Jeffrey D Katz Of JDKatz On The Top 5 Mistakes Businesses Make Without Legal Counsel
An Interview With Chad Silverstein
Entering into poorly structured partnerships or joint ventures.
In today’s fast-paced business world, the complexity of legal matters can often be overlooked, leading to significant repercussions for businesses of all sizes. From startup ventures to established corporations, the absence of legal guidance can result in critical errors that affect growth, operations, and sustainability. These mistakes range from issues with contracts and intellectual property to compliance and employment law, each carrying the potential for financial loss and reputational damage. I had the pleasure of interviewing Jeffrey D. Katz.
Jeffrey D. Katz, Esq., founder and managing partner of JDKatz, P.C. in Bethesda, Md., is recognized by SuperLawyers as amongst the Top 5 percent of tax and estate lawyers in Maryland and Washington, DC. Over the last 20 years, he has prepared over 5,000 estate plans and has administered over $100 million in estates and trust assets. A national speaker for NBI and myLawCLE, and a featured legal expert with various media outlets including Bloomberg/BNA, Inc., Katz also runs a 1031 exchange company.
Thank you for joining us. To start, could you share your “origin story” with our readers? How did you begin your career? What challenges did you face in the early days? How did you overcome them?
My career as a tax and real estate attorney began after graduating from law school, obtaining my LLM (master’s in taxation) and joining a boutique firm specializing in these areas — KPMG, LLP. While I started my career in an accounting firm, I was surrounded by some of the best and brightest minds in tax law, in a firm that only did tax work. Unfortunately, one of my first and soon to be my last engagements was the MCI-WorldCom merger. This turned out to be one of the greatest frauds in the history of U.S. business, and the entire practice group that worked on the project at KPMG was subsequently terminated as the firm sought to distance itself from the project.
After my burgeoning career as a tax attorney in a public accounting firm was drawn to a very short end, I was immediately drawn to the complex world of corporate and real estate transactions and the intricacies of tax law. In the early days, the biggest challenge was gaining the trust of clients and demonstrating my expertise in such specialized fields. I overcame these challenges through hard work, continuous learning and dedication to providing exceptional service to my clients. Over time, I built a reputation as a go-to attorney for complex tax matters, 1031 exchanges and other complex tax-based matters.
Is there a particular book that made a significant impact on you? Can you share a story or explain why it resonated with you so much?
One book that had a significant impact on me was How to Win Friends and Influence People by Dale Carnegie. This book resonated with me because it emphasizes the importance of building strong relationships and understanding the perspectives of others. As an attorney, I’ve found that the ability to connect with clients, understand their needs and communicate effectively is just as important as technical legal knowledge. Carnegie’s insights have helped me become a better advisor and advocate for my clients.
Do you have a favorite “Life Lesson Quote”? Do you have a story about how that was relevant in your life or your work?
“Success is not final, failure is not fatal: it is the courage to continue that counts.” This quote, often attributed to Winston Churchill, has been a guiding principle throughout my career. In the legal profession, there are always challenges and setbacks. What matters most is the resilience to keep pushing forward, learn from mistakes and continue striving for success. This mindset has helped me navigate difficult times and maintain a focus on achieving the best outcomes for my clients.
How have you used your success to make the world a better place?
Believing in the power of education to empower people and communities, I’ve made it a point to support various educational initiatives, including scholarships for students interested in pursuing careers in law and real estate. By helping to create opportunities for the next generation of professionals, I hope to contribute to a more knowledgeable and equitable society.
Additionally, I’ve been involved in pro bono work, providing legal services to those who may not otherwise have access to quality representation. I was able to represent Kurds gas bombed in the 1980s against a variety of chemical companies that manufactured mustard gas components. I also worked on a litigation matter with Johnnie Cochran and even got to investigate claims made against the Ringling Bros. Circus by a former reporter documenting their ongoing relationship with the CIA.
Ok, let’s now turn to the central part of our interview. What is the most common legal mistake you see businesses make due to the lack of proper legal counsel, and what are its potential consequences?
All too often, I see businesses make is failing to properly document agreements and transactions. Whether it’s a lease, purchase agreement or partnership arrangement, having clear, legally enforceable contracts is essential. Without proper documentation, businesses open themselves up to misunderstandings, disputes and costly litigation down the line. The potential consequences can range from financial losses to damaged relationships and reputational harm.
Can you share an example where early legal intervention could have significantly altered the outcome of a business dispute or challenge?
In one case, a client came to me after entering into a verbal agreement with a business partner. As the venture grew, disagreements arose and the lack of a written contract made it difficult to resolve the issues. If the client had sought legal counsel from the outset and put a proper partnership agreement in place, many of the problems could have been avoided.
We were able to help the client navigate the situation, but it was a more challenging and expensive process than it needed to be. This experience underscores the importance of involving legal counsel early on in business dealings.
