More on My Dad: Little Things Do Make a Difference

My Dad, Dr. Lloyd I. Watkins, died on March 1, 2012. I wrote an earlier post on his rather remarkable life. Since Dad passed away, my brothers and I have gotten through the funeral and are dealing with the loss. Even though Dad was 83 years old and we knew this was coming, it is still a challenge.

One of the things that has been really gratifying is learning how little things Dad did really helped others. A professor wrote us a note about how Dad had offered an encouraging word at just the right time when his career was not going as desired. A colleague of my brother Bob wrote that she was a recipient of a scholarship that my Dad had been instrumental in starting at Illinois State University. The recently retired ISU Chief of Police wrote about how Dad had hired him, encouraged him to professionalize the ISU police, and how more than twenty years later had congratulated him for doing an outstanding job. There were others, and if Dad had not outlived so many of his contemporaries, would have been more.

What these messages brought home to me is how small acts can mean so much to other people. A word of encouragement or a word of thanks at just the right time can really make a difference. I'm going to try to live up to Dad's example.

Dr. Lloyd I. Watkins: A Son's Remembrance of a Life Well Lived

On Thursday, March 1, 2012, my Dad, Dr. Lloyd I. Watkins, died peacefully in his sleep following a lengthy battle with cancer. He was 83 years old. He was the fourth President of West Texas State University from 1973-1977, and the thirteenth President of Illinois State University from 1977 to 1988. He was married to my mother, Mary (Caudle) Watkins for nearly 59 years.  Dad had a full and truly remarkable life.

It was somewhat remarkable that Dad was even born. His mother, Lydia Irion, was 35 years old when she married (for the first and only time) Herman Watkins on September 18, 1927. Herman was then 41. Especially for those times, this was a "late" marriage, and children were by no means a certainty. Dad was born less than a year later, on August 29, 1928. He was an only child.

Having been born in the river town of Cape Girardeau, Missouri, just before the start of the Great Depression, Dad was raised in a family that probably qualified, barely, as middle class. Lydia was a school teacher. Herman had a succession of jobs, mainly as a salesman, but never with a great deal of success. Although Herman may not have been a great success, he must have been a great father, because Dad always spoke of him fondly and said he was one of the nicest guys in the world.

A couple of weeks ago, in one of our last conversations, I talked to Dad about his childhood. To me, Dad's childhood in some ways foreshadowed what Dad would be for all of his life: A man who strove to fit in as a regular guy, but never quite was one.  He was always  more than a regular guy. Anyway, Dad spoke of his childhood friends, his Lionel train (which he said he wished he had kept -- me, too!), his BB gun, and his three dogs. He fondly remembered a wealthy neighborhood couple who never had children, but who had a big house with a big yard and who let Dad and his friends play in the yard whenever they wanted.

Dad was fascinated with airplanes, and built balsa wood and tissue paper models from kits. He won a trophy in a model airplane contest (I think he got second place -- we still have the trophy somewhere). Years later, he showed me how to build them, although it was a temporary fascination for me.

Dad lived in a house with his parents, and also with his mother's sisters. This was a bit of an odd arrangement, certainly driven out of necessity to get by during the Depression, but not totally to his liking. I'm pretty sure he longed for a sibling, but that never happened.

Dad excelled in his studies.  World War II ended before Dad would have been called to serve, but due to having punctured ear drums from some poor medical treatment for ear infections as a child, was 4-F anyway. In any event, Dad graduated from Southeast Missouri State in Cape Girardeau in 1949 with a degree in education. 

On August 14, 1949, just before his twenty-first birthday, Dad married my mother, Mary Ellen Caudle. Mary, who was from a working class family that could fairly be described as dirt poor, was intelligent, spunky, and quite a looker. Dad definitely knew a good thing when he saw it, and convincing Mom to marry him may have been the best thing he ever did.

After a short stint teaching, Dad earned a Masters degree in 1951 and a Ph.D. in 1954, both from the University of Wisconsin in Madison. Mom supported Dad throughout his studies, dropping out of college and working as a secretary at Oscar Mayer. She later completed her degree at Drake University in 1970.

In 1956, Mom and Dad moved to Athens, Ohio, the home of Ohio University, located in the foothills of the Appalachians in southeastern Ohio. Dad was a Professor in the Speech Department at Ohio U. until about 1964, when he became involved in Administration. The 1950s and 1960s were a heady time for higher education. As Dad mentioned in one of our last conversations, millions of G.I.s were able to attend college on the G.I. Bill. The economy was booming after the war.  The Baby Boom was also on, and Mom and Dad participated. I came along in 1957, followed by my brother Joe in 1960, and Bob in 1964.   

