Biometric data could widen your exposure if you’re not cautious

Seeking to reduce their risks and improve security, business owners may unknowingly take steps that invite more risk of liability. Upgrading your security by using biometric data to strengthen security protocols can subject your business to liability from an increased risk of privacy litigation. More businesses are using biometric data for internal operational security, consumer authentication and other identification purposes.

While there is no uniform definition, biometric data is information derived from human biological and behavioral characteristics such as fingerprints, facial scans and voiceprints. Today, the use of biometric data in everyday interactions is exploding — retailers are using fingerprint scans at the point of sale to verify customer payment, banks have announced plans to replace PIN numbers with facial and retina scans at ATMs, and employers are increasingly using biometric identifiers to access and maintain data centers.

Smart Business spoke with Lucas Blower and Amanda Parker, Attorneys at Law at Brouse McDowell, about the consumer and employee privacy implications of this trend.

How is biometric data governed?

One problem with biometric data is that currently, there is no federal or uniform law that directly addresses its collection and use. Consequently, it is unclear whether biometric data will be treated as Personal Identifiable Information or if it will be subject to a heightened standard. While there are regulations for the health care, insurance and employment context, these laws do not address novel uses businesses may employ using biometric data. In some instances, biometric data may be subject to the Health Insurance Portability and Accountability Act or the Genetic Information Nondiscrimination Act.

Currently, the only states with pending or existing laws addressing biometric data are Illinois, Texas, Alaska, California, New York and Washington. The legislation in these states often addresses requirements such as notice, consent, disclosure, policy and destruction periods. Several such laws also provide for civil penalties for each violation.

Additionally, the Federal Trade Commission may have the authority under the Federal Trade Commission Act to pursue enforcement action where businesses do not comply with their own policies regarding consumer data collection. This inconsistent treatment of biometric data increases the potential risk of litigation for businesses using biometric identifiers.

What other issues should be considered when using biometric identifiers?

Businesses across industries collect, use, protect and share biometric data differently. As a result, there are no clear standards for how companies should handle biometric data. Decisions on how to collect, store, protect, share and analyze biometric data should be made in consideration of existing and emerging privacy laws, but also in light of available insurance coverage. Whether businesses use biometric data to prevent fraud, increase internal controls or promote wellness, the collection of biometric data increases a company’s exposure to a data breach. Having adequate coverage in the event of a data breach is the only way to protect against the cost of litigating privacy claims and to reduce the risks associated with using biometric data. A company’s policies and controls for handling biometric data can also affect whether a data breach is covered or excluded from coverage. Insurance companies are adding new exclusions, especially those applying to cyberrisks. Businesses that fail to follow minimum required practices will likely find themselves without coverage.

How can I minimize the risks?

In order to ensure your biometric technology is reducing risk and not increasing your exposure, businesses should develop thorough policies and controls for handling biometric data. Additionally, businesses must develop and train employees in compliance with their privacy and data security policies. Finally, by periodically auditing and re-evaluating both your privacy and data security policies and employee compliance, businesses can reduce the risks of using biometric data and ensure that they won’t be denied coverage in the event of a data breach for failure to follow minimum required practices.

Insights Legal Affairs is brought to you by Brouse McDowell

Consider putting a general power of attorney in place

A durable, general power of attorney is a document in which you appoint an agent to make decisions for you and otherwise act on your behalf when you are incapacitated.

“Everyone needs a durable, general power of attorney,” says John T. Ort, an attorney at Semanoff, Ormsby, Greenberg & Torchia, LLC. “They are not just for the elderly.”

Smart Business spoke with Ort about a general power of attorney, how it should be structured and when it becomes effective.

How should one go about addressing the possibility of being incapacitated?

Without a durable, general power of attorney in place, no one could act on your behalf if you become incapacitated. In that situation, your family or another interested party would have to apply to the local Orphans’ Court to have you declared incapacitated and have someone appointed as your guardian to act on your behalf. That takes time and money, and the court-appointed guardian would be subject to continued court supervision.

