The Legal Zone (S2:E6): How to Structure & Operate your Business to Avoid Being Sued

Transcript

Host: Regina M. Campbell, Esq., The Campbell Law Group (TCLG)

Guest: Thomas Scolaro, Esq., partner, Leesfield Scolaro, P.A.

Introduction

Regina Campbell: Hi everybody, welcome back to The Legal Zone. I hope everyone's enjoyed our podcast so far. We have the pleasure today of having a new guest, and today, on Season 2, Episode 6 of The Legal Zone, we're going to be talking about how to structure and operate your business to avoid being sued.

Just to recap a little bit of what happened last time: we had Ms. Melva Garcia on. She gave you some tips about the real estate market, particularly luxury home buying and how it's different, and tips on how to do luxury selling in this difficult market. And today, for our topic, we have one of the gurus who's going to help us. He usually sits on the other side from my clients.

Thomas Scolaro: And friendly today.

Regina Campbell: Yes, totally friendly today. But I thought it was very, very important. This is Mr. Tom Scolaro, and he's from Leesfield Scolaro, right?

Thomas Scolaro: That's right.

Regina Campbell: Okay. And he is pretty amazing. He has an amazing background. He's a Miami-based attorney, a personal injury attorney. He's an accomplished trial lawyer who has tried numerous cases, multimillion-dollar cases against businesses. And of his verdicts, I guess the largest verdict you've had is $40.5 million?

Thomas Scolaro: To date, yes. There's always the next one.

Regina Campbell: Oh goodness, I hope it's not one of my clients. But he's going to help us out today. He's represented different individuals and plaintiffs in assault cases related to security, like negligent security cases, some of them malpractice issues, and in general, overall negligence on a larger scale.

Thomas Scolaro: Yes.

Regina Campbell: Okay. He's going to talk to us today about how to help business owners avoid these types of lawsuits. And maybe they'll be surprised by the ways they can get themselves into trouble.

Thomas Scolaro: Yes. I can shed some light on that.

Why businesses get sued

Regina Campbell: Wonderful. I think that's really helpful, because he's experienced. He's a seasoned trial lawyer. He's had to go into court, and he wins verdicts based on what businesses may or may not have done, whether it's intentional or not. I assume there are businesses that actually engage in intentional behavior?

Thomas Scolaro: Yes.

Regina Campbell: They're not just cost-cutting. They're engaging in some behavior to cut costs, and they know it, versus just being negligent.

Thomas Scolaro: Yeah. I would say the larger the entity gets and the more lucrative they get, the more they're supposed to fix the problem. So it's actually part of their capitalism.

Regina Campbell: Oh yeah. Okay, so it's not that they're just so big that they don't realize all the moving parts sometimes.

Thomas Scolaro: Most of these businesses that we take on have quality control departments. They understand when there is a problem, and there is usually a mechanism for them to fix it. But rather than fix it, they just deal with the injury, as opposed to shutting down the line and recasting the machines, ordering new parts, to really fix it and get the problem right.

Regina Campbell: That makes sense, because that costs a lot of money.

Thomas Scolaro: That's not just the proverbial case where there was water down an aisle and they didn't notice it in time. There's a lot of it.

Regina Campbell: Okay, so that makes it a lot more involved. So they're making a calculation a lot of times, it sounds like: fixing it versus one person suing, and...

Thomas Scolaro: Correct. It's a cost. You always hope that what we do, or at least what I do, will result in some sort of change: that the business will learn its lesson and protect itself. And the smart ones do. No one wants to see me a second time. Once is enough. They've gotten the message. But some don't.

Regina Campbell: It sounds like you've done something right, then. They don't want to see you again. Like you said, you've got the message across, and hopefully they're taking it into their business models, as part of their objectives. We like to think sometimes that businesses have social responsibility, or a sense of it. Do you find that?

Thomas Scolaro: I think so. I think more and more, businesses are also thinking about their reflection of their owners, their reflection of their ownership. So if the owner has good community values, if the owner is a civic-minded person, then in large part they tend to run their businesses a certain way. But there are bad actors. We're not all perfect people, and you're going to run into bad actors, and these bad actors have businesses just like anybody else. And you see it: their personality, their style bleeds over into how they run the business, how they view the public, their customers, their partners, their relationships. And if they're a toxic type of person, it just draws...

Regina Campbell: I assume that creates a similar environment.

