Alexis Neely - Legal Best Practices for Internet Marketers. The Online Marketing Show Episode 005

Alexis Neely is known as "The Truth Telling Lawyer". She helps business owners grow their business by building on the correct foundations, which then allows them to grow the business as big as they like

In this interview I ask Alexis, how the typical online marketer can make sure they protect themselves when doing business online

If you are an online business owner but have never given a second thought to the legal side of things, make sure you listen to this interview as it could help you to stay out of trouble.

Alexis reveals...

* The legal agreements and advisers you should have in place to stay protected

* The disclaimers and policies you need to have present on your website

* How to make sure you don't break any spam laws when email marketing

* What you need to know about running an affiliate program and paying your affiliates

* What you should know about running contests and sweepstakes

* And more. Just listen to the interview or you can read the entire transcript below...

Joey Bushnell: Hi everyone, this is Joey Bushnell. Today I have with me a fantastic guest, her name is Alexis Neely.

Hi Alexis, thank you for being on the call with me today!

Alexis Neely: Hi Joey, it’s great to be here! Thanks for having me

Joey Bushnell: Alexis is a business and entrepreneurial strategist. Some people call her “The truth telling lawyer”. 

We are going to be talking about how as online marketers, we can make sure that we have the legal side of our business prepared and everything in place and in order. So Alexis could you tell uslittle bit about how you got started in this industry?

Alexis Neely: This all really started for me when I went out on my own as a lawyer. I had graduated 1st in my class from Georgetown Law and started my career at one of the big law firms in the US it’s called Munger, Tolles and Olson. It was started by Charlie Munger who if you know Warren Buffet, he is Warren’s number 1 business adviser.

I went to that law firm because I thought that I would get to practice law in an advisory kind of way. However I quickly found out it wasn’t like that. Everything was about forms, documents and transactions. So I went out on my own knowing nothing about business. My husband was a stay at home dad taking care of our kids and I was the bread winner so I really had to make it work from the beginning.

I focused all my effort and energy on learning how to make money doing business like an entrepreneur. I became very successful, very quickly at that. I built my practice into a million dollar per year revenue generating business.

That was great except I didn’t know anything about legal, insurance, financial and tax parts of my business. Even though I was a lawyer. They didn’t teach us that in law school, they taught us about legal things from the perspective of big corporations. But I didn’t really think that applied to me as the owner of a practice. Ultimately what happened was, that lack of knowledge cost me more than $1million.

Joey Bushnell: Oh no, what happened?

Alexis Neely: A lot of things, I’ll just give you some of them. Starting with an unexpected 6 figure tax bill in the first year that I hit $1million of revenue. It really just came from not knowing the right questions to ask my CPA. I just didn’t know what I didn’t know. Even though I had a CPA and a book keeper, I wasn’t interacting with them in a way that could really help me and my business. Turns out, I could have cut that tax bill in half, if I had known the right questions to ask.

It just proceeded on from there. I ended up getting sued by an employee. I didn’t have the right insurance in place to fight the law suit. Even though I thought I was the best employer ever! I was so nice, caring, I didn’t make my employees keep track of any time or hours, just come in and leave when you want, just get the work done. I really thought I was the best but ultimately it turned out that employee was stealing from me so I fired her and she sued me.

I didn’t have the right insurance in place to fight that law suit nor did I have the right documentation in place and had to settle that law suit for a 5 figure settlement. I had to pay an attorney more than $10,000 to work with me on that. That was a big ugly investment.

It just went on from there. There were all sorts of things that happened in my business from not having the right financial systems, not having the right legal agreements in place.

Finally I sold my law practice in 2008 because I started on online training company, training lawyers on this new law business model that I had created. What I saw was, I very quickly grew that business into a million and a half dollars a year business. But once again I was making the exact same mistakes with the foundation. I didn’t have the right business model in place so the business was really dependent on me to work an excessive number of hours. I didn’t have the right agreements or financial system. So I was repeating the same mistakes again and I set out to learn everything I could about legal insurance, financial intact and business models for the micro business owner. For people like me and you who are not the big companies but are the small guys.

