In this fundamental episode, Richard Gearhart, Founding Partner of Gearhart Law, LLC, shares how to smartly handle legal basics as a pre-founder so you can protect your ideas without big costs or risks. If you feel intimidated by legal stuff while still collecting a paycheck and juggling a side hustle, you won’t want to miss it.
You will discover:
– How to set up an LLC, bank account, and upfront payments to build legitimacy and get paid faster
– How to check your employment contract and document ideas separately to safeguard your IP from employer claims
– Why running a proper trademark search early prevents costly rebranding or litigation down the road
Episode Transcript
Scott Ritzheimer
Hello, hello, and welcome, welcome once again to the Start Scale and Succeed podcast, the only podcast that grows with you through all seven levels of your journey as a founder. I’m your host, Scott Retzheimer, and this one’s for all you pre-founders out there, folks who have a great idea and have the wonderful benefit of still collecting a paycheck, and as much as that can feel like a challenge when you’re in the middle of it, because there’s so much to do and there’s so much you’re excited about, there’s a lot to do before you take the leap, and in that window, legal protection can be really, really painful. However, if you’re smart about it, it can also be highly profitable, and here to show us that narrow path is Richard Gerhardt, Esquire, who is a leading intellectual property attorney, entrepreneur, and nationally recognized speaker dedicated to helping innovators protect and scale their ideas. He’s the founder of Gerhardt Law, an international law firm focused on patent, trademark, and copyright matters for startups and growing businesses worldwide.
He has presented to Fortune 50 companies, top colleges and universities, and legal audiences nationwide, having also spoken alongside New Jersey Supreme Court Justice Chief Justice Stuart Rabner. Richard is the co-host of the nationally syndicated iHeart Radio Show Passage to Profit: Road to entrepreneurship, airing on 35 radio stations. He’s here with us today. Richard, welcome to the show. Really excited to have you here. As I was getting ready for this episode, I told you how struck I was that an attorney’s focus would be on the passage to profit. That is just like probably one of my favorite things in the world, and so you work with founders at every stage in this journey, but I really want to start here with that person who they haven’t quit their job yet, maybe a kid at school, but they haven’t made the leap to full time, and for these folks, the legal side, if they think about it at all, is so intimidating, but from what I gather and the research that I’ve done, you approach this very differently. So, how do you see legal on the road to profit?
Richard Gearhart
Well, that’s a great question, Scott. And thank you very much for having me. I’ve been looking forward to this, and I love talking about entrepreneurs and entrepreneurism. Gerhard Law was an entrepreneurial venture. I worked for a big company, and then left, started the law firm 20 years ago, and I still feel like an entrepreneur after all these times. So, it’s really, it’s been really been a great journey, and it’s, it’s really worked out. If you’re starting a side hustle, one piece of advice I would give you is to make sure it’s okay with your employer, right. A lot of people have employment contracts that restrict what they’re able to do, and if what you’re doing is too close to the employer’s business, it could cause you problems, right. And I think you, it’s almost always better to get permission from your employer before you embark on that path. If not, you have to have a strategy to make sure that the employer can’t come back later and you know claim rights in your ideas, etc. So that’s one area I think everybody needs to be a little bit careful with.
Now, if you don’t have an employment contract, if you’re working on software, but you’re working at a grocery store, it’s probably not going to be an issue, but if you’re working for a software company and you’re starting a software business on the side, it’s something that you might want to pay a little bit of attention to, and so really getting set up from a legal perspective is super important. It’s not, doesn’t have to be super expensive, you know. Generally, you want to set up an LLC at some point, you’re going to need that in order to have a bank account, right. Pretty basic stuff, but if you’re going to be a legitimate business, you’re going to want your own bank account where you can, you know, pay and receive money. In order to do that. Banks require an LLC.
So one question that comes up a lot is, what should I call my company? And if you have an idea for a company name, it’s really important to make sure that you not only check the availability of the name with the state registration bureau, like in New Jersey, it’s the secretary of state that provides business names, but you also make sure that it’s free from a trademark perspective, so just because you can register the name with your state registrar doesn’t mean that the name is generally available, and so I see this happening a lot. People come to me and say, well, the business name was available, and when I went to register, and so I thought I was good, but that really doesn’t give you the freedom to operate that you. Need somebody could have a trademark on that name, and the registry, the registrar will give you the name if it’s all even off by a period, right? If you put L period C period L L C period, or you put L period L period C period, that the software doesn’t know the difference, right, and, and so that’s something that you need to be careful about when you’re first getting started.
