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Business Law, Commercial Litigation and International Business Law

Showing posts with label contracts. Show all posts
Showing posts with label contracts. Show all posts

03 July 2013

Controlling the Idiot in the Deal




CONTROLLING THE IDIOT IN THE DEAL
By Donald W. Hudspeth Esq.


When I was a young man starting in business I read the book

Winning Through Intimidation” by Robert J. Ringer. The book, though denounced by some at the time, was not really about intimidating people, but of not being intimidated by people, for example, doctors, lawyers and high powered professionals.

The part of the book most interesting to me was its description of three kinds of persons that you may meet in a business transaction (or any dealings really).
 
The first type, described by Mr. Springer as a “Number 1 #” is the guy or gal who says, in effect,” “I am in this deal for the money – the more for me, the merrier – that’s how I roll.” While often criticized or condemned for being “self-interested” or “greedy,” the #1’s are actually the most honest and forthright because their cards are on the table. 


 
The second type, the “Number 2” says “I’m not after X,” but really is after X, so may be untrustworthy and cut you out of, or gyp you, in the deal if he or she can.  This is the proverbial “snake,” treacherous and slippery when wet. Captain Jack Sparrow (Johnny Depp) in the movie, “Pirates of the Caribbean” said that “you can trust the dishonest man to be dishonest.” So, in a way the treacherous man is less formidable than you might expect because he is more predictable. You know he is going to try to cheat you so you build triggers and fail safe mechanisms into the deal.  The secret is spotting his type early on.   

The third type, the “Number 3,” appears to mean it when he or she originally says “I’m not interested in X,” or “It’s not about the money for me,” but, eventually due to (i) incompetence, or (ii) weakness of character, makes a last minute grab and screws up the deal.
       The problem with working with types #2 or #3 is that you can become the victim. As the reputed Mafia saying goes: “If you don’t know who the patsy in the deal is, it’s you.”  So, when I am doing a deal or engaging in an important transaction I attempt to identify the kind of person I am dealing with as #1, #2 or #3.  
        
Perhaps, counter-intuitively to you, I fear #3’s the most. Let me give you an example of how #3’s can get in the way or just screw up the deal for everyone. A firm recently negotiated a lease for prime penthouse-suite type office space. Although landlord and tenant brokers were involved, the space never hit the market; the tenant was taking over the space “AS IS,” from the existing tenant.
      
 The existing tenant was a nationally famous and well respected attorney (who unfortunately does not practice business law).  So, after the new tenant and the landlord – who is heavily influenced or under the control of the building lender – entered into a letter of intent, the existing tenant said he wanted to take the rolling file shelving (because he paid for and installed it) even though the shelves are on tracks and are probably a fixture. Next, the tenant said that he wanted the front reception desk (built in) and a “Star Trek” type secretarial desk (also built in with no carpet underneath) and the old tenant also wanted to take a built in dishwasher. All three were there when the tenant moved in.

Obviously, when the new tenant signed the letter of intent to take the space “AS IS” it was not agreeing to replace $10,000 worth of rolling shelving (present value maybe $500 because of obsolete technology) or to refurbish the area left by their removal, nor was it contracting to lay carpet – which would never match or to buy a built in dishwasher. 

The landlord, with the lender’s approval, has agreed to cover the shelving; that is, to buy the shelving or provide a finished room where the shelving was, but the landlord – to our knowledge - does not even know the about the issues on the front desk, “Star Trek” desk, or the dishwasher.
       
This all leads to my point about “controlling the idiot.” If you do not control the idiot, you become the idiot. The idiot can make fools of us all. What may happen here is that the tenant does its thing and removes the built in items. The new tenant could then declare breach or ask the landlord to cover the cost to fix. The landlord has shown good faith, so let’s assume the landlord will want to do the latter.  However, the landlord is subject to the lender, which has been very tight-fisted in the transaction, so far. That could put a million dollar lease deal at risk:  lost lease, lost commission, bad will, etc.  All this.…because no one is controlling the idiot.   
        
Law Offices of Donald W. Hudspeth, P.C. | By Donald W. Hudspeth, ESQ.
Business Law | Commercial Litigation | International Law
www.AZBUSLAW.com  | 866-696-2033 |  TheFirm@azbuslaw.com

For more information about business law topics and the Hudspeth Law Firm please visit our website at azbuslaw.com or call us at 602-265-7997.

 

09 May 2013

Are You What You Sell?



ARE YOU WHAT YOU SELL?
(Especially if you own a small business?) 


