The Legally Savvy BSC

The U.S. government routinely issues or modifies thousands of pages of regulations, and any industry is susceptible to mandates being revisited, tweaked or drastically overhauled on a regular basis. Building service contractors who operated their business in accordance with the various laws governing their enterprise one day could be out of compliance the next.

Dealing with seemingly fickle lawmakers represents only part of the challenge. The U.S., in particular, has become notorious as a wildly litigious society. Every day, we hear stories of who’s suing whom, and for what.

What’s a law-abiding BSC to do? Well, there’s always law school, but it takes several years of education, pages and pages of reading and passing a very tough exam to become a lawyer. So, top-notch legal service is a must. But attorneys may charge hundreds of dollars for nothing more than a preliminary discussion regarding some legal matters.

Good legal advice notwithstanding, how about making a commitment to be more law-savvy yourself? For starters, you can read up on the basic legal issues that affect your business so day-to-day decision-making isn’t done in a legal vacuum. Second, you can learn what legal resources are available to you, how to locate them, and which type of lawyer/client arrangement works best for you.

What follows is a series of informational pieces designed to familiarize you with legal issues that might affect your business. We tried hard not to overwhelm you with legalese. The information is summed up in small, bite-size pieces, not voluminous texts. Use this information as a jumping-off point for discussion with your own advisers or to support your own research.

What follows is not legal or other professional advice. We strongly recommend you consult a qualified attorney or other expert regarding legal representation, your legal options or for interpretation of laws relating to your business.

Experts are divided. For instance, Fritz Damm recommends contractors get a lawyer before they go into business, to help them determine whether and how to incorporate. Damm, an employment and transportation attorney with Clark Hill PLC in Detroit, believes many small-business owners rely too heavily on their certified public accountant at this stage, when they should be consulting an attorney.

However, Stephen Fishman argues some small-business owners can go it alone in some situations, including incorporation, perhaps with the assistance of one of the myriad legal self-help guides available to the general public. Fishman is an author and an attorney specializing in small-business and intellectual-property law.

“It all depends on what you’re willing to do yourself,” he says. “It’s possible to use books to do a lot of things, but it also takes a lot of time. If you don’t have the time, then find someone who will charge you.”

For example, Fishman recommends BSCs who have the time use self-help materials to incorporate their business, appear in small-claims court, or file responses to basic government inquiries.

This is the philosophy espoused by Nolo, a Web site and book publisher dedicated to legal self-help. Fishman has authored several books for the company.

Books also are useful to help you prepare for when you do visit a lawyer, adds Janet Portman, Nolo’s book publisher and a lawyer specializing in commercial and residential leasing in San Francisco.

“There’s a lot of basic information in books that people can use,” Portman says. “A lot of our books are used for background, so you’re not spending time at $200 an hour asking lawyers for basic information.”

However, if you’re dealing with a large lawsuit, allegations of employment discrimination or anything else that’s complex or costly, then an attorney is a must, agree Fishman and Portman.

And, legal help isn’t always as expensive as one might think, Damm points out.

“There are plenty of lawyers out there,” he says. “We have small companies in our system who just pay $150 a year to be on our list, and then the fees kick in for work. Prior planning pays.”

Even if you don’t pay to retain a lawyer, Portman recommends having someone in mind, perhaps someone you’ve talked to or consulted with, who you can call when necessary. Having a contact before you need it can save time, especially in an emergency.

That’s because most leases contain a “pollution and contamination clause.” Building owners prohibit or restrict certain chemicals because any contamination of the groundwater, air or surrounding area puts people at risk, but also exposes the owners to environmental liability and cleanup costs.

“Don’t sign without thinking,” Portman cautions. “You may need to negotiate and convince the landlord that you’ll store and dispose of the chemicals safely.”

The landlord might require an additional security deposit or insurance coverage, she says. The landlord also may refuse to change the lease, and you’ll need to look elsewhere.

There can be serious consequences if you try to sneak the chemicals past the facility manager in violation of your lease. At best, you could be evicted for being in “material breach” of the lease conditions, Portman says. You also could be sued if your chemicals leak into the groundwater, damage building surfaces or are disposed of illegally. In addition, if the area is later declared an environmentally hazardous site subject to Superfund cleanup, the building owner can pass the cleanup costs on to you.

“I think the best way to find a good lawyer is to find a peer who is satisfied with his counsel,” says Fritz Damm, an attorney with Clark Hill PLC in Detroit. “Go to a trade association and talk to others who have had a good result.”

“Talk to people whose standards and experiences are the same as yours,” advises Janet Portman, a San Francisco attorney. “If you talk to many other janitorial-firm owners in your area, or an industry association, you’ll quickly generate lists. Three or four names will consistently appear, and those are the ones you should talk to.”

Another good resource is a lawyer you might already work with who doesn’t specialize in business law.

“Let’s sat you got a divorce, or your kid got a traffic ticket, and the lawyer did a good job,” Portman says. “Now you’re faced with an employment-discrimination case. You don’t want your divorce attorney to handle the case, and she probably won’t want to handle it, but she may be able to refer you to a good person with experience defending against employment-discrimination suits.”

