WORKING WITH LAWYERS AND ACCOUNTANTS

The first thing we do, let’s kill all the lawyers.

I have spoken at a major conference for lawyers, and that company purchased my Ultimate Sales Letter and Ultimate Marketing Plan books to give to all the attorneys in attendance. In my personal coaching groups, I have had six attorneys, we have quite a few lawyers as Glazer-Kennedy Insider’s Circle™ Members, and several have followed my lead and become marketing “”gurus” to their professions, notably including Bill Hammond, expert in marketing elder law practices and legal services for families with a person suffering from Alzheimer’s, and Ben Glass III, expert in marketing personal injury practices. As a speaker, I have appeared on programs with famous lawyers Alan Dershowitz and Gerry Spence. I confess to admiring Spence’s masterful persuasive abilities and I recommend reading his book How to Win an Argument Every Time.

With all that said, I still share most entrepreneurs’ allergic reactions to them. Here and now, I apologize to all entrepreneurs for helping attorneys. I’m sorry. My defense? I take special joy in taking their money.

The relationships between entrepreneurs and their lawyers, accountants, and bankers tend to be rocky at best. Most entrepreneurs I know harbor intense dislike for these people, including the ones they pay, and all their colleagues. Believe me, I understand this dislike. On the other hand, I have faced the reality that you cannot survive in today’s business environment without relationships with these people. It’s okay not to like them, but it’s still important to be able to elicit productive results from them as needed.

How to Be Litigious without Buying Your Lawyer a Yacht

I have been accused of being litigious, which means I have often threatened to sue and file lawsuits. I have, on a number of occasions, been quick to threaten and even quick to proceed; it’s often proved to be the best way to avoid being pushed around. I’ve discovered that most people as well as many companies have no real stomach for legal warfare. They know how costly and time-consuming it can be.

When you are building a company, you, sadly, often find yourself having to defend your intellectual property or proprietary products, in conflicts with competitors or partners or ex-employees, having to enforce contracts others ignore, even having to defend yourself against misplaced regulatory interference. I have, over years, won battles with the U.S. Postal Service, a trade association I belonged to, individuals owing me money, and a major insurance company. In most cases, aggressive action on my part backed only by a knowledge of the relevant law and threat of litigation was sufficient; but in some, nothing but a real, honest-togum lawyer would do.

In the most recent years I have been more restrained in this than in earlier years. Some of that is the prevailing of a cooler head, a lot of it the opportunity to be much more selective in who I permit myself to be involved with. At this point, I command enough respect that many unfair uses and abuses of copyrighted or otherwise protected intellectual property can be stopped or reversed with nothing but a stern letter from me. However, still, there are times when nothing short of a lawsuit will do.

Al Capone is credited with saying, “You can get a lot with a kind word and a smile, but you can get a lot more with a kind word, a smile, and a gun.” Some people only understand power and force.

What to Do If You Are in a Fight

One of the most time-consuming legal weapons is called “discovery.” This allows you to subpoena opponents’ records, interrogate them under oath, and serve them with written interrogatories that must be completed within a certain period of time. An interrogatory is a written set of questions, pages long, prying into every imaginable aspect of the opponent’s business and personal life. If there is a possibility of your being awarded damages from your lawsuit, you usually have the right to discover, in advance, the nature and location of all the opponent’s assets. You can ask for detailed information about income, bank accounts, and personal and family assets. Like an inventory of the wife’s jewelry, the amounts in the kids’ piggy banks.

With this approach, you can consume immense amounts of the opponent’s time and force public disclosure of information he would rather not make public. Also, dropping a 200-page interrogatory on an opponent’s spouse can make for a very interesting evening in their home. Used properly, the interrogatory is often the only shot you have to fire.

Some lawyers are reluctant to drop this big a bomb. I advise against employing timid or polite lawyers. If the time comes when you must sue somebody, it’s important to find a lawyer who will go for the jugular. I cannot emphasize this enough. Once you find that a real fight is unavoidable, you do not want a lawyer who likes playing nice with his professional peers or proceeding slowly, cautiously, step by step according to some secret guidebook of professional courtesies and procedural norms. You want a guy with finger hovering right above the big red button, eager to push it.

In a number of conflicts, people have instantly become more reasonable and respectful as soon as they’ve realized that I was prepared to bring in the legal beagles and start discovery. I signify this by sending copies to my lawyer of the correspondence I have with the other party, and, sometimes copying that party my memo to my lawyer. Using only this method, I’ve settled a lot of problems in my favor. Of course, I must mention here that I am not a lawyer, and my comments here are not a substitute for legal advice.

