Morgan Friedman: Hey everyone, welcome to the latest episode of Client Horror Stories. I’m very excited to have with me the one and only Jane Weir today. How are you doing, Jane?
Jane Muir: Fine, thanks. Thanks for having me.
Morgan Friedman: Did I pronounce your last name correctly? I really hope I did.
Jane Muir: Well, it’s close enough.
Morgan Friedman: What is the right pronunciation?
Jane Muir: Muir.
Morgan Friedman: Muir. Okay, I was off, but now we have it on the record for the correct pronunciation. Jane, I have my coffee with a whole load of whiskey in hand. And what are you drinking today?
Jane Muir: Well, really, it’s buttered coffee, but it’s still going to give me some energy so that I can tell this story with a lot of pizzazz.
Morgan Friedman: Pizzazz. I love the buttered coffee. I’ll try it one day. And I’m in a pizzazz mood. Tell us, and all of our listeners, about your craziest client horror story.
Jane Muir: Okay, so this was a case where I was representing a group of older Jewish guys that were retired from New York down in Florida.
Morgan Friedman: As a Jewish guy from New York, I’m already excited.
Jane Muir: Oh, they were a bunch of characters for sure. And their hobby was to go to the horse races at Calder Racecourse up in the North Miami area and bet on the ponies. And so one day they were having one of their typical days of gambling and talking and hanging out, and they decided, wouldn’t it be a good idea for them to invest in a Chinese restaurant?
Morgan Friedman: So, you know, the best ideas happen when you’re hanging out gambling and horse racing.
Jane Muir: Yeah, exactly. And I’m sure alcohol must have been involved, or buttered coffee perhaps.
Morgan Friedman: Or buttered coffee. Who knows?
Jane Muir: So, they had some friend or business colleague that already had a Chinese restaurant, and this person was Chinese, and her sibling ran a Chinese food distribution company. So there are very special menu items at a Chinese restaurant that you might not be able to find at an ordinary grocery store. So they would import these unique things, certain kinds of mushrooms or certain kinds of vegetables from China, and supply different Chinese restaurants. So one sibling had the distribution of the food, and the other sibling had the retail outlet of the food. And when my clients decided to partner with the sibling with the restaurant, they didn’t worry too much about having a contract or anything like that.
Morgan Friedman: I just want to point out I’ve done almost 100 episodes of Client Horror Stories, and in my experience, from 100 episodes, the people that tend to not worry about doing a contract tend to be the people that are like 21 years old and just doing it out of inexperience. But, these are a bunch of retired guys. Like, had they not learned that contracts are useful?
Jane Muir: I guess not. I guess not. Well, in any case, their business deal didn’t go so well, and from their perspective, their partner was not being truthful with them about how much money was being generated by their venture, and that the partner was marking up the expenses associated with the food, which was to the benefit of her brother and to the detriment of her partners.
Morgan Friedman: Interesting. Let’s pause on that. A couple of different things there. First, what happened for them to realize that… like, usually you don’t even, if I invest in a restaurant, I wouldn’t even be looking at how much they pay for their spaghetti, or a chicken chow mein, or whatever it is.
Jane Muir: I don’t really know why they believed that, but they thought they were getting gouged.
Morgan Friedman: So they then looked into it, and they realized that the food that was being bought from their brother, they were being overcharged for it.
Jane Muir: Overcharged. That was their belief. And they believed that other restaurants were paying less for the same products than their restaurant, the one that they had invested in.
Morgan Friedman: Okay.
Jane Muir: So it’s been so long that I’m not even really remembering if we had any solid evidence of this, because the business was run in a very old-fashioned way. You know, paper records, pencil-written checkbooks and ledgers, that kind of old-school thing. So they didn’t necessarily know for sure. It was kind of the kind of thing that they would have had to have a forensic accountant look at to prove. So the gentleman that I represented, they hired us jointly. And I have a real soft spot for older people. I just love old people. I think they’re so cute. And so I thought, oh, these cute old guys, they’re going to be so much fun to represent. Well, it kind of went sideways, because eventually the two guys wanted to delegate to one of their friends most of the client contact with us.
Morgan Friedman: Wait, wait. So there’s three Jewish guys. There’s the two owners, and of the three guys who thought they were being ripped off, two of them thought they were being ripped off. They just didn’t want to deal with it.
Jane Muir: They wanted to step back. So they said, okay, one of you works with Jane.
Morgan Friedman: Right. Exactly. Okay.
Jane Muir: So, the one guy, we had them all sign a joint representation agreement. Thank goodness, because I was fresh from law school, and I had remembered that when you represent clients together, you have to make sure that they’re all aware in writing that anything any of them tell me is open for all of them to know, and that I cannot keep secrets between any of them, and if they have a conflict between them, then I couldn’t represent one against the other.
Morgan Friedman: Right. But actually, as a side note, I didn’t know that. I know about the famous attorney-client privilege, but I see, if you have multiple clients together, there’s no privilege within the group, it’s all open.
