Tag: Paul Fenaroli

Legal Challenges for Fitness Influencers

Posted on by Kelly McElroy

As a fitness influencer, the journey to stardom on social media is as challenging as it is exciting. Understanding the legal landscape is crucial in safeguarding your interests and ensuring your career thrives amidst the dynamic demands of content creation and brand collaborations. Here are key insights to help you navigate these challenges:

  • Understanding Contracts: When partnering with brands, clear and comprehensive contracts are vital. These agreements ensure that both parties’ expectations and obligations are explicitly outlined, helping to prevent misunderstandings and disputes.
  • Intellectual Property Awareness: Your content is not just a reflection of your creativity but also a crucial business asset. Protecting your copyrights and trademarks is essential to maintaining control over your work and reinforcing your brand’s value in the marketplace.
  • Regulatory Compliance: Adhering to guidelines set by entities like the FTC and respecting platform-specific rules are foundational to building trust with your audience. Transparent disclosure of sponsored content and conscientious privacy practices are not just good ethics—they’re good for business.
  • Risk Management: Proactively identifying and addressing potential legal issues before they escalate can save you from future headaches. Understanding common pitfalls in the influencer industry can help you navigate smoothly and confidently.

By focusing on these core areas, you can build a more secure and successful career in the fast-evolving world of social media. For those seeking deeper dives into specific topics or facing unique challenges, consulting with a legal expert who understands the nuances of the influencer industry can be invaluable.

Remember, the path to success is best navigated with knowledge and preparedness. Equip yourself with the right information and support to continue inspiring your followers and achieving your business goals.

Legal Essentials for Fitness Influencers: Navigating the Complexities

Posted on by Kelly McElroy

In the rapidly expanding world of fitness influencers, understanding and adhering to legal standards is crucial. As influencers transition from fitness enthusiasts to public figures, their legal needs become more intricate and vital to their continued success and brand integrity.

Intellectual Property Rights. Fitness influencers often create unique workout routines, slogans, and branded content. Protecting this intellectual property is essential to maintain exclusivity and leverage for monetization. Registering trademarks for brand names or catchphrases can safeguard an influencer’s business assets.

Contract Law. Influencers frequently engage with brands for endorsements and sponsorships. It is important to understand the terms and conditions of these contracts thoroughly. This includes compensation, deliverables, the scope of work, and termination clauses. Professional legal advice can prevent potential conflicts and ensure fair agreements.

Disclosure and Compliance. Influencers must comply with the advertising guidelines set by regulatory bodies such as the Federal Trade Commission (FTC) in the U.S. This includes clearly disclosing any partnerships or sponsorships in their posts to maintain transparency with their audience. Non-compliance can lead to hefty fines and a tarnished reputation.

Liability Issues. Offering fitness advice online can be tricky. Without proper disclaimers, influencers might be held liable for any injuries or damages that occur from followers attempting their routines. It is advisable to clearly state that content is for informational purposes only and not a substitute for professional medical advice.

The intersection of fitness and law may seem overwhelming, but it is indispensable for influencers aiming to build sustainable and compliant brands. Consulting with legal professionals who specialize in digital media and entertainment law can provide the necessary guidance to navigate these waters smoothly.

For fitness influencers, the digital stage is fraught with potential legal issues, but with the right knowledge and support, they can continue to inspire and engage responsibly and profitably.

Resolving Partnership Disputes in the Fitness Industry

Posted on by Kelly McElroy

In the dynamic fitness industry, partnership disputes can emerge from differences in business vision, management styles, or financial expectations. Effectively resolving these disputes is critical for maintaining the operational health of any fitness business. Here’s how disputes can be navigated through legal strategies:

Negotiating Operating Agreements and Shareholder Agreements

The foundation for preventing and resolving disputes lies in well-crafted operating agreements for LLCs and shareholder agreements for corporations. These documents act as a blueprint for business operations, detailing the distribution of profits and losses, management duties, and dispute resolution mechanisms. Clearly defined rights and responsibilities, coupled with clauses like buyout options or decision-making processes, help mitigate conflicts before they escalate.

