Sam Waltz: SBGC legal services grow in importance
By Sam Waltz
Our First State of Delaware, of course, is well known and globally regarded for the epic sweep of our bench and our bar (i.e., our legal industry, not only in our state courts but as well in federal matters.
Cases like TransPerfect in its Chancery Court battles grab the headlines for the million-dollar fees it generates and the role of larger-than-life legal eminence like Alan Dershowitz.
But it’s the “grunt work” of day-to-day business law in the trenches that keeps so many people employed here and contributes to a sense of order in Delaware’s business and civic life.
For them, there’s an emerging legal specialty that “bundles legal matters” for SMBs (small- and mid-sized businesses) that has the potential to change the legal landscape.
Small Business General Counsel, also known as SBGC, is a term used by a couple of attorneys with whom I’ve talked recently, Martin Haverly, who has his own firm on Foulk Road in Brandywine Hundred, and Steven Director, a long-time member of the bar and a partner in one of Wilmington’s mid-sized go-to firms, the Bayard Firm.
Their SBGC practices are following in a niche briefly pioneered some 20-25 years ago by Douglas MacGray, at his Bear law firm before he refocused his skills on wealth management and financial planning. Today, MacGray runs Stonecrop Wealth Advisers in North Wilmington, from where he works throughout the MidAtlantic, even nationally, “to help people with money make more money.”
“What really characterizes those of us in an SBGC practice is not just our capability to handle business legal matters that someone refers to us, but our proactivity in working with entrepreneurs, business owners and executives in creating an ongoing (usually modest) retainer-based relationship with its focus on legal risk-management and availability for day-to-day legal counsel as needed,” says Haverly.
“What many entrepreneurs don’t focus on – and they should,” adds Director, “is that every day they’re literally playing with ‘house money.’ They’re risking their own net worth, right down to their home and their kids’ college funds.”
Strategies exist to mitigate that risk at a macro level, as well as in day-to-day decision-making, and $20,000 to $25,000 (sometimes more), spent on having SBGC counsel proactively looking out for you is a pretty modest business insurance premium for many of you.
Both Haverly and Director said they leverage their SBGC practices with an annual retainer contract that is “front-loaded” with risk-management analysis, risk-reduction strategies, and ongoing legal advisory services, as well as the experience to recognize the need for and then recruit outside legal specialists.
Each said that upon beginning an engagement, they review risk factors, among them, insurance coverages, employment agreements, confidentiality and non-disclosure agreements, vendor and sales agreements. That builds the attorney’s familiarity with the business, but, perhaps more important, it immediately results in tangible benefits in the form of improvements for the business.
I’m familiar with a second-generation family business, a well-known and regarded retail business, that regularly used under-the-table cash payments “at straight time” for overtime for its blue-collar staff, all of whom were hourly employees, rather than pay the tax-withheld time-and-a-half overtime per their hiring agreements.
Just last month, when one employee who the young second-gen manager dismissed raised an issue of his entitlement to time-and-a-half overtime pay, the young manager’s call to the owner’s attorney made him immediately aware of his exposure to wage-and-hour Department of Labor regulatory issues, worker’s comp issues, and the potential for charges from the IRS and the State of Delaware that he was hiding cash income by paying his employees under-the-table in cash.
With counsel from his attorney and his CPA, he immediately made changes. (Although, I’d imagine, he’s still looking over his shoulder today.)
You don’t want “to take a knife to a gunfight,” and, in today’s highly litigious and regulated business environment, no entrepreneur and small business manager should be comfortable with a D-I-Y (do-it-yourself) legal approach, to run a business without having an attorney, perhaps a Small Business General Counsel, on speed dial, perhaps on retainer.
Sam Waltz is Publisher Emeritus of the Delaware Business Times.
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