Thomas Scolaro: Oh yeah. It's totally a reflection of the ownership and management. That's just the way it is. And you hope, the way I run my business and you run yours, that everybody shares in the values we're trying to create and in the mission of the business. But if you are a person who's only focused on... well, that has consequences. Maybe not today or tomorrow, but it will. It's short-sighted.

Regina Campbell: Oh, yeah. And then of course, a lot of times you see some of the larger companies having to deal with public relations when it becomes large enough, right? When the issue really gets out there.

Thomas Scolaro: Correct. And there are a number of instances where that happened. Now, again, I will say there are some businesses out there that, when they have a problem, recognize it and they're on top of it. Whether they have their own internal legal departments or whatever, they're on top of it. They handle it. But there are others that just let it go completely wrong.

Start with the right lawyer and accountant

Regina Campbell: So what can business owners do, the ones that want to make a difference, make a change? What's the number one tip you can give a business owner to help them avoid these types of lawsuits, with negligence and the issues that come about with that?

Thomas Scolaro: Sure. Well, there are two parts to this, and they're very, very related. The very first thing I would say is that you need to have very good counsel. So many folks, when they're setting up their business, worry about how to succeed in business, right? How to stand out, how to do everything right. But what does a lawyer do? A lawyer's job is to protect you, right, and to deal with problems. And if you have a lawyer's input and advice from the beginning, the lawyer is going to see things that you don't see. This is your first or second foray into this business, but the lawyer specializes in this. They've seen the script. They've seen people like me. They've seen business lawsuits and litigation and how things can blow up. They've got the relevant experience.

But a lot of times when people start a business, they don't want to spend the money on that line item, right? That's being penny-wise and pound-foolish. I'm big on sayings, and one of the sayings I have is: buy once, cry once. Spend a little bit at the beginning for sound, competent representation in terms of how you're structuring your business, the forms your business uses, the internal policies and procedures you use, how you deal with vendors or your landlord, your customers, anything where you're engaging with the public especially, and how to protect you. What does somebody who's selling pancakes know about that? Or somebody who wants to start a bakery, or somebody who wants to open a restaurant? They don't know the potential ways they can get into trouble. They know how to bake bread.

Regina Campbell: Yes, they know how to cook. The recipes.

Thomas Scolaro: But we live in a world of sharks. It's just the way it is. And if you are not protecting yourself from the beginning, it's a painful lesson to learn down the road.

The reason why I say it's interrelated is that the business owner is focused on making the business succeed, right? That is their singular focus. But who is watching his flank? Who's watching his back? Who's got his six? He or she is not thinking about that. But hopefully they've engaged with a lawyer to begin with, to look at and anticipate those issues, because if you deal with them at the front end, it's so much easier. You can eliminate most problems.

Regina Campbell: Yes. Well, I see business owners from start to finish, so to speak. Some of them are just starting out: "I'm going to do this right. Make sure I'm registering." There's so much to this: from business registrations to workers' compensation to HR. Even if you're small, you still need some form of HR policies and procedures in place, and with your vendors. And they always say the other thing you always want to do is have a good accountant, so that even if you don't have a lot to talk about now, you've established a relationship, and you can call up and go, "Hey, listen, I'm going to do this. Is this okay? How am I supposed to categorize this? Is there a way to make this more tax-efficient?" And a lot of them will answer that question, or they may say, "Well, what did your lawyer say about doing it this way?" So sometimes it's a dance. And I always try to tell them that as you grow... the same way a lot of business owners don't understand cash flow. You have to anticipate it.

Thomas Scolaro: Yeah, especially in what I do, my world. I don't bake bread. I'm a litigator, right? But behind all that, there's a business. We have employees, HR issues. I've got customers, my clients. I've got to deal with vendors. I've got to deal with insurance. We've got all of that, and cash flow, especially in my world. I don't work on an hourly basis. I work on contingency. I don't have an influx every month of residuals. So I have to anticipate that some months are going to be lean and some months are going to be big hits, because we're 100% straight contingency. And I don't control when the other side comes around.

Regina Campbell: No.

Thomas Scolaro: I can just help them see the light.

Regina Campbell: But when a case gets set, trials can be delayed. Some hearings can take months to get a judge to hear you. And clients, I'm sure, also get weird. The other side gets weird, for lack of a legal term.

Thomas Scolaro: Businesses, and mine is not immune to it either... everybody had to deal with some level of adjustment when COVID hit.

Regina Campbell: Right.

Thomas Scolaro: Because of everybody's cash flow. Most businesses were affected in some way. In our business we were affected because we couldn't get trial dates. And everybody in the hospitality business was affected because people weren't allowed to go out to eat. People weren't allowed to go to the bars. So how do they anticipate those problems?