Mediation

Mediation is a preferred strategy for its efficiency and its focus on preserving professional relationships. This process involves a neutral third party who assists the disputing partners in finding a mutually satisfactory resolution. Mediation is informal, cost-effective, and quicker than traditional legal processes, making it ideal for resolving disputes while maintaining ongoing professional relationships within the fitness community.

Litigation

While often seen as a last resort due to its public nature and potential costs, litigation is sometimes necessary to resolve deep-rooted disputes decisively. For those in the fitness industry facing such scenarios, engaging with a specialized firm like Pastore LLC can provide the expertise needed to navigate complex legal landscapes. With extensive experience in litigation, Pastore LLC offers robust representation, ensuring that clients’ interests are effectively protected and advanced in court.

Arbitration

Similar to litigation but conducted outside of court, arbitration involves resolving disputes through an arbitrator or a panel. It is generally quicker than court proceedings and can be kept confidential, which helps protect the business’s reputation. Many agreements in the fitness industry might mandate arbitration as the method for dispute resolution, emphasizing its role in efficient conflict resolution.

Effective handling of disputes in the fitness industry requires a combination of proactive agreement drafting and strategic use of resolution methods. Whether through mediation or litigation, it is important to address conflicts swiftly and effectively. Firms like Pastore LLC play a crucial role for those needing to pursue litigation, providing expert guidance and representation that aligns with the best interests of the business. In every case, working with legal professionals adept in these areas can help safeguard the longevity and success of your fitness enterprise.

Key Regulations Concerning NIL Deals

Posted on by Kelly McElroy

Since the NCAA’s policy change in 2021 allowing college athletes to profit from their Name, Image, and Likeness (NIL), both states and schools have scrambled to adopt regulations to govern these deals. While specific rules can vary widely depending on the jurisdiction and institution, several key regulations have emerged as common themes across the country. These regulations are designed to protect student-athletes, ensure fair play, and maintain the integrity of college sports.

Key Regulations Concerning NIL Deals

  1. Disclosure Requirements. Many states and schools require student-athletes to disclose NIL deals to their institution. This ensures transparency and allows schools to monitor compliance with NCAA rules and state laws.
  2. Prohibition of Pay-for-Play. Regulations commonly prohibit NIL agreements that directly pay athletes for their performance on the field or court. The intent is to distinguish NIL compensation from pay-for-play arrangements, maintaining the amateur status of college athletes.
  3. No School Involvement in Securing Deals. There is a general prohibition on schools being involved in negotiating NIL deals on behalf of their athletes. This aims to prevent conflicts of interest and ensures that NIL deals are made independently of the athlete’s participation in collegiate sports.
  4. Compliance with School and Conference Policies. Student-athletes must comply with policies set forth by their schools and athletic conferences. These policies often include restrictions on partnering with certain types of businesses (e.g., alcohol, tobacco, gambling) and guidelines on how athletes can use school logos and trademarks.
  5. Education on NIL and Financial Literacy. Recognizing the complexity of NIL deals and their potential tax implications, some states and schools mandate or encourage education programs on NIL, financial literacy, and contract law for student-athletes.
  6. Agent Registration and Certification. To protect athletes from exploitation, regulations often require agents and advisors involved in NIL deals to be registered and certified. This helps ensure that those representing student-athletes are qualified and adhere to professional standards.
  7. Conflict of Interest and Endorsement Limitations. Rules may restrict deals that present a conflict of interest with existing school sponsorships or that are deemed detrimental to the school’s image and values. Athletes are typically barred from endorsing products or services that conflict with NCAA rules or school policies.

Impact and Considerations

The patchwork of state laws and individual school policies creates a complex regulatory environment for NIL deals. While these regulations aim to provide a framework for the ethical and fair conduct of NIL activities, they also present challenges. Compliance can be burdensome for student-athletes and institutions alike, necessitating careful navigation of the legal landscape.

As the NIL space continues to evolve, further adjustments to regulations are expected. Stakeholders, including lawmakers, educational institutions, and advocacy groups, are closely monitoring the impact of NIL deals on college sports to ensure that the regulations serve the best interests of student-athletes, schools, and the broader sports community.

