How not to get sued. A thread. Oh good, I love a good Twitter thread. Are we gonna do that live? Ex-Paul. Ex-I'm sorry. My name is Rich Cioti. I'm Paul Ford. We're the co-founders of a board, which we'll tell you about in a second, and this is the aboard pod. It is. [♪ INTRO MUSIC PLAYING [♪ Oh, yes. I'm doing fine. We had some technical glipses with the last one. Now, we have now- It sucked. We've spent hours unpacking that, and now we have a pretty good setup.
To clarify, this is the podcast formerly known as Xeody and Ford Advisors. Correct. And we are also on YouTube. If you want to keep listening, just audio and not see our faces. Sorry. I mean, sad for you, but if you want to see our faces and some cool visuals, we're on YouTube as well. Sorry, potential spam was calling. Spam likely. No, it's potential spam now. They grew it up a little bit. I have an idea. You know spam like the canned ham? Yes, I do.
I think spam likely is a good name for the canned ham. Ooh, interesting. You don't know it's in it, really. Spam likely. Potential spam. Anyway, welcome to the aboard podcast. Abords are start up. We'll talk about it a little bit later. What do you want to talk about, Paul? Well, you know, we like to talk about big broad subjects that are relevant to people in business and who are trying to build careers. And so we think about that. What's going to be useful? What's going to be helpful?
And one that popped into my head the other day and that we both should talk about is relates to how we started our business together, which is you used to be a lawyer for like a minute. For a minute. For a minute. You went to law school. You loved the law. I love the sort of deductive reasoning aspects. I used the law. Law school teaches you to think a certain way. It's not like med school where you sort of ingest information. Every exam in law school is an open book. Exam. It's a process.
It's a process. It's a way of thinking. And also, it also teaches you how to handle an adversarial situation. In a lot of ways. So yeah, I went to law school. My dad said I had a trusting face and he said you should go to law school. That is a lot. We won't even break that down right now. He used to watch Matlock. Do you know Matlock? Hell yeah, I know Matlock. I put it in Western friendly lawyer. For those who are younger than 200 years old. It was. It was Andy Griffith.
Andy Griffith. Yeah. And it was sort of like an old timey actor. And he's a good goodly lawyer. It's kind of in there with murder. She wrote like I'm bet that Matlock was on murder. She wrote Angela Lanzberry. It was on Matlock. Yeah. Yeah. You don't get that good crossover. Like you used to get what you all. Well, they would show up. Yeah. Yeah. Yeah. Yeah. Yeah, yeah. They would just call, they would do a night court. Yeah. And it would show up in like Simon Feld or not.
Yeah. Simon Feld was too cool. There was another one different strokes. Yeah. And the girl's school was called. Oh. Facts of life. Facts of life. Yes, there was the whole like Norman Leran Pirer. Like all the Jefferson's and all the family. Yeah. So what you have to understand is people who grew up when Rich and I grew up saw the world as a holistic connected. to connect to our own butter. Everything exactly. Everything was part of it. Anyway, okay. Yes, I have a lot of agree.
So let me, I took the bar exam, pass the bar exam, okay? It's hard. But had to formally retire. You have to retire. You have to retire. Yeah, you have to take continuing education. I'm an education work ethic. Yes, fair. That's for those. Okay, so for those who don't know, Rich's work ethic is a little more profound than mine. So he took that well. Okay. Okay. So here's the thing. We start this company. Yeah. You are good at difficult conversations. You welcome them. You lean into them.
You don't love them. No, I hate them. I'm terrified of them. And I'm really scared as a first time business operator of getting sued. And let me explain why we didn't do anything. I'm not doing anything bad. But I'm in a world now of contracts. I'm in a world of taxes. I'm in a world of obligations that I don't fully understand. Yeah. And I was really like genuinely, when you don't understand something, it becomes very scary.
