00:00.000 --> 00:03.960 Johny Fernandez: Being in the business, any business, there's always a risk for 00:03.960 --> 00:08.160 a lawsuit. So let's talk a little a little bit about that when you know, you 00:08.160 --> 00:13.470 are a broker and you have your own business here in the industry, the risk 00:13.470 --> 00:21.540 of being sued. What does that look like? What exactly is the risk when you jump 00:21.540 --> 00:22.680 into the business? 00:22.690 --> 00:26.440 Sean Murray: Yeah, that's a really good question. So this kind of feeds into 00:26.440 --> 00:30.580 being an independent, you know, sales office independent operator is that you 00:30.580 --> 00:34.090 may operate under the impression that you're now removed from the liability if 00:34.090 --> 00:39.970 something goes wrong. Yeah, if the merchant has some sort of problem with 00:39.970 --> 00:43.390 the funder, the lender, you're like, well, that's between you, I would just 00:43.390 --> 00:48.490 the broker, I'm independent. And I mean, my hands are clean in this deal. Don't 00:48.490 --> 00:53.350 blame me. But that's not always how it works out. Sometimes when disputes 00:53.350 --> 01:00.790 arise between the merchant and the funding source, the broker unwittingly 01:01.330 --> 01:07.000 could be could be viewed as liable. And that might be because the merchant 01:07.000 --> 01:09.370 doesn't know that they're not the same, you know what I mean? They may they 01:09.370 --> 01:12.640 think it's all one in the same. Yeah, you know, I talked to this person, they 01:12.640 --> 01:17.680 referred me to here. And it didn't go the way I thought and so I'm mad at all 01:17.680 --> 01:22.480 of you. And so if it results in some type of legal dispute, maybe maybe there 01:22.480 --> 01:26.560 is a lawsuit. Yeah, they just name everybody. Yeah, as like co-defendants, 01:26.590 --> 01:30.130 right. And here, you were this independent broker, minding your own 01:30.130 --> 01:32.920 business, you know, you weren't the lender, you weren't the funder, all of a 01:32.920 --> 01:37.990 sudden, you're a co-defendant in a lawsuit. This is not actually not that 01:38.020 --> 01:42.520 uncommon. Yeah, it's, it's a real risk that people need to be mindful of, if 01:42.520 --> 01:43.630 they get into this industry. 01:43.680 --> 01:48.210 Johny Fernandez: So let me ask you this financially, if you have to go through 01:48.210 --> 01:51.900 something like this, and let's say, you know, you don't have the money to pay 01:51.900 --> 01:57.090 for this. What have you seen other people do to kind of figure out and go 01:57.090 --> 02:01.590 about a lawsuit? But what have you seen personally, you know, working with all 02:01.590 --> 02:03.960 these different guys, like, how do you handle this? 02:05.190 --> 02:10.950 Sean Murray: So, you know, I've said this before, and I don't think... it's 02:10.950 --> 02:17.790 hard to take it seriously, until it happens. Because you know, what, what do 02:17.790 --> 02:20.520 you do if you're being sued, and you're a broker, and you don't have the 02:20.520 --> 02:25.620 resources to defend yourself? I don't really know what you do. You really need 02:25.620 --> 02:29.520 to go into the industry itself. This is commercial finance, I don't care what 02:29.520 --> 02:33.810 anyone told you about. This is a work from home job, or it's easy, you know, 02:33.810 --> 02:36.840 you can make a million dollars, it's just sales, just phone sales, or 02:36.840 --> 02:41.310 whatever. This is the world of commercial finance, like period, and 02:41.310 --> 02:46.590 it's a complicated and somewhat institutionalized world. And when things 02:46.590 --> 02:50.700 go wrong, well, it's you're going to be playing, you know, with the big boys and 02:50.700 --> 02:54.330 and how that that dispute gets resolved. Yeah, a lot of times, it's going to be 02:54.330 --> 02:58.050 through the court system, you're going to be named the CO defendant, and you're 02:58.050 --> 03:01.860 going to be expected to defend yourself. Do not expect the fonder of the lender 03:01.860 --> 03:05.610 to pay your legal bills. And guess what, you can't just ignore these things and 03:05.610 --> 03:09.330 be like, I'm just not gonna respond and hope hope it goes away, it really 03:09.330 --> 03:13.650 doesn't work like that. You're going to have to pay for a lawyer to defend you. 03:14.160 --> 03:19.680 Even if you did nothing. Anyone can file a lawsuit against you. Even even if it's 03:19.680 --> 03:24.390 not true, they just have to believe that it is true. And had an accurately state 03:24.390 --> 03:27.900 their claim against you. And you can do like it's total. You know, it's total 03:27.900 --> 03:31.740 nonsense. It's false that now What happened? Well, that's for your own 03:31.740 --> 03:37.560 lawyer. Yeah. To handle for