panyÔÇ™s requirement that applicants for certain low-level, unskilled positions
have a high school diploma and pass a test was liable for unlawfully discrim-
inating against minorities. The requirements disproportionately affected
racial minorities, and there was no legitimate business reason to have those
requirements for those unskilled positions. A lawyer can help ensure that the
job qualifications that you identify for the positions you create for your busi-
ness are not similarly discriminatory. Sample role and responsibility docu-
ments are on the CD which accompanies this book.
Lawyers can also help guide you through the hiring and, if necessary, the
termination process. It is important to know what types of inquiries to job ap-
plicants are lawful and about whether the decision to discharge an employee
is likely to expose you to a lawsuit. A lawyer can also give you guidance about
the types of records that you should keep on your businessÔÇ™s employees and
about the best way to maintain those records. Lawyers can help ensure that
you follow the rules regarding posting the required legal notices and report-
ing new employees to appropriate government agencies. Lawyers can also
guide you through the workersÔÇ™ compensation and unemployment insurance
laws that apply to your business.
EMPLOYMENT CONTRACTS. Most employees do not have written con-
tracts with their employers, but professional services firms should consider
several issues that may lead to the conclusion that an agreement with some or
all employees regarding aspects of their employment is appropriate.
One consideration for employment agreements is the employeeÔÇ™s length of
service. Although most employment relationships are ÔÇťat willÔÇŁÔÇ”that is, they
can be terminated at the will of either the employee or the employer at any
time and for any reasonÔÇ”written contacts can specify a time period of em-
ployment. However, a new business should carefully consider whether the
need to commit to employ a person for a period of time outweighs the need
to retain the f lexibility to end his or her employment if conditions change.
Written contracts are also often used to specify compensation packages that
are more complicated than a set hourly wage rate or annual salary. Written
employment contracts can be used to specifically delineate the employeeÔÇ™s
job duties and responsibilities as well.
Whether you have written contracts covering other aspects of employ-
ment or not, it is important to consider having explicit agreements with em-
ployees (or independent contractors) that cover any inventions or other
intellectual property rights that may be created in the course of a personÔÇ™s
work for your business. Such agreements should clearly assign those rights to
the business. Entering into such agreements at the beginning of a personÔÇ™s
work for your company can prevent later disagreements about inventions.
If you wish to enter into employment contracts with your employees, it is
essential that you have a lawyer review the contracts to ensure that your
business does not enter into agreements it cannot live with, especially if the
employment relationship later sours.
504 The Back Office: Efficient Firm Operations
NONDISCLOSURE AND NONCOMPETITION AGREEMENTS. Apart from
formal employment agreements, it may be worthwhile to draft and require
your employees to sign confidentiality or nondisclosure agreements. If an
employee, or any service provider such as a Web site designer, is going to
have access to information that you do not disclose to the public and you
would not want shared with your competitorsÔÇ”such as customer lists, pric-
ing information, business plans, or proprietary business methodsÔÇ”a nondis-
closure agreement can give you an added level of security. Such agreements
should make it explicit that the employee is prohibited from using or disclos-
ing any confidential information that he or she learns from your business ex-
cept as authorized by the business.
You may also want to consider having certain employees sign noncompeti-
tion agreements. In those agreements, employees agree not to compete
against your firm for a given time period and sometimes in a specific area or
with specific clients. If a person subject to a noncompetition agreement
leaves your company and starts competing against you, it may be possible to
go to court and get an injunction prohibiting the person from violating the
agreement. However, it is essential to consult with a lawyer about entering
into such contracts. The laws of different states differ widely. In some states,
such agreements are not enforceable at all, and even in the states in which
noncompetition agreements are enforceable, there are often specific require-
ments that must be met before such an agreement will stand up in court.
Intellectual Property Issues
Intellectual property issues also present a number of difficulties to the profes-
sional services firm. Often, intellectual property developed by the firm is one
of the firmÔÇ™s most important assets, particularly for consulting firms. This part
of this chapter outlines some major considerations with trademarks, copy-
rights, patents, and trade secrets.
TRADEMARKS. A trademark is a word, name, or symbol (or even a color,
sound, or smell) that is used to identify products or services of a company
and to distinguish them from another companyÔÇ™s products or services. To
have rights in a trademark, you must initially pick a mark that is protectable.