You're very scared of that letter showing up on legal letterhead saying you owe us this money or it's rough. You get emails from people who are like, hey, in a contract, it says this and so on. So that I had some of those dynamics. And then before we started the business, I'd been an editor and actually one of the funny things would be in editors. And you people think you're like making magazine pieces better.
But what the first thing you have to do is manage litigation risk for the magazine because somebody always wants to sue the magazine. Sure, sure, sure. If facts are wrong, they go wrong and it tees you a lesson. Yeah. Or threatened to sue or send a letter or whatever. Exactly. And so put the correction out and we're good. I mean, it depends. And so I thought we could talk about how to avoid getting sued. Yeah. So let me disclaim first. This isn't formal legal advice. That's right.
We're not lawyers. Let's get, let's break this into two key pieces of advice. Okay. The first is, well, let's get the bad news out of the way. Okay. Anybody can sue anyone. Like anybody can sue anyone. I mean, that is just got to get some paperwork. You actually don't even need a lawyer. You could sue someone without a lawyer. Anybody can sue anyone. Well, anybody can, not only that, just to back up a second. Anybody can hint that they may sue someone or threaten that they may sue someone.
I can send, I could go make up, I could put my letterhead. I could make it look all swirly like Jacobian Myers. Yes. Small caps. And I could send you a letter right now saying, right? Yes. You haven't met your obligations in our partner. I mean, the threatening legal letter is sort of the first sort of salvo in a confrontation that could lead to a lawsuit.
One of the fundamental lessons about that too, which I had to internalize is that the threatening legal letter, if you're not someone in this world, feels like the worst day of your life. It's scary. And for the lawyer, it's Thursday afternoon and they build an hour and a half.
Yeah. And look, there are many circumstances that legal letter may actually be the first step in a lawsuit or it may be a bully tactic to get you to do something like stop doing something or pay a bill or whatever it may be. You have to take it seriously. You should read the letter. You should read the letter. You shouldn't hide from that. Yes. You should not. But it in no way means that your life is over that you are out of control in this situation. That's a lot of control. That's right.
So let's talk about most people who get the letter. Mm-hmm. Aren't shocked by the letter. Yeah, that's true. Usually after like five bad phone calls and a couple of terrible meetings is like, we're done. Every now and then there are those people who just love the sue. Like that sucks. Yeah. You don't really get that at an agency. You don't like somebody, you're like your shoe store. We'll get sued because the guy is just like, I didn't like the shoe.
All the tigious person or a neighbor that's cranky and hates the fact that you painted your house yellow and the store to them. They'll sue you. Yeah. I mean, people sue people. Like we said earlier, anybody can sue. Well, also the person who does that who is like the serial lawsuit sander is they're hitting like a hundred people, right? Like it's actually be a fan out. Yeah. Yeah. And then there's just amounts of like, it's not really power, but kind of like notoriety because they do this.
So they have a kind of loud voice in the community because they sue everybody. So there's that. But that's kind of an outlier and the judge tends to know them and be like, what are you doing here? Damn, damn, get out of here. Yeah. All right. So that's one. Yeah. So how'd you get there? And it's going to feel a little bait and switchy, I guess. And if you got to that point, it means something else broke down. It means things melted down.
And if things go silent, if things got bad and then you didn't talk to each other for like three weeks, and it's gotten quiet, it's a bad scene, right? And what's happening is it's not that people are loyering up. They're stewing, right? The communication is broken down. And so what this comes back to and it's kind of a curveball here in terms of advice because it has less to do with the law and more to do with relationships.
You said earlier, when I started my company, I started to freak out, I freaked out about getting sued. And that's frankly well-founded. You're essentially, if you have a company of 30 people and you're dealing with five vendors and you're dealing with six clients, you effectively have 30 relationships, 40 relationships in your life, your landlord, your clients, your vendors, your employees, you now have many lines. This is real.
