How to maintain corporate integrity while monitoring employees

There are many reasons why companies choose to monitor their employees. They do so to help protect against theft, ensure safety, promote good customer service, protect company information, and as a deterrent against bad acts in general. Employee monitoring can also be a useful tool in reducing or eliminating workplace harassment. It is important, however, to strike a balance between corporate integrity and employee privacy.

“Employers want to make sure they are not illegally invading their employees’ privacy at the same time they are protecting the smooth functioning of their business,” says Alfredo Sergio, an attorney in the Employment Law and Commercial Litigation groups at Semanoff Ormsby Greenberg & Torchia, LLC.

Balancing monitoring and privacy is attainable when organizations communicate to their employees the purpose of monitoring activities, set privacy expectations and implement reasonable monitoring policies.

Smart Business spoke with Sergio about corporate integrity, the importance of signed documentation and factors to consider when implementing various monitoring tools.

What corporate integrity concerns do employers have relating to email, video or audio monitoring?

Corporate integrity concerns include preserving confidential corporate information, business records and trade information, ensuring employees comply with work rules, and maintaining a workplace free of harassment and discrimination.

Employers need to have a variety of written human resource policies in place, which employees acknowledge, that address email usage and monitoring, the types of video and telephone monitoring that might be used, and should implement those practices and policies in compliance with federal, state and local laws.

How should a company address email monitoring and computer use?

Employees should be informed by a policy, which they acknowledge, that the company computer system and emails thereon are the employer’s property and should be used for business purposes only. The policy should make it clear that employees have no privacy rights when it comes to company email usage and that email may be monitored. It is also recommended to inform employees that other policies, such as confidentiality and anti-harassment/non-discrimination/anti-retaliation, extend to the use of email.

Employees should be held responsible for following the policy, and policy language should clearly state that failure to adhere to the rules could result in disciplinary action up to and including termination.

What advice would you give about telephone monitoring?

Employers need to be careful with monitoring employees’ phone calls, even if the calls are on company equipment. There are federal and individual state laws regarding electronic monitoring or wiretapping. Pennsylvania has the Wiretapping and Electronic Surveillance Control Act.

In general, employers are not allowed to monitor employees’ telephone conversations unless all parties to the communication have given prior consent. There are, however, limited circumstances where this is acceptable, such as monitoring personnel of businesses engaged in telephone marketing or telephone customer service, if the business only uses the interceptions for training, quality control, and one party has consented to the interception. This is commonplace for quality control or training purposes.

In the appropriate instances, employees and call participants should be informed that calls may be monitored.

How should video surveillance be handled?

There are various reasons an employer might want to install video cameras. For instance, in a manufacturing environment a camera might be important for safety concerns or complying with procedure, or retailers may need cameras for security and loss prevention. Typically, the recording should not include audio because this would be counter to the wiretapping laws in place. Also, video surveillance cannot be used where employees have reasonable expectations of privacy, such as in restrooms or changing rooms.

There are numerous laws that impact and relate to employee privacy. A judicious implementation of employee monitoring should meet employers’ needs in maintaining their corporate integrity while not running afoul of laws that protect employee privacy.

Insights Legal Affairs is brought to you by Semanoff Ormsby Greenberg & Torchia, LLC

Washington Redskins’ trademark battle and the implications for brand owners

One of the more interesting and controversial trademark cases of the past decade is the invalidation of the Washington Redskins trademarks. The social implications are apparent, but there are also lessons to be learned for businesses.

Nearly 10 years ago, the Trademark Trial and Appeal Board (TTAB) cancelled all Washington Redskins marks, a decision that was later reversed by the U.S. District Court for the District of Columbia in Pro-Football, Inc. v. Harjo. Under Section 2 of the Lanham Act, a trademark cannot be registered if it is disparaging to persons living or dead, and a mark is disparaging if it may “slight, deprecate, degrade, or affect or injure by unjust comparison.”

“The social ramifications stemming from any decision are fairly predictable. Legally, however, the lasting effects are less obvious,” says Ashley Johnson, a law clerk at Fay Sharpe LLP.

“Moving forward, it would be beneficial for trademark owners to take a step back and look at whether or not a group or an individual may find their marks disparaging,” says Rachel A. Smoot, an attorney at Fay Sharpe. “Should the marks imply insult or ridicule, it may save registrants a great deal of effort to change the marks.”

