The legal tension is building.  Private Texas companies and their owners are awaiting a court decision that may force them to say “Howdy, Partner” to companies with whom they have no written partnership agreement. The case on which business eyes are focused is ETP v. Enterprise Products Partners, which is before the Dallas Court of Appeals after a jury awarded $535 million in early 2014.  The case has been described as a corporate form of common law marriage to a company that the jury determined was jilted in favor of another. This is the hottest partnership case the Lone Star State has seen in years.
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Picking the devil you know in selecting a business partner may seem like a good strategy.  But the list of celebrities who have suffered financially in their dealings with business partners is striking with losses totaling millions of dollars in some cases.  Uma Thurman lost $1 million. Sting lost $9.8 million. Billy Joel lost $90 million.  And celebrities are not the only ones who have suffered negative results because they, like so many people, picked poor business partners.  Fortunately, there are steps that anyone entering into a long-term relationship with a business partner can take to avoid the financial consequences of a disastrous partnership.
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Ensuring that Trade Secrets Stay Secret

One of the NFL’s most legendary football coaches, Vince Lombardi, is known for fiery speeches extolling his players that “Winning isn’t everything, it’s the only thing.”  Yet, when triumph on the battlefield is so costly it actually destroys the “winner,” it is known as a “Pyrrhic victory,” named in honor of Greek King Pyrrhus, who lost most of his army in two “successful” battles with the Romans.

This prospect of a Pyrrhic victory—a success that rings hollow—is something that business owners in Texas faced until recently when they filed lawsuits to protect their company’s trade secrets from misuse by former employees and competitors.   The danger was posed because the company was generally required to disclose its trade secrets during discovery in the lawsuit to permit the competitor to mount a defense to the company’s claims.  Thus, in fighting to protect trade secrets from misuse by competitors, the business owner was given the Hobson’s choice of foregoing legal action or filing a lawsuit in which the company would be required to reveal its trade secrets to a business rival.  To a business owner, winning the legal battle to protect the company’s trade secrets could often feel like losing the war. 
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Hiring the wrong people can quickly push a company off course, especially a growing private company.  This seems obvious, yet statistics show that companies do a remarkably poor job of hiring.  Gallup reports that, companies hire employees 82% of the time who have the wrong qualifications or who are not a good fit for the business. This report is even more troubling in light of research by the Harvard Business School, which determined that it costs an average of $12,489 to replace a poorly performing employee, and that figure does not include the legal risks that are involved in terminating employees.
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Private company business owners often feel pressured to hold the line on costs, and the pressure only increases as market conditions become more challenging.  At the same time, the billing rates for lawyers continue to escalate, sample forms of contracts can be found on the web for free, colleagues have contracts they are willing to share and the business issues addressed in many contracts seem fairly straightforward.  Business owners may therefore conclude that they can forego obtaining help from outside legal counsel in drafting and negotiating contracts as an effective means to achieve substantial cost savings. 
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