In order to prosper in an increasingly competitive marketplace, it is essential to have a dedicated banking partner who is intimately familiar with your business needs and who can provide customized financial resources to grow your company.
A bank that doesn’t pay attention to your company’s needs and instead takes a one-size-fits-all approach may not be a bank that you want to build a relationship with.
“If clients have concerns about their banking relationship, that may be a good indication that they should look for a new banking partner,” says Alfred DeFlaviis, chief lending officer and senior vice president of First State Bank.
Smart Business spoke with DeFlaviis about how to identify a suitable bank and the importance of being prepared when seeking a loan.
What should a business look for in a bank when it is seeking a loan?
A business should look for a bank that takes the time to work with it and is interested in creating a partnership to help move the company forward toward achieving its financial goals. Find a bank that is familiar with the industry and geographic area in which the company operates and has other clients in similar industries. This allows it not only to tailor a package of financial products and services to the business but to share trends it has seen in similar companies.
How does the size of a bank influence how it does business?
National banks usually have a broad range of products and services and try to fit customers into their existing offerings rather than tailor products and services to fit the customer’s individual needs. Community banks have a lot more flexibility to offer customized solutions.
Take, for example, a company in need of many products and services that was doing business with a larger regional bank. The company was working with four individuals within the bank because regional banks tend to pigeonhole bankers into specialized categories, such as C&I loans, commercial real estate, small business loans, etc. The company’s leaders became confused as to whom they needed to deal with. Consequently, the package of financial products and services that was given to the customer by four internal bankers didn’t work. Individuals were selling their particular products and didn’t understand how all of them would work together to help the company achieve its goals.
Community banks, on the other hand, usually have one person, a commercial relationship manager, who coordinates products and services. That person will understand what a customer needs and create a package of products and services that meets the customer’s needs.
Because these institutions are smaller, the business owner may be able to talk directly with higher-level decision-makers to present his or her case. Larger banks have more rigid rules and processes associated with small business loans, and even if the person you’re talking to believes in you, he or she may not be able to help.
How can a business identify a suitable bank to partner with?
First, evaluate your existing relationship. Has your bank been responsive, acting not just as a lender but as a partner? If not, it may be time to find a bank that can work with you to grow your business. When making this decision, remember a community bank is knowledgeable about the community in which you operate and can make decisions based on that information at the local level instead of relying on decision-makers in another city.
After identifying a bank, how can you improve your chances of obtaining a loan?
Be prepared. Have a very clear goal of what you are trying to achieve. Existing companies should provide two to three years of historical financial statements/tax returns, for the business, related entities and owners. And all businesses should have a two-year business plan with a sales goal, profit goal and summary of business activities. Also have the assumptions used to derive those goals; if you are going to increase sales by 20 percent, specify how you are going to do that. If you don’t have a business plan, your banker should be able to help you develop one.
When obtaining a loan, what should a business expect from its banking partner?
Businesses should expect a high level of attention, both pre- and post-closing. Oftentimes, once the loan is closed, a bank and its client won’t communicate again until a problem arises on either side. Bankers and their clients should keep the lines of communication open, conveying information and building a partnership. A good lender sees customers regularly to make sure everything is progressing as planned based on discussions they had prior to the loan closing. In addition, the lender should be a consultant, helping the business expand and providing guidance.
A bank with good customer service should communicate with the borrower, at a minimum, on a quarterly basis. During these conversations, the business owner should convey to the bank how the company performed during that time period, whether it is on track with its business plan, how the bank’s products and services are working and whether there is anything the bank can provide to keep the company on track.
How has the downturn in the economy affected bank loans?
When the economy takes a turn for the worse, you must have confidence that you can get through the rough patch with the aid of your bank. Too many times, customers wait until there is a problem before they go to their bank for assistance, making it difficult for the bank to help. However, if the banker and the business owner have maintained a good relationship with open communication, the there will be no surprises on either side.
Alfred DeFlaviis is chief lending officer and senior vice president of First State Bank. Reach him at (586) 775-5000 or email@example.com.
Leases are rarely conducted on an entirely level playing field, as the landlord is in the business of real estate and the tenant is not. However, with planning and professional guidance, tenants can wrest away the advantage from the landlord and negotiate more attractive terms for occupancy.
“In today’s market, it is imperative that you identify hidden or unanticipated expenses in a lease,” says Richard Mersman, a partner with The Stolar Partnership. “Having a qualified attorney review the lease can save you tremendous headaches in the future.”
Smart Business spoke with Mersman about lease negotiations, what type of provisions and stipulations should be considered, and when to start the lease renewal process.
Why is it important for an attorney to participate in lease negotiations?
For most companies, lease expenses are one of the highest fixed costs on their balance sheet, second only to payroll. Certainly lease expenses — which include rent, common area maintenance costs, taxes and insurance — can have a substantial economic effect on a company’s overall financial performance.
There are a number of financial and legal issues that a tenant will face when negotiating a lease. You want to put yourself in the most advantageous economic and legal position in order to protect your income stream and your business.
What is the role of the letter of intent in the process?
A letter of intent is a tool that the tenant, and later, the tenant’s attorney, can use to streamline the lease negotiation process. The letter of intent defines the basic business terms between the landlord and the tenant.