It’s better to create a durable, general power of attorney now so you can choose your agent.

A ‘durable’ power of attorney is effective notwithstanding your subsequent incapacity. Pennsylvania law makes all powers of attorney presumptively durable.

How should a general power of attorney be structured?

The concept of the general power of attorney is to grant your agent as broad authority as possible because you don’t know what actions your agent may have to take on your behalf in the future. It’s often useful to designate specific powers such as the power to open and close safety deposit boxes, to write checks, pay bills, manage investments, sign your tax returns, and to sue or defend against a suit on your behalf.

A general power of attorney typically is not the best way to authorize someone to make health care decisions on your behalf. That should be relegated to a separate document, such as a combined health care power of attorney and living will.

What are hot powers?

In Pennsylvania, there are certain powers that an agent is not granted by a general grant of authority. These so-called ‘hot powers’ are very sensitive and can potentially be abused by the agent. Such powers include the power to create or change rights of survivorship, the power to create or change beneficiary designations on insurance policies, annuities and retirement plans, and the power to make gifts. If you want to authorize your agent to exercise these powers on your behalf, you need to specifically grant your agent such powers.

When is a power of attorney effective?

You can make the power of attorney effective immediately when you sign it. This means your agent could act on your behalf even though you are not disabled. The alternative is a springing power of attorney, which becomes effective at some future point in time and requires a clear definition of the future event that makes it effective.

One common way for a springing power of attorney to become effective is upon a certification by a physician that the principal has become disabled. This can be problematic if the physician does not want to be put in that position, especially if there’s family friction about whether or not the power of attorney should become effective.

Alternatively, you could delegate to one or more persons the power to make it effective — for instance, a majority of your spouse and your adult children.

What advice would give about choosing agents?

General powers of attorney are powerful documents and can be subject to abuse by the agent, so you need to have absolute confidence that the agent will act in your best interests. You can have just one agent at a time serve on your behalf. Or, you can appoint two or more agents to serve at the same time, in which case it is presumed that they are required to act jointly, thereby requiring unanimous agreement among the agents, which could minimize the possibility of a single agent abusing his or her powers. Also, successor agents should be appointed and you should consider granting the last-serving agent the power to appoint one or more successor agents.

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

Contests, sweepstakes provide fun opportunities for customer engagement

Contests and sweepstakes can be a fun way to boost customer engagement, but there are some important details to consider before the games begin, says Christy A. Prince, a Director at Kegler Brown.

“These types of promotions are a valuable and relatively inexpensive way to engage with customers and build brand recognition and customer loyalty,” Prince says. “They can also help the company position itself as fun, creative and relevant depending on the structure and execution of the promotion. The key is to have good rules for your promotions to ensure that they run smoothly and that any disputes can be handled appropriately without creating exposure or negative publicity.”

The worst-case scenario is you develop an exciting contest that draws customers to your business, but you end up in court because you didn’t verify that the prize and method of selection were in compliance with laws and regulations.

“If you have a good framework and clearly understood rules in place, it is a great opportunity,” Prince says. “You want someone who has compliance in mind to be involved as you develop your plan.”

Smart Business spoke with Prince about how to engage customers and build momentum with contests, sweepstakes and social media promotions.

Where is a good place to begin building customer engagement using contests and sweepstakes?

One of the first steps is to be clear about the difference between contests and sweepstakes. A sweepstakes is a drawing in which the winner is randomly selected and everyone has an equal chance to win. A contest is based on skill, meaning everyone does not have an equal chance to win. The winner is the person with the cutest dog or someone who answered a series of trivia questions correctly or came up with the funniest one-liner for your new slogan.

As you consider the nature of your promotion, you should also think about customer demographics and what type of promotion customers would best respond to. Would they prefer a skill-based contest or a simple raffle for a prize? You should also consider whether you want to incorporate audience participation to select the winner or use a preselected panel of judges. In either case, participants need to clearly understand how the winner will be selected.

