Arthur G. Sharp

Wednesday, 25 October 2006 07:51

Navigating high-tech trials

Courtrooms are going “Hollywood” — and paperless. Society has changed, and the courtroom is catching up with jurors who use technology in their jobs on a daily basis. Since the jurors themselves are “technology savvy,” they expect attorneys and their vendors to be as well.

The high-tech changes taking place are spawning a new courtroom protocol and a new industry that revolves around technology vendors who can understand attorneys and predict where they might be going and be ready to call up an image or highlight a passage at a moment’s notice.

Smart Business spoke with Keith Langley, a partner with Godwin Pappas Langley Ronquillo LLP, to get some insights into the expansion of technology in courtrooms, how it affects the parties involved in litigation, and what business owners need to do to adapt to the changing courtroom environment.

How does the trend to high-tech trials affect participants?
For one thing, the way a jury decides a dispute is changing rapidly. In general, jurors nowadays have shorter attention spans than their counterparts of only 10 or 20 years ago, and they process information differently. They expect productions nowadays, complete with technologically advanced bells and whistles, rather than being handed plain pieces of paper.

Judges, too, are more astute now about the benefits of technology in their courtrooms. Moreover, they are setting new ground rules about how technology can be used, and impacting attorneys’ preparations and presentations as a result.

What do business owners need to know about trials in high-tech courtrooms?
Business owners involved in disputes that reach the high-tech courtroom must recognize that technology is changing the way trials are conducted, and they have to be prepared to work with attorneys who are comfortable with Hollywood-like presentations. They also have to understand that the introduction of updated technology can be more costly, which means they should always weigh the costs of alternative dispute resolutions against those of high-tech trials.

How does a technologically proficient attorney benefit clients?
An attorney’s ability to display relevant parts of documents or present evidence visually while questioning a witness simultaneously can be attractive to a jury. And, since some judges will not allow any paper in the courtroom, everything has to be done electronically. Then it becomes an issue of which attorney does a better job of using technology. The one who does it well has a significant advantage in the courtroom. Worse, the attorney who is technologically challenged runs the risk of alienating the jury.

The number of electronic documents in a case today can be overwhelming both to the attorney and technology vendor. Jurors are not forgiving, and even though there may be thousands of images, they expect the attorney and the technology vendor to be able to navigate through the documents without trouble.

How does the high-tech trend affect attorneys?
They have to embrace the technology and its concomitant changes, which makes preparation all the more important. For instance, they have to make sure their exhibits are digitized, know how to access them quickly, and make sure they are pre-admitted. They have to have their video cuts done, and scope out the venue before a trial. All the preparation in the world is useless if the courtroom is not equipped with the necessary technology.

Attorneys practicing due diligence in this respect will check a courtroom to see what equipment it does or doesn’t have, and supplement whatever is there by bringing in plasma displays or screens on which they can project images, or smaller monitors that they place strategically for the benefit of judges and jurors, etc.

What criteria should a client apply when hiring an attorney who is comfortable in a high-tech courtroom?
The first thing is to look for an attorney who is willing to do the work required to turn any courtroom into a high-tech courtroom, even if it is a 150-year-old venue. Clients have to find attorneys who know the judges and their preferences regarding technology in their courtrooms, and who embrace technology and understand the ways jurors filter information.

For example, they should ask attorneys if they are comfortable working with plasma screens, PowerPoint, the electronic display of evidence, and if they have the ability to tie everything together. They can also ask to see if the attorney has any Certified Electronic Discovery Specialists on staff to assist in the case.

Of course, the best approach is still to settle disputes before they get to the courtroom. That may be low-tech, but it is still the most cost-effective resolution.

KEITH LANGLEY is a partner and secretary/treasurer for Godwin Pappas Langley Ronquillo LLP in Dallas. Reach him at (214) 939-4458 or

Wednesday, 20 September 2006 13:13

Handling small contract disputes

At times, corporations become engaged in contractual disputes in which the dollar amount of the contract is small (say, less than $100,000). Yet the parties, due to emotion, lack of forward thinking, or both, engage in litigation that results in attorneys’ fees being out of proportion with the size of the amount in controversy. Worse, they endanger their business relationships and adversely affect their future sales.

Smart Business talked to Andrew Sarne, a partner with Godwin Pappas Langley Ronquillo LLP, to learn more about how business owners can balance attorneys’ fees and the costs involved in their small contract legal disputes while retaining business relationships and goodwill.