How do changes in digital technology and online business practices complicate legal issues for businesses without dedicated legal advice?
The rapid evolution of digital technology and online business practices has created new legal challenges for businesses. Issues related to data privacy, cybersecurity, intellectual property, and e-commerce regulations are increasingly complex and ever-changing.
Without dedicated legal advice, businesses may struggle to keep up with these developments and inadvertently expose themselves to legal risks. It’s crucial for businesses operating in the digital space to have ongoing guidance from attorneys who specialize in these areas.
In your experience, how does the absence of legal counsel impact a business’s approach to contracts and negotiations, and what advice would you give to mitigate these risks?
Without legal counsel, businesses often enter into contracts and negotiations without fully understanding the legal implications of the terms they agree to. They may overlook important provisions, such as indemnification clauses, termination rights, or dispute resolution mechanisms. This can lead to unfavorable outcomes and costly disputes down the road.
To mitigate these risks, businesses should involve legal counsel in reviewing and drafting contracts, as well as in preparing for and conducting negotiations. Attorneys can help identify potential pitfalls, protect the business’s interests and ensure that agreements are legally sound.
What legal pitfalls do new businesses often overlook during their initial setup and growth phases, and how can they proactively address these issues?
New businesses often overlook several key legal issues during their setup and growth phases, such as:
1. Choosing the wrong business structure: Failing to select the appropriate legal entity (e.g., LLC, corporation) can have tax and liability implications.
2. Neglecting to protect intellectual property: Businesses should take steps to secure trademarks, copyrights, and patents early on to safeguard their valuable assets.
3. Not having proper employment agreements and policies: As businesses hire employees, they need to ensure they have legally compliant employment contracts, handbooks and procedures in place.
4. Failing to comply with regulatory requirements: Depending on the industry and location, businesses may need to obtain licenses, permits and comply with various regulations.
5. Skipping key agreements with co-founders and partners: Without clear, written agreements outlining roles, responsibilities and ownership stakes, businesses are more prone to internal disputes.
To proactively address these issues, new businesses should seek legal guidance from the start. An experienced attorney can help navigate the legal landscape, put essential protections in place and set the business up for long-term success.
Could you list and briefly explain “Top 5 Mistakes Businesses Make Without Legal Counsel” based on your experiences and insights?
1. Not having proper contracts and agreements in place.
Example: A business enters into a handshake deal with a supplier, only to face delays and quality issues. Without a written contract, it’s difficult to hold the supplier accountable and recover losses.
2. Failing to protect intellectual property.
Example: A startup develops a unique product but fails to secure a patent. A competitor copies the product and the startup has limited legal recourse.
3. Misclassifying employees as independent contractors.
Example: To save on costs, a business classifies workers as contractors instead of employees. An audit reveals the misclassification, leading to penalties and back taxes.
4. Not complying with regulatory requirements.
Example: A restaurant opens without obtaining the necessary health permits and licenses. It faces fines and is forced to shut down until it comes into compliance.
5. Entering into poorly structured partnerships or joint ventures.
Example: Two businesses enter into a joint venture without a clear agreement. Disagreements arise over profit-sharing and decision-making, leading to a messy legal battle.
In each of these scenarios, proactive legal guidance could have helped the business avoid costly mistakes and protect its interests.
You are a person of great influence. If you could inspire a movement that would bring the most amount of good for the greatest number of people, what would that be? You never know what your idea can trigger.
If I could inspire a movement, it would be one focused on increasing access to quality legal education and services in underserved communities. I believe that everyone, regardless of their background or financial means, should have the opportunity to understand their legal rights and receive competent representation when needed.
We live this truth by providing free or low-cost services to individuals through group legal plans, and I believe that this movement would involve initiatives such as legal clinics, educational programs and pro bono services. By empowering individuals with legal knowledge and resources, we can foster a more just and equitable society.
As we wrap up, how can our readers follow your work?
Readers can follow my work through my law firm’s website, www.JDKatz.com, where we share updates, articles and resources related to tax and real estate law. We also have a presence on Facebook, X and LinkedIn, where we engage with our audience and share insights on the latest legal developments. They also can see me speak at industry conferences and events, which are often announced on our website and social media channels.
Thank you for these fantastic insights. We greatly appreciate the time you spent on this.
About the Interviewer: Chad Silverstein, a seasoned entrepreneur with over two decades of experience as the Founder and CEO of multiple companies. He launched Choice Recovery, Inc., a healthcare collection agency, while going to The Ohio State University, His team earned national recognition, twice being ranked as the #1 business to work for in Central Ohio. In 2018, Chad launched [re]start, a career development platform connecting thousands of individuals in collections with meaningful employment opportunities, He sold Choice Recovery on his 25th anniversary and in 2023, sold the majority interest in [re]start so he can focus his transition to Built to Lead as an Executive Leadership Coach. Learn more at www.chadsilverstein.com