Regina Campbell: Or traveling.

Thomas Scolaro: Exactly. But getting with an accountant and a business lawyer from the beginning to establish those relationships is critical. I try to practice what I preach most of the time. We've had the same accountant forever, the same business lawyer forever. I try to have the same office staff forever. The woman who answers my phones at the office is the same woman who was there when I was hired, back in the '90s.

Treat your people well

Regina Campbell: That speaks well of your environment, then, because it's hard to keep people these days. You're doing something right.

Thomas Scolaro: Very hard. And that takes you to the other part of operating a business and making sure you don't get sued: treat your people well.

Regina Campbell: Oh, yeah.

Thomas Scolaro: Oh my Lord, the problems you could avoid if you just treat people well. They taught us that when we were kids, right? Treat somebody like you want to be treated. If you do that, you're not going to get sued.

Regina Campbell: No, you're not. And people are going to be happy. And my clients are like... someone has to put these policies, these employee policies, together, and they're like, "But hey, it's only one guy. I really don't know the rules," or whatever. I'm like, "Yes, but because this could happen, and this could happen, we're going to put it together." "But don't penalize everybody else by making things stricter because of one guy." And they say, "Regina, this happened. She thought I was going to pay her for this, and I didn't think I was." And I said, "Has she always been a good employee?" "Okay." "Then err on the side of caution and pay her. Treat her well."

Treat people well. And do exit interviews, so that you know what happened. You can learn if you have a bad manager, or someone doing certain things that are incorrect, or possibly veering outside of company policies or procedures. You're able to identify the potential risks that are going to come down the road if someone is just firing somebody randomly, not giving them warnings, not doing it the way you taught that manager to act. And potentially, it's a lot harder to replace people. It's more expensive. It's an unknown.

Thomas Scolaro: We've got a whole ton of situations, and not just in this world. Every industry, I think, across the board is affected by that.

Regina Campbell: Yes.

Thomas Scolaro: I talk to my friends in finance, the restaurant business, insurance. Everybody's got the same issues as the legal field. I don't know what it is, but we just can't draw people.

Regina Campbell: Oh, it's been crazy. Absolutely crazy.

Thomas Scolaro: I was making some small talk with your office folks here: if anybody knows any legal assistants, let me know, because we are hiring.

Regina Campbell: Yes. I just told him, "Eyes off mine."

Thomas Scolaro: I don't poach. I know people who do, and I don't like it. So no, I don't poach.

Regina Campbell: No, it's just funny, because it is actually hard. I have found myself restricting some of the things that I do, particularly because of the difficulty of finding more employees or more attorneys. I'd rather keep the quality than try to continue to expand in some ways, if I can't maintain a certain level of quality.

Thomas Scolaro: Correct. Your growth is dictated in large part by the quality of the people that you have out front. Can they self-sustain? Can they start managing more tasks and taking more responsibility? Do I have the ability to let them go, so I can start attracting new business and leave them on their own, with supervision, obviously? That's a balance. But if you have quality people, you can make that stretch, and you treat them right.

Regina Campbell: And you also want to see the growth. They like to be treated right for doing a good job. That includes bonuses where you can, increases in pay. Sometimes my staff doesn't realize... I just give them a bonus, whatever you can do. I listen carefully to their lives as well. We're all humans. It's not as if you don't have things going on in your lives. So there's a distinction between an employee who always brings all their personal problems to work versus someone just going through something who might need a little more flexibility at the time, but they don't abuse it. So you give it to them.

Thomas Scolaro: Exactly. And my clients see that as well. Think about it: we can't deal with our clients all the time, so sometimes they have to deal with our legal assistants and paralegals. And I have 100% confidence in everybody in my office dealing with even the most difficult clients, because they're good people. I like them. I'm a tough guy to get the stamp of approval from. And if I like you, my clients are going to like you. It just makes life so much easier.

Regina Campbell: Yes. And you give them that level of trust, because people want to feel valued.

Thomas Scolaro: And if you give them the runway to have responsibility and to be valued, and you treat them right, you're going to eliminate that worry about somebody coming back and suing you at the end of the day for some stupid little HR violation, or some technicality, or some unpaid time off.

Regina Campbell: Because you treat them right.

Thomas Scolaro: You treat them right. And you make sure that if something's wrong, you fix it.

Regina Campbell: Fix it. There are mistakes that occur. But, "Okay, oh wait, you're right. Okay, here you go."

