Honesty, Integrity, and Loyalty

Alan Greenspan, former chairman of the Federal Reserve Bank, told the Harvard graduating Class of 1999, "Without mutual trust and market participants abiding by a rule of law, no economy can prosper." Then in 2005, he taught the graduating class of the University of Pennsylvania’s Wharton School, "In virtually all our transactions, whether with customers or with colleagues, with friends or with strangers, we rely on the word of those with whom we do business. If we could not do so, goods and services could not be exchanged efficiently."

His consensus that business cannot function without trust, which is rooted in honesty, not only applies to economics, but to the Rule of Law, as well. Testimony given “under oath”, is held up as the standard upon which life-altering decisions are made. The lives and fortunes of legal adversaries hang on the accuracy and validity of statements given by witnesses. So important is honesty in the Courts, that the violation of this oath is punishable by years of incarceration.

So, how do attorneys and experts navigate the minefield of seductive falsehoods and still maintain honesty, integrity, and loyalty to their clients? . . .

Simply be honest with the facts and always draw fact-based conclusions.

This does not imply that we must take every bit of evidence at face value nor refrain from diligently researching past decisions to find a ruling that fits our case. It means that part of truth cannot be omitted. Fabrication of facts or blatant misrepresentation of the truth, can never occur. Accusations are specific, and the defense of them should be as specific, but not censured.

There will always be times, nearly all the time, when facts contradict, don’t align, or are ambiguous. Rather than succumb to fact-less conclusions or inflammatory accusations, we need to concentrate our efforts to separate fact from fiction, align perspectives, and clarify conditions. It is our job to do so, it should not be a convenience if it happens. Anything less than this is a disservice to our clients and reflects on our level of competence.

Integrity is not something we do, it is what we have as a result of our actions. Without integrity we have no bearings, no character, and we lose the ability to be trusted. Integrity precludes stable opinions based on principles and the consistent implementation of those principles. It negates the need to remember which lie fits into which cubby, because the answers are always the same, even if they are adjusted to fit individual circumstances.

Loyalty to a client does not mean we have an obligation to provide acquittal. Loyalty in representation demands that we ensure the Rule of Law is followed, that our client has every opportunity to correctly present their story, and that miscarriages, injustice, and abuse are neutralized.

The first question a client usually asks an attorney is some variation of, “Can you get me off?” For some attorneys and experts, the answer is always, “Yes,” then any means available are employed to achieve that goal, whether it serves justice or not. This attitude thwarts the very reason for the Rule of Law. If laws are not enforceable, they cease to exist. We have cultures around the world where justice is doled out on the basis of who you know, who your family is, or what your status is in society. This is not justice, it is cronyism. Chronic abuse, theft, loss of liberty, and the destruction of lives and property, always follow such a course.

As attorneys and experts, we have to consciously review our past opinions to ensure they align with our present ones. Laws change and situations are often different, but if we move our opinions, there must always be concrete facts or evidence, that justifies such behavior.

There may be some who feel these remarks are a threat to their livelihood and that may be true. If people are looking to escape consequences or maliciously injure another, they may not engage an attorney or expert who will not bend or misrepresent the truth. Each may find a measure of success in this path, but ultimately, their actions will erode the pedestal under Lady Justice, until she eventually topples to the earth.

Without honesty, we cannot have integrity.

Without integrity, we cannot be trusted.

If we cannot be trusted, we are of no value.

Image courtesy of:
https://www.reference.com/government-politics/lady-justice-blindfolded-55d3389af74020f6

How Do You Keep The Cash Flow Going?

This was the question I posted on the RIA forum on LinkedIn. This particular forum is populated with contractors that are working in the restoration industry. They are all primarily owners of restoration companies, sub-contractors and suppliers.

There were many great insights and suggestions to remain solvent, especially during the heavy crunch times. Here is the list of tips I distilled from the discussion.

1. Always have a line of credit available. If you can't get a line of credit, have 10% of your annual gross income as cash in the bank. If you can't do that, life may be hard at times.

2. Acquire the line of credit in advance of emergency needs. Once the heavy freezes happen or the tornado strikes, you don't have time to get a line of credit. It may also take a month or more to gather all the documentation, gain the approvals and set up a line of credit.

3. Make the conscious choice, in advance, to not extend credit to clients. It's like loaning money to family, don't do it unless you expect to not be paid back. There are many good people that will commit to a schedule and pay you back in full. The problem you face is, usually you are not set up to offer credit, charge interest, and follow up on collections. Also, once the emergency is past, the insurance adjuster and the owner lose their urgency to act now and make you happy.