What methods exist to prevent attorneys’ fees from ‘eclipsing’ the amount at issue?
Internally, reasonable business decisions need to be made regarding disputes that remove the emotions of the parties. Although two corporations might have a dispute, it often seems that there is a substantial likelihood they will continue to do business in the future. As such, the dispute itself can be resolved by knowing that whatever loss is taken on that deal can be made up in the future.

How can the parties resolve their disputes without incurring unnecessary legal costs?
An informal meeting without attorneys by two unemotional representatives of the respective corporations can generally yield a dialogue for resolution. Parties can also include appropriate clauses in their contracts that dictate that the matter shall be submitted to mediation (prior to litigation being commenced), arbitration, a bench trial, or be resolved by way of other creative means.

If mediation or arbitration is selected, the quality of the mediator or arbitrator is extremely important.

Assuming internal mechanisms are not available, the entities can engage counsel to attempt to resolve the matter through an alternative dispute resolution mechanism. Ultimately, a decision has to be made that the attorneys’ fees that will be invested in the dispute may very well eclipse the matter at issue. As such, a business decision needs to be weighed in comparison with those fees.

Although many contractual causes of action will allow for the recovery of attorneys’ fees, this is not always a guarantee. The party that seeks to litigate ‘to the end,’ assuming it will get its attorneys’ fees paid, may learn that this is not automatic. In fact, if the opposition is pushed too hard, they may find themselves litigating against an insolvent party.

What can an attorney do in small contract disputes that the parties involved cannot?
An attorney can, if empowered by the client, often take the emotion out of the situation, which generally drives the litigation. If the attorney is properly objective, he should explain to the client that regardless of the principles involved, the attorneys’ fees are a legitimate issue in these types of matters, and that immediate resolution tactics are more prudent than litigation tactics.

On occasion, attorneys give in to their clients’ emotions and allow the matter to escalate into such a tremendous lawsuit that, at the end of the matter, the parties would have been much better off negotiating a reduced amount on the front end versus paying out the attorneys’ fees and ultimate judgment on the back end.

Additionally, sometimes public relations issues and future business contacts can be impacted negatively.

At what point in the negotiation process should an attorney be introduced?
The attorney should always be involved from the beginning, but given clear objectives by the client.

In terms of contract negotiation, it is best for the parties to have a clear understanding of what goal they want to reach before attorneys are involved. Frequently, a client who relies solely on an attorney to provide direction for the contract can veer the project away from the intended goal by trying to protect the client.

In any event, once the attorney is involved, he should receive clear direction from the client, as all too often clients provide a contractual document to an attorney and allow the attorney to have free rein, which can destroy the goal. However, if an attorney is given proper direction and has negotiation latitude with the opposition, this is a useful tool. Additionally, the dispute resolution options mentioned above should be incorporated into any agreement.

What benefits accrue to the clients from the attorney’s involvement?
Often, in addition to reduced attorneys’ fees, a number of potential problems can be avoided by having an attorney involved on the front end of a negotiation. It is important to note, though, that other problems can also be created if attorneys are not given the proper objectives.

ANDREW SARNE is a partner with Godwin Pappas Langley Ronquillo LLP in the Houston office. Reach him at (713) 425-7405 or

Wednesday, 30 August 2006 10:04

Cutting legal costs

Many people think they want their “day in court” to settle disputes. Once they get there, they may discover that it’s not really what they wanted after all. Trials are often time-consuming and expensive, and the outcomes may not always be what the parties anticipated.

There is an alternative to trials: mediation.

The use of mediation is growing. In the Houston area and throughout the state, the majority of Texas State Court judges order most cases to mediation before trial.

Smart Business talked with Ron Bankston, a partner at Godwin Pappas Langley Ronquillo LLP, about the benefits of mediation and how it can reduce the comparatively higher cost of litigation.

Why should people consider mediation?
Mediation leaves control over a dispute — and the terms of any settlement — in the hands of the parties themselves. The mediator simply helps the parties come up with a solution that, while not always ideal and not an absolute win for either side, is acceptable to everyone. The mediator’s primary role is to act as an agent of reality, someone who points out privately to both sides what their risks are and how much it is likely to cost for that day in court.

Are some cases more amenable to mediation than others?
Mediation is based more on the interests of the participants and the timing of the case than on the type of case or the area of law involved. In the end, most cases are going to settle before a jury verdict, anyway.

Probably five percent or less of all civil cases are actually decided by a trial, whether mediated or not. Of the cases that do go to mediation, a high percentage — probably 80 percent — settle either at mediation or shortly after.

A settlement on the courthouse steps may be the ‘worst of all worlds’ in which the parties have spent the money to prepare for trial, but end up settling on terms that are no better than a mediated agreement.

