I do not like bullies

Some three or four years previously Tony had started a business with friends.

Everybody had contributed $25,000 with the idea that when the company got on its feet they would repay themselves this seed capital.

Tony’s father had grown up doing manual labour and Tony, my client, was determined that his children would “have something better than he did” and it was extremely important to him that he recover his seed capital. This was the money he was going to use to send his boy to a private school.

His partners knew he would require his money. So, what happened when he asked for it? 

They said that they couldn’t afford it.

After that, my job was to “look at the company and see if there was anything that could be done”.

Two things became apparent. 

First, the only way to get his money back was by way of return of capital and this was not possible.

The second reason was that whilst the Company had an annual turnover of 9 to 10 million dollars, there was no money… the other shareholders had been paying expense accounts and upgrading motor vehicles to “grow the company”. It didn’t appear as if there was anything that could be done.

I gave Tony the bad news and sent him home.

But over the weekend I got out the information and looked at it again.

There had to be another way.  I felt he was being bullied… and I do not like bullies.

That's when the ‘AHA Moment’ hit me.

The clue was not in the return of capital but rather the relativity of the loan accounts that had been created.  The other partners had large loan accounts and borrowed against their future earnings.  My client had been living within his means, still driving the same motor vehicle he had when the company was incorporated.

I rang Tony and asked him if he was annoyed and what he would like to do about it. He listened quietly and said to me “let’s do it”.

The next 9 weeks were filled with requests for repayment of loan accounts, meetings, resolutions and lots of table banging.

End result was that they each offered to sell out.  Tony became the sole shareholder and director of the company.

After assignment and reapplication of the loan accounts, total out of pocket to my client was nil.

His first (un)official task was to buy his boy’s uniform for the ensuing year’s (private) school.

Oils ain’t oils

I was working as a solicitor in a large legal firm when one day the senior partner tossed a contract on my desk and said “Myles, we act for this client and need to get them out of this contract!”

He mentioned that other solicitors in the firm had tried but had not been successful in finding a solution.

Challenge accepted!

In simple terms, our client had a contract with an Oil Company… the exclusive rights to truck oil to and from an oil pipeline’s inlet/outlet valves.  The contract was firm and set for a number of years, with rights of renewal.

To our client’s detriment, what it did not contain was an escalation clause. And, over the period of the contract term, the client’s cost of supply had risen to the point where it was costing more than he was making. He needed a re-negotiated contract, and he needed it fast.

Well, I read the law. Nothing I could use there. I considered the facts. Nothing I could use there.

And then began the lateral thinking process. It occurred to me that there is often something in a contract that neither party wish to enforce. So, I went looking and found… nothing!

Then I decided to look for what was not there (often what is not said is more important than what is said). I read and re-read the contract until I saw it, or rather didn’t see it, because it wasn’t there.

There were no ‘quantities’ clauses! None!

Our client had exclusive rights to truck oil from the pipeline, but there were no minimum quantities that had to be trucked.  My client could literally truck zero oil if he wished! 

My thinking was that our client should contact the Oil Company and say that he is going to remove all trucks from the job by three o clock that afternoon.  He would be quite within his rights and what’s more he should advise them that if they attempted to have anyone else truck the oil he would sue them for breach of the exclusivity provisions of the contract.

Subsequent board room negotiations ensued with the Oil Company Solicitors for a new contract.

Escalation clauses were negotiated along with a new base price (based on quantity) and our client was happy (and so was the Oil Company).

Which just goes to prove that sometimes, in complex legal matters, ‘oils ain’t oils’ and it takes thinking outside the square to find solutions.

Worth it in the end

A man unknown to me (let’s call him ‘Mr John Smith’) phoned and proceeded to quiz me as to whether a particular person was employed by me. I said “Yes. Why?

John said “Well, I found their briefcase and it contains some documents and a pay packet full of money.” This was in the days when fortnightly pay packets contained cash. My employee had left her briefcase in a supermarket trolley.

