Corporate documentation

Policies and Procedures

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Every once in a while we are lucky enough to get to work on the holy grail of a client’s operations – the policies and procedures manual. Sometimes it’s after our business compliance audit turns up some unexpected sources of liability, sometimes it’s after some triggering event has highlighted the need to put things on paper, and sometimes it’s a proactive first step in putting together a company right from the ground up.

The P&P manual is a great place to tie employees into the workplace by giving them a comprehensive document that outlines all of the rights and responsibilities associated with their job. It includes government mandated policies that address privacy, harassment, violence, accessibility standards and many more. It also sets out the specifics of the discipline policy so there are no ambiguities (and far fewer lawsuits) in the event of discipline or termination.

I probably get a lot more excited about putting these together than Inga or Paul or Murray do – but they often have a lot of input into them. Either they have knowledge of the client’s operations that help customize a policy that works in their workplace, or they have court experience on a particular issue that goes directly into how the policies and procedures are written.

If you are putting together a business from the ground up or are ready for a spring cleaning to make sure that your workplace is compliant from the top to the bottom, please have competent legal counsel draft some policies that work for your business, or review your current policies to ensure that they reflect the hundreds of legislative changes that have occurred in the last decade.

Scott R. Young

ILA

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Amidst all the Facebook IPO hype this week, there was the release of an e-mail from Mark Zuckerberg to his corporate lawyer, instructing them to dilute Facebook co-founder Eduardo Saverin’s share in the burgeoning company.

Aside from the obvious professional responsibility issue that this presents for the lawyer (assuming the lawyer was acting for the corporation, they had an immediate duty to declare a conflict of interest and cease all representation of the company), the story highlights the need to get good independent legal advice before entering into any legal agreement. I had a great example of the right way to do things last week – we were retained to give ILA to a shareholder on a Shareholder’s Agreement that they had largely formulated. Despite the fact that this shareholder had been the principal instructor to the corporation’s lawyer, and was intimately familiar with most of the terms of the agreement, the corporation’s lawyer still thought it would benefit all of the shareholders to get ILA – not just to waive it as is sometimes (unfortunately) done.

The shareholder was convinced that ILA would add value even if only to have a fresh set of eyes review the agreement. In our review, we offered more than that; considering various critical events from the shareholder’s individual perspective was very different than the perspective of corporate representative they had while preparing the agreement.

The details of the Facebook dilution are not entirely clear (the ensuing litigation was settled and not much is on the public record) but presumably the restructuring that diluted Savarin down to 10% was ultimately effected, and presumably without Savarin retaining counsel to explain this to him. And when he did realize the dilution, litigation was the only option available.

Getting independent legal advice is not cheap, but the value in what you are getting is often immeasurable. If you are entering into an agreement of any significance (including potential future liabilities), you absolutely must have legal counsel review the agreement and confirm that your interests are protected (or that your unprotected interests are known to you). It’s that simple.

Scott R. Young

Social Media Won'ts

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I am reading more and more lately about the idea of putting together a Will for your social media accounts. Some are advising that you elect a trustee who will delete or otherwise take care of your twitterbookspaces after you shuffle off of this mortal coil, and others are suggesting that you write instructions directly into your Will. Some US states are even considering legislation that will deal with the issue directly. And of course, with an aging population, the social media companies themselves are spending more time dealing with the issue of what do to with dead members.

To be clear, from a legal standpoint, in Ontario, at this time, any directive about what do to with a social media account after your death has no legal force on its own. It’s the same as organ donation (and I know this always shocks some people) – all the good intentions in the world, coupled with the best drafted and executed documents, can be completely undone by those you leave behind. And there’s no added validity to putting something in your Will about what to do with all those ones and zeroes floating in the cloud after you pass on.

That said, thinking about what you would like done with your digital life after you’re gone is a great idea and I highly recommend it. I also highly recommend talking about the issue with your legal counsel so you can get the clarity needed to find out the legal effect of all of your estate planning wishes. A good lawyer will be able to tell you what belongs in a Will, what doesn’t, what to look for in an Estate Trustee, and how to go about effecting all of your wishes.

