by Leeanne Rebic Hay
(Dallas, Texas )
(Excerpt published in the Dallas Morning News, 02-27-2010)
I really have to chuckle when all these “economists” spout their platitudes about how a “down economy” is a great time to start a small business. In my last column I talked about the government abandoning the small business person. Now I’m going to share with you how small business gets beaten down by dishonest employees and the judicial system. Get a cup of coffee…
While visiting a friend at the Collin County Courthouse in McKinney, I stopped by a courtroom to listen to the goings on. The trial that day in the courtroom was ‘the punishment phase’ after a guilty verdict. What I heard and saw broke my heart – the “murder” of a small business.
Before the judge stood the victim, Joe**, who was about 60 years-old. He was clasping a sheet of paper as he faced, Dick**, 30, who had been found guilty of embezzling over $200,000 from Joe’s family business. Before the judge pronounced the sentence, Joe got to read a victim’s impact statement to the court. Despite providing Dick with a salary and many benefits, Dick stole the money meant to pay Joe’s suppliers. The devastation to Dick’s business was permanent, and even though Joe would go to jail, the money was gone.
Although not on the same scale, there was an experience my company would unfortunately have with a dishonest employee. We never thought that the civil legal system would work against us, too.
The reality of filing a lawsuit is this - being legally and morally right is useless if you don’t have the cash to burn to see it through to trial. And remember, lawyers and experts, like professional athletes, get paid whether they win or lose – and almost as much.
Along with the losses incurred from a dishonest employee, the costs to seek redress can be prohibitively expensive to a small business. According to Dawn Estes, partner in the firm of Taber, Estes, Thorne, and Carr, “Client costs can escalate well over $100,000 to bring a case to court for violation of trade secrets, Theft Liability, and other civil court issues. And even then, there is no guarantee a judge or jury will rule in your favor or provide full restitution.” A forensic examination of a laptop computer starts at $5000 to $25,000. Erin Nealy Cox, managing director of the Dallas office of Stroz-Friedberg, an electronic forensics company, states that, “Most clients’ information is recoverable with our state-of-the-art diagnostics.” And she adds, “The quality control protocols we use are expensive because of the strict adherence to best practices.” How many small businesses do you know can take that much cash out of their operating budget for a gamble?
In our case, after an ex- employee (call him ‘Little Dick’) resigned, we began uncovering his misdeeds. From people coming forward about his attempt to steal equipment, theft of jobs already quoted, to his forwarding his company cell phone to his new employer’s phone, it was clear he was attempting “assault and battery” on our company. His company assigned laptop would confirm even more.
In the course of wanting to be a good, albeit small, corporate citizen, we sent a Cease and Desist letter to his new employer, “Artic Service Systems” (‘A.S.S.’) – a big company, who did nothing. So, after 4 weeks, we filed a lawsuit – because our attorney assured us that “you have a case here.”
Over a year passed, and the case still wasn’t settled. Then, we had an epiphany - and dropped it. You may wonder why.
I could not control what others would do, but I did have a flotilla of damning evidence that certain authorities found of value. And, many corporate organizations have compliance departments who are very appreciative to learn about any of their employees who collude with a vendor representative in violation of company policies. Also providing evidence uncovered to the local police department and, for antitrust concerns, the US Department of Justice (http://www.justice.gov/atr/contact/newcase.htm), may turn up something they want to pursue with their funds, and a little poetic justice to boot.
We would never recover lost business or customers, but with process improvements implemented, we would still get new ones (and have). All employees now sign confidentiality agreements, and we have a GPS tracking system in place. Then, we left the rest to God.
** Names of people and companies have been changed to protect me from getting sued.