At some point in the early to mid-1960s, Dad decided that he wanted to become a college president. This led our family on a magical mystery tour across the country as Dad pursued his dream. The first stop was Pocatello, Idaho, and Idaho State University where Dad was Executive Vice President from 1966 to 1969. The next stop was Des Moines, Iowa, where Dad was President of the Iowa Association of Private Colleges and Universities from 1969-1973. 

Then Dad got his first Presidency at West Texas State, a small state school just outside of Amarillo in Canyon, Texas, in 1973. Although our family came to really like Canyon and made many wonderful friends there, I don't think Dad ever felt fully accepted. There were some who felt Dad was a "Yankee" (pretty silly since he was Midwestern to the core), and after four years he had the opportunity to move on. The opportunity was as President of Illinois State, located in the heart of the Midwest in the somewhat humorously named town of Normal, Illinois.

ISU certainly seemed like an ideal job. However, in the final stage of the interview process, Dad was asked what he was going to do about "Rites of Spring." Dad's response was,  in essence, "What is that?" Rites of Spring was an annual drunk fest that, although highly popular among the students, created a lot of property damage and consternation in the local community. It was a festering problem and something had to be done. Dad's predecessor had courageously passed the buck to his successor. Dad made the decision that had to be made and shut it down. 

The decision did not endear him to the student population for the first few years, and there are a few choice words I could use to describe the buck passing, but "unfair" will do for now. It was particularly unfair in Dad's case. First, he was hardly a prude. Dad loved a good party and a cocktail, but he could not support what Rites of Spring had become. Second, Dad always yearned to be popular with the students. He wanted to increase their involvement in the university and their educational opportunities. Eventually, I think most of the students understood this. If you want to hear it straight from Dad, he was interviewed about the decision in 2010, and the video is available on You Tube. If you are interested, click here.  

After a bit of a rough start, Dad and his team accomplished a great deal during his tenure. Enrollment increased from 19,000 to 22,000. Opportunities for international studies increased. The athletic program for women made substantial advances. Redbird Arena was built. The academic standards and overall status and reputation of the university increased.

That said, things were not easy. By the time Dad was President of ISU, the booming 1960s were far in the rear view mirror, and funding for education was tight. Dad was always in Springfield seeking more funding for the university.  It was difficult for ISU and the other universities to compete with U of I, the state's flagship university. By 1988, there was some faculty unrest over salaries and funding (pretty ironic given Dad's steadfast efforts to increase funding for the school). By then, Dad decided it was time to pass the torch to a new leader. A couple of weeks ago, he told me that he was just thoroughly exhausted at the time. He stayed at the university and taught for a couple of years (which he seemed to thoroughly enjoy), and then retired completely in 1991.

Dad had a long and enjoyable retirement. He and Mom briefly toyed with moving to Florida, but Mom put her foot down about staying put in Bloomington-Normal. The compromise was to move "south" to Crestwick, a golf course community on the Bloomington side of town. Mom and Dad lived there for a number of years, playing golf, walking, and traveling. Spurred on by Ken Burns' series on the Civil War on PBS, Dad became very interested in Civil War history, and he and Mom visited a number of battlefields. In 1999, the family gathered at Crestwick to celebrate Mom and Dad's 50th wedding anniversary. Mom and Dad later moved to a townhouse in Normal, largely to be closer to my brother Bob and his young family.

Dad also stayed active in community affairs, serving on the board of a number of local institutions. The local newspaper, the Pantagraph, appropriately remembered Dad as a community leader as well as a leader of ISU.

In 2008, my wife and I visited in April for Mom's 80th birthday. She seemed to be in good health, although Dad seemed a little frail. In May, Mom got a case of pneumonia, from which she never fully recovered. In late July, Dad went to Mayo Clinic for testing regarding some cancer his local doctors had found. Mayo told Dad that he had four months to live without treatment and perhaps nine months with treatment. Dad was literally told to take one final trip to France and to get his affairs in order.  The next week, Mom died, just eight days short of their 59th wedding anniversary. 

In so many instances, when a spouse of many years dies, the other quickly follows.  And in Dad's case, no less than the Mayo Clinic told him that he would quickly follow. Thanks to the treatment of Dr. John Migas (a man I have yet to meet but to whom our family is grateful), Dad beat the odds. After chemo treatment, Dad went into complete remission and scanned clean for over two years.

Dad's neighbor across the street, Kay Bloomquist, was with Dad through every step of the cancer treatment. Dad and Kay fell in love. In September of 2009, instead of traveling to Bloomington for Dad's funeral (as predicted by Mayo Clinic) we attended Dad and Kay's marriage. Although Dad and Kay did not have as much time as we all wished, she was a rock throughout their marriage, and especially in Dad's last days. Kay will always be part of our family and we will always be grateful for all that she did for Dad.

Late last year, Dad began feeling a little run down. A new scan showed the cancer had returned. At first, it appeared limited. We expected, and Dad expected, that he would fight it off again. A few weeks ago, Dr. Migas ordered another scan and this time the chemo had not worked. The cancer had returned and spread. Fortunately, we were able to visit Dad one last time, as was my brother Joe. Dad remained lucid, and maintained his sense of humor. We are grateful that he died peacefully and without apparent pain.

I would be remiss not to mention my brother Bob. Bob lives in Normal, and, as such, was on the front line for Dad's final weeks. Bob has a young family and a demanding job. Like Kay, he was also a rock and somehow found time for Dad. Thank you, brother.

Having given the narrative, I'd like to share a few final thoughts about Dad. First, what were his best qualities? I would list them as follows:

• Intelligent. Dad was always one of the smartest guys around. Dad was never a knee jerk thinker. He thought things through and from different sides.
• Enthusiastic. Dad was enthusiastic about just about everything he did. He enjoyed his career, despite the inevitable frustrations, his family and his life. Trust me, Dad did not want to go. He would have liked to have lived to 100.
• Great sense of humor. Dad was a great joke teller, and could always see the funny or ironic side of just about anything.
• Outgoing. My parents had more parties and social gatherings than any people I know. Dad was one of those rare people who could not only remember names, but would  also remember intimate details about his many acquaintances. 
• Courageous. We didn't always see this side of Dad, but it sure came out when he had to make tough decisions and when he battled cancer, and, for a while at least, beat it.

 Second, what did he care deeply about? What were his passions? I would include the following:

• ISU. Dad was very proud of having been President of ISU. He was proud of what he and his team were able to achieve, and was proud of what others achieved after he left. Dad was very grateful for the contributions of his colleagues at ISU, and it would be remiss not to say that again now.
• Bloomington-Normal. After having moved around the country, Dad found his home in Bloomington-Normal. Whenever we would visit, Dad would insist on driving us around and showing us any new buildings, restaurants, subdivisions, etc. He really loved the community.
•  Friends. Dad had so many friends, some who have gone before him and others who are still with us. He really enjoyed people and he enjoyed knowing people of different ages. 
• Pets. We always had cats and dogs in our house. In recent years, it became family tradition to make donations to local humane societies for holidays instead of exchanging gifts. We agreed that there will always needy animals, and that we all had enough "stuff."
• Cars. This may be a new one to some, but not to family members. Dad seemed genetically predisposed to purchase a new car about every three years. This created some consternation because, as Dad said, if Mom had her way, they just would have kept that 1948 Hudson. Last year, even though Dad had given up the keys due to his deteriorating eyesight, he pretty much insisted that he and Kay buy a new car. He told her that it was really great to buy a new car without having to argue with his spouse about it! Shortly before he died, Dad was dreaming and talking  in his sleep about driving. Maybe it was a new S Class down Highway 1 in California. But that's more my dream. For Dad, it was probably a new Lincoln through the Illinois farm country with the corn growing under a blue sky on a summer day.
• Family. Dad got really lucky when he married Mom. He then got lucky again when he found Kay. Although our family is not without its faults and issues, there was never any doubt that Dad loved all of us deeply, including my wife, my brothers and their spouses, the grandchildren, and, most recently, the step children from Kay.

To sum it up: Not bad for a boy from a lower middle class family from Cape Girardeau. Dad lived a great life, enjoyed his life, and left the world better than he found it. 

Particularly in his last years he fought the good fight, finished the course, and kept the faith. 

We will miss him dearly.

Reflections on Nearly 30 Years of Practicing Law

By John L. Watkins

It hardly seems possible, but, God willing, by the middle of this year I will have practiced law for 30 years. Given this milestone, I offer a few thoughts on how the profession has changed since 1982.

In many ways, the practice of law and the legal system have not changed very much. The law is, in many ways, a conservative and evolutionary profession. The legal system still resolves disputes in the same adversarial manner. Lawyers still represent their clients as advocates and file motions, write briefs, and, if necessary, try the case.