Jane Muir: Exactly. The attorney-client privilege umbrella covers the group instead of just one person.
Morgan Friedman: Got it.
Jane Muir: Okay. So we’ve always been very careful about that issue.
Morgan Friedman: Okay.
Jane Muir: But in this particular case, we had made sure that in the engagement agreement it said no secrets among you, if you have a conflict we have to withdraw, all that kind of thing. That’s informed consent in writing that you have to get, and we all get tested on that on the bar exam to make sure we know about it. So thank God we had that, because the one guy who was delegated the work of interacting with us lawyers ended up not being entirely truthful with his partners.
Morgan Friedman: Right. I love the multiple layers of deceit. So what was he not being truthful about, regarding the partners?
Jane Muir: To be honest, I don’t recall the precise issue that it was, but how it came up is that I wrote a letter explaining the status of the negotiation, and delivered this letter to all of the partners, to the three of them. And then we got a call from this one guy chewing me out, saying that I had divulged attorney-client privileged information to the other two partners. And I was like, no, sir, we represent you jointly, and that means everything that you’ve ever said to us is open to your partners, too.
Morgan Friedman: Okay. Okay. So, interesting in a few ways. First, I want to point out, what he chewed you out about was the exact same thing I had a question about five minutes ago. So interesting learning here, laymen, non-lawyers, even educated, overeducated, overexperienced, don’t understand that attorney-client privilege means it’s open between a group of clients together. I see, so your report to all of them revealed some detail that he thought his partners couldn’t know, and he didn’t connect the dots to realize attorney-client privilege wouldn’t cover that.
Jane Muir: Exactly.
Morgan Friedman: Okay. Exactly.
Jane Muir: So then we had to write a follow-up letter explaining that, no, in fact, everything we’ve done is exactly per the rules, and if there arises a conflict among you, here in our engagement letter it says we cannot proceed if you have a conflict among you, and ultimately we were able to resolve the matter at mediation. So everybody went their separate ways with a settlement agreement.
Morgan Friedman: Oh, so I see. So because of you revealing that information and him getting angry, you’re saying there’s some sort of secret agreement between you guys, which then triggered mediation with the owner and the brother as well, and then everyone got something and the issue wrapped up.
Jane Muir: Basically. Yeah, because you had oral agreements between all these parties. There were oral agreements among the three gentlemen from New York. There were oral agreements between the brother and sister. There were oral agreements between the investors in the Chinese restaurant and the owners of the Chinese restaurant. It was an oral agreement nightmare. And finding out what had really happened was also a challenge, between the paper records that were very difficult to parse and translate, some were literally in Chinese, and the memories of these elderly gentlemen, who were retired, weren’t very clear. So it was a real mess of a case.
Morgan Friedman: By the way, I often observe that there’s this funny quality about memory, where people tend to remember everything in their own favor, where they look the best. So I’m sure everyone’s memory of the situation was, I’m the good guy and the other person is the bad guy.
Jane Muir: You guessed it.
Morgan Friedman: Okay, interesting story. Let’s talk about some lessons from this story. So one lesson we’ve already covered is that non-lawyers don’t really understand attorney-client privilege as it applies to groups.
Another lesson is people don’t read the contracts, because your contract clearly said all this, and these guys were like, yeah, yeah, yeah, I’ll sign without reading.
A third lesson is it’s really risky to just make oral promises.
Jane Muir: It’s insane. I mean, the problem is expectations have to be clarified from the beginning. It needs to be completely understood what your rights and responsibilities are. And the Florida statutes do define rights and responsibilities of owners of the different kinds of companies that we have, and they include some dispute resolution details, but it’s very fuzzy and debatable. And that’s not something you want in a business setting. You want clarity and precision so that everybody can know what they’re getting into and what they’re going to need to do in order to fulfill their obligations to the group or to the partners.
Morgan Friedman: I agree. Okay. There’s a few more lessons from here that are worth mentioning. Keeping secrets from your business partners, that’s another interesting one. An unexpected twist in the story was the breakdown between the three of them, because I thought it’d be like three good Jewish guys against these sketchy Chinese restaurant owners, but it actually turns out the Jewish guys are sketchy themselves. Why, like, you’re three investing in this thing together, what wouldn’t you want your partners to know?
Jane Muir: Yeah. I wish I could remember in greater detail what the issue was that they had not made clear amongst themselves. But it was enough that the one delegated to speak with us was outraged and threatened us with a bar grievance. And I was just shocked. I was like, what do you mean this was not shared with your partners? You have a fiduciary duty to them, and I have a fiduciary duty to all of you. So you have to disclose anything you find out to your partners, and that’s really the job you took on when you decided to represent them along with the lawyers.
Morgan Friedman: Yeah. Okay. Yeah. Interesting. Interesting. Other interesting lessons here, people you work with or invest in, you might want to look carefully at whether any of the key business relationships are also family members, because I think that is a key detail here. If there’s a random provider from outer space that I’m just buying, you know, my chicken from, then okay, random provider, but when it’s my brother, that by definition increases the probability that something sketchy might be going on.