What should litigants consider before deciding on mediation?
First, the parties have to understand their side of the case — accurate information; goals, strengths and weaknesses; and estimated litigation costs. Once they do, they should communicate with the other side to see if they are legitimately interested in resolving the case. Without a legitimate interest in resolution on both sides, mediation stands a poor chance of being effective.

Does seeking mediation signal weakness on a client’s part?
Offering to mediate is not a sign of weakness; it is a sign of being realistic. Every case involves some weakness, risk and cost, and litigation may not produce the desired results. Mediation balances the cost and risk. Delaying that process may accomplish nothing more than driving up the costs for all concerned.

Is it less expensive to go through mediation rather than a trial?
It is, from both a monetary and quality-of-life standpoint. Mediation typically lasts a day or two, whereas the discovery and pre-trial stage of litigation often lasts months or years. A trial may drag on for weeks or months. That translates into legal fees and costs for court reporter charges, expert witness fees, preparation of exhibits and graphics, etc.

But not all the costs can be measured in dollars. The time that a company’s personnel spend during the litigation process, which takes them away from their normal responsibilities, is costly. There are intangible costs involved in trials as well, such as the stress involved and the time litigants spend thinking and worrying about the dispute, which exacts a mental and emotional toll.

Even if the parties choose mediation, they will still incur some legal expenses, and they will pay a fee to the mediator (typically a flat fee per party for a day of mediation). Comparatively, mediation is significantly less expensive. But perhaps more importantly, mediation also reduces the quality-of-life costs.

What should litigants look for when retaining lawyers for mediation?
Some of the questions to be asked address lawyers’ philosophies about mediation; when they think mediation is appropriate; how much success they and their clients have had in past mediations; and whether they have received specialized training in it. Obviously, the lawyer needs to have experience and expertise in the relevant area of law, but litigants considering mediation can use this information as criteria for selecting from among otherwise qualified attorneys to find the one best suited for their case.

RONALD G. BANKSTON is a partner with Godwin Pappas Langley Ronquillo LLP in the Houston office. Reach him at (713) 425-7419 or

Tuesday, 29 August 2006 10:13

Private banking

In today’s financial world, business owners understand that managing a family’s finances requires the same diligence and foresight as managing a company’s. Private bankers are a key resource in this process. With thousands of financial products and services available today, having a trusted resource to aid in navigation is crucial.

For example, private bankers can save their clients time by customizing personal or business loan structures, reducing turnaround times for products such as construction or bridge loans, and making it easier to meet crucial fiduciary deadlines. In effect, they become extensions of their clients’ businesses and families — and their chief financial advisers as well.

Smart Business spoke with R. Scott Wolfsen of MB Financial Bank N.A to get some insight into the benefits of private banking and the reasons owners should consider it.

What is private banking?
It is a comprehensive, advisory approach to personal financial management that gives clients a single point of contact for all of their personal financial needs.

Private bankers work closely with their clients to provide customized credit and cash management services that typically include checking and money market accounts, certificates of deposit, lines of credit, and first and second home mortgages. They also act as the liaison between clients and the other specialized wealth management services within the bank such as investment management and personal trust.

Why do business owners establish relationships with private bankers?
While the initial contact between banker and client may be driven by a specific loan or deposit need, business owners quickly see the advantage of having an established, trusted adviser to mitigate the difficulties associated with the complex financial environment in which they operate today. From buying that vacation home to saving for retirement, private bankers will bring together a team of competent, experienced professionals all working toward the client’s long-term goals.

Can’t business owners get the same type of service from their commercial bankers?
The private banking relationship is a supplement to — not a replacement for — the commercial banking relationship. While the typical business owner’s personal finances are often closely tied to his or her business, the personal needs and solutions are unique. The private banker works closely with the commercial banker to ensure that all the client’s financial needs are met as conveniently and completely as possible.

How does private banking benefit business owners?
The private banker provides a single source for a vast array of wealth management services and finds solutions based on a comprehensive understanding of the business owner’s ultimate goals and objectives. Having an established, trusted relationship often means shorter response times, faster solutions and greater flexibility in meeting the client’s needs. Most institutions also have customized products for the private banking customer with preferred rates, structure, or fees based on the total relationship.

What criteria would a business owner use when selecting the private banking institution best suited to his or her needs?
While similar, each institution will approach the private banking business in its own unique way. The important thing is to find an organization where you are comfortable with the culture as well as the people. For business owners, this often means banking where the company banks. Using a single institution for both business and private banking services ensures that all of their financial advisers are working toward a common goal with the most comprehensive information available.

