Six Legal Tips To Help You Safely Do Business Online
“Information is the currency of democracy.” – Thomas Jefferson, Third US President, Architect and Author
In today’s digital world, the ability to use the Internet and online platforms to connect and do business with others down the street, on the other side of the country, and even the other side of the world is simple and inexpensive. Starting and running a new business has never been easier. At the same time, your exposure to litigation has never been greater.
As Thomas Jefferson was referencing, information is power and as such, the primary goal of this post is to share good information with you that will help you safely do business in our new global environment. Taking action and implementing each of these 6 online business communication tips will not only help protect you, but also will allow you to establish a firm business foundation for your future success.
As a lawyer who’s been practicing law longer than the Internet has been around, I’ve seen and litigated just about every kind of case imaginable. In almost all business cases, many of the issues and problems could have been avoided if one or both parties had utilized these 6 communication tips. My advice may require a bit of work but I can assure you that the long-term benefits and protection substantially outweigh the short-term hassle and inconvenience.
One last thing before we get started. Please remember that although I am a lawyer, I’m not your lawyer. This is not legal advice. Also, the laws in each state are different so please contact an experienced attorney in your state to discuss your questions, legal needs and options.
TIP #1: CORPORATIONS AND LLCs- Do Business as a Corporation or LLC and Communicate Your Message on Behalf of the Company- Be smart and build virtual brick walls for protection!
Never expose your personal assets to business liability.
Do you take trips in your car without putting your young child in a safety seat? Do you ride your bike or motorcycle down the street without a helmet?
This is exactly what people are doing when they communicate and do business on the Internet without the protection of a properly formed legal entity such as a limited liability company or corporation.
The unfortunate question in today’s business world isn’t if you’ll be sued, it’s when. According to recent statistics, the average small business owner will be sued at least 3 times during his or her business lifetime. Knowing this, I encourage you to please be smart, plan ahead, and take steps to protect yourself and your business before something bad happens.
When you do business as a limited liability company or corporation, you are putting a protective shield between your customer, business, and your personal life. So long as you correctly set up, run and manage your company, your personal assets will be protected if a claim or lawsuit is ever brought against you.
When communicating, make sure your audience knows that you’re doing so on behalf of the XYZ company. By doing this, the protective shield I mentioned above will usually limit the claims and stop them dead in their tracks at your business. Your personal life, assets and bank accounts will not be exposed.
One more thing. In my opinion you should never do business as a sole proprietor or general partnership. For the above reasons (and many more), there’s just too much liability attached to doing so.
TIP #2: CONTRACTS- Communicate in Writing, Use Written Contracts, and Read All Agreements Before Clicking
Read the fine print!
Almost everything you do online involves contract law. Be smart and communicate and confirm all deals, proposals and agreements in writing. A phone call, email or text is not good enough.
Before representing another person or company’s product or service, read all contracts and agreements. Communicate any issues in writing.
Here’s something to think about. When you sign up for a free or paid social media platform or service, or agree to become an affiliate and sell someone else’s product or service, you may be liable if something goes wrong. There is an agreement that controls the rights and remedies of all parties involved. Almost without exception, you are on your own should an end user experience harm and damages. When’s the last time you read one of these agreements before clicking the “I Agree” box?
The fact of the matter is that most internet users never give this liability exposure the thought it deserves. Dangerous products, software that doesn’t work, and business or investment opportunities that turn out to be Ponzi type schemes all expose you to liability and damages.
Keep in mind that if you did Tip #1 and put up a protective shield, and then communicate your message on behalf of the company, you will be well ahead of the game. Avoiding oral deals and agreements and communicating everything in writing will also help.
If you were able to purchase liability insurance to protect you for any online business issues, then that’s even better. The bottom line is that there is exposure. As I tell all my clients, always put everything in writing. Always perform your due diligence before clicking and agreeing to use, promote or sell a new product or service.
TIP #3: DEFAMATION- When Communicating About Others, Be Kind and Careful About What You Say, Write, Record or Videotape
Smart online business owners practice the “Golden Rule”
Almost daily, I see people communicating their comments on blogs and reviews that are malicious and intended to cause harm to someone else. What these writers may not realize is that by doing this, they are potentially exposing themselves to an expensive defamation lawsuit and damages. If the false statements are made with the intent to harm another person or company, punitive damages may even be available in some cases.
Defamation also applies to oral or written communications made during webinars, podcasts and videos. Any type of untrue communication may be actionable so be very careful before starting down this slippery path.
The best advice I can give on this topic is to simply not communicate unkind, inaccurate or untrue comments about others. Don’t say, write, post or record bad or negative things about someone else or another business. If you do feel like it’s your obligation to say something, do yourself a favor and wait at least 24 hours before posting or saying something. In most cases, time heals all wounds and what seemed like a good idea yesterday will be a waste of your time today. I know that on the Internet 24 hours sounds like an eternity but it’s just the smart thing to do.
