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From AI to M&A: Navigating the New Legal Frontier · Business Roundtable

0:30
Speaker 1: All right, everybody, welcome back to the Business ROUNDABELE podcast.
0:34
Speaker 1: We're here for another great week, another great new guest.
0:37
Speaker 1: I am your host, David Carve Steward your business where
0:39
Speaker 1: we're bringing teams together accomplished great things, and I'm so
0:42
Speaker 1: glad to have mort A Reid of Salapoor Legal here
0:46
Speaker 1: on with us today. We've been actually having a number
0:49
Speaker 1: of lawyers on here on the podcast because there's a
0:51
Speaker 1: lot of legal issues out there. But I'm really excited
0:54
Speaker 1: to have more of a read on here and talk
0:57
Speaker 1: as we were meeting earlier about tech law, AI, cyberseurity.
1:03
Speaker 1: There's a whole lot of things evolving and so we
1:06
Speaker 1: want to help you make sure you're not missing the
1:09
Speaker 1: mark here on this and so Mauri, thank you so
1:12
Speaker 1: much for coming on the podcast and speaking to our audience.
1:14
Speaker 1: We're so glad to have you here.
1:16
Speaker 2: Thank you for having me. David.
1:17
Speaker 1: I'm glad to join you guys absolutely. So you know,
1:21
Speaker 1: I love your journey of You've come from working for
1:24
Speaker 1: other firms and I want you to share that background.
1:26
Speaker 1: And now you've had your firm and you're working with
1:30
Speaker 1: what I loved about startup smaller firms. They're all different types,
1:33
Speaker 1: but I felt like your take and why I wanted
1:36
Speaker 1: to have you on today was unique because I'm literally
1:40
Speaker 1: messaging some people today. I'm new AI technologies, new this that,
1:43
Speaker 1: and the other thing is like how do we do
1:45
Speaker 1: this safely and incorporating into our business? And You've been
1:48
Speaker 1: speaking on this quite extensively, and so I just want
1:50
Speaker 1: to say thanks again for coming on Bord and just
1:53
Speaker 1: you know, take us back a little bit about what
1:54
Speaker 1: got you into Salaport Legal and in your in your journey.
1:58
Speaker 2: Yeah, yeah, well Pappy Share, Yeah. I started off at
2:01
Speaker 2: a large international law firm, over one thousand attorneys working
2:06
Speaker 2: with Fortune one hundred companies. So I did that for
2:10
Speaker 2: almost a decade, and I realized at that point that they,
2:15
Speaker 2: you know, it wasn't a good environment for small and
2:19
Speaker 2: mid sized businesses to get citizens and counsel, and there
2:23
Speaker 2: was a real gap in terms of being able to
2:25
Speaker 2: get quality legal assistance for smaller mid sized businesses. So
2:29
Speaker 2: I left eight years ago and launched my own law
2:33
Speaker 2: practice to really focus on working with small and mid
2:35
Speaker 2: sized businesses who need a more high touch personal relationship
2:39
Speaker 2: with their attorneys. Yes, to be a partner with them,
2:42
Speaker 2: right and help them. It is over time.
2:46
Speaker 1: Yeah, and so you know you have you know now
2:50
Speaker 1: you've been in you've had your company for eight or
2:53
Speaker 1: nine years? Is that right?
2:54
Speaker 2: Years? Yes?
2:55
Speaker 1: Eight years? That's great. And I love the high touch
2:58
Speaker 1: because I think a lot of people are intimidated. Honestly,
3:00
Speaker 1: as I'm talking to other folks at business owners and leaders,
3:03
Speaker 1: they're intimidated, like I don't know if I should be
3:06
Speaker 1: talking to them, and I'm going to feel bad about
3:08
Speaker 1: myself if I asked a question or like you know,
3:11
Speaker 1: so there's a hesitancy and that can really cost them
3:15
Speaker 1: if they don't actually lean on you as a trusted advisor.
3:19
Speaker 2: Yes, yes, very much so, and that's why one of
3:22
Speaker 2: I love having that person personal close relationship with my
3:25
Speaker 2: clients so they really see me as a resource and
3:27
Speaker 2: someone they trust and aren't able to reach out to
3:30
Speaker 2: and call when needed, right because I want to help.
3:33
Speaker 2: And one of important things is you need to call
3:37
Speaker 2: your attorney. So you have to have relationship that you
3:39
Speaker 2: feel comfortable calling your attorney.
3:41
Speaker 1: Right. No, it's so important and to be educated. And
3:45
Speaker 1: I think one of the things you're doing and getting
3:47
Speaker 1: you on this podcast is another way to get the
3:49
Speaker 1: word out well, I love the Business Roundtable podcast. Here
3:52
Speaker 1: is we get people the opportunity to experience you see
3:54
Speaker 1: you in a different light. I'm getting you're getting a
3:56
Speaker 1: different audience from me and through this venue. And I'm
4:00
Speaker 1: so excited because you know, it gives people the opportunity
4:04
Speaker 1: to learn ask some questions. And we're going to get
4:06
Speaker 1: into it today on some things that I don't think
4:08
Speaker 1: a lot of people are really clear on and they
4:10
Speaker 1: might not even know how to ask the question articulated
4:13
Speaker 1: because I feel like there's so much changing in technology
4:16
Speaker 1: and and like what's you know, what is keeping people
4:19
Speaker 1: up at night? So you know, I'd love to get
4:21
Speaker 1: you explore with you some of the things that you're
4:24
Speaker 1: seeing and and and and maybe probably the law I'm
4:27
Speaker 1: sure is behind on this, but you know where like
4:31
Speaker 1: for example, I mean, AI is the big word, right,
4:33
Speaker 1: everybody's talking AI this, AI that. But what are the
4:36
Speaker 1: real like concerns that we as business owners should be
4:40
Speaker 1: considering as things are evolving? Yeah?
