The Legal Checkup

Dentists typically recommend that a person’s teeth be cleaned every six months and that oral x-rays be taken at least once every year.

Internists recommend that a person receive a physical examination annually. Pets visit the veterinarian for vaccinations and well-care appointments. Vehicles need oil changes and regular maintenance. Your personal and business legal affairs are no different and require regular “legal checkups.”

Much like going to the dentist, the idea of meeting regularly with your attorney is probably not going to excite you; but now more than ever, periodic communication with your lawyer is essential. This is even more true for online and adult business operators. Unfortunately, far too many web entrepreneurs wait too long and ultimately reach out to their attorneys when trouble has already come their way. In many instances, the legal problems encountered could have been prevented had a “legal checkup” taken place.

The law in the United States and throughout the world is constantly changing. It is naïve to think that just because a certain activity was legal in 1998, that it is still legal in 2017. In my experience, adult entertainment business operators can be stubborn and unintentionally engage in conduct that may have started as legal but is now considered unlawful. A turbulent or significant change to a jurisdiction’s political landscape make legal change a virtual certainty.

Hence the need for the “legal checkup.” If you are the operator of an adult entertainment business and still haven’t found yourself a lawyer, then stop reading this article and start looking (there are fantastic tools and resources available online to assist you in finding the right lawyer). You can also utilize message boards such as xbiz.net to find out the experiences that other industry members have had with a certain attorney.

Unless you have the financial means to afford a full time-general counsel, it is unlikely that your attorney is aware of the daily operations of your business. This is where the necessity of a “legal checkup” becomes essential.

A proper “legal checkup” will give you the opportunity to talk to your lawyer about past, present and future business intentions. As much as a “legal checkup” enables your attorney to get a handle on where you may have loose ends to tie up, it also presents a unique opportunity for you to be educated on the various changes and creations to applicable law (hint: are you aware that there have been substantial changes to the process of being able to assert DMCA Safe Harbor immunity?). For the online business operator, your regular “legal checkup” should also include your lawyer reviewing your website(s) to spot areas of potential legal exposure. It is disturbing to learn how many “high-risk” businesses operate websites without ever having had a lawyer review the sites.

A solid “legal checkup” should include but not be limited to the following:

• Comprehensive website review (including legal disclaimers);
• Conversation about current business model and future business plans;
• Conversation about business financial stability;
• Conversation about new or changed laws that impact the business;
• Discussion about any company formation changes (such as change in ownership, sale of assets, legal entity setup etc.);
• Discussion about political changes that have or may affect ongoing business operations

Business operators too frequently take the “if it isn’t broken, don’t fix it attitude” but in this age of data privacy, data breaches, FTC enforcement actions, intellectual property enforcement, the 18 USC §2257 legal challenge and the government’s war against human trafficking; the “legal checkup” is more important than ever.

Here are some examples of issues that I have seen while conducting “legal checkups” through the years.

Scenario 1: A website is purchased from one business to another. During the course of the purchase, the new owner decides to change the website’s terms of use on his own and simply changes the corporate entity name but neglects to change some other essential provisions in the website’s terms of use. Ultimately, the new business owner is forced to litigate a consumer matter in an unfavorable jurisdiction and spend a small fortune hiring a lawyer far outside of the business owner’s backyard.

Scenario 2: A “newbie” creates a cam style website but decides that simply “borrowing” another website’s privacy policy is cheaper than contacting an attorney. Unfortunately for the newbie, the website has a data breach within the first 6 months and ultimately is forced to explain to a state attorney general’s office why the website wasn’t using the encryption that was referenced in the “borrowed” privacy policy.

Scenario 3: A veteran and successful business operator decides that she wants to make more money and so she spends $50,000 having an online service designed and programmed. Unfortunately for the veteran, after spending the $50,000 she learns that she cannot release the product to the public because it would violate the intellectual property rights of a fortune 500 company. What would have been a minuscule legal bill instead turned into a $50,000 loss.

All three of the above-mentioned scenarios could have been avoided had the business operator been having regular communications with their lawyer. Learn from their mistakes; a 1-2 hour meeting every few months can most certainly save you a small fortune.