(Paul Fenaroli  (former NFL Athlete) is an Associate Attorney at Pastore, a law firm that helps corporate and financial services clients find creative solutions to complex legal challenges. He can be reached at 203.658.8470 or pfenaroli@pastore.net.)

Navigating the New Frontier: The Rise of NIL Collectives in College Sports

Posted on by Kelly McElroy

The landscape of college athletics has undergone a seismic shift with the introduction of Name, Image, and Likeness (NIL) rights, granting college athletes the unprecedented ability to profit from their personal brands. Amidst this transformation, a new concept has emerged at the forefront of the NIL era: NIL collectives. These entities, often formed by universities, alumni groups, and third-party organizations, are rapidly reshaping the dynamics of college sports, providing a structured platform for athletes to capitalize on their NIL opportunities while ensuring compliance with the complex web of regulations governing these activities.

The Purpose of NIL Collectives

At their core, NIL collectives serve as bridges connecting student-athletes with businesses and brands interested in leveraging the athletes’ NIL for endorsements, sponsorships, and other promotional activities. By facilitating these deals, collectives not only help athletes monetize their fame but also ensure that such agreements adhere to state laws, NCAA rules and school policies.

Beyond deal-making, many collectives are committed to providing athletes with resources and education on financial literacy, personal branding and the legalities of contract negotiation. This holistic approach is crucial, empowering athletes to navigate the NIL landscape wisely and sustainably.

The Impact on College Athletics

NIL collectives are redefining the recruitment game, offering schools an additional allure for prospective talents. The promise of a supportive, compliant, and profitable NIL ecosystem can be a significant draw for recruits, potentially tilting the competitive balance in favor of those institutions with the most robust NIL programs.

However, the rise of collectives also brings challenges and concerns. Issues of equity and access loom large, with fears that the focus on lucrative deals for a few may overshadow the broader athlete community, particularly those in less prominent sports. Moreover, the expanding commercialization raises questions about the future of amateurism in college sports and its traditional values.

Regulatory and Legal Considerations

The regulatory landscape surrounding NIL and collectives is still in flux, with state laws, NCAA policies and potential federal legislation evolving. This fluidity presents both opportunities and pitfalls for collectives, requiring vigilant compliance efforts and adaptive strategies to navigate the legal complexities.

Legal professionals play a pivotal role in this environment, offering guidance to collectives, universities, and athletes alike. From structuring collectives in compliance with regulations to negotiating contracts and safeguarding athletes’ rights, attorneys are indispensable navigators in the NIL era.

Looking Ahead

As we venture further into the NIL era, the significance of NIL collectives in college athletics will undoubtedly continue to grow. These entities have the potential to not only transform how athletes engage with the market but also to influence the very fabric of college sports. The challenges are significant, from ensuring equitable opportunities to maintaining the spirit of amateurism, but so too are the opportunities for empowerment, education, and entrepreneurship among student-athletes.

The future of NIL collectives, like the landscape of NIL itself, is poised on the edge of vast potential and profound change. Stakeholders across the spectrum of college sports—legal advisors, educational institutions, athletes and businesses—must collaborate to navigate this new frontier responsibly and innovatively. Together, they can ensure that the NIL era heralds a period of growth, opportunity and fairness for all involved in college athletics.

As we chart this unexplored territory, one thing is clear: NIL collectives are more than just a passing trend. They represent a pivotal development in the business of sports, reflecting a broader shift towards recognizing and compensating the value that student-athletes bring to their institutions and beyond.

(Paul Fenaroli (former NFL Athlete) is an Associate Attorney at Pastore, a law firm that helps corporate and financial services clients find creative solutions to complex legal challenges.  He can be reached at 203.658.8470 or pfenaroli@pastore.net.)

What Standard of Care Applies When Engaged in Fitness Activities?

Posted on by Kelly McElroy

The fitness industry, while promoting health and wellness, is not immune to legal challenges. Businesses in this sector, particularly in states like Connecticut, need to be vigilant about potential litigation, especially concerning negligence and contract breaches. This article aims to guide fitness facility operators on how to mitigate these risks, incorporating real case examples and legal principles.