Smart Business spoke with Johnson and Smoot about the Redskins’ trademark cases and what they could mean for businesses.

What happened in the Redskins cases?

The District Court ruled that the TTAB lacked evidence to find disparagement in the time frame at issue, and Harjo’s petition was barred by laches, a legal theory prohibiting a party from waiting so long to file a claim that it becomes unfair to the other party. Harjo appealed, but ultimately the District Court found in favor of Pro-Football, asserting that laches barred the case.

Fast forward to 2012 and Blackhorse v. Pro-Football, Inc. Pro-Football is again named as a party, but this time the opposition includes younger plaintiffs unhindered by laches. In June 2014, the TTAB again found disparagement and voided six Redskins marks. With millions of dollars and a decades-long reputation at stake, Pro-Football has filed an appeal.

Where do the cases stand today?

As of now, the Redskins marks are scheduled to be cancelled, but Pro-Football is still fighting. Should the TTAB’s decision stand, it will effectively make the Washington Redskins’ marks available for public use, preventing Pro-Football from receiving benefits of federal registration.

Pro-Football is taking up the fight on several issues, and is asking the District Court to dismiss the case against it, asserting that because Blackhorse is not seeking economic or legal benefits from the decision, Blackhorse has no stake in the outcome of the case, and therefore the case against it is improper.

What implications could this have for sports teams with similar names?

Professional teams such as the Cleveland Indians, in addition to thousands of high schools and recreational leagues, may find themselves under examination as to whether a ‘substantial composite’ of Native Americans are offended. Moreover, should the District Court maintain the TTAB’s decision, then the door is opened to dozens of questions, such as: Will the court take the composite of Native Americans as a whole? Will it focus on a particular state? Where does the line between disparaging and nonoffensive actually lie?

While the forthcoming ruling may not have an immediate economic effect on the Redskins franchise, cancellation of marks in sister franchises as well as of marks in other professional sports may lead to a lasting impact legally and financially.

How might this affect business owners?

For business owners who may need to prepare for national cancellation, international mark protection may still be available as long as the marks are registered directly in other countries. Ultimately, whether or not a mark owner should launch an alternative mark is an individual decision based on many factors including: the amount of time and money required to rebrand, the likelihood that the new brand will bring in revenue compared to the old brand, and the potential impact on any profit-sharing partners.

Insights Legal Affairs is brought to you by Fay Sharpe LLP

The differences between employees and independent contractors

A driver making a delivery for your company is involved in a car accident that seriously injures someone, resulting in a lawsuit against your company.

Will your company have to pay?

This is a complicated subject with numerous exceptions. Usually, while an employer can be held liable for acts committed by an employee that fall within the scope of employment, a business typically is not responsible for the conduct of an independent contractor.

Smart Business spoke with Elizabeth Wolicki, an associate at Novack and Macey LLP, about proper classification of independent contractors.

How can businesses protect themselves and limit their liability?

First, it is important to be aware that merely labeling a relationship with somebody who is providing services for your company as that of an independent contractor is not enough.

Whether a worker is an independent contractor or employee depends on how the relationship between the parties actually works in practice.

To determine the true classification of a worker for liability purposes, courts consider a variety of factors.

These include an employer’s right to control the manner in which the work is performed; the nature of the work performed in relation to the general business of the employer; the manner of hiring; the right to discharge the worker; the character of the supervision of work done; the kind of occupation; the nature of the skill required, including whether the necessary skills are obtained in the workplace; the responsibility for the cost of operation, such as equipment, supplies, fees, licenses; whether the worker receives paychecks or benefits from the employer; whether taxes are deducted from the payment received from the employer; and whether the worker wears a uniform with the company name and logo.

Of these factors, the most important is whether the business has the right to control the manner of the work, regardless of whether the business actually exercises that right.

How would the courts view the worker in the example?

In the example of the delivery truck driver, a court might look at who owns the truck; who is responsible for costs associated with the truck, such as insurance and maintenance; if the company requires its logo to be on the truck; whether the driver is wearing an outfit with the company logo; whether the driver is free to contract with other companies; and whether the driver sets his own schedule.

The court may also examine written documentation between the truck driver and the company, such as a contract or a drivers’ manual, to see whether these documents allow for control by the company over the driver.

How can businesses ensure workers are classified as independent contractors?

If a business wishes to have true independent contractors and limit its potential liability for their actions, then it needs to take steps to ensure that legally the worker will be considered an independent contractor.