Jane Muir: Yes, I would totally agree with that. And the other thing I would say is that the family relationship can supersede the business partnership and loyalty.
Morgan Friedman: Good point. Good point.
Jane Muir: Because if you’re loyal to your sibling, I mean, you’re going to lie for your sibling. You’ll put the sibling’s concerns ahead of your business partners, or there’s a risk that you might.
Morgan Friedman: Yeah, that is a good point. I think for most people, unless the numbers are huge, if it’s billions of dollars it might be different, but until the numbers are ginormous, the first loyalty is probably to the family. And it’s also interesting that they’re Chinese. I spent a lot of my career managing companies outside of the US, let’s say, what we could call non-Anglo-Saxon cultures. And in my experience, in non-Anglo-Saxon cultures, family loyalty is much stronger than in Anglo-Saxon cultures. So this could be another risk factor piling on top of it. Oh, non-Anglo-Saxon family teams, they’re likely to have a very strong relationship between them.
Jane Muir: Yeah, that’s a great point.
Morgan Friedman: Okay. And then we also covered, at the start of the story, don’t make a deal when you’re gambling and drinking alcohol.
Jane Muir: For sure. For sure. Maybe call a lawyer before you get into an investment situation. I don’t know, you could maybe have someone draw up a contract that sets some parameters that require the distributor to give you their best prices, that would be reasonable to do, charge you the best price that they’re offering in that geographic region. Because, now that I think about it, reflecting on it, if I were going to give a group this advice today, I would have definitely required there to be a written contract with the food distributor, in addition to a written contract to address the investment in the restaurant.
Morgan Friedman: So that’s a good point. I’ve sold a few companies, and something like, when you’re going through the process of selling a company, something the acquirer always looks into is the internal contracts between the employees and the outsourcers and everyone involved. Those are key factors in due diligence before an acquisition. But what’s interesting here is, if these people want to invest, it’s like applying the same sort of principle. It’s not just, oh well, they have a successful restaurant, we think it can make a lot of money. okay, now let’s go do our diligence and make sure there are contracts between the key players involved.
Jane Muir: Exactly. You would need a contract with the sibling who was the manager of the restaurant, so that she couldn’t just depart the operation and fail to manage the restaurant effectively.
Morgan Friedman: For sure, that key person needs to be locked in.
Jane Muir: You would need some kind of defined investment agreement. Sometimes people, when they invest, will have the option to convert their investment from equity into a loan, or vice versa.
Morgan Friedman: Convertible debt or convertible note, right?
Jane Muir: And then they could have gotten their money back at a profit, in spite of the belief, whether it was true or not, that they were getting gouged on the prices for food. But there were just so many ways that they did not think through their original investment that led to this conflict. And along with the personality traits, you know, gambling, to me it looks a little bit like they were gambling on this restaurant.
Morgan Friedman: Elegant interpretation. Okay, so here’s a different possible interpretation. Someone invests in something, you don’t really know how much money the person has. If someone gives you an investment of $100,000, it could be their life savings, and they’re betting their future on your company. It could also be they have $100 million in the bank, and this is like a vacation, they’ll take one less vacation and use it, because it’ll be more fun for them to invest in your company than take that vacation. So it could be that they’re drinking, having fun, betting on horses, and they’re not thinking about it like an investment, or even a gamble, they could just be thinking about it as pure fun. Like, rather than throw away $20,000 on a trip, it’s fun to give it to these crazy Chinese guys and see what happens.
Jane Muir: That’s not the scenario that I recall. These guys were on tight budgets. They were not…
Morgan Friedman: They were not hundred-millionaires, as you’re describing.
Jane Muir: Because the other nightmare about this client was that they asked us to do a lot of this work and wait to be paid until we resolved the case.
Morgan Friedman: Oh, I see. So here you’re withholding facts from me about the story.
Jane Muir: Yeah, this is the kicker. So when all was said and done, and we sent them the bill, it was like $50,000, which at that time was a lot of money we had invested in this case. And they complained about the bill and said they shouldn’t owe us anything at all.
Morgan Friedman: No.
Jane Muir: So even though we had an engagement letter, and even though we’d done all this work, because we had extended so much credit, and the guys were on retirement income and social security, here’s no way to collect from someone because you can’t reach their retirement assets, or their homestead, or their social security. So we ended up working for free for these nightmare clients.
Morgan Friedman: Oh.
Jane Muir: It was just awful. And ever since then, the way I’ve avoided this in the future, from that point forward, I now require a retainer to be held in trust, and it’s an evergreen retainer. You’ve heard that term before, right?
Morgan Friedman: Not in regard to retainers, but I imagine it means that once your retainer is used up, they have to refill it for the next part.
Jane Muir: Exactly. But even more aggressively, they have to refill it every month. So they get a bill, and let’s say the retainer is $10,000, they get a bill for $3,000, they have to pay that $3,000 every month to keep it always at that $10,000.
