Legal Issues for Farmers: NOFA-NY 2016
Today, I had the opportunity to speak to a group of mostly beginning farmers at the NOFA-NY 2016 Conference (Northeast Organic Farming Association of NY) about legal issues. Charlotte Carter, Executive Director of NYSDRA, Inc. (New York State Dispute Resolution Association, Inc.) joined me in discussing mediation as a tool for resolving legal issues.
Here is a recap of some of the questions and responses:
(A) Should I use an attorney to form a business entity?
Yes, absolutely use an attorney who understands agricultural businesses. An attorney can help you determine (1) what type of entity is best (LLC, corporation, partnership...) and (2) how the entity (or entities) should be structured to best suit your business operations. Most importantly, an attorney can write the legal documents needed for running your business like a business.
By having an attorney create these documents, you can end up with documents that: (1) make sense to you and (2) are customized for your business (rather than a generic agreement that might not make sense for your business). A business entity is like the creation of another person. In order to keep that other being in existence, you need procedures in place that you understand and are likely to follow.
If you have different types of operations the attorney may also recommend multiple entities and can help you understand how to keep the entities separate and how each entity can work together.
(B) When should I form a business entity?
This is a personal answer that depends on your business and your risk tolerance. Generally, when you are starting a business that is exposed to some type of liability or you are working with other people as partners or with investors, it is a good time to think about the legal structure of the business. At the very least when you are starting out and you have multiple parties involved in business operations, it is important to have a written agreement that records each person's involvement and how the profits/losses will be shared.
(C) How do you find an attorney?
If you are a farmer or working in a food business, I recommend finding an attorney who works with agricultural clients because it is good to have someone who (1) understands your business and (2) knows other professionals in the industry who can assist you as well.
Your attorney does not have to be local to you. I work with many clients over the phone and computer. I work with many clients remotely- sharing documents and having video conferences online. NY Farm Net maintains a list of attorneys who work with agricultural clients.
(C) How can mediation help farmers (or anyone) with disputes?
The NY State Dispute Resolution Association administers the NY State Agricultural Mediation Program, which can offer mediation services at no cost to many farmers and agricultural businesses through community dispute resolution centers. These services can assist with neighbor disputes, contract disputes, family or business partner disputes. A mediator is a neutral party that facilitates a communication process and is not there to provide legal information or to be a decision maker.
As a trained mediator myself, mediation training has enhanced my skills in working with clients in my everyday practice, and adds to the services I can offer. Harris-Pero Legal Counsel, PLLC is entering a new frontier of collaborative law by advocating the use of mediation in appropriate circumstances.
As an attorney I can prepare clients for mediation by informing them of the law, giving advice before they negotiate at a mediation, and/or participating in a mediation to support my client. An attorney can also out write an agreement in the appropriate form if necessary for a court proceeding or recordable document.
(D) What are some of the common issues that new business owners run into?
1- Navigating Business Relationships - Clearly written contracts and other documents to protect your interests (business agreements, estate planning documents, etc.) can protect your interests. Many disputes arise from misunderstandings or from not thinking through potential consequences. Putting agreements in writing forces you to think through who will bear the risk in situations that could arise. Mediation can help parties in a dispute come to a solution that works best for them.
2- Permits/licensing - You want to start a farm, restaurant or have a farm store. Does your zoning allow you to have that type of business? Can you process your food product on site? Make a list of what you want to do with your property or business and do your research (or hire your team of consultants/experts to do the research before you get started).
You can find help to these questions from contacting agencies yourself, asking your attorney (information, advice, advocacy), your Cornell Cooperative Extension agent (for information).
(E) What issues do I need an attorney for, and what things can I do on my own?
This depends on your time and abilities. There is a lot of information out there that you can access and decipher on your own but sometimes it's worth it to have an expert guide you. Depending on my client's needs (including budget and time pressures) many times I will charge a flat fee for a certain amount of services and suggest that the client take certain steps on his/her own and then check back in and let me know if he/she wants me to continue those steps for them at an hourly rate. Attorneys have a certain education and way of thinking and researching that allows them to spot issues and look up changes in the laws. If you have a good relationship with an attorney, he/she can let you know what things you can do on your own to support the attorney's legal work on your matter.
Beware of just looking for the cheapest services, you often get what you pay for! Doing things by yourself to save money can also come back to haunt you if it's not done right.
(F) What resources are available to prepare new farmers to deal with legal issues?
There are many, here are a few:
Annie's Project- Empowering Women in Agriculture - Business planning and an introduction to legal issues, providing a good background to prepare women to work with their attorneys, bankers, and others to make their business a success. Check out the link for upcoming classes in NY state.
NYSDRA NYSAMP- New York State Agricultural Mediation Program
NY FarmNet - Maintains a list of attorneys who work in agriculture. Use the contact form and ask for the list. Check out the other resources on NY FarmNet page as well. There are resources through NY FarmNet as well as information on other resources, such as Cornell Cooperative Extension.
Thanks for reading!
Megan Harris-Pero, Principal Attorney*
Harris-Pero Legal Counsel, PLLC
Small Business Law - Estate Planning - Elder Law
*NY and PA Licensed
**ATTORNEY ADVERTISING- This post is provided for general advice and entertainment only. Please speak with an attorney about the specifics for your situation and your state. This post does not create an attorney-client relationship with its readers.**