TIP #4: INTELLECTUAL PROPERTY- Don’t Communicate Using Protected Intellectual Property
Think before your click, copy, download, and use content.
It’s easier than ever to “borrow” written content and images from someone else and use it for your own communication purposes. How many times have you searched, clicked, copied or downloaded someone else’s picture or content? Be honest. You know what I’m talking about.
The problem is that regardless of how easy it is, by using someone else’s material without their permission, you may be breaking the law and exposing yourself to civil money damages. Searching google for the term “Cats” and then using an image that you find on your blog probably violates someone’s copyright or trademark. Adding a popular song to your video or blog post without the permission of the artist is probably also a violation. Don’t do it.
There are plenty of resources on the Internet that allow you to use or purchase images, videos and songs for your online work. Take advantage of these sites and you’ll never have to worry about an intellectual property claim being filed against you. It really is that simple.
TIP #5: MEDIATION AND ARBITRATION- Avoid Expensive and Time Consuming Litigation by Clearly Communicating this Provision
“…trial by jury…the only anchor ever yet imagined by man by which a government can be held to the principles of its constitution….” — Thomas Jefferson, letter to Tom Paine, 1789
I’m a trial lawyer. I understand and appreciate the importance of our jury trial system. I enjoy trying cases and truly believe the American justice system is the best in the world. Having said that, I do suggest the following for most readers of this article.
When individuals and small businesses are setting up and using contracts to support their online efforts, I recommend communicating clearly in writing, in large bold print, a mediation and arbitration provision. While you’re at it, also include a venue and attorney fees clause. Have a place next to the paragraphs for the other person to initial and date. Note that the laws in each state vary so check with local counsel about how to do this correctly in your state.
The fact of the matter is that having and clearly communicating the existence of your mediation and arbitration agreements will increase the chances of you having the opportunity to resolve a dispute with another party without the need for litigation. Not only will you save a great amount of time and aggravation by avoiding litigation, you’ll also save a great deal of money.
A good attorney fees clause will do two things. First, it will help eliminate frivolous lawsuits because the winning party will be entitled to have her attorney fees paid by the other side. People will think twice about suing you. Second, it allows you to retain a good lawyer who you may not otherwise be able to afford. If a client comes into my office with a good case but can’t afford to pay my hourly rate, I may still take the case if there is an attorney fees clause and, the other side has assets or insurance to cover the fees after we win our case in court.
Clearly communicating these provisions will avoid many unnecessary claims and also help you resolve unavoidable claims in a timely fashion.
TIP #6: VENUE CLAUSE- When it’s Time to Tango, Communicate Exactly Where the Dance Will Take Place
Prior preparation prevents piss poor performance. Use a venue clause.
Sometimes you have to walk out on the dance floor and do the legal tango. If this happens, where will the dance happen? Where will the legal matter be resolved? In what city and state will the mediation, arbitration or litigation take place?
A well written and communicated venue clause will determine where all legal disputes will be resolved. Smart business owners have venue clauses in all their contracts and invoices.
For example, let’s say you have venue clause that states all disputes and litigation will take place in Orange County, California. A disgruntled New York based customer will need to travel to Orange County to resolve all disputes. If litigation becomes necessary, the New York customer will need to hire California legal counsel to handle his dispute or claim in Orange County.
A good venue clause can be an effective deterrent to frivolous claims. It can also be a good tool to help you keep your litigation expenses to a minimum.
I enjoy and embrace the Internet and social media platforms. These are truly exciting times and we are all lucky to be living and doing business in today’s global digital business environment. When it comes to setting up and running a business, what used to take weeks and even months to accomplish, can now be done with a couple of mouse clicks.
But, as I point out in this article, speed and ease of use do not necessarily translate into safety and long-term security in business. Take a moment and always communicate these six things to your customer or client. Confirm important things in writing. Handshakes, emails and text are great, but written contracts are better.
Also make sure the general public and your customers all appreciate that they are doing business with you on behalf of your limited liability company or corporation. Use letterhead and descriptions above or beneath your name to show that you are entering into a contract on behalf of your company and not personally.
Review and discuss these six communication needs with your business partner, advisor and/or lawyer and see if there are communication improvements you can make to increase your protection and minimize your risks.
“Jon Mitchell Jackson enjoys combining law, technology and social media to disrupt, hack, and improve our legal system. He has been a trial lawyer for almost 3 decades and is the 2013 California Litigation Lawyer of the Year (CLAY Award) and 2009 Orange County Trial Lawyer of the Year. When he’s not trying cases, Mitch uses social media and technology to help good attorneys become great trial lawyers and to show everyone (not just lawyers) how to communicate better. His law firm website is JacksonandWilson.com and his social media and livestreaming can be found at Streaming.Lawyer. Connect with Mitch on social at Mitch.Social