Just for example, I used this method to settle a dispute with a trade magazine that had made a mistake with the photos in an advertisement we placed. When the magazine billed us, I wrote to the publisher expressing my dissatisfaction. When that got nowhere, I sent a second letter indicating my refusal to pay any amount and describing how the deficient ad had probably damaged us at a trade show. That second letter indicated a copy had gone to my lawyer. Soon afterward, I got an offer from the publisher to settle. That happened early in my career, and taught me that you don’t need to let media you advertise in abuse you. Since then, I’ve gotten free make-good ads and money in excess of the original buy quite a few times from magazines and other media that placed my ads improperly or otherwise “made mistakes.”

Why, you ask, did I do all the work myself? Why not just turn it over to the lawyer from the beginning?

First of all, although some of my companies have had lawyers on retainer, I have never had a blanket retainer arrangement. Putting “cc” at the bottom of my letter costs me nothing. Having a lawyer handle it costs me $200.00 to $400.00 an hour. Second, I wanted to rattle my sabers, not actually wind up in battle. Keep in mind that your interests and your lawyer’s interests rarely coincide. In the matter of the dispute I described above, I would have had to nudge, push, and check up on the lawyer a half-dozen times to get it handled. Lawyers tend to deal each day with only those matters that have escalated to crisis, so a case like mine would have been put on the back burner forever. Including value of my time, it would have cost me more than the spoils from my victory to get it done. The cliché “talk is cheap” does not apply to lawyers. For their own financial interests and by conditioning, they are not prone to swift solutions.

Using a similar threat of litigation, I have, at various times, stopped a competitive company’s salesperson from spreading rumors, got an insurance company to pay off nearly $250,000.00 in claims on a technically lapsed policy, got an undesirable equipment lease terminated without penalty, reduced and compromised bills, and collected past-due balances.

My objective through all this has been to win cheaply and quickly. And, in 35-odd years of using this approach, I’ve wound up in actual lawsuits only four times: settling twice and litigating twice.

Your Turn Can Come

It comes as a seismic shock to many entrepreneurs how easily and frequently they can be threatened with lawsuits. Anybody can sue you at anytime for anything. Sure, you have recourse in most cases where the suit filed against you proves baseless, and you can demonstrate cash damages as a result. By that time, though, you’ve had your business and family disrupted, tied up money in legal fees and costs, and consumed a fortune in antacids.

When you get attacked, most lawyers will want to react slowly, cautiously, and by the book. I’ve found, however, that when threatened or served with a lawsuit, the best defense is a very fast, very strong, even a little wild-eyed-and-foaming-atthe-mouth, kick-butt offense. Push your lawyer to run straight at them.

Legal problems are a part of business. The old idea that nobody has legal problems unless they deserve them is as out-ofdate as handshake agreements and leaving the back door unlocked while you take any evening stroll down to the ice cream parlor.

Dan Kennedy’s Eternal Truth #11

Talk is cheap ... until you
hire a lawyer.

When You Must Really Use a Lawyer

Keep this in mind: don’t lose control. Don’t be intimidated. Don’t let yourself leave with a pat on the head, a reassuring word, and unanswered questions. You must understand everything about your situation. Take nothing for granted. Insist on being an informed participant in the strategy process. If the lawyer wants to tell you what to do rather than educate you about your options and their ramifications and help you make your decision, run.

You must manage your lawyer just as you would any other employee. Be very clear about fees, costs, and how the relationship is to work. Follow up on every phone conversation or meeting with a written letter, “just to confirm what we agreed to do,” and use this memo to reference and enforce deadlines. Be polite and considerate, of course, but firm. You are the boss—act like it.

Some lawyers will work effectively with you in this kind of the relationship. Some will not. There are plenty to choose from.

Putting a Wall Around Your Castle and Alligators in the Moat

If you have or appear to have assets, are or appear to be successful, you are a target.

The business owner is in constant peril of lawsuits from employees, associates, investors, customers, vendors, and passers-by.

Most entrepreneurs are negligent, chronic procrastinators about asset protection. It is akin to home security systems: well over half are purchased and installed only after the home is burgled. However we are talking about more than the loss of your TV and having your undies pawed over.

There are more than 100-million lawsuits filed in the United States in an average year. We have more attorneys per capita than any other nation. Hundreds of thousands more are in law schools as I write this. They all need work. They all need somebody to sue. Like you.