Courts have found terms such as ÔÇťDiscount Muff lerÔÇŁ or ÔÇťLiteÔÇŁ beer to be too
generic to be protectable trademarks. On the other hand, arbitrary or fanci-
ful associations between a mark and a productÔÇ”such as ÔÇťAppleÔÇŁ comput-
If you are the first one to use a protectable mark, you automatically obtain
some rights in it by displaying it in connection with the sale or advertising of
your service. However, to ensure that you will have rights in a trademark that
you may spend money promoting, you should be sure that you are not using a
trademark in which someone else already has rights. Although commercial
trademark search firms exist, a lawyer often better can help you decide how
thorough a search you need to undertake given your needs.
Trademarks do not automatically offer protection to your mark across the
country. They typically apply only in the area in which you use the mark.
Thus, it is possible for two businesses in the same line of work to have the
same name, as long as they operate in different areas. You can receive ÔÇťprior-
ityÔÇŁ in your mark nationwide if you register it with the United States Patent
and Trademark Office. If you do not intend to operate nationwide, registra-
tion with your stateÔÇ™s government may be sufficient. (Note that you do not
obtain trademark rights in the name of your company simply by incorporat-
ing or by registering an assumed name under which to do business.) Seeking
legal advice to guide you through the various questions you may have about
how best to protect your trademarks can help ensure that the investment you
make in the identity of your business does not go to waste.
COPYRIGHTS. Copyright gives legal protection against others who copy
anything original that you write or record. You automatically have copy-
right rights in any book, article, advertisement, software, movie, or music
recording that you create. Copyright protects the particular expression that
you write or record; it does not, however, protect the underlying idea that
you have expressed. Your copyright rights generally give you the exclusive
right to reproduce, distribute, display, or create derivative works from your
There is no requirement that a copyright owner put a copyright notice on
a protected work, but printing the copyright symbolÔÇ”┬©ÔÇ”along with the
copyright owner and the date of publication on a copyrighted work alerts
others to the fact that the material is copyrighted and perhaps reduces the
chance of unauthorized copying in the first place. Attaching this notice can
entitle the owner to enhanced damages in a copyright lawsuit as well.
Apart from attaching the copyright notice, it can be worthwhile to regis-
ter copyrighted works with the Copyright Office of the Library of Congress.
It is necessary to register a copyrighted work in order to recover statutory
damages and attorneyÔÇ™s fees from an infringer.
PATENTS. A patent is basically a government-issued monopoly over an in-
vention. Many people think that patents apply only to machines, but patents
are available for business processes and methods. You can protect a new hy-
brid of a plant with a patent, and you can obtain a design patent to protect
the aesthetic look of a product. Patent protection is also available for im-
provements to preexisting inventions.
If you invent a new process or business method, you can obtain a patent
to protect your invention, if you can show that your invention is useful, new,
and nonobvious. For example, Amazon.com, Inc. obtained a patent on its
ÔÇťone clickÔÇŁ Internet ordering process.
506 The Back Office: Efficient Firm Operations
Obtaining a patent simply gives you the right to prevent others from using
your invention by suing others who make, use, sell, or import a product pro-
duced by the process. Other people can be liable to you for patent infringe-
ment even if they did not know about your patent. There are a variety of
reasons to consider seeking patent protection for your invention. Obtaining a
patent can discourage others from copying your know-how, increase the
recognition of your products or services, provide a potential source of li-
censing revenue, serve as a marketing tool, and attract investors and venture
To obtain a patent, you have to apply for one within one year of the date
you first used the invention publicly or commercially, although the safest
course is to apply for a patent before you begin commercial use of your in-
vention. A patent issued by the federal government is valid only in the United
States. If you plan to do business in other countries, you will have to seek
patent protection from those other countries. Finally, a patent is valid only
for a certain number of years. Most U.S. patents are good for 20 years from
the date you first seek patent protection.
The process of obtaining a patent can be complex, and it is usually worth
the expense to hire a patent attorney to assist you in seeking patent protec-
tion for your invention.
TRADE SECRETS. Finally, the professional services business should make
special efforts to protect its trade secrets. Trade secrets can be anything that
a business knows or does that gives it an advantage over competitors. Trade
secrets can be customer lists, pricing information, marketing plans, and
other processes. To be a trade secret, information need not be novel enough
to be patentable, but it must be, and remain, secret. It can thus be useful to
have a lawyer perform a ÔÇťtrade secretÔÇŁ audit for your business to ensure that
you are doing all that you can to ensure that your protectable secret informa-
tion remains secret. Such an audit can review your businessÔÇ™s confidentiality
notices, confidentiality agreements, and procedures to ensure that access to
sensitive information is appropriately restricted.
Consulting a lawyer to review contracts that you enter into can also be a wise
use of your resources. Particularly with major agreements, it is essential that
the firm understands all of the terms of the contract it is are going to execute.