We’ve had significant experience in putting together comprehensive estate plans for some incredibly tech-savvy business people – there are a lot of creative solutions out there – escrow service agreements that hold data in a secure environment and subject to very strict (and heavily insured) contractual obligations are one solution; joint licensing agreements that give ownership of social media property to multiple parties is another. There are options – but they’re not as simple as putting an instruction in your Will.

In short, social media continues to proliferate and is becoming an increasingly important personal and business commodity. Like anything else, there are things we want to happen to those things when we die. Think about it. Put together a plan and talk to a legal expert to make sure it’ll all happen the way you’d like.

If you have any questions, send us a twitterpoke or something #beforeyoudie.

Scott R. Young

Use it or Lose it™

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So you’ve gone to all the time and expense of developing a brand, establishing goodwill in the marketplace and even registering your trade-mark – now what? Just like the title says, use it or lose it. The rights and responsibilities that come along with trade-mark registration are important to keep in mind.

1. A mark only has rights so long as it is used in conjunction with the goods or services that its registration is associated with. If you stop using the mark, a competitor can have your mark expunged from registration; this includes not using the mark in conjunction with the goods and services that its registration is associated with, but still using it in association with other goods and services.

2. If you do expand the scope of usage to include goods and services not in the original registration, you’ll need to apply to have those categories added. Failure to do so may weaken your rights in the trade-mark.

3. Make sure no one else is using your mark. Trade-mark rights diminish if they become generic. If others use your trade-mark improperly, or as a generic term to describe certain goods and services, you could lose you trade-mark rights. This means you’ll need to keep an eye on your competitors, wherever they may be. Regular searches are key.

4. Renew your registration. Remember that trade-mark registration is a limited right, lasting for 15 years. After that, you’ll need to renew the mark’s registration every 15 years or your rights to it disappear.

If you have any questions about this topic, please contact us.

Scott R. Young

The Business of Brothels

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Well, yesterday’s Ontario Court of Appeal decision certainly has generated a lot of discussion. You know, the one where Brothels are now legal, well they will be in a year if the Supreme Court of Canada doesn’t disagree.

In our office the talk was not of the morality of the decision (we’re lawyers after all, discussions of morals are better left to those with higher callings) rather it was the business aspect of brothels.

The business issues will not be any different that any other business: they are a commercial enterprise and will have to be carried on in areas zoned appropriately. They will require a licence, be subject to all of the Government regulations the rest of the business world is subject to and they will pay taxes.

Trademark will be an interesting legal/marketing issue as the brothels are not allowed to communicate what they do.

Additionally, determining at what level charging fees to manage the brothels is exploitation and therefore illegal: some Bay Street Law Firms might want to avoid working for brothels given the fees they charge could be exploitative. (joking, of course)

An interesting decision generating interesting discussions. We certainly live in interesting times.

Inga B. Andriessen JD

Summer Workers

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It’s summertime (not really) and our thoughts naturally turn (again not really) to summer students, interns and other temporary employees. Some of these indentured servants, er, temporary workers, will return to their studies in the fall, some will wander off to other jobs and others may even become permanent employees. For those employers thinking of bringing on some short-term help, here are some things to keep in mind:

Regardless of a worker’s status, they have the same ability to expose you to liability as any long-standing employee. Make sure short-term workers are fully aware of their confidentiality and privacy obligations, and any other policies and procedures applicable to the workplace. Have them acknowledge consent in writing – if your workers are not working for ordinary remuneration, as in the case of volunteers or unpaid interns, you will have to be very careful about making sure that written agreements document the legal consideration that binds employees to their part of the contract; this is not something that should be done without legal review. Failure to do this right may leave you with an ambiguous agreement, or, worse yet, an entirely unenforceable contract.

