129: Create A Piece Of Mind Legal Framework With Dara Rosenbaum


Dara Rosenbaum is the founding partner of Rosenbaum & Taylor, a boutique law firm specializing in the high-quality legal representation of businesses throughout New York. We discuss the “Set It and Forget It” management blueprint, what to do when people underestimate you, and how to handle power imbalances in a negotiation.

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Create A Piece Of Mind Legal Framework With Dara Rosenbaum

In this episode, our guest is Dara Rosenbaum, the Founding Partner of Rosenbaum & Taylor, a boutique law firm specializing in the high-quality legal representation of businesses throughout New York. They’re offering personalized solutions, including litigations, contract drafting, review and negotiation, business disputes and insurance coverage. Dara, welcome to the show.

Thank you so much, Steve. It’s a pleasure to be here.

It’s great to have you. I love professional services firms and talking to leaders of such firms because you have unique challenges of growing and being dependent on people. I’m also always curious about how these professional services get formed. Let’s start with your entrepreneurial journey. What prompted you to find your law firm in a hyper-competitive market such as New York?

It’s a competitive market. There are crazy people. Way back in 2002, Scott hired me. He and I are working together at another firm. He was a partner there for many years and I was his associate on a team of associates. We worked together for about ten years. He’d been at the firm for 28 years. I worked there for 10 years.

Within our little world, we always joked about, “If this was Rosenbaum & Taylor, we wouldn’t have to deal with the politics of a larger firm. We could do this if it was Rosenbaum & Taylor. If it was Rosenbaum & Taylor, we could do it our way.” It has always been the joking name of the firm. We worked at a firm with a total of 30 attorneys. Things get to a certain size and there’s nothing wrong with being larger. When things get to a certain size, you get certain power dynamics and political issues that develop. We love practicing law together.

In 2010, between Christmas and New Year’s, we said, “We think it’s time.” From January 1st, 2011, we decided that every day we would do something in furtherance of creating the firm. We were still practicing at the other firm up until April of that year. We finished up and spent a lot of time speaking to our clients to come with us and discussing their matters. We opened the doors in May of 2011. We were very fortunate because all of our clients and all of their matters came with us. We walked out of the office with 90-something boxes of files. On that Monday morning, we were ready to start at our firm under our name working on the same cases we’ve been working on before.

What is the difference between being a lawyer in some partnership and building a little firm as a business?

Scott and I had been in business for several years. I’m thinking of myself as an attorney with our firm. There was a mindset shift after a couple of years, “It’s a business.” As we grew, we were hiring people, moving into different spaces and taking on additional responsibilities. I always treated it as a business but thinking of it as a business gave me a lot of insight into the way that small and mid-size business owners think and operate in the challenges that they have. That’s what has informed a lot of my work in the transactional litigation space where I’m supporting small and mid-size businesses.

Are you guys beginning this firm as a partnership or you are thinking about scaling and building this as a business?

We’re a professional corporation so we’re an S Corp in New York. It’s not just the two of us anymore. We have other attorneys here. We have other support staff here so we’re growing. I don’t want to get too big. I like the personal touch we offer but I could see being as large, maybe ten attorneys.

Let’s switch gears here a little bit and talk about the theme of this show, which is management blueprints and business frameworks. We talked about this framework that you developed. It’s called set it and forget it or another smart name you can call it but it gives business owners peace of mind. It’s a blueprint that they can apply in their business. Can you describe the idea behind it and how it works?

One of the things we talked about was business formation. A lot of people are very excited to get the name, get themselves registered or not and then get ready to make money. There’s some framework that you need to put in place. It’s like the blueprints for a house or your business. What are you going to do, how are you going to do it, who’s going to do it, why are you doing it and all of those types of questions. When I refer to something as set it and forget it, your readers from the US probably may remember this infomercial from a guy named Ron Popeil, who is selling some oven where you would put all the food in, set it and forget it and then come back and have your dinner.

When you start a business, you can't just make money right off the bat. You need to have a blueprint that defines your business first. Share on X

My thought process when working with small and mid-sized business owners is you as a business owner, do not want to think about legal issues every day. You want to set it and forget it. You need to check in with it but when you start the business, you want to have the appropriate framework. If you have partners, you need a partnership agreement. If you’re an LLC, you need an operating agreement.