Are there minimum requirements clients must meet before seeking private banking services?
The qualifications for private banking will differ from institution to institution but will generally include parameters for income, net worth, investable assets, and/or loan amounts. Most banks look for clients with personal income over $250,000, assets available for investment of $500,000, or personal lending needs over $1 million. That said, commercial banking customers not meeting these standards individually will often qualify based on the commercial relationship with the bank.

Business owners interested in establishing a private banking relationship should speak with their commercial banker to see what services are available.

Is there anything intangible that contributes to a strong, long-term private banker-client relationship?
The most significant intangible factor that guides the relationship is communication. Private bankers recognized that each business owner is unique with respect to their goals and objectives, their resources, and their time frame. Private bankers learn as much as they can about their clients, from special family needs to business succession plans. By working together on an ongoing basis and communicating regularly, the banker can ensure that the business owner’s financial needs are met both today and in the future.

R. SCOTT WOLFSEN is first vice president with the Private Banking Division of MB Financial Bank N.A. Reach him at (847) 653-2154 or

Thursday, 29 June 2006 17:50

Hydrocarbons and global warming

The subject of global warming has a way of opening rifts. Experts who believe it is taking place also believe that manmade hydrocarbons in the environment are making it worse. Opposing experts say global warming is a natural phenomenon that ultimately won’t harm the environment. In either case, business owners are stranded in the middle, facing potential costly outlays to deal with the proposed solutions.

If you listen to global-warming advocates, you would think that global warming results primarily from gases spewed into the atmospheres by manufacturers and autos. That is not even remotely true. The fact is that 97 percent of the global warming gases are water vapor. Manmade hydrocarbons (CO2), per federal research reports, compose less than half of 1 percent of global warming gases. Again, regardless of the facts, the controversy rages and businesses are in the middle.

Smart Business spoke with John Barnes about the hydrocarbons and their possible connection to global warming in the context of the effect on U.S. businesses — and business’ response to it.

Do you believe that global warming is a byproduct of manmade hydrocarbons?
Global warming may be real, but most of it is a natural phenomenon. And the influence of manmade hydrocarbons as a harmful factor in it is theory, not fact. The data supporting the theory is heavily suspect, and a lot of evidence exists to refute it.

Keep in mind that without some global warming, humans couldn’t survive here. Temperatures would average somewhere below zero. From the historical perspective, consider that, 12,500 years ago, Earth experienced a double-digit increase in global temperatures — at a time when no automobiles or manufacturing plants were around to cause it.

What evidence exists to refute the idea of a global warming threat to the planet?
The Earth has more ice right now than 100 years ago. It is true that the thin Artic icecap and a small peninsula in Antarctica are melting, but the Antarctic has 90 percent of the world’s ice and 70 percent of the world’s fresh water. The Antarctic ice cap has, in fact, thickened overall over the past few years.

If you look at the 100-year temperature surveys that global-warning proponents use for evidence, almost all were conducted in or around large cities. Global-warming proponents believe that average temperatures in those cities have risen because of the increase in industrial gases. If they have — and variations are small — one must factor in that concrete, asphalt and sun-reflecting skyscrapers create more heat than the grass, dirt and trees they displaced. Around smaller cities that have not grown significantly with a lot more concrete, asphalt and skyscrapers, temperatures have not risen.

Evidence for or against the role of manmade hydrocarbons in global warming notwithstanding, the concept has enough momentum to harm U.S. industry.

Harm U.S. industry how?
Potentially — and this is significant — with carbon taxes. It’s likewise significant that the global warming theory began as a political issue in Europe. Given that the United States has the most productive economy in the world and is the biggest energy user, some Europeans look at global warming as a way to cripple their competitor’s economy and improve their own.

For people outside the United States and some within it, the global warming theory is a pretext for raising taxes massively or requiring permits for energy use — so-called carbon taxes or permits — for technologically advanced countries. Such taxes or permit requirements don’t exist yet, but the Kyoto Treaty, which the U.S. has thus far refused to ratify, calls for them.

How would the Kyoto Treaty affect U.S. industry if our government were to ratify it?
The treaty is designed to mitigate the effects of global warming by some small fraction of the one half of 1 percent of the global warming effect of CO2 — that’s all — and raise taxes in multi trillions of dollars. The treaty’s carbon taxes would transfer a massive amount of wealth. That might have a major impact on U.S. businesses, but a small impact on perceived global warming. Meanwhile, large developing nations like China and India would go unaffected by it.

What can U.S. business people do about the possible impact of global warming legislation?
They can always push to revive focus on alternate energy sources — and use the alternatives available now.

They can attempt to offset negative media reports. Bad news sells, and global warming is one of media’s major current causes clbre.