By Donald W. Hudspeth

I. Who Are You? (And, do you really want to know?) 

From the beginning of recorded time we (well, maybe not you and me personally but some of us) have been asking ourselves the question: Who are we? Are we children of God or space aliens? --  a fortuitous combination of matter and energy?  Thales said “All is water,” presumably he meant to include ourselves. Heraclitus said “All is change.” You cannot step in the same river twice and time is like a river.  Democritus said the world is made of atoms. (Did the thought determine the reality? How does science work anyway?) Are we like fish in the water looking for a God that is all around us? From the beginning we have been off to the races to determine what we are made of. Descartes asked the question “How do I know any reality exists at all? I could be influenced by an evil demon that causes all my thoughts about myself and reality to be false.” (For his answer, see below.[1])  Obviously, I cannot answer such profound and perhaps futile questions.[2] But, like the song “Who are you?”[3]  I want to know. 

II. You Are What You … (If I think about a pizza all day long do I become a pizza?) 

A quick survey Online of endings to the statement “You are what you …” includes the following results: eat, grow, read, and hear, think about, measure, and spend money on.  The “You are what you eat” and “grow” results were related to the dietary movement and the problem of obesity. 

A. Reading.
The article on reading said we reveal ourselves by who we identify with. (When I was a kid I liked super heroes and Robin Hood  - the idea of living “free” in the forest appealed to me more than the robbing, but I think I also liked Robin Hood’s challenge to corrupt, uncaring authority. Does that say anything about me now?

I practice business law and sit in an office reading and writing for a living. I do not know martial arts nor am I particularly fit.  Yet, I read novels about, among other things, super espionage agents, helpful wizards and “shapeshifters” that get the “bad guys.” What do these readings say about me? It seems more like a case of vicarious adventure or identifying who I am not – or at most, manifesting a “denied self” -- than a statement about who I am day to day.

What about Ralph Waldo Emerson’s essays, among others, on Compensation, Self Reliance and Spiritual Laws?[4] Or, Thoreau’s book Solitude or essay on Civil Disobedience?[5] Would or could reading that change my life? Or consider Plutarch’s volumes on the great men of history, fictionalized as they may be.[6] Does what we read or hear have the power to change and influence us? Do they determine who we are? It would seem that they can greatly influence us, especially if their content becomes something that we think about often, like how to make pizza.  Does reading about great men help make us become or want to become one – or does being already receptive to such literature make us more receptive to the lessons offered?

B. Hearing.
What we hear is obviously important. Take music. Music tames the savage beast. It may even improve test scores (the so-called “Mozart Effect”). Does music permanently change us? Are we what we listen to? Do we become a different person if we listen to Frank Sinatra instead of Frank Zappa or Jay –Z? [7]  I do not know that our goals, or our genetically and environmentally programmed self, change – as a result of music, except to develop a taste in music. But, to the extent environment is important to our development, music would be a factor. [8]  

C. Thinking.
Do we, as James Allen[9] wrote, become what we think about and declare? I believe it was Napoleon Hill in his book “Think & Grow Rich” who said that “What the mind can conceive and believe it can achieve.” Under this success system our thoughts are said to control our destiny. This must mean goal-oriented thoughts. Thinking about pizza is not going to make me become one, but it may guide my behavior so that I get one. In that case the thought is not determinative of who I am except to express that I like a certain kind of food.    
 

D. Measuring. (Or, Standardized test scores as a basis of reality.)
In his column “You Are What You Measure, Dan Ariely,[10] discussed the power of metrics. Give people frequent flyer miles, he says, and they will do absurd things to get them. More down to earth, Mr. Ariely says that while at MIT he was measured on his ability to handle his teaching load. He found that the rating system affected his teaching because he could earn more points doing other things. In other words his conduct adjusted to the system of measurement. This result is seen in our use of standardized testing to measure student and teacher achievement. Do the tests produce better students and teachers or students who know how to take the test?

I heard on the radio David Hestenes, a physics professor at Arizona State University, explain that he was shocked to find that under his (and everyone else’s) standardized way of lecturing only those (10% or so of) students who could teach themselves were doing well in his classes.[11] The rest of the students were not learning much of  anything – at least not from him. So, the good professor changed his method to one of an interactive and team approach to questions and answers. The results were much better.

The underlying point here is that we tend to become what we measure. This principle would seem to underlie much of our law as well in that we measure and accept or hold people accountable for their measured and documented conduct. Think speed limits.

E. The Chicken and the Egg (and whose turn is it to make dinner?)
The problem with these answers to the question of who we are is that  each of them presents the  “Which came first, the chicken or the egg?” quandary. Do we become who are (partially of course) in response to Emerson, or are we affected by Emerson because of who we already are (because our mother was a teacher, we grew up across the alley from the library, etc.?).