Look at your goals for the promotion. If you’re trying to drive traffic to your website or social media channels, that forum would be your ideal method of entry. Social media has led to a surge in promotions as companies see value in the exposure and the additional opportunity for engagement, especially if your promotion goes ‘viral’ and gets shared with a wider audience.

What are some legal concerns that need to be addressed?

There are laws you must comply with when conducting your promotion. If your promotion is only going to be available to Ohio residents, you should state that in the rules. Make sure the entry method for your promotion is clearly understood.

Requiring any form of consideration (payment or valuable effort like completing a lengthy feedback survey, etc.) can be problematic if you don’t have the right safeguards in place. For example, if you run a drawing and the only way to have a chance to win is to buy a product, and you don’t fit into some exception, such as a charity, that would be illegal gambling. You must be aware of the law of each state where the promotion will be offered, and each state typically has substantial differences in what it considers to be permissible promotions  Your promotion must also comply with federal requirements.

Also, companies can run into ‘troll’ participants who perceive problems in the promotion (for example, with unclear rules or selection criteria) and threaten to sue or create negative publicity. Work with your attorney or legal counsel to ensure you’ve addressed all legal questions that might pertain to your promotion.

If you don’t maintain your focus or try to take shortcuts as the promotion is developed and operated, it’s easy to run into legal trouble. As long as there is a framework in place and you work within that framework, you can typically avoid problems and focus on the benefits of increased visibility that the promotion will offer you.

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

Before you sign a contract, take time to understand indemnification clauses

Business executives often spend a considerable amount of time negotiating the contract terms they deem the most critical while others are merely glanced over.

As such, monetary terms, warranties, lead times, contract length, termination and noncompete covenants typically generate a lot more passion than indemnification or “hold harmless” clauses.

Smart Business spoke with Isabelle Bibet-Kalinyak, an Immigration and Health Care Corporate Attorney at Brouse McDowell, in order to better understand the purpose and importance of these technical provisions.

What are indemnification clauses?

Risks are inherent to all types of contracts. Indemnification is the process whereby one party seeks to secure another party against anticipated losses or damages. It is a contractual tool that allocates in advance the risks or losses associated with the contractual relationship, whether such risks or losses are suffered by the parties to the contract or a third party.

Why are indemnification clauses important?

Indemnification or ‘hold harmless’ clauses have become universal in the business world. Although initially most common in the construction industry, they are now pervasive across all industries and contract types by default.

Parties should carefully review all indemnification terms because they may cause substantial financial losses (including, at times, reimbursement for all legal fees) to the indemnifying party if successfully invoked.

Are indemnification terms required in all contracts?

The parties should analyze the necessity and scope of the indemnification terms to best fit their respective needs and risk tolerance.

Express indemnification terms may not be required when insurance (general liability, medical malpractice, etc.) for the risks or losses at stake is already part of the deal.

Further, various common law principles already allocate vicarious or derivative risks based upon the relationship between the parties.

For example, under the legal doctrine of respondeat superior, an employer is responsible for the wrongful acts of its employees, and under the doctrine of agency by estoppel, a principal is liable for the acts or omissions of its apparent agents. These common law doctrines vary from state to state.

Are indemnification clauses legal?

Indemnification clauses are legal, for the most part. Their proliferation and abuse have, however, triggered statutory limits at the state level, notably in the construction industry and landlord-tenant context. Some states now prohibit certain transfers of risk or void clauses that attempt to pin all liability on one party, even when concurrent negligence exists.

What are some key elements executives should discuss with legal counsel?

Executives should not forego all negotiations relative to indemnification merely because of relatively unequal bargaining power between the parties.