Make sure temporary workers understand the limits of their authority. The law of agency may leave you on the hook for any agreements or obligations that they enter into on behalf of the business.

Remember that the Employment Standards Act mandates minimum notice periods (or pay in lieu thereof) for without cause terminations. These apply even in the event of a short-term employment situation and cannot be contracted out of. Make sure you’re aware of the notice periods appropriate to your staff in the event of a termination. Make sure you’re very aware of the common law notice periods and remember that these often can be contracted out of.

Supervise and manage your short-term employees properly. They may not have the same commitment to the workplace that you’re used to and that could be a huge problem. There are issues much more problematic than time theft to worry about.

Lastly, as always, if you have any questions about any of these issues, give us a call.

Scott R. Young

Ontario Court of Appeal Privacy Ruling

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Almost a decade and a half after invasion of privacy was touted to be the tort of the 21st century, and after almost a century and a half of debate, Ontario got its first civil award for damages in a privacy breach this week.

Calling it “intrusion upon seclusion”, the Ontario Court of Appeals awarded the plaintiff $10,000 in Jones v. Tsige, for the defendant’s repeated, unauthorized snooping into the plaintiff’s banking records (the two were employees of the same bank).

The legal test was enumerated as follows:

“One who intentionally intrudes, physically or otherwise, upon the seclusion of another or his private affairs or concerns, is subject to liability to the other for invasion of his privacy, if the invasion would be highly offensive to a reasonable person.”

Of particular interest in the case, is that the court explicitly noted that the right of individuals to this civil remedy lies in addition to statutory remedies available under PIPEDA and similar privacy legislation. While this ruling will have a considerable effect on privacy law in Ontario, the court does not feel that it will “open up the floodgates.” The court noted that the facts of the case limited the availability of the tort:

“The key features of this cause of action are, first, that the defendant’s conduct must be intentional, within which I would include reckless; second that the defendant must have invaded, without lawful justification, the plaintiff’s private affairs or concerns; and third, that a reasonable person would regard the invasion as highly offensive causing distress, humiliation or anguish.”

The court further limited the scope of what constitutes the kind of privacy breach that could give rise to an action:

“…it is only intrusions into matters such as one’s financial or health records, sexual practices and orientation, employment, diary or private correspondence that, viewed objectively on the reasonable person standard, can be described as highly offensive.”

But perhaps the most sobering aspect of the judgment is the award. Saying that it could only award moral damages, the court decided on $10,000 for the plaintiff’s humiliation and suffering. Some analysts have suggested that this could be seen as a modest fee by those who are intent on breaching privacy for nefarious reasons.

What is unclear is the effect this will have on our clients – business owners. It is certain that the obligation to protect the privacy of customers and employers is as strong as ever, but it is important to note that in the present case, the court noted that the defendant’s actions were that if a rogue employee who had violated the employer’s code of conduct, and thus no action was available (presumably under PIPEDA) to the plaintiff.

We will be watching further developments in this area with great interest – particularly to see if this case is appealed to the Supreme Court.

Scott R. Young

New Years Resolutions for Business

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Tomorrow is New Year’s Eve – time to promise to workout more, eat less & be kinder to everyone (except the Kardashians, well, maybe even them).

As many people find personal resolutions hard to keep, I’m happy to propose a few business resolutions which should be easier to keep and therefore give you smug satisfaction next year at this time when you look back on the year.

So, without the snappy banter of Dick Clark’s Rockin’ New Years Eve, here are some suggested resolutions:

1. Have your lawyer prepare your annual business minutes and esnure your minute book is up to date.

2. Prepare both a personal and business will.

3. Register a Trademark if it has value to you.

4. If you are in Construction, lien projects within 45 days of last service or supply.

5. Follow 30-60-90 Sue to ensure your receivables do not cripple your cash flow.

Wishing you a Happy & Profitable 2012 !

Inga B. Andriessen J.D.

