Living The Red Life - Entrepreneur 101 Legal Basics w/ My Attorney

Episode Date: September 25, 2023

How is your business set up from a legal perspective? As an entrepreneur are you too focused on making money, and not spending enough time protecting it? What legal hassles could you avoid if you were just a little bit more proactive?Rudy sets out to answer these questions for us today by drawing on the experience of his attorney, Greg Christiansen. Greg has been an attorney for decades now, and has seen his fair share of problems arise over the years with online marketing, disgruntled clients, and contractual disputes.As we've come to appreciate with Rudy, he's heading off those problems at the pass for us by letting us ride shotgun with his legal eagle while he picks his brain on how to structure your business and protect your assets. Together they're also offering priceless insights on employee contracts, when you should worry about the FTC, and how not to be intimated by the law when you're just starting out. Maverick businessmen need their legal eagle wingman and it's great to be privy to some of Greg's wisdom in today's awesome episode of Living The Red Life. Contracts, if they're good, set expectations and provide clarity! Thank you Rudy, thank you Greg. Come and get it guys!“The best advice I can give to anybody out there: have integrity in your marketing practices.” ~ Greg ChristiansenIn This Episode:How to get a good legal 'base' and the right foundation for your business structureThe importance of fulfilling your promise from a marketing perspectiveWhy entrepreneurs get initimated by the law early on Are you too small for the FTC to worry about you? Why 'happy clients make your world go round'Red hot legal advice for staff hiring The value of a good, clear dispute resolution processUnderstanding asset protection through holding companiesConnect with Greg Christiansen:Website - https://www.guardianlaw.com/Connect with Rudy Mawer:LinkedIn - www.linkedin.com/in/rudymawer/Instagram - www.instagram.com/rudymawerlifeFacebook - www.facebook.com/rudymawerlifeTwitter - www.twitter.com/rudymawer

You get into business, you're excited, and it's great. You're going to do great. And I love the entrepreneurs. That's why I love this space because it's energy and people are excited about new business opportunities and going out there and generating and creating their own world, right? But the problem is that a lot of attorneys make it intimidating because they don't talk your language, right? They try to just use legal jargon that you may not understand don't let that trip you my name is rudy moore host of living the red life podcast and i'm here to change the way you see your life in your earpiece every single week if you're ready to start living the red life ditch the blue pill take the red pill join me in wonderland and change your life guys

welcome back to another episode of living the Red Life. We have a special guest today, my in-house main attorney, Greg, who has a law firm, but he's become a big part of my business in terms of navigating the law, staying protected, understanding how to obviously run a business and all the right things that you have to learn when you grow a big business. I, like many of you listening today, started as an entrepreneur, hired my first contractor for $5 an hour on Upwork, and now I have around 100 staff. So a lot of learnings through that,

a lot of deal structures, clients, disputes, all those things that you get as you grow. And Greg, for the last few years, has been a big part of helping me navigate those things. So Greg, welcome, thanks for coming on today. No, I appreciate you, Rudy. I'm happy to answer any questions and get any counsel that can help any entrepreneurs out there be successful in their businesses. Great. And just so you guys have a backstory, I got connected to Greg through some of the biggest entrepreneurs in this space, some of the top, top people that you'll follow. He was kind of behind the scenes working on, we can't name names, on a lot of their legal side

and still does. So I really, you know, and I do use law firms. I still have a law firm. I do some specialized stuff with, but having someone that understands this industry and understands what you do is so, so important. And I'm sure we'll speak a little more about that. But Greg, maybe just give a one minute overview of your background and how you ended up dealing with all of those crazy entrepreneurs. So 20 years ago, graduated from law school, went clerk for the Nevada Supreme Court for a year. And then out of that, I started representing marketing and advertising companies. Just kind of fell into it.