Generally, the business terms will include key financial terms such as how much rent you are going to pay, what type of tenant improvement allowance the landlord will provide and whether or not there will be a free rent period. The letter of intent will also outline provisions with regard to expansion space, as well as relocation obligations and requirements.
When the attorney — who generally should not be negotiating the business terms — receives the letter of intent, it enables the attorney to concentrate on the legal issues at hand and not the business terms.
What type of provisions should a tenant fight for in a lease?
There are a number of provisions that a tenant should fight for. Commercial leases in today’s market are complicated, sophisticated documents. Generally, in Class A and Class B office buildings, landlords will have a specific lease form that they will provide to the tenant. Naturally, these lease forms are weighted in favor of the landlord.
The responsibility of the tenant’s attorney is to make sure that the tenant is not subject to additional expenses and/or legal obligations that were not originally contemplated in the letter of intent yet may be customary in the marketplace. Involving the tenant’s attorney early in the letter of intent negotiations can be very beneficial and can help eliminate obvious issues.
What stipulations should tenants avoid in a lease?
Make sure that there is no limitation on the use of the space; if the tenant wants to downsize, it may want to sublease space to a different type of business. Additionally, you will not want to be subject to a relocation provision without providing your prior approval. For example, you don’t want the landlord to move you from prime space in a building to space that is less attractive or desirable.
You also want to confirm the parking allocation for your company and identify where that parking will be, thereby ensuring that you have sufficient parking for your employees at a reasonable cost. Signage may also be a concern. Make sure that you have appropriate signage to identify your company within the building as well as outside the building so your customers and clients can easily find you.
Finally, be very careful about common area maintenance costs. The pro rata percentage charge should be accurate and based upon a formula of no less than 95 percent occupancy. This will protect your company’s share of the common area costs so, in the event that a large tenant moves out of the building, your proportionate share of the building costs does not increase.
How should a business go about negotiating a favorable lease renewal?
Start early. The sooner you find out where the market is and what comparable space might cost, the better off you will be. Most leases provide for anywhere between 60 days’ to one year’s notice of renewal, and 180 days is a common threshold. It is incumbent upon each tenant to determine the market rate prior to the 180-day period.
Currently, we are in a very favorable market for tenants. Landlords don’t want to lose a creditworthy, rent-paying tenant. As a result, tenants are able to negotiate a much higher tenant improvement allowance to refurbish space, as well as garner additional rent concessions.
How can a business find a qualified attorney to represent it in lease negotiations?
Referrals are generally the best method for identifying a qualified attorney, as you will likely have someone whom you respect making the recommendation. You can also turn to the local bar association and other legal directories for assistance in finding counsel.
While conducting your search for an attorney, it is important to look for specific experience in commercial leasing as it is a unique area of law that has become much more sophisticated over the last few decades.
Richard Mersman is a partner with The Stolar Partnership. Reach him at (314) 641-5125 or firstname.lastname@example.org.
If an employee leaves your company, is there anything you can do to stop that employee from taking your customers to his new employer?
Many business managers already know that a noncompete agreement can help stop that from happening because it can preclude the employee from competing for a period of time after he or she leaves. But new developments in the way courts apply noncompete agreements could change how much protection they afford employers, says Steven Ciszewski, a partner with Novack and Macey LLP.
“In Illinois, courts have typically enforced noncompete agreements only if the employer could establish that it has a legitimate business need for the noncompete agreement,” says Ciszewski. “However, one of our appellate courts recently broke ranks and held that the employer does not have to establish a legitimate business need in order to enforce its noncompete agreement.”
The issue is currently being reviewed by the Illinois Supreme Court, and the analysis provided by that court could dramatically change how noncompete agreements are enforced in Illinois.
Smart Business spoke with Ciszewski about these new developments and the effect that the Illinois Supreme Court’s ruling could have on employers in the future.
What new developments in the law governing noncompete agreements should employers be aware of?
The general rule in Illinois has been that noncompete agreements are enforceable only if there is a legitimate business need to preclude employees from competing freely after they leave the company. To satisfy this requirement, the employer typically had to show that the noncompete agreement was necessary to protect either its near permanent customer relationships or its confidential information or trade secrets.
One of the state’s appellate courts recently ruled that an employer no longer needs to make this showing to enforce its noncompete agreement. This has created a conflict among Illinois courts that the Illinois Supreme Court should resolve in the coming months.
What effect will the Supreme Court’s upcoming ruling have on employers?
There are a number of things that could happen and a number of possible effects. One possibility is that the Supreme Court affirms the general rule that has been in place and requires the employer to continue to show a legitimate business reason for its noncompete agreement.
That outcome would essentially leave the law in Illinois the same as it has been in the past.
A second possibility is that the court will agree with the appellate court’s new way of thinking and determine that the employer does not have to show that its noncompete agreement is necessary to protect near-permanent customer relationships or confidential information/trade secrets. If that happens, noncompete agreements could be more broadly enforceable in Illinois.
Another possibility, although less likely, is that the Supreme Court announces an entirely new way of interpreting noncompete agreements that is more strict or more lenient than anything adopted by our appellate courts in the past.
