Tags: denis | kleinfeld | legal | liability | risk | protect

Don’t Take Big Legal Risk of Not Protecting Yourself

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Monday, 18 Oct 2010 12:09 PM Current | Bio | Archive

Sitting around the bar at Morton's after a conference a couple of weeks ago, the conversation was sort of typical.

Complaints about Congress, disagreements over what needs to be done to "fix" the economy, divergent opinions on whether we are at war with Islam or just Muslim extremists, and how the United States should deal with Iran.

Mostly the remarks followed the general lines of, "We have got to get a change in Congress." Or, "Obama is a socialist and we have to get back to a free-market economy." Or, "I'm buying gold." The words "portfolio diversification" also pops up a lot. Stuff like that.

Investment risks are soaring and anything valued in dollars is taking a nosedive.

I think all of this ignores the real, more likely problem that, in my experience, is most likely to make my clients destitute: getting sued.

Basically, anyone who has some modicum of retained wealth has a target on his or her back and the trial lawyers and the judiciary are talking aim.

The only real growth industry in the United States, besides the creation of new federal agencies and hiring more bureaucrats, is the litigation industry.

The trial lawyers and their associations, who support both political parties (who receive nearly unlimited amounts of campaign contributions), have every financial incentive to make sure lawsuits of every kind and description continue unabated by any limitation or reform. The courts seem powerless to prevent this litigation avalanche.

This litigation scenario plays out every day in every corner and facet of the U.S. economy.

Business owners are finding the banks calling in their inventory loans; property owners are being sued on personal guarantees; anyone who has equipment leases is being pressed; and government essentially extorts huge fines and settlements, and is in the process of increasing taxes.

If you have signed a personal guarantee, are a director or officer of a company, are on the board of your church or synagogue, you have a target on your back.

Similarly, if your business has any form of exposure to local, state or federal governmental control or regulation, or if you are a trustee of your company's pension plan, have employees or teenagers who drive a family car — watch out.

Divorce? Don't even get me started on that racket.

Lots of people tell me that they have plenty of insurance. Basically, insurance companies follow what I call "The Rule of 3 Ds." Deny, Delay, and Don't Pay.

And, even that reality is ultimately dependent upon the insurance company still being in business when the time comes to pay a claim.

Worse still, all insurance is going to be subject to an even bigger risk now that there is a new Federal Insurance Office that was established as part of the Dodd-Frank Act. Before this, insurance was thought to be the exclusive province of the states. And now, insurance will be subject to regulations issued by the Office of Information and Regulatory Affairs.

What is clear to me is that legal risk management should be your top priority. I always remember the words of one of my clients who had just survived a lawsuit: "Golf is optional in life, protecting your assets from legal liability is not."

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Kleinfeld
Sitting around the bar at Morton's after a conference a couple of weeks ago, the conversation was sort of typical. Complaints about Congress, disagreements over what needs to be done to fix the economy, divergent opinions on whether we are at war with Islam or just...
denis,kleinfeld,legal,liability,risk,protect
538
2010-09-18
Monday, 18 Oct 2010 12:09 PM
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