Everyone could benefit from a legal mentor: a trusted generalist with some knowledge of the law. Periodically meeting with a legal mentor and discussing your business activities may alert you to issues you may have overlooked. Left unaddressed, these, what I like to call little foxes, can cost you time and money down the road. Paying attention to business, especially activities undertaken with partners, is vitally important. But most business people lack the time and intricate legal knowledge essential to safeguarding their interests.
I know a businessman who was allegedly defrauded over a period of many years. He entered a real estate deal with a friend to acquire income producing property. They opened a bank account in both their names connected by “or” versus “and” e.g.: “John Doe or Tom Row.” Row received some early income. But because Doe was the hands-on-manager of the property while Row stayed busy with myriad other business activities, Doe received the income checks and started simply spending the money as he pleased. Whenever Tom Row would, once in a blue moon, ask about revenue, John Doe would tell him that their tenants weren’t paying. The bank readily cashed the checks presented by Doe because the account was styled with the conjunction “or” signifying checks were payable to either account owner.
You may think Row was foolish and irresponsible. You would be right to a degree. He also trusted his friend to do the right thing. (Although he knew his friend had a reputation for taking advantage of others, he never dreamed that he would take advantage of their friendship, too.) Additionally, Tom Row was truly crazy-busy and depended on his friend to take care of business. Row scarcely had time to think through the legal ramification of “or” versus “and.”
In working with high-net-worth individuals over the years, my observation has been that little details seem to slip by really smart people all the time. Few of them slow down enough to pay attention to the minutiae of their day-to-day affairs. Unfortunately, it’s the minutia that can slip into your “hen house” and devour your chickens. You may have a legal claim without realizing you do; and, if so, your claim could be barred by what is called the “statute of limitations,” a type of federal or state law that restricts the time within which legal proceedings may be brought. Tom Row eventually slowed down enough to realize that the numbers didn’t add up. But he had sat on his rights for too long.
Lawyers digest hundreds, if not thousands, of cases during their careers. This constant exposure to the vicissitudes of human relationships gives them a heightened awareness of the little foxes of life. Their training helps them spot and anticipate what even shrewd practitioners of business tend to overlook. Are you sitting on your rights?
Jeff Barganier spent 2.5 years in a bank trust department, 2 years as associate general counsel to a real estate securities firm and 17 years as a financial adviser. Today, he makes his living as an attorney, writer and entrepreneur. Click here to read his full biography.
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The opinions expressed in this blog post are the author's own, and do not necessarily reflect the opinion of Red Oak Legal, PC.