Will there be restrictions on the enforceability of noncompete agreements if the Supreme Court does adopt the appellate court’s new way of thinking?
In all likelihood, yes. Illinois courts still seem to unanimously hold that, in order to be enforceable, the noncompete agreement has to be reasonable in duration and geographic scope. Generally speaking, noncompete agreements that last up to a couple of years and cover a reasonable geographic territory are enforceable. There is no reason to think that these limitations will change, regardless of how the Supreme Court rules on the case currently before it. But the Supreme Court can make new law if it wants to, so this could change if the court decides to go in an entirely new direction.
How would employers be affected if noncompete agreements are enforceable in more situations?
The knee-jerk reaction is to think that all employers will be happy because they want their noncompete agreements to be broadly enforced in order to protect their business when their employees leave. In many cases, that might be the right reaction, but it can cut both ways because employers often find themselves on both sides of this issue over the long run.
One year, the employer might want its own noncompete agreement to be enforced because it needs to protect its business when its employee leaves. The next year, the same employer might want to hire an employee from a competitor. In that situation, the employer would want its competitor’s noncompete agreement to not be enforced so that it can improve its business by hiring talent away from that competitor.
A business might have the best legal arguments in the world to win the case it has today, but how might that win impact the situation it faces in a year? From the employer’s standpoint, this tension is present in almost every noncompete case and needs to be thoroughly considered before any type of legal action is initiated.
Steve Ciszewski is a partner with Novack and Macey LLP. Reach him at (312) 419-6900 or email@example.com.
Do you know what, exactly, your employees do? Believe it or not, many executives haven’t taken the necessary steps to truly understand each position in their organization.
In today’s chaotic employment landscape, a job analysis should be the first step in every major human resources effort. A job analysis provides the objective criteria needed for executives to make informed decisions regarding staffing, selection, performance, succession planning and compensation.
While some people use the term job description interchangeably with job analysis, the processes are actually quite different, says Jody Wheaton, director of Organizational Effectiveness for Corporate College. “A job description is a written statement about the job,” she says. “A job analysis is a systematic process that captures the entire job in compliance with professional and legal guidelines. Ultimately, this helps you develop a selection system that is valid and legally defensible.”
Smart Business spoke with Wheaton about the benefits of a job analysis, what approaches are available and who should be involved.
How can an organization benefit from conducting a job analysis?
Conducting a job analysis is important because organizations are being asked to work leaner and more efficiently while developing growth and innovation. It’s important to be aware of the critical responsibilities for each position, especially those that are considered strategic in nature, and those that impact the customer and the bottom line. In addition to determining the critical tasks associated with each job, it’s crucial to identify the desired knowledge, abilities, skill sets and other preferred characteristics.
Job analysis serves as the foundation for helping select the right people into an organization, in terms of job fit as well as cultural fit. A job analysis allows companies to not only create better selection systems, but also create effective training development programs, compensation and talent management systems. Often organizations hire for technical ability and fire for personality flaws. Organizations should consider hiring for both experience and cultural fit. Job analysis provides the needed data. In the event an organization is challenged legally, the court will look to see if a job analysis was done properly and if the selection system was considered to be job-relevant. Organizations should take a proactive approach to minimize legal challenges.
What job analysis approaches are available?
Many companies begin with reviewing the Occupational Informational Network (O*NET), which provides comprehensive occupational descriptions and data under the sponsorship of the U.S. Department of Labor/Employment and Training Administration.
To build on the O*NET data, the first approach is conducting interviews and focus groups. Typically these are conducted with job incumbents and supervisors. The drawbacks to this approach include the time required, scheduling and large number of people that need to be included if there are a large number of incumbents serving in the role.
Surveys are another option. This method allows you to gather data quickly and summarize the data statistically. Drawbacks include the inability to ask clarifying questions and gain needed buy in.
Off-the-shelf job analysis systems don’t allow for flexibility and are often too generic. We believe a blended tailored approach is the best choice, gathering and leveraging multiple perspectives and methods. We also believe leveraging technology in the process is critical.
What kind of components should be included?
Knowledge, skills, abilities, work behaviors, tasks associated with the job, competencies and cultural aspects of the organization should all be part of the data collection process. Be sure to distinguish between essential and non-essential characteristics for Americans with Disability Act (ADA) purposes.
Who should be included?
You want to make sure you have a good sample of high performers who understand the job and do it well. You should include senior-level management, direct supervisors and anyone who has critical knowledge about the job. Finally, include those who understand the training and development function, because they can often best articulate where people go wrong after attending training.
How much time will it take?
It depends on your approach. It can take anywhere from a few weeks to three months. You don’t have to take a manual- or labor-intensive approach. Often, a manual approach involves time, resources, creation of job analysis questions, summarizing the data, availability of employees, travel, schedules, etc.
Having a systematic process and leveraging technology-based tools allow job analysis participants to go through the process in a more efficient manner. Such tools provide standardized questions that can be edited to ensure they are customized to that job, as opposed to off-the-shelf tools, which use generic statements that can’t be customized.
How can businesses ensure standardization and legal compliance?