The thought process lawyers use to analyze legal issues has not changed. The substance of writing legal briefs and memoranda has not changed. I pass on the same tips and techniques to younger lawyers that partners at Hansell & Post, my first firm, passed on to me almost thirty years ago because they still work. 

Last year, a former colleague from those days cleaned out some old files and found a copy of a legal memorandum I had written as a first year lawyer. Other than the fact it was written on legal-sized paper, which is hardly used anymore, it was exactly the type of treatment a young lawyer might write for me today.

That said, there have been many changes in the profession. I will reflect on those changes in this post. Although the substance of analyzing legal issues has not changed, and although the law itself has not changed that much, the process of practicing law has changed considerably. 

Although we can debate whether the changes are good or bad, lawyers will need to continue to adapt or risk becoming, for lack of a better word, dinosaurs. As someone who hopes to keep practicing for years to come, this is a good "reminder to self," that will hopefully also be useful to others.

Technology Has Changed Everything About How We Practice

The most significant changes have been driven by technology. When I began practicing, lawyers did not have computers in their offices, although our legal assistants had computers at their desks. Most composing was done either by dictation or even by long hand on a legal pad. Legal research was done primarily in a law library by using digests and annotations. Although there were legal research databases, they required dedicated terminals and were more of a secondary means of research.

Now all of that has changed. Just about every lawyer I know composes on a computer. Law firms have largely phased out their law libraries. Westlaw and Lexis/Nexis are primary research tools, and can be accessed on any computer with an Internet connection. Although the courts have been agonizingly slow in adopting technology, almost all filing in the federal court system is done electronically, and the state courts are not far behind. 

Technology has also transformed in many respects the discovery process, which is the process for exchanging information in lawsuits. Emails and other electronically stored information are now a routine part of discovery. E-discovery, however, remains somewhat controversial because it often adds a substantial layer of cost to an already expensive process.

The way we communicate as lawyers has also changed dramatically. In 1982, we did not have email (I'm not sure that Al Gore had even invented the Internet yet!). Faxes came into widespread use a few years later. By the 1990s, email had become ubiquitous. Today, with iPhones, Droids, and Blackberries, we are always instantly connected. Sending a document simultaneously to Europe and Asia can be done with the touch of a button. That certainly was not true in 1982. Faxes, once seen as a wonder of instantaneous communication, are now largely viewed as an obsolete technology.

The technology changes continue. Social networking now seems like a part of everyday life, but it is a very recent phenomenon, having truly taken off only in the last five years. From a lawyer's perspective, blogging, LinkedIn, Facebook and other sites not only provide new means to communicate with clients, potential clients, and other lawyers, but also provide new opportunities for investigation and discovery.

Although technology has dramatically increased our capabilities in many respects, it has not been without its negative consequences. First, although email and instant communication has dramatically increased the speed and quantity of communication, it has not improved the quality of communication. Email is not a good tool for collaboration, nor is it a good tool for building relationships. One of the most interesting observations in Walter Isaacson's biography of Steve Jobs is that Jobs was a fanatic about meetings. Jobs believed in the power of face to face communications. 

The fact that one of the true geniuses and icons of technology believed in the power of meetings and human interaction should serve as a cautionary tale for all of us, but particularly for those of us in the law practice. Human interaction is important for solving legal problems and is also important for building the personal relationships that allow us to succeed. This is why I am always telling younger lawyers to pick up the phone instead of sending an email. Sending an email does not mean that you have communicated with someone.

Another negative effect of technology is that it has deprived younger lawyers of the opportunity to get time in court. Clients often are surprised to learn that many judges do not hear oral argument on motions, but just rule on the papers. As a result, there are many litigation lawyers who have practiced at prestigious firms for five years or more who have literally never had to stand up in court and make an argument. This is of course not good for the next generation of lawyers, but I think it also tends to isolate the bench from the bar, which is probably not a good thing. Ironically, I'm not sure that considering motions only on paper is very efficient. Having a hearing tends to force a judge to make a decision instead of postponing it to another day. If it were up to me, we would re-think this whole issue.

A final arguably negative effect of technology is to shrink the need for support staff, which in turn leads to fewer well-paying white collar jobs. When I started practicing, it was common for a partner and associate to share an assistant (and sharing was a fairly new development then). Today, ratios of at least three to one or higher are common. The reason is that most lawyers do things today (such as type their own letters and briefs) that assistants did in the "old days." 