For example, the business can allow workers to establish their own schedules, such as hours worked and whether or not to accept certain assignments; require workers to provide their own equipment without too many specifications as to the type of equipment; require that the worker cover any costs associated with the maintenance of that equipment; have third parties pay the worker directly; and not outfit the worker in company attire.

While it is not a dispositive factor, the employer should make sure that the worker’s contract refers to the worker as an independent contractor.

What compromises will businesses need to make to utilize independent contractors?

A downside to having independent contractors and not employees is that, for a worker to be considered an independent contractor, the business must give up a large amount of control over the worker. You need to compare the risks of having workers doing things for your business that you do not control to the risks of having employees under your control subject you to liability for their actions. ●

Insights Legal Affairs is brought to you by Novack and Macey LLP

What to do when your company has fallen victim to a breach of contract

Read before you sign. It seems like good advice in any setting, but Loriann E. Fuhrer says a surprising number of breach-of-contract cases come about simply because the breaching party did not read or understand the terms of the contract into which it had entered.

“Certainly, paying attention to the details of the obligations placed on your company by the contracts it enters goes a long way toward preventing an inadvertent breach,” says Fuhrer, a director at Kegler, Brown, Hill + Ritter.

But not all breaches of contract are that simple. Contract language, however well-intended, can often be ambiguous or susceptible to more than one interpretation.

“It is helpful to have someone who litigates contract disputes weigh in on whether a breach of the contract has occurred and what options there are for either bringing the relationship back on track or recovering damages,” Fuhrer says.

Smart Business spoke with Fuhrer about what to do when a breach of contract occurs and how to prevent it from happening in the first place.

What are common types of breach of contract?

Most breaches of contract are backward-looking and relate to what happened in the past. These typically fall into two general categories.

Either a party fails to perform an obligation that is required by the contract or it takes an action that is prohibited by the contract. Depending on the terms of the particular contract at issue, either action or inaction may be the basis of a breach of the contract.

Some breaches are forward-looking. An anticipatory breach of contract is where a party states its intention not to perform its obligations in the future. Even though the time for performance may not yet have arrived, expressing an intention not to perform future obligations can actually amount to a present breach of contract.

Once a breach of contract occurs, what steps should the company take?

If you’re the non-breaching party, give thought immediately to how to minimize your damages. Every party to a contract has a duty to mitigate damages, so you can’t wait around forever, letting your damages mount, if there are steps you could reasonably take to minimize them.

If you are thinking about suspending your own performance under the contract because of a breach by the other party, you have to think about and determine whether the breach was material or nonmaterial. Under Ohio law, only a material breach excuses further performance by the non-breaching party.

If a company has some question about whether there was a breach, or whether that breach was material, contact an attorney experienced in helping businesses deal with breach-of-contract disputes. You also want to make sure you keep all records. Documentation of the breach, and any damages accrued, will be important if the matter ends up in court.

Is a breach of contract preventable?

Maintain good and open communication with the other party about how the relationship is going and whether expectations are being met to identify and correct problems before they get out of hand. Breaches of contract are sometimes simply the result of bad communication.

What if litigation becomes necessary?

If litigation becomes necessary, you and your attorney will go back to the contract to find out, for example, what law applies to the action, and where it can be brought. Most commercial contracts contain provisions that select the applicable law and the agreed-upon forum.

Some contracts contain arbitration provisions, which are routinely enforced, and which mean that any dispute will be decided by one or more arbitrators, rather than by a judge or jury. Sometimes contracts will also have provisions that govern what damages will be recoverable in the event of a breach, and how they will be measured.

Ohio law generally presumes that businesses know what they are doing when they enter into contracts. Typically, the unambiguous terms of a contract will be enforced to the letter. Companies would be well-advised to understand their contracts, to perform their obligations and to hold trading partners to their obligations.

Insights Legal Affairs is brought to you by Kegler Brown Hill + Ritter

Planning is critical to a sale you can feel good about well beyond closing

While business owners strategically plan for growth and other key initiatives, when it comes to selling a business, preparation is often lacking among those who are nearing the next phase of life.

This lack of planning happens for a number of reasons, but the most simple is that business owners are not in the business of selling companies and they typically don’t focus on a sale until either an opportunity presents itself, or worse, a health or other life event makes a sale necessary.

In either case, the sale is reactionary and almost always results in owners leaving money and other desires on the table.