The best practice is educating and training all employees on the process, the importance behind it, and why you do it. In some organizations, stakeholders get involved in the process, even becoming engaged in the selection measures that are chosen. With other organizations, the HR department bears the entire burden. For legal compliance, it’s important to follow professional guidelines regarding sampling — who you include, the type of information you include, etc. The Equal Employment Opportunity Commission’s (EEOC) Uniform Guidelines and the Society for Industrial and Organizational Psychology’s (SIOC) Principles for the Validation and Use of Personnel Selection Procedures are a couple of good resources to help with compliance.
Jody Wheaton is director of Organizational Effectiveness for Corporate College. Reach her at firstname.lastname@example.org or (216) 987-5867.
Has your company found it more difficult to compete in today’s marketplace? With the increased economic pressures and a more informed customer base, many organizations find it increasingly difficult to meet or maintain business objectives.
Six Sigma is a business management strategy initially developed by Motorola in 1986. Lean manufacturing is the result of years of practical operational efficiency tools developed by Toyota, often referred to as the Toyota Production System (TPS). Business practitioners have melded Six Sigma ideas with lean manufacturing to yield a methodology termed Lean Six Sigma. Put simply, it seeks to eliminate process variation and defects while optimizing the process by eliminating or reducing waste and increasing efficiency.
“Lean Six Sigma is a systematic approach using analytical tools to identify and remove problems within a process,” says Ed Siurek, director of Quality for Corporate College. “It creates efficiencies, drives productivity and reduces costs — all things companies are looking to achieve in a struggling economy.”
Smart Business spoke with Siurek about Lean Six Sigma, who should be involved within an organization and how the model should be evaluated.
Why is it important for companies to be aware of Lean Six Sigma?
In today’s global economy, consumers have become better informed and increased demands for higher quality, more consistent products at a lower price. Companies have been forced to perform at higher levels with the same or limited staff. Reduction of waste in the form of defects, operational inefficiencies and nonvalue-added activities is one place companies have turned. An additional benefit to reducing variation and defects is higher customer satisfaction. Having happy customers typically results in repeat business.
Why is Lean Six Sigma effective when compared to other management programs?
Plain and simple, it uses data. Lean Six Sigma uses a defined methodology when looking at process optimization. Part of this methodology involves collecting process data and using tools to pinpoint problems using statistical analysis. The approach takes into account variables that occur and may not necessarily be obvious. These process influencers are often not even considered when using other continuous improvement methods because they are not seen as directly involved in a process. Often management thinks they know what’s wrong with a process. But until they analyze the problem, it’s hard to identify the true root cause.
Is there an optimal time for an organization to implement a Lean Six Sigma program?
Any organization can see the benefits of Lean Six Sigma tools, but until an organization makes the conscious decision to deploy the program, the benefits will only be minimal and may not be sustainable. Organizations seeing the biggest benefits from Lean Six Sigma are those that implement the program before they ‘need’ to do it. Being proactive can allow companies to develop efficiencies and, more important, the culture necessary for continuous improvement. Implementing when it becomes a necessity is still very effective. Organizations must be diligent in the commitment and planning of their implementation to obtain the maximum benefits.
Who should be involved within the organization?
Lean Six Sigma is intended to be an enterprisewide program. Management must champion the different projects so they can help with major decisions and clear roadblocks. But the reality is that the people who are really analyzing and fixing the process are those who are doing the work — they are the closest to it. You also want to have individuals involved who are adept at identifying collateral damage. If the process you’re working on negatively impacts another process, you can create a bigger problem for yourself. This doesn’t mean every employee needs to be a Lean Six Sigma Black Belt, but every employee should be introduced to the basic concepts and principles. Individuals will then need to be selected to be trained to various levels within Lean Six Sigma, depending on their role in continuous improvement projects.
How should an organization get started with Lean Six Sigma?
First, make a commitment. Management needs to make sure they understand the program and commit to continuous improvement. Initially, many employees are afraid Lean Six Sigma will become the ‘program of the month.’ When implemented that way, it will fail. As management gets involved and employees see the personal benefits to their daily work, the program begins to take hold. Employees start to look for ways to optimize their work and others want to learn how they can benefit. At that point, the program has started to truly take hold and the benefits will quickly increase.
How should the effectiveness of Lean Six Sigma be evaluated?
Every project should have clearly defined measurables. Spending the time in the first phase of a project allows an organization to understand the process, the project scope and potential influencing factors. When evaluating a process, it is common for a Lean Six Sigma Black Belt to ask the process owner, ‘What’s your biggest pain?’ or ‘If you could fix one issue with the process, what would it be?’ Taking initial measurement of the process ‘as is’ is critical to understanding the impact of any continuous improvement project.
Effectiveness should be measured in defect reduction, time savings, monetary measures or anything else that can show direct benefit to the increased efficiency of the process.
Using Lean Six Sigma as an organizational tool for continuous improvement allows companies to constantly seek to minimize problems, increase efficiencies and maintain the highest levels of productivity, even during tough economic times.
Ed Siurek is director of Quality for Corporate College. Reach him at (216) 987-2828 or Edward.email@example.com.
In today’s competitive environment, noncompete and confidentiality agreements can be critical to maintaining an edge over your rivals.
And failing to have them could put your company out of business should your employees leave and take your secrets with them, says Susan Rowe, a partner with The Stolar Partnership.