Communication and partnerships

Thomas Scolaro: And then you go out to them and communicate with them. Communication is another huge thing, because again, the business is a reflection of us. If you're somebody who is tight-lipped, who doesn't like to talk a lot, that's going to reflect in problems down the road. It's almost like when you have a business, you have to flip a switch.

Regina Campbell: Yes. You have to become a business leader who has all of these skills.

Thomas Scolaro: Because if you don't, you'll have problems. And if it's not natural to you, well, you buck up.

Regina Campbell: Right. Either you buck up, or you're going to have to get someone who's going to help complement you.

Thomas Scolaro: Exactly. A partner or a manager or somebody. 1,000%. Everybody's got their strengths and weaknesses, right? I'm far from perfect. But it's balanced: he makes up where I fall short, and hopefully I make up where he falls short. That's just the way a good business runs. I've been with my partner for a long time, so we have a good relationship. And that's another key to not being sued: have a good relationship with your partners. And if you don't, again, it's that friction that's underlying.

Regina Campbell: Dysfunctionality is going to come out.

Thomas Scolaro: Yeah. Well, listen, if you come from a dysfunctional family, like I do, right?

Regina Campbell: Most of us do.

Thomas Scolaro: Yeah. It's easy to see how that can become a problem in your business, that dysfunctionality. So, boy, I made these mistakes in my personal life. I kind of don't want them in my business.

Regina Campbell: They learn. Because you don't want to bring the issues that you carry, your kinds of problems, into your business. And you spend so much time doing business, so much time doing your work. So you need to have good personal relationships and business relationships.

Thomas Scolaro: I agree.

Customer service and minding the shop

Regina Campbell: I have another question, also, speaking of being short-staffed. I have definitely noticed... and I've become a little bit cranky, don't get me wrong. I've had difficulty even at my doctors' offices, most places I go. And I think some of it has been because of the shortage in staffing, and I understand that as well. So I kind of go, "Okay, that's all right. This is more complicated." I try to calm down. But how do business owners deal with that? Because sometimes it affects safety, legal issues, all the different things that we just talked about. I can go into a business sometimes, and without meaning to, right, all of a sudden you have a different world.

Thomas Scolaro: Yeah. At the end of the day, you've got to remember that most of us in business are in the customer service business. So we have to be accessible. We have to be accountable. We have to listen. We have to take everybody's concerns seriously. And it's a lot. It's a lot of listening, dealing with this person's problems, or this vendor's problems, or opposing counsel's problems, or my bread supplier's problems. You have to listen to people's problems. And business is not about kicking your heels up on the desk and watching people do the work.

Regina Campbell: Maybe on TV.

Thomas Scolaro: But not in the real world. Business is a job, and you have to treat it like a job. If you don't water it, if you don't nurture it, if you don't treat everybody well and listen to people, if you forget that you're in the service business, you're going to have problems down the road. And I come to my job a little bit differently than others.

Regina Campbell: You're from New York, right?

Thomas Scolaro: Well, I was actually going to raise this. When I was in New York, there was this old-time TV commercial, and some people may know what I'm talking about. It was called the Hair Club for Men. I don't know if you remember that. The guy's shtick was, "I don't just run the business. I'm also a member." So I come into my world never forgetting that lesson. I was a client before I ever became a lawyer.

My background is that my brother got into a very terrible motorcycle accident when I was a kid in school. And I had to hire a lawyer. I had to do all that. I had to find the person and make sure I had it. So I remember the anxiety, and I wear that every day. I understand what it is to be a client, and I understand what it is to have that anxiety. And if you always put yourself in the shoes of your customer: what does my customer expect? What does my partner expect? What can I do to bring value to them, to this relationship? You're good. It sets you up for success.

Regina Campbell: Yes, it does. And you'll catch something that's lacking. With this communication, you're going to see where you're not thinking about some person.

So what would be... I know it must be very varied by industry and type of business as well. But is there something you would say to businesses that's crucial? Is it documentation of incidents? Is there one thing that sticks out across industries that businesses don't seem to be able to do?

Thomas Scolaro: Yeah, it's very varied, right? Depending on the business and what you do. The financial services business is different from the bakery or the restaurant or the bar. But if I can speak more globally on this, and this is a little cliché: you have to mind the shop. You have to understand what it is, and always be looking at your six, always looking behind you. Because you can never let your guard down. It is a never-ending cycle. And if you don't have the stomach for it, be an employee.