Smart Business spoke with Mark E. Krohn, a partner at Brouse McDowell, about the right way to prepare your business to be sold.

What’s the first step?

Create a strategic plan around the sale of your business and do so a year or two in advance of when a sale is likely. In the process, you should identify accounting and legal experts who have great experience representing buyers and sellers, not just the company’s everyday accountant or lawyer who says, “I do that.” Selling a business is the culmination of a life’s worth of work and is a specialty, so finding people who know the process can maximize value and the terms of the sale are essential.

What should one consider when beginning the planning process?

Start by talking to your advisers about your dreams, goals and non-negotiables. Considerations such as price, payments over time, continued involvement in the business, continued opportunities for employees and keeping the business local are all important. What matters most, where you are willing to compromise and what is not an option, usually paints a clear picture of what you want and dictates the next steps.

In most cases, it’s not about maximizing price. You may feel an incredible loyalty to the cities, counties and employees that helped you get to the sale and you want to be loyal to those people post-closing. Very few owners are happy if a company is relocated after the sale. Options exist to keep a company local, but those priorities have to be identified before a buyer is found or a term sheet is executed.

If the main consideration is price, you may need to make certain adjustments to increase value, such as improving revenue/EBITDA margin (an approximate measure operating cash flow based on the income statement), securing management succession and achieving better customer diversification. Making some of these changes can take months/years to achieve, but the end results are worth it.

How do you find the right buyer?

Many advisers are simply looking to find “a” buyer and evaluate “an” offer. It’s often more beneficial to create a competitive bidding environment, so long as you do so under strict confidentiality so that the news of a possible sale does not become public.

Once your team knows what is important to you, it can evaluate who the most likely acquirers are, both strategic (in the industry or vertically aligned) and/or private equity. This team can develop a package establishing who the company is, what the company wants, the value proposition offered and that the entity being contacted has been identified as one of a select group of potential acquirers.

This creates an air of selectiveness and makes the buyer feel special. Establish a timeline for the prospects to express interest and then close the transaction. It is typical to have two to three companies desiring to purchase the business, and it is much easier to get the price and terms you want when there are multiple parties vying for the right to buy.

What else should an owner be thinking about?

Ensure that key pieces of information about your company are organized in a central location, where they can be easily accessed confidentially by your advisers and the purchaser.

One of the most disruptive parts of a sale is due diligence. Taking the time in advance of a sale to make certain that the things that an adviser or buyer is going to review, and having those things in one place is paramount.

It saves a lot of time, money, stress and employee awareness issues.

Insights Legal Affairs is brought to you by Brouse McDowell

Discovery of electronically stored information poses significant risks

In a lawsuit’s discovery phase, each party must turn over to its opponent documents and electronically stored information (ESI) that could be used as evidence.

Discovery of ESI poses significant risks for unwary businesses. That’s because the obligation to preserve the ESI that is potentially relevant to a lawsuit can arise well before the lawsuit is filed.

“The first time that management thinks about ESI preservation should not be after one party to a dispute runs to court,” says Andrew P. Shelby, a litigation associate at Novack and Macey LLP.

Smart Business spoke with Shelby about what businesses should be doing when the duty to preserve is triggered in order to protect themselves from facing substantial consequences.

What is ESI?

ESI is data stored in any electronic medium.

For many businesses, email constitutes the most significant form of ESI. But it is not the only form. Increasingly, businesses’ ESI includes text messages, instant messages and social media. It also includes voice mail, photographs, databases and office documents such as Microsoft Word, PowerPoint and Excel.

Courts trend toward inclusiveness in determining whether data forms constitute ESI. So, as new office platforms and digital-communication formats emerge, they will likely be considered ESI.

What is the duty to preserve ESI and when is it triggered?

The duty to preserve is the obligation to prevent the destruction or alteration of ESI that may be used as evidence in litigation by either party, including a business’s opponent.

In general, the duty to preserve arises when litigation is reasonably anticipated — i.e., when it would be reasonable for a business to foresee that it may either sue or be sued.

What do businesses need to do to comply with the duty to preserve ESI?

Retaining a lawyer experienced in ESI discovery is the first thing that a business should do when anticipating litigation.

With the lawyer’s assistance, the business must then identify the ‘universe’ of ESI potentially relevant to the anticipated litigation. Doing so will involve identifying the custodians of that ESI — e.g., the employees involved in the dispute — and determining where they store ESI.