“One of the primary assets that most businesses have — which they’ve often spent significant funds to develop — is their confidential information,” says Rowe. “This includes, for example, formulas, proprietary research, customer databases, pricing strategies and other trade secrets.”
Smart Business spoke with Rowe about noncompete and confidentiality agreements, what type of information to include in employee contracts and, if things go awry, what type of evidence is needed to pursue legal action.
Why is it important for employers to address noncompete and confidentiality agreements?
Missouri statutes protect confidential information that is a trade secret. It’s important to have a confidentiality agreement because you can use it to talk to the employee about the importance of protecting confidential information. You can also identify trade secrets and confidential information. If you fully describe what is confidential, the employee can’t later say, ‘I didn’t understand that this was or wasn’t confidential.’ Furthermore, you can include certain protections in addition to the protections that statutes might provide for the employer.
It’s also important to have a noncompete agreement. Absent a noncompete, former employees can leave to join a competitor, with nothing to prevent them from doing so. Even without confidential information, there are circumstances in which an employer doesn’t want someone it has trained — and spent significant resources doing so — to go out and compete against it.
What information should be included in a noncompete agreement?
It’s important for employers to realize that the enforcement of a noncompete agreement is a legal matter. Noncompetes can be expensive to enforce in the courts. Noncompetes undergo a lot of scrutiny in the courts because the law says such agreements are anti-competitive and can only be used to protect certain interests of the employer — such as the customer base or trade secrets.
If you’re protecting client relationships, describe the scope of the relationships and identify which are considered confidential and subject to the noncompete.
Also, be careful about the scope of the agreement in terms of its length and geographic restrictions. The courts typically do not allow for a very broad geographic scope or permit a noncompete to go on for a long period of time.
Finally, include remedies for yourself, such as attorney fees and other provisions, which will protect your business if you have to enforce the agreement.
If an employee signs a noncompete agreement but takes a job with a competitor, what steps can an employer take?
To prevent disputes, give the employee who is leaving or who has been terminated copies of the agreement upon his or her departure.
Employers who employ someone with an existing noncompete with a former employer — and are aware of the noncompete but continue to employ that person nonetheless — run the risk of being sued by the former employer on a tortious interference with contract claim. If you become aware of a former employee, bound by your noncompete agreement, working for a competitor, have your attorney send the new employer a copy of the agreement, thereby putting the new employer on notice that you believe there is a noncompete agreement in effect. Often, this will dissuade the new employer from continuing to employ the person. You can also send a letter to the former employee, reminding him or her of the noncompete agreement and stating that you intend to enforce the provisions. Sometimes that’s enough. Other times, employees will proceed in the face of a noncompete and you will have to go to court to enforce the agreement.
What evidence does a business need to pursue legal action against a former employee whom it suspects has leaked confidential information?
As with any lawsuit, before it is filed, make sure that you have good-faith basis for the lawsuit and see that much of your evidence already in place. If one of your former customers says, ‘Oh, your former employee is calling on me,’ ask that person to send a note or letter identifying the person who has called on the business.
If you think the former employee is talking about your confidential information, ask your customer to write down the substance of the conversation. This allows you to have a statement ahead of time that you can use to support what you will be alleging in the lawsuit.
In addition to noncompetes, what other methods can a business use to protect its intellectual property?
Employers should be mindful of what’s out on the Web. Commentators have talked about employers who have found their former employees disclosing confidential information or engaging in developing relationships with former customers on such sites as Facebook and LinkedIn. When employers find this type of information, they should demand that the former employee stop this conduct or remove confidential materials, or face legal action for failing to do so.
Employees change jobs because they’re dissatisfied — they feel like they don’t have opportunities or that they’ve been treated badly. To prevent people from leaving with confidential information, it’s important to build loyalty with your employees, listen to them when they’re upset and treat them fairly.
Susan Rowe is a partner with The Stolar Partnership. Reach her at (314) 641-5119 or firstname.lastname@example.org.
When a dispute occurs between businesses, it is not uncommon for one of the parties to turn to the court system for resolution in the form of a lawsuit. However, there is an alternative method to resolving legal issues that can save you both time and money.
Alternative dispute resolution, or ADR, is a process in which legal disputes are resolved by trained mediators or arbitrators rather than a judge. Under certain circumstances, ADR can be used to settle disputes more quickly and less expensively than if they were decided in litigation. ADR also provides the parties with greater privacy because proceedings are not taking place in a public forum.
“Privacy is one of the principal advantages of arbitration or mediation over litigation,” says Stephen J. Siegel, a partner with Novack and Macey LLP.
Smart Business spoke with Siegel about how ADR can benefit your business and when it is an appropriate choice for dispute resolution.
What are the most commonly used forms of ADR?
The two principal forms of ADR in the United States are arbitration and mediation. Arbitration is similar in some respects to litigation. Both are adversarial processes in which the parties offer evidence and arguments to try to obtain a favorable binding ruling from a neutral decision-maker.
But, arbitration is different from litigation in several key respects. Unlike in the court system, the parties typically participate in selecting one or more of the arbitrators. Also, there are only a handful of grounds on which you can try to overturn an arbitration award and these are very hard to establish. In addition, U.S. arbitrations are generally resolved in less than a year, whereas it often takes several years to get a decision ‘on the merits’ in business litigation. Finally, on average, there is less discovery and less motion practice in arbitration than in litigation.