Regina Campbell: Yeah, I see.

Thomas Scolaro: So you always have to have that vigilance, always understand that something can go catastrophically wrong today, and just keep your eyes open and anticipate. Half of this is anticipation. If you can anticipate...

Regina Campbell: Yes, you can prevent and mitigate.

Thomas Scolaro: Exactly. There are strategies you can use to minimize that. You can have very clear written policies and procedures that your employees are trained on, that your staff understands. You can have clear, understandable, consistent documents.

Regina Campbell: Safety rules too, I assume.

Thomas Scolaro: Exactly, safety rules for sure. And you can standardize things a certain way and make sure there's no variation, that somebody doesn't go rogue. People go rogue.

Regina Campbell: They're always going to. You can't protect against everything in life. If someone goes rogue once in a while, it's not something you're likely to catch. But if they're doing it for years or months, by that point you probably should have caught it.

Thomas Scolaro: Oh, yeah, for sure. Especially when we talk about financial crimes.

Regina Campbell: Oh, yeah. And you're not checking the books.

Thomas Scolaro: If you are not watching and making sure where every penny goes...

Regina Campbell: Absolutely.

Thomas Scolaro: You could have the greatest heart in the world, and somebody can be leading you on.

Put it in writing: operating agreements

Regina Campbell: A lot of my clients are trusting. It starts with, "Well, we had this arrangement," or "We did this. This is my business partner. I put $100,000 in, and this occurred, and now they're saying I'm not even an owner." Crazy stuff.

Thomas Scolaro: You just can't let your guard down. If this was the business deal, and they were itchy or sketchy about putting something in writing about your rights, that's the first red flag.

Regina Campbell: Exactly. Right.

Thomas Scolaro: And people get pulled into this: "Well, it's a good opportunity." Look, if it sounds too good to be true...

Regina Campbell: It usually is.

Thomas Scolaro: It probably is. Exactly.

Regina Campbell: And a lot of times, I see it specifically in Miami.

Thomas Scolaro: Well, Miami is another story.

Regina Campbell: I heard about four new frauds this week, and I'm like, "Oh my gosh, I didn't think it could get worse."

Thomas Scolaro: Miami is special. There is so much. And you see it, obviously, so much more than I do: all the different ways people try to play these fraud games. I'm sure you've got stories. And they look legitimate.

Regina Campbell: They do. They look legitimate. They look absolutely genuine.

Thomas Scolaro: So again, pointer: vet who you're going into bed with. I mean, listen, this is the age of, what is it, Tinder and swipe left and right. Not that I'd know. I've been married for a very long time.

Regina Campbell: You can find a lot of things on the internet nowadays that you could not easily find out about people before. And people say, "Oh yeah, you know me. I'm your sister's cousin's friend, so-and-so. I wouldn't do that to you and your family." That's a red flag. You've got to be careful with those. That's the first one. Because it's always, "You don't need it in writing. Lawyers are a pain. They're ridiculous." And then they come to me later, $300,000 later, and they're like, "I gave them this money." And I'm like, "Do you have it anywhere? Have you documented anything?"

And then they're actually hostile with me, like they don't trust me anymore, because of course they've been burned so badly they don't know who to trust. And then I tell them how difficult it is. Yes, this is the United States, but this is what you have to do with this kind of action. "I have to lose my money, and then I have to pay all this money to try to sue them to get it back?" I'm like, "That's the system." That's also why it's better to just have things in writing, have a contract. And even then, people still breach.

Thomas Scolaro: Exactly. My wife... I'm a lawyer, and she does land development. And she's getting into a deal. Everything's nice. They have great relationships. Everything's right. But both of us insist: we're going to put everything in writing. That's the best way. Nobody's going to get their feelings hurt, because we're professionals. We understand it. There's got to be an operating agreement. If you run a business, if you have any sort of partnership or joint venture, you must, must, must get with a lawyer to draft an operating agreement. Because if you don't: "Oh, I'm supposed to do that?" "No, no, no, you said you would do that."

Regina Campbell: "How much am I supposed to contribute?" "Well, who gets paid out first?"

Thomas Scolaro: Yeah, exactly.

Regina Campbell: "But I worked all this and you only gave this. That's not fair."

Thomas Scolaro: Yeah, exactly. But it was fair three years ago.

Regina Campbell: Yeah. So if it's written down and done... A lot of times people are like, "Well, I'm a half owner, so..." And I'm like, "Yeah, but do you know what the statute says? You don't want to know what the statute says." And they've locked you out, and you're not getting your salary anymore. If you're completely locked out, okay, it's going to be six or seven months, maybe, before I can get you back in, assuming the judge agrees that's the best solution. So keep in mind: have an operating agreement.