For example, their ESI could be on the business’s server or in its cloud storage. It could also be on employees’ computers, smartphones or tablets. The business then needs to instruct the custodians to not destroy any ESI that may relate to the litigation. This instruction is typically communicated through a ‘litigation hold’ letter.

The business also should disable any programs that automatically delete ESI on a periodic basis.

What are the consequences of failing to comply?

The worst-case scenario is losing the case automatically as a sanction.

Courts can also impose severe monetary fines. One litigant recently received a fine of almost $1 million.

Nonmonetary sanctions are also possible. For example, the court could instruct the jury to make an inference that the ESI destroyed in violation of the duty to preserve must have harmed the legal position of the party who destroyed it.

What are some steps that a business can take to proactively prevent violations of the duty preserve ESI?

Developing an ESI-preservation plan that is followed when the duty to preserve is triggered can prevent many problems.

The plan should include procedures for identifying custodians, disarming automatic deletion functions and training employees about preserving ESI if they receive a litigation hold letter, among other things. If a business has legal and IT departments, the discovery plan should be a joint effort between them with the help of counsel versed in ESI discovery.

The plan should also require periodic coordination between IT and legal departments about ESI creation, use, storage and deletion so that changes are taken into account. ●

Insights Legal Affairs is brought to you by Novack and Macey LLP

Growing infrastructure provides hope that oil and gas boom is here to stay

Oil and gas production in eastern Ohio is thriving and the industry should continue growing in the years ahead, says Margeaux Kimbrough, an attorney at Kegler, Brown, Hill + Ritter.

“We have seen a ton of jobs flow into the region related to the drilling and production wells that have already been drilled,” Kimbrough says. “Currently, we’re seeing an increase in the infrastructure that is necessary to move the oil and gas and other constituents from those wells to processing plants. Going into 2015, I expect to continue to see an increase in the amount of infrastructure being put into place, and that means an increase in jobs for Ohioans.”

As more wells are drilled and more oil and gas is unearthed and processed, some remain skeptical about the future and whether the bubble will soon burst. Kimbrough says that doesn’t appear likely.

“There is a lot of upfront demand for these projects and that is eventually going to level off, but probably not for another 10 years,” Kimbrough says. “Right now is a good time to be thinking about how you can become a part of the new development in the region.”

Smart Business spoke with Kimbrough about the process to extract oil and gas in Ohio and what is being done to ensure it happens safely.

How has new technology impacted drilling?

Production wells are drilled thousands of feet into the ground to extract oil and gas from subsurface deposits.

Traditionally, production wells were drilled vertically into the ground, and in order to fully develop a deposit, several vertical wells were drilled over a large surface area. New technology allows drillers to drill vertically and then horizontally into the ground.

This process is called horizontal drilling. As a result, drillers can use one drilling unit with multiple laterals. This new process takes up a lot less surface area than using vertical wells.

What are some misconceptions about hydraulic fracturing?

Hydraulic fracturing is a process where millions of gallons of fresh water mixed with different kinds of chemicals is injected into production wells at a very high pressure. This water, called brine, goes through the pipes, breaks up the rock in the subsurface, and allows the oil and gas to be released and flow back up through the pipe.

Some have expressed concern that injecting so much water into the ground and releasing the chemicals, gas and oil, risks contaminating individual water wells. But the oil and gas wells are drilled thousands of feet deep, much deeper than any water wells. So the concern is really not well-founded.

Can the brine water be treated?

Currently, Ohio does not have any specific regulatory provisions that would allow a company to treat brine water and dispose of it through state waterways.

The safest way to dispose of brine water is to inject it back into the ground through injection wells.
Injections wells are used to inject the brine water into porous rock.

The Ohio Department of Natural Resources, the state agency with regulatory authority over injection wells, has instituted new regulations to ensure that injection wells are not located near fault lines in an effort to address concerns about the potential for seismic activity.

What is the economic impact of all of this drilling?

The eastern region of Ohio has seen a substantial increase in the number of hotels, restaurants and supportive services needed to react to the demand created by the oil and gas boom.

Although you may not be directly connected to the oil and gas business, there is significant demand for ancillary services that are going to support development in this region for several years to come.

Insights Legal Affairs is brought to you by Kegler Brown Hill + Ritter

How to take advantage of the accelerating M&A market

As the M&A market for small businesses continues to recover after the recession, now is the time for potential sellers to begin planning. After all, business owners who sell their business without a well-defined exit plan typically sell for too little.