Mediation is quite different from arbitration and from litigation. First, though mediations are sometimes contentious and have adversarial elements, a successful mediation requires the parties to collaborate with a neutral mediator and one another to negotiate an agreed resolution to the dispute. Second, there are fewer rules in mediation and generally, the mediator and parties are free to design the process to suit their needs. Third, if settlement efforts fail, a mediation does not commonly lead to any sort of binding ruling.
Under what instances is it most appropriate to use ADR?
Arbitration and mediation are tools. They are helpful if used wisely, and can be frustrating and costly if not. Arbitration is a good tool for resolving repeat disputes of a known size and complexity. For example, if your company periodically has pricing or performance disputes with its customers that are significant but not ‘bet the company’ events, arbitration might be a good way to resolve those disputes. It can provide you with a confidential process, a say in who the arbitrator is and the opportunity to limit discovery and motion practice to help contain costs.
On the other hand, in large, complex or unique disputes, arbitration may not be the best choice because it offers little or no right to appeal. If you don’t agree with the award, you’ll generally have to live with it, whereas in litigation, an appellate court can take a fresh look at the legal issues. Also, with bigger disputes involving multiple claims and issues, the parties often want more discovery and the opportunity to file motions to resolve issues before trial. Litigation is well suited for such cases, though arbitrators often permit discovery, and sometimes allow motion practice.
Mediation is worthwhile for nearly any dispute that both parties want to resolve but which they are having trouble settling on their own. Setting aside a time and place to meet about settlement, and working with a neutral party frequently helps parties to bridge differences that seemed insurmountable.
Even when a settlement is not reached during mediation, the process can still be beneficial. For example, it might bring the parties closer to a settlement and facilitate reaching a settlement in the future. Even if no settlement is ever reached, mediations often provide the parties with insights into their adversary’s positions, goals and strategies, and that can be invaluable as the dispute proceeds. Most mediations are valuable whether or not the mediation leads directly to a negotiated resolution.
On the flip side, a common frustration occurs when two parties want to settle but the mediator is not skilled at working the parties toward common ground. So take the time to investigate and select your mediator carefully.
How do ADR costs compare to cases processed in the court system?
Generally, arbitration should reduce your direct costs in attorney’s fees and other dispute-related expenses as compared to a litigated outcome. This is because there is less motion practice and discovery and the process typically leads more quickly than litigation to a hearing on the merits of the dispute. But, these savings are not always realized. Sometimes arbitrations get very involved and complicated. The choice of how to manage arbitration is as important as the choice of whether to arbitrate. Once you’ve agreed to arbitrate, you have an important task in laying out the ground rules to keep it less costly, burdensome and time-consuming than litigation. You have to manage the process to achieve those goals.
In general, mediation is less expensive than litigation or arbitration, but it’s hard to compare the costs. Mediation is often a supplemental way to resolve a dispute that’s in litigation or arbitration, so unless the mediation leads directly to a settlement, it may increase your direct costs. If the parties go to mediation simply because they were asked or required to do so, not out of a genuine desire to resolve the matter, then it can be an added cost with little or no benefit. But, as with arbitration, if you select your neutral party carefully and manage the mediation process, you’ll increase the chances of saving costs and obtaining an acceptable outcome.
Stephen J. Siegel is a partner with Novack and Macey LLP. Reach him at (312) 419-6900 or email@example.com.
More than 47 billion nonspam e-mails are sent every day, and many of those pass through an employer’s e-mail system or an employer-provided mobile device.
“As of mid-2010, approximately 40 percent of corporate employees used employer-provided mobile devices to send and receive electronic messages,” says Andrew D. Campbell, a commercial litigation partner at Novack and Macey LLP.
Managing e-mails can be time consuming and costly for employers, says Campbell. The time and expense of regulating e-mails can be exacerbated when employees send or receive personal e-mails on employer-provided devices. Personal e-mails sent through employer-owned devices raise unique issues such as who owns these e-mails, and what, if any, expectations of privacy do employees have with respect to nonbusiness e-mails sent via corporate devices?
Smart Business spoke with Campbell about the rights of employers to access e-mail sent on company-owned devices and how an e-mail policy can help protect employers.
What are some of the issues regarding employees sending personal e-mails through their employers’ devices?
Some organizations allow their employees to use employer-owned mobile devices or e-mail systems to send or receive occasional personal messages.
These organizations tend to believe that requiring an employee to use two devices — an employer-provided device for business and an employee-provided device for personal use — will result in employees opting to carry just their own device after hours and on weekends. For these employers, the benefit of greater access to their employees seven days a week outweighs the costs associated with employees sending and receiving personal messages. However, many employers prohibit employees from using employer-owned devices for personal or nonbusiness use. So why do employees continue to send personal e-mail despite these policies? Likely because they feel they can get away with it.
A recent study found that while 95 percent of organizations have policies in place for mobile devices, only 10 percent say that enforcing restrictions on their use is ‘very easy.’ In light of the fact that more than 47 billion e-mails are sent each day, employees may send personal e-mails believing that there is minimal chance that their personal messages will be detected.
