Most of my business clients see mediation as the thing you do when you are almost at the end of litigation.

Mediation can be a cost-savings tool if used early when a dispute is still minor.

Times to use mediation early:

1) You have a good business relationship that you would like to save

2) You suspect the other party “doesn’t get it”

3) The other party says you “don’t get it”

4) The best solution involves something other than just money

A mediator may help you find resolution while you can still afford it. You may use mediation to resolve issues with suppliers, contractors, employee and customers.

Find a great mediator the same way you find a great lawyer:

a) Ask trusted advisors

b) Research credentials

c) Interview more than one and make comparisons

Getting to the solution may be easier if you have someone who specializes in facilitating calm meaningful negotiation. As Abraham Lincoln said, “Discourage litigation. Persuade your neighbors to compromise whenever you can.”

A license grants someone (licensee) permission via contract to engage in an activity or to use property owned by the person granting the license (licensor). These prolific interactions are part of daily transactions. Obtaining a hotel room for a night is a license. Franchise agreements involve a license. The computer on which I am typing this has software licenses from Microsoft, Apple, Intel, and HP.

My iTunes license agreement is 4,289 words long.

For personal use, license agreements are often reasonable. What about when you click through for business? Sometimes not. There may be specific provisions stating you cannot use certain programs, images or words for business. The license agreements may reserve a fair amount of control for the licensor. Additionally, various other terms are working their way into license agreements. (See my prior two posts: nondisclosure agreements and indemnity agreements).

The licensor will request the licensee not share business secrets obtained through the license agreement and will also ask the licensee to indemnify, or hold harmless, the licensor in the event of injury or damage from the licensed item.

What does this mean? If you post a Microsoft Word document on your website, are you violating your Microsoft License Agreement? What if your link allows the user to access Word through your server?

Step 1: Read that long long long boring license agreement.

Step 2: Decide if you are engaging in any activities that may extend beyond the term of the license (e.g. making copies of a program for other business computers or using the source code for your own custom program or simply using images for which you have no license. Yes, they will sue you even if you are a “little” business.

Step 3: Ask yourself whether your business property, such as your website, would benefit from a license agreement, which should not be 7,000 words long.

Is the license for exclusive use of the licensee or is it non-exclusive – can it be used by multiple people at once? What is the term of the license? Can you charging a fee or a royalty for use?

If your business owns a patent, trademark or has a business model that works, a license is one way that you may be able to protect your asset. Or perhaps earn money from that asset. It is a wise, and sometimes mandated, decision to work closely with a licensee to be sure that your business property is not used in a manner that is inconsistent with your business.

Getting sued for violating an agreement is not fun. The best way to avoid that lawsuit is to read the agreement before clicking “I agree”. Reading the agreement may give you ideas about which of your products you wish to protect and how you will create that protection.

- Christine Branstad

Image by Aquila via Flickr

that you are willing to give up the stated rights. As a business owner, ask:

• From what are your protecting yourself?
• Is this a real danger?
• What is your goal?
• Do you run a PR risk by warning your clients that your product “may cause death” (especially if you sell coffee tables)?

This post addresses personal injury waivers: the kind you sign at batting cages and skating rinks.

My next post will address the types of waivers that are part of sales agreements and are found within websites for products..

The post that follows that will address Indemnification Agreements.

First, the easiest way to avoid lawsuits and judgments for personal injury is to be prudent in taking care of your business. Common sense safety is more cost effective than waivers.

-   Encourage employee common sense through a wellness program.

-   Have a plan to keep your employees and patrons safe.

-   Talk with your insurer about risk analysis and risk reduction.

The Iowa Supreme Court addresses waivers in a number of cases:

Personal injury waivers must “be specific enough to identify all possible causes of injury so that a reasonable person is on notice.” A waiver that simply agrees that one party is not responsible for any injuries is not specific enough to waive all claims related to acts by that party¹.

A waiver must be “voluntary“, ”intentional” and “knowing”. The waiver must intentionally relinquishment a known right.”² The court uses the standard of a reasonable person to determine whether a party had notice of the provisions in question and may be bound by terms within a contract/agreement.³

The parties must be clearly identified to be considered released parties.⁴

Once the release is clear in its intent, parties may be bound. Even if you (or your client) does not read the release, a party who is able to read and has the opportunity to do so must suffer the consequences of failing to do so.⁵

The more dangerous your business, the more likely you can set out the risk and put them in the hands of a person who assumes the risk. For example,“Hang gliding is associated with injuries and death.” If you run a shoe-shine stand, it is more difficult to set out the risks and pass them on to a client. (Then again, hopefully the shoe-shine isn’t dangerous.) From a client perspective, you may have clients who wonder why they must sign a waiver that states that “death is a possible consequence” of their shoe shine. If you are leading  rock-climbing expedition, the client likely expects a waiver.

A well drafted waiver will:

• specifically set out the parties involved,
• address the type of danger,
• specifically waive the damages, if any,
• show that the waiver is voluntary, and
• provide clear language.

