An Interview With Chad Silverstein

Develop a growth plan. Determine which markets to expand into and set target milestones for company growth. This plan should align with your labor and employment strategies and corporate framework.

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 Andrew Adams of DarrowEverett LLP.

Andrew J. Adams is the Practice Leader of DarrowEverett’s Labor & Employment Practice Group. On the transactional side of the practice, he has represented clients ranging from small local businesses to those with a larger, multinational presence on matters ranging from acqui-hire transactions to due diligence on reverse SPAC mergers. Andrew has represented employers in federal and state litigation across the country involving claims of discrimination, harassment and retaliation, wage and hour violations, contract disputes, and other employment issues.

He regularly advises clients with respect to employment agreements, restrictive covenant compliance, regulatory compliance challenges, personnel policies, and day-to-day employment issues, and provides custom training programs and materials to clients on a variety of important topics, including wage and hour issues, paid and unpaid leave, ADA accommodations, and drugs and alcohol in the workplace. Andrew also has experience with state and federal agency investigations such as the U.S. Department of Labor, and he has additional experience in the labor side of the practice negotiating collective bargaining agreements and litigating unfair labor practice charges on behalf of employers.

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 path has been somewhat unconventional. I started with a degree in marine biology during undergrad and pursued that for about a year afterwards. Towards the end of college, I began preparing for the U.S. Navy and enlisted right after graduation. I served on active duty for about a year until an injury brought me back home. After returning, I joined the sheriff’s department and worked the overnight shift while starting law school. I completed law school while working full-time and transitioned directly into a role at a Labor and Employment firm in western Massachusetts. There, I focused on learning the intricacies of labor and employment law, working closely with companies.

From there, I moved to DarrowEverett, my current firm, where my role expanded into labor and employment in the context of corporate and transactional matters, in addition to strict labor and employment. Being the first lawyer in my direct family presented challenges, but my background in law enforcement and the military provided valuable skills, particularly in client communication and understanding of business needs.

Overcoming these challenges was aided greatly by mentorships from senior attorneys who guided me through the nuances of legal practice and client relationships. These experiences have shaped me into the attorney I am today, equipped to adapt to various client needs in the business community.

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?

Early in my career, I found inspiration in books like “Lone Survivor,” which tells a powerful story of bravery and sacrifice. These stories, especially those of heroes from my youth, taught me about courage, commitment, and determination. They influenced my initial career path in the Navy, where I aimed to join the Special Forces but was sidelined by an injury.

This experience shaped my approach to life in general, teaching me how to break down challenges into manageable steps and shift my mindset to overcome adversity. It showed me that with determination and hard work, even the toughest obstacles can be conquered. These lessons continue to guide me as I navigate my career and personal life.

Do you have a favorite “Life Lesson Quote”? Do you have a story about how that was relevant in your life or your work?

One of my favorite life lessons, which used to hang on my wall as an ironic reminder, and I should probably put back up in my office, is “We’ve always done it that way.” I always strive to do the opposite of this statement. This quote inspires me not to fall into the trap of complacency but instead encourages me to continuously adapt and learn. Whether it’s embracing new technologies, adjusting to changes in the law, or evolving with the expanding knowledge base in our community and globally, I believe in constantly refining processes and approaches.

I’ve always been driven to avoid being stagnant or stuck in outdated practices. I firmly believe in the importance of learning, growing, and adapting to make continual improvements. While no system is perfect, I’m committed to seeking ways to enhance efficiency and effectiveness in everything I do. It’s easy to fall into the mindset of “if it ain’t broke, don’t fix it,” but I strive to maintain a mindset of innovation and improvement, believing that every process can be refined for the better.

How have you used your success to make the world a better place?

My wife and I prioritize giving back in several ways. We live frugally and save diligently, which allows us to support causes we care about, such as animal shelters and groups that assist with animal surgeries. Professionally, I believe in using my licensure to contribute through pro bono work, both online and within our community. It’s important to us that we don’t hoard our success but instead find meaningful ways to give back. Whether it’s applying our professional skills or sharing our resources, we strive to make a positive impact and encourage others to do the same.

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?

Certainly. One of the most common challenges I see for businesses starting out is the lack of comprehensive strategy as advised by legal counsel. Entrepreneurs often have a clear vision and enthusiasm for their new venture but may overlook the critical legal foundations necessary for long-term success. Setting up a company involves more than just pursuing a dream — it requires an understanding of best practices in corporate governance, employment law, and operational frameworks.

Many new entrepreneurs may not initially consider the need for essential legal structures such as employee handbooks, HR policies, and corporate documents like operating agreements or partnership agreements. These foundational elements are crucial for protecting a growing business and ensuring compliance with regulatory requirements.

Without proper legal guidance, businesses risk encountering issues down the road, such as disputes over ownership, inadequate employee policies, or regulatory noncompliance. It’s essential for entrepreneurs to recognize the importance of establishing these frameworks early on to safeguard their business interests and pave the way for sustainable growth and success.