Business professionals must look past the media’s stories and know the facts for themselves. Business owners must also monitor governments’ reactions to the issue of global warning, stay current on where legislation may be heading, and work with other business owners to keep the debate centered on balanced facts, not media-driven frenzy.

JOHN BARNES is chairman and CEO of B&R Energy LLC. Reach him at (972) 934-3800 or

Thursday, 29 June 2006 17:39

Maximizing your benefit plan

Employers want to make sure their employees understand and appreciate the benefits they provide. It is also important to learn about new trends in employee benefits and to have the proper steps in place when adopting new programs or plans.

Lack of proper attention to employee benefits programs can put employers in the position of incurring adverse legal exposure. This can happen in numerous ways, including being put out on a tax limb without support, having a pension plan that is not qualified, or having an executive comp arrangement that doesn’t meet its purpose or produces adverse tax consequences. One way to avoid these scenarios is to work with competent consultants.

Smart Business talked with Gary Lawson, a partner at Godwin Pappas Langley Ronquillo LLP, about how employers can get the most out of their employee benefits programs and partner with experienced lawyers and consultants to guide them in the right direction.

Will the same employee benefits plans that apply to executives work for rank-and-file employees?
There are generally substantial differences. Executives usually participate in all the basic benefits a business maintains for their rank and file, such as a pension plan, 401(k) plan, or stock purchase arrangement and health care benefits. But they may require additional benefit arrangements, ranging from nonqualified deferred compensation, incentive stock options and phantom stock plans to special travel arrangements such as access to a company plane.

Employer interests are best served by providing adequate plans to all employees, and by making sure everyone knows and fully appreciates their plan details.

How can employers make sure employees appreciate their benefit plans?
Employers might conduct surveys to determine what employees think about their benefits, which ones they consider more than others, what additional benefits they would like to see, etc. But be careful in shaping the questions so you don’t create expectations that you cannot afford to deliver. Following up on such surveys shows employees that companies take their benefit plans seriously.

Employers also have to remember that it is a lot easier to implement programs than it is to get rid of them, so they must carefully consider changes.

Another way is to get employees involved in their benefits plans. Rather than just presenting employees with a finished plan, give them some choices. Within the confines of your acceptable plan alternatives, let them design what will work best for them in the long run.

Should employers try to implement and maintain benefit plans without outside guidance?
No. Employers should be concerned with two questions when offering or amending benefit plans: are we getting our money’s worth?, and can we afford it? A prudent way to answer both questions positively is to team with qualified employee benefit lawyers and consultants, preferably with strong experience. Employers should choose carefully because choosing the wrong consultant can cost employers tens of millions of dollars.

How do employers choose qualified consultants?
It’s a matter of due diligence. Check candidates’ references and degrees, consider their past experiences and how they related to your specific issues with previous clients. Visit with current and past clients, review any publications they have written on the subject, check to see if they have been rated by their peers, and inquire about their involvement with organization such as bar associations. Verify their litigation history and know that such experience in the ‘hot seat’ often makes someone a better counselor.

In general, employers will get better results from consultants who have actually been involved in court proceedings, rather than those who have just read about employee benefit programs.

Are there any trends in employee benefits that employers might consider in evaluating their individual plans?
The Internet allows employers to gather more information about employee benefits than was available only a short time ago. They can often access retirement modeling programs as well, to try to predict what their future needs might be.

They can look at social changes that may affect defined benefit plans, such as dealing with disability laws, coverage of people not related directly to employees, and shifting costs brought about by union contracts that can create unique legal complexities.

Monitoring trends can help employers in the long run as they and their employees try to get the best out of their benefit plans.

GARY LAWSON is a partner and chair of ERISA, Pension, Employee Benefits and Executive Compensation Section with Godwin Pappas Langley Ronquillo LLP in the Dallas office. Reach him at (214) 939-4870, or

(A. G. “Gus” Fields, a former chief of the Employee Plans Technical Branch of the IRS National Office, Washington, D.C., and Lawson’s colleague for many years, contributed to this article.)

Thursday, 29 June 2006 12:51

Protecting against large stock positions

People with large investments in stocks — especially when those stocks are limited to one or two companies — are constantly on the lookout for protection against significant declines in their market value. There exist a bewildering number of products to help them with portfolio evaluation and asset allocation strategies. The myriad of products presents another problem: how do investors pick the right ones that will help them offset, or “hedge,” their investment risks — or even understand the terminology associated with them?

Since there is no one product that guarantees risk-free investments, the best approach for individual investors is generally to work with qualified professionals to determine which plans and products are best suited to their unique needs and circumstances.