The state or local bar association also is a useful resource — simply call or visit their Web site for a referral. Since lawyers are regulated in every state, and can be disbarred for ethical violations, checking the bar association may decrease your chances of hiring a questionable attorney.

“There are a lot of illegal products,” says James Wright, Esq., of Wright & Sielaty PC, a firm specializing in chemical law in Lakeridge, Va. “It’s an issue we deal with frequently. If a contractor is using an illegal product, they’re open to liability.”

For instance, if BSCs aren’t exercising due diligence to make sure the products are legal, and an employee gets sick, the company can be held liable.

It isn’t that difficult to examine products for legality, says Wright. All registered products should include a two- or three-part registration number, as well as an establishment number, on the front label.

“In a routine course of business, you should be at least checking for a number,” says Wright. “If it’s suspicious, go back to your distributor for more information.”

However, even if a chemical has a registration number, that doesn’t mean it’s registered for all possible uses. If you wish to use a product to remove mold, for example, it needs to be registered to kill or control mold; you also must use the product in a manner consistent with its labeling.

“That’s called the doctrine of pre-emption,” Wright explains. The ability to prove you used a pesticide product in a manner consistent with its label information may protect you from some lawsuits.

“People tend to have stuff in e-mail they wouldn’t put in other correspondence,” says Detroit attorney Fritz Damm. “They feel it’s informal and confidential, but it’s not. They put in racist or sexist language; they think no one is watching.”

However, if a lawsuit materializes, e-mail is “discoverable” — the opposing counsel can obtain it and use it against your company.

“The first rule is, don’t write it unless you want it to be seen by a plaintiff’s lawyer,” Damm says.

Damm’s second rule? Have a policy in place explaining appropriate uses of e-mail, as well as any monitoring procedures your company uses and potential consequences for employee e-mail abuse.

Each case is different, warns Fritz Damm, an employment attorney with Clark Hill PLC in Detroit. But, the first thing you should do is get the complaint into your lawyer’s hands.

“There are a lot of procedural matters we need to attend to,” he explains. “Give the lawyer everything you have.”
That includes evidence that could be used against you, he says.

“Once you are served with papers, in many states, you have 30 days to file an answer,” says San Francisco attorney and publisher Janet Portman. “So, get to your lawyer immediately. That’s why it’s so important to at least know who to call. Hopefully, your lawyer will know the rules about time limits; you don’t want to be a pest, but the clock is running.”

An “answer,” says Portman, usually includes an explanation as to why your company feels the allegations are untrue, or why it isn’t responsible for the problem. After your attorney files the answer, any number of things could happen — the case could go to mediation for a settlement. It could be thrown out. It could go to trial after months or years.

But, having a good relationship with your attorney can go a long way toward making the process as painless as possible. A good relationship also can help prevent the lawsuit in the first place — your lawyer can help you devise best practices, documentation procedures and properly worded policies to help keep you out of trouble.

“The bottom line is that an ounce of prevention equals many multiples of cure,” Damm says. “One small company I know just got walloped with a $1.7 million verdict. Even without a verdict, discovery, interrogatories and subpoenas are expensive. We try to prevent the lawsuit from happening in the first place. There’s a big difference between having a process server show up at your door and having best practices implemented from the start.”

“If you register your trademark with the government, you have an exclusive right to that name in your field,” says San Francisco small-business and intellectual-property attorney Stephen Fishman

If another company discovers you using its trademark, and can prove they had it first, they can send a cease-and-desist complaint and legally petition that you change your business name. It makes no difference whether you knew about the existing trademark or not.

Before incorporating or building your brand, you can verify your proposed name isn’t being used. To do this, you can hire a trademark-search firm, or you can do it yourself on the Internet.

But not every immigrant has permission to work in this country, and building service contractors must determine whether applicants are allowed to. Proof of positive legal status can include a social-security card or green card, says Randy Davison, a placement consultant and immigration expert for American Work Visa, a Greenbelt, Md. agency that helps place overseas workers in jobs with American companies.

But how do BSCs know whether the documents are valid? The U.S. Bureau of Citizenship and Immigration Services (BCIS, formerly the Immigration and Naturalization Service) offers rules and examples of proper identification. But, if a prospective employee presents a convincing forgery, a contractor may unwittingly hire an illegal worker.

“If a manager receives the documents, and they appear to be valid, that fulfills the company’s obligation. The standard is ‘reasonableness,’” he says. If later, you find out the documents may be fraudulent — for instance, if the Social Security office says the name and Social Security number don’t match those in the agency’s files — you need to call the worker in for an explanation.

Generally, government agencies will send an initial warning and allow managers and employees to correct the problem. Sometimes, the discrepancy will be an honest one. A simple misspelling or other clerical error can raise suspicion.

If BSCs knowingly hire illegal workers, they can be subject to heavy fines or even criminal prosecution. Davison recommends finding a labor or immigration lawyer if you knowingly hire illegal workers — or if you are accused of doing so.