And I've been dealing with regulatory and contractual on business issues ever since. So really honed in to the self-improvement, self-education, online space. So there's not an area of marketing practices that I'm not familiar with. And yeah, I obviously started with you more just on the FTC side, right? So like understand advertising guidelines. Marketers in general are probably some of the most guilty in that because as a marketer, you get taught in your early days to, you know, write good copy and make all these wow claims and big promises.

And then you learn over time how to do that in a way that, you know, well, most people don't, but I mean, you know, something that we as a company are focused on and our staff is doing that in an, you know, in an ethical, legal, correct way that sets good expectations and isn't like most marketing firms where all marketers or copywriters where it's just outrageous, right? So obviously we started there and we'll talk about that today. And then I would love to talk too about just all the other sides of business and navigating law and business. So what would you say, going into this for entrepreneurs listening, they have a couple of employees or assistants, they're starting out maybe 10, 20 employees, they don't really use an attorney, maybe occasionally just for contract stuff.

What are the biggest things you see with entrepreneurs like me as we grow that they get into situations that they could avoid if they were proactive? Having the basic foundational principles in place so they have a good foundation to start on is really essential. And I find that a lot of entrepreneurs will get too quick for themselves since they won't have a good base. So when I say a good base, what am I talking about? Well, making sure you understand the type of industry you're engaged in. If there are some particular rules or nuances that you hire somebody briefly, it doesn't have to be forever, that understands those so you can set yourself correct. The other thing I see is making sure you've got the right foundation for your business structure. You've got a business set up. You're not just doing it

as a sole practitioner out there doing business online and taking a ton of risk. So I always start foundation. Do you have a business? What are you doing? Do you own that business yourself? Do you have a parent or a holding company? Do you have a setup for your employees? Do you have contractors? Do you have the employment agreements, contractor agreements? Do you have an employee manual? Just the basic things that a lot of entrepreneurs say they dive into it. They shotgun it a little bit. They don't have that foundation. And then it gets them into a mess. And then the best advice I can give to anybody out there, have integrity in your marketing practices. If you're saying, this is what I offer, then fulfill them.

Don't sell something you're not willing to provide. A good, happy client is a client that you can have forever. And it's the most expensive most businesses have is acquisition of clients. And so if you go in there and burn insurance client, and then you've spent so much money obtaining them, then that doesn't help you monetize on your business. And it creates other issues like demands and lawsuits and so forth. And that just distracts you.

So if you can avoid the distractions, have good contracts with employees and contractors and clients, you fulfill on the service you're doing, you're going to be in a good place. Yep. And I remember, you know, my first few years, you like realize all the laws and all the things that go into really running a big business. Like, you know, you start with a couple of contractors or maybe an agency and people are not at work and you have this basic agreement and then you know once i think you get past a couple of million and you go into 10 million and then you get there you have a lot more right you have all your asset protection you have all your entity structure you have all your tax side you have all your employment side you have all your agreements set up you have you know so many things and

it seems overwhelming and i remember a few times, like, as I was really getting into it, I was like, wow, there's so much legal here, like, is this what I even want to do, like, is this for me, like, do I want to deal with all this, it's scary, and obviously, because I have such big goals, I've always pushed through that, but they've been mindset things for me that I've had to work through, and then it's like, hindsight's hindsight, like, I look back now, and you kind of laugh, right? Because the things that were so scary four years ago, you kind of start dealing with them every week or month. And then they become like, it's like, yeah, whatever. Right. And you see that I'm sure you've seen, you know, my, I guess,

development or growth on a legal side from where when we first started, all these things weren't organized. We had to build them all out. And then we we ever got problems it was like you know me ringing you saying hey am i going to prison right whereas now it's like i don't even speak to you my team just send it and you deal with it so talk can you talk about like i know this is a weird question but like the mindset of that growth as an entrepreneur because i think that's a big thing that stopped people doing the legal is they don't want to deal with it so they just pretend it doesn't exist and then they get smacked in the face right yeah at the ignorance the law is in the defense i said as a judge in four cities in sully a metropolitan area in utah and a lot of times people come before me and they'll say