Understanding the Risks: Negligence  

Negligence forms the core of many lawsuits in the fitness industry. Cases often revolve around personal training, where trainers may fail to consider clients’ medical conditions, provide unsuitable exercises, or inadequately supervise workout sessions. These oversights and decisions can lead to severe injuries, ranging from fractures to more serious conditions like heart attacks or strokes due to overexertion.

In Connecticut, the standard of care in fitness-related injuries can vary based on the nature of the activity. Importantly, Conn. Gen. Stat. § 52-572h makes clear that a participant’s assumption of the risk does not bar recovery in negligence actions in Connecticut and instead, the standard of “comparative negligence” applies.

The Connecticut Supreme Court in Jaworski v. Kiernan (1997) established that the duty owed to a participant in a sport where physical contact is inherent or expected is not to engage in reckless or intentional conduct, rather than the ordinary standard of acting in a reasonable manner under the circumstances.

However, this heightened standard of care does not always apply.  In Jagger v. Mohawk Mountain Ski Area, Inc. (2004), the court found that, in non-contact sports like skiing, participants are expected to engage in the sport reasonably and appropriately. This “ordinary” standard of care has also been applied in evaluating whether providing standard fitness safety equipment (in the form of a yoga mat) was actionable conduct Schmus v. Davis (2021) and even in sporting activities where physical contact seems unavoidable – like boxing – where the plaintiff, as a trainee, enlisted the defendant trainer, as a trainer for instruction in fitness boxing. They were not co-participants in an athletic contest. Robles v. Dean (2017).

Practical Steps to Mitigate Risks

  1. Regular Equipment Maintenance and Safety Checks: Regularly inspect and maintain equipment to prevent accidents.
  2. Qualified Personnel: Employ qualified trainers and ensure they are well-versed in handling diverse client needs and health considerations. This reduces the risk of injuries due to inappropriate training methods.
  3. Effective Use of Waivers: Develop comprehensive and specific waivers, clearly outlining the risks involved in various fitness activities. Remember, the clarity and specificity of a waiver can be pivotal in legal defenses.
  4. Emergency Protocols and Staff Training: Establish clear procedures for handling injuries and emergencies. Ensure all staff members are trained to respond effectively and document incidents thoroughly.
  5. Insurance Coverage: Maintain adequate insurance to cover potential claims. This not only provides financial protection but also ensures compliance with legal standards.
  6. Legal Consultation: Regularly consult with legal experts to ensure that all operational practices, contracts, and waivers align with current laws and regulations.
  7. Client Communication and Education: Educate clients about the risks associated with fitness activities and the importance of acknowledging their health conditions and limitations.

By addressing these key areas, fitness facilities can significantly reduce the risk of litigation. It’s not just about legal protection; it’s also about creating a safe and responsible environment for clients to pursue their health and fitness goals.

 

This article is intended for informational purposes and does not constitute legal advice.

(Paul Fenaroli is an Associate Attorney at Pastore admitted in Connecticut and the District of Connecticut. He provides private companies with a full range of business law services covering formations, mergers, acquisitions, corporate governance, securities offerings and litigation)

Understanding Connecticut’s Legal Landscape for Health and Fitness Businesses

Posted on by Kelly McElroy

Introduction

The health and fitness sector is a rapidly growing industry, particularly in Connecticut, where there’s a burgeoning market for everything from gyms and yoga studios to dietary supplements. However, this growth comes with its share of legal complexities, often specific to the state of Connecticut. At Pastore LLC, we offer specialized legal services in both corporate litigation and transactional matters, and we are committed to helping companies of all sizes navigate this intricate legal landscape.

Connecticut State Regulations

Licensing and Certification

In Connecticut, gyms and health clubs are required to register with the Department of Consumer Protection. There may be specific requirements for other types of health and fitness businesses as well, such as yoga studios or martial arts centers.

Health and Safety Codes

Connecticut has specific safety standards that health and fitness establishments must meet. This includes proper maintenance of equipment, appropriate medical readiness, and sanitation standards, among others.