John said he did not want any reward. He was down and out, and more concerned he would be accused of having taken the briefcase and the money. We retrieved the lost articles, and I delivered a Red Cross ‘thank you’ package to him at his basement flat. He was grateful. I mentioned that, if there was anything else we could do, he should feel free to ask. He ushered me out the door with a “She’s right mate.”

Time passed. One day John called down to the office and told me that he was in financial difficulty, didn’t know what to do, and thought I could help. 

Aha! Cynicism got the better of me and I thought “here comes the touch up”. He assured me that was not the case… but he had no education and thought that, as I was the only professional person he knew, I might be able to “sort it.” I said I would see what I could do.

Apparently, 20 odd years before, he and his wife had owned and operated a general store in a small country town, but he had not seen his wife or children since then. 

However, his wife still owned the store and they were still officially married.

What followed was a matrimonial property settlement, sufficient to pay out his debts and allow him to purchase a caravan, which his cousin allowed him to live in on his farm. Mission accomplished. John Smith truly was a good man caught in bad times.

But what he had not remembered was that I had negotiated a larger amount, which his wife said she could not pay right away and so we had left it outstanding.

Some years later I got a phone call from a lady (let’s call her Ms Jones). She said that John Smith was her Uncle and had been diagnosed with cancer with 3 months left to live.  He’d asked her to call me “as I would know what to do.” A totally humbling judgement of me and my ability.

John was scared of being buried in a pauper’s grave, as his Mother had been back in the Great Depression. I remembered the settlement I had done with his wife, and without making promises told Ms Jones I would call her back.

I then negotiated an early One-Lump-Sum-Payout of the balance of the property with his (now ex) wife. I arranged for the funds to be transferred to John’s bank. About a week later the Niece called me to say Uncle John had been in and prepaid for his funeral and he wanted her to tell me how grateful he was.

He passed peacefully. It was worth it in the end.

Question the Answers

My father used to tell me “Myles, it is not enough to answer the questions. You must always question the answers.” The concept has lived with me ever since and is part of my way of working as a solicitor.

One of the more interesting examples of this happened to me when I had a new client, an astronomer, who had ‘invented’ a poster, with original artwork, showing the passing of Halley’s comet through the night sky. He asked me “Can I patent it?”

He also asked “Can I patent this?” holding a small item consisting of two cardboard wheels which could turn to match up the date (printed on one wheel) with some other variable factor (printed on the other wheel) An arrow would point to the quadrant in the sky where the comet was expected to appear. It is called a planisphere.

Neither the poster nor the planisphere, in their basic form, were capable of registration as a patent, so my answer to his question was ”No.”

I then questioned the answer “No” with “Why is it important?”

He said “Because Halley’s comet is in visible orbit for about 9 months and I want to make a lot of money from it. I want to sell the poster and planisphere to schools for student projects and I think I could make about $50,000 over the 9 months.”

But I questioned that answer too. “You cannot patent them, but if there was another way to make money would you be interested?” He said “Yes.”

What followed was exciting!  With some professional assistance, we organised an introduction to Caltex who, at the time, had a logo of a big red star with swish lines and the positioning statement ‘follow the star’.  We sold a 2.5 cm square of the poster space to Caltex for sponsorship rights. They provided distribution through all their petrol stations in Australia and paid for large numbers of posters to be printed and distributed through the school system, free for the children.

What followed was an exponential explosion of the original concept. We obtained introductions to Caltex NZ and repeated the process. 

The concept then went to Asia, followed by exporting the copyright to the USA and, through a series of tax treaties, we were able to make the product viable for the American market.

By thinking outside the square, we enabled the client to make a lot more money than his original expectation

It was questioning the answers that made it possible.

‘Thanks’ means a lot

Sed ut perspiciatis unde omnis iste natus error sit voluptatem accusantium doloremque laudantium, totam rem aperiam, eaque ipsa quae ab illo inventore veritatis emo enim ipsam.

Continue reading