Morgan Friedman: Yes. I see, I see. And that’s been very helpful. Okay. Okay. So, yeah, this is a whole other level of horror, that you got zero from this. Wow. I like the evergreen strategy in order to prevent that from happening again. The early 20th-century writer G.K. Chesterton has an interesting observation, sometimes called Chesterton’s fence. And that basically means, there’s a fence between you and your neighbor, and you buy the house. Never take down the fence before you first learn why the fence was put up. In other words, don’t change rules or policies until you learn the reason why they’re there. The reason I thought of Chesterton’s fence in this context is charging a retainer, super standard for lawyers. But I could see young, eager lawyers, you just need some money, you want new clients, you’re like, nah, we don’t need a retainer, I trust them, they’re nice, I love old Jewish men. But guess what, before saying we’re not going to take a retainer, you have to understand why it’s the best practice to always have one.
Jane Muir: Right, right. And this was a time where we were charging an ultra-low retainer. We might have been paid $2,500 for $50,000 worth of work. It was awful. It was so bad.
Morgan Friedman: Wow. Okay, okay. So, I’m trying to extract more lessons from this. Here’s another one, as a Jewish guy, I can say, be wary of these old Jewish men. You know, there’s this rule that you’re kind of allowed to make fun of the groups you’re a member of, and as a member of that group, I’m giving myself permission, or let’s say a younger… I’m not yet old, hopefully I’m not yet old, in a few decades I’ll be retired. But the serious version of that point is, there are lots of people who just come off as cute and nice. These cute little old men, you began the episode by saying you have a soft spot.
Jane Muir: They were so cute, and I just thought, grandpa, Santa Claus, so sweet, so kind, so wise older gentlemen, they would never stiff me on my bill.
Morgan Friedman: Never would. Okay. So wisdom has taught us, don’t judge a book by its cover.
Jane Muir: Don’t judge a book by its cover. That is the lesson, right? So now I have to filter through the lens of, don’t get taken advantage of by the wolf in sheep’s clothing.
Morgan Friedman: Okay. This is a really interesting, important lesson, but, I might not use the right wording for this, so my apologies in advance if it doesn’t come off in the positive spirit I intend, since you are nice and generous and want to help people by your nature, but you have to put up this wall, how do you stop yourself from turning into a jerk? And by that I mean, I personally see myself as a nice guy, and I know I have to put up this wall, and this wall, and this wall, but you kind of stop yourself from being nice again and again and again, and you do that so much that you kind of become one of them, and it’s hard to draw the line or find the balance. How do you deal with that?
Jane Muir: Yeah, that’s such a good point. Well, for me, we just have to have hard rules. And the rules are, our minimum retainer is X. We don’t accept any clients who are not able to make that payment. We also refer people to legal aid organizations. I do a lot of fundraising and support for nonprofit legal organizations. And so my hope is that I can send these sweet people that I feel sorry for, that I want to help, to those organizations, and then they get vetted, because there have been times where someone has come to me for help who seems like they’re in great need, and they play their tiny violin about their awful situation, and I’m just like, oh, I’m so sorry you’re going through this awful situation, I really feel for you, let me give you the names of three different legal aid organizations that may be able to help you under these circumstances, because it sounds like you’re in terrible need. Because the worst thing is to extend credit or do something on a contingency basis that’s questionable, where you’re not as wealthy as the person you’re helping, like, this person has an annual income in the high six figures, and you’re a regular person earning regular income, bending over backwards for someone who isn’t deserving of charity because they’re not at the poverty line the way they’ve explained themselves to you.
Morgan Friedman: Yeah, people often misrepresent themselves on purpose to their advantage, and in these situations where you hire someone expensive, you’d understand why a lot of people would misrepresent themselves as not having much money even if they really do.
Jane Muir: Right, and I’ve started asking for tax returns.
Morgan Friedman: Really?
Jane Muir: Yeah, because people will represent themselves as indigent, and really they’re earning a really seriously good living. It’s just that in their own minds they don’t see themselves as wealthy, and they see themselves as normal, middle class, and the way they look at their situation, they feel like they’re the victim, and victims need to be rescued. And gosh, I did become a lawyer because I love helping people, but it’s hard to let yourself be the hero for someone who really could have afforded an attorney.
Morgan Friedman: Yeah. Wow. Me thinking about it in real time, maybe this is a reason why the concept of pro bono work exists for lawyers, because maybe you have hard and fast rules so you’re not taken advantage of by, say, some entertainers, etc., but then also you say, okay, 10% of my time I will follow the hard and fast rule of explicitly doing it for free for these people who really do deserve it, because that could be a way to reconcile in your mind, to use my earlier language, to stop yourself from turning into a jerk, because if you say, I want to follow the hard and fast rule of using 10% of my time to do work for free for people who deserve it, then you keep that human aspect to it as well.
Jane Muir: Exactly. And the client has to prove that they are in genuine need, because that’s the risk. There’s a book I read called The Sociopath Next Door.
