Archive for October, 2010

Accidents at Work

Friday, October 15th, 2010

I was driving to work today and heard about an odd story. It seems that a fellow in Florida settled a personal injury case for over a half-million dollars after he was hit in the eye. “Yeah, yeah, OK, big deal for him but why should I care?”, I thought to myself. Then I learned that he was hit in the eye while getting a lap dance at a strip club and the stripper somehow moved her foot around and her stiletto heel caught him in the eye.  (And, for some reason, the old saying “it’s always fun until someone loses an eye” immediately came to mind.)  It has been reported now a fair amount on the Internet, so I’ll just give you one of the links here.

Now that we’ve added something a little tawdry to the otherwise fairly dry blog posts and I’ve got more of your attention, I’ll use this as the excuse to point out that I would expect that this was an accident – but an accident that cost the employer $650,000.  Now, I can hear everyone yelling at me “but that’s the U.S., we don’t have personal injury awards that high, so it’s not so bad here.”  Fair enough.  But let’s suppose that it happened here in Ontario and the settlement was $65,000.  Maybe your company is doing better than most and happens to have an extra $65,000 sitting around doing nothing and you’re fine to pay it to someone else – but I doubt that that’s actually the case.

When was the last time you sat in your business and looked around and thought to yourself “what kind of things could go wrong around here to hurt someone?”  Maybe it’s time to do that.  I can bet you two things: (a) the strip club owner never thought in a million years that this type of accident would happen – if they had thought about it at all and (b) that they probably have new rules in place for lap dances to avoid this type of problem in the future.  Similarly, you may want to ask yourself (a) do I have insurance to cover this? (b) is it enough? and (c) what types of problems are excluded from insurance coverage?  I could just as easily see the strip club in Florida having general insurance coverage that could have included this accident as I could see the insurance company pointing out that it’s not covered.

At the same time, what happened to the stripper?  Nobody seems to have said if she was hurt.  Obviously any injury she suffered would have paled in comparison.  But suppose that she broke her ankle in the incident.  Now we’ve got a workplace safety issue.  When you’re looking around your business, give some thought to both how any customers or “outsiders” might get hurt but also how any of you or your employees might get hurt.  If you are not in a business category that has mandatory workplace safety insurance (that is, “workers’ comp”), should you voluntarily opt into the program or else get other insurance?  Also, is there any need for concern that any injuries might result in prosecutions under the workplace health and safety legislation?  For many small businesses the answer might be no, but then ask yourself whether you have any equipment that can result in injury.  I’m no longer amazed at how some employees can find ways to get themselves into trouble in situations that nobody thought anyone could ever have been so dumb or reckless – and yet it happens, with surprising frequency.

I’m not giving any definite answers here, only suggesting things you should think about to determine if there is any potential exposure to losing your business (or a lot of its value) in the blink of an eye.  (Pardon the pun, I couldn’t resist.)  Well, I suppose that if there is anything definite to be learned here, it’s probably to avoid strippers with stiletto heels ;-)

Something to think about.

CALC

Lessons from “The Social Network”

Tuesday, October 5th, 2010

This weekend I had the opportunity to see the movie The Social Network. For those who haven’t seen it, the movie is about the origins of Facebook. That much I knew before I saw it. What I did not realize was that it was the story as told through the proceedings in two lawsuits that were generated by Facebook’s creation – so that made for an interesting twist (at least for me).

What struck me, though, was that this was a very interesting morality play. After the movie, I engaged in a long discussion of the various lessons that could be learned from the movie and at least three of them are clearly legal lessons, so I thought I’d share them with you here.

One of the lawsuits relates to twin brothers and their buddy who supposedly had the original idea that would form the basis of Facebook. They supposedly hired Facebook’s creator to help them implement the concept and they alleged that he stole the idea. According to the ending, there was a settlement for their lawsuit. One of their difficulties, however, was that they went to various people and argued that their idea was stolen and various persons (including apparently the President of Harvard University) would not believe them. The lesson to be learned? If they had entered into a non-disclosure agreement with the people they hired it would have given them more protection and more evidence to prove their claim.

The other lawsuit was between the two guys who created Facebook. When the concept caught on, various investors were brought in to help take the business from start-up mode to more seasoned company. In the process, the company went from a few shares to millions of shares. The one founder trusted the other and believed that the lawyers who were working on the deal were working for him. As it turned out, the one founder was left in a position where further shares were issued and only his shares were diluted with the result that the other founder along with other investors were left with their shareholdings intact but the first founder’s percentage ownership of the company went down from approximately 35% to less than 1%. The lesson to be learned: in business it is every person for him/herself. Moreover, unless the lawyers at the table have confirmed in a retainer agreement that they are working for you, then they are not. As the founder admitted in the film, he should have had his own lawyer and reviewed the documents he signed more carefully.

The third lesson from the film relates to the fact that both of the lawsuits settled. What is implicit from the film is that the two lawsuits settled because the remaining founder of Facebook would have made a terrible witness in a trial and also because the amounts of settlements were a pittance compared to the value of the company. Who should have won the two cases? I don’t know because the film clearly did not present the full set of facts of the cases and only took whatever worked best for the purposes of the plot, etc. That said, it would not be surprising if a settlement was reached on the bases suggested because (a) $65,000,000 for the twin brothers – while not exactly pocket change for anyone – is still peanuts for a company that was ultimately valued (according to the movie) at $25 Billion and with future value accruing every day; and (b) trials are as much about “art” as they are about “science” – for example, I have a jury trial scheduled in one file not because I particularly want a jury to determine the law, but rather because the party on the other side is such an incredibly unlikeable person that I know that the jury is really not going to like this person (a decision that I made early on in the lawsuit but was confirmed when I had both a court reporter and an interpreter describe this person to me in far less than favorable terms). Jurors are human and if they can find a way to “stick it to you” for being on the wrong side of an issue and for being less than likable, they will do so. In the movie, the lawsuit settled on the basis of financial reality and the ability of someone to “look good” in a trial. Is that a fair determination on the merits? Probably not, but it’s a realistic portrayal of the economic and human elements of the system. If you want “perfect justice”, you can take that up with God when you get to see Him but until then, we all have to make due with the system that we have.

In the end it was a good film and it does set out some very interesting things to consider and I would recommend that you see it. I found it most interesting when one took into account that these were all issues that arose when the company was a fledgling and then started to take off – which means that these issues are just as likely to affect your small business as they could all of the bigger companies.

Something to think about.

CALC