Tuesday, January 24, 2017

Do You Need a Lawyer?

I am joined today by Paul Simer, owner and proprietor of Nerdvana in Jackson, Tennessee.  This is the first of what I hope will be a great series of interview-style articles here on The Backstage Pass.  The next one is already in development with a retailer who is a member of the GAMA Retail Division Board.  But that is then, this is now.

I also opted out of my MTG Aether Revolt post-mortem, as I realized after revisiting my last several entries that there is nothing new to say in the immediate aftermath of yet another release.  I have a rather math-y article about the Magic card business due up in the near future that I think will scratch that reader itch.  Besides, Paul himself posted a great article today about the situation in the Magic category, in which he says much of what I would want to have said.

Paul and I have gathered today to discuss a matter of great importance that many retailers seem unwilling to address: How can you (a store owner) tell whether you need a lawyer?
Paul Simer, as seen on TV

BAHR: Hey, Paul, you're a fellow retailer.  What do you think I should do about my landlord not fixing our mold problem?

SIMER: You need a lawyer.  Hey Mike, you're a fellow retailer.  What do you think I should do about my employee embezzling from me?

BAHR: You need a lawyer.  Hey Paul, what do you think I should do about the state Department of Revenue imposing a tax lien on my inventory?

SIMER: You need a lawyer.   Hey Mike, what do you think I should do about the store two states over that's using almost the same name and trade dress as mine?

BAHR: You need a lawyer.  Hey Paul, what do you think I should do about this guy who slipped and fell and broke his leg in my comic aisle?

SIMER: You need a lawyer.  Hey Mike, what should I do to make sure my sales tax collection on tournaments is legal?

BAHR: You need a lawyer.

SIMER: What if I check with my accountant?

BAHR: Do that too.  But still, Lawyer.

SIMER: What if I check with my brother who is in law school?

BAHR: Lawyer.

SIMER: What if I check with these smart customers I have?

BAHR: Lawyer.

SIMER: What if I crowdsource an answer from other retailers on Facebook?

BAHR: You need a lawyer.  But what should I do about the co-tenant in my building flooding my storage room?

SIMER: You need a lawyer.

BAHR: What if I check with my landlord?

SIMER: Do that too.  But still, lawyer.

BAHR: What if I check with my parents?

SIMER: Lawyer.

BAHR: What if I make up a plan as I go along?

SIMER: Lawyer.

BAHR: What if I hope the problem will go away?

SIMER: You need a lawyer.  You need one really, really badly.

BAHR: Okay, tongue-in-cheek aside, a lawyer isn't always necessary, and they don't work cheap.  Are there times when it's safe to go without?

SIMER: You should always at least consider hiring professional legal help.  But basic problems ought to be within your realm of business acumen to solve.  If there are transients congregating in front of the smoke shop next door and scaring off your customers, that's not really a lawyer issue -- yet.

BAHR: Right.  That's an issue for you to discuss with the shop owner, then with your landlord, then with the local constabulary, and then, if nothing else works, then you have your attorney fire off a cease-and-desist and threaten to go further.

SIMER: I've approached my lawyer about doing a C&D three times.  One time he's done it, and the other two times he's talked me out of it, and that was just as valuable.

BAHR: What about the ill fortune that brought a smoke shop to your proximity? Lawyer?

SIMER: One would hope you communicate with the landlord.  But my lawyer has been wonderful for me for general business stuff.  Stuff like, "I'm about to move, what does 'broom-clean' mean in my lease?  Do I have to prime the walls, or can I just putty/sand and leave them?"  My lawyer has seen it all and that really helps.

BAHR: Similar for me.  My current landlord has been great about playing ball with me and mostly solving things that have come up.  But we also pressed to get lease exclusives and exclusions.  Nobody needs a neighbor that will poison the plaza.  That's where a lawyer came in.

SIMER: Exactly.  And if the landlord is more adversarial, or even just uninformed, there is danger.

BAHR: Gordon Lugauer, a practicing attorney and owner of The Board Game Barrister in Milwaukee, did a GAMA talk about that, where he gave great detail on issues of subrogation, subordination, and liability in a lease.

SIMER: I remember.  I think a lot of people may get tripped up by subordination and estoppel stuff.  A landlord may present a seemingly boilerplate amendment that their bank wants all tenants to sign before they'll loan the landlord money.  It looks fine, but then your lawyer may spot that it significantly changes your responsibilities and protections in the event the landlord defaults and the bank takes ownership of the premises.  Not cool.