4:43
Speaker 2: Yeah, and you know I want to before we get
4:45
Speaker 2: into I want to make ye please something else you
4:48
Speaker 2: mentioned so you talked about you know how you you know,
4:51
Speaker 2: a lot of business owners don't know what you know
4:54
Speaker 2: what they should be keeping their eyes out for. And
4:56
Speaker 2: that is so absolutely and one of the things I
4:58
Speaker 2: always tell them what I do clients like a lot
5:00
Speaker 2: of times they may have a preconceived notion about what
5:04
Speaker 2: it is they're doing. Like I'll give an example. I
5:06
Speaker 2: had a client who thought they were doing a joint venture.
5:09
Speaker 2: So they came and said, I want a joint venture
5:11
Speaker 2: agreement with this party. You know a lot of people
5:13
Speaker 2: attorneys wouldn't even ask questions, but I said, let's get
5:16
Speaker 2: on a call. I want to really understand your goals.
5:18
Speaker 2: Once I got on the call and asked the hard questions,
5:20
Speaker 2: it wasn't a joint venture. It was a beta test,
5:23
Speaker 2: which has very differentations for intellectual property ownership and rights,
5:29
Speaker 2: and so a lot of times that's the important thing
5:32
Speaker 2: is you don't necessarily need to know what that answer
5:34
Speaker 2: is or what you think the answered is. But if
5:36
Speaker 2: you call in your attorney, the attorney will help you
5:38
Speaker 2: figure it out. Right.
5:40
Speaker 1: That's a great, great observation. I've seen that in my
5:42
Speaker 1: in my space of environmental consulting for twenty five years,
5:45
Speaker 1: where somebody is saying I need this, and like you said,
5:48
Speaker 1: well maybe, but let me if you're a savvy consultant,
5:52
Speaker 1: like you know, legal in this case, you know you're
5:54
Speaker 1: going to be able to ask them to questions and
5:58
Speaker 1: peel that away and find out is that really the
6:00
Speaker 1: real issue? And I think there's so many different areas
6:04
Speaker 1: in the legal field. We have so many different specialties, right,
6:08
Speaker 1: So like what is it that you need help with?
6:10
Speaker 1: And I know your background particularly is those that are
6:13
Speaker 1: these you know, startups and looking at some of these
6:17
Speaker 1: things and seeing evaluating them. And if I just had
6:19
Speaker 1: a great conversation the other day on the podcast with
6:22
Speaker 1: a gentleman that does funding for and like we're talking
6:24
Speaker 1: about like not asking the right questions and getting things
6:28
Speaker 1: in place. So if you do that in a silo,
6:31
Speaker 1: it's just gonna take you longer, and ultimately it will
6:33
Speaker 1: really cost you more than if you just slow down
6:36
Speaker 1: and get the help like you're saying, I read it,
6:38
Speaker 1: and then getting some key council.
6:40
Speaker 2: Here exactly, like just figuring out what actually fits your goals.
6:44
Speaker 1: Right.
6:45
Speaker 2: So that's where I always say it's better to get
6:47
Speaker 2: those discussions started.
6:48
Speaker 1: Early, right, absolutely absolutely, And we're only on today's podcast
6:53
Speaker 1: because we're gonna have to come back because we're only
6:56
Speaker 1: picking a slice because I wanted to pick this particular
6:59
Speaker 1: topic because well, it's it's one that I see a
7:02
Speaker 1: big issue on and I think it's honestly not not
7:05
Speaker 1: that many people are talking about. But there's you cover
7:08
Speaker 1: the gamut. And and by the way, everybody that's listening,
7:10
Speaker 1: we're going to have Muveri's link to her website with
7:14
Speaker 1: their LinkedIn. We'll have all that stuff at the end
7:16
Speaker 1: of the podcast, so don't worry. We'll make sure you
7:18
Speaker 1: get plugged in because she covers a wide range of services.
7:22
Speaker 1: But today I just really you know, we're going to
7:24
Speaker 1: get into a little bit more. Is technology doesn't necessarily
7:27
Speaker 1: bi U, but I figured that's that's one that probably
7:29
Speaker 1: a lot of people are thinking about hearing about, and
7:31
Speaker 1: they're like, I don't even know what to do with this,
7:33
Speaker 1: all right, so figuring like what should I you know,
7:36
Speaker 1: what should they be considering? For example, even in incorporating AI,
7:40
Speaker 1: some people are like I don't want to touch it.
7:41
Speaker 1: Other people like, I know I should, but I don't
7:43
Speaker 1: know where how to do it, what's the safe way
7:46
Speaker 1: to do it? And so you know, at a high level,
7:49
Speaker 1: I know there's a whole lot of things to consider here.