Thomas Scolaro: Operating agreement. It spells out who has to do what, and it makes it a lot easier.

Regina Campbell: Yeah, that's exactly it. As opposed to, "Oh, you've got a trial on this. Now let's have a three-day trial so I can figure out what's what."

Thomas Scolaro: Yes, yes. As opposed to it being spelled out in a document. And that's just the best practice, right? And honestly, with legitimate business partners who really mean business...

Regina Campbell: Because if you have someone who does things loosely, you have to decide whether you want to be in business with them, right? Because it may not be your style, it may not be your cup of tea, or you're not willing to risk the same way they risk.

Thomas Scolaro: Put your money where your mouth is.

Regina Campbell: Yeah, exactly. So if you're not willing to actually put down in writing what you say, then is it really there?

Thomas Scolaro: Is it really there? So they want a fluid situation. That's another red flag.

Regina Campbell: Exactly.

Thomas Scolaro: You're not going to hurt my feelings by listing it out, baby. We're all adults here. This is not some high school club where somebody's going to get their feelings hurt. This is the real world, the business world. Put it out on paper: "This is our money. I'm willing to invest in this. I'm not willing to invest in something that can turn into something else over here." So either we do it or we don't.

Regina Campbell: And you've got to be willing to walk away.

Thomas Scolaro: Yeah, I guess you do. Because, okay, you may be walking away from an opportunity, but was it ever really a good opportunity, right?

Regina Campbell: Yes, exactly. Or are you walking away from a potential lawsuit right there? But people don't realize how bad it can get sometimes.

Thomas Scolaro: Ask a lawyer, I'm telling you.

Regina Campbell: Yeah. Well, they ask me things, and I'm like, "Wait, this can happen in a second." And they're like, "Regina, oh my gosh." There are so many ways something can go wrong. And they're like, "Hey, you're like doomsday." I'm like, "No, no, no, hold on a second. I hope it goes very well too. But you're going to have trouble down the line if you have these issues and don't take care of them."

Thomas Scolaro: I agree. And by the way, do you know how many businesses have broken apart? They did very well in the first year or two, and now they can't agree about what they're going to take, what cut they're going to take, what expenses they can deduct when it's not proper, and they have no agreement.

Regina Campbell: And now they're fighting.

Thomas Scolaro: Which goes back to what we said at the beginning, right? Have a good lawyer who understands and has been around the block a few times. Because this is all about anticipating what can go wrong. And you, as business owners, are novices. How many cases have you litigated, Mr. Restaurant Owner? Tell me how it went. No idea. They don't know how it can go wrong. And so that's why you have to...

Regina Campbell: And I educate my clients on this, especially as general counsel for numerous businesses. You can't just incorporate. Even simple stuff: when you get here, make sure you're looking at insurance requirements. I try to give them a schedule for when they should be coming back and thinking about these things, if they're in working order. And I even say that even when you're stable, you want to go back every so often and do an audit of your HR employment policies and certain things, to make sure you're up to date and you know what's going on. It's a little bit expensive initially, but trust me, these lawsuits are much more expensive.

Insurance

Thomas Scolaro: You said something very crucial there that a lot of people just don't think about or anticipate. That's what I was going to say. The amount of problems, the anxiety, that could be eliminated. So many businesses, again, don't want to pay that line item. They're starting out, and capital is hard to come by. But you've got to protect your downside, and insurance is there for a reason.

Regina Campbell: Especially in Miami. It's a litigious place.

Thomas Scolaro: It just is. And 1,000%, if anybody walks away from here with only one piece of advice from me, it's: make sure you are well insured, and well insured for the risks that your business takes.

This may sound crazy, but it's actually true. Some of my cases involve death and personal injury, things of that nature. There was one occasion where a young man was visiting, and he rents a stand-up paddleboard. You know where this is going? He's out there, he falls off, he drowns and dies. A bigger problem for the business owner: she thought she had insurance, and she did, but her agent never told her that there was an exclusion for paddleboards. How can somebody issue an insurance policy to a stand-up paddleboard business and not tell them that?

Regina Campbell: Oh my God. What do they need insurance for, then?

Thomas Scolaro: Anyway, don't try to buy it from the TV commercials or something. Get yourself a real, licensed, bonded insurance agent. Go over what your business is, and make sure the risks that you have are covered.