you, right. And this is something that's going to 03:37.560 --> 03:42.120 come up whether you're a very small operator, it could be a one man show 03:42.120 --> 03:46.650 working from home, and all of a sudden you get sued. This was a real risk that 03:46.650 --> 03:50.850 you need to consider. It could happen. Yeah. And I think when you're a really 03:50.850 --> 03:54.990 good salesperson, you like to think that everything is within your control, that 03:54.990 --> 03:58.800 if I just call them yeah, you know, they won't do this, right? Or let me just 03:58.800 --> 04:03.630 give them a call. This can all be fixed, right? And I think that even if you're a 04:03.630 --> 04:08.160 super confident in your abilities, yeah, you may be somewhat helpless to actually 04:08.160 --> 04:12.120 resolve their dispute. If the underlying dispute is with the lender, the funder, 04:12.120 --> 04:16.440 and only they can only they can truly fix it, all you can do is talk to them, 04:16.470 --> 04:20.910 right? And you could just get lumped into it. And this is the real risk to 04:20.910 --> 04:26.550 consider. And I've seen it happen. A lot of times, I've seen it happen to big 04:26.550 --> 04:31.110 shops, medium sized shops. I've seen it happen to way too many small companies, 04:31.110 --> 04:37.260 one man shows, who ended up getting sued for one reason or another, because they 04:37.260 --> 04:41.280 didn't realize the stakes that this is the commercial finance industry. And 04:41.280 --> 04:44.550 even though it may seem like you just need a phone an email to get started, 04:44.550 --> 04:46.860 and you know, the funders and the lenders are the ones with all the 04:46.860 --> 04:51.300 liability. No, you're like us, you're presumed to be a sophisticated party 04:51.300 --> 04:54.180 too. So this is something you really need to be thinking about. 04:54.180 --> 04:56.190 Johny Fernandez: I think I think what comes to mind, it's like you want to 04:56.190 --> 05:00.510 play with the big boys and the big boys come calling you have to be prepared to 05:00.510 --> 05:01.410 defend yourself. 05:02.070 --> 05:05.760 Sean Murray: Yeah, that's exactly right. This is a this is an industry where, you 05:05.760 --> 05:06.330 know, there's a lot 05:06.850 --> 05:06.760 Johny Fernandez: Of great money, you can make great money. But also, 05:06.760 --> 05:07.230 Sean Murray: Yeah, exactly. It's gonna cost you, you know, if you want to if 05:07.230 --> 05:11.460 you want to make big money, then you're you're playing a table where everyone 05:11.460 --> 05:21.750 has a lot of money. And one of the tools they have in their arsenal is lawyers. 05:21.810 --> 05:25.980 Yeah. Right. So if the potential to make a lot of money is there, and it is you 05:25.980 --> 05:28.500 can, you can make a million dollars, you know, I don't know if we can make a 05:28.500 --> 05:31.050 million dollars per year, but you can certainly make a million dollars and 05:31.080 --> 05:35.430 small business finance world. And guess what? There's so much money flowing 05:35.430 --> 05:39.390 around that. So many people have lawyers, they don't think anything of it 05:39.390 --> 05:41.310 at all. It's just a normal part of business. 05:41.310 --> 05:41.760 Johny Fernandez: It is. 05:41.850 --> 05:45.450 Sean Murray: And then here you are, you know, it's essentially a one man show or 05:45.450 --> 05:50.310 a very small shop that game. Well, you know, that that? Hopefully, I won't need 05:50.310 --> 05:52.170 that you will, you won't need that. And 05:52.170 --> 05:56.170 Johny Fernandez: I think it's what you just said, right? They're having a 05:56.170 --> 06:00.940 lawyer and being ready to sue, it's a normal part of business, just any 06:00.940 --> 06:04.990 business, any business owner, you know, corporations, etc. They're ready 06:04.990 --> 06:09.730 legally, and they have the legal department ready to go guns blazing, if 06:09.730 --> 06:14.920 you need to. Yeah, and kind of like what you said, if you are a one man show, and 06:14.920 --> 06:18.940 you think you're on top of the world. And some and you do something wrong, or 06:18.940 --> 06:22.210 you encounter a situation where you are going to get sued, and you're, you know, 06:22.210 --> 06:26.860 subpoenaed to show up to court, etc, etc. You have to prepare. 06:26.930 --> 06:30.590 Sean Murray: Yeah. And it's, it may be hard in the beginning to imagine having 06:30.590 --> 06:34.790 to set aside money for future legal expenses, because it's already hard 06:34.790 --> 06:41.690 enough to run a you know, an ISO and ISO broker company as it is. But you really 06:41.690 --> 06:45.800 do need to have it and too many people out there say, Oh, I have a friend who's 06:45.800 --> 06:46.760 a lawyer, everyone. 06:47.240 --> 06:48.260 Johny Fernandez: Everyone has friend... 