The parties should at least review and weigh the following elements of the clause, particularly when the stakes are high: necessity, scope, types of risk transferred (acts, omissions, concurrent negligence, etc.), defense, defense/legal costs, duration and termination, effect of settlement, damages limitation, insurance coverage, effect of merger and acquisition, statutory limitations at the state and federal level, and regulations (Medicare).

Amending the language or establishing reciprocity can help mitigate the risks. Indemnification clauses are risky and complicated. Understanding exposure and specific terms is key prior to signing on the dotted line.

Insights Legal Affairs is brought to you by Brouse McDowell

Estate planning 101: Stop and think about the pieces

Many people don’t understand that when it comes to transferring property after death a will does not cover all assets. When designing someone’s estate plan, it’s critical to look at the different types of property so the decedent’s intentions will be carried out correctly.

“An estate plan isn’t just getting signed documents in place, it’s also looking at the asset base to make sure everything will match up and play out properly,” says Mary Jo ‘MJ’ Baum, an attorney at Semanoff Ormsby Greenberg & Torchia, LLC. “Otherwise, the estate plan or will isn’t worth the price you paid for it.”

Smart Business spoke with Baum about properly transferring property at death and the problems that can arise if a will is not crafted correctly.

How is property transferred at death?

There’s a misconception that a will controls the disposition of all of a person’s assets at death. The truth is that if you own an asset with your spouse or child as ‘joint tenants with rights of survivorship’ — for instance, a bank account or primary residence — it’s the last person standing who receives the asset in full. After the first death, the surviving co-owner only needs to show a death certificate to retitle the joint bank account to the survivor’s sole name.

This also holds true for joint tenants with rights of survivorship (JTWROS) real estate. Usually a new deed is not prepared after the first co-owner’s death. Instead, it is normal for a new deed to be prepped only when the surviving co-owner subsequently transfers the property by sale or gift. For ‘chain of title’ purposes, that deed then recites the death of the first co-owner, which resulted in the survivor’s exclusive ownership and set the stage for the instant sale or gift.

Another asset category is property subject to a beneficiary designation. For life insurance, annuities, IRAs and 401(k) or other retirement plans, the owner designates a beneficiary in writing on a form supplied by the provider. The last designation on record with the provider controls. Unless a beneficiary designation asset is made payable to the owner’s estate, reference to that asset in a will has no meaning.

A shortcut form of beneficiary designation asset is one that is earmarked as an in trust for (ITF), pay on death (POD) or transfer on death (TOD) asset. Accounts retitled in these ways won’t be available to fund a bequest in the will or to pay for the funeral or death taxes. This is tricky because the monthly statement for the bank/brokerage account often only shows the owner’s name and doesn’t reflect that it’s an ITF/POD/TOD account.

Another asset category is one where an asset is owned by a trust. These have an underlying written trust document containing specific terms that apply to the trust’s assets.

Essentially, the only property that is disposed of by will is property that is titled in the decedent’s name alone, which is not subject to a regular or shortcut form beneficiary designation, or owned as ‘tenants in common’ (TIC). With TIC ownership, two or more people possess portions of the asset together, but not with rights of survivorship. Each person’s portion is his or hers to control or transfer. Each person’s separate portion is treated as the person’s sole name property.

What problems can arise if a will is not written correctly?

In one post-death situation I handled, a gentleman had written his own will. He had been widowed, was remarried and had children from his first marriage. His will stated that at his death his life insurance was to pay for his funeral, his second wife could live in his house for the rest of her life and then it would pass to his kids, and specific bank accounts were bequeathed to his kids. Of all of the provisions he wrote, not one was validated because the extra-testamentary asset arrangements trumped his will’s contrary provisions. Even worse, the will contained no residuary clause — a ‘catch all’ provision in a will that disposes of property not expressly disposed of by other provisions. He had sole name assets not mentioned and no residuary clause to cover them. So, in essence, he died without a will as to those assets, leaving his wife and children to parse their way through the intestate laws.

Don’t let this happen to you.

