Harrison Law - February 2020

February 2020 Te Contractor’s Advantage

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Of Presidents and Groundhogs

Not long ago, I read biographies on several of the Founding Fathers of the United States. I read about some who became president and others who did not, but all of them still made a significant impact on the development of the country and its many parts. Every February, we recognize past presidents with Presidents Day. It’s a day that at one time recognized George Washington’s birthday but eventually came to honor all who have served as president. Also in February is Groundhog Dog, a day centered around a peculiar ritual where people watch on as a groundhog emerges from its burrow to see its shadow — or not — and predict the next several weeks of weather. Of course, many people also associate Groundhog Day with the 1993 Bill Murray movie of the same name. Murray’s character becomes trapped in a day, which repeats ad nauseam. As such, Groundhog Day has come to colloquially mean “getting stuck in a highly repetitive routine.” What’s interesting is that when you look at the Founding Fathers and the politics of the 1700s and compare them to the politics of today, you’ll see many similarities. There’s divisiveness, mudslinging, and general resentment from one side to the other. It’s reflective of how people like John Adams, Thomas Jefferson, and Alexander Hamilton engaged with one another and their political opponents. Jefferson and Hamilton were entirely at odds with one another when the Constitution was written and in the

with Congress or get Congressional approval, which technically was required by law. Instead, Jefferson made the deal, then passed it to Congress. He basically told Congress to ratify the deal and pay for it. Today, we see leaders overstepping their bounds of office and making decisions the other side doesn’t approve of, and vice versa. It’s almost like we're living in our own “Groundhog Day” as the American people. But there is no question we’ve come a long way as a country since the 1700s, even if some things have stayed the same.

1790s when leaders were deciding whether or not to implement a centralized banking system. While we ultimately did implement a central bank, Jefferson said it was an overly broad exercise of federal power. Hamilton was doing everything he could to make it a reality. He said it would lead to a robust and lasting economy, and he was right. We use pretty much the same system Hamilton fought to establish — and it’s not just a system used by the U.S., but by most of the world too. Whoever is in power has a different view of the world than those who are not. As president, Jefferson had a very different outlook than when he was fighting Hamilton on the federal bank. One good example is the Louisiana Purchase, a purchase that effectively doubled the size of the land controlled by the U.S. What’s not as well-known is the fact that President Jefferson did not have the power to make the purchase, yet he did it anyway. He didn’t consult

-Jeremy Wyatt

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The line between technologies that are beneficial for large businesses and those beneficial for small businesses continues to blur. While the latest software programs were once only available to large companies that could afford them, some of these programs have also become available and profitable for small businesses to use. In an age of increasing connectivity, these are a few tech trends that small businesses should watch out for. interaction, using AI software programs for small tasks — like email marketing, data entry, accounting, and some low-stress forms of customer service — is invaluable to small businesses. Delegating menial tasks to AI can free up time for you to focus on those more important face-to-face interactions with your customers. Increased Use of Data Analytics “Big data” is intimidating. For years, sifting through customer data and extracting valuable information that can be used to grow businesses was something that only the largest companies had the time, funds, and expertise to do. However, more programs that reduce the upfront investment and expertise necessary to contextualize customer data are popping up. If you can make use of your customers’ data, you can give them an experience with your business that they won’t find many other places. Continued Reliance on Social Media Social media marketing remains an effective tool for attracting customers to your small business, even if the tools continue to change. While marketing on Facebook and Instagram might seem like old news, marketing on trendier apps, like TikTok, Pinterest, or Snapchat, can still work to your business’s benefit. A recent study showed that 45% of consumers head to social media when they have a question about something — are you going to be there to answer it? 3 Tech Trends to Accelerate Your Company KEEP UP WITH THE BIG BUSINESSES Collaboration With Artificial Intelligence While it certainly shouldn’t replace every customer

TWITTER ME THIS The Storied History of Evan Williams’ Journey to Success

The journey of entrepreneurship is akin to finding your way through a jungle with a poorly drawn map. Navigating all the obstacles can be terrifying, but thankfully, the many entrepreneurial odysseys that came before us offer great opportunities to learn. Evan Williams, co-founder of Blogger and Twitter, went on a wild journey himself while finding his way out of the metaphorical jungle and into success. Williams began his career running irrigation for his family farm in Nebraska. After only a year and a half of working for tech startups in Florida and Texas, he found his way back to the farm but didn’t give up. He persevered, moving to California and eventually working with Meg Hourihan, pioneer of online blogging and fellow internet entrepreneur, to co-found Pyra Labs in 1999. Together at Pyra, they developed Blogger, a journaling platform that became the launch pad for Williams’ entrepreneurial prosperity. Unfortunately, after venture capital and company resources were depleted, Pyra Labs’ employees, including Hourihan, quit en masse, and Williams forged on alone to keep Blogger afloat. In 2003, Google acquired Blogger, which is successful to this day and credited as one of the first blogging sites. Fun fact: Williams also coined the term “blogger”! After Blogger’s acquisition, Williams' new startup, Odeo, was poised to be a premiere platform for podcasts and podcasting software. However, due to a laundry list of problems, including a lack of vision and the rise of Apple, Odeo experienced a less-than-stellar launch and simply could not compete with iTunes, a platform already holding a major foothold in the podcasting community. At that point, Williams turned his attention to another side project under Odeo’s umbrella: Twitter. Learning from their abysmal launch, the team focused on making a social networking service. With this singular focus, Twitter’s popularity exploded and garnered attention from entrepreneurs and consumers everywhere. Today, Twitter is the sixth most visited website in the world and boasts 330 million active users. In the third quarter of 2019, Twitter’s revenue amounted to $823.7 million. Evan Williams’ journey to success is one for the ages, and it’s a lesson every entrepreneur can learn from while trying to find the one opportunity that will launch them into the big leagues. If you’re interested in learning more about Williams’ path to entrepreneurial glory, check out the bestselling biography “Hatching Twitter: A True Story of Money, Power, Friendship, and Betrayal” by Nick Bilton.