Labor Laws

Employee Contracts

In Connecticut, while employers must comply with federal labor laws, they must also be mindful of the state’s particular regulations, including those pertaining to minimum wage, overtime, and occupational safety. Additionally, Connecticut imposes specific limitations on the enforceability of non-compete and non-solicitation clauses in employment agreements. These restrictions aim to balance the protection of business interests with the right of individuals to work and engage in their profession freely. Consequently, it is crucial for employment contracts drafted within Connecticut to conform to both federal standards and these nuanced state-specific legal obligations to ensure they are legally sound and enforceable.

Independent Contractors vs. Employees

The classification of workers as either employees or independent contractors is a hot topic in Connecticut and misclassification can result in hefty fines. Make sure you’re familiar with Connecticut’s criteria for classification to avoid legal pitfalls.

Liability and Insurance

Premises Liability

Business owners in Connecticut are required to keep their property “reasonably safe” for visitors. Failure to do so can result in liability for any injuries that occur on your premises.

Indemnity Agreements

These are especially crucial for businesses in the health and fitness industry, where there’s a high potential for injury. Connecticut law has specific requirements for these types of agreements, so they must be drafted carefully.

Data Privacy

Connecticut has enacted various laws to protect consumer privacy, including the Connecticut Insurance Information and Privacy Protection Act. If your health and fitness business collects personal or health data, you must ensure compliance with these state-specific regulations, in addition to federal laws like HIPAA.

Intellectual Property

Connecticut has established protections for trade secrets through the adoption of the Connecticut Uniform Trade Secrets Act (CUTSA), codified in Conn. Gen. Stat. Ann. §§ 35-50 to 35-58. CUTSA provides a legal framework for the protection of business information and know-how, defining trade secrets and setting forth the remedies available to victims of trade secret misappropriation. Through this act, Connecticut ensures that businesses can safeguard their competitive edge by securing their proprietary information.

In addition to CUTSA, federal laws apply. Local practices can influence the process and enforcement, making it valuable to consult with legal professionals familiar with the Connecticut business environment.

Conclusion

Operating a health and fitness business in Connecticut comes with numerous state-specific legal considerations, from licensing and labor laws to liability and data privacy regulations. At Pastore LLC, we specialize in helping businesses navigate these complexities effectively. If you’re looking to understand your legal obligations better or require assistance with corporate litigation or transactional matters, contact us today.

 

This article is intended for informational purposes and does not constitute legal advice.

(Paul Fenaroli is an Associate Attorney at Pastore admitted in Connecticut and the District of Connecticut. He provides private companies with a full range of business law services covering formations, mergers, acquisitions, corporate governance, securities offerings and litigation)

Managing Legal Issues in the Health and Fitness Industry

Posted on by Luke Daigle

The health and fitness industry is booming, driven by a collective focus on well-being, technology advancements, and an increasingly health-conscious consumer base. However, this growth often brings a complex landscape of legal challenges that mid-sized companies need to navigate. At Pastore LLC, we specialize in both corporate litigation and transactional matters, and we’re here to share some critical legal insights tailored to businesses like yours.

Regulatory Compliance

FDA and FTC Regulations

If your company is involved in the manufacturing or marketing of dietary supplements, equipment, or health services, you’re likely subject to regulations from the Food and Drug Administration (FDA) and the Federal Trade Commission (FTC). Compliance is critical, as failure to meet these standards can result in severe penalties.

State-Specific Regulations

Depending on your jurisdiction, state-specific laws may affect your business, such as licensing requirements for fitness trainers or specific disclaimers needed for health advice.

Intellectual Property

Trademarks

Your brand is one of your most valuable assets. Ensure that your company’s name, logo, and any proprietary procedures or technologies are appropriately trademarked to protect them from unauthorized use.

Patents

If your health and fitness company has developed a unique piece of equipment or technology, consider patenting it to protect your competitive edge.

Contractual Obligations

Vendor Contracts

Your relationship with vendors is often governed by contracts. Be vigilant in understanding terms concerning quality, delivery timelines, and payment conditions.

Employment Contracts

Non-compete and confidentiality agreements can safeguard your business secrets. Always consult with legal experts when drafting these contracts to ensure they’re enforceable.