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

Why you need to take caution when using independent contractors

As independent contractors continue to become a bigger part of the American workforce, the Department of Labor (DOL) is investing more time and energy to make sure companies follow the law when it comes to classifying these workers, says Timothy J. Gallagher, an attorney at Kegler Brown.

“Employers are shifting toward using more independent contractors,” Gallagher says. “It’s a direct result of companies trying to control costs where they can. You can’t keep reducing the price on goods or you’ll never make a profit. You can’t keep limiting services or you’ll be swallowed up by the competition.

“If you can minimize your labor costs by paying a lump sum for a project and avoid paying benefits or taxes for an employee, it’s easier and cheaper for the employer.”

The practice of using independent contractors has grown significantly since the recession as companies look to reduce long-term costs. In a 10-year period, usage of this contingent workforce has grown from under 30 percent of the overall workforce to more than 40 percent of that group, according to the U.S Government Accountability Office.

Smart Business spoke with Gallagher about what companies should know before utilizing independent contractors.

What is the difference between an employee and an independent contractor?

An independent contractor is not entitled to benefits from the employer. This person doesn’t have to be paid overtime or a minimum wage and bargains for terms that he or she is willing to accept. Employees are entitled to benefits from the employer and certain protections for minimum wage and overtime compensation.

The employer is also required to pay unemployment tax, income tax and worker’s compensation for employees. These costs are not required with an independent contractor, which is where the financial savings can be achieved.

How do employers get into trouble with independent contractors?

You could decide that rather than call these individuals you’ve identified as employees, you’ll change their hours and duties a bit, provide them each with 1099 tax forms and call them independent contractors.

The IRS, however, does not base its worker classifications on what the employer chooses to call its workers. Rather, the federal agency looks at 20 different factors with the goal of determining who it is that controls the relationship.

If you’re telling people where to show up, where to work, what tools to use, what equipment to use and you’re providing training and instruction, at that point, you’re controlling the whole relationship. They will likely be seen as employees, even if you’ve decided to call them independent contractors.

What happens if the IRS determines you’ve misclassified your employees?

If you’ve labeled someone as an independent contractor when the individual should be an employee, the IRS will come after you for the unpaid taxes. If it’s determined that you willfully changed someone’s classification, you’ll also incur a $1,000 penalty per each worker that you misclassified.

The DOL has developed memorandums of understanding and is sharing data with the IRS and state tax departments and agencies in 28 states. Ohio is not currently one of those states, but the trend is moving toward getting those memorandums with every state.

So if you’re reporting one thing to the federal government and something else to the state, you’re at increased risk of those discrepancies being identified and then audited and penalized.

What should employers do?

If you’re a small business that has changed employee classifications to save money, talk to an attorney about the risks and how to do it the right way.

If you’re a larger company and you use a staffing company to open a new factory or support a large expansion, you could be considered an employer or a joint employer with the staffing firm for the people you bring in, depending on how much control you exert over these workers.

Review the IRS and DOL worker classification factors and do a self-audit. You’re better off paying for a $500 consultation with an attorney before you make changes versus paying that attorney $50,000 to defend you in a lawsuit for a class action by workers you misclassified.

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

Legal bills too high? How to reduce sticker shock

Most lawyers in private law firms bill by the hour. And many types of legal work — particularly drafting, research and document review — require more time than clients generally assume. So “sticker shock” over the amount of the first legal is common.
Are there things a client can do to lower the shock? Yes, says William J. Maffucci, attorney with Semanoff Ormsby Greenberg & Torchia, LLC.

Smart Business spoke with Maffucci about how clients can lower their own legal bills.

How can one go about lowering legal expenses when hiring an hourly-fee lawyer?

Legal work billed by the hour will always be expensive. But many people who hire hourly-fee lawyers don’t realize that they can reduce their future legal bills by, effectively, becoming part of their own legal team. They can handle many tasks that, although necessary to the representation, do not require a legal degree or a paralegal certification. The savings can be substantial, and — not paradoxically — the client’s efforts can improve the quality of the legal service.