7:52
Speaker 1: But what is maybe some of the top legal risks
7:54
Speaker 1: of things you're seeing that when you're starting to integrate
7:58
Speaker 1: AIR in your workflow or customer offerings they should be
8:00
Speaker 1: considering or reading. They need your input, you know, help
8:03
Speaker 1: help to protect them, especially intellectual property otherwise you know, Yeah, there's.
8:07
Speaker 2: You know a lot of Obviously, using AI and incorporating
8:13
Speaker 2: AI is something that is data heavy, right, and there
8:17
Speaker 2: are a lot of considerations that go into its use
8:22
Speaker 2: and application in a business, particularly around considerations such as
8:26
Speaker 2: confidentiality issues, both for example, sensitive data that you may
8:33
Speaker 2: be handling on behalf of customers for example or now
8:37
Speaker 2: even but also just proprietary trade secrets and intellectual property
8:42
Speaker 2: of your own business that you want to pain secret
8:45
Speaker 2: and maintain that protection.
8:46
Speaker 1: Right.
8:47
Speaker 2: So there's around confidentiality and proprietary information. There's issues around
8:52
Speaker 2: data privacy, cybersecurity, and intellectual property rights. Uh, and business
9:00
Speaker 2: is have to think about this as not only does
9:02
Speaker 2: it come in when you are putting data into the platform, right,
9:07
Speaker 2: so you have to think about is this information that
9:10
Speaker 2: really I should be keeping confidential because inputting is now
9:13
Speaker 2: a breach of confidentiality, especially since a lot of these
9:16
Speaker 2: platforms by default use input to train, right, so they're
9:20
Speaker 2: being personal purposes, and often it can also show up
9:25
Speaker 2: and potentially an output that is given to other people
9:28
Speaker 2: because they're using it for training, right, So you have
9:30
Speaker 2: to be careful about putting in sensitive information like the
9:33
Speaker 2: categories I described as. There are confidential reality obligations that
9:40
Speaker 2: you may be bound by under law, under by contract,
9:44
Speaker 2: seen by data privacy obligations, and even with the intellectual
9:49
Speaker 2: property the output, a lot of these platforms say you
9:56
Speaker 2: own whatever rights they may have to the output. They
10:00
Speaker 2: don't actually own the rights of the output. And you
10:03
Speaker 2: publish something and there's all these lawsuits. I'm sure many
10:06
Speaker 2: people have heard about how people whose data has been
10:09
Speaker 2: used for training are suing several of these companies and
10:12
Speaker 2: platforms for intellectual property infringement. If the courts end up
10:17
Speaker 2: holding that is infringement and the output can be potentially infringing,
10:20
Speaker 2: then you, as a user who published, may be subject
10:23
Speaker 2: to a claim. So it's careful about what platforms you're using,
10:28
Speaker 2: how are you using the output. One that's very I
10:33
Speaker 2: think important that I've helped clients do who are starting
10:37
Speaker 2: to deploy the technology is put together AI policies for
10:40
Speaker 2: their businesses and training their employees.
10:44
Speaker 1: Yeah. Absolutely. I mean I think this is an ongoing
10:47
Speaker 1: issue because like you said, AI is changing and evolving.
10:50
Speaker 1: So what you could do with one platform maybe okay,
10:53
Speaker 1: but maybe an another one. And so you have to
10:55
Speaker 1: be clarifying, like you said, what what where can you use?
11:00
Speaker 1: Is how can you use this? It's challenging, it's it's dynamic,
11:04
Speaker 1: you know, and having somebody like yourself more read that's
11:08
Speaker 1: looking at this and saying like, let's try to show
11:10
Speaker 1: this up as much as possible to minimize risk, minify
11:14
Speaker 1: his exposure. And I think doing this more, you know,
11:18
Speaker 1: doing this on the front end is much better than
11:19
Speaker 1: the back end when you're like, oh man, and so
11:23
Speaker 1: you know, if you haven't looked at this, So as
11:25
Speaker 1: you're listening to more we talk about this and you're
11:28
Speaker 1: starting to incorporate this, I would say look at it
11:30
Speaker 1: because I would imagine too and clarify for free more read.
11:32
Speaker 1: I mean, depending on when we have we have we're
11:35
Speaker 1: going we're going to get into a little bit more
11:36
Speaker 1: into dator data privacy, but you know, we have you know,
11:39
Speaker 1: laws at a federal, state or local level, depending on
11:42
Speaker 1: what it is like, it's fairly complicated right on where
11:45
Speaker 1: you're at, where how your accessing data is, who's actually
11:48
Speaker 1: is in the country out of the country.
11:49
Speaker 2: You know, right, there are obligations you know, depending on
11:54
Speaker 2: what just what kind of you're having an issue. For example,
11:56
Speaker 2: if you are handling health data, there's obviously but issues involved, right,
12:02
Speaker 2: and then you have all the different state frameworks for
12:04
Speaker 2: the privacy, for the laws, and you know, a lot
12:07
Speaker 2: of these platforms aren't really set up to handle sensitive
12:09
Speaker 2: data and you will automatically be reaching your obligations to
12:13
Speaker 2: your customers given you know, if you're inputting, for example,
12:18
Speaker 2: health data into one of these platforms. So it's so
12:21
Speaker 2: and that's why I say, like, as a business, you
12:25
Speaker 2: need to create like a like the AI policy has to.
12:27
Speaker 1: Because at least at least you have something right to say,
12:30
Speaker 1: i can hang my hand at the end of the day,
12:32
Speaker 1: I've done some kind of proactive approach right to address this.