Scott Ritzheimer
Yeah. I want to unpack that, because there’s, there’s kind of two ways to look here: there’s looking backward, or at the current situation, and then there’s looking forward about what you’re building, and this idea of paying attention to your employment contract, I think, is really, really important. One of the areas that I think is of growing concern, especially because we have such an intellectual property heavy economy at the moment.
How do you, how do you know or navigate whether or not it’s actually your property to use, because there’s the possibility that if it’s, if it’s something that you do well already, if it’s something that’s part of your work, if it’s something you do for your employer, that might be related. How do you help folks navigate that conversation?
Richard Gearhart
Well, we would look at the employment contract number one, and you know there are always clauses in the employment contract about using employer information and disclosing employer trade secrets. So, my suggestion is, is that if you’re in a closed case where you’re working for a software company, but you’re also developing software to be very careful to document your ideas in a way that it doesn’t implicate the intellectual property of the company that you’re working for, right. So, if you work for Google, and you’re building browsers. Well, it’s going to be a tough sell to somebody to say you weren’t using Google trade secrets, right? But so you generally kind of want to find a way to stay clear of the company’s main business if you want to take the safest path, another thing, you don’t want to use company time or company materials, you don’t want to use the company computer, you don’t want to use company resources. Those are things that the court would look at when they’re trying to decide, well, is this your invention, is this your intellectual property, or does it belong to the to the company, so those are things that I think are important to keep track of.
I, I know we had one client many years ago who was getting an MBA, and she entered a business contest to, you know, an MBA competition, and she used her company computer when she was in school, and she created the presentation, and she won the competition, and then she went on to start a business around this. Well, the company found out about it, and they said, look, it, you’re using the company computer, and you know, she was meeting with people at 4o’clock you know, like company hours, and the company got mad and terminated her employment, and so that’s kind of an extreme case, but you know, here’s she just thought she was getting an MBA, and and entering a contest, and then she was going to see if this business could take off, and the company didn’t like it, so yeah, you have to, you know, you have to kind of evaluate, are you putting your job at risk, and do you care? I mean, sometimes people are putting their job at risk, and they don’t care, because they’re planning to leave anyway, but other people are like, no, I, I need this job, and I want to, I don’t want to, I don’t want to leave yet, right? So, yeah,
Scott Ritzheimer
I think for some of our mercurial listeners, whether or not you should care isn’t necessarily how you feel in the moment, but what is, what is going to put you in the best position to succeed in this new venture? There’s a slightly different, and so I can just imagine, like I would hate to be in the legal profession with work from home, and how so many of those lines are starting to blur. I could see some folks just thinking, like, hey, like, how could I ever navigate that, and, and so these ideas on, on how to separate that, how to document that, I think are really, really helpful for folks now looking ahead, because ultimately the, the, the goal isn’t to just not get, not to not get fired, the goal is to, to go out and. And start your own thing, and to do that, you have to be profitable, right, or you have to be very close on the path to profit. So, walk us through, and you kind of did this out of the intro, but let’s, let’s break it apart a little bit, but walk us through those, those kind of minimum legal steps that you can do to help get on the road to profitability as soon as possible,
Richard Gearhart
so I mean, most of the legal stuff is more of more defensive. So, setting up your LLC, you know, you want to shield your personal assets. It depends on what kind of business you are in, but if something goes wrong with your business, you don’t want people trying to reach your house, and if you, if you do an LLC properly, you can prevent that from happening. Another area that we want to look at, I specialize in intellectual property, so I do patents, trademarks, and copyrights and agreements related there. But if you’re picking a name, you want to make sure that somebody else doesn’t have the name. If you’re creating a new product, you want to make sure that somebody else doesn’t have a patent on it and could block you. So, I think at some point during your commercialization process, you have to do research, and you know you can do it yourself, or you can hire an attorney to do it. It’s typically not that expensive, and but an attorney is going to look at things a little bit differently with a little bit more experience when it comes to like selecting a name and again I have had clients who start the business it goes well for a couple of years all of a sudden they gain some visibility somebody in another state says, ‘Hey, wait a minute, you’re using my name and I’ve got a trademark on that.