Can you share an example where early legal intervention could have significantly altered the outcome of a business dispute or challenge?

One common issue we encounter involves the sale of a company, particularly regarding equity promises made by founders. Often, these promises are initially informal — either oral or loosely documented — especially in the early stages when the company’s future rise in value is uncertain. For instance, a founder might promise an early C-suite executive a payout equal to 15% of a company’s value upon sale without formalizing the terms in a written agreement.

This lack of formalization can lead to disputes during the acquisition process. Without clear legal agreements in place, misunderstandings can arise about who is entitled to what share of the company’s proceeds. These disputes can be costly, potentially jeopardizing deals worth millions or even tens of millions of dollars, especially for startups.

To mitigate such risks, it’s crucial for founders to seek legal counsel early on and formalize items such as equity arrangements in written form. These agreements should clearly outline the terms of equity distribution, including conditions under which equity can be earned or lost. Doing so not only protects the interests of all parties involved but also streamlines the sale process by preventing last-minute conflicts over items such as ownership stakes.

How do changes in digital technology and online business practices complicate legal issues for businesses without dedicated legal advice?

It’s a timely question. With the development of AI and related AI datasets — I won’t specify any particular ones available to the public — we’re seeing a mixed reception. It’s not solely a generational issue; rather, it’s about how much trust individuals place in AI systems currently. While these tools are becoming increasingly helpful in day-to-day tasks, they haven’t yet reached a level of reliability for documenting business transactions or structuring complex agreements. Many people are overly reliant on the outputs of current AI systems.

These systems often operate on closed datasets without the latest legal updates or consideration of external factors beyond their programming. While they serve as valuable building blocks, they aren’t fully matured and should be interpreted alongside legal advice.

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?

We often witness two distinct impacts. On one hand, some individuals either err on the side of excessive caution or disregard caution entirely. Even sophisticated parties with a strong business background sometimes approach contracts and negotiations in a less than optimal manner, opting for handshake deals or oral agreements. Legal counsel would never recommend such approaches for significant agreements.

On the other hand, there are those who are extremely risk-averse and tend to over-document deals using various online sources or public filings like SEC documents. However, these documents may not always be suitable for the specific transaction or goal in question.

The absence of legal counsel can lead to either missed opportunities or overly cautious approaches. While there’s a middle ground in some cases, these extremes are frequently observed.

What legal pitfalls do new businesses often overlook during their initial setup and growth phases, and how can they proactively address these issues?

I think this ties back to establishing a structured framework when building a company. You need to consider step-by-step processes such as defining policies and procedures for employees and understanding which laws apply. For instance, in a remote work scenario, if employees are based in a different state than the company headquarters, you may need to set up various items specific to that state, such as accounts for workers’ compensation, navigate state unemployment taxes, and take into account other considerations like state paid family medical leave.

This extends into tax and corporate aspects — whether you need to register to do business in the state where employees are located. Establishing foundational structures like operating agreements, corporate documents, equity sharing, and partnership agreements is crucial. You also need to think about growth — are you content as a local business, or do you have plans for expansion?

When considering growth, it’s important to factor in regulatory differences between states. For example, moving to a highly regulated state like Massachusetts from one with more relaxed labor laws such as Florida requires careful consideration and compliance planning. Being aware of these factors is essential in navigating the complexities of business expansion.

Here is our main question. Could you list and briefly explain “Top 5 Mistakes Businesses Make Without Legal Counsel” based on your experiences and insights? If you can, please share a story or example for each.

1. Establishing a solid business framework is crucial. This includes formally defining your business via a document such as an operating agreement and by choosing the appropriate corporate structure (LLC or Corporation) for optimal tax benefits.
2. Focus on labor and equipment. Ensure policies are set up correctly, such as by creating an employee handbook and setting up proper payroll systems. Selecting reliable vendors is also important for smooth operations.
3. Develop a growth plan. Determine which markets to expand into and set target milestones for company growth. This plan should align with your labor and employment strategies and corporate framework.
4. Devise a tax strategy that complements your chosen corporate entity. Consider how your tax strategy will evolve with business expansions.
5. Safeguard personal assets by choosing the right corporate structure. This decision directly impacts personal liability. Additionally, consider setting up an estate plan to protect personal assets and ensure asset distribution as per your wishes.

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.

I believe that fostering acceptance of new viewpoints is crucial. It involves being mindful during conversations, welcoming diverse perspectives, and engaging in open dialogue on any subject. It’s important to remain open-minded and avoid being judgmental or imposing one’s views on others. Instead, we should aim for the kind of thoughtful, respectful discussions that used to be more common, where everyone feels comfortable expressing their ideas without fear of overwhelming criticism. This approach is vital not only in academia but also in broader contexts.

As we wrap up, how can our readers follow your work?

https://www.darroweverett.com/

https://www.linkedin.com/in/andrewadams-esq/

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