12:37
Speaker 2: Well, it's two things. I think it's one both being
12:40
Speaker 2: like taking a proactive approach, but I also think it's
12:44
Speaker 2: necessary because without having a formal AI policy, that you're
12:47
Speaker 2: having your personnel agree to bet a free for all.
12:52
Speaker 2: So a lot of there's even breaches, like Samsung had
12:54
Speaker 2: a couple of breaches last year because their employees were
12:56
Speaker 2: putting confidential proprietary information into Samsung. So you don't want
13:01
Speaker 2: your employees going out and committing these breaches that you
13:04
Speaker 2: may not even know of because you fail to put
13:07
Speaker 2: a policy in place and train them.
13:09
Speaker 1: Yeah, no, absolutely, Yeah, I think that's so so important.
13:15
Speaker 1: And if you're not, if you don't have something yet,
13:18
Speaker 1: so it's an absence that it's there's basically yeah, you're
13:20
Speaker 1: you're not. You're you're leaving yourself exposed. So rather than
13:24
Speaker 1: being exposed and then obviously adapt as you need to
13:28
Speaker 1: look at the policy and see what needs to be updated.
13:30
Speaker 1: You know, I don't know how often you're looking at
13:33
Speaker 1: these things that there is evolving, but you know, uh,
13:37
Speaker 1: just have a check up, right, some kind of audit
13:39
Speaker 1: if you will.
13:40
Speaker 2: Yeah, I think it's you know, it's always good I
13:42
Speaker 2: think for any kind of policy or contract everything, you know,
13:46
Speaker 2: I think it's just good to have. I would tell
13:48
Speaker 2: clients like end of year, beginning of the year, it's
13:50
Speaker 2: a good time to just have a checking to see
13:53
Speaker 2: second year attorney say, you know what updates have happened
13:56
Speaker 2: to the operations of the business, how you're dealing with
13:59
Speaker 2: a different parties, and then you can kind of make
14:01
Speaker 2: a determination, like your attorney will help you determine, like Okay,
14:04
Speaker 2: it's time for an update, or you're still kind of
14:05
Speaker 2: good with what we have in place.
14:07
Speaker 1: Right, So you you mentioned data heavy, I think it'd
14:11
Speaker 1: be good too to talk about that. I think data
14:14
Speaker 1: privacy is nothing, it's not new. However, you know there
14:19
Speaker 1: are still differences in you know, state laws and international
14:24
Speaker 1: and you have to help me corregnant all the acronyms
14:27
Speaker 1: because I get lost in them myself. Alphabet soup here.
14:30
Speaker 1: But you know, where do you see small companies kind
14:35
Speaker 1: of maybe getting caught off guard here with privacy policies
14:38
Speaker 1: or ven youor agreements or marketing data. What are the
14:40
Speaker 1: things that they should be looking at?
14:42
Speaker 2: Yeah, So, you know, particularly in the US, because we
14:47
Speaker 2: do not have a federal level law or just general
14:51
Speaker 2: consumer privacy and I think, unfortunately it's gonna it's unlikely
14:55
Speaker 2: that we'll have any in the near future, given that
14:58
Speaker 2: our federal government is just not very effective a passing laws.
15:02
Speaker 2: At this point. We are just getting a patchwork of
15:07
Speaker 2: state laws and so maybe about every six months we
15:10
Speaker 2: have a couple of new privacy laws that go in
15:13
Speaker 2: at the state level. So it's actually becoming more complex
15:16
Speaker 2: as a small sized business to comply. So for a
15:22
Speaker 2: lot of clients, i've you know, I help them do
15:24
Speaker 2: that analysis of where does it make sense to comply, Like,
15:29
Speaker 2: you know, do the analysis of where are our operations,
15:32
Speaker 2: where are we target how how much of our businesses
15:35
Speaker 2: in different locations, try to figure out when you do
15:39
Speaker 2: a cost benefit analysis, which place issue you really make
15:42
Speaker 2: an effort to comply with and where is it maybe
15:44
Speaker 2: lower over risk so you may be able to live
15:47
Speaker 2: with the risk on. So that's a I think that's
15:50
Speaker 2: a situation that a lot of small businesses are having
15:52
Speaker 2: to face because they don't have the kind of budget
15:55
Speaker 2: and capabilities that larger businesses have to just be able
15:58
Speaker 2: to do like a worldwide complyience. Right, there's some laws.
16:02
Speaker 2: So I think a lot of it is that kind
16:04
Speaker 2: of targeted analysis of what really applies to your business
16:09
Speaker 2: and how do we comply with that? And then the
16:11
Speaker 2: other thing that a lot of small businesses that have
16:13
Speaker 2: been getting in trouble with recently is that a lot
16:18
Speaker 2: of businesses or maybe they don't even know themselves because
16:22
Speaker 2: they have vendors like marketing or advertising vendors they're using
16:26
Speaker 2: who institute tracking technologies on their websites. And there's been
16:31
Speaker 2: a lot of lawsuits around invasion of privacy, wired tapping
16:36
Speaker 2: claims and state laws that have been going around. Yeah,
16:40
Speaker 2: so there's a whole host of additional actions and consents
16:45
Speaker 2: and notices that you have to undertake to avoid those issues.
16:49
Speaker 2: So that's been an issue that I've been dealing with
16:52
Speaker 2: from many clients over the past.