Data Privacy

Health and fitness companies often collect a lot of personal and health-related data. Familiarize yourself with data protection regulations such as GDPR or HIPAA, if applicable, to protect your company from legal repercussions.

Liability and Insurance

Premises Liability

If you operate a physical location, such as a gym, it’s essential to understand premises liability and have appropriate insurance coverages in place.

Product Liability

Manufacturers and suppliers in the health and fitness sector are often targets for product liability claims. Comprehensive insurance can provide a financial safety net.

Conclusion

Legal complexities in the health and fitness industry are numerous, but proactive steps and knowledgeable legal guidance can help you navigate them successfully. At Pastore LLC, we are committed to providing high-end, specialized legal services that can help your company not only survive but thrive. Contact us to learn more about how we can assist you in facing these challenges effectively.

For legal inquiries, please contact us at Pastore LLC.


(Paul Fenaroli is an Associate Attorney at Pastore admitted in Connecticut and the District of Connecticut. He provides private companies with a full range of business law services covering formations, mergers, acquisitions, corporate governance, securities offerings and litigation)

Understanding the Legal Landscape and Navigating Challenges

Posted on by Kelly McElroy

Mid-sized businesses, often viewed as the backbone of many economies, enjoy several advantages due to their scale and flexibility. However, their position in the marketplace can also make them susceptible to various legal challenges. Understanding the landscape of business litigation can be instrumental in helping these enterprises prepare for, respond to, and navigate legal disputes.

What is Business Litigation?

At its core, business litigation involves disputes arising out of commercial and business relationships. These include issues related to contracts, partnerships, and transactions. For a mid-sized business, litigation can come in various forms – from a dispute with a supplier over contract terms to a disagreement with a competitor over intellectual property rights.

Why Mid-sized Businesses?

Larger corporations often have entire legal teams dedicated to handling disputes, while smaller businesses might fly under the radar or lack the extensive contracts and partnerships that can lead to litigation. Mid-sized businesses, however, often engage in a significant number of transactions, making them more vulnerable to disputes, but may not always have the extensive in-house legal resources of larger corporations.

Common Types of Lawsuits Involving Mid-sized Businesses:

  • Contract Disputes: The foundation of many business relationships, contracts, if ambiguous or breached, can lead to significant disagreements.
  • Shareholder and Partnership Disputes: Differences in opinion among business partners or shareholders can lead to internal strife and potential litigation.
  • Employment Disputes: These can range from wrongful termination claims to wage and hour disputes.
  • Intellectual Property Disputes: As businesses grow, protecting their intellectual assets becomes crucial, leading to potential disagreements with competitors or even within the industry.
  • Real Estate and Property Disputes: These can involve lease agreements, property rights, or disputes related to property values and damages.
  • Consumer-related Lawsuits: These can arise from claims of false advertising, product defects, or other consumer protection issues.

Preparation is Key

For mid-sized businesses, the adage “an ounce of prevention is worth a pound of cure” holds. Here are some proactive steps:

  • Clear Contracts: Ensuring that all business contracts are clear, specific, and legally sound can prevent many disputes.
  • In-house Counsel or Retained Lawyers: Having a dedicated legal advisor, even if on a retainer basis, ensures that the business has someone familiar with its operations and ready to advise when needed.
  • Insurance: Various insurances, like liability or errors and omissions insurance, can help protect against potential litigation.
  • Employee Training: Ensuring that employees are well-trained, especially in areas like compliance, can prevent issues down the line.

Conclusion

While business litigation is a reality that many mid-sized businesses may face, understanding the landscape and being prepared can make a significant difference. With the right strategies and resources, businesses can navigate these challenges effectively, ensuring that they continue to thrive and grow in a competitive marketplace.

 

(Paul Fenaroli is an Associate Attorney at Pastore admitted in Connecticut and the District of Connecticut. He provides private companies with a full range of business law services covering formations, mergers, acquisitions, corporate governance, securities offerings and litigation)

7 Questions to Ask Potential Business Partners About the Firm

Posted on by Kelly McElroy

Business partnerships can be very successful when they work.