“To maximize value, minimize cost and make for an efficient sale, the business owner must seriously review legal, financial and business operations before going to market,” says Peter J. Smith, a member at Semanoff Ormsby Greenberg & Torchia, LLC. “Your lawyer, accountant and/or a good business consultant can help with this evaluation.”

Smart Business spoke with Smith about the M&A market and how to create an effective exit plan strategy.

What are some indicators that the M&A market is heating up?

BizBuySell.com reports that sales of small businesses have for the first time reached pre-recession levels. We’ve seen this in our own practice as well with increased deal flow and increased multiples.

What is driving the increase?

A variety of factors: improving small business performance, increased capital availability, more add-on acquisitions for venture capital portfolio companies, more sellers who waited out the post-recession recovery in order to regain lost value, and more buyers willing to take on debt and risk to grow.

Currently, there are many potential sellers in the market with viable businesses. Many restructured during the recession, so expenses were reduced and their EBITDA and profits have now increased. At the same time, banks have relaxed underwriting criteria and are more willing to finance buyers who are interested in making strategic acquisitions. Finally, there is a lot of pent-up demand, both among small businesses that see acquisition as a way to grow, and venture capital firms that are looking to expand their holdings through add-on acquisitions that provide synergy with their existing portfolio.

According to a BizBuySell.com survey of brokers, the strong M&A market is expected to continue throughout 2014 and we see nothing on the horizon that should cause a decline in deal activity.

What should potential sellers be thinking about in this market?

They should be thinking about exit planning — How can I position my business for maximum value and a clean, quick sale? They should be reviewing their entire company from the perspective of a buyer. This is not how most business people usually view their companies.

What are some examples of things to consider when exit planning?

Among other things, the business owner should ask:

  • Are financial systems and controls in place and adequate? Are financial statements presentable and in accordance with standard accounting principles? The business owner should consider having the financial statements reviewed or audited, if they are not already.
  • Can the business owner identify the best ways to increase EBIDTA? This is the biggest driver of value in your business.
  • Are employment agreements in place for key employees? Do all sales employees have non-competes?
  • Do key customers and vendors have contracts? Is there any guarantee of recurring revenue?
  • Does the business have title to all of its assets? Can it prove this in writing?
  • Does the company have title to all of its intellectual property? Without contracts, this is unclear.
  • Are all key contracts assignable? The business owner should know who can hold up their deal.
  • Is the business qualified in all states in which it does business? Has it filed tax returns in all of the appropriate states?

How far in advance of an anticipated sale should exit planning occur?

The longer the lead time the better. Planning should occur at least a year in advance of going to market. Ideally, it would be two to three years before a sale as it’s important to have the financial statements and tax returns in place as part of due diligence.

Insights Legal Affairs is brought to you by Semanoff Ormsby Greenberg & Torchia, LLC

How to avoid violating intellectual property rights in corporate videos

Corporate videos are a popular means of promotion for companies, and for reaching internal employees with important messages. What companies often miss is that many of the images, sounds or references included in these presentations may be legally protected under copyright, trademark, or other intellectual property (IP) rights. Even something as innocuous as a painting on the wall in the background of a shot may be protected under copyright, and displaying it in the video without proper permission can result in heavy penalties.

“As companies work through the planning stages of their corporate video, it’s critical that they consider what releases and licenses must legally be obtained before shooting,” says Sandra M. Koenig, a partner at Fay Sharpe LLP.

Smart Business spoke with Koenig about corporate videos and how companies can ensure they are free from copyright violations before broadcasting.

How is ownership determined?

The creator of a video is typically considered the holder of the copyright. In the U.S., when a work is created within the scope of one’s employment, the employer is the author and owner. This is the case when it is the employee’s responsibility to create a video as a central part of his or her employment. If making the video falls outside of the employee’s core duties, or the employee works for the company at a foreign office, then the employee is considered the author and owner and he or she must transfer the copyright or provide permission to the employer before the employer can freely broadcast it.

When a third party creates a video, even if it’s done so on a company’s behalf, the third party owns the copyright and the company needs to get permission from the owner to broadcast it. Ideally, the creator will agree to assign the copyright in the video to the company.

Must a company get permission from employees to show them in a video?