In addition, and although I do not have any statistics on this, there seem to be many fewer paralegals today than in the past. The use of paralegals seemed to crest in the late 1980s and early 1990s. Much of the work that they formerly did (such as organizing and managing document productions) is now outsourced to vendors. Whether this is good or bad is debatable, but I have not encouraged anyone to go to paralegal school for over a decade. The long-term opportunities just do not seem to be there.

Alternative Dispute Resolution Has Changed Everything

Thirty years ago, litigators resolved cases either by settling cases (which happened most of the time) or trying them. Mediation was virtually unknown. That started to change around 1990. When mediation came into vogue, I originally thought it was a complete waste of time, and just another layer added to an already inefficient process. And, frankly, when I was 30, I viewed mediation as being pushed by retired judges and older lawyers as a way to supplement their retirement.

That view quickly changed after I saw good mediators resolve cases that previously seemed incapable of settlement. Mediation is now a staple and is used in most cases and often mandated by courts. It has become an important and necessary tool in resolving civil disputes. Having started out as a skeptic, I am now an unabashed fan, and have even become a registered mediator myself. (For more thoughts on mediation, you can visit my mediation website).

Arbitration has also become more prevalent. Arbitration is a particularly good choice for international companies that are unfamiliar with the jury system or simply do not trust it. One phenomenon that has accompanied the rise in the use of arbitration is that, at least in the U.S., it has come to resemble a civil court proceeding, with full blown discovery, depositions, and pre-hearing procedures. This is something we, as a profession, need to review critically.

I am proud to be part of a recent effort to make Atlanta a venue for international arbitration. With the world's busiest airport and easy connections to all parts of the world, a sophisticated bar, and an arbitration-friendly environment, Atlanta is an excellent choice. For more about the Atlanta International Arbitration Society and this effort, click here.

Specialization Has Become Rampant

When I began practicing, being a litigator was enough of a specialty. We were the guys who handled lawsuits, wrote briefs, tried cases, handled appeals, and even on occasion handled an arbitration. The subject matter of the dispute did not matter so much. We handled injury cases, contract cases, securities cases, real estate cases, and trust and estate cases. 

We assumed that if we were handling a case involving a type of business with which we were unfamiliar, we simply would learn about the business in the process of working the case. That was, frankly, part of what made practicing law fun and interesting.

I thank my lucky stars that I came up in this environment, and also in a firm that would let associates take as much on as they were willing to handle. In my first four years of practicing, I had taken hundreds of depositions, argued many motions, and had participated in trying several cases. In the process, I learned about banking, accounting, railroads, the natural gas industry, and many other businesses. I also learned about many areas of law, both procedurally and substantively, including class actions, arbitration, product liability, contract law, real estate law, trade secret law, and business torts.

Over the years, particularly at larger firms, we have become more and more specialized. Today, most of my litigation practice focuses on insurance coverage, although I still handle trade secret, banking and other matters. The remainder of my practice focuses on representing international companies in doing business in the U.S.

I recognize that clients do not want to pay for re-inventing the wheel, and, in that respect, specialization is probably good. On the other hand, I think a broad base of experience in many areas of the law is also a good thing, particularly for clients looking for a lawyer to serve as their general counsel or regular outside counsel. I do not believe you can get that experience base if you are a pure specialist, and fear that, after the next 10 to 15 years, finding lawyers with a broad experience base will become very difficult.

The Business Aspects of Law Are Very Different

When I started practicing, we never seemed to worry about where the work was coming from or that there would not be enough work. Litigators, in particular, were not seen as "rainmakers," nor were they expected to develop business. Maybe my perspective is skewed by the fact that I was then a brand new associate, or perhaps it is due to the fact that I was working for the largest law firm at the time in Atlanta, a law firm with many long-established client relationships. On the other hand, when I left that firm in 1986 to join another firm, I had the opportunity to bring a couple of clients with me. I was discouraged from doing so and thus did not follow up on it. In retrospect, this was a big mistake, both on the part of the second firm and myself.

Today, relationships are everything, both in terms of keeping existing clients happy and in finding new clients. Lawyers frequently move from firm to firm, and clients frequently move their work from firm to firm or lawyer to lawyer. More clients spread their work among a number of firms and lawyers. The old days of a bank or other large client being irrevocably tied to one law firm seem, for the most part, to be long gone.