Keeping up with the latest and greatest tech trends in small-business management can be exhausting, but in an age where

technological advancement is accelerating faster than ever, it’s necessary for the survival of businesses of all

shapes and sizes.

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‘Let My People Go Surfing: The Education of a Reluctant Businessman’ How Patagonia’s Founder Set a New Standard for Environmental Responsibility

From the very beginning of his 2006 memoir, “Let My People Go Surfing: The Education of a Reluctant Businessman,” it’s clear that Patagonia's founder, Yvon Chouinard, is not the typical entrepreneur. As a kid, Chouinard wanted to be a fur trapper, and rather than going into business with dreams of getting rich, he started making climbing gear to fund his passion for scaling cliffs and adventuring in the outdoors. “Let My People Go Surfing” follows Patagonia’s meteoric rise through its victories and rough patches — including the stalled growth that led to layoffs of 20% of the staff in the 1990s — but its main focus is on the company’s ideals. In plain, forthright, and sometimes irascible language, Chouinard lays out Patagonia’s growth goals, culture aims, and environmental stewardship efforts. The last of which is truly the core of the brand. Patagonia prioritizes minimalism, function, durability, and reparability in all of its products, from backpacks to jackets. It tracks the energy and water use of its facilities, works to eliminate pollution, focuses on recycled and recyclable materials, participates in environmental activism, funds environmental organizations worldwide, and even encourages shoppers to send in worn-out apparel for reuse and repair. In short, over HAVE A Laugh

the course of 272 pages, Chouinard proves he not only talks the talk but also walks the walk — and has made millions championing his cause. He encourages other entrepreneurs to do the same, laying out Patagonia’s footsteps and philosophies for readers to follow. Many already have. “Let My People Go Surfing” was updated and rereleased in 2016, but either version will make entrepreneurs think twice about their environmental impact and what they can do to reduce it. As one Amazon reviewer wrote, “Whether you're a manager or business owner looking to motivate your employees and create a sustainable business, or a fan of Patagonia, or someone curious about how to live a life you can feel good about, this book should work for you.”

PUZZLE

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Jeremy Wyatt jwyatt@harrisonlawgroup.com www.HarrisonLawGroup.com (410) 832-0000

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Inside This Edition

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The More Things Change the More They Stay the Same Important Tech Trends for Small Businesses to Keep Up With Evan Williams’ Entrepreneurial Journey Yvon Chouinard’s Rise From Wannabe Fur Trapper to Billionaire Entrepreneur

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Have a Laugh

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Selling With Compassion

* Level With Me: Keeping Warm: Three Contract Clauses that Boil my Blood Even in Winter

Sell With Your Heart Avoid a Bad Sales Reputation With These Tips

also lets you learn from happy and dissatisfied customers. You can discover what worked, what didn’t, and what they wish they had known before buying. Picking up the phone — or dropping in — to leave a post-sale impression could be more valuable than you realize. Just Listen A good salesperson knows what their customers want. They actually listen to what customers are saying and don’t second-guess customers’ needs. Many people associate salespeople with smooth-talking and wittiness. But in reality, a good salesperson just needs to be a good listener. When a customer says, “I just want something that works,” they are not looking for the latest and greatest model. They just want something that works. Selling with your heart is easier than it appears, and these methods are a solid foundation for creating strong, lasting customer relationships.