Regina Campbell: Yes, yes.

Thomas Scolaro: That may sound silly, but I probably have two dozen stories like that. And so think about it: what do I do? I'm not going away. It ain't my problem that you didn't have insurance. So either you're going out of business, and I'll put you there, or I'm going to make your life miserable until you give me an assignment to sue your insurance agent.

Regina Campbell: Yeah, that's right.

Thomas Scolaro: Some lawyers will go away, but you're going to run into somebody like me. I'm not going to.

Regina Campbell: I know. Since I'm kind of the GC for a lot of businesses, in general they tend to have insurance. So they say, "Okay, my insurance carrier, they're going to provide me a lawyer?" You have an insurance company, so go ahead and call them up. They call back, and they're like, "Oh." This is going to be painful. I don't want to deliver this news, you know what I mean? And then they want like hundreds of thousands of dollars, and this and that.

And that can happen with workers' comp. It can happen with general insurance. We've actually seen numerous cases. You don't realize it: you might have what appears to be a good policy, but if you have two incidents, two severe accidents in the same year or at the same time, you might not have enough coverage to cover both of them.

Thomas Scolaro: Yes. People don't realize that. There's an aggregate each year.

Regina Campbell: Yes, correct.

Thomas Scolaro: And one bad accident, or one bad incident or episode, is all it takes.

Regina Campbell: And some of them don't realize that. It might be 100/300, but you might not get $100,000 for a particular incident. And if it's a severe incident, it won't be enough.

Thomas Scolaro: The amount of cases that would be solved with adequate insurance, or some sort of umbrella coverage... because I see the ways somebody can get hurt, injured, killed, sued, everything. I've got eyes on that.

Regina Campbell: Yeah, that's great. You must be thinking of all the dangers and everything.

Thomas Scolaro: Oh, I'm like Jason Bourne in The Bourne Identity. I'm counting the exits before I get in, or anything like that. But part of that education is: like me, I'm very well insured. I need to be, because...

Regina Campbell: Yes, yes.

Thomas Scolaro: I'm a target too.

Fraud and cameras

Regina Campbell: Well, anybody can fall outside my building here, and it could be an accident, but still, you fall. It can happen. So you have to be aware that these things can happen without intention. And some people do this intentionally.

Thomas Scolaro: They do.

Regina Campbell: This is the fraud capital of the world, if you ask me.

Thomas Scolaro: And I'm a plaintiff's lawyer, but I personally think that anybody who's involved in fraud should fry.

Regina Campbell: Yes.

Thomas Scolaro: It's destructive to the system. It's destructive to legitimate business owners. It games the system. It increases the price of everything.

Regina Campbell: It increases the price of everything.

Thomas Scolaro: The price of everything. And then the prices of all the goods and services go up. And anybody who engages in that trade, I absolutely think they should throw the book at them, and whoever was involved, including their lawyers. Their parents, whoever gave birth to those people, should be fried.

Regina Campbell: But it's here. It's here. It's not going away. I tell my clients all the time: they drive an expensive car, and they might come from a different country, and they already know the risks in their country, because they understand the system. They come here and think we might be more straight, so to speak, because everything here is like, "Oh, we have laws, we have rules." And I'm like, "That car alone, you will attract attention."

Thomas Scolaro: Yes. This is why I don't wear jewelry. I'm like, my watch is broken. I don't wear anything.

Regina Campbell: Yeah. I don't want to be their target.

Thomas Scolaro: Absolutely. It's not worth it. And the other thing I would say in terms of this, and this is always my advice, may seem like a small thing, but it's not: cameras.

Regina Campbell: Yes.

Thomas Scolaro: Put cameras everywhere.

Regina Campbell: Yes, yes, yes.

Thomas Scolaro: Save it for 30 days. Have a document retention policy that you're retaining all the video for 30 days, or whatever, before it automatically records over. But put that policy in writing, so you can't be accused of messing around with the cameras. Protect yourself with cameras, because you will catch the fraud.

Regina Campbell: Yes. Oh, Lord, yes, you will.

Thomas Scolaro: And if there is a legitimate incident that happens...

Regina Campbell: You'll see exactly what happens.

Thomas Scolaro: You'll see exactly what happened. Give it to your insurance carrier and resolve it.

Regina Campbell: Yeah. Because sometimes, and people don't really realize this, depending on the activity the plaintiff was involved in, there is possibly some liability on them too, for their behavior.