well i didn't know what the law was and it doesn't matter um if'll say, well, I didn't know what the law was, and it doesn't matter. If you say, I didn't know what the speed limit was, and you get pulled over speeding, it doesn't matter. So ignorance doesn't really help you. But the problem with it is it gets intimidating, like what you said. People don't look at it not because they don't want to be compliant with the law, not that they want to create legal issues. It's because they're intimidated

by it. I remember when I got out of the clerkship, my partner and I had been friends forever. We started our first law practice and we went down to the secretary of state when we filed our articles of organization, set up our law firm. We were like, they stamped it and we high-fived each other. We're like, great, let's start. So we didn't know where to go from there because they don't teach you that in law school. We went to a friend of ours who'd been practicing for 40 years. Hey, what do we do now? He couldn't tell us. And so what we learned at that time is

we needed to educate ourselves on how to do things. And entrepreneurs, you're the same way. You get into business, you're excited and it's great. You're going to do great. And I love the entrepreneurs. That's why I love this space because it's energy and people are excited about new business opportunities and going out there and generating and creating their own world, right? But the problem is that a lot of attorneys make it intimidating because they don't talk your language, right? They try to just use legal

jargon that you may not understand. Don't let that trip you up. Just know that you can learn things. There are attorneys like myself that are out there that will give you clearance, concise, legal advice. It's easy. It's not hard. It's once you know the rules, you're starting your own business. That's hard, right? The legal side's easy. It's just communicating that. So once you understand how contracts work and how relationships and disclosures work, it's not hard. It's actually a pretty easy thing to do and to implement. And you shouldn't be intimidated by it, but it's really something that you should do. We set up our first law firm.

We went out there. We high-fived each other. And then we went to meet with the managing partner of a large law firm downtown. And we asked him what to do. He'd been practicing for 40 years. How do we do this? And he was like, I don't know. Go talk to Bill.

He's over at corporations. But he didn't know. So we realized really quick that there wasn't a lot of resources available. If they were available for us as attorneys, they weren't going to be available for entrepreneurs. So we've dedicated the last 20 years of my practice of learning how to communicate things clearly to clients. So don't get intimidated. What you need is an attorney who can convey messages simply to you because the law is not hard. I mean, what you do as an entrepreneur, that's hard,

but the law is not hard. It's pretty straightforward. It's just understanding it. And as long as you have somebody that's able to communicate those principles clearly without getting bogged down in a whole bunch of legal terms, then you're going to be fine. I mean, the rules are pretty clear. It's not hard to do what you're going to be fine. I mean, it's not, the rules are pretty clear. It's not hard to do what you're doing, just knowing the rules and play by the game. And if you can do that, you'll be in a good position. I mean, most people ignore it. They're ignorant.

I think one thing I learned too, with a lot of people is, you know, because I'll make comments sometimes and they're, you know, FTC, for example, claims they're clueless and then they'll just brush it off and they'll go, well, I'm too small. I don't think it matters for me. Right. And so what is the truth in that, you know, like in terms of FTC or just lawsuits in general? I think a lot of entrepreneurs, especially under 10 mil, they just don't care, really. Some of the ones I ask because they think they're too small and it's never going to happen to them is that true or not that's unique it's not the standard but it happens all the time so what I always tell clients is the best defense in in any market your advertising practice for anything is truthful disclosure. Hey,

this is what we do. This is the company we're in. It's not a promise and guaranteed my client that they're going to generate 10X or a million dollars in our first 90 days or whatever, because how can you force that? Well, you provide an excellent product and service, then you provide that excellent product and service. You go to a restaurant and it says, hey, we're the best French restaurant in Miami, for example, and you go and they send, it's like canned caviar. And you're like, this is not what I... Then your review of that's horrible. But if every single time the social power and the proof is every single time you get a 100 people that are up there saying wow this was awesome this is exactly that what i wanted this is what they told me i got it

it changed my life that's powerful well yeah and i think the problem is right is what everyone does including you know people i know is if they get five percent of clients do hit 100k a month but that's all they say, right? And they'll just use those testimonials and they'll go, well, I do have clients and you know what I obviously learned from you and we talk about my team is always not the top five, it's the average, right?

