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Legal Agreements - What About Disagreements? Thumbnail

Legal Agreements - What About Disagreements?

Posted by John Posey

Have you ever had to sign an employment agreement? For many, it’s a requirement of the job. Maybe you have even had experience with a non-compete, partnership, or buy-sell agreement.  Using legal documents can serve as a prudent and responsible way to establish rules of engagement for all involved parties, and often is completed at the beginning of a relationship when everybody is getting along superbly - you know, the honeymoon stage. But did you thoroughly examine what happens if you should ever disagree? It’s probably not hard to imagine that most agreements don’t get carefully reviewed until after there’s a disagreement. Maybe we should be calling them disagreements instead. So here’s a pro tip before signing the dotted line – always read the termination, separation or dissolution sections and references so you are acutely aware of what stands to happen when there’s a disagreement, death, or separation. It could be smart to seek out others that are experienced in the kinds of agreements you’re considering and get some thoughtful guidance. Do legal documents intimidate you? Hire an attorney specialized in your area of need to help you navigate and fully understand the implications – you’ll probably thank yourself later.

Identifying the means of reconciliation and what happens if and when you part ways is a crucial component of all agreements. It will provide you with insight on just how painful or marginally pleasant parting ways could be. Get your own legal counsel particularly when the stakes are high before you sign anything. Agreements can be thrown out of a court of law in instances where both parties were represented by the same attorney so plan accordingly. Also, your choice of legal representation will need to make sure they don’t have a conflict with the other parties involved so be prepared to potentially explore more than one option. The point of reviewing and trying to understand the implications of these possibilities isn’t so you can weasel out of something or plan for failure BUT because you need to have a plan if you don’t see eye to eye at some point or death or separation comes to pass. This is in fact why legal documents such as those already mentioned in addition to powers of attorney, wills, and trusts become so important. You want to have a prearranged plan already established when emotions are stable and hopefully reasonable before a “crap hitting the fan” moment. Many so-called risk-takers are masters of capping the downside and setting worst-case scenarios and if-then plans as part of their agreements. It’s just the smart thing to do.

Now it’s time for some cautionary tales. First, I’ll start with my own. I once signed an employment agreement that included a non-compete clause at the ripe old age of 25. I was just happy to take a job I was interested in with not much regard to what the implications would be should I leave one day. Heck, I just landed a job – it’s the honeymoon phase! You could say the stakes weren’t too high at the time, but often enough that’s how these stories start. I suspect few attorneys experienced in employment law and non-compete clauses would have advised me to sign the document “as is” without proposing a few revisions. Some elements of the agreement seemingly went beyond basic employer protections into punitive measures for leaving the employer – measures a court of law may have to render legally enforceable. In short, I did not seek legal counsel when I joined the firm and I signed the employment agreement as it was presented to me. I did eventually leave the employer years later and I left amicably…or at least I thought so at the time. I thought I had reasonably upheld the agreement upon departure, but I still received notices from the employer’s law firm communicating their intent to pursue legal damages. Ultimately, my new employer negotiated a settlement for a fraction of what was originally sought, and the agreement was never tested in court. It was an unpleasant experience, to say the least, and fortunately, additional time and money were not wasted in court in my case.  The appetite for legal pursuits can vary widely among employers (and obviously some have deeper pockets than others) so it’s sometimes hard to tell just what will happen at the point of separation but hopefully, you can see why consulting legal counsel before signing agreements can be valuable. You might view the upfront expense as an investment in your career, your relationships, yourself, and your future sanity. If you find yourself parting ways, take the high road on the way out. Anything less never seems to result in anything positive.

Here’s cautionary tale number two which is also a true story. There once was a man that was widowed and remarried years later. He had a son-in-law that suggested he get a prenuptial agreement in place for the second marriage. He told him to hire separate attorneys to represent him and his fiancé. The son-in-law knew it was important to have separate representation because of a prior personal experience where one of his legal agreements was thrown out of his court case as the parties to the agreement were represented by the same attorney – that’s a no-no! Back to the original story, the man developed dementia years later and eventually passed but before his passing said, “Keep an eye on my wife, she might be up to something…” A few days after his death, the son-in-law’s family received a handwritten letter signed by the man and provided by the wife stating all his assets should be distributed to her. His dementia had been documented by healthcare practitioners fortunately.  In short order, the wife’s lawyer recused themself of the case as it was clear the man’s family was prepared for a legal battle and it would be exposed for the attempted fraud that it was.

Remember when someone has the opportunity of a financial windfall, their character is waiting to be revealed to you. Money won’t change a person, but it will reveal them. Eventually, time reveals all.

Advisory services offered through Plains Advisory LLC, an investment adviser registered with the State of Nebraska. Insurance products and services are offered and sold separately through John Posey, a licensed insurance agent. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Any information provided is designed to provide general information on the subjects covered, it is not, however, intended to provide specific legal, tax, financial or investing advice and cannot be used to avoid tax penalties or to promote, market, or recommend any plan or arrangement. Material presented is believed to be from reliable sources and no representations are made by our firm as to another parties’ informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation.