event of a breach of contract by the horse owner.  The contract should address if the horse owner pays, if the trainer pays, or if there is a joint payment of some set fee for damages caused by the horse.  What happens if the horse causes injury or death to another animal or a person?  It is a good idea to include a risk of loss or injury section in the contract that requires the horse owner to assume these risks. 

If the horse is being stabled at the trainer’s facility the contract should also contain terms pertaining to the trainer’s barn/stable.  It should include specifics related to the trainer’s premises including vaccinations, feed and feeding schedule, bedding, exercise, timing and frequency for cleaning stalls and paddocks, veterinary care, injuries and/or illness, special or emergency care, and decision making when the horse owner is unavailable or absent.  The contract should include details regarding the types and policy limits for insurance policies covering the trainer and the trainer’s facility and covering the horse.  A trainer may require the horse owner to provide a warranty regarding the horse’s health.  This warranty may require that a horse be free from diseases whether infectious, transmissible, or contagious prior to boarding.  This warranty also requires the horse owner to notify the trainer if the owner has any reason to believe the horse has been exposed to or becomes sick from any such diseases.

No matter how prepared or no matter how well written a contract, disagreements can arise between trainers and horse owners so it is important to include some type of dispute resolution section in the contract such as mediation, arbitration, or some other terms for resolving disputes.

Liability Waivers and Releases
Waivers and release agreements (also known as hold harmless agreements) for horse training typically cover the rules and risks related to riding or handling horses and who is liable in the event of injury or death.  These agreements can be meant to protect the trainer or the owner.  These agreements can also be a combined agreement that addresses both trainer and owner waivers and releases.   It is important to know what purpose you need and have your attorney draft an appropriate agreement.  For example, an owner may wish to have the trainer sign a waiver stating that the owner is not liable if the trainer is injured or dies as a result of training the horse.  However, a trainer may wish to have the owner waive liability for injury or death to the horse.  Each state has statutes governing the liability and assumption of risk for equine activities that should be included in a waiver or release agreement.  For any training services, it is important to know your state’s laws and the rights of the trainer and the owner when considering any waivers and releases.

Liability waivers and releases can be useful in providing a strong defense if the trainer or owner is sued and can assist in dispute resolution situations.  In addition, they might discourage a person from filing a lawsuit.  However, no waiver and release or contract can prevent a person from filing a lawsuit.  It is important to have the proper insurance coverage along with well-written and enforceable contracts, waivers and releases that are in compliance with your state’s laws and specific to the boarding facility and the types of activities at the facility. 

Remember to always contact your attorney to make sure you have the proper contracts, waivers and releases and that you understand your legal obligations and risks. Contact us to schedule an appointment.

Top 6 Legal Mistakes Small Businesses Make and How to Avoid Them

By: Marc Summers

Navigating the legal landscape is crucial for any business success. However, many companies make common legal mistakes that can lead to significant challenges. This article briefly highlights the top five legal pitfalls and offers guidance on how to avoid them.

1. Inadequate or Incorrect Business Structure

Choosing the wrong business structure, or not having a business structure, can have potentially significant tax and liability implications. Many businesses fail to consider the long-term effects of their choice in that they do not take into account potential tax savings or liability protection advantages provided by certain business structures.

Avoidance Tips:

• Consult with legal and financial advisors to select the appropriate structure for your business (e.g. LLC, Corporation, etc.), or to determine if a restructure is also appropriate.
• Consider factors like liability protection, taxation, and management flexibility to determine with your advisors the appropriate business structure for you and your business.

2. Company Governance: Not having appropriate documents

Businesses without formal agreements are more vulnerable to internal disputes, especially those with multiple owners. Issues can arise around decision-making, profit sharing, and ownership transfers.

Avoidance Tips:

• Have an attorney draft operating agreements or bylaws that clearly outline ownership, decision-making, and dispute resolution protocols.

