10 Things That a Savvy Businessperson Would Never Do

March 4, 2022

Legal knowledge
10 Things That a Lawyer or Savvy Businessperson Would Never Do
(source: https://unsplash.com/photos/bwki71ap-y8)

In the legal field, the term layperson refers to someone who is not a lawyer. While this term may seem slightly condescending, there are things that laypeople often do that a lawyer never would. In my opinion, based on my legal background and my business experience as a procurement executive, here are some things that a lawyer or a savvy businessperson would never do. 

1. Having a “handshake agreement” without documentation 

In the old-school way of doing business, people often enter into agreements on a “gentleman's handshake.” While trust is important and oral contracts are generally valid, the issue is how you can prove the existence and terms of the agreement if things do go south. Writing down the basic terms of a transaction is much more prudent. A formal contract is unnecessary. As long as the parties, date, amount, and details of the transaction are sufficiently clear, even via text messages, a court will be able to deduce the parties’ intent and make a ruling. Not having all key terms in writing is a big no-no and something that a lawyer or experienced businessperson would never do. 

2. Admitting fault 

What are the first three things you should do when confronted with an accusation? Deny, deny, deny. All jokes aside, laypeople may sometimes put themselves in a disadvantageous position by saying things—or, even worse, writing down things—that implies they are at fault. Remember, everything you say can be used against you in a court of law. For example, if you happen to be in a car accident, it doesn't matter what happened or whether you genuinely believe that you made a mistake: never come out of the car and apologize. Let it cool off, hire a lawyer and decide what type of statement you will make. 

3. Entering into a business deal without knowing the total cost or budget 

Many people chase speed and will kick off a project without even knowing the total cost, which can lead to frustrations and arguments down the road. As we mentioned in this article, whether you are hiring a lawyer, a consultant, or even a construction contractor, it’s almost always better to get a quote for the entire project as opposed to being billed by the hour. Agreeing to an hourly rate gives the other party the wrong incentive to drag out your project as long as possible. In some situations, paying by the hour is unavoidable due to the complexity of the project and/or unforeseeable factors that make quoting a total cost impossible. Even in these situations, ask for an estimate of total hours/cost. Even though it may not be binding, you will at least have a basis on which to evaluate the total cost afterward. A person who tries to charge you three times the initial estimate had better come up with some really good reasons and evidence for doing so. 

4. Paying people all the money upfront 

A related point is to never pay upfront for a big project, which takes away all of your leverage and leaves you with almost no recourse if the project is not done on time or to your satisfaction. Instead, pay by milestones and deliverables; even better, pay after your counterparty has successfully delivered. If you must front some money to get the project started, try to limit that to the amount required to buy materials or tools. 

5. Believing people without seeing the evidence 

Going back to the trust factor mentioned above, we tend to give people the benefit of the doubt and believe what they tell us. Only after we get burned by bad tenants, untrustworthy contractors and other failures do we come to realize that people may not be who they say they are or behave as they say they will. Check their credit reports and work history. Ask for references. Talk to their other customers or parties with whom they have transacted. A minimum amount of due diligence can go a long way in saving you from a bad situation. 

6. Signing someone else’s contract without having an expert review it 

People often sign other people’s contracts verbatim. Lawyers know that anyone drafting a contract will always prioritize their own side’s interests. It is imprudent to sign someone else’s contract without asking an expert in the field to review it. While you may think the contract is just a formality (see point 1 on the “gentleman’s handshake”), people may still try to sneak in terms to which you would never agree if you had the benefit of expert advice. As mentioned in this article about lawyering up, even though I am a lawyer, I still hire other lawyers with expertise in fields outside of my specialization to review my contracts. It’s well worth the money to have a professional review of all of your contracts. If you need any assistance, Trusli can help you find the lawyer that you need. 

7. Not asking for a price reduction 

As a procurement professional, I have a responsibility to haggle. I am not the mean type who pounds the table and intends to squeeze the last penny out of the other party. However, I am oftentimes surprised by how much money I can save by asking for a price reduction, which I generally do politely. Many price quotations have some wiggle room for negotiation. All you need to do is ask. Of course, if you want to negotiate more seriously, you should ask the other party to break down their pricing, compare your options, get a competitive quote, have a bottom line at which point you are prepared to walk away, etc. More on that in our future blog. But the first step is to ask. 

8. Paying a demand, ticket, or fine without attempting to dispute it 

Similarly, it’s important to avoid paying a demand, ticket, or fine without first attempting to dispute it. Our accountant just sent us a huge bill for twice the amount that we thought we owed. I didn't budge so easily. I wrote him an attorney’s letter (always good to do and because I can ☺) outlining why I thought we had been overcharged and demanded a price reduction (see my point above). He quickly agreed to reduce the bill by half. If you get a speeding ticket or parking ticket, don’t just pony up and pay. There are services that can help you dispute them. Even if they can’t help you win, you can always appear in court and ask for a reduction. Most times, just by purely showing up, you can pay only 50% of the fine. 

9. Telling people business secrets without the protection of an NDA 

First-time entrepreneurs are often so excited to tell others about their ideas that they forget to protect themselves. Before sharing all your secrets with someone, it is crucial to have a signed NDA. If people refuse to sign an NDA, then be very careful about what you will and will not say to protect your secret sauce. We include an NDA as part of our startup bundle to protect you. 

10. Not reading the fine print

Because contracts are so complicated, most people don’t bother to read the fine print. However, your rights are often buried in the fine print. Can you cancel at any time, or are you bound by the contract for months or years? Do you have any warranty? What happens if the other party fails to deliver? What happens if they get sued and you are somehow entangled in the lawsuit as well? What is your maximum liability under the contract? Having a basic understanding of these key terms about termination, warranty, indemnity, and limitation of liability will go a long way toward protecting you if things go south. When in doubt, ask an expert lawyer to review the fine print.