It’s a very good idea to discuss all possible business and personal insurance options with a very knowledgeable propertycasualty, business insurance agent. If yours does not impress you as expert, and will not invest time in full understanding of your business, find one who fits that bill. It is also a good idea to educate yourself about asset protections, trusts, states with highest homestead protection for primary residences, etc., then to consult with an attorney expert in such matters.

If you are at all high profile, locally or nationally, you should also give some careful thought to your personal, family, and home security. The internet has made it frighteningly easy to invade your privacy and security, to find your home, even to access its floor plan. Identity theft is rampant. Not long ago, a client of mine well known in his area as a highly successful entrepreneur withdrew a large sum of cash from his bank, for legitimate reason. It is now believed but not, as I write this, proven that a bank employee tipped off criminals about this withdrawal. That same night, two armed men bashed in the front door of his home and held him, his wife, and his children at gunpoint. Unfortunately for them, the business he is so successful in is a martial arts academy; he is a big, strong, and extremely capable black belt who trains fighters competing in the extreme fighting matches on TV. His assailants left with broken bones and no swag. I have had other clients experience similar situations and not have them end as nicely.

Whether it is the thugs in Washington, DC, in Congress, targeting you, thugs in business suits with briefcases to whom contracts are meaningless and ethics comedy, disgruntled ex-employee thugs looking for a self-made golden parachute, or actual thugs with ski masks and guns, they are all around us. This is the world we live in.

Strange Creatures, Accountants

Accountants can be almost as maddening as lawyers to the entrepreneur, but for different reasons. The temperament and thinking of someone happy to sit in an office crunching numbers is diametrically opposed to the personality of the go-get-’em entrepreneur.

Still, you need a good accountant.

What makes a good accountant? The entrepreneurial joke is that you ask “What’s this number?” And the good accountant says, “What would you like it to be?” That’s amusing right up until the first tax audit. My own working definition, which may or may not be exactly right for you, is that a good accountant imposes a reasonable degree of discipline on your record-keeping and is very knowledgeable, informative, and helpful in the area of tax law—where your biggest risks and biggest costs can occur.

I have had good ones and bad ones, cheap ones and expensive ones, and my advice is find and hire good even if expensive.

The one mistake never to make is to put the bean counters in charge of making decisions about planting seeds or harvesting beans. Just as we entrepreneurs aren’t very good at counting or keeping beans and a whole lot better at harvesting them, the accountants good at counting ‘em are inept at planting or harvesting. A lot of companies are grown to a certain point by an entrepreneur, then turned over to accountant-types to manage. More often than not, they destroy it. It’s quite common for an entrepreneur to sell a good company to a big, dumb company run by bean counters, then get to buy it back for a fraction of what he was paid for it in the first place! That doesn’t mean entrepreneurs ought to continue with their hands-on, micromanagement, antidelegation, control-freak style as a business grows from small to large and simple to complex either, but putting accountants in control is hardly ever an improvement.

Rear View Mirrors, Magnifying Glasses, and Binoculars

It’s very important to understand that the kinds of numbers accountants and CPAs assemble and provide to you are Rear View Mirror numbers. They are historical. They tell you what has already happened in your business.

These numbers are useful in identifying what has gone awry that needs to be fixed, such as a type of expense that has grown in terms of percentage of sales and needs to be roped in, or a product or service insufficiently profitable vs. others. That sort of thing. But with these numbers you are always fixing problems that have already occurred.

Their numbers are also constructed more to satisfy tax authority requirements and meet general accounting norms than they are to help you manage your business more profitably. Yes, you need to know how to read balance sheets and income statements, but God help you if you try actually managing your business with them.

You need Magnifying Glass numbers to make good day-today, current decisions. That means what is happening, magnified, so you can clearly see and understand it. These numbers are foreign to most accountants. For example, two of the most important numbers in marketing are CPL, Cost Per Lead, and CPS, Cost Per Sale, and they need to be tracked by source. Most business owners cannot tell you what it costs them to acquire a new customer, or to sell a particular product. Another vital number is TCV, Total Customer Value. You decide whether your business has short or long customer life, one year or ten years. But you have to know what a customer is worth in order to determine how much you are willing to pay to get one. And you have to know the different values of different customers secured from different sources. These are the kinds of numbers that those of us in direct marketing understand, that most other types of entrepreneurs don’t.