Written releases from all individuals who appear or can be heard in a video should be obtained well before the video is shown, either publicly or internally. Rights of publicity are different in each state, so check to make sure the appropriate permissions have been obtained from each person before proceeding with a video shoot.

Similarly, if a company uses a person’s name, likeness or other recognizable aspects of their persona, even a nickname, without permission in a video, the company may have violated an individual’s publicity or privacy right. Make sure to obtain written  authorizations from the persons or the estates of the persons who may be included in a video before proceeding.

How can music be incorporated into a video without violating copyright?

Companies that include music in their corporate video need to get the appropriate licenses from the copyright holders before music can be used.  For example, a music publisher may own the copyright in the sheet music, while a record label owns the recorded song. Permissions from all relevant copyright holders should be obtained.

What IP might be missed in videos?

Sometimes companies inadvertently include a protected property in their videos. This can happen when a product, piece of art or brand is not cleared from the shot and appears in a video. Even if it’s an accident, the company could be liable for using the image without obtaining permission. Showing any branded or protected product or image in a corporate video can be misconstrued as that brand in some way supporting the products showcased in the video.

Unless they are in the public domain, works of art, such as painting or sculpture, also should not be shown without permission from the copyright owner for similar reasons.

The risks associated with video presentations can easily be cleared if companies are familiar with the potential copyright pitfalls that can happen during a shoot. Lawyers familiar with IP law can help companies navigate potentially costly mistakes, but it’s important to engage an expert from the outset because once a video is broadcast, it’s too late.

Insights Legal Affairs is brought to you by Fay Sharpe LLP

Alternative fee arrangements provide insight to manage your legal costs

Managing expectations is a critical part of the relationship between law firms and their clients.

“If expectations are different between the two parties, it can either lead to the client feeling that they were overcharged or feeling that they did not get value for the service provided,” says Marc B. Merklin, managing partner at Brouse McDowell.

“The last thing a law firm wants is a client whose expectations weren’t met and who is unhappy with the final bill,” he says. “They may complain about it, and they probably aren’t going to be a client in the future or recommend the law firm to others.”

Alternative fee arrangements can reduce the risk of hard feelings by ensuring that clients understand both the services they need and what those services will cost.

“Almost any firm is willing to talk about fee alternatives as a way to manage legal cost expectations,” Merklin says.

Smart Business spoke with Merklin about the different approaches companies can take in managing their legal needs.

What payment options are available for legal services?

Clients can ask for a blended rate, which is a single rate to be charged irrespective of who is working on the case. So instead of worrying about whether you’re going to get a senior partner or a junior associate, you work out a blended single rate and whoever is needed on that file to manage that matter works on it. You don’t worry about differences in rates between different attorneys.

Firms will sometimes give a volume discount. So if you consolidate your legal affairs with a single firm, the more business you’re able to give that firm, the lower the total cost. The firm will give a percentage off the total based upon levels of business.

There are also flat fee arrangements. If it’s a routine matter such as intellectual property or estate planning where there is some certainty as to what the costs are going to be, firms will often give a flat fee quote for that project.

Flat fees can be tougher in the merger/acquisition or litigation areas, but there are still ways to do it. You may have a fixed fee for the discovery phase and then some incentives for the firm to manage within the budget.

There is also the traditional contingent fee. You have a lower hourly rate or a lower flat fee arrangement with a greater bonus for the law firm if there’s a successful conclusion to the transaction or litigation.

What’s the key to getting value for your legal services?

You need to look at the size and complexity of the particular matter at hand. It may not make sense to have the largest firm in the city handle a $50,000 piece of litigation because it may not be done in an efficient, cost-effective, value-driven manner.

If you know you’re looking for service in a particular area, who are the firms that can provide service in those areas? Compare rates and shop around to see if you’re getting value. What are the reputations of the firms you are considering? Are there other clients you can talk to who can talk about their experience with that firm and the value they received?

There is a wide range of people who can handle your matter, and within that group there may be wide variations in cost and approach.

It depends on how concerned you are with cost versus your concern about the specific matter being handled and who is handling it. That’s often the balance.

But, anybody who says, ‘I’m going to put my project out for bid and take the lowest bid,’ is risking a mistake.

How has the economy affected legal services?

More clients are putting work out for bid and asking what you would do to keep the costs down in a particular transaction.
Clients are much more willing to look at alternatives now, if the cost justifies it. In the past, that was far less prevalent.

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