Once I did that, and I did about more than 100 hours of interviews with legal, insurance, financial and tax professionals. Once I did that, I knew I had to teach it to other people. I should say that I really didn’t want to, I was really resistant because I thought these things were boring and they were the things that no one wanted to focus on.

But I was part of a mastermind group with a whole bunch of women and they were all 7 figure business owners. What they said to me was “Alexis we need you to teach this to us. We are stuck in our businesses because we don’t have the right foundations in place.” Many of them didn’t even know what kind of insurance they should have.

So with their encouragement I created a program called “LIFT” and it stands for Legal, Insurance, Financial and Tax.

It teaches the micro business owner entrepreneur exactly what you need to have in place to have a foundation in your business that will allow your business to grow to wherever you want it to be.

I’ve been sharing that system with folks for the past few years now and people are benefiting from it hugely. Many of them say that it’s really better than an MBA. Especially if you have this kind of business, that is not a huge big business to business, it serves people, helps people and you want to make a difference in the world. There are certain things that you need to now for your type and size of business.

Joey Bushnell: Do you find that people have these things in place or is it a case of when trouble arises then suddenly they scramble around and try to get it sorted out but it’s too late?

Alexis Neely: Yes, it’s a combination. There are some people that just want to keep their heads buried in the sand and that was me. I wanted to keep my head buried in the sand, I didn’t want to think about any of this. In fact I thought thinking about it, would attract bad things to me.

If I asked for legal agreements or talked about legal agreements people wouldn’t like me or think I didn’t trust them and they wouldn’t want to do business with me. Then I thought If I got insurance I would be attracting bad things to me under the law of attraction. 

Then with the financial systems I thought “I’ll just make more money. I don’t have to keep track of my money because very quickly, I’ll just make more. I’m really good at making money”. So there is a group of people like that who figure “Well, if something happens I’ll just make more money”.

Then there is a group of people who are very proactive, who want to take care of things upfront and make sure they’ve got the business foundation to support the size of the business that they are growing and to support the clients they have and work they are doing.

So it’s really a mix and I’m willing to meet people wherever they are. I had a friend come to me for help the other day, he actually had got himself in big trouble because he didn’t classify the people working for him properly. He called them independent contractors even though they were employees. Therefore he didn’t have workers comp insurance and he got charged with workers comp fraud. He had a $150,000 fine and he was facing criminal charges, misdemeanor and felony charges in California.

He called me and said “Alexis what do I do? How do I get out of this? Can you help me out?” and the answer was “No”. It was too late now, he had to face the consequences. No matter when you come to me, I’ll help you face what you have to face. But I can tell you this... it’s a lot easier to face it when you are not forced to face it. It's easier to face it when you do it by choice. When you do, those big crazy things like that don’t tend to happen.

Joey Bushnell: Absolutely, I totally agree Alexis. I got into business very young and I never thought about these things. To be honest with you it’s been a bit of an after thought. Luckily and fingers crossed I’ve not had anything too bad happen. But little things have happened here and there that have made me think.

Which is one of the reasons why I wanted to get in touch with you to do this interview because I think that possibly I’m not alone there. My audience perhaps maybe have the same feeling, it’s not something they’ve not really thought about too much.

I agree it's something that is much nicer to get it in place so we don’t find ourselves, like your friend did, where it it just too late for us. So a lot of the questions today are to do with internet marketing and online marketing.

The first things I wanted to ask you was for those of us doing business online, what are some ways that we might find ourselves getting in trouble with the law if we are over looking these types of things?

Alexis Neely: If you do business online you absolutely need to realize that you have a real business. Just saying “business online” doesn’t mean that you don’t need legal agreements in place. It also doesn’t mean that you need insurance and financial systems.

If your business is not incorporated, in the UK that will be different than the US, you don’t have a real business. Period. If you want a real business you incorporate your business. Once you incorporate it, you make sure you have a separate bank account, make sure you have a tax ID number, make sure you have legal agreements in place with everyone. That is really your biggest risk.