3. Contract Management

Contracts are the backbone of business relationships, yet many companies neglect to draft clear and enforceable agreements. The days of a “handshake deal” are unfortunately a thing of the past. Contracts help to avoid confusion and spell out the specific rights and duties of the parties involved. 

Avoidance Tips:

• Seek legal review for complex agreements – and “simple” agreements. The use legal counsel to prepare contracts, even if you do not think you are “big enough” to use a lawyer, outside general counsel services can help to reduce ambiguity in contracts.
• Regularly review and update contracts to reflect current business practices.

4. Compliance with Regulations and Company Governance

Failing to comply with industry-specific regulations can result in fines and legal actions. Failure to comply with company governance requirements can result in a loss of liability protection.

Avoidance Tips:

• Stay informed about relevant laws and regulations for municipal, state and federal.
• Implement compliance programs and conduct regular audits.
• Ensure that annual meetings and the necessary minutes are prepared at least annually and that all reporting with the State is completed on time every year.

5. Intellectual Property Oversights

Neglecting to protect intellectual property can lead to loss of competitive advantage and legal disputes. Whether it is your company name, brand, or trademark, regardless of the size of your company, your company intellectual property needs to be protected and monitored.

Avoidance Tips:

• Register trademarks, copyrights, and patents as needed.
• Monitor and enforce intellectual property rights.
• Conduct intellectual property audits to identify and protect valuable assets.

6. Employment Law Violations

Missteps in employment law, such as improper classification of employees or failure to adhere to labor laws, can lead to costly lawsuits.

Avoidance Tips:

• Classify employees correctly and comply with wage and hour laws. There is a big difference between a W2 employee and a 1099 Independent Contractor.
• Develop and employee handbook with clear employment policies and procedures.
• Provide regular training on employment law compliance.

Conclusion

Avoiding these common legal mistakes requires proactive planning and ongoing diligence. By understanding and addressing these issues, businesses can help to protect themselves from legal risks and liabilities, and focus on growth and success. Regular consultation with legal professionals is essential to navigate the complexities of business law effectively, so that you can focus on the important part – growing a successful business.

At McDonough Law Group we provide business services for all businesses big and small. Whatever your needs, McDonough Law Group can assist by providing an array of services from in-house and outside corporate counsel services to small business legal subscription services that allow companies access to superior legal services on an as needed basis. Let the attorneys at McDonough Law Group perform a business stress test on your company to assess any risks and liabilities, and to proscribe the action steps needed to fix any such exposure. Contact us to schedule an appointment.

Understanding Business and Corporate Compliance: A Key to Sustainable Success

By: Marc Summers

Introduction

In today’s complex regulatory environment, business and corporate compliance have become essential components of organizational success. Compliance refers to the adherence to laws, regulations, guidelines, and specifications relevant to business operations. This article explores the significance of compliance, its key components, and its implications for businesses.

The Importance of Compliance

Compliance is crucial for several reasons:

1. Legal Protection: Adhering to laws and regulations helps businesses avoid legal penalties, fines, and lawsuits, and helps preserve the liability protection vital to business owners, members or shareholders.
2. Operational Efficiency: Implementing compliance measures can streamline processes and improve operational efficiency.
3. Risk Management: Identifying and mitigating risks through compliance reduces the likelihood of financial and operational disruptions and the associated costs related to such disruptions.
4. Reputation Management: Compliance enhances a company’s reputation, building trust with customers, investors, and partners.

Key Components of Compliance

1. Regulatory Compliance: Involves adhering to industry-specific regulations, such as health and safety laws, environmental laws, municipal and state regulations, and financial reporting standards.
2. Corporate Governance: Ensures that a company operates with integrity and accountability, involving policies and procedures that guide decision-making and corporate behavior that help preserve liability protections for a company’s owners, members or shareholders.
3. Ethical Standards: Establishes a code of conduct for employees, promoting ethical behavior and decision-making within the organization.
4. Internal Controls: Involves systems and processes designed to ensure accuracy and reliability in financial reporting and operational efficiency.