06:48.540 --> 06:50.880 Sean Murray: Everyone has a friend who's a lawyer. So that's why I'm bringing it 06:50.880 --> 06:53.610 up. Because everyone's like, oh, man, I got a friend who's a lawyer. Yeah. 06:53.700 --> 06:58.380 Unfortunately, that lawyer may not always be exactly what you're going to 06:58.380 --> 07:02.640 need. Like there might be a lawyer who does real estate deals. They're not 07:02.640 --> 07:06.150 someone who goes and like defends people in court. There's all different types of 07:06.150 --> 07:09.810 lawyers. Yeah. So the lawyer you're friends with might not be the type of 07:09.810 --> 07:14.130 lawyer you would need, if someone is threatening to sue you, or actually 07:14.130 --> 07:17.730 suing you. And then when you go and you say, Hey, can you help me out? You might 07:17.730 --> 07:22.260 find that that person tells you, No, I can't. I can help you with your 07:22.260 --> 07:26.340 contract. I can answer a couple of questions for you. I can notarize 07:26.340 --> 07:29.850 something for you. But I can't defend you in a lawsuit. That's not the type of 07:29.850 --> 07:33.360 law that I do. Or I can't go up against this type of commercial litigator, it's 07:33.390 --> 07:37.140 not going to work out for you. So you got to have more than just my friend is 07:37.140 --> 07:39.090 a lawyer type of arragement. 07:39.090 --> 07:42.270 Johny Fernandez: I think it's like what you just said, a lot of people they 07:42.450 --> 07:47.640 think that because their friend is a lawyer, they can back them up. But I 07:47.640 --> 07:51.900 think something people forget is that there's different types of law, you 07:51.900 --> 07:56.760 know, entertainment, law, real estate, law, family, Marriage and Family Law. 07:57.750 --> 08:02.250 You know, just regular criminal justice law, contracts. You know, you have 08:02.280 --> 08:09.000 entertainment law, so, yeah, but there's these different areas that they just 08:09.000 --> 08:12.990 can't crossover. It's like the medical field, like, you're not going to get a 08:13.020 --> 08:16.650 gastroenterologist to do a family practice visit. Like, they just don't 08:16.680 --> 08:21.570 intervine. Yeah, I feel like that's the perception. When people say, I have a 08:21.570 --> 08:26.700 family friend, that's a lawyer, and they don't practice the law that we need. 08:26.760 --> 08:27.570 They can't do anything. 08:27.600 --> 08:31.200 Sean Murray: Yeah. You know, now that we're talking about it, this has come up 08:31.200 --> 08:35.880 before, this is the risk that should be disclosed to anybody there. There are a 08:35.880 --> 08:38.880 lot of small companies out there that they go out, and they raise money from 08:38.880 --> 08:43.500 family and friends to start their companies up. And I think oftentimes, 08:43.890 --> 08:49.050 the presentation that's given to them about, you know, the risks and the 08:49.050 --> 08:54.150 rewards, it's how much return can you make? And what are the defaults? Like? 08:54.180 --> 08:58.590 Yeah, and they, they everything is based off that. Yeah. And the legal side just 08:58.590 --> 09:01.920 gets pushed back, push back. They might say, well, like, hey, certain courts 09:01.920 --> 09:07.200 have deemed these products to be legal mistakes or whatever. But I don't think 09:07.200 --> 09:15.150 that they I don't think it's adequately present presented. That litigation tends 09:15.150 --> 09:19.740 to be a major part of the business. And litigation is extremely expensive. 09:19.770 --> 09:20.040 Right. 09:20.520 --> 09:22.800 Johny Fernandez: Well, litigation literally closed down your business. 09:23.010 --> 09:24.780 Because a fee, like, it's expensive 09:24.810 --> 09:28.440 Sean Murray: Yeah, these are things that can cost 10s of 1000s of dollars, right, 09:28.470 --> 09:34.650 depending on you know, whatever the nature of it is. And you need to decide 09:34.710 --> 09:38.400 from the onset with whoever you're raising money from, who's going to be 09:38.490 --> 09:43.140 paying for those costs? And did you tell them in advance that this is the true 09:43.140 --> 09:48.660 risk that I did have? Someone asked me a few years ago.You know, you know what I 09:48.660 --> 09:52.590 mean? What am I missing? Here are the returns is the cost, raising a bunch of 09:52.590 --> 09:55.740 money, what am I missing? And I was looking at what they sent me just like a 09:55.740 --> 10:00.120 random email. Yeah. And I was I was like, Well, what about all the legal 10:00.180 --> 10:04.050 These you don't I mean, like, what happens if someone what happens if these 10:04.050 --> 10:08.790 merchants sue? Who Who pays for that, like, well, how often does that happen? 10:08.820 --> 10:12.840 And I was like it happens all the time! Happens all the time. And you really 10:12.840 --> 10:14.130 need to build that into your model.