Your biggest risk right now is that you don’t have legal agreements in place with the people you are doing business with. I know people who don’t have legal agreements in place with their partners. You don’t have legal agreements in place with the people who are working for you. Most people will have legal agreements in place with people who are hiring them. That is the bare minimum that I do see. If you don’t have that you need that as well. That is not going to get you in trouble with the law per sé.

Your biggest risk with getting in trouble with the law is not characterizing your employees properly. You’re treating them as contractors when they are employees that is probably your biggest risk. In fact the cost of employing people generally whether as independent contractors or employees is your biggest risk overall. Especially when you don’t have legal agreements in place. That’s really what you need to be the most aware of because something is going to go wrong with those people. You think they are your friends and they like you and chances are that it’s not the case. You are only going to find that out when they are on their way out and now you’ve got a law suit against you.

Joey Bushnell: Sure so we need to make sure we have those legal agreements, just a quick one Alexis, in that situation when does an independent contractor become an employee? I know that might be a bit of a silly question but I know a lot of online marketers outsource to places like India and the Philippines, all of that still counts as independent contractors right?

Alexis Neely: That’s right yes, so when you are outsourcing overseas to India or Philippines you don’t have to worry about it. It’s when you’re hiring in the United states and you think because someone is working from home that they are not an employee.

In fact we are dealing with this right now ourselves, now we have people working for us full time from home and we are looking at turning them into employees because they are full time for us and that is exactly what makes them employees.

So what you need to be looking at is... Do you have someone who is really working for you full time, under your control? In which case, they are an employee not an independent contractor.

Joey Bushnell: And obviously an independent contractor would have their own business and they would deal with their own tax, is that right?

Alexis Neely:  Exactly right. That is one way you can make sure someone is an independent contractor is by having an independent contractor agreement in place with them. That is really important if you do have independent contractors you need to have an independent contractor agreement in place. Ideally you pay them through their own business instead of paying them as an individual.

Joey Bushnell: My next question was to do with websites. Is there anything we need to have on our website to be complaint with the law? Things like disclaimers, privacy policies etc?

Alexis Neely: Yes absolutely, you need to have terms of service, a privacy policy, disclaimers, especially if you are a lawyer like me.

For example I can give you a disclaimer right now... Even though we are talking about legal things, I am not your lawyer, this is not legal advice, it is for informational and educational purposes only and you should definitely seek the counsel of your own attorney to advise you on the specifics of your business.

That is a disclaimer.

If you are providing any legal or medical advice or anything that could be construed like that, you need to have the disclaimers.

Also if you are selling anything that has to do with making money then you need to have the earnings disclaimer on your website.

If you are selling anything as an affiliate you need to disclose that and make sure that it is indicated you are selling products as an affiliate and you are being compensated for your recommendations.

Joey Bushnell: How about email marketing is there anything that we should know about there?

Alexis Neely: The best thing you could know from an email marketing perspective is you could really understand the laws, it's the spam laws. So you know when are you spamming someone and when are you not.

They key of course is to make sure everyone that you are emailing opted in to your email list, that you have an unsubscribe link in all of your emails so they can easily unsubscribe if they want to.

One of the things that we are learning is to make it really easy to unsubscribe it really helps. Not just from a legal perspective, it’s just good business, it actually gets your emails more easily delivered. If people can’t easily unsubscribe and they report you to their ISP as a spammer that hurts your sender report, it makes it less likely that your emails will get delivered to the inbox of the people who really want it.

Joey Bushnell: So even from a marketing point of view, if you want to get good deliver-ability then you should be adhering to that, but also from a legal perspective as well. So a lot of reasons to stay on the right track with that one.

How about running an affiliate program? Lots of internet marketers have their own products and they have affiliates who help them make sales. Are there things we should know about that from a legal point of view?

Alexis Neely: I think the big thing for you to know, is you should customize your affiliate agreement. You need to stay in good communication with your affiliates you need to let them know how and when they are going to get paid.

Here’s a trick as a matter of fact, because you are going to need to 1099 all of your affiliates that make over $600 dollars with you in the US. That's big huge pain at the end of the year if you have not collected W9’s throughout the year.