We will see how the Iowa Supreme Court handles the inevitable case about “throw in the kitchen sink waivers” written in three-point font. For amusement or consideration, the waiver below from an actual ticket. I used a magnifying glass to read it. Apparently a kids’ concert needed the following waiver:

“warning! Despite enhanced spectator shielding measures, pucks still may fly into the spectator area, serious injury can occur, stay alert at all times including during warm up and after play stops. If struck, immediately ask usher for directions to medical station. Holder voluntarily assumes all risks and danger incidental to the event for which the ticket is issue, whether occurring prior to, during or after the event, including, but not limited to, danger of being injured by thrown, batted, kicked, shot, struck, etc. objects such as balls bats hockey sticks pucks racquets and other objects or equipment or by other spectators or players or by entering a mosh pit. Holder voluntarily agrees that the management, facility, league, participants, participating clubs, Ticketmaster, and all of their respective agents, officers, directors, owners, and employees are expressly released by holder from any claims arising from such causes”

-   Christine Branstad

1. Sweeney v. City of Bettendorf, 762 N.W.2d 873, (Iowa 2009)

2. Benton v. Slater, 605 N.W.2d 3, (Iowa, 2000)

3. Joseph L. Wilmotte & Co. v. Rosenman Bros. 258 N.W.2d 317, (Iowa 1977)

4. Huber v. Hovey, 501 N.W.2d 53, (Iowa 1993) (plaintiff injured by fireworks misfiring into pit area of race track); Grabill v. Adams County Fair and Racing Association, 666 N.W.2d 592,( Iowa 2003) (plaintiff injured by detached wheel of race car flung into pit area of race track).

5. Forrester v. Aspen Athletic Clubs LLC, 766 N.W.2d 648, (Iowa App. 2009).

Image by lumaxart via Flickr

My previous post reviewed non-competition agreements to keep employees from walking away with the kitchen sink – trade secrets, client lists and knowhow. This post focuses on Non-Solicitation Agreements, a more narrow method of keeping other companies from luring employees or clients away. The next post will address non-disclosure agreements.

In the second year of your burgeoning IT business, you have 5 employees. You land a project that requires a temporary workforce of 10 employees. A staffing company offers to provide workers, but a clause in the contract prohibits you from soliciting any of the temporary staff for 2 years. Should you sign?

In its third year, your company competes for a project requiring onsite work. You plan to embed your team, but are concerned that you risk losing the contract if you muddy negotiations with a requirement that the client not solicit your employees. How do you address the issue?

A non-solicitation clause is a normative approach to both situations. Non-solicitation clauses are a common method for setting boundaries with staffing companies, consultants, and trainers.

A non-solicitation agreement with another company may prohibit luring employees. The strictest agreements prohibit all contact, which has led to litigation about whether purely social interaction violates the clause. Additionally, employees may be prohibited from hiring other employees away.

Other non-solicitation agreements prohibit luring away customers. Companies have agreed that, as employees move between companies, each will not solicit the clients previously serviced by the employee for the other company. In the alternative, the non-solicitation agreements may be directly between employer and employee (often in lieu of a non-competition agreement). Those agreements may be narrow (e.g. employee may not solicit clients for whom employee was account manager) or broad (e.g. employee may not solicit any client on company’s client list). The more broad the provision, the more likely it will be scrutinized by the court.

Agreements to limit competition, disclosure or solicitation are, by their nature, restrictions on trade. Iowa courts have long held that any restraint of trade is strictly construed against the one seeking to restrain another from pursuing employment or business pursuits. As one example, Iowa Courts specifically distinguished “selling” and “solicitation” based on who initiated the transaction.

As you consider non-solicitations agreements, consider:

• Is non solicitation good for your business?
• Is it good for the industry in general?
• What time limit should apply?
• What geographic limit should apply?
• Is the agreement limited to a certain type of client?
• Is it limited to a certain type of employee?
• Will it affect your ability to recruit and retain employees?
• Is it fair?

-    Christine Branstad

Image via Wikipedia

Non-Disclosure Agreements (also called NDAs, Confidentiality Agreements or Secrecy Agreements) have broad use in business.

The “form” NDA is a business myth. Each is designed for a purpose; the provision to protect a trade secret in a severance agreement bears little resemblance to one used when exploring a joint venture. An intellectual property attorney protecting your patent-pending machine in “pitches” to manufacturers uses a significantly different NDA than an employment law attorney protecting your client list from “walking away” with current employees.

All non-disclosure agreements should be:

-   Realistic: Protecting information should not involve parties agreeing to lock themselves in windowless rooms while dealing with each other. If you are dealing with an unscrupulous person with no assets, an NDA may not protect you.

-   Tailored enough. If collaborating, do you expect the other party to disclose information to contractors or employees?

-   Broad enough. If you provide a plant tour, is information discovered in the plant tour protected?

-   Specific enough. If one party drops out, may the other use information obtained? Is there a specific penalty for disclosure? Is there a penalty for accidental disclosure (e-mail intercepted by hacker, cleaning service theft, et cetera)? Does the NDA adhere to the laws of the state where it is written and to the laws of states where each party does business?

The Iowa Supreme Court sets out a test to determine whether a “nondisclosure-confidential agreement” is enforceable. The courts look at whether the restriction is: “(1) reasonably necessary for the protection of the employer’s business; (2) unreasonably restrictive of the employee’s rights; and (3) prejudicial to the public interest.”

Among ethical business partners, an NDA will set boundaries of conduct and mutual expectations. A well-worded agreement may save future headaches.

But even the best NDA will not make an unethical employee act ethically. In the event of unethical behavior, a properly drafted NDA may be a corporate lifesaver.

- Christine Branstad