Smart Business spoke with Beau Collins to learn how investors can effectively implement wealth management plans and leverage available products to reduce their risks and protect their assets.

Are there innovative ‘hedge’ products available for higher net worth investors who have large positions in stock?
Two come to mind: equity collars and prepaid forward contracts. Both are designed to protect higher net worth investors such as executives and business owners with large positions in stock from declines in stock prices.

How are ‘high net worth’ and ‘large position in stock’ defined in the context of equity loans and prepaid forward products?
Transaction sizes are typically in the $1 million in market value range, but there are programs for investors whose net worth is less than that. People who want to take advantage of such products should work with specialists like Chartered Wealth Advisors and tax advisers to find out how to take advantage of the products available.

What are the purposes of these products?
One offers a way for investors to diversify large stock positions; the other insures them against downward moves in the market. That applies especially to investors who have large holdings of one stock in one company, such as people who were awarded stock options by their employers, and who have held them for long periods of time. Products like equity collars and prepaid forward contracts help protect investors in a dramatic loss in the market values of those stocks.

How do the products work?
Let’s start with the equity collar. There are two types: with or without a loan. Neither requires a large up-front payment and both retain some upside potential in the security. The equity collar with loan offers the advantages of the basic equity collar, but it also has the monetizing benefits of a loan.

Both products offer similar benefits. In addition to the little or no up-front payment, there is no taxable sale of shares and some benefit from upward stock price movements up to the call option strike price. Significantly, the investors’ upside is limited, and tax straddle rules may impact holding period and loss recognition, which is one reason to consult tax advisers.

The products are based on certain time frames, as well. The contract range is generally one to five years.

How does the prepaid forward contract compare to the equity collar?
The prepaid forward contract is a sale agreement in which the investor receives an upfront payment in exchange for a commitment to deliver securities in the future. The number of shares to be delivered varies with the share price at maturity. And, like the equity collar, the transaction is based on a contract period. Typically, the investor receives between 75 percent and 80 percent of the stock’s current value, and owes no taxes until the transaction matures.

How does that differ from the equity collar?
The prepaid forward contract is an alternative to the equity collar with loan, because 100 percent of the upfront payment may be invested in the market, and there are no periodic interest payments. Moreover, there is more flexibility due to the way the contract is structured.

For example, an investor may elect to accept more downside risk in exchange for more upside potential. Or, the investor may opt to limit all the upside above a defined level in return for a greater advance rate.

Are these one-size-fits-all products?
Since every investor’s case is different, they are structured to meet individual investors’ objectives. And they are not something that investors are advised to create by themselves. Investors should consult with professional advisers when considering these products.

What should investors be aware of when considering equity collars or prepaid forward contracts?
Any legal, contractual or employer restrictions have to be taken into account. Hilliard Lyons does not offer tax or legal advice. Investors should always consult their tax advisers or attorneys before making any decision that may affect their tax or legal situation.

BEAU COLLINS is a financial consultant and Chartered Wealth Advisor in the Dublin, Ohio, office of J.J.B.Hilliard, W.L. Lyons. Reach him at (614) 210-6281 or

Tuesday, 16 May 2006 06:06

Leveraging technology

Since telecommunications is business-critical but not often cost-optimized, small businesses should consider reviewing their telecommunications needs every year to identify any changes within their industry and new telecommunication tools.

In many businesses, telecommunications expenses such as telephone long-distance minutes, local charges, Internet connectivity, wireless and messaging -- among the top five indirect expenses --show no sign of a downturn.

Finding the right local solution provider/partner with relevant experience with a company's day-to-day type operations is the key to maximizing that potential.

Smart Business talked with Kevin Teeters of Mpower Telecommunications to find out how the right business/telecommunications provider can improve competitive position.

When should businesses start looking for upgrades in telecommunications systems?
When they want to balance cost with benefits. Most small businesses are not in a position to attach every bell and whistle to their hardware, software, communication systems and services. The right provider will carefully balance a business's costs with its benefits and provide managed solutions that are less expensive to small businesses.

Rather than pushing the most expensive products and services, a trustworthy solutions provider will only suggest options that make solid fiscal sense.

Why is it important to find the right telecommunications solutions partner?
Telecommunications providers understand the technology and how it translates into helping businesses. The right partner will educate the business and cut through the jargon to provide relevant, concise information about the technology and how it translates to its bottom line.

Today, smart businesses look constantly for new ideas and communication solutions that improve productivity and business processes while staying cognizant of the capital and support costs, and competing with international companies.