The Andriessen Document Advantage

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One of the many positives to being a small law firm is the close interaction between the litigation and non-litigation sides of the firm. We meet together on a regular basis to discuss files from both perspectives (how to avoid litigation and what strategy to pursue when litigation becomes inevitable). We also talk about avoiding disputes from the very beginning of a commercial relationship – this usually means getting the documentation right.

When we draft documentation for a client, we try to find out as much as we can about the way they do business; or more exactly, we find out about the way they want to do business and then we try to make sure that its completely compliant with the statutory framework under which the client operates, and any applicable case law. When possible, we try to approach the process holistically, and address as much of the business relationship as possible. We consider client solicitation, customer intake, the review of documents, imbalances in bargaining power, the need to retain specialized counsel on both sides of a transaction, the execution of the documents, the clarity of the documents, the term and termination of the agreement and what rights the parties have after the life of the document has ended.

When we talk about the clarity of legal documents, we’re talking about more than plain language and the clarity of our words – although we are talking about that too. We’re talking about everything from the readability of documents to font size, white space, kerning, the appropriate placement of margins in the event that a document will be faxed repeatedly, organization, numeration, and everything else we can think of. And then the litigators look at the document from the perspective of a judge, squinting to read and understand what exactly the parties have bargained for. And we fine tune.

At the end of the day, our goal is to provide a legal document that envisions the intention of the parties in a clear manner, contemplates current and incoming legislation, is adaptable for changes in case law and will add value to the underlying interaction between the parties. Our multi-disciplined and flexible approach produces excellent documentation. And that documentation improves the systems of our clients.

That’s the Andriessen Document Advantage.

Scott R. Young

Liability Waivers

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As I was playing soccer with my Monday night league team, my thoughts shifted from the warm mid-summer breeze and lighthearted enjoyment of a recreational game of footy to the liability waiver I signed (or in this case didn’t sign) when I joined the league. I can’t say exactly when my thoughts shifted, but it was right around the time that the opposing team’s forward stomped his cleats onto the top of my foot while I was tackling for the ball. The resulting sprain led to a trip to the ER, three trips to athletic therapy, crutches, a cane and several ice packs.

It could have been worse. A few years ago, I played on a team full of lawyers who I worked with. In one month, I tore my ACL while another associate tore his Achilles tendon; a senior partner tore his quadriceps. Although we had all signed waivers, the league management were sweating heavily. The fields were in bad shape. The referees weren’t great about enforcing fouls for contact. There wasn’t any provision for emergency medical care. The waivers were worthless and they knew it. I’m sure they sweated right up until the limitations period expired two years later. But we didn’t sue. And there won’t be any litigation this time either. I accepted the risks inherent in the sport and it’s not an issue. However, the things I’ve seen in my practice tell me that there are enough people and strange circumstances out there to make the liability waiver a very important part of a lot of business plans.

The basic presumption is that by acknowledging the risks inherent in a given activity or undertaking, the participant accepts responsibility for any accidents or injuries that may befall them. In many cases this is true. And a good liability waiver is a great risk mitigation strategy. It does require some thinking about the nature of the risks involved though, and it does require the business that exposes customers or clients to risks to take an active role in minimizing those risks to the extent reasonably possible.

If you’re thinking that you can have someone sign a waiver and that you will be completely indemnified of all blame regardless of your subsequent behaviour, any changes in the risk landscape or a host of other factors though, you’re wrong. There are a number of things that can deflate a waiver. Jurisdiction-specific legislation. Issue-specific caselaw (ie you can’t make someone indemnify you for killing them, for example). Misrepresentation. Failure to meet the Standard of Care required. Lots of things.

So if you are involved in a risk-intense business activity, I would highly recommend having your waiver documentation reviewed on a regular basis by counsel who are knowledgeable and familiar with your business practices. And if you, or someone you know, has been injured in an accident, you may be entitled to a LARGE CA$H SETTLEMENT. But you’ll have to call someone else for that, because that’s not our bag.

Scott R. Young