BAHR: Gordon isn't on the schedule for GAMA 2017 but hopefully he will make a return down the road because the immense value of an attorney's guidance is something too many retailers go without.

SIMER: Speaking of attorneys who own game stores, what about you?

BAHR: I don't count.  I am not licensed to practice, and even in my legal career such as it was, I was an administrator and analyst, not a litigator.  As I tell people who ask me, my opinions are not legal advice, and I am nobody's lawyer, not even my own.

SIMER: Would you say a legal education like yours informs your business judgment?

BAHR: Sure.  It's nice to know some of the minutiae, and it saves me money to do my own payroll and such.  I still have a certified accountant do my taxes and those of the business.  But it's no substitute for a real lawyer, and yet fewer businesses are turning to professional legal assistance today than in years past.  I graduated from ASU Law at the end of 2006, and then got my job in government administration in 2007, then around 2008 there was the Great Recession, as you know.  Law graduates couldn't find or keep a job for love or money, because of the tightening of liquidity across all of business and commerce.  Primarily this meant much less demand for lawyer services as transaction volume in high finance plummeted.  But more than that, companies decided they didn't want to pay to be litigious anymore.  They decided a certain amount of loss due to bad actions of competitors, customers, or elsewhere in the market would ultimately be a small price to pay compared to the cost to continue to litigate everything.

SIMER: They accepted a dirtbag dividend, if you will.

BAHR: Exactly.  And it changed the entire mindset of the legal industry.  Business changed processes so as to minimize exposure to the risk of litigation itself.  Not just changing business processes to make them less prone to losing a lawsuit, but changing to make legal action less likely in the first place.

SIMER: Best way to avoid the punch, don't be there.

BAHR: This was the mindset in late 2011 when I started planning Desert Sky Games.  I wanted to set things up so that no right-minded person would ever sue us.  You can't really stop the fools, but I'll take my chances against them.  And we had an attorney who reviewed my initial lease and formative business documents to protect me from defects in my own work.  I used to hate my lease due to its cost, and resent all the burdens it imposed on me, but time has proven the value of the legal work we purchased.  Changes he made have benefited me greatly as circumstances came up, and my lease is sufficiently tenant-leaning that my landlord insists on removing several clauses if and when we renew.  When our lawyer got picked up by the County Attorney's office, he had to leave private practice, and I've been able to put off fully engaging an attorney ever since.  I've gone too far the other way now, and I need to follow my own advice here and get back on the professional services plan.

SIMER: The time to engage an attorney is early, when it's just small stuff, so they know you and your store and don't have to start from ground zero when you need something big.

BAHR: Indeed.  It's going to be this spring.  I have a lot going on right now and I'll need the execution of documents and cleanup on some litigation I should have done long ago, so I need to get that done.  I've been passing up money and letting problems sit unaddressed.

SIMER: You need a lawyer.

BAHR: I could just crowdsource an answer on Facebook, though.

SIMER: Don't make me come down there.

That wraps up this week's edition of The Backstage Pass.  I hope you'll trust in the earnest advice of Paul Simer and myself and get thee to a law office before it becomes critical.  You don't have to go to Biglaw or a plaintiff's firm; in fact, you're probably best off in bang for your buck with a local general practice attorney, considering that most legal issues a comic or hobby game store encounters are going to be pretty mundane, legally speaking.  Beyond general practice, other specialty areas that might be relevant to you include commercial real estate, labor law, consumer law, landlord/tenant law, trademarks, and resort/leisure business law.  The best place to start your search is networking in your community, but if you come up with no leads there, the Martindale-Hubbell Lawyer Directory is a great online resource.

Thank you Paul for your time and insight!

1 comment:

  1. On a similar note, when I am asked by new or prospective store owners about the need for an accountant, I always tell them. "GET ONE!" When I asked my accountant (whom I've known almost 25 years) whether I could do the taxes for my own business, her reply, to paraphrase, was as follows:

    "Just as you do your personal taxes with TurboTax, you are a smart guy and could probably do your business' taxes. However, and most importantly, do you get paid to keep up with all the little changes in tax laws that happen constantly?"

    That was the question that instantly made me decide to use an accountant for all of our State and Federal taxes. Note, our payroll taxes are handled by ADP, who we use to do our payroll.