Newer services such as business text messaging, integrated messaging (fax, voicemail and e-mail in the same desktop inbox) and wireless telecommunications often provide a competitive edge in industries where efficiency and customer service are paramount.

How can businesses take advantage of new telecommunications products and services?
Rather than attempting to navigate this ever-shifting landscape on their own, they should partner with an expert who is fully versed in the products and services available, and who can help integrate these systems to help them maximize the potential of technology.

What benefits do business owners derive from comparing providers and telecommunications systems available?
Businesses that review their return on investment when making choices benefit by solving problems that drive costs. The lowest price may not always be the best choice.

Providers that develop next-generation communication services by leveraging new technology and focusing on solving customer communication problems can provide solutions that improve productivity and give businesses the competitive advantage they need in their industry.

How do businesses find the right solution provider partner?
They should look for five crucial characteristics in a provider.

1. Good listener: No matter how much knowledge providers have, they can't identify unique solutions for individual businesses unless they're willing to listen. The right adviser will probe for important information about current assets, issues and challenges, and will ask about the growth and direction of the company.

2. Financial stability and longevity: Solution providers come and go. Those that have built a history and thrived in recent years have earned their good reputations. Check their status with the Better Business Bureau. And research public records to find out how often they have been to court. Finally, don't be shy about asking a firm to provide some proof of its current financial stability.

3. References: Ask for references. Don't settle for just one -- ask for several.

4. Reliability: Do they stand behind their services? Carefully review service-level agreements and other contracts to be sure they are fair to all sides. Explore what's to be included, such as solution performance, uptimes, support response times and more. Make sure all commitments are in writing.

5. A well-oiled machine: Ask for the details of the company's standard operating procedures and project methodologies. Demand to meet with the highest-level executive available. Face-to-face relationships with the CEO, CFO, CIO and others always help management make decisions and solve problems.

Also, ask to meet with every technical person involved with the account, from project coordinators to engineers. Make sure they are the kind of folks you want to be working with side-by-side in the future.

KEVIN TEETERS is the vice president for marketing for Mpower Telecommunications. Reach him at

Monday, 24 April 2006 07:04

Successful succession planning

Business owners put a great deal of effort into making sure their companies succeed. Surprisingly, many of them defer or ignore altogether succession planning, the timely transfer of leadership, management and ownership to the next generation.

The primary reason many business owners do not get involved in succession planning can be summed up in one word, according to Hilliard Lyons financial consultant John R. Stewart: control.

“Some business owners simply do not want to give up control of their companies,” he says. “Psychologically, failing to plan for succession gives them the feeling they are still — and always will be — in control.” Ironically, Stewart notes, “Succession planning actually gives them more control, since they no longer have to worry about who will manage the business once they are gone.”

Smart Business spoke with Stewart about the need for succession planning by business owners, how to go about it, and who it benefits.

Why should business owners worry about succession planning?
For one thing, establishing and growing a business — especially a family business — is often one of an owner’s proudest achievements. For another, when a small business is a key component of family wealth, the owner usually has a strong desire to perpetuate it in one form or another. That is why succession planning and the selection of qualified planning professionals are so important.

What are business owners really transferring when they plan for succession?
A typical business plan has two elements that owners should consider separately: the transfer of power and the transfer of assets. The former involves transferring control of the business’s operation to the people best suited to exercising it. That is an art. The transfer of assets, on the other hand, is a science. The wealth concentrated in the business is transferred to designated people who may comprise a different or larger group than the person or persons who will be assuming power.

How should a business owner select a succession planner?
Carefully. One of the hardest tasks a business owner does is provide for an orderly succession in perpetuating the company. Succession is particularly difficult in a family business. So a business owner should select a team that is objective to construct a succession plan that works best for family members, employees — and the owner.

Who should be included on that team?
Ideally, the team should include a CPA, an attorney, a specialist in business evaluation, and a coordinator, such as a Chartered Wealth Advisor. It makes more sense to let one person coordinate the process rather than hire each specialist individually. Third-party coordinators can offer a range of strategies and deal with the psychological and emotional issues that often affect succession planning.

It is recommended that business owners interview prospective coordinators before choosing the one that best fits their individual needs. Some financial advisers offer free consultations to prospective clients so they can get to know one another.

Is there a rule of thumb regarding when a business owner should start succession planning?
Conceivably, it can start from the first day. But the ideal age is around 40. That gives the owner time to assess the success and direction of the business, and allows for changes that arise as the business grows.

Some people wait too long. Once an owner reaches age 60, for example, it might be too late for successful succession planning. The key is to start thinking about an exit strategy as early as possible in order to consult with professionals, put a plan in place, follow up continually to adapt to inevitable changes, and provide for and optimize chances of getting the most financial and personal satisfaction from the results.