You need the foundational documents that define what the business is, what the business isn’t, what it does, what it doesn’t do and what everyone’s responsibilities are. That’s why the blueprint word is an excellent one. Once you have that document and have agreed on all of those things, put it in the drawers and the computer and have it as a reference document but you don’t need to think about it every day and come up with new rules or guidelines every day.

To me, it’s a lot like playing a game. You and I can’t start playing a game on a court, make a move or do something and I say, “No, that’s against the rules.” You’ll say, “We don’t know what the rules are.” It’s nice to have the handbook, guidebook, manual, agreement or whatever documents you need for your business worked out with an attorney ahead of time.

You can say, “No, we dealt with this before. We talked about this before when we formed the business. What would happen if one of us wanted to retire or one of us wanted to bring in a new partner? If we were given an opportunity that required great capital investment, how we would handle certain issues? Who would be responsible for certain things?” That also builds in a lot of protections with respect to who’s responsible for what and where liabilities fall.

That’s how I describe it in terms of the set it and forget it. Create the relationship on paper, brainstorm all the details that you need to go through and deal with as many foreseeable issues as you can early so you don’t have to keep revisiting those relationships. That goes for external relationships too. It goes through relationships with vendors, customers, clients, manufacturers and distributors, whether you’re in a service or product business. You want to set those relationships in the beginning and then have that document to go back to. You want to do the business of the business. You don’t want to be worrying about the legal stuff.

It’s almost like a prenuptial agreement.

It’s similar in concept.

What I understand is that the problem with prenuptial agreements is that it’s quite depressing to go through all the potential problems that marriage can face and come up with rules. It can spoil some of the fun. Do you think that this is the same for a business? When you and Scott started you understood this, probably it was easier for you because you have faced many of your clients having these problems. For two partners excited about the business idea, for them to get together and talk about all these negative potential eventualities, is this relatively easy to do or do you see that being a challenge?

It’s not negative things that you’re dealing with. You’re dealing with emotions but different emotions when you’re forming a business as opposed to maybe entering into a marriage. You’re not dealing with negative things, first of all. You’re dealing with protections. When you’re the most excited, everything’s going well. When you have great vision, it’s a great time to deal with all of those things. It’s not necessarily negative things but what happens if one of you wins the Powerball lottery and you don’t want to be in the business? What happens to your shares? Where do they go? Where does your interest in the business go? Do you have any management control? You’re dealing with things like responsibilities, duties and structure.

It’s not necessarily negative things. We’re not always talking about somebody becoming deceased, disabled or in dispute. We’re talking about in most cases, how you are going to make decisions. I don’t think it creates hostility or introduces a negative feeling. To me, it’s a comfort that people can have that we’ve already dealt with all these issues.

We sat down with somebody who has experienced all these things, who knows what other business owners have gone through and who has given us an opportunity to look at the issues we might face and deal with them ahead of time so that on a day-to-day basis, you’re not trying to figure out like, “If we have 3 partners and 1 of them wants to do this and 2 of them want to do that, are we voting based on people, on the number of shares or role in the business?” You don’t want to deal with those things on a day-to-day basis. You want to have that determined in the beginning and then move forward under that framework.

Business partners can figure that out and you can help them do that. What about other negotiations like when business owners negotiate with vendors who are perhaps more powerful than they are or very powerful customers? What is your suggestion? How can someone negotiate with someone who is much more powerful than they are or someone much weaker? What is your strategy for them?

This is often in a power imbalance. There’s an owner of a building who’s looking for a contractor for certain building services. The owner can go anywhere and the person who’s going to be contracted for the services is looking to land that account. Whether it’s personal service or products, you can go to a different manufacturer or distributor. There’s generally a strong power dynamic or differential there. What you need to do, especially if you’re working with an attorney, is make sure that the attorney understands what your position is.

I have worked with clients who say, “I need this contract. I am not walking away from this contract no matter what. We need this for the lifeline of our business. Help us get the best terms we can.” It’s important to share with your attorney or know for yourself what power you have. Are you the only manufacturer that can make this part? Is this particular company that’s coming to you failed in a relationship with somebody else for a reason that you understand very well and the problem that you won’t have with them? What is it you can offer?

It’s important to go into any contract negotiation, recognizing that you’re never going to get everything you want. Somebody once told me, “Contract negotiation is Latin for nobody’s extremely happy.” I don’t know if that’s necessarily true but you’re going to know where you want to give and take. “There are a couple of things you can give up over here in this paragraph up above.” When it gets to a later paragraph, you have a strong position with respect to something else.