What's the average achieving? Yeah, because it's not representative. You've got one person that wouldn't made a million dollars in two days, but nobody ever made $5,000 ever outside of this person. And that's all you advertise. That's not representative of the typical experience of your consumer, your client, that it has to mesh up with people, their expectations, right? If somebody tells me it's going to be a Porsche, but it's a VW Bug. My expectations are off. So you want clear messaging and you'll have happy clients. And that's the key to this. Happy clients make

your world go round, right? It's easy. It's fun. But when you have unhappy clients, I'm dealing with a client right now, they have unhappy clients because they entered into a contract with them and it didn't fulfill the way they wanted to. And it's a big mess. And they spend more time dealing with unhappy clients than growing their business. It's a distraction. So it's just do what you say you're going to do and advertise that way and you're good. Whoa, whoa, whoa.

Wait a second. Before we go into the rest of this episode, I'm going to interrupt abruptly and just ask you one big favor. I hope you're getting a ton of value, a ton of knowledge. I hope you're getting some breakthroughs from myself and the guests. And I want one thing in return. What I would love is for you to subscribe and leave a review. The reviews and the subscription grows the podcast. It allows me to bring you even better guests. It allows me to invest even more time and money into this podcast to bring you the latest and greatest, the best entrepreneurs from around the world that are crushing life, crushing their

business, and giving you all the tools, the mindset hacks, the knowledge, and the environment you need to be successful. So do me a favor, if you've got any amount of value from today's episode so far, or any previous episode, or any of the content I've done, it would mean the world to me if you hit a five-star review, give us your feedback on the show, the episodes, and subscribe and download. Plus, if you do that and send me a screenshot on Instagram at rudymorelife, I will send you a bunch of my free training, marketing courses, sales courses worth $499. Yes, $500 worth of courses for a simple 30- second review. It would mean the world to me. Send me that screenshot. I would love for you to leave that review and I would

appreciate it very, very much so we can keep growing this show and make it awesome. So let's get back into the episode. I appreciate you guys and let's dive back in. Let's talk about the unhappy clients because I feel it is some level. There's always some unhappy clients. Right. So how do you suggest people if they start getting disputes, chargebacks, threats? How do you recommend people that don't have attorneys that can kind of get guidance? What's the general way that they should be dealing with these unhappy clients and handling this? Where they draw the line between just refund everyone or say, hey, no, you didn't do this and this and this? How do you advise on that? Yeah. Practically, what I tell clients to do is kind of take a pulse on what these clients are saying. Because if you have a good group, obviously you've got a spattering of complaints and they're all the same, then you need to look introspectively and see, are we doing something in our marketing that's creating this impression? Now, if it's one-offs, which is generally the case with a lot of clients, you got to realize,

like Abraham Lincoln said, you can please some of the people all the time and all the people some of the time, but you can't please all the people all the time. You're going to have dissatisfied clients. I do too. No matter what I do, at the end of the day, they're just pissed off. Okay, so you deal with those on one-offs. You try to resolve it, and if you can't resolve it, then my recommendation is to get rid of those clients and just move on. It's better for your business to try to do that. So I tell clients all the time is go ahead and set up some sort of reserve for those

outlier clients that you just can't satisfy. Now, for those that you've done a good job for, you've provided them this service and they're still upset and that you have reasonable justification to kind of push back a little bit, then you explain that. You're truthful and you communicate that to them. Hey, listen, you signed up for this. You not only got X, you got Y and Z. And we did a really good job for you. And you should be happy with this because we did what we promised to provide. And then you stay true to that. So case by case basis, every time I always look at that. But if you get a group all once, and it all seems to be identical types of complaints, then I will look in turn. Now,

if you've messed up, own it. That's one thing I want to make sure that this client all the time will come to me and like, well, yeah, we had somebody that said the wrong thing or had was a mistake and it said this, but we really meant this and they just have to deal with it. No, don't do that. Own it. Because people like that integrity, right? They like it when you've made a mistake, you say, you know what? It's on us, we're gonna take care of it, right? Good. And what about just last few minutes,