Why would an employer want to review an employee’s e-mail?
For the most part, employees use e-mail accounts as permitted by their employers. Yet, there are some who use their accounts to break the law, disparage an employer or transfer trade secrets or confidential information outside an organization. Incoming e-mails can also be a source of electronic viruses, and employers may monitor these e-mails for security purposes. Reserving the right to review an employee’s company-provided e-mail can be extremely important to maintaining the security and integrity of an organization.
When is it permissible for an employer to review personal e-mails?
As with most legal questions, the answer is, ‘It depends.’ Among other things, it depends on whether the employer is a government entity or a private business. Government entities, even when acting in their capacities as employers, are bound by the Fourth Amendment, which prohibits the government from making unreasonable searches of people’s property or effects. Private employers, while not bound by the Fourth Amendment, must still be concerned with potential claims for invasion of privacy.
While the analysis under the Fourth Amendment and privacy claims can differ, one element they share is that employees must have a reasonable expectation of privacy. If there is no reasonable expectation of privacy, an employer’s review of an employee’s e-mails is far less likely to be regarded as violating the law.
How do courts assess whether an employee has a reasonable expectation of privacy?
There are a number of factors that courts will consider. Four of the most common questions addressed are, does the organization maintain a policy banning personal or other objectionable use? Does the organization monitor the use of the employee’s computer or e-mail? Do third parties have a right of access to the computer or e-mails? And did the organization notify the employee of, or was the employee aware of, the use and monitoring policy? The more factors that are present, the more likely it is that a court will find that an employee had no reasonable expectation of privacy in his or her e-mails.
Other factors that courts have considered — although these factors are generally not outcome determinative — include whether the employee has a password; whether anyone other than the employee knew the password; and whether the employee has a private office or a more visible workspace. The harder it is to access an employee’s e-mails, the more likely it is that a court will find there is an expectation of privacy.
What provisions should an organization’s e-mail policy include?
Regardless of whether an employer allows personal e-mail, to minimize the risk of liability from an employee-initiated claim for privacy violation, a policy should, among other things, be in writing; be signed by each employee to whom it applies; state that employees do not have any expectation of privacy in e-mails; notify employees that e-mails may be monitored by the employer; state that all communications sent or received through an employer’s software or hardware are property of the employer; and prohibit the use of employer software or hardware for illegal or harassing purposes.
An alert, reminding employees of the policy when they sign onto their accounts, can also help shield employers from liability for claims of invasion of privacy.
Andrew D. Campbell is a commercial litigation partner at Novack and Macey LLP. Reach him at firstname.lastname@example.org or (312) 419-6900.
Historically, the power of eminent domain has been exercised to facilitate the construction of large public projects such as highways and railroads, schools and housing developments, to name a few.
Eminent domain has been used to clear blighted areas in cities to make way for redevelopment. More recently, the power has also been used to enable municipalities to clear the way for economic redevelopment projects, such as new shopping centers. Indeed, the decision in Kelo v. City of New London, a case that went before the United States Supreme Court in 2004, set a precedent for property to be transferred to a private owner for the purpose of economic redevelopment.
The court found that if an economic project creates new jobs, increases city revenue and revitalizes a depressed or blighted urban area, that project qualifies as a public use.
“Eminent domain is the power of the state to appropriate an individual citizen’s property for the benefit of the citizenry,” says Jay Levitch, a partner with The Stolar Partnership. “Eminent domain is embedded in the federal constitution and the state constitution.”
Smart Business spoke with Levitch about eminent domain, how compensation in a property-taking is determined and how to go about finding a suitable attorney to assist you in an eminent domain case.
How does the process of eminent domain work?
If it’s a state agency — such as the Missouri Department of Transportation — the condemning authority has the power to claim land for a public purpose or public use. This power derives from the constitution.
If it’s a municipality seeking the land, the agency can pass legislation to claim it for a public purpose or public use. In either case, the entity identifies the property and the purpose for which it is to be taken. It then notifies the property owner or owners of the need for the property and makes an offer of compensation.
If the condemning authority and the property owners cannot agree on the compensation for the taking, there is a procedure prescribed by statute that enables the condemning authority to initiate a lawsuit in order to pursue taking the property.
How is compensation determined?
The process was revamped by the Missouri General Assembly in 2007. There is a statute that defines just compensation and says that it is to be determined by a jury utilizing a variety of generally accepted appraisal practices.
This includes, but is not limited to, the sales comparison approach, which looks at sales of similar types of property; the cost replacement approach, which is an evaluation technique based on what it would cost to replace the property with a similar property of similar construction; and the income approach, which looks at the property in terms of the income it generates and translates that into the property value.
These techniques, plus other generally accepted appraisal techniques, may be presented to the jury as a means by which the jury becomes informed as to the fair market value of the property. After evaluating the evidence, the jury then makes a determination and awards the property owner compensation for the taking of his or her property.
How have public views about eminent domain shifted recently?
We have a seen a change in the attitudes of the public over the last several years. It culminated with the Kelo decision by the United States Supreme Court. Ten years ago, people were not opposed to the use of eminent domain to try to foster redevelopment, the rebuilding of cities and the development of roads.