Clients are expecting and demanding good service, and, for the most part, I think they are receiving it. Lawyers are more likely to agree to alternative billing arrangements that provide the firm and the client with the possibility of a "win/win" resolution. For example, we are willing to quote defined corporate work on a flat fee basis, and, for certain cases, will consider capped fees with a partial contingency, or other fee arrangements. That said, the traditional billable hour engagement remains most common.

Some developments that have, in my view, been negative include the common use of third-party bill review services. These services, in my opinion, place an adversarial third party (and typically an unaccountable third party) in between the lawyer and the client. Do not misunderstand me: A client has a perfect right to review a bill closely, to question a bill, and, if appropriate, to request an adjustment. However, I want that discussion to be between me and the client for whom the services were performed, not some faceless intermediary. Nevertheless, I am afraid clients will continue to use these services.

Conclusion

It has been an interesting 30 years (well, almost 30 years). The analytical skills that made a good lawyer in 1982 are the same today. The law itself has not changed that much. Sure, there have been major cases and developments, but, by and large, the substance is not that much different.

The way we practice law has changed dramatically. If someone had told me in 1982 about the tools widely available now, I'm not sure I would have believed it. 

The law remains a demanding and interesting profession. I hope to keep it up for many years to come.  

Benjamin Franklin's Words of Wisdom For Closely Held Businesses

By John L. Watkins

Most of my practice currently consists of representing businesses in disputes with their insurance companies and helping international companies do business in the U.S. However, I started my career as a general commercial litigator, handling everything from banking and securities litigation to product liability cases. Although my current firm represents many larger companies, we also represent many middle market companies and family businesses. One staple in this area is what I loosely call the "corporate divorce." 

Corporate divorces happen when business partners (I use the term in the general and not purely legal sense) no longer get along. Perhaps there is a difference in where to take the business. Perhaps one partner has worked hard and built the business when the other has been content to sit back and share in the profits. Perhaps animosities have built over personal issues that really have little to do with the business. 

Often, these animosities divide life long friends and family members. The resulting disputes can be every bit as acrimonious and destructive as a marital divorce. The primary reason that these disputes develop is because the partners never contemplated that their interests would diverge and consequently never planned for it.

One of the greatest citizens that America ever produced was Benjamin Franklin. Before Franklin achieved success as a civic leader, scientist, inventor and diplomat, he was a successful businessman, a printer by trade. Franklin achieved success by hard work and through developing successful alliances and partnerships. Franklin set up a number of his apprentices in their own printing businesses, seemingly without disputes or disagreements. Here is Franklin's advice from his famous autobiography:

"Partnerships often finish in quarrels; but I was happy in this, that mine were all carried on and ended  amicably owing, I think, a good deal to the precaution of having very explicitly settled, in our articles, every thing to be done by or expected from each partner, so that there was nothing to dispute, which precaution I would therefore recommend to all who enter into partnerships; for, whatever esteem partners may have for, and confidence in each other at the time of the contract, little jealousies and disgusts may arise, with ideas of inequality in the care and burden of the business, etc., which are attended often with breach of friendship and of the connection, perhaps with lawsuits and other disagreeable consequences." (Franklin's Autobiography is in the public domain and is available free in Amazon.com's Kindle store).

Franklin's clear and concise advice rings as true today as it did when it was written over two hundred years ago. While technology will change and new businesses will be started and others will become obsolete, human nature is still the same. If you are in a closely held business, whether it be a start-up, small, medium, or large, Franklin's words are some of the best free advice you will ever receive.

Here are a few other thoughts on how business partners can avoid, as Franklin so aptly put it, "lawsuits and other disagreeable consequences":

1. 50/50 is almost never a good idea. Many friends and family members envision a "50/50 partnership" as the ideal business arrangement. Although it may seem like a good idea when the business is starting and goodwill among the participants abounds, 50/50 partnerships seldom end well. When disagreements occur, which they will, 50/50 partnerships result in automatic deadlock, with no way to move forward. Note that, in my experience, there is a direct positive correlation between the success of this business the the likelihood of a dispute. If the participants are unable to agree on a resolution, the only legal solution is often the appointment of a receiver to take control and run the business and sell it or dispose of its assets. Not a happy result.

2. You need an exit strategy from the get go. If you are involved in any venture with more than one investor, you should have an exit strategy in your operating agreement, shareholder's agreement, or partnership agreement from the very beginning. There are numerous options, but typically such provisions provide for one party buying the other out based on an agreed metric. 