So what you want to do is not send out any check to an affiliate that you do not have a W9 for. Get them to do their W9 at the time you send their check. Send them an email that says "Hey I have a check for you but I need you to do this W9" attach it, have it set up an echo sign or one of the online signing services so they can sign it and get it back to you very quickly.

Joey Bushnell: Brilliant thank you for that, that’s great. What about running contests or sweepstakes? From a legal stand point is there anything we should know there?

Alexis Neely: What I would do if you run contests or sweepstakes is I would look at a trusted site that run contests or sweepstake and see exactly what they are doing in terms of their disclaimers. This is if you don’t want to hire a lawyer to help you do it.

Now you are taking a risk there, that they didn’t do it right but if it is a really trusted, reputable company and you know they spent a lot of money hiring a lawyer and you want to run a contest or sweepstake and you want to see what they are doing take a look at their disclaimers and know that you are going to need something just like that.

Then of course if you are running it on something like Facebook there are going to be Facebook's own rules you have to comply with or your contest will be taken down. Which is different from the law. You have the law and then there’s Facebook. Facebook isn’t the law but if you are trying to run something on their platform then what they say goes even if it’s not what the law requires. So you really need to be aware of that, whatever it is.

Joey Bushnell: So if you do it on Facebook, you maybe won’t get in trouble with the law but you could get banned from Facebook which isn’t very nice either.

Does it matter what country we are in Alexis? For example I live in the UK and let’s say I violate one of the FTC’s laws, and the FTC is based in America, can they still take me to court? Can I still get in trouble?

Alexis Neely: You can still get in trouble, whether or not they can bring you here to enforce the trouble that you got in is a whole different question. But I don’t think you want to do something that keeps you coming to the US.

It’s not worth it to think “I’m over here, I’m just going to violate the laws of the FTC then I just won’t go to the US" because you might want to come to the US at some point. They could certainly seize bank accounts if you have any US bank accounts, it is possible they could even seize bank accounts overseas if there is a treaty with the place that you are in. If you got convicted of something here, they could seize your bank account wherever you are.

If you get sued civilly or criminally and you get charged with that and the jurisdiction is here in the US because you are doing business here you could potentially have to come here to fight that. They could put that judgement against you and you are going to have to deal with that if you ever want to come to the states.

Joey Bushnell: Yes, I don’t want any problems, I like coming to the states! But that was a very specific example of the UK and the USA.

Because all the countries have different laws around the world, do you see that one day there may be some kind of international law that applies to the internet or is that just not the case right now?

Alexis Neely: I don’t know, I don’t have the answer to that question, but I think a lot of it depends on where we go with all of the globalization. I imagine that there certainly will be as we become more global and we are all working with each other in various places and there is no barriers to us connecting, communicating, exchanging money and doing things. I would imagine it would become even more international.

Joey Bushnell: Yes, sorry to ask you an awkward question and I know that you wouldn’t have known the exact answer to that but it’s interesting to think about because I’ve always wondered how does it work, if I do something in the UK, do America's rules still apply. I guess it's best to adhere to everyone's rules to stay out of trouble!

Alexis Neely: Especially when it comes to money. That is really what we are talking about here. So lets say you are from some small town in the Ukraine and you have a website that you are selling something on and you violate the FTC rules, like you don’t have an earnings disclaimer for example. Is it ever going to be a problem for you? Possibly not, probably not, unless you get big enough in which case it could.

You don’t want to be banned from selling in the US. So why take that risk? Maybe you say “Well, I don’t care, if I do maybe I’ll just open up another ISP account and do it another way.” That’s fine, that’s not really the businesses that I work with.

The businesses I work with are the businesses that are focused on helping people making a difference in the world and doing what I call “The great work” and aren't just in it for the money. I find that someone who is just in it for the money maybe doesn’t care so much about having the right foundation in place because maybe for them it doesn’t matter as much.

Joey Bushnell: Is there anywhere we can go to read up about these laws, FTC guidelines and these types of things, do you have any recommended reading?