16:54
Speaker 1: No, I see that. I mean now, but pretty much
16:57
Speaker 1: every website says, well you accept the cookies or whatever
17:00
Speaker 1: of tracking right coming on there. You don't have that,
17:03
Speaker 1: or you don't have some kind of like stated privacy
17:07
Speaker 1: policy or something right on your website or something like
17:10
Speaker 1: that that speaks to this. Can you also speak to
17:14
Speaker 1: I know this has been a challenge for businesses, at
17:17
Speaker 1: least in my experience, small businesses when if they have
17:21
Speaker 1: employees collecting you know, media imagery, other things like a
17:27
Speaker 1: consent right of some kind of like what what using
17:29
Speaker 1: their likeness or other things like that too.
17:32
Speaker 2: Oh yeah, yeah, if there there are you know, certain
17:34
Speaker 2: times businesses will you know, have events or things where
17:38
Speaker 2: they want to use those kind of photo photography or
17:42
Speaker 2: videos that come out of it. And yeah, it's important
17:44
Speaker 2: to make sure you have an appropriate release in place
17:47
Speaker 2: that you know, creating formality, right, Like everything you're doing,
17:51
Speaker 2: you want to make sure you have rights to it
17:54
Speaker 2: so that when you use it, you don't have people
17:55
Speaker 2: coming out of the woodwork saying, well, I you know
17:58
Speaker 2: I'm going to yeah, come after you because I didn't
18:00
Speaker 2: agree to that.
18:01
Speaker 1: Right, right, I mean I've done enough, you know this
18:05
Speaker 1: way before I know, but I imagery was a big
18:09
Speaker 1: one where we would be putting together things and like
18:11
Speaker 1: where are you getting the image? Is this public use
18:13
Speaker 1: or did you get some kind of verification that you
18:16
Speaker 1: could use this? And sometimes again, like I said, if
18:19
Speaker 1: always don't know any difference, like oh what's the difference,
18:21
Speaker 1: I'm just going to use.
18:21
Speaker 2: This picture exactly. And that's why Again it's things like that,
18:26
Speaker 2: it's important to train your personnel right, make sure they
18:30
Speaker 2: understand what is allowed to be used. But also it's important.
18:34
Speaker 2: I've seen clients get in trouble because they've used vendors
18:40
Speaker 2: and the vendors, you know, maybe use something that wasn't
18:43
Speaker 2: a public image or that wasn't a license to it.
18:46
Speaker 2: So you also have to you know, when you are
18:49
Speaker 2: using third party like website vendors or blog vendors, again
18:53
Speaker 2: you need to have very strong agreements in place with them.
18:56
Speaker 2: So that's go wrong, you're not going to be on
18:59
Speaker 2: the hook. Are going to be on the.
19:00
Speaker 1: Hook, right right? Yeah, No, that's huge. You know, right
19:04
Speaker 1: before this, uh Marverite, I was talking to an insurance
19:07
Speaker 1: broker and we were talking about, you know, one company
19:11
Speaker 1: that they signed a clause that said they were to
19:13
Speaker 1: be held the company they were working with gonna be
19:15
Speaker 1: held harmless, like if anything happens their employees, they're health harmless.
19:18
Speaker 1: And they were willing to take that, and then something
19:20
Speaker 1: really bad happened and they're on the hook. And so
19:24
Speaker 1: understanding your relationships with with contractors and and this kind
19:30
Speaker 1: of leads into my next conversation about contracts, liability, vendor
19:35
Speaker 1: risk particularly. I mean, we cover a lot of areas,
19:37
Speaker 1: but cybersecurity is another big one that keeps coming up,
19:40
Speaker 1: like what happens here? How is that you know, blowing
19:43
Speaker 1: down and looking at those clauses in master services agreements
19:48
Speaker 1: and other types of agreements, So what what are you
19:51
Speaker 1: seeing like, how can businesses better protect themselves contractually, particularly
19:55
Speaker 1: as this vendor you know, data breach occurs for example.
20:00
Speaker 2: Yeah, I think these agreements are cybersecurity, data privacy are
20:07
Speaker 2: becoming more and more heavily negotiated every I feel like
20:11
Speaker 2: every day. These are issues of potential really large liability
20:15
Speaker 2: exposures for both parties. So it's important to actually take
20:20
Speaker 2: a position on it that has some thought has gone
20:23
Speaker 2: into it, right. And I think the mistake I see
20:27
Speaker 2: a lot of small, smaller businesses make is they decide
20:32
Speaker 2: to not bring in legal counsel to help. They decided
20:36
Speaker 2: to sign their agreement as is, not make the effort
20:39
Speaker 2: to negotiate or understand what the terms actually mean a
20:44
Speaker 2: lot of times sometimes they'll see a deal as a
20:47
Speaker 2: This is what I think is confusing for some business owners.
20:51
Speaker 2: They see a deal as low value, but they don't
20:55
Speaker 2: understand that low value doesn't mean low risk value, but
21:01
Speaker 2: high risk. So that can really hurt your business, right.