And like you might be on great terms with your employees and very low risk there, but your landlord is a whole nother world. It's a whole other world. It's involved in all kinds of things. You threw a party where somebody kept urinating out the 11th floor window. Right. And the landlord got a huge fine from the city or something. No, that's your problem. And they're going to come back at you or they're, but now look, again, you say Mr. Landlord, this was embarrassing and terrible.
Can we talk about this? And then by doing that, when people see each other's faces, there's like the likelihood of diffusing the situation goes up like 40%. You really does. Phone calls aren't as good. You know what I bet was? You got to see each other. You know what I bet was great for lawyers. pandemic. Interesting. Because nobody's stopping by. Nobody's having to stop and buy. Nobody's stopping by. And the zoom doesn't cut it. No, because the zoom is all about getting to some.
The zoom is about getting to the outcome. That's right. So how do you not get to that point? Before you get there, there was a thing you used to say a lot because you saw my anxiety about this. And we were every organization that's kind of worth its salt is writing a lot of contracts. Right. Like there's just contracts flying around. And I always felt ours were short and that was sort of by design. And you were like, you got to understand anyone can sue anyone else.
That's principle one. Yeah. What I do is that the contract is not don't the contract is binding. Everybody signed it. But the reality is that the contract is a recipe for what to do. It's instructions for what to do when things go wrong. Yeah. It is not. It's not good. It's not it doesn't it isn't the relationship. No relationship has a connection to the contract. But it isn't the relationship. That's right. It's subtle. But what that means is that.
And what this really means is when when we have that one client, okay, who would love to go back to the contract. She'd paste clauses in the agreement. And look, let's say the contract kept hiring us. Right. Like she had a particular view of how this was a good relationship. Yeah. Yeah. Yeah. She had a particular view of how services worked. Like we could have been a caterer. Yes. Frankly. And look, how do you get there?
When let's say the contract says, we're going to do the thing for you and you pay us on the 30th of every month. Okay. Okay. And then the third 30th of the month comes along and comes and goes and nobody pays. And then we pick up the phone a week later. We don't want to be too aggressive and say, hey, you didn't pay your bill. It's like, well, I'm not paying it. Why not? Well, I don't think you fulfilled your services. What do you mean? We did fulfill our services. Well, what about this?
And then a lot of pasted clause from the agreement. This is a client. That's unusual. Well, you know when that happens, it's when the company on the other side tanks and they have to get out of their obligations. Trying to get out of it. So instead of being like, look, I can give you 10% and then after that, I have no money. Because frankly, I would have been empathetic to that. In these situations, they often, like, their bold dog comes and is like, you know, you never did these five things.
I'll tell you a story. I'll tell you a second story from real world experience. We had an agreement with one of the largest investment banks in the world and they wanted out of it. And they wanted out of it and they said it very matter of fact like we're out of it. And then I looked at them and this is not a normal room to be in. I'm a nobody. And these were like six partners at this firm. And I said, you can't do that. You signed the contract. Yeah. And it wasn't a threat.
It was like, and then they understood how about, and then I went into constructive mode. They weren't happy. Sure. We needed to rejig the relationship. I'm not going to fight them. They have an entire floor of lawyers that are just bored. This is right. Yeah. Yeah. Yeah. Again, like I think the contract also people think that with a contract they have superpowers. Yeah. So you'll sign this like giant agreement with a giant company.
And then they'll come in and they'll completely alter the rules of everything. And this is where like you have to be a little proactive. You have to write them memo and it doesn't. They have to sign it. You have to send an email saying like, it just wanted to let you know. Yeah. Pretty request. We're going to rejigger this schedule a little bit. And like we're probably not going to get these three things for you, but we are going to get the other three things.
Yeah. And they'll write back and go, looks good to me. Humans diffuse conflict when they see each other. That's a fact. Like that's why the UN gets together or that's why people have conferences. That's why there's the summit meetings and that's why companies and partners get together. Those get together aren't just to land business. It's also to maintain those relationships, right? And by doing that, when things do go wrong, you can say, Jim, let's figure this out.