F. Money and Art.
Of course other acts may express who we are as well. There is the saying that “Money lets us be ourselves.” If we have the money, the car we drive and the art we buy not only tell others something about ourselves, but may also reveal something about ourselves to ourselves as well.[12] A painting, like music, may bypass reason and the psychological defense systems. In that way purchasing or admiring the art piece may say more about who we are than our rational analysis or thoughtful expression. For example, a picture of two sisters may reveal deep yearning for love wanted or lost. A wood cut of Jesus at the Well may reflect a value system of not judging.[13]

               

But, even money and art may not tell the world who we are. We may have inherited the money and not care about it. Sometimes we spend money just for immediate gratification. Sometimes money can get in the way of knowing who we are and becoming what we could be. As William Wordsworth said:  “The world is too much with us; late and soon, Getting and spending, we lay waste our powers. [14] If we do not want the money or money is a curse, as it is reputed to be with the Onassis heirs[15] does it still define us?  Maybe it does because it plays such a dominant role in our lives. 
 
               G. You Are What You Sell. (Unless You Sell Donuts).[16]

Because each of the above answers has its shortcomings (and in that case another wrong answer won’t hurt, right?) I want to suggest a new answer to the question “Who are you?”  That answer is: You are what you sell. Naturally, this answer is strongly influenced by my past and present experience as a business person and business lawyer. But, my thought is that “what we sell” is a short form statement of our knowledge, our values and experience.  A teacher appreciates learning, wants to help others to learn and, unless bound and gagged and tied up with a rope (in which case I would ask what are you reading?)  will act accordingly. A tradesman knows and values the custom and usage of his trade and manifests who he as he applies himself to his trade.  

This is not to say that a person literally is what he sells. A person who makes pizza is not a pizza – unless he is.[17] And, it is not necessarily true that what the person sells is something the person values. It may be a means to an end. We must define what is being sold to have the mirror of what’s underneath. For example, a garbage person may not like or value the garbage in itself. But, he or she may enjoy having a job, driving the truck, value the service as necessary and good for the community, know that many people depend on him or her, and have self esteem for that, independent of social status. The occupation and acceptance can tell us a lot about the person.

A person who sells drugs does not necessarily use or like drugs, but he or she is a person who sees the benefit from the sale as greater than the personal or social cost. Therefore, the willingness and act of selling drugs, for personal gain in spite of the likelihood of eventual harm to others, tells us a lot about the person’s motivations and value system. And that says a lot – as much as reading or music – about who that person is to himself and others.  

Selling takes more proactive work than buying; thus, it may express even more of who we are than a purchase, i.e. spending money. By “selling” I mean a career choice, not a garage sale. And, the act of selling, including the thoughts and deeds of preparing to sell, encapsulate other factors, including what we think about.

A philosopher might argue that selling is just one example –perhaps a profound and more archetypal example – of the maxim “You are what you do.” (which I did not find Online in response to the query “You are what you…”). Under this positivist approach what we do is who we are and all the machinations existing or experienced underneath (say child abuse or a Harvard education) are interesting but irrelevant.[18]

This may be a grander statement – or corollary (I’m not sure) of the Column, You Are What You Measure alluded to above.  If so (this was not Ariely’s argument but the positivists’), then the explanation seems to fail.  Where “measurement is the truth of all things”  “intelligence” becomes “what an intelligence test measures” – an explanation most of us consider circular and rejected in educational science long ago. The fallacy of the argument is that the measurement or testing becomes the reality instead of the expression of it – which is kind of like saying that fishing is the act of counting the fish caught instead of putting the hook and bait in the water. (This is not to disagree with the Ariely Column that we adjust our behavior according to what is measured.)   

Reasonable minds can disagree, but for those of us in business what we sell  -- what we motivate ourselves to do “with a shoeshine and a smile” says a lot about who we are. For example, I loved the academic life, but found the lack of action and ability to test and get feedback on my ideas stifling and unfulfilling. As a business person I loved being a man of action who could marry the thought to the deed and see what happened – to “actualize myself through actualizing my ideas.”  But for me business alone lacked the intellectual approach to life which I appreciate. (My father was a business person; mother was a teacher.) So, law for me is perfect. It combines the intellectual with what Aristotle call practical wisdom and results. I have the benefit of both thought and deed; that is what I sell. That works for me and best expresses who I am – in what I do, how I do it, and the values expressed in doing it. 