Incidentally, the entrepreneurs I’ve worked with over the years who make the most money and build the biggest fortunes are the ones who are very, very good at these Magnifying Glass Numbers. So good, I can’t easily stump them with questions. My former client, now retired, Len Shykind at U.S. Gold, could, in moments, pull up any number you could ask for, with regard to the CPL or CPS from any of hundreds of different TV stations and dozens of magazines he advertised with, comparing day to day, month to month, time slot to time slot. A much bigger user of TV, Guthy-Renker, is comparably on top of these numbers as well as every number in the back end of their businesses. Bill Glazer, who has built Glazer-Kennedy Insider’s Circle^™ from small business to multi, multi-million dollar enterprise is, to be impolite, downright anal retentive about these numbers. They win big because they are. If you don’t “Know Your Numbers,” you cannot possibly manage for profit, and you’ll likely have unpleasant meetings with bean counters telling you about beans lost after the fact.

This is difficult for most entrepreneurs, because we hate crunching numbers. I love working with clients who do it well even though, personally, I’m mediocre at it; better than most by small margin. The worst entrepreneur I’ve ever seen at it, bar none, was an early mentor of mine, who constantly insisted “If there’s enough gross, there must be net around here somewhere.” He was wrong. And broke a lot, even with gigantic grosses.

You also need Binocular Numbers. These are predictions and forecasts into the future that may affect current decisions. These, of course, are the hardest to come by.

One way I use Binoculars and approach this, for each year, is figuring up, listing, and forecasting all the income I can be reasonably sure of earning. The difference between that total and my goal must then be bridged. I can then start slicing that sum up, and assigning pieces of it to different sources of income, different promotions I’ll need to do. This is how I plan my year’s schedule of activities.

Finally, you need to consider all your numbers in some big picture context. There is an inside-Disney story about an ambitious, relatively new vice-president of something-or-other coming into the CEO with a list of proposed cost savings—and being summarily fired. Looking at costs in a vacuum, any idiot can see thousands of ways Disney could spend less. They paint white fences every night—why not once a week? The walkway from the lake to one of the resort’s entrance has a large open lawn on either side, bordered with a row of neatly trimmed hedges. Imagine the savings to be had replacing grass with astro-turf, hedges with potted, artificial shrubs. The V.P. did imagine that, but that’s not what the Disney folks mean when they use the term “Imagineering.” They have been way ahead of so many other companies in understanding that they are in the experience business, so everything matters, and marketing is more than media.

The New Economy is all about customers’ experiences. There are so many choices in every product, service, and business category, so much more access to choices, often from beyond local or traditional geographic boundaries, and consumers are more thoughtful and demanding for dollars spent, so creating and delivering extraordinary experiences leading up to, during, and after the sale, throughout the relationship, is essential. This is the context in which numbers crunched must be considered.

Who Can You Count On?

In these necessary relationships, with accountants, lawyers, other advisors, strive to make things the best they can be, but do everything you can to ensure against them turning to the worst they can be. And never lose sight of the fact that the only person you can completely rely on to protect your interests is you. The most successful entrepreneurs I know develop extreme confidence in their own judgment.

I teach that there are two things you NEVER delegate in a business. One is the marketing, the acquiring, optimizing, retaining, and multiplying of customers. That you want to be up to your armpits in, all the time.

The other is control of the checkbook. And, the important numbers affecting the checkbook.

I have had a number of private clients who each, at different times, ignored my pleadings and turned their checkbooks over to someone else: a comptroller, an accountant. All got screwed in slightly different ways. I handle millions of dollars a year. I sign every check. By hand. And I pay attention to what I’m signing. I wouldn’t do it any other way. I have always done so.

“Here’s something else about God that any billionaire knows: He’s in the details, and you need to be there, too. I couldn’t run a business any other way. When I’m talking to a contractor, or examining a site, or planning a new development, no detail is too small to consider. I even try to sign as many checks as possible. For me, there’s nothing worse than a computer signing checks. When you sign a check yourself, you’re seeing what’s really going on inside your business, and if people see your signature at the bottom of the check, they know you’re watching them, and they screw you less because they have proof that you care about the details.”

—Donald Trump, author TRUMP: Think Like a Billionaire

Another thing you want to pay attention to is your “white mail,” which is any and all first-class mail containing correspondence from customers other than orders, including customerservice inquiries, complaints, and stories they write and share. To give credit where credit is due, I got this piece of advice from Gary Halbert, and it has served me well. For many years, even when personally running a fairly large company, I not only opened and read my own mail, I occasionally swept in, grabbed all the incoming mail, and went through every piece—especially correspondence from customers. If you don’t, problems may be swept under the rug or mishandled, and eventually wind up biting you in the butt.

The bottom line is: you’re on the hot seat all by yourself. It may look like you’re surrounded by others, but don’t be standing in their way en route to the lifeboats in a storm.