What are some tasks clients can handle on their own?

One simple thing can be done whenever you are about to deliver documents to your lawyer: organize them. At a minimum, put them in chronological order. This is particularly important at the beginning of the engagement.

Recently a new client told me she had about 100 documents that were relevant to her matter. I asked her to arrange the documents chronologically before bringing them to my office. She ignored my request and showed up at my office with a grocery bag of unorganized, unstapled and unfastened documents. It took us over two hours to sort, which resulted in additional legal fee of approximately $900.

Clients can also review and comment upon documents, such as deposition transcripts, that are produced or created during the course of the representation. I have had many intelligent and motivated clients make comments that were at least as helpful as the comments I would have expected from paralegals, working at billing rates of perhaps $200/hour.

Are there other things a client can do to reduce the cost of hourly-rate legal service?

Whenever possible, the client should communicate with the attorney by email and not by telephone. Reading an email takes less time than having the same communication by phone. Far more than emails, phone calls disrupt a lawyer’s day in ways that a lawyer often reflects in a bill.

Many law firms and lawyers have a policy of billing in minimum time increments, often 15 minutes, even if the work at issue required less time. Clients understandably can get upset when they are billed for fifteen minutes of a time on a phone call that only took, say, six or seven minutes. But billing for the additional time is defensible because the disruption that a phone call usually causes to workflow almost always results in additional time spent by the lawyer.

The other email-related rule is this: Make it clear to your lawyer that, whenever possible, written communication to you should be through email, not the postal service or hard-document courier service. No one expects standard email communications to be as polished and professional-looking as documents on letterhead. So, whether the lawyer types the email or dictates it and gives it to a secretary to type, the elapsed lawyer time will usually be less than the time the lawyer spends preparing a hard-copy letter. And email avoids postage, which many lawyers would pass on to their clients.

Do lawyers generally appreciate when their clients use these techniques?

I’ve never met a lawyer who didn’t welcome the efforts of a client to relieve the amount of non-legal work the lawyer was obligated to do. And I’ve never met a lawyer who was offended by a client’s insistence that the lawyer communicate via email.

Eliminating the time that a lawyer must spend on non-legal work and reducing the amount of time that a lawyer must spend on written communication helps the lawyer focus on the important components of the representation. That can only make the legal service more effective.

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

A look at how to preserve insurance assets in a corporate transaction

Liability insurance is an important component of risk management for most businesses, but insurance policies are often overlooked in the sale of a business. Both the current liability policies in place at the time of the transaction, as well as the historical policies issued for prior time periods are valuable assets. Steps should be taken to preserve these assets, whether for the seller if it will remain a viable entity going forward, or the acquiring company.

Smart Business spoke with Keven Drummond Eiber, Attorney at Law, OSBA Certified Specialist — Insurance Coverage Law, at Brouse McDowell, about preserving valuable insurance assets.

How does a merger or acquisition affect the preservation of insurance assets?

When a company is acquired in a stock purchase, no change of corporate form occurs. The acquired corporation remains the same entity, but with different owners, or shareholders. It is neither a successor nor a predecessor of the company that acquired its stock and it will continue to have all of its rights to coverage under its current and past liability policies.

When a merger takes place, typically, the acquired corporation is merged into its new owner. The surviving corporation will be considered the ‘successor’ and, pursuant to state statute, will inherit all of the rights and obligations, including rights to insurance policies, of the merged company.

The real challenge to preserving insurance assets, particularly from the standpoint of the acquiring company, arises in the context of an asset purchase. When an asset purchase takes place, some or all of the assets of a company are sold or transferred. Liabilities may or may not be transferred as well. The new owner of the assets is not a ‘successor’ of the company from which the assets were acquired.

How does the acquiring company identify all of the insurance assets?