I wanna talk about all the key pillars, just real rapid fire. So let's talk about quickly hiring employees. And I know there's obviously employment specialists, there's tailored legal advice, but some of the things i've learned is you know and you can talk on these two qualifying people correctly w-2 versus contractor especially in america having good contracts for each making sure you have all your insurances what else is

important uh you know just for one minute on the employment hiring side i see the biggest history from employment contractor issues is exactly what you said. First, identify them properly. If you have a lot of control and means over the person, they're an employee, especially if you're doing business in California, absolute employee, right? Second issue is make sure that they sign some sort of non-circumvention agreement when they come in. What does that mean? They're not going to solicit your clients. They're not going to solicit your employees. They're not going to solicit your employees. They're not going to try to take intellectual property for you.

Protect the assets you have so that you don't have to worry that somebody's going to take that. Because sometimes in this environment, you'll have an employee for a couple of weeks and they'll try to take things because they feel justified with it and it may harm you.

Yep. Okay, great. And then next one I would say is like a deal structure like contracts with clients contracts when doing deals especially if it becomes like bigger deals rev share i mean a lot of even me i've messed that up many years ago cost me hundreds of thousands of dollars on some big deals that split because of it what what are some key aspects there for a minute? Just make sure you have a good dispute resolution process because when you entered a contract, you want it to go well. But what I find the biggest shortfall in all this is not having a way to handle disputes when there's a dispute between the parties you enter into, right?

And making sure that you've got that there. If you're in Florida, then make sure that dispute's in Florida. Don't let the consumer dictate and allow you to pull in San Antonio and Wisconsin or Chicago or wherever. You want to be able to handle all that in your own backyard. So have a good clear dispute resolution provision. You don't want to use it. It's just in case you've got it in

place okay good next one um well actually just on that one too i mean the biggest lesson i learned the hard way is actually having tailored contracts for bigger deals right because when you i tried to save money i had this like random jack of all trades attorney and you know we used a bit of a template and then it was missing everything we needed to protect ourselves when the person tried to basically kick me out after I made him half a million dollars. So I learned the hard way and we couldn't really defend it. When I hired a big law firm to come and defend it, they said it's going to be really hard and we can probably still win, but it's going to cost you 20, 30, 40, 50 grand to fight it because you're missing all these key clauses. So I don't know if you want to add to that, but yeah, I mean, tailored contracts for bigger deals, right? Yeah. I mean, you never know, like, especially

if you're going to do an offer and you're going to have thousands of clients that are going to buy your offer. One little thing that I do that's tailored in there is they do like a class action waiver just to make sure they can't come around and turn serious. It's enforceable by the Supreme Court to have those waivers. And that's what you're seeing. Know the provisions in your contracts. And if you don't have those, and sometimes you don't know what you don't know, and not all attorneys deal with this space with entrepreneurs. So you got to make sure whatever attorney you hire, they deal with these type of contracts because there are certain provisions I put in my contracts that an attorney working with Coca-Cola doesn't put in his contracts. problem and they go well what do you mean i go yeah my industry this is gonna happen a lot and then they'll build a contract around it but i think i'm a little different that i like i really am good at fortune like looking forward looking at what ifs what ifs i've been like that my whole

life most people aren't so then they just trust that it's like oh we got everything we need um and you really don't and even if you are good at it, like over a three-year period, we were updating our contracts because we'd be like, okay, we ran into these issues and we didn't have that clear in the contract. Let's add it. Okay, three months later, now we ran into this twice. Let's make sure that's crystal clear. And one of the biggest things I've learned from lots of people that have built $100 million