Let’s face it: Salespeople get a bad rap. Scammers, con artists, and inexperienced or unempathetic sellers make it hard to convince customers you have their best interests in mind. Here are three qualities every salesperson must have to convincingly sell with heart. A Win-Win The most important trait of an ethical salesperson is having a product or service that is honest and true. You can’t ethically peddle something that doesn’t have value for your potential customers. Sure, it’s exciting to make a sale. It gives you a sense of accomplishment, and the payout isn’t too bad, either. But if what you’re selling doesn’t also benefit your customer , then you’re no better than a swindler. Your product has to be a win for the customer, and you have to believe in it wholeheartedly to succeed. The ‘How Ya Doin’?’ Call The sale is done. The dotted line is signed. The customer is happy, and you are excited. Time to forget about them and move on to the next sale, right? Wrong. You have to follow up with customers after a successful sale. If anything has gone wrong, checking in will allow you to be proactive in fixing it. Being proactive builds trust and bolsters your chance of a referral. It

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Level With Me By JeremyWyatt

Keeping Warm: 3 Contract Clauses That Boil My Blood Even in Winter

that a drywall subcontractor that signed a broad-form indemnity clause would be responsible for protecting the general contractor from flooding damage to a project’s drywall installation, even if the general contractor caused the flooding. Essentially, a broad-form indemnity clause requires a subcontractor to act like an insurance company, paying out for losses for which it was not otherwise responsible. When presented with a broad-form indemnity clause, the right thing to do is draw a line in the sand and demand limited indemnity. Otherwise, you can be responsible for anything that goes wrong. Project delays regularly cause subcontractors to incur additional, unanticipated costs, such as unanticipated general conditions, equipment rental, or labor costs, including demobilization and remobilization costs. In addition to those direct costs, subcontractors can suffer lost opportunities (as their project team cannot work other projects while it waits for the delayed project to continue) and losses to its home office finances (as the delayed job likely was meant to provide partial funding for the subcontractor’s home office). In fairness, the party responsible for a project being delayed should also be responsible for the additional costs caused by the delay. Unfortunately, many modern construction subcontracts contain a “no damages for delay” clause that essentially states that a subcontractor is not entitled to any damages arising out of delay and, instead, No Damages for Delay

When I review contracts for clients, I turn my phone off and lock my computer; I like to have the space to focus. But that doesn’t mean my office stays quiet. Reading the insidious clauses that worm their way into contracts, I sometimes exclaim, “You’ve got to be kidding me!” or “Not in a million years!” Sometimes I even come up with some choice words that can’t be reprinted in a polite publication. Here are three clauses that boil my blood (and what you can do to avoid losing big when you encounter them). Indemnity is a concept found in many contracts. It means that one party (the “indemnitor”) will protect another party (the “indemnitee”) against some kind of harm, usually against “claims,” like lawsuits. By indemnifying a general contractor, for example, a subcontractor assumes the general contractor’s risk to the extent of the indemnity. Indemnity comes in several flavors, starting with the blandest and most limited, where the indemnitor protects the indemnitee only from claims and damages caused solely by the indemnitor’s wrongdoing. For example, a drywall subcontractor under this limited form of indemnity would be responsible to protect the indemnitee only from harm actually and wrongfully caused by the drywall subcontractor. On the other side of the spectrum, however, is broad-form indemnity. Under this kind of indemnity clause, the subcontract- indemnitor must protect the general contractor from claims and damage, even if the general contractor is solely responsible for the damage. On a construction project, this could mean, for example, Broad-Form Indemnity

Continued on Back ...

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... continued from Front

the general contractor receives payment for that work from the project’s owner. The essential problem with the pay-if-paid clause is that it transfers risk of the owner’s nonpayment from the general contractor to a project’s subcontractors. This is inherently unfair, as the general contractor is the entity in the best position to manage payment disputes with the owner. It is even more unfair when you consider that subcontractors are already laying out funds for labor and materials rendered to the project and are typically required to continue rendering labor and materials regardless of whether payment occurs in a timely fashion. A reasonable alternative to pay-if-paid is the similarly-named “pay- when-paid” clause, meaning general contractor can only wait a reasonable period of time before paying the subcontractor, regardless of whether the owner has paid. This makes good sense, as it is fair that the general contractor has some time to resolve whatever payment dispute they may have with the owner, but because they have a direct contract and relationship with the owner, it is also fair that the general contractor bears the ultimate risk that the owner fails to pay. If you want to learn more skills and tips about avoiding construction claim pitfalls, you can receive a free copy of my book “The Subcontractor’s Roadmap to Getting Paid for Extra Work” by emailing me at jwyatt@harrisonlawgroup.com.

would only be entitled to an extension of time within which to finish the work. This can turn a subcontractor’s finances upside down, as the additional unrecoverable costs can eat into any profit and overhead the subcontractor was to make on the project. A reasonable alternative is requiring a general contractor (or owner) to be responsible for some damages and some scope of delay, such as reimbursing for the out-of-pocket costs of delay, which might include demobilization and remobilization costs, as well as the cost of fluctuations in the price of labor or materials over time. If a party “actively interferes” with a subcontractor’s work, such as ordering the subcontractor to stop and start work off-schedule, however, then that party should be required to pay for all damages caused by that active interference.

Pay-if-Paid

A “pay-if-paid” clause typically states that payment by a construction project’s owner is a condition precedent to a general contractor’s obligation to pay a subcontractor for project work. That is, under a pay-if-paid clause, the general contractor has no obligation to pay a subcontractor for work on a construction project unless and until

-Jeremy Wyatt

jwyatt@harrisonlawgroup.com

www.HarrisonLawGroup.com

(410) 832-0000

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