We kind of screwed up, but you can't tell me we screwed up for $100. Whereas we probably screwed up for $30. Where it'd be like, oh, I don't know, Rich, how about 50? And then you work it out. This is a digression, but it's worth a minute, which is I actually think a lot of the work from home to be a lot of the people on one side of that to be didn't have relationships or dynamics where they were managing relationship risk. And if you're just checking in code, you don't have to go to the office.
I get it. But where the managers get confused by this, is there like, I have to be there. I have to look people in the eyes. You have to calm everybody down. And I feel like that dynamic, because one side feels that in their bones and the other is like, what the hell are you talking about? Right? Just a little tangent there. Yeah. Anyway, regardless. Okay, so there's all this. So I come in. So A, we tell people we're going to help them avoid getting, and now we tell them they can't.
And now that we tell them the contracts are kind of meaningless. No, they're not meaningless. They do represent the responsibilities and obligations of the parties. Like, I have to deliver bottle milk to you every day. But the reality is, you need to know what's in that contract. You need to know what's in the contract. And you need to externalize that as a relationship where you're actually not doing your job. You have to. You have to.
Uh, if things go south, the contract is not merely a recipe for what, what happens when things go wrong. It's a blueprint blueprint for a relationship that needs to be evaluated daily. It needs to be 10. I wouldn't say evaluate it. I would say nurtured and tended to. Okay. Um, so nobody looks at a contract and goes time and nurture. Look, if you're a business and you want more business, you need to nurture it anyway. Like if you're not doing that, and I want more business.
You want more business. If you want to avoid conflict or diffuse conflict when things go wrong, you want to, you want to maintain the relationship any. It's all, it goes back to relationships. Lastly, I want to talk about one and on the most boring possible thing. You ready? Yeah. Insurance. Well, all right. Okay. But this is another thing, which is like, what is liability insurance? How does that all work? Because that was another thing that kind of threw me.
Everybody demanded we have it and we had errors in omissions and like, what is that? When you are providing goods or services to someone else or frankly access to a piece of property, um, you need liability insurance. If you have a clothing store and someone comes in and they just mopped it and they slip and fall, they could sue me. Okay. And when they sue me, that could wreck my whole business.
They could say, oh, you broke my, I broke my back, you give me a million dollars and I don't have a million dollars. So you get what's called liability insurance. That's called premises liability, which is essentially whatever happens on your premises, um, is covered by you pay some insurance money. And if somebody brings a lawsuit against you, the insurance company steps in, puts lawyers on it and actually pays out. Okay. So they handle it for you.
If you're in consulting firm, there's something called errors and omissions insurance. So if they say, hey, you delivered the software to me, but the data is leaky and everything's in, in the wrong language or something. And you ruin my, my, my customer reputation, my, my reputation with my customers. I can pull up that policy and say, hey, they, this and this and this and they're going to cover it. Now, is it necessary?
Yeah, it is necessary because you can have severe, um, events that could do in a store for business or could do in the most damaging brutal liability is, um, design defect liability. If you designed a car and the brakes, the way they worked with occasionally jam and not work, and that's a design defect, not a manufacturing. You know, I mean, like one of the cars was, the brakes were installed poorly, you got one issue. Instead, you have a design defect, which means everybody's under threat.
It needs a class action law. It's a huge, huge deal. Anyway, um, insurance is part of protecting yourself from lawsuits. Here's, I think, another thing, I think this is probably the more useful sort of piece of advice to share. Somebody can weaponize the law. If somebody is, has it out for you, um, they can, they can use the law to create a lot of headaches for you. And that could be an employer who wants to get someone fired. They could rummage through their emails.
That could be an employee who wants to get their employer in trouble and they could say he, they said something to me. So it's, it's sort of a, let me bolt on one more piece of advice, which is be careful what you do and what you say and do less of it and say less of it. This is, this is a big lesson for me, which is the way I summarize it is irony doesn't scale. Like you love to say ironic things if you're like, you think of yourself as a funny, serious person.
