New Year’s Resolutions. Like the rest of the country did you personally resolve to get fit, lose weight, drink less, manage your debt better or get organized? What about your business life? In a slight departure from our usual monthly banter, Tilting the Scales offers 6 business resolutions (we resolved to come up with 10 but, like our other personal resolutions, fell short) to promote the productive life of your business in these tumultuous times, and to suggest ways that you can start the year on a positive note by knowing that you are managing your legal risk. With all deference to the usual “Top Ten,” we offer only our “Top Six.” Like resolutions, less may be better.

  1. Trim Your Employee Handbook to Fit. Certainly company policies are intended to protect you and your company from legal liability. Yet, it may be one of the few tools you have to market your company and its culture to your employees. Stuffing it with page after page of legalese can be counterproductive and of little help to you legally, particularly if your wonderful employee manual, stitched from internet documents, was originally intended to satisfy the laws of Bali-Bali. Even if once tailored to laws affecting you, it may no longer reflect current changes in the marketplace or the law, such as recent changes to COBRA insurance and the ADA.  The start of a new year may also be a good time to implement new HR policies including revisiting the use of non-competition agreements which now more than ever can be enforceable under Texas law. See Convenants Not to Compete: Still Enforceable!Non-Compete Repeats in Texas.
  2. Manage Evolving Cell Phone Risks. Nearly 80% of vehicle accidents are the result of driver distraction.  Phone calls and text messaging are increasingly the most common of these distractions. Use of a cell phone immediately before and even during an accident is easily provable. Governments, victims, their lawyers and juries are becoming less and less tolerant of “distracted” drivers.  More and more juries are hearing about studies which suggest that driver distraction from cell phone use impairs your ability to operate a vehicle much like driving while impaired by alcohol.  Some states have gone so far as to ban all cell phone use while driving.  While Texas does not prohibit cell phone use for most drivers  (other than in school zones), Texas does place restrictions on cell phone use by drivers under the age of 19.  Your company may well be responsible for an employee who operates a company vehicle during business hours. Consider a company policy prohibiting employees from texting or talking on the cell phone while driving on company time.  See  Distracted Driving – US Dpt of TransportationNew Texas Laws to Know.
  3. Crises Happen – “Be Prepared”.  Your mission statement directs your business culture and mental well being. Your business plan sets the intended course and measuring points of your fiscal health and goals. Like New Year’s Resolutions, both are appropriate planning. But, what about planning for emergencies? Just as a fire drill sets in place a routine to avoid panic, your crisis management strategy should establish a routine – a checklist of necessary steps – to avoid conduct that, in a panic, might make matters worse. Crises are inevitable. Even the most courageous and clear thinking management team is likely to overlook critical steps that might reduce the negative impact or even end the emergency sooner. Having a crisis management strategy is as important as a mission statement and a business plan so that you can rapidly restore normality and confidence for both your employees and clients.    “Be Prepared.” See “No Comment” and Another Comment about “No Comment”.
  4. Know Your Banker.  Myth: Banks don’t want to make loans. Truth: The current economic and Congressional climate radically changes the way banks can profit from making loans. For starters, establish a good working relationship with your banker.  Communicate with your banker– the good and the bad. The key to excellent relations with your banker is having excellent communications. What are the strengths and limitations of your banker and your bank? Find out about their business and tell them regularly about yours. No one likes surprises, particularly your banker in this economy. The better you are able accurately to project the course of your company’s finances, the more confidence your banker will have in you. Your goal is to reach the point when you can tell your banker what is happening in your world before it happens. If your relationship looks shaky, either because of your company or your banker’s bank, make new banker friends. See No Good Deed Goes Unpunished; Pitfalls of the Cascading Credit Crunch.
  5. Manage Your Litigation. No business problem is solved by consciously ignoring it. Inattention almost certainly makes things worse. The same can be said for lawsuits. Establish personnel responsibilities and internal controls to manage all disputes, and certainly litigation. What actions should be taken if your company is sued?  Once you receive a lawsuit, is there a company plan for what to do with it? There is a limited time in which you must answer – sometimes as short as 10 days. If you snooze, you lose – really. Consider implementing procedures which clearly detail which employee does what in the event of a lawsuit, and which employee has primary responsibility for managing the flow of ongoing communications with outside counsel.  See He Who Hesitates is Lost – Letting the Chickens Come Home to Roost; The Costly Case of the Gyrating Granny.
  6. Give your Corporate Documents a Checkup. No one likes their annual physicals. Often they happen only because of relentless nagging. We can’t help you there – although we can nag you about your business documents if you would like! While corporate documents generally do not require an annual checkup, like physical exams if your business has changed or if it’s been a long time, then it’s about time. Have you moved? Changed or added owners/partners? Changed services or product mixes that affect your corporate structure? Changes in tax laws? Perhaps it’s time for a checkup!

New Year’s Resolutions, personal or business, are our way of recognizing that there is or may be something “wrong” that needs attention. One way or the other, it seems, we are ultimately forced to make necessary changes in our lives. Personal resolutions are intended for us to make those changes on our own time and in our own way without being forced to deal with the consequences of our inaction. Similarly, inaction to business matters can have long term, undesirable repercussions. Make an effort to set business goals and resolutions just as you do for yourself and your family. Both help to bring about that Happy and Prosperous New Year that we seek.

May your New Year be just that, Happy and Prosperous!

Jamie and Cleve