plus businesses and attorneys is contracts, if they're good, are rarely ever needed because what they do is they set great expectations and clarity. So when there is a problem, you can just go, hey, no, it says it right here. And then people generally go, okay, right. So would you agree on that? 100%. The more clear the agreement is, especially these higher end deals you're going to do, then you're deterring the conflict because it's clear. The both parties understand what the expectations and responsibilities are, then that's great. When you don't have clarity in contracts, like I've had clients that just throw a one pager, do this one page, Rick. Yeah, I can't do that. And if I did, then it wouldn't be clear enough

to be able to resolve a dispute if it ever arose. And then you'd end up in court, which is way more expensive than just spending a little extra money to have the contract written correctly in the first place. Okay, good. And last question for today, the entity structure, right? So like everyone should have LLCs, for example, different holding companies. Can you give a very third grade level, explain how that works? Because it's very easy to do. It doesn't cost a whole ton. Yeah. So I do a lot of asset protection too in my business. So if you operate just a single business, then I would recommend doing an LLC in

the state where you live. Gives you asset protection, gives you ability to avoid audit for taxation, allows you to be a little more aggressive on deductions so you can save some money in taxes. So there's a lot of benefits of having a business set up for that. If you run multiple businesses, I recommend having a holding company in one of four states, Delaware, Alaska, Nevada, or Wyoming. Those states have predominant laws that are a little bit better than most of the other states. And then the operating company that you're engaged in would not be owned by you, but by your holding company under that state. Now, what does that do for you? It creates distance between you and that operating company. So say you're training people on how to be real estate investors. If I hold a rental property in

an LLC and somebody gets hurt with that rental property and I own that LLC, guess what? I'm most likely going to get sued personally in addition to the LLC that owns the rental property. But if that LLC that owns the rental property isn't owned by me, but is owned by another company in one of those four states, guess what? I'm not getting sued personally. So it's all about leveraging and making sure you're set up correctly and so if you understand the foundation of it's not but it's pretty simple the way i explain it is like imagine you have uh you're doing some sort of a business and it's in a box right and then another type of business in another box and when if that thing inside the box explodes well it only explodes in that one box not your whole life and then actually what you eventually

do is when you have several of them you have a bigger box that all the littler boxes are in and then you kind of like have this double layer of protection and you should never be in those boxes as a personal person because once you're in the boxes you can now get hit by the explosion like so is that a somewhat accurate way of understanding it? 100%. I use the term silos for you farmers that are out there. When you have crops, you silo it from the weather and from other crops. So the rain and the storms don't destroy your crops. It keeps it separate.

So the same for you. Great. All right. Last question. If people are looking to, you know, have everything reviewed, obviously I've sent several people to you over time and they want to have everything reviewed or obviously maybe engage with you and work with you, how do they find you?

We're on a website and they can reach out to you and you can give them a list. It's just guardianlaw.com or gregatguardianlaw.com and you can reach out and ask. I'm happy to give a free consultation i have the attorneys of the work for me and other staff members too so how to have any supporters i love entrepreneurs so um mostly i'm just trying to get provide service for you know for meller and capital on everything that you guys do because you do such a good job with it but yeah happy to talk

to anybody that needs some guidance and we'll put those links in the show notes and um yeah obviously you've been fantastic for us and anyone listening today um it's like everything i always teach it's like even if you don't need it all now or you think you don't start now because you'll build up over time and you'll build into a good place and what generally happens with every entrepreneur is they'll have a wake up call if they don't, where they get this big lawsuit or this big issue, and then they didn't have it. And now they have to go back and add everything, but they got stung, right? So just, you know, it's protective clothing. So you don't get stung or if someone tries to sting you, it doesn't

impact you anywhere near the amount. And I've learned that over the years from many people, way more successful than me and from great attorneys such as Greg so thank you sir I appreciate you coming on and educating everyone on maybe not the sexiest part of business but arguably the most important part of business because it's easy to make money it's harder to protect that money so thank you and until next time guys keep living the red life. We'll see you soon. Greg, appreciate it.