3. If you did not document your business arrangement properly at the beginning, do it now. If, as is so often the case, you started a business venture without documenting the relationship among the participants, and there is still good will among the participants, do it now. Just because things are going well now does not mean that harmony will last forever. View the present cordial circumstances as a second chance to do when you should have done when you started the business.

4. Bring in new "partners" carefully. Often, businesses will want to bring in an individual as a "partner," perhaps as a reward for loyal service or perhaps to provide an incentive to a new participant viewed as valuable to the business. Although the concept of an "equity kicker" may seem like a good idea, keep in mind that it creates an additional level of risk and entanglement. Consider other forms of rewards in the form of structured bonuses, etc. If you do bring in a new partner, have an exit strategy if things do not work out.

5. If there is a dispute, see an experienced lawyer sooner rather than later. If things seem to be going south, see an experienced lawyer sooner rather than later. The sooner that a dispute can be resolved the better. Business people almost always, in my experience, underestimate the toll in time, distraction, and human energy that a dispute will impose on a closely held business. Be careful in selecting a lawyer. If all the lawyer can talk about is the fight and taking it to the other side, that may appeal to your raw emotions, but it rarely makes for a quick or relatively painless resolution. Be open to the possibility of mediation, as it is often the best (and least public) way to resolve disputes.

A Great New Year's Resolution for Your Business: A Legal Check-Up

By John L. Watkins

One of the best New Year’s Resolutions any business can make is to have a legal checkup. The idea of a legal checkup (sometimes called a legal audit) is to identify potential legal risks and issues and to take proactive measures to resolve or minimize them before they become expensive problems. The nearly universal rule is that it costs less to resolve a legal issue early on - such as through a proper contract prepared with professional assistance - rather than trying to address the issue later, such as through litigation.

The best legal checkups are customized for each business. The legal issues faced by a start-up will be different than those of an established larger business. The legal risks of a trucking company can be quite different from those of a software company.

If a business has in-house counsel, then in-house counsel should coordinate the review, with the assistance of outside counsel as necessary. If a business does not have in-house counsel, it should have a continuing relationship with an outside business attorney, who can handle the work.

Each legal review should be customized, but here are some of the issues to be considered. The items are listed starting with issues that are more frequently faced by small companies and then proceeding to issues more frequently faced by medium-sized or larger companies.

• Has the business properly maintained its registration with the secretary of state or other authorities? Failure to maintain registration (at least in some jurisdictions) can result in dissolution, which can in turn lead to a loss of corporate liability protection.

• Does the business maintain proper corporate or company records? Are corporate minutes and resolutions, for example, maintained and up to date? Failure to maintain proper records may put the corporate liability shield at risk.

• Does the business properly maintain financial records? Are loans from shareholders or members properly documented? Are corporate financial expenditures segregated from personal expenditures? If there are multiple corporations, are separate books and records carefully kept for each company? Again, failure to maintain proper financial records may place the corporate liability shield at risk.

• Does the business have a professionally drafted set of terms and conditions under which it does business? Do the terms and conditions properly limit risks, such as by disclaiming implied warranties and limiting remedies? Have the terms been reviewed recently?

• In addition to customer terms and conditions, are supplier terms and conditions properly documented? Are subcontractor terms and conditions documented? Do suppliers and subcontractors assume an appropriate level of risk in relationship to the transactions? Do suppliers and subcontractors have sufficient financial resources and insurance to back up their obligations?

• Does the business have procedures for protecting confidential information and trade secrets? Are employees who handle the information subject to non-disclosure agreements (“NDAs”)? Do suppliers, contractors, subcontractors or customers have access to the confidential information and trade secrets, and, if so, are they also subject to NDAs? Have the NDAs been professionally prepared and recently reviewed?

• Does the business have other intellectual property in the form of patents, copyrights, and trade secrets? Is the intellectual property carefully managed and protected? Are procedures in place to make sure that deadlines are met and fees are paid?

• Does the company have in place proper security and privacy procedures for its information technology? Has the company determined if there are any special regulatory requirements for data storage, security, or privacy applicable to its industry? Does the company outsource any of its IT, such as to a cloud computing provider? If so, has the company performed proper review and due diligence of the provider’s technology and procedures? Does the contract with the cloud computing provider protect the company’s interests?

• Does the business periodically review its employment and employee benefit procedures? Do key employees have employment contracts with appropriate covenants (which may include, depending on the circumstances, covenants not to compete and non-solicitation covenants)? Have employment contracts been recently reviewed and updated?

Note: There are important changes to Georgia law. Employers in Georgia should, in particular, consult with an employment attorney regarding the changes.