Implementing an Effective Compliance Program

1. Risk Assessment: Identify potential compliance risks and develop strategies to mitigate them.
2. Policy Development: Create clear policies and procedures that align with legal requirements and ethical standards.
3. Training and Education: Regularly train employees on compliance policies and ethical standards to ensure understanding and adherence.
4. Monitoring and Auditing: Continuously monitor compliance efforts and conduct regular audits to identify and address any gaps.
5. Reporting and Response: Establish a system for reporting compliance issues and responding promptly to violations.

Implications for Businesses

Non-compliance can lead to severe consequences, including legal penalties, financial losses, and reputational damage. Conversely, a robust compliance program can enhance a company’s reputation, improve operational efficiency, and foster a culture of integrity and accountability.

Conclusion

Business and corporate compliance are integral to sustainable success. By understanding and implementing effective compliance measures, organizations can protect themselves from legal risks, enhance their reputation, and achieve long-term growth. As the regulatory landscape continues to evolve, staying informed and proactive in compliance efforts is more important than ever.

At McDonough Law Group we provide business services for all businesses big and small. Whatever your needs, McDonough Law Group can assist by providing an array of services from in-house and outside corporate counsel services to small business legal subscription services that allow companies access to superior legal services on an as needed basis. Let the attorneys at McDonough Law Group perform a business stress test on your company to assess any risks and liabilities, and to proscribe the action steps needed to fix any such exposure.

Contact us to schedule an appointment to make sure you are protected.

Horse Boarding Liability

By: Crystal McDonough

Whether you are boarding your horse or providing boarding facilities and services you should always have liability insurance, a well-written boarding contract, and waivers and/or releases as well as posting the standard liability signage per your state’s equine laws.  If you are just starting a boarding operation you might want to consider setting up an LLC or corporation for the business as well so that all business activity falls under the business entity rather than you personally.

Insurance
A few types of insurance for horse boarding facilities includes (but is not limited to) fire and theft, commercial liability, and care, custody, and control policies.  An insurance provider will be able to provide more comprehensive details regarding the types of insurance coverage needed depending on the types of activities and boarding at a facility.  In addition, horse owners should also carry sufficient insurance to cover their horses for potential liability arising from leasing, lessons, guests, riders, veterinary care, barn/stable rules, safety, and state specific equine laws.

Boarding Contract
A well-written boarding contract should cover more than just payment terms and length of stay.  It should include specifics related to feed and feeding schedule, bedding, exercise, timing and frequency for cleaning stalls and paddocks, veterinary care, injuries and/or illness, special care, and decision making when the horse owner is unavailable or absent.  The contract should include details regarding the types and policy limits for insurance policies covering the boarding facility and covering the horse.  The contract should also include terms for default and boarding facility remedies in the event of a breach of contract by the horse owner. 

Let’s face it, horses sometimes find ways to break a gate or a fence.  My horses seem to find ways to break our irrigation pipes every year.  A good boarding contract should address if the horse owner pays, the barn or stable pays, or if there is a joint payment of some set fee for damages caused by the horse.  What happens if the horse causes injury or death to another animal or a person?  Most boarding contracts include a risk of loss or injury section that requires the horse owner to assume these risks.  

Some boarding facilities require the horse owner to provide a warranty regarding the horse’s health.  This warranty may require that a horse be free from diseases whether infectious, transmissible, or contagious prior to boarding.  This warranty also requires the horse owner to notify the boarding management if the owner has any reason to believe the horse has been exposed to or becomes sick from any such diseases.

Disagreements can arise between boarding facilities and horse owners so it is important to include some type of dispute resolution section in the contract such as mediation, arbitration, or some other terms for resolving disputes.