Before you go into any contract negotiation, you must first understand that you will never get everything you want. Share on X

I was browsing on Amazon and I saw a book. It was about growing the pie rather than focusing on sharing the pie. How can you negotiate in a way that both of you grow together the pie that you can then share? I read from a negotiation book, “The best question to ask is not to oppose a clause but to ask, is this the best you can do?” Hopefully, they respond, “We can do a little bit more,” and then you can ask again, “Is this really the best you can do?” It’s a very non-threatening way of asking more and if they can’t do anymore, then you can still accept the terms.

That’s a very good question to ask. There are other couples of other questions that I ask when I’m doing contract negotiations. For example, if my client is manufacturing a product and says, “I need to get the price to this per piece. What can we do to get there?” I make it a we problem. We are looking at this together. We’re on the same side of the table looking up at the wall and thinking about what the problem is. We start thinking about other terms because you’ve set the mindset of, “I need to be at this dollar value. I’m building maintenance. I’m providing janitorial services and I need to get to this number of dollars per month or square foot.”

Somebody may say, “We can do that in year 1 but then in year 2, this is what we need to do. I can do that but I need to sign a 6-month contract with you because I’m not sure how you’re going to do yet so let’s wait and see how that goes.” Sometimes it’s important to pick the element of the contract that is most important and try to work the other elements toward getting to that.

You also talk about setting rules in a business-friendly way. What do you mean by that? Can you give me an example?

I’ve heard lots of people over the years say, “We don’t want to get the lawyers involved. It gets so complicated and expensive.” The way I look at it my job is to be business-friendly. My clients are not coming to me to kill deals. They’re not coming to me to stand in the way of them doing business. They want to get contracts and have good relationships. If they have a dispute, they want to resolve it amicably so that their reputation and the relationship with that particular entity aren’t damaged so that they don’t have a big financial hit.

The way that I look at it is setting rules in a business-friendly way is to set the relationship reasonably so that everybody knows what the rules are and everybody can make them properly. For things like cancellation terms, you have to think about what cancellation terms should be for your particular product or service. If you are a service provider providing security for events and you know that you have an outlay of cash 60 days before the event to get everything set up, you don’t want a 30-day cancellation policy.

The client you’re working with lost the money in 30 days and you have to explain, “Here’s why it has to be 60.” If everybody understands that you’re not making arbitrary rules and rules that are too strict or that are heavily in favor of one side and you’re trying to be fair, to me, that’s the way to encourage business. Those are the types of issues where that comes up like payment terms, cancellation terms and the scope of work which is a big one.

You want to define the scope of work very clearly or you end up with what people call in construction in other industries, scope creep. The scope keeps creeping up little by little and suddenly you’re doing a much bigger project for the same price you agreed to the smaller project for. You want to set those guidelines or, to use your word, set that blueprint. What’s the blueprint for our relationship? How are we all going to behave?

Some of the challenges in negotiations is also the information in balance. One party understands the process a lot more deeply than the other party. They know what to ask for and the landmines. I used to be an investment banker. Often, we were selling very small business owners to a large corporation or a private equity fund. They had very experienced lawyers who knew exactly what to do and have been writing a contract. The challenge was what we don’t know. Also, to explain to the business owner why certain things are in a certain way and have an argument with the buyer that some clauses are unreasonable. It should be on them to explain why it’s reasonable. Sometimes they have to admit that it was not reasonable in negotiating.

That certainly comes up pretty often where there’s an imbalance of information. I would say two things there. One is to find the right advisor, whether that’s a friend, an attorney or somebody who knows what it is you’re going through. The other thing is to find a network of people whom you can trust. Very few people in this world are doing something that nobody’s ever done before. If you have a network of people whether they do exactly what you do, they don’t have to but what are they encountering? Have those conversations and those people who are in your village like, “I ran into this issue. It happened a lot in the last few years with contracts that needed to be canceled because of everything was going on in the world.”

People are going, “How did you handle that?” “I had a client who handled it this way and I’ll explain that.” “I see how they’re handling it but I would recommend this strategy.” In law school, they called it issue spotting. You need somebody who is experienced and had seen enough to know where the pitfalls are. A contract may look fine to a client but they bring it to me and say, “Can you give this once over?” When I’m putting a magnifying glass to it and showing them where the problems are, sometimes they’re surprised that they didn’t even notice in terms of the implications that somebody might have for them.