Morgan Friedman: Oh my god, I love the name. I love the name.
Jane Muir: Have you read this book?
Morgan Friedman: No, I never heard of it before,
Jane Muir: Tremendous. It is so so good. And what I love about it is it explains why people sometimes behave in a way that is really detrimental to their counterpart. The description, I’ll give you a quick cliff’s notes of this book, is that in every human quality there’s a bell curve, right, height…
Morgan Friedman: Yes.
Jane Muir: Or intelligence, or…
Morgan Friedman: Yes, with anything at all, a bell curve.
Jane Muir: So one of the things that falls on a bell curve is empathy. And so at the bottom of the bell curve of empathy, you have these people who will torture kittens and eat their victims, you know, Jeffrey Dahmer kind of people, who are serial killers and genuinely evil, and they just have so little empathy that it doesn’t hurt their feelings to watch someone else be in pain. In fact, it excites them in a pathological way. And then on the high end of the empathy curve, you’ve got these people who are so caring and understanding that they practically can read your mind, like your amazing guidance counselors, your parents, your teachers, that kind of person who just exudes warmth and understanding, that’s the higher end of the bell curve. And then the rest of us are all kind of in the middle. But there’s this whole area of the bell curve on the lower side where people are on the low end of empathy, but they’re still in a normal range, and those are the people who act with incredible selfishness, and they really will just do anything that benefits them to their detriment. And I had to read this book because I’m so fortunate, I grew up in a family that always values truth and fairness. And so becoming a litigator in Miami, which is the fraud capital of the United States…
Morgan Friedman: Wow. I didn’t know that.
Jane Muir: Oh yeah. We are the capital of Medicare fraud, mortgage fraud, any kind of fraud, we are the capital. And it just shocked me why people would be so selfish and unkind and willing to trample on other people’s rights, and things that people should be entitled to, like self-determination. Life, liberty, and the pursuit of happiness, right?
Morgan Friedman: They really want to pursue their own happiness, right?
Jane Muir: They do. But that’s the line. That’s what the law does. It draws a line between the pursuit of your own happiness and the interference with someone else’s pursuit of their happiness.
Morgan Friedman: Yes. You know, that makes sense. Far too many people, unfortunately, lack empathy. By the way, I don’t think I told you this, I actually wrote and published a book on empathy.
Jane Muir: Really?
Morgan Friedman: The Scorpion and the Frog, an exercise in empathy.
Jane Muir: Oh, I’ve heard that story.
Morgan Friedman: Yeah. So you know the scorpion and frog story, where the scorpion asks the frog to carry him across the river. The frog says, why should I, you’ll kill me. And the scorpion says, no, if I do that, we’ll both die.nSo the frog agrees. Then, partway across, the scorpion stings him anyway. The frog asks, why? And the scorpion says, it’s in my nature. What I did is I took that story and retold it 29 times, keeping the exact same story. All I did is add in a backstory you don’t know and that completely changes the moral and meaning, and who’s good and who’s bad. So in one of them the scorpion’s on drugs, in another the frog is getting revenge against him, in another he’s a spy and has to kill him, and so on. And I call it an exercise in empathy, because if you take the exact same facts, like a litigator, you go to court, and the judge reads all the contracts, all the documentation, all the record, those are the facts, but you need to construct the backstory in order to figure out what happened. And different backstories, that you’ll never really know, change everything about it, including possibly reversing the morality, who’s good and who’s bad. Are you sure it’s the scorpion that’s the bad one? Maybe this was a setup, or there’s a plan, and so on.
Jane Muir: Well, that sounds very interesting, Morgan. I’d love to read that book.
Morgan Friedman: Right. Yeah, we can have our own book club.
Jane Muir: Yeah, you can put a link in the episode notes.
Morgan Friedman: Oh, yeah, for sure. So, by the way, I’ve never really thought about sociopathy before. An implication of what you’re saying about The Sociopath Next Door is that a sociopath is kind of someone at the low end of the empathy scale. And I never thought about it before, but that definition kind of makes sense. Like, if I truly am in the 0.001% lowest empathy, people like, well, who cares if the kitten is in pain, because I’ll have fun torturing it.
Jane Muir: Yeah. Well, that’s the theory by the author, she believes that explains why people will, you know, undercut you at work, or take something, steal your lawn gnome, or little things that are hurtful to a person that you can’t understand, like someone will key your car in the parking lot of Target because they feel that you took their parking spot. All that behavior is inspired by this kind of low empathy.