Succession planning is a process, not an event. The process requires planning, teamwork and constant re-evaluation. If it is not done by process, it will be done by crisis, which is nothing more than a failure to plan. That can lead to disastrous results — another reason for timely succession planning.

Is there one exit option that is better than others when deciding to cede control of a business?
Not really. One of the purposes of succession planning is to identify the exit strategy that best fits a specific business’s needs. Owners who do not plan for succession lose their options.

There are several options available to business owners who plan carefully. They can pass the business on to their children, other family members or employees; sell it as a going concern; liquidate it and sell the assets; or file for bankruptcy (if all else fails and the business has substantial debts). Which option depends on individual owners’ circumstances and preferences.

JOHN STEWART, a Chartered Wealth Advisor, is the Dublin branch office manager for J.J.B. Hilliard, W.L. Lyons Inc. Reach him at (614) 210-6285 or

Wednesday, 29 March 2006 09:38

The Americans with Disabilities Act

Employers with 15 or more employees are required to adhere to the ADA and its state equivalents. The ADA is replete with nuances, of which employers may not always be aware.

Smart Business spoke with Vincent Tersigni, a management attorney with the national law firm of Vorys, Sater, Seymour and Pease LLP, to learn more about how employers can comply with ADA requirements.

What do employers generally need to do to comply with the ADA?
Employers are required to provide reasonable accommodations for employees who have disabilities as defined under the ADA. Disabilities are mental or physical limitations that affect major life activities, such as walking, breathing or seeing. Employers must provide accommodations unless the employer would suffer an undue hardship, which is defined as a significant difficulty or expense.

For example, creating a new job for the employee or changing an entire manufacturing process would normally not be required under the law. However, the extent of the hardship of an accommodation may vary in the eyes of the courts, depending on the size of the employer.

Are employers required to grant accommodations to ADA-qualified employees that they may not make for regular employees?
The ADA was designed to ensure that employees with disabilities are not treated less favorably than non-disabled employees. Workers who are disabled still have to be able to safely perform their essential job duties. However, employers need to ensure that they are taking reasonable steps to enable these employees to do their jobs, such as eliminating physical barriers or restructuring non-essential duties.

How does an employee prove that a business has discriminated against him on the basis of his disability?
An employee must show that he is an individual with a disability as defined under the ADA and is otherwise qualified to perform his essential job requirements with or without a reasonable accommodation. He also must be able to show that his employer discharged him or committed some other adverse action because of his disability. The burden of proof is on the employee.

How do employers protect themselves from ADA litigation?
One way is to engage in an “interactive process” with the employee. In other words, meet with the employee, discuss his limitations, and explore options for getting the job done. Employers are also advised to consult during the accommodation process with qualified labor, legal and medical counsel to ensure that the appropriate steps are taken. Whenever possible, the consultants should be educated in ADA requirements. For instance, it is helpful if medical doctors consulted have training in occupational medicine.

It is also important for employers to understand the nuances of the law. For example, some conditions which one may assume to constitute disabilities may not be under the law. Recently, the U. S. Supreme Court found that an employee with carpal tunnel syndrome was not disabled and thus not protected by the ADA, because her condition was not severe enough to impact her daily life activities and did not otherwise preclude her from performing a broad range of jobs.

On the other hand, employees who may be “regarded as” disabled by their employer, even if they are not, are protected under the ADA. The classic example is an employee who is fired because the employer believed that he had AIDS even though, in reality, he didn’t have the disease. That employee would be protected under the ADA and potentially entitled to reinstatement and damages.

Do you find that employers have more difficulty accommodating certain conditions than others?
It is always a challenge trying to accommodate physical conditions that don’t have obvious symptoms or mental conditions which may cause employees to become abusive with co-workers or customers. Employees who won’t take their prescribed medication, or fail to use their own corrective devices such as hearing aids, also create challenging scenarios.

Conditions that require extended leaves of absence are also difficult for many employers to accommodate, but may be required — even beyond the 12-week leave requirements of the federal Family and Medical Leave Act — unless the employer can show an undue hardship.

How is ADA litigation evolving?
An interesting area to monitor is how far the courts will require employers to go in paying for workplace accommodations, as new medical and technological advances allow employees with more severe disabilities to perform a variety of jobs.

VINCENT J. TERSIGNI is a management attorney, OSBA Certified Specialist in Labor & Employment Law, with the national law firm of Vorys, Sater, Seymour and Pease LLP. He is based in Akron, Ohio. Reach him at, (330)208-1000.

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