Alexis Neely: One of the places you can go is on our website eyeswideopenlife.com, you can get our recommended advisers guide if you are looking for help with some of these issues from advisers, through to those who specifically work in serving entrepreneurs with online businesses.

You can also get 3 free legal agreements on that site, one for affiliates, one for independent contractors and one as a non disclosure agreement.

Joey Bushnell: You mentioned there about advisers. What sort of advisers and professional services should we make sure we look into? Things such as lawyers, accountants etc where should we be looking to get things covered?

Alexis Neely: You are definitely going to want to have a lawyer that you trust working at your side if you are growing your business. That is going to be a lawyer who you can look to as more of a business adviser rather than just a document drafter.

You are also going to want to have an insurance adviser, someone who is helping you make sure you have the right insurance in place. You need business insurance, personal insurance and any life insurance. I go through all of that in my LIFT foundation system program.

You are also going to want to have a book keeper and possibly an outsourced CFO and definitely a tax adviser.

Your book keeper needs to be someone who’s not just entering data but is actually helping you create the reports that are necessary for you to analyze either by yourself or by your CFO to determine whether your business is on track to be able to grow to the degree you want it to be able to.

Then your tax adviser is someone you want to meet with a couple of times a year to be able to strategize on your taxes. That is going to save you a huge amount of taxes over the lifetime of your company if you strategize with the tax advisor twice a year.

Joey Bushnell: Cost wise is this something that small business owners will find affordable? Or is it something they are going to have to be expecting to pay a little bit out for?

Alexis Neely: You will have to expect to pay a little bit out but the way I look at it is, you always want to build your business to where you want to be, rather than from where you are now.

If you want a multimillion dollar business then you are going to be investing some money in setting up financial systems and getting business structures in place.

If you want one to just make a couple hundred dollars a year you could probably just do it yourself. The key is you want to make sure you know what you can do yourself, you get educated even if you will hire people to do it and know that you hire the right people.

I put together a system that makes all of that really easy. Number 1 getting educated so you get the know about what you don’t know. Some people have said my program is better than an MBA for the micro business owners like us because it’s very applicable to us.

Once you have been educated about what you need and don’t need, what you can do yourself and hire out, then we have created hiring guides. So when you are ready to hire people, you hire the right people who can do what you need.

We are giving you questions to ask those people before you hire them. So you’re not just calling them up and saying “Hi, how much do you cost?” Which is what a lot of people actually ask. But we give you questions to ask them that are going to really help you know is this person really the right one for you?

Then we have created implementation maps that guide you step by step through making the right decisions for and implementing the strategy whether you do it yourself or hire someone to do it.

Then we also have legal agreements, more than 20, so you don’t have to go out and hire an attorney every time you want to put in place a legal agreement, you can just use the template agreement to do it and learn how to go through the legal agreement process so you can do it yourself as well.

We have put all that into our system and that is one way you can learn how to do it and get it in place for less than a couple thousand dollars. Or you could invest tens of thousands of dollars hiring someone to do it or millions of dollars learning it the trial and error way, like I did.

Joey Bushnell: Yes, ultimately it will cost but it could cost you far more if you don’t do it, that is a good incentive for anyone.

I just want to thank you Alexis for doing this interview with me today. Can you tell us where we can get the LIFT program and where is your website where people can find out more about you and maybe stay in touch via social media or on your newsletter?

Alexis Neely: I would start with eyeswideopenlife.com that is where you will get legal agreements, resource advisers guide.

Then the other place to check us out where you can see a whole talk I did on this topic is at myliftfoundation.com. When you opt in I have a 60 minute talk I did that goes through everything about getting your lift foundation set up and will tell you more about where you can get the lift foundation system.

Joey Bushnell: Great, I encourage everyone to take advantage of that. Thank you so much for this interview and the offer that you have just given us to all of those great free templates and guides, it’s very useful indeed so thank you once again.

 Alexis Neely: Of course! Thank you Joey

Disclaimer: This interview is not legal advice, it is for informational and educational purposes only and you should seek the counsel of your own attorney to advise you on the specifics of your business.