Morgan Friedman: Sometimes I think to myself that there needs to be a movement to make people more empathetic. Like, I remember 10, 15 years ago they started teaching mindfulness, and now it’s a whole movement, and they teach it in schools, when I was a kid that word didn’t exist. And now I think we’re in the right era in the universe where they need to start teaching empathy in some sort of way. Something I like about my method in the Scorpion and Frog book, basically, to reveal a little bit too much about myself, is by nature I’m a law-and-empathy guy. I was always a math, science nerd, robotic, good or bad, let’s look at the facts. But life has taught me the overwhelming importance of being empathetic, as a partner, as a boss, as a friend, you have to be, because who wants to be friends with someone who’s like, no, you’re wrong. You want your friend to be able to see it from your point of view, even when you’re in the wrong. So I basically went through an exercise over 15 years, on my own, to try to teach myself empathy. And as part of that, I came up with my own method of saying, okay, when people are acting really stupid, let me see if I can invent a backstory in which they’re not stupid, oh wait, maybe this thing is happening that I don’t know about. So in this way, I’m a little bit of a self-taught empath. And sometimes I think there’s so much need to teach low-empathy people how to be empathetic.
Jane Muir: I think that’s a great idea. Don’t judge someone until you’ve walked a mile in their shoes, right?
Morgan Friedman: Yes, yes, yes, that is right. It’s hard to walk in other people’s shoes.
Jane Muir: It is. I grew up valuing accuracy very much, my family are all lawyers.
Morgan Friedman: I can just imagine the dinner-time conversation when you’re a kid.
Jane Muir: Oh yeah. My mom was a circuit judge, my father’s a lawyer, I come from a long line of lawyers. And I really think imagination gives you empathy too, like reading stories about different kinds of people, all different areas of the world, socioeconomic backgrounds, and time periods, and imagining yourself in, you know, medieval England, or in ancient Rome, or ancient Egypt, or some setting that’s completely different, or, you know, science fiction, like Ender’s Game kind of books. It really helps you imagine yourself in a completely different way, pretend you’re not male, you’re not female, pretend you’re older or younger, pretend you’ve had a life of severe lack or extreme wealth. The ability to imagine where you might be if you had a different background is, I think, so important, and can help with that empathy.
Morgan Friedman: I had never thought about how imagination gives you empathy, but I agree with that. And that also goes right to the heart of the thesis of the Scorpion and Frog book, because you basically need to imagine the backstories that could explain and even justify their behavior, and that is fundamentally a very creative act of imagination. I think another thing that gives you empathy is age, because something that age and just living as an adult teaches you is that the world is strange, and people are strange, and there are all these things that people do that when I was a really intellectual, really smart 18-year-old, I’d be like, no way would anyone ever do that, that’s irrational, in a very obvious way, and even to really unintelligent people that makes no sense and they wouldn’t do it. And guess what, different people have different logic, different facts, different inputs, different incentives, different preferences, different priorities. So people come to wildly different conclusions. And not just that, these things happen that you literally don’t think are possible. When you’re a kid, you’re like, no, this sort of technology is literally impossible. And then, like, 20 years later, that impossible technology exists.
Jane Muir: And, I used to watch Star Trek growing up, so all this stuff was very obvious to me. There’s no surprise to me that we have MRIs, and you can look through someone’s flesh and see what’s going on inside, and AI makes perfect sense, you know, computer, show me The Great Gatsby, and virtual reality, all these things, we would all watch Star Trek every night, The Next Generation.
Morgan Friedman: My parents love Star Trek, my mom was a fan of the original series, my dad was a fan of The Next Generation, so I watched both of those growing up. I’m still waiting for someone to invent the holodeck.
Jane Muir: I know. Well, have you ever tried the virtual reality goggles that Meta makes?
Morgan Friedman: Not yet.
Jane Muir: It’s cool, it’s cool. I have a pair, and I was using them to work out. There’s a program where you basically put these things in your hands and it turns into a bat, and you pop balloons in a kind of dance pattern, and that’s really fun.
Morgan Friedman: That’s really cool. And I guess that is something comparable to the holodeck, you don’t see it in the walls.
Jane Muir: But you can’t touch it like that. Yeah, it is. It is very immediate.
Morgan Friedman: I remember TNG episodes where characters would fall in love with people on the holodeck, and now those Meta glasses combined with AI and GPTs, we’re not that far from being able to fall in love with characters on a holodeck.
Jane Muir: Oh my gosh, it’s so true. I saw a video, you know, Esther Perel, this relationship expert?
Morgan Friedman: Yes, yes, yes.
Jane Muir: She talks about that, that it’s problematic, because people can invent a perfect AI partner that isn’t going to have any friction with them, because it’ll just say whatever you want, anything you say. And in human relationships, we’re going to have friction because of just what you said, different experiences and priorities and beliefs and rationale. That’s what makes us human.
Morgan Friedman: Now, okay, so we’re coming closer to making holograms and falling in love with holograms a reality. Now, what needs to be invented now is the beam-me-up, the teleporter.
Jane Muir: Oh my gosh, that would be so cool. I really hate flying for long periods, I prefer not to go anywhere farther than four hours away, because sitting on the plane is just so exhausting and taxing, being stuck in this little box. But I would really love to just appear in London or something without having to sit around.
Morgan Friedman: I feel like it’s coming. I feel like we’re still far away from that. On the other hand, a minute ago I said the world is strange, including technologies you never would have imagined would be possible actually happening. So I don’t rule anything out, and I don’t judge.