21:06
Speaker 1: So absolutely, if you're not clear on this percent where
21:12
Speaker 1: I mean, I remember a scenario where you know, understanding
21:17
Speaker 1: the relationship with your your your your vendors, and one
21:22
Speaker 1: one that came up for me in California. Was you know,
21:24
Speaker 1: if you're rab Bards working professional services where you're an
21:27
Speaker 1: independent licensed contractor, I can't sub to you if I'm
21:31
Speaker 1: not an independent license contractor. There's there's flow downs and
21:33
Speaker 1: there's requirements there understanding what the risks are if something
21:37
Speaker 1: doesn't work right and who's on the hook here, And
21:39
Speaker 1: I agree, I agree with you that that idea of well,
21:42
Speaker 1: it's not that sounds like a big a lot of
21:43
Speaker 1: money or anything. However, if something goes wrong, this is
21:47
Speaker 1: going to cost You're gonna lose everything on this job
21:49
Speaker 1: and then some right right, well, a lot.
21:52
Speaker 2: Of things, particularly when you get into like cybersecurity and
21:55
Speaker 2: data privacy issues that can make your business bankrupt. So
21:58
Speaker 2: you may be in your business because you saw a
22:01
Speaker 2: deal as low value. So it's that's why, just something
22:05
Speaker 2: for businesses to kind of think about a little bit
22:08
Speaker 2: more consciously and realize these are things that can affect
22:12
Speaker 2: them on a larger scale. And even if they're like
22:15
Speaker 2: for example, UH looking to get acquired down the line,
22:19
Speaker 2: a lot of these agreements they're not They are from
22:23
Speaker 2: often there for multiple years, so it's all going to
22:26
Speaker 2: come out in due diligence and when it comes out,
22:29
Speaker 2: it's going to negatively impact the valuation.
22:32
Speaker 1: Of the business vala.
22:34
Speaker 2: Yeah, the buyers. You know, the buyer is not going
22:36
Speaker 2: to be happy if you agree to you know, non
22:39
Speaker 2: standard terms around these things, and it's going to be
22:42
Speaker 2: basically a ding, right, So that's right.
22:45
Speaker 1: They're going to want to like that's too much, that's
22:47
Speaker 1: risk where I don't want to. I'm not going to
22:48
Speaker 1: be ailling to pay that much with that much risk
22:51
Speaker 1: on the line.
22:52
Speaker 2: Yeah, And sometimes they walk away, so you might even
22:54
Speaker 2: lose heel. So it's that's why it's important to again,
22:59
Speaker 2: like if you are looking to grow your business long term,
23:02
Speaker 2: you're looking to scale exit, you need to be thinking
23:05
Speaker 2: about these things at a larger scale.
23:07
Speaker 1: Yeah. And and you know it's like you said, looking
23:12
Speaker 1: at your the contracts you're having with your vendors and
23:16
Speaker 1: the ones that you're accepting on behalf you know that
23:18
Speaker 1: are coming through. And and what I think I've learned
23:21
Speaker 1: more of it is yes, you know you have to
23:24
Speaker 1: you know, evaluate and help use legal help to evaluate
23:29
Speaker 1: the risks that you're being exposed to and what what
23:31
Speaker 1: you're willing to you know, you know take and where
23:34
Speaker 1: like I said, what's negotiable here on some of these things,
23:39
Speaker 1: and and have somebody to come in and educate you,
23:41
Speaker 1: because sometimes I'm like, I don't know what can I
23:43
Speaker 1: can I push back on this, or how can I
23:45
Speaker 1: push back on this, or you know, and having your
23:49
Speaker 1: expertise of saying, okay, well this is we have standing here,
23:52
Speaker 1: we have an understanding, or you know, how can we
23:55
Speaker 1: you know, come together? I find, you know, for better
23:59
Speaker 1: or for worse. I found, you know, if you're receiving
24:00
Speaker 1: somebody's contract, it's always going to be in the favor
24:02
Speaker 1: of him issuing the contract, not in your favor. Typically
24:05
Speaker 1: they're not like it's looking after them first. So there's
24:08
Speaker 1: like having something like marvda on your team say well,
24:10
Speaker 1: let me look at this and say, how can we
24:12
Speaker 1: make this, you know, mutually beneficial or have at least
24:15
Speaker 1: an understanding of like how this is all going to go?
24:20
Speaker 2: Yeah, yeah, And I will say there's many many situations
24:24
Speaker 2: where I've been working with clients and you know, they've
24:28
Speaker 2: the other side has drafted the initial version of the agreement,
24:32
Speaker 2: and you know, they send it to me and I'm like,
24:33
Speaker 2: this is not even close to what you told me.
24:36
Speaker 2: You've agreed to with the other side, Like this is
24:39
Speaker 2: just different. This is doing something totally different. Like it's
24:42
Speaker 2: so one sided, and so strategy is to like negotiate
24:46
Speaker 2: that and approach that at all, like help the client
24:50
Speaker 2: go through as a way to kind of get it
24:51
Speaker 2: to what actually the business people have agreed.
24:54
Speaker 1: Right.
24:55
Speaker 2: Sometimes you know, the other sides, if it's a you know,
25:00
Speaker 2: business that's larger or whatever, their attorneys may be like
25:03
Speaker 2: overly aggressive.
25:05
Speaker 1: Right, Yeah, I've seen that. I've seen that. And then,
25:09
Speaker 1: like I said, I was like, whoa this is this
25:11
Speaker 1: is really one sided. And this is where you can,
25:14
Speaker 1: like you said, maybe you're so hungry for the deal,
25:17
Speaker 1: you want the deal, but don't do it at the
25:18
Speaker 1: expense of like what what you're accepting potent, you know,
25:22
Speaker 1: potentially right, the terms that.