Thomas Scolaro: And it's obvious. Exactly. You can see the comparative negligence. You can see it all. But if there is a legitimate claim, look, resolve it. It'll keep the litigation cost down. And again, you want to escape that episode with as little damage as possible to your premiums, your business or your reputation. So look, nobody's perfect. We all make mistakes. But in this day and age, put up cameras.

Regina Campbell: Yes, I agree. They're not as expensive as they used to be.

Thomas Scolaro: No, it's nothing. It's a very small line item. It doesn't have to be anything super fancy. People can get these cameras installed for just hundreds of dollars. It's not tens of thousands.

Regina Campbell: Like it used to be.

Thomas Scolaro: It used to be kind of cost-prohibitive. And look, one of the things I do is negligent security cases and premises liability, things of that nature. You would be shocked at the number of places that don't have cameras set up in high-crime areas. Cameras are a level of deterrence for bad actors. Nobody wants to get caught. If they see cameras everywhere, they know they'll get caught. Crime goes down, especially in a high-crime area.

Regina Campbell: You want to put that up. A lot of people don't do it.

Thomas Scolaro: I'm litigating with a very big South Florida company right now, a negligent security case involving the horrific death of a father, which was needless. They had no cameras up. There were multiple requests for cameras. If they had just had those cameras up, and other things right there, this doesn't happen. And look, it doesn't need to be. You don't need that heartache. These people didn't need to lose their father. I didn't need to work on that case. But people make foolish decisions sometimes because they don't want the cost. Yes, I know. Then don't go into this business.

Regina Campbell: Then, like I said, just stop. It's the vigilance we're talking about. Even though they've been doing this for 20, 30 years and they're used to the old school, I get it. But you have to be able to adapt to the circumstances. That's the most important thing.

Thomas Scolaro: Think back to it. When we're consumers too, we feel good when we're on a property that's safe. We feel good when we know that there's surveillance, there are lights.

Regina Campbell: Exactly. It's lit up.

Thomas Scolaro: And we have a feeling of safety. So if we enjoy that, if we have that good experience, why can't you give that to your residents, your tenants? It goes back, again, to the old saying: treat people like you want to be treated. And if you have that mindset when you're engaged in your business, whatever it is, a lot of your problems are going to be gone.

Closing

Regina Campbell: I think we've covered quite a bit today.

Thomas Scolaro: I think we have. I probably didn't stay on script.

Regina Campbell: No, no, don't worry. I usually don't. I have a tendency to... actually, when I look at my script, sometimes it throws me off. So it's wonderful. I think it's a more fluid conversation. And my hope is to bring some of these points to my audience, a lot of the business owners, and of course the people out there too, so they also know what to look for if they have an incident as well. And hopefully my business owners learn why. There is a face to this. There is a reason why: not just because you want it for yourself, but because you want to treat people the way you want them to treat you. You want to be treated well.

So many of my business owners put their blood, sweat and tears into their businesses. They really do. And I think this can seem like a boogeyman sometimes that can come out of anywhere. So sometimes this gives them an idea of how to mitigate these things, how to look at it a little bit more objectively, and not be so scared of things. Because sometimes when they're so scared, they might actually retract and be like, "Oh, there are too many things to fix or do or even know, and there are people trying to steal from you all the time." It can seem so overwhelming. They put so much effort into their businesses, and they want to keep making the bread. They want to keep doing certain things. This is part of their life.

Thomas Scolaro: It is. It is. It's just another part of business.

Regina Campbell: So hopefully people have gotten some advice out of this and some pointers. We can't cover everything, but...

Thomas Scolaro: The thing I always tell everybody: if anybody's got any questions, I'm sure they can call you. And if anybody's got any questions about what I do, I will answer them.

Regina Campbell: And we're going to put up your link, your phone number and everything when we post. Everything's available on the website.

Thomas Scolaro: Any questions? And if you have a business, call Regina. Get protected from the beginning, not when it's too late. My advice, free advice, right there.

Regina Campbell: Yes, I'd like to help, and trust me, I'm one of those who's actually pretty proactive and preventive. I want to thank you for coming. It's been a great interview, and a great time spending time with you and having you help us.

Thomas Scolaro: Excellent. Glad to be here.

Regina Campbell: Yes, definitely. We want to thank everyone for tuning in, and hopefully this has been very helpful. If you've missed any of our prior podcasts, please feel free to go on Buzzsprout, or on the Apple platform, or Spotify, where we have various different podcast episodes. And we'll post on our social media accounts. We look forward to seeing you in the future. Take care.