But over time, some people have come to believe that eminent domain has been used to transfer private property from one owner to another who plans to develop the property for their own profit. As a result, in the St. Louis area, you don’t see nearly as much use of eminent domain in connection with redevelopment as you once did.
Can a business be compensated if the government’s eminent domain acquisition adversely affects its operations?
The law in Missouri holds that a business owner is not compensated for the impact an eminent domain taking has upon its business. The view has been that the condemning authority is taking the land; it is not taking the business.
However, there are exceptions. There have been instances of substantial rewards for the partial taking of a business that completely closes off the access to a public street and leaves customers with a convoluted type of access to the business.
There have also been awards for the taking of property that impacts the ability of a business to expand.
What criteria should be considered when selecting an attorney in an eminent domain matter?
As with any legal matter, the person who is seeking an attorney should look for a lawyer with experience in the field. If a person is faced with a letter from a condemning authority saying, ‘We are going to be taking your property,’ it’s important for the property owner to look for a lawyer who has represented property owners and who is familiar with the eminent domain process.
Jay Levitch is a partner with The Stolar Partnership. Reach him at email@example.com or (314) 641-5178.
If your organization still doesn’t have a social media policy, it is time to create one.
“Every organization should have a social media policy that enables it to optimize the opportunities that interactive social media sites present while minimizing the attendant risks,” says Kristen Werries Collier, a partner with Novack and Macey LLP.
Smart Business spoke with Collier about those risks and how to develop a workable policy to minimize your exposure.
What are some of the risks associated with social media?
While social media’s open format and accessibility to the public makes it a vital platform for organizations to disseminate information, that attribute engenders certain risks, including: the disclosure of confidential or proprietary information; the broadcast of negative comments about your organization, co-workers, customers or clients; and the risk of employees’ personal views being improperly imputed to the organization’s detriment. Your social media policy should essentially be a primer of how to avoid these and other risks.
How can an organization begin to draft a social media policy?
You don’t need to start from scratch. Visit socialmediagovernance.com/policies.php or www.kokasexton.com/word/100-examples-of-corporate-social-media-policies — free databases of social media policies. Assimilate what you like from these policies and then continue to modify the directives to address your specific concerns. If your organization already has a code of conduct related to media, you can modify those directives to cover the use of social media.
One size doesn’t fit all. You need to tailor your policy to reflect your organization’s culture. Determine how strict your policy needs to be based on your needs and tolerance for risk. I don’t think it makes sense to bar your employees from accessing social media sites at work. Your organization depends on your employees’ professional judgment, and their use of social media sites should be governed by that judgment, guided by your social media policy.
Even if you block access to social media altogether, that does not obviate the need for a policy that informs employees of the repercussions of posting negative comments during nonwork hours that could damage the organization’s reputation or reveal confidential or propriety information.
Who should be involved in creating the policy?
Keep in mind that you are asking your employees to self-monitor their behavior in accordance with prescribed guidelines, which means that any policy’s effectiveness turns on whether your employees understand it and buy into it. Given that, you want to create an understandable policy that protects your organization from the pitfalls of social media sites without overreaching.
To get employee buy-in, recruit a cross-section of employees to help you create the policy. They can then be integral to communicating it, facilitating implementation, monitoring its effectiveness and tweaking it.
What are some general guidelines for creating an effective social media policy?
1. Keep it short.
2. Define social media so it is clear what the policy is addressing.
3. Start on a positive note and highlight how your organization uses social media sites to its advantage so it is clear the policy is intended to empower and educate.
4. Declare that the purpose of the policy is to protect the organization.
5. State that the policy is not intended to infringe on employees’ personal interaction online but to ensure their posts do not reflect poorly on the organization, its employees or clients, and do not reveal confidential or proprietary information.
6. Encourage employees to use common sense.
7. Be specific. Provide an organization-specific list of the types of information that cannot be disclosed and note that if it seems confidential, it probably is.
8. Remind employees that if they identify the organization as their employer in online profiles, comments posted there could be imputed to the organization.
9. Direct employees to refrain from posting comments that could be interpreted as harassing, slurs, disparaging, demeaning or inflammatory.
10. Explain why certain conduct is prohibited.
11. Remind employees that their online presence is subject to applicable laws and terms of service.
12. Inform employees that you will monitor their social media presence, and then do it.
13. Tell employees the use of social media at work is a privilege, one that can be rescinded if abused.
14. Spell out the repercussions for violating the policy.
15. Have employees sign the policy.
16. Have a plan to minimize damage if the policy is violated.
How should an organization implement the plan?
Communicating the policy is as important as writing it. With that in mind, designate someone to convey a clear message about why the policy is necessary and that employees are expected to follow it. It would be a shame to invest significant time and effort into drafting the policy and then have it sit unread in your employees’ inboxes.
Also have a point person to answer questions because employees can’t abide by the policy if they don’t fully understand it.
How often should the policy be reviewed?
It should be reviewed at least annually, allowing you to work out the kinks by refining what works and eliminating what doesn’t. After you have a policy that has proven to be workable and effective over time, you can revisit it when the need arises, or at least every couple of years.
Kristen Werries Collier is a partner with Novack and Macey LLP. Reach her at firstname.lastname@example.org.