Jane Muir: Well, aren’t we all living in a simulation anyway? And electrons can pop in and out of existence all over the world, you know, the universe, so if an electron can do it, why couldn’t we?
Morgan Friedman: Yeah, by the way, when you were talking about that, I was thinking of the exact same thing about the famous physics experiment, is it the double-slit experiment, I think, where when you split an electron in half, and when one moves or does something, the other one, that’s miles away, is doing the exact same thing. So things are happening that we don’t understand, which means we should keep an open mind, even with the drunk old Jewish guys at the restaurant.
Jane Muir: Keep an open mind. Way to bring it full circle.
Morgan Friedman: Yeah. Remember, Ronald Reagan had the line trust but verify, in the same sort of vein. Don’t judge, but sign the contract.
Jane Muir: Sign the contract, right? And, you know, people who aren’t similar in cultural background or personality can have very successful businesses together. There’s a book I love called Traction, and it talks about how there’s usually not one lone-wolf entrepreneur who starts a major company and becomes incredibly successful, it’s usually a duo. And the examples they give are like Steve Wozniak and Steve Jobs, Jobs had nothing to imagine or sell without Woz engineering the computers, or Bill Gates and Matt Bulmer. Bulmer was the big sales guy, and he had the people…
Morgan Friedman: Steve Ballmer.
Jane Muir: Steve, thank you. Matt Bulmer is an actor, sorry. Ballmer was the one who was able to get the team organized and motivated and sell the software, and that allowed Bill Gates to be in the background, tinkering with the software, because I’m told, or what I’ve heard about him, is that he’s not so interested really in organizing people or talking to anyone. He puts together these think weeks where he’s just alone in a cabin with a bunch of books and reading materials, and that’s his way of creating. So these duos are what really find that they can be successful, and they have to be very different people, because if you have two of a kind, then the strengths are overloaded on the same buckets. You’ve got to fill in all the different strengths with multiple people and their backgrounds and history.
Morgan Friedman: Okay, interesting. So, by the way, that book, Traction, a friend recommended it to me a week ago. It’s sitting in that pile.
Jane Muir: Oh, it’s tremendous, you’re going to love it. It’s so good.
Morgan Friedman: Yeah. So, I have not yet read it. However, I have an off-the-cuff analysis of what you said, that I’ll tie back into the story so we can wrap up the episode, which is, a few years ago I was considering starting another company, and I said, should I found it alone, should I have a partner? And I said, let me look at the big tech startups and see how many founders they had. And, by the way, I hadn’t read this book yet, so I didn’t know of this analysis you told me, and the conclusion I came to is interesting but slightly different, which is, I realized that every single successful tech company, the unicorns etc., when I did the analysis a few years ago, has two founders. So I agree with the duo, and I realized even the ones you think have one founder really had two. Like, everyone knows Steve and Steve from Apple, but you always think of Facebook and Mark Zuckerberg, but it was really Mark Zuckerberg and the Brazilian guy, Eduardo Saverin, whom he then threw out. So even the ones you think are one person really are two. Then I said, okay, is there a pattern I see among the two? And the conclusion I came to is, of the two, it’s very consistently one is the sales-visionary, outgoing type, and the other is the operations figure, figuring out how to actually make it happen. Like Woz figured out how to make the computers while Jobs got the world excited about it. And every single power duo has that same sort of dynamic. And then I realized, wait, this is the reason why successful companies tend to be led by the CEO and the COO, it’s a very comparable division of skills. And then I realized it kind of feels like a marriage, because in every successful marriage or couple that I know in my social circle, at least one of the two is like, let’s go, let’s move here, let’s do this, and the other is like, I’m not going to pay all the bills unless we make sure we have enough money for this and this, and make sure the house is all locked up. And so I think you need a separate set of skills, but in this very consistent way, one needs to be more CEO-ish, one needs to be more COO-ish. And I feel like that’s a healthy division of skills, healthy diversity, or intellectual skill-set diversity, between the founders. On the other hand, to wrap it back to the story so you could wrap up the episode, it could be that there’s another risk factor that we didn’t articulate, or let’s say a lesson, we got a whole lot of lessons out, maybe a 13th lesson is, there’s quite a cultural gap between retired Jewish guys from New York and off-the-boat Chinese immigrants, like different worlds. And my instinct tells me that if you’re doing business with someone from such a wildly different culture, the expectations are, in this subconscious way, just how you communicate, what you do, what you evaluate, how you spend money, how you document, is just such a universe of difference, it might even be irreconcilable. So it might be that there’s a risk factor to doing business with people who are too similar to you, like, you don’t need two CEOs, two CEOs is a problem, you need difference, like that, on the other hand, when it’s two different people, there’s a whole other set of risk factors. Does that make sense?
Jane Muir: Totally. And I would call that CEO-COO dichotomy the visionary and the integrator, in the Traction language. You’re going to love that book.
Morgan Friedman: Well, wait, he made the same point about dividing between these two personality types. He stole my thunder.