Yeah, yeah, yeah. Absolutely. And I let it be drooled. I'll be like, oh, well, looks like this is a disaster. Well, they're going to your career. Yeah. And, um, you know, I remember there's a book called agency about running an agency. One of the pieces of book. I need to read that book. That's right, I mean, we're going to have a book. You're going to have a book. I'm going to say that too, but that's what I'm going to say. I'm going to say, uh, I'm going to have a book today.
I'm going to have a book today. I'm going to have a book today. One day, one day, one day, um, there is a piece of advice in it, which is, don't joke about saying like you're fired. Oh, like, because one day you're at the fire of the person. Oh, like, you're not actually firing them. You're making a joke about it. It's like they brought in like a, uh, the wrong kind of crumb cake and it's like, you're fired. Yeah. Yeah. I don't do that. like you're going to work. You're not buddies.
You're not buddies. Well, it's tricky. You actually have a relationship. That is bound by a contract. Well, we have an operating agreement for our businesses. Yes. And we're very, very good friends. We never go to the agreement. That would be... You never... I got to say. That would be a disaster. That's a bad thing. It means it's broken down between us. If we haven't gone out to drinks to talk about it. Exactly.
Look, we've had our disagreements about where to take the business at some different points. We just have to talk it through. Yes, that's right. It's kind of like the same advice you get for marriages and friendships. Except the marriage is not... It's an easy legal construct, but that's not the foundation. The legal construct comes after the marriage. The relationship comes after the contract. Yes. That's right. That's the big difference. So wait, let me break this down really quick.
So if you are just a freelancer, read some FAQs, get out there, learn a little bit, maybe you need a little insurance. Most likely your clients would ask you for it. Sometimes they do. That kind of thing. If you're starting a business, go see a lawyer. Yes. It's not expensive. If you're starting a business, it means you've got some bigger ambitions. Spend a little bit of it. You don't need a white shoe firm. Just go get a lawyer that can help you out.
Literally someone who's done it before, cost you like $1,500. You get all the right paperwork. And then you have a lawyer. So that actually feels good because if somebody calls or somebody says like, I don't... And what you did was wrong, you know you can call someone and be like, hey, what's going on? And then they'll be inside. It is a big relief when you forward a letter along to a lawyer and he just sort of shrugs and say, don't worry about it. It's a very big issue.
It's the same as like hearing from a doctor that the tests came back from. 90% of the time, if something happens, a lawyer will just be like, well, yeah, exactly. I'm going to write him a letter. Yeah. And when they see there's a lawyer on the side, lawyers love to fight. They love to fight with other lawyers. Yeah, but they also know each other all the time. I mean, we don't near cities a big place. What are you doing here? Yeah. It actually comes down to that.
So, and then as the organization gets larger, now it's actually like real and you need everything buttoned up. Yes. You need really good advice. Yes. But that first ten in place, one lawyer that you know is plenty. Yeah. And get some insurance. What? We have insurance at this firm, don't we? No. Oh my God. We don't. Not yet. Which firm are you talking about? A board. Oh, what a segue. A board.com, collect, organize and collaborate. It's a free software as a service tool. It's on the web.
But the mobile app is coming very soon. I'm going to check it out. Join us for free. It's very cool. It's a great way to organize stuff. I'm going to say something utterly real. I've been using it a lot lately. Yeah. And there, there have been many points in development this software. I'm like, I know why we don't have a lot of users. Yeah. Yeah. I now don't know why we don't have a lot. Well, we haven't marketed the tool. Well, there we are. No, I don't understand. No one knows it exists.
But when I sit down and use it, I'm like, millions of people should be. It's very useful. It's pretty good. Yeah. Check it out at board.com. And thank you for listening. If you're on YouTube, thank you for watching. Subscribe, like, and turn on the notification button. That's right. I got a haircut for this. You're looking good, Paul. All right. You're going to be on the right. Have a lovely week. Bye.