• Has the company carefully assembled and reviewed its insurance coverage? Does the company really know what is covered and not covered? Have the policy limits been reviewed for adequacy? Is there a procedure in place for reviewing endorsements that insurers may add upon renewal that may limit coverage? Have issues such as environmental liability, employment liability, and cyber liability been considered and properly insured? Does the company grant “additional insured” status to customers? If so, has the potential effect on the company’s aggregate policy limits been considered?

• Does the business have procedures in place for handling and documenting potential claims? Are potential claims reported promptly to the insurance carriers? Are claims tracked? Do the carriers and defense counsel provide periodic reports?

Please note that this is not intended to be a complete list, although it should provide a reasonable starting point. If you do not have an in-house attorney, the business should engage a regular outside attorney to learn about the company’s business and serve as a trusted legal adviser. If you do not know how to go about finding an attorney, check out my book, An Insider's Guide on Hiring a Business Attorney, which provides a step-by-step guide for finding, evaluating, interviewing, engaging, and working with a business attorney.

Veterans Old and New: Let's Not Forget

In the last three weeks, I have traveled out of town to Phoenix for a mediation and to our home office in Indianapolis for my law firm's Partners meeting.

On the way back from Phoenix, I was seated next to a young man with very closely cropped hair, who appeared to be traveling with two other young men. We struck up a conversation. He and his buddies had just joined the Army and were on their way to basic training. The young man's story was interesting. A Navajo, he had grown up on the reservation  in a house that did not have running water until he was about ten years old. This would have been in the past decade.

My young acquaintance decided that he wanted to make something out of his life. He told me that he and his buddies had been hanging out and going nowhere. Some had been drinking too much. He wanted to learn skills, see the world and be successful, so he joined up. The Army was honest with him: After basic training, he would go back to a base in Arizona for a short period and would then deploy to Afghanistan.

The other fellow on our row -- a guy who looked to be a few years older than me -- joined the conversation. It turns out that he was an Air Force veteran who had served in Vietnam. He is now a military contractor, assisting the Air Force with logistics. He was returning home to Florida, but had done multiple stints in Iraq and Afghanistan as a contractor. The older fellow offered words of encouragement to our young friend.

As our young friend prepared to leave the plane in Atlanta with his buddies, I thanked him for his service and wished him well. I said a silent prayer for the success and safe return of this young man and his buddies.

Yesterday, I was sitting on another plane next to a young man in an Army uniform. Although he was a young guy, the look in his eyes suggested he had a lot of experience under his belt. Unlike my young friend from the earlier flight, he was not talkative. I asked him where he was headed. He said he was on his way back to Afghanistan, having previously done tours in Iraq and Afghanistan. I thanked him for his service. He did not appear to want to talk more, and I respected that.

Veterans Day is next Thursday. On this day -- which seems to receive so little publicity -- we should certainly remember the many sacrifices our fellow citizens have made during the history of our country to preserve freedom at home and abroad. The sacrifice is not just of lives lost or physical wounds received. It is a sacrifice of families being separated and lives and ambitions put on hold.

It should also be remembered -- as my two recent acquaintances reminded me -- that the sacrifice continues. Young men and women are still serving their country, and are still being sent into harm's way, enduring separation from their families, and putting other ambitions on hold. 

On the other hand, it is also worth remembering the considerable achievements of our men and women in uniform. Without their service, the world would be a very different place, and not for the better.

It is also worth remembering that military service has proven to be a life long honorable career for some, and a springboard to success in the civilian world for others.  My acquaintance from Phoenix volunteered because he felt that military service would allow him to "be somebody," and to lead to a better life. I wish him all the success in the world.

If you see a veteran next Thursday, or if you see a man or woman in uniform, thank them for their service. It's the least we can do.

Barnes & Thornburg Cloud Computing and Cyber Security Blog

My law firm, Barnes & Thornburg LLP, one of the top 100 largest law firms in the U.S., has just launched its Cloud Computing and Cyber Security blog. The firm also just formed a Cloud Computing and Cyber Security Practice team. The team is composed of lawyers in the firm's various offices, and cuts across many other practice areas, including information technology, intellectual property, business, litigation, insurance coverage and international law.

Roy Hadley and I co-lead the team. Roy is an information security and technology lawyer, and deserves the lion's share of the credit in organizing the new team. Right now, Roy and I are also monitoring and contributing to the blog, although we hope and expect other team members will contribute in the near future.

To access the blog, click here.