Jane Muir: He stole your thunder.
Morgan Friedman: I think that people who are different can certainly work together, but they have to have that imagination and empathy, and just like you said, they have to very clearly articulate the expectations and who’s going to do what.
Jane Muir: And another good idea is to have outside arbiters. I always recommend that you have an outside bookkeeper or an accountant, because, have you ever heard of the triangle of fraud?
Morgan Friedman: No. Please teach me.
Jane Muir: Okay. The triangle of fraud is opportunity, need, and justification.
Morgan Friedman: So interesting.
Jane Muir: If you have, let’s say, the manager of the restaurant who doesn’t have anyone counting cash out of the register at the end of the day with her, then she could just pocket the money. There’s nothing stopping her from taking it.
Morgan Friedman: So she has the opportunity.
Jane Muir: She has the opportunity. The need is obvious what that means. And then justification, maybe she felt she was entitled to this.
Morgan Friedman: These rich Jewish guys from New York are oppressing me and taking advantage of me.
Jane Muir: Or maybe she felt that they were not compensating her fairly, that she was doing more of the work than they were, that she shouldn’t receive as much of the profit because of that. She might have had some reasons that I never knew about, I’m just kind of imagining what that could have been. But opportunity, need, and justification, that’s where fraud happens. And so what I try to do in my work as a lawyer is eliminate that opportunity component by making sure that when people are doing business together, there are enough eyes so that you don’t have any opportunity. For instance, you’ve got to have at least three people who count out the registers in a restaurant. Why?
Because two people can conspire, but a third person will keep everybody honest.
Morgan Friedman: It’s harder, the more people you add, the harder it is for them to conspire.
Jane Muir: Exactly. Exactly. So you always have three people counting out the money. You always have a safe where the money can be dropped, and then once a week somebody who is an outsider is taking the cash to the bank, so there’s no risk that someone can take the money without it being observed. The books are going to be supervised by someone outside the company. That way it’s not possible for the same person to be counting the money and recording the money and depositing the money.
Morgan Friedman: Out of curiosity, I’ve never heard of this triangle of fraud before, but it makes sense. Is this just an interesting concept that likely leads to fraud, or, knowing you’re a lawyer, is this a legal concept? Like, if a judge sees all three of those, can they legally say, okay, it’s likely to be fraud?
Jane Muir: You know, I think it’s a business concept, really, not so much a law concept. In law we have elements of claims, and fraud is a material statement that is made, that is knowingly false, that causes someone to act, and causes damages to that person.
Morgan Friedman: Wait, no, wait, actually I’m going to write this down. This is interesting, fraud is a material statement that is knowingly false. What are the other two?
Jane Muir: Material statement, so, like, I have a swimming pool full of gold coins. This is not a true statement, I do not have a swimming pool full of gold coins. I’m telling you that you do, and I know it’s false, so it’s got to be knowingly false. It’s got to induce you to act. So I say, if you give me $10,000, I will let you swim in my swimming pool full of gold coins. Then you pay me $10,000, and then I disappear. That’s fraud.
Morgan Friedman: Okay, and so it’s a material statement that’s knowingly false, that induces you to act against your interest.
Jane Muir: Against your interest. So that’s literally what you have to prove if you sue someone for fraud.
Morgan Friedman: Super interesting. Sounds fun being a lawyer, except dealing with these old Jewish guys.
Jane Muir: You know, I wouldn’t say it was just them, and I hope it’s clear that I have only love for my Jewish friends.
Morgan Friedman: And you’re the one that’s super clear and full of love, I’m the one making fun of my own group.
Jane Muir: What I want to make sure is clear is that when you’re doing business with anyone, regardless of the cultural background, as a lawyer, you have to protect yourself from your client, because you take on a risk when you work for a client, you have to put the client’s interest before your own, and there are all these ethical duties we’re obligated to fulfill as lawyers. So we have to be extremely clear about what our clients’ duties are to us also. And for instance, in my fee agreement, I have a whole section on the client’s responsibilities that says things like, the client must be truthful with the attorney, the client must communicate with the attorney, the client must provide documentation upon request to the attorney, because my job is to fight for my clients, and to do that I need to have all the information. And absolutely, if someone comes to me and misstates the facts, then that’s not something I can work with, because I’ll find out halfway through a lawsuit that the client lied to me, and I just have to withdraw if that happens, because I have a duty of candor to the court. So I can’t violate my own duty based on the client having misstated the facts to me. So we always make sure we include that, and these are things we started doing because of the lessons from this horror story.
Morgan Friedman: Wow, I love it. Words of wisdom to wrap up the episode on. Jane, it’s been so much fun having this brainstorm with you, learning a story, learning about empathy, the triangle of fraud, so much in today’s learning. Thank you for your time.
Jane Muir: It’s been my pleasure. Thank you for having me.
Morgan Friedman: And to everyone who listened all the way through, thank you. We hope you enjoyed this episode as much as we enjoyed recording it. Until next time, cheers.