III. Conclusion

As listed above there are many popular approaches to determining and expressing who we are. These include eating, reading, hearing, measuring, art, music, spending money and what we do.  I would like to add to the list “You are what you sell.” Because owning and operating a business can be so challenging and rewarding, interesting and exciting, enveloping and encompassing, this answer may work as well for many of the small and medium size business owners who are my clients.[19] To quote myself[20]  “Running a small business is like having a small child. When it cries, you have to be there.” And because you have to “be there” when the small business needs you, owning and operating the business is more than a vocation; it is more even than a career. It is a way of life. In that sense and for that reason, especially for many of my business owner clients, it is probably true to say “You are what you sell.”   

The Law Offices of Donald W. Hudspeth, P.C.





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[1] Whether my thinking is false or not, I am thinking and because I think; therefore, I am. (aka Cogito ergo sum). Descartes, René Meditations on First Philosophy. 1641. The French translation was published in 1647 as Méditations Metaphysiques.
[2] But if I had to choose I would vote for “relationships” in both physical and interpersonal sense.
[3] By The Who and used as the CSI theme.
[4] Essays of Emerson, Ed. Richard Whiteing, Glasgow, Blackie and Sons Limited. 
[5] Henry David Thoreau, naturalist, poet and philosopher (July 12, 1817 – May 6, 1862). Generally Thoreau says that it is not enough just to work to amend an unjust law but we have a moral duty to break it. His position can be paraphrased as “when the laws are unjust the place for the just person is in jail.” Thoreau went to jail but stayed only overnight because Emerson bailed him out the next day.  
[6] Plutarch Lives of Noble Greeks and Romans aka Parallel Lives or Plutarch’s Lives, 1st century A.D.
[7] Frank Zappa in his album, You Are What you Is, included the song “I’m harder than your husband.” If you like that song does it say something about you?  Ditto on the book phenomenon, the Shades of Grey trilogy.
[8] The experts seem to be going back and forth on this. Yesterday, it was environment; today it is back to genetics as the primary factor in determining our personality and behavior. And is that who we are- our personality and behavior?
[9] Allen, James As a Man Thinketh. CornerstoneBooks.net. 1902. Web July 14, 2012. (From the Bible, Book of Proverbs chapter 23, Verse 7, “As a man thinketh in His heart, so is he.”  
[10] Ariely, Dan. “Column: You Are What You Measure” Harvard Business Review. June 2010. Web. July 14, 2012.
[11] Handford, Emily Physicists Seek to Lose Lecture as Teaching Tool. America Public Media/NPR January 1. 2012. Web. July 15, 2012
[12] For example, I like Ferraris as an expression of art and engineering. Maybe also I just like fast cars and would appreciate what seems to come with them. 
[13]That is art based on Scripture John 4: 1-40.  Jesus was in Samaria, talking to a woman alone, who had “five husbands.” Under the mores of the day Jesus should not have been doing any of those things, but the moral of the scripture and Rembrandt’s art is “Do not judge.’  
[14] William Wordsworth, The World is Too Much With Us; Late and Soon. 1806
[15] Churcher, Sharon, Model leaps to her death over anguish about children as Onassis curse strikes again. April 2, 2011. Web. July 15, 2012.
[16] In that case you probably are what you eat.
[17] Ralph Waldo Emerson in his essay History said “A painter told me that nobody could draw a tree without in some sort becoming a tree…” Emerson continues: “The true poet is the poet’s mind; the true ship is the ship-builder.” 
[18] Protagoras, the pre-Socratic philosopher (about 500 BC) said “Man is the measure of all things.” He rejected the notion of an objective independent reality. For more on this subject you might start with Bishop (George) Berkeley who wrote in the early 1700’s “esse est percipi” that is, to be is to be perceived. (So, he’s the one that started all stuff about “If a tree falls in a forest but no one is around to hear it…“ ) Roughly, the rationale here is that because our perceptions are always between us and the thing, we can’t get to the “thing itself.” Worse, Berkeley concluded that because perceptions are but ideas in the mind; reality is but ideas in the mind. If there is an independent reality we can’t get to it. Other than a “Yea right” response, I do not know that Berkeley has ever been refuted. Regarding the forest, in his essay on History, Emerson says that a lady told him that for her while riding, the woods always seem to wait as if the genii that inhabit them suspend their activity until we have passed.  
[19] I have a friend – I’ll call her Jamie – Jamie is tall, slim, beautiful, educated and brilliant, accepting of others and with a wonderful personality. Obviously she would be a “prize” for someone. But, she is unmarried. I asked her once why she is and has not been married. Her answer, in part, was that she had never been able to find someone as fulfilling as her business.     
[20] “I often quote myself; it adds spice to the conversation.” George Bernard Shaw.