Your lawyer should be able to explain the provisions of a proposed contract to
your satisfaction; you should not rely on an interpretation of a proposed agree-
ment made by the other party to the transaction. It is also a good idea to dis-
cuss with your lawyer the nature of the deal involved. Through a discussion of
the matter, you and your attorney may identify areas of uncertainty that need
to be clarified.
There is an advantage to having and using your own form contracts.
Once you learn and become at ease with the terms of your own form, you
will not have to analyze new proposed contracts from others with whom
you do business to the extent your form is used. In addition, by using your
own form contract as a starting point, you will often have a greater degree
of control over the contents of the final agreement.
Selecting a Lawyer
The process of selecting a lawyer can be difficult. When a firm decides to
hire a lawyer, either because it suddenly has a need or, preferably, because it
is planning ahead, it is faced with a variety of choices. For some reason, it can
be difficult to find a good lawyer who fits your needs. While there are many
different contexts in which a professional services firm can benefit from the
services of a lawyer (including those most typical circumstances discussed
earlier), it can sometimes be difficult to expend the time and effort the firm
would like to spend to make a good choice. Also, legal matters can be com-
plex, and it can be a chore to dig in and understand what your firm needs.
Nevertheless, a good attorney can significantly benefit your firm. Lawyers
can be valuable advisors for overall company business in addition to driving
resolution of strictly legal matters.
Ultimately, the choice of a legal advisor can rest on any number of factors,
depending on the needs and preferences of the firm. In this section, we survey
some of the major points you may want to consider in choosing legal services.
Establishing Selection Criteria
The first step in selecting a lawyer is to determine what characteristics in a
lawyer are important to the firm. In this part of the chapter, we discuss some
of the issues you may want to consider in determining what factors you will use
in the selection process.
LAWYER VERSUS LAW FIRM AND THE PRIMARY LEGAL CONTACT. One
issue that should be considered is whether to choose a large law firm or a
smaller firm or sole practitioner. Often it is a good idea to focus, at least ini-
tially, on finding a good lawyer rather than a good law firm because in large law
firms, as in other types of service businesses, the quality of the individual ser-
vice provider varies, regardless of the quality of the overall firm. Additionally,
it is useful to establish a relationship with a primary legal contact to help you
work through issues. Even if the firm is outstanding, if your relationship with
your primary contact is poor, you will most likely be dissatisfied. Accordingly,
it is important to find a lawyer who is a good fit from a variety of standpoints,
including among other things, skill-set, experience, knowledge, and personality.
508 The Back Office: Efficient Firm Operations
GENERALIST VERSUS SPECIALIST. Another issue to consider is whether
to select a generalist or a specialist. Often an attorney with extensive special-
ized knowledge in a particular area can seem to be an attractive choice. In
the course of business, however, a professional services provider is likely to
encounter a wide range of legal issues. Thus, if you attempt to select a spe-
cialist for each issue that arises, you may end up with a large number of
lawyers working on narrow, discrete items. In many cases, it may instead be
preferable to select as your primary legal contact a strong generalist with
good business sense. If you choose the path of the generalist, it is important
to determine that he or she understands his or her weaknesses and ÔÇťblind-
spotsÔÇŁ and understands when and how to call in an expert (or, put another
way, a specialist). Further, the generalist should have an advantage if he or
she has a broad range of quality legal contacts with specialized expertise.
ASSESSING FIT. You will also be well served to consider whether a lawyer
is a good fit for your particular firm. First, in assessing your candidates, it is
imperative that you are comfortable that the lawyer has sufficient legal
knowledge in the relevant areas. If a lawyer is not knowledgeable enough to
complete (or appropriately delegate) the given set of tasks at hand at a high-
quality level, that lawyer should not be doing the work.
Additionally, determine whether the lawyer has the desired general skills.
For example, some lawyers (like some people) may be most skilled at negoti-
ating, while others may be most comfortable doing research. Similarly, some
may have stronger business skills than others. You should try to find a lawyer
whose strengths meet your needs.
Another useful determinant of fit is how well the attorney understands
your business. This measure is useful for two reasons. First, a lawyer who
understands your business is more likely to recommend decisions in a manner
supporting your business objectives. Second, the level of understanding a
lawyer presents regarding your business can potentially serve as a measure
for the level of client service you will receive. You may want to try to deter-
mine whether the lawyer has taken the time and made the effort to under-
stand your firm. The answer to this question may yield a clue about the kind
of service you can expect from that lawyer.
Yet another factor to consider is cultural fit. As most professional services
providers know, cultural fit can be an important element of a successful rela-
tionship. This is especially so when selecting an important, sensitive position