25:24
Speaker 2: Are strategic, like you kind of have to look at it,
25:28
Speaker 2: you know, and a legal advisor can tell you, like
25:31
Speaker 2: maybe what areas would be good to push on and
25:34
Speaker 2: what the risk is if you agree to so you
25:36
Speaker 2: can make an informed decision versus signing something in a vacuum,
25:41
Speaker 2: right and not really understanding what you're getting into.
25:44
Speaker 1: Yeah, absolutely, So, you know, as particularly the tech enabled
25:49
Speaker 1: folks that you talk about and software, how can these
25:54
Speaker 1: these you know, kind of tech forward founders, they're trying
25:56
Speaker 1: to move forward, but you know, what can they do
25:59
Speaker 1: to balance kind of their innovation with compliance? And I mean,
26:03
Speaker 1: what are the things they should be looking at, maybe
26:05
Speaker 1: auditing their existing agreements or terms. What's some of the
26:09
Speaker 1: smart legal planning that they can do.
26:12
Speaker 2: Yeah, I think, well it's good to get legal involved
26:15
Speaker 2: as early as possible and all example, there was a
26:19
Speaker 2: business I talked to and they'd come to me about
26:22
Speaker 2: a year and a half after they'd been working out
26:25
Speaker 2: on building out a hardware prototype with software built in.
26:29
Speaker 2: They had paid consultants, they'd spend time and money to
26:32
Speaker 2: grow this thing, and then they came to me, you know,
26:35
Speaker 2: analyzed their business model and it was illegal. So now
26:38
Speaker 2: they were faced with changing their whole business model and
26:41
Speaker 2: that didn't even get rid of the criminal liability potentially
26:45
Speaker 2: on issue, right, And so they decided to shut down
26:48
Speaker 2: their business. But that could have been avoided if they'd
26:51
Speaker 2: come to me on day one and I told them, hey,
26:53
Speaker 2: this problem, don't go down this route, maybe consider another route.
26:57
Speaker 2: So I think if you're early age business, at least
27:01
Speaker 2: having an attorney that you can have periodic strategic discussions
27:05
Speaker 2: with to help guide you towards what direction you should
27:09
Speaker 2: be going in, or even particular deals like if you're
27:13
Speaker 2: you know, you don't have the budget to get the
27:14
Speaker 2: attorney involved with drafting it, you can at least get
27:17
Speaker 2: them involved to help you think about what are the
27:20
Speaker 2: important issues and what really needs to be in there
27:22
Speaker 2: so that there is some guidance that you're going in
27:25
Speaker 2: the right direction.
27:27
Speaker 1: Yeah. Absolutely, Well, as you're saying that too. Depending, I've
27:29
Speaker 1: heard people, you know, start with one way they're trying
27:32
Speaker 1: to get funding, and do they set up you know,
27:34
Speaker 1: how they set up like you said, the business or
27:36
Speaker 1: is it is it? Is? It? Is it? Is it
27:38
Speaker 1: a joint venture? Is this a partnership? What are we
27:41
Speaker 1: putting in here? And then like you advising them where
27:44
Speaker 1: read as to like what you know, there's pluss and minuses?
27:47
Speaker 1: What are the things they need to consider as the
27:49
Speaker 1: business evolves? Right?
27:51
Speaker 2: Yes, yes, very much so. And yeah, it's you know,
27:53
Speaker 2: I've even had you know, clients who've been sole founders
27:57
Speaker 2: who've messed up the corporate structure and paperwork and then
28:00
Speaker 2: they've had to spend a lot of time and money
28:02
Speaker 2: to clean it up later when they're going to look
28:04
Speaker 2: for investments. So it's a lot more cost effective and
28:08
Speaker 2: less stressful to get counselor early on.
28:11
Speaker 1: Mm hmm. And then you mentioned this earlier too, about
28:15
Speaker 1: you know, if you get this set up correctly, how
28:17
Speaker 1: this can help you as you get maybe acquired or merged.
28:21
Speaker 2: Right, Yeah, yeah, yeah, Because anytime you're looking at investment
28:26
Speaker 2: or an acquisition or merger, due diligence is going to happen.
28:30
Speaker 2: So they're going to want to see not only all
28:31
Speaker 2: the corporate paperwork is in order, but they're going to
28:34
Speaker 2: want all your customer agreements, your vendor agreements, partner agreements.
28:38
Speaker 2: All that has to look good. Your intellectual property has
28:41
Speaker 2: to look good. Financials have to look at like all
28:44
Speaker 2: of that's going to come out.
28:46
Speaker 1: Yeah, I mean there's so there's different elements and depending
28:49
Speaker 1: on the business model and what's set up, And like
28:51
Speaker 1: I said, you've had a lot of experience in you know, SaaS,
28:55
Speaker 1: software as a service and others. But depending on the
28:57
Speaker 1: business model, what kind of agreements are licensing that you
29:00
Speaker 1: have to have in place, you know, getting somebody like
29:04
Speaker 1: you in Maria look at all that stuff, right, have
29:06
Speaker 1: they like you said, do they have those policies in
29:08
Speaker 1: terms of conditions and all of those things.