The first step is to obtain all of the necessary information about the target company’s insurance program. The search should not be limited to the current liability policies, because prior policies can provide valuable coverage for future claims, especially for so-called long tail claims. Obtain actual complete copies of the policies because they will contain provisions that will be important to analyze and understand in order to ensure they remain available going forward. The due diligence period prior to closing affords the best, and perhaps the only opportunity to obtain this information.

The second step is to analyze and understand the insurance policies. Are they claims-made policies or occurrence-based policies? Do they define the ‘insured’ to include subsidiaries? Do they contain anti-assignment provisions? Do they require that the insurer be given notice of certain corporate transactions or other events, such as a sale of substantially all of the assets of the company? Are there historical claims? Have the limits been eroded by payment of claims? Are the insurers still in existence?

In Ohio, when a covered occurrence under an insurance policy occurs before liability is transferred to an acquiring company, coverage does not also transfer to that company automatically just because the liability was assumed. However, Ohio law does generally permit a party to affirmatively assign its right to be indemnified by insurance for past occurrences, regardless of the consent of the insurer. Otherwise, Ohio law will give effect to an anti-assignment provision in a policy, particularly when the nature of the insurer’s risk that it bargained for is altered by the transaction.

So what can the parties do to preserve the continued availability of liability insurance?

Include specific provisions in the transaction documents related to the retention or assumption of liabilities and indemnification with insurance in mind. Explicitly transfer the right to insurance proceeds for pre-acquisition occurrences (a ‘chose in action’), whether or not known, as an identified asset in the transaction. Assign all past liability insurance policies, not just the ones for the current policy period. Provide notice of the assignments to insurance companies. To the greatest extent possible, obtain the insurers’ consent to the assignments. If the seller is retaining all rights to insurance, obtain endorsements to reflect any company name changes going forward. And, work with your broker who can serve as a valuable resource throughout the process.

Insights Legal Affairs is brought to you by Brouse McDowell

A look at what to consider before you sign your next building lease

Property managers can use their experience negotiating lease agreements to outmaneuver business owners who are in a hurry to get a deal signed and get moved into their new office space, says Daniel K. Wright II, Attorney at Law for Brouse McDowell.

“You need to give yourself plenty of time to negotiate a fair deal,” Wright says. “You never want to lose leverage by having the pressure of an expiring lease looming in the background. It forces you to speed everything up and that’s when things get missed, things that could come back to haunt both you and your business.”

Northeast Ohio has seen its population shrink considerably over the years as the region’s economy has continued to struggle, resulting in a steady loss of both businesses and jobs. It’s created real estate opportunities, however, for companies that remain and are looking to make a move.

“If you allow yourself the time to get good advice and make the best deal for your needs, you as the tenant can take advantage of the market,” Wright says.

Smart Business spoke with Wright about things to consider when relocating your leased office or industrial facility.

Where’s the best place to start when looking to relocate your business?

Have a trustworthy and experienced fee-only real estate adviser who knows the local market and has experience in your particular industry. Fee-only means you want an adviser whose compensation is not dependent on the amount of rent you’ll pay for the space. That is important when rents are falling.

Get your attorney involved early on to help structure the negotiations and the terms of the deal and coordinate with your real estate adviser. You need this group to function as a team.

You want legal counsel with you at the table as the deal is being negotiated to ensure your best interests are being taken into account. If you wait until the end and items are missed, you’ll waste both time and money as you back up and try to rework the deal.

Put together a detailed, non-binding term sheet or letter of intent that contains important economic and business terms so as to frame the deal. This can be particularly helpful when comparing competing offers on an apples-to-apples basis, and to clarify concepts or terminology that may lack clear definition.

How can the matter of rent vs. total occupancy cost cause problems?

The real estate industry has gone to great lengths to build rent increases into leases in today’s market for operating expenses and more nebulous fees, which is the reason for the previous point about clarifying terminology.