Liability Waivers and Releases
It is not enough to hang the standard liability signage per your state’s equine laws.  Each person who may be around or near a horse or may ride a horse must sign a waiver and release in case of accident, injury, or death.  This policy should apply to the horse’s owner, family, guests, students, facility employees or volunteers, and any and all persons who may be near the horses or are participating in a an activity at the facility. 

Waivers and release agreements (also known as hold harmless agreements) typically cover the rules and risks related to riding or handling horses and are meant to protect the boarding facility from liability.  These agreements also serve to notify the rider that she assumes all the risk associated with riding, handling, or being near the horse.  The rider acknowledges in writing that she understands all the risks and assumes all liability in case of injury or death.  Each state has statutes governing the liability and assumption of risk for equine activities that should be included in a waiver or release agreement.  It is also important to include that the rider assumes the risk of damage to property or other animals when handling or riding the horse.

Liability waivers and releases can be useful in providing a strong defense if the boarding facility is sued and can assist in dispute resolution situations.  In addition, they might discourage a person from filing a lawsuit.  However, no waiver and release or contract can prevent a person from filing a lawsuit.  It is important to have the proper insurance coverage along with well-written and enforceable contracts, waivers and releases that are in compliance with your state’s laws and specific to the boarding facility and the types of activities at the facility. 

If you are boarding horses at your barn or stables or if you are boarding your horse at a facility, then you should contact your attorney to make sure you have the proper contracts, waivers and releases and that you understand your legal obligations and risks.

Contact us to schedule an appointment to make sure you are protected.

Mitigating the Risk of Corporate Veil Piercing: Strategies for Business Protection

By: Marc Summers

Introduction
Corporate veil piercing is a legal concept that allows courts to hold a company’s shareholders or directors personally liable for the company’s debts and obligations. This article explores the implications of corporate veil piercing and provides strategies to mitigate its risks.

Understanding Corporate Veil Piercing
The corporate veil is a legal distinction that separates the identity of a corporation or LLC from its shareholders/members, protecting them from personal liability. However, courts may pierce this veil if the corporation is found to be a mere facade for personal dealings or if there is fraudulent conduct.

Implications for Businesses

1. Personal Liability: Shareholders and directors or members may face personal financial responsibility for corporate debts.
2. Reputational Damage: Legal actions can harm the company’s reputation and stakeholder trust.
3. Financial Loss: Piercing the corporate veil can lead to significant financial losses for individuals involved.

Strategies to Mitigate Risks

1. Maintain Corporate Formalities: 
– Hold regular board meetings and document minutes.
– Keep accurate and separate financial records for the corporation.
– Ensure compliance with all corporate governance requirements.

2. Adequate Capitalization:
– Ensure the corporation is adequately funded to meet its obligations.
– Avoid commingling personal and corporate assets.

3. Transparent Operations:
– Conduct business transparently and ethically.
– Avoid fraudulent or deceptive practices.

4. Proper Documentation:
– Maintain clear and thorough documentation of all business transactions.
– Use written agreements for all significant business dealings.

5. Separate Identities:
– Clearly distinguish between personal and corporate activities.
– Use the corporation’s name on all contracts and legal documents.

6. Legal Compliance:
– Adhere to all applicable laws and regulations.
– Regularly review and update compliance programs.

Conclusion
Mitigating the risk of corporate veil piercing is essential for protecting shareholders and directors from personal liability. By maintaining corporate formalities, ensuring adequate capitalization, and operating transparently, businesses can safeguard their corporate structure. Proactive measures and adherence to legal requirements are key to preserving the integrity of the corporate veil.

At McDonough Law Group we provide business services for all businesses big and small. Whatever your needs, McDonough Law Group can assist by providing an array of services from in-house and outside corporate counsel services to small business legal subscription services that allow companies access to superior legal services on an as needed basis. Let the attorneys at McDonough Law Group perform a business stress test on your company to assess any risks and liabilities, and to proscribe the action steps needed to fix any such exposure.

Contact us to schedule an appointment to make sure you are protected.