29:11
Speaker 2: Yeah, yeah, Yeah, any business, it's you know, it's going
29:14
Speaker 2: to be, for example, the customer agreements, So that may
29:17
Speaker 2: take informs depending on what kind of business they are.
29:20
Speaker 2: So if they're like a service business, that might be
29:23
Speaker 2: an MSA and sow's. If they're a SaaS company, that
29:27
Speaker 2: will be you know, software agreements SaaS agreements. And then
29:31
Speaker 2: of course it's going to be the vendor agreements, which
29:32
Speaker 2: will be a whole various forms of agreements based on
29:36
Speaker 2: what the vendor is doing for them, right whether it's
29:38
Speaker 2: a consultant, to whether they're having you know, they have
29:41
Speaker 2: SaaS companies that they're hiring right to like hosting or
29:45
Speaker 2: software for them. And there's the different partnerships that some
29:50
Speaker 2: businesses explore as ways to generate more revenue, and those
29:55
Speaker 2: can take various forms from reseller agreements to strategic alliances.
30:02
Speaker 2: So it's really those who can get to API licensing.
30:05
Speaker 2: It could be all sorts of different forms depending on
30:08
Speaker 2: what the business is exploring as ways to generate revenue.
30:12
Speaker 1: Yeah, and so you know, as we're getting close to
30:14
Speaker 1: the end of the episode here because I want there's
30:17
Speaker 1: you're gonna have to come back. We're I don't have
30:18
Speaker 1: to have another legal roundtable, I think, because there's so
30:20
Speaker 1: many different things there to cover. But let's just you know,
30:24
Speaker 1: if if they're like you said, if they they started up,
30:28
Speaker 1: let's or you're along your journey, maybe you know you
30:31
Speaker 1: you've you've got going. But what would you say, kind
30:34
Speaker 1: of as a wrapping up, like, what's a legal step
30:36
Speaker 1: that maybe they should be looking at taking this quarter
30:40
Speaker 1: like sooner than later, if they haven't done anything, or
30:43
Speaker 1: if they don't have if they don't have somebody regularly
30:44
Speaker 1: that they can rely on as a legal counsel, what
30:47
Speaker 1: would you say, Hey, let's start here, let's get going
30:50
Speaker 1: and cleaning cleaning up some things or helping getting your
30:53
Speaker 1: house in order. Yeah.
30:55
Speaker 2: So I always think one of the biggest priorities for
30:58
Speaker 2: any business is the customer because that's how the company
31:01
Speaker 2: is generating revenue, and it's also how the liabilities exposure
31:07
Speaker 2: of the company is set. So that agreement, getting that
31:10
Speaker 2: a well drapped cosmer agreement is very important. So yeah,
31:15
Speaker 2: I can take again differents depending on what your business
31:18
Speaker 2: is and whether it's B two B or B two C.
31:20
Speaker 2: But I think that is a very good investment because
31:23
Speaker 2: it's a document that once you have the proper same
31:27
Speaker 2: framework set up, you're basically using over and over with
31:30
Speaker 2: your different customers.
31:32
Speaker 1: That's that's great because, yeah, find find the things that
31:34
Speaker 1: you're going to be re using repeatedly. Maybe I work
31:38
Speaker 1: with environmental or consulting firms. Example, they have a master
31:41
Speaker 1: services Agreement or an s OW like can you get
31:43
Speaker 1: that dialed in? But you say, that's a good use too,
31:46
Speaker 1: to focus on something like that exactly.
31:48
Speaker 2: That's exact example m S a s W for service companies.
31:52
Speaker 2: That's an important thing to clean up.
31:55
Speaker 1: Yeah, and you know, I think AI is great. I
31:57
Speaker 1: think it's wonderful. It's a great tool out there, but
31:59
Speaker 1: you know, doesn't replace somebody like you, Ma Reid, that
32:02
Speaker 1: can you actually go back and really look at this
32:03
Speaker 1: and know what it should look like. I mean I
32:06
Speaker 1: could go jump put something in technology, but I don't
32:08
Speaker 1: know ultimately what it should look like. I have an idea.
32:12
Speaker 1: But having somebody like yourself that can say, hey, you know,
32:15
Speaker 1: bring this to me and then let me help you.
32:19
Speaker 2: Yeah, and I will say, any of these agreements are
32:21
Speaker 2: really specific to the business and I think that's where
32:23
Speaker 2: it makes the difference of having something custom drafted by
32:26
Speaker 2: Ernie versus you know, cut and paste them somewhere.
32:29
Speaker 1: Yeah. Well, we we're so grateful to have you here
32:32
Speaker 1: on the podcast. This is a fantastic discussion. I'm sure
32:35
Speaker 1: we'll have you back. For those of you that want
32:37
Speaker 1: to connect with her, please, you know, look up Mariad
32:40
Speaker 1: Salaport on the LinkedIn. We're connected there. We're going to
32:44
Speaker 1: provide her link to her website, Sellaport Legal. Thank you
32:47
Speaker 1: so much for being here, Maurite. It was wonderful having you.
32:50
Speaker 2: Thank you for having me, David. I was glad to
32:52
Speaker 2: join you all.
32:53
Speaker 1: Thanks. Thanks everybody, please like subscribe, leave your comments we'll
32:57
Speaker 1: be sure to reply, share them with Red and again,
33:00
Speaker 1: thanks everybody for joining us on the Business round Table podcast.
33:03
Speaker 1: Pick everybody. Bye,