A simple one that people often run into is the calculation of rentable square feet versus usable square feet. ‘Rentable’ is a euphemism that is used by landlords to charge a tenant for rent on portions of the building that are outside the leased premises.

On top of that, the method for measuring square footage usually includes unusable space that may be occupied by HVAC units or columns in the building. So you end up paying for space that you can’t use, as well as common hallway space and a portion of the bathrooms adjacent to your location.

These are things you need to check out during the negotiations. Get a copy of the lease so you and your team can review it. Measure the space yourself and see what you’re actually getting before you get locked into a multiyear deal.

What are some other costs to consider?

Get a quote for operating expenses per square foot over the past three years, determine what the increases have been, and try to negotiate a cap so that you can budget for these increases over the lease term.

With construction, the landlord will often build out the space however you want it. But it is typically amortized over the lease term and included in the rent, so it can add up quickly. Put tight controls in place over the scope of and schedule for the work. Require the landlord to solicit multiple bids. And in some cases, consider finding a knowledgeable design or construction professional who can work on your behalf to oversee the work and keep everything on track.

Insights Legal Affairs is brought to you by Brouse McDowell

What will this year’s election outcomes mean for both you and your business?

This is a presidential election year and as the debate continues over who will lead our nation for the next four years, there is a great deal of conversation about what impact the outcome will have on both the nation’s economy and on individual businesses.

In most presidential election years, while the race for the White House grabs the headlines, it’s the issues and candidate races closer to home that ultimately have a bigger impact on your economic future.

But 2016 is shaping up to be a little bit different, says Lloyd Pierre-Louis, a director at Kegler Brown.

“Normally, local elections have much more direct impact on business than national elections,” says Pierre-Louis.

“But this year’s national elections are just as impactful since they will determine control of the White House, the Senate and the U.S. Supreme Court. The stakes for business couldn’t be higher due to issues such as health care, equal pay, regulation, taxation, foreign trade and labor relations, just to name a few.”

Smart Business spoke with Pierre-Louis about how this year’s election cycle could impact the economy and how accurate the experts are in their projections of the election’s impact.

Which election issues or candidates should business owners keep an eye on during the upcoming election season?

As noted, most of the national races could have a dramatic effect on a number of meaningful issues. That said, you shouldn’t ignore the local elections. The commitment that candidates for local positions make to infrastructure development, modern transportation, environmental issues and regionalism can have a direct impact on local economic development.

Take the time to study each of the races and determine where the candidates stand and what they would plan to do if elected.

How impactful is this election year compared to what we’ve seen in previous years?

More so than ever. First, having a political convention in Cleveland is great economically for the region and the state. It has been decades since a national election had the potential to directly impact our state government. Obviously, Ohio and Florida are must-have swing states, so the governor’s growing national notoriety keeps him relevant in his party ticket discussion at least through July and possibly into November. That impacts our state’s political landscape.

How accurate are these projections typically?

Reputable polls usually present an accurate snapshot of how likely voters feel at that time. And candidates should be scrutinized by industries since they don’t often stray from their past records. If someone is viewed as a ‘friend’ of an industry or received plenty of campaign support from a consistent source, it should be easy to predict their business positions.

With news cycles, though, a week or month is an eternity, i.e., enough time for a candidate to self-destruct or fall victim to an unexpected scandal that could quickly reverse his or her political fortunes.

What else should people think about as they gauge the potential effects of this year’s election?

Neither political party can justifiably stake a claim as the business-friendly party. Some popular career politicians have never run a small or large business, while others have only run large businesses and never taken the personal risk small business owners have stressed over time and time again.

But every candidate claims to have the silver bullet to ‘fix’ our nation’s business climate. A candidate’s past record is much more reliable than the rhetoric, which is little more than noise. Everyone will have a business friendly tone, but it’s OK to dig a bit deeper to determine if they truly are and whether it’s enough to earn your vote.

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