The other thing I experienced was that problems can arise in a transaction when the two attorneys are of different caliber. If you have a major a big law firm attorney who has done a lot of bigger mergers and acquisition transactions, on the other side, there is this attorney who had only done a couple of transactions or maybe this is the first transaction.

You can have a situation where the experienced attorney is going to be condescending perhaps or maybe a little bit arrogant. The other attorney will be maybe a little bit insecure. They might not be able to resolve problems because the insecurity and the condescension or the ego is going to get in the way. Have you experienced this? How do you think this can be resolved?

I’ve given this advice to other people. I love it when people underestimate me because it gives me a tactical advantage. I’m in a small firm and have been doing this for many years. Somebody on the other side may perceive that they’re more powerful, experienced or skilled than you are and that may be true but there’s an element in every business that you don’t show like, “I’m not familiar. I don’t understand. I’ve never done this before.” That’s where that network comes in.

It is empowering when people underestimate you because it gives you a tactical advantage. Share on X

You want to go to the right attorney and speak to somebody who says, “Have you dealt with this issue before? What attorney did you use?” You want somebody who you’re comfortable with. That’s a big deal. One of the things that your question raises for me is you may think that the best place for you to go is with the loud fast-talking angry attorney whom you think has this pit bull in them and they’re going to fight for everything that you want.

As a client, you may feel uncomfortable dealing with that person. That person may not match your personality. That person may be condescending to you. That person may not be listening to how you want to do things. They’re going to tell you how it has to be done because they’ve done it before. It may not be in line with what you want.

No matter what your personality is or what your needs are in any area of law, I always recommend to somebody that you find an attorney that you’re comfortable with and whom you know understands what you want and how you want to go about it. If you have a relationship that’s very important that you need to continue, you may not want to send in the person who is going to be condescending and rough with somebody because it may jeopardize the relationship you wanted to build.

Is there such a distinction between a corporate-type attorney and an entrepreneurial-type attorney? In business, you have the corporate employee who is more inclined to not make a mistake perhaps or to protect their career and think about their next posting, whereas you have a business owner who will be looking at maybe the long-term value creation in the business, maybe the long-term relationships or being more creative. Do you think that there’s such a distinction that entrepreneurial boutique law firms have more of an entrepreneurial mindset than big corporate firms?

I’ll speak about my experience. Being a small business owner myself or my client that’s across from me or calls me on the phone as a small business owner, I get it. I understand what they’re going through. I understand that cost, time and reputation are big issues. There are lots of other things but I understand fundamentally what it means to be in business. That brings an important perspective. I’ll never cast aspersions at large law firms. They’re large and have been in business for a long time for very good reasons but the approach is a little bit different. It’s more of a structured approach, whereas what I like to do is individualize and personalize the approach for every client.

I may have a client who comes in and says, “Here’s what I’m doing. I’m doing this on a shoestring. I want to form a relationship with you and stay with you throughout my journey as an entrepreneur but I need to know what I need to do now and what I can afford to wait to do until a little bit later.” That’s a different dynamic and relationship than that person might have if they went to a very large law firm, where the fees are going to be higher and dealing with people at different levels who are going to be handling a matter who may not necessarily be interested in helping a solopreneur who’s starting their entrepreneurial journey.

There are the right clients for the right firms and there are clients that are not fit for the same firms. I love working with small to mid-size businesses because that’s the space that I live in and it’s been a big deal for me to recognize that the work that I do and the firm that I have supports the families of nine people who work here. That’s true for my clients as well. It’s a different perspective at a firm that has hundreds of employees across the world.

That’s an enlightening conversation. First of all, are you only serving people in New York or because we’re virtual, you can also reach out to further places as well? Secondly, where can people reach you? How can they get in touch with you?

Thank you for that. I practice throughout New York and New Jersey. The firm is Rosenbaum & Taylor, the website is RosenbaumTaylor.com. I’m on LinkedIn very frequently so feel free to connect with me and reach out to me there. I always enjoy those conversations.

Thank you for coming to the show. I enjoyed our conversation. If you are reading this and enjoying it, we are doing two episodes a week. Check wherever you can get these episodes frequently because there are new episodes with exciting entrepreneurs coming up all the time. Thank you for the conversation, Dara.

Thanks, Steve. I appreciate it.


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