These alliances are utilized to monetize relationships that bring in top-line revenue. They can also serve as a catalyst for more opportunities that will lead to top and bottom lines. Almost half (44%) of companies create alliances for new ideas, according to BPI Network. Harvard Business Review says most of tech’s executives (94%) envision partnerships as a fundamental part of their overall business plan.

Despite the promise, however, research finds that most business partnerships fail.

This type of angst makes the interviewing process even more important. The next time you need a new business partner, make sure a series of questions is asked about how prospective partners expect to play nicely with the existing operations, as well as each existing partner.

Business Partnership Insight: 1. What are your expectations of each owner?

Figuring out how each business partner fits together is an important question that you will need to address sooner rather than later. The topic of gross negligence, when a partner harms another by failing to provide a certain standard of care, is one of the more common reasons why business partnerships fail. Assessing each partner’s motivation, which is closely tied to expectations, should jibe with the business partnership agreement and operations plan to increase chances for success.

Business Partnership Insight: 2. What is your vision for the firm?

This question asks about what the prospective business partner wants from the venture. New business partners can bring new thoughts, ideas and motivation that can propel the company forward. New energy, however, doesn’t always have a positive impact. Are the prospective partner’s goals in line with the other partners? Would the candidate’s management style elevate the firm? Breach of Partnership/Operating Agreement is another common legal problem that can doom a business partnership. The best time to discuss alignment is during the interview process.

Business Partnership Insight: 3. How would you manage the departure of a partner?

This is why you need a comprehensive business partnership agreement. Depending on how many partners you have in the firm, the departure of a business partner can be quite involved in varying degrees. Typically, there are four options. The fastest option is for the remaining partners to buy out the shares of the departing partner. If the departing partner played a large role in the company, then perhaps selling the business would be the best option.

Dissolving the business, on the other hand, could be the best option. This option could also be spelled out in the business partnership agreement to avoid a potentially lengthy legal battle, which is possible when one partner disagrees.

Replacing the departing business partner is another option. Although it would take more time than a buyout, it wouldn’t impact the resources of existing partners and would create an opportunity to bring on someone with a different perspective and skill set.

Business Partnership Insight: 4. What experience do you have with business partnerships?

Being an employee and being a business partner are two different things. Partners, for example, must act in good faith and fairness as part of their fiduciary duty to other partners.

Mismanaging company funds, damaging the firm’s reputation or “goodwill” and putting the company at legal risk due to your own negligence would be examples of a breach of fiduciary duty.

Along with ownership comes more legal responsibilities that must be considered.

Business Partnership Insight: 5. What is your experience with sales and margins?

In sports, it has been said that winning is the best deodorant. Success tends to cover missteps and miscues.

In business, top-line sales and margins are important factors when determining success. When those two items are realized, however, there could be finger-pointing. The setback could also encourage business partners to lose interest as they put their energy behind other entities. Partnership abandonment is a real legal issue for business partnerships, and it is another reason why you need to work with a trusted legal advisor to ensure all possible outcomes are covered in writing before they occur in your business partnership.

Business Partnership Insight: 6. How can this firm take it to the next level in the next 12 months?

This question is about resources and how they will be utilized. When asking about the path forward, a prospective business partner will have to disclose specifics about the “how” as well as the “why” behind the plan.

In the big picture, business partners are very important, in-house resources that should be utilized fully based on areas of expertise. Delegating the work can be a challenging area for partners. Failure to delineate authority is another common legal issue that surfaces with business partnerships. The operating agreement should contain enough detail so partners understand how they can make a meaningful contribution while staying in their own lane.

Business Partnership Insight: 7. Looking ahead 12 months, you believe that you made a great decision by joining this partnership. What are the two reasons?

This question asks, “What do you want?” in a different way, which tends to draw more specifics about the prospective business partner’s intentions. The more insight that the existing partners gather before an offer is made, the better for the entire venture. Making time for due diligence will pay dividends figuratively and literally.

(Paul Fenaroli is an Associate Attorney at Pastore, a law firm that helps corporate and financial services clients find creative solutions to complex legal challenges. He can be reached at 203.658.8470 or pfenaroli@pastore.net.)