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Last May we announced that we were a part of a pilot program the Iowa Secretary of State’s office launched for fast track filing of limited liability companies (LLCs) and corporations. I am happy to report that the filing system has worked like an absolute gem. Now it is truly more convenient than ever to get your business formed within the State of Iowa. Our turnaround time for preparing and filing LLCs and corporations has been dramatically reduced. In my years of practice I must admit that this is one of the best projects a government office has pulled off. I give Iowa Secretary of State’s office major kudos for their work.

If you want to learn more about how we can help you set up your Iowa small business please see our Iowa Small Business Formation Services page for information. I know you’ll love the level of service we provide to new business owners.  We still offer in-person meetings for those that want to discuss their business set-up directly with a lawyer but we are also just an email or call away. Even if you don’t live in the Des Moines area we can still help you set up your Iowa business. We have clients from all over the State of Iowa. We look forward to working with you.

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Let’s get down to brass tacks. The main reason Republican lawmakers in Iowa are looking to change the way Iowa judges are selected is because they want protection for social issues like an anti-abortion bill they hope to pass this legislative session and due to the Iowa Supreme Court decision in Varnum from several years ago where the Iowa Supreme Court ruled that non-religious, civil marriage, is available to everyone. Since Varnum, special interests worked hard to oust Iowa Supreme Court justices. And now, these special interests are setting their sights on changing the process for the Judicial Nominating Commission that ultimately appoints judges in Iowa. Under the current system, Iowa lawyers elect one-half of the commissioners to the Judicial District Nominating Commissions while the governor appoints the other half of the members. Lawmakers want to change this so that lawyers no longer elect one-half of the commissioners but rather lawmakers from the political parties would nominate the other half.

Unfortunately, there is a perception on the part of some conservative lawmakers that “left-leaning” democratic lawyers control the judicial nominating commission and therefore are preventing conservative candidates from nomination. The actual facts though paint a different story. Currently, registered Republican lawyers hold the majority of positions on the Judicial Nominating Commissions. When you combine that with the fact that the last two Republican governor(s) have appointed conservatives with their appointments, 12 of the 14 Judicial District Nominating Commissions are currently controlled by registered Republicans. In the other two districts, the votes are split evenly.

But our judges should not be selected on the basis of political control. It should be based upon merit. It is about candidates who have the best qualifications, rather than the best political connections. We have long had an excellent system of justice in Iowa. Like any lawyer or the public, I do not agree with every decision issued by our judges. However, it is my belief that our judges do their best to make our court system fair and impartial. On survey after survey, Iowa courts have ranked high in judicial fairness nationally. Moreover, the positive feedback from Iowa lawyers on the Iowa State Bar Association surveys demonstrates the high quality of work performed by our justices. Even Governor Reynolds has admitted that she has had no problem with the candidates that have been brought to her. If it ain’t broke, don’t fix it.

My partner (and current Iowa State Bar Association President) Tom Levis has an excellent letter addressing the judicial nominating commission issues. I encourage you to read it and we also encourage you to reach out to your lawmakers and let them know that we do not want our judicial system increasingly politicized. We have enough issues and problems in Washington with political squabbling. Let’s keep that out of our Iowa court system.

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A major area of our trial and business law practice consists of non-compete and trade secrets law. We hear all the time from people that believe Iowa is a “right to work” state so that means non-competes are not upheld under Iowa law, right? Wrong.

Non-competes are upheld in cases where the scope and duration of the restrictive period is reasonably necessary to protect the employer’s interest as compared to the employee’s interest. Whether the non-compete will be upheld various greatly on the wording of the agreement and the position held by the employee.

But in a recent article from Seyfarth Shaw on some of the top developments in trade secret, non-compete law and computer fraud, I found it really interesting that government agencies are increasing the scrutiny of non-compete agreements. This is especially true in the case of certain franchises who had “no poach” provisions in their agreements. Lots of times these policies are used to prevent lower-wage workers from moving to higher paying jobs. Often fast food franchise operators have been found to have these sorts of provisions in their agreements. Attorney generals in several states alleged these provisions limited the earning potential of these lower wage employees and many franchisors decided to remove the clauses in the agreements due to pressure from the attorney generals.

Please be sure to read the article link for other interesting developments including a $700 million to a technology start-up In Texas for damages in a misappropriation of trade secrets case.

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I recently had the distinction of reviewing a franchise agreement for the very first prospective franchisee in a franchise. My review revealed there were still many issues to work out in the agreement and with the system in general to make it reasonable for the franchisee. But the potential opportunity was very intriguing to the prospective franchisee due to the financial success of the underlying business. Sometimes it is difficult to balance the legal issues (what I know from past experiences with franchises that have failed) v. prospects of financial success (i.e.the potential for a significant return on investment particularly with a new or inexperienced franchisor).

So what’s a lawyer to do?

In this case, we’re working with the franchisor to make some improvements to the agreements and system. We are asking that they provide us the proper information, disclosures and details. There must be some willingness on the other side to do this. In the early stages I think it’s absolutely critical for a new franchise to listen to that new prospective franchisee for input. It doesn’t mean the new franchisor should just give in to a franchisee. We were prepared to discuss the business case for how our suggested changes would benefit both sides.

So the dialogue is critical particularly with new or inexperienced franchisors. The framework of discussions should be more than what is best for the potential franchisee, but also, what is helpful for the entire franchise long term. If a new franchise won’t work with you on negotiations then it may very well be in your best interest to walk away from a deal. You don’t need to be the guinea pig. Let someone else take that risk. Be willing to walk away. Your savings may depend on it.

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If you’re not a risk taker, you should get the hell out of business.

– Ray Kroc

I read the above quote today, and wondered, is this true? Do you really need to be a risk taker to be in business? And, if you don’t take risks you should actually get the hell out of business. Because as a business lawyer, our whole being is about reducing risks for clients, not advocating for it.

I have worked with entrepreneurs for 24 years as a lawyer. During that time I have also started and run some of my own businesses as well. Perhaps even some would have considered starting this blog a risk when I did so back in 2006. But never have I looked at risk quite the same way as Ray Kroc professed in the above quote. I do believe that business owners must take and accept certain calculated risks. And sure, I have worked with my fair share of business owners who leap first and worry about the consequences later. But generally the most successful business owners have a plan or a system that they know or have proven will work. They may have invested capital, which could be considered risky to some, but almost always those business owners knew they could expect a return from that investment. It wasn’t just a shot in the dark.

So in my mind the best business people are “calculated risk takers”. They don’t just gamble. In my experience, the successful business person actually finds ways to reduce risks as they move forward with their business.

Just thoughts for an entrepreneur to ponder.

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