4. Bill mitigation costs separately and invoice immediately. Progressive billing is the easiest way to avoid long payment wait times. Lien holders and mortgage companies do not have claim on any mitigation costs so they are left off the check. This enables you to get paid much faster with less effort on your part.

5. Once the building is stable, take the time to: 
        A. Complete repair estimates. Now that the building is stable, you can more clearly see what should be done and write an accurate estimate. Always include a comment to allow for supplementals that may not be included in your estimate. 

        B. Agree on a price with the payee. With an accurate estimate in hand, you can arrive at an agreed upon price with the adjuster or owner. Without a concrete price, everyone is uneasy with the situation. In some States, it is actually illegal to sign a contract without a price and a completion date included.

        C. Sign a contract. Until you sign a contract, you are dependent on the integrity of the owner for payment. Even if the insurance company pays the owner, you may not get paid if there is not a signed contract in place with the owner.

        D. Collect mitigation fees. You should always insist on the mitigation payment before any work begins on the repairs. Again, once the work is done, urgency and oral commitments seem to dissipate in the wind.

        E. Collect a deposit for the repairs before starting the restoration. Just as with payment for mitigation work, you should also get a deposit before you start the repairs. There are smaller jobs where this seems impractical, but 10 - $5,000 jobs quickly equal $50,000 in receivables that you may not be equipment to float.

6. Partner with companies that insure receivables and guarantee payments. There are some companies that will buy your receivables. Once the work is done, they collect the amounts owed. These companies are actually credit companies and have the machinery in place to collect money, something the typical restoration contractor doesn't have.

7. Offer instant credit card services for owners to pay deductible or emergency services on the spot. There some credit card companies that will do on-the-spot approvals. Many retail outlets use them for Lasik surgery, cosmetic surgery, expensive sewing machine and other equipment sales, etc. It is literally a phone call and 5 questions, then approval is issued on the spot. The credit limits range from a few hundred dollars to several thousand. Synchrony is one institution that offers these types of cards.

8. Possibly consider "program work" as shorter, guaranteed payment schedules often offset the lower prices paid and keep the cash flow going. Many start-up restoration companies can benefit from "program work" offered by large insurance companies. There are trade offs, but generally you have guaranteed payments on a shorter schedule. These programs are rife with regulations, monitoring and paperwork, but can help keep you solvent.

9. Lower your overhead costs by purchasing the equipment that you use everyday and renting all other specialty or seldom used equipment and labor. Generally you can rent equipment 10 times for the cost to purchase it. If it is not in the field every week or two, sell it and rent. This lowers your storage costs, equipment purchase costs and maintenance costs. You can set up accounts with your local rental facilities like Sunbelt or Interlink. Many times these rental places will also maintain and service the equipment on site, which also lowers your labor costs.

10. Sub-contract work to pre-screened, pre-trained contractors. Using the same principle as in #9, keep only the staff you will use on a daily basis and sub out the other work. You should screen and train these subs so that they will do the same quality of work as an in-house crew. When the lean times come, you don't have to lay them off, they will just work for someone else until your work picks back up again. If you take good care of them, they will always want to come back and they will put your jobs ahead of others.

11. Maintain a constant presence with the payee regarding invoices due. Call regularly and/or email often. Be just persistent enough to not quite be irritating. This will keep your invoice constantly moving up to the top of their piles. 

12. Provide incentives to pay quickly; discounts, interest, start of work, etc. It is easier to give a discount of 5% if the bill is paid within 10 days than spend weeks or months on the phone trying to collect. For many, 5% may seem like a lot, but look at the numbers. 

On a $50,000 job, 5% is $2500. If you spent 3 hrs/week for 16 weeks (4 months) trying to collect, you spent 48 hours. If your time is worth $50/hr, then you have lost another $2400, 48 hours x $50 = $2400. But, if the $47,500 came in without you have to spend any extra time collecting, you could use that 48 hours to generate additional work, and realize thousands of dollars in extra income, far more than you sacrificed. 

13. Never return contents or property to the owner without payment first. Once you have relinquished control of the property, you have lost all leverage you possessed. Let it be known from the onset, that nothing will be returned until it is paid for in full. All moving and storage companies will not release the property until it is paid in full. You may also need a clause that states, "Any property not paid and claimed within 30 days will be sold." The storage unit companies do it all the time.

Now, go to and make your business grow.

Photos courtesy of:
http://englishwithatwist.com/2013/05/24/money-is-liquid-10-metaphors-about-money/
https://www.synchronybusiness.com/markets/home-improvement-financing.html