And so it’s two years of branding and advertising that are put in jeopardy, and then you know you have to change your name or you get lawyers involved, or there’s litigation, I I’ve had clients who have, you know, picked the wrong name, and $300,000 later in litigation they’ve been out for five years, and all of a sudden this company in Europe decides to sue them, and it’s not only just the legal fees, it’s like, well, do I have to change my name, are customers going to be able to find me, and so doing that research early on can maintain your profitability and your ability to exist as a business, and so I mean, for like a trademark search, you’re looking at spending maybe 750 bucks, and it’s kind of a small price to pay, and so you want to check into that, you know, before you get too far down the road, and and so I think that’s, you know, I think that should be part of every entrepreneur’s planning process.
Scott Ritzheimer
Yeah,
Richard Gearhart
so
Scott Ritzheimer
it’s very good. There’s there’s one area that I know is a total headache for me, and I’ve seen this happen for others as well. But one of the things that you have to do to be profitable is get paid, and you talked a little bit about some of the requirements for the bank. What I’ve also found is getting a payments processor set up can be a really cumbersome process, and, and so, what have you found for helping folks to, to get the, the legal side of that everything sorted, so that they can start collecting payments and actually put themselves on the road to profit?
Richard Gearhart
Well, you have to have a bank account, and then there are a lot of payment processors now. I mean, you have QuickBooks, has a payment processing system, there’s Clover, there’s Stripe, there’s a lot of drop-in plugins that make it easy to accept credit card payments. It’s kind of expensive sometimes, but it makes it easy, I think. The bigger challenge is actually getting people to pay right, and so I think it’s important. One of the lessons that we learned early on in the business was to get some sort of deposit or get money up front if you’re providing a service right, and you know, in my life, I would, I would never purchase something or order a service that I wasn’t planning to pay for, but unfortunately, there’s people out there that don’t have that same approach, or they, they are well-intentioned to pay for it when it starts, but then, for whatever reason, they, they, they can’t, the circumstances change, and now you’ve put a lot of effort and labor and materials, perhaps into project, and now you’re spending too much time trying to get payments, so it’s pretty rare now that we only.
For certain customers, do we extend credit at the firm, so getting paid early is, is important, and it’s here, and if you’re, if you’re, you know, you want to maybe set up automatic withdrawals, if it’s a reoccurring, if it’s a reoccurring service, if you’re making appointments where you’re going to be showing up, getting a deposit of part of the money before the appointment helps ensure that somebody’s going to show up, because it’s, it’s too easy for somebody to send you a note, you know, an hour before the appointment, saying, “Oh, sorry, I can’t make it today. My kids are sick, right? And the kids may be sick, but then you’ve just planned to spend that hour. If you have a deposit, it sort of weeds out the people who are serious about it from the people who are still thinking about it. So,
Scott Ritzheimer
yeah,
Richard Gearhart
you know, making sure that you set your business up, and it’s kind of hard to do when you’re first starting out. For some people, I think it wasn’t natural for me. I’m an attorney, and it wasn’t natural for me, you know. But over time, I saw how much time and effort we spent trying to collect the money, and it’s like, I don’t want to work with somebody who’s not able to, you know, at least give me a deposit upfront, so
Scott Ritzheimer
yeah, so good. Richard, before I let you go, I’ve got just two quick questions for you. The first one here is a question I’d ask all my guests. I’m very interested to see what you’d have to say, but the question is this: What is the biggest secret you wish wasn’t a secret at all? What’s that one thing you wish every founder watching or listening today knew?
Richard Gearhart
I would just say, take care of your health. I mean, get enough sleep, eat the right foods, get some exercise, get some entertainment. I think you can get stale. I think, especially work from home projects, entrepreneurs can kind of just turn their, their office into their own little mini prison, right? And they never come out, and so I think you need to get out, take a break, get some fresh ideas, and you can go back to it with a new mindset.
Scott Ritzheimer
Very good, very good. No mini prisons, we don’t want that, Richard. There’s some folks listening that would love help from someone who gets entrepreneurs and legal. It’s a rare combination there. Where can they reach out to you? How can they find out more about you and the work that you all do?
Richard Gearhart
So you can reach out to us at gearhartlaw.com It’s spelled G E A R H A R T L A w.com and you can fill out a contact form, or give us a call. Our initial consultations are complimentary, and people get a lot of good advice and support. We hope, and entrepreneurs are our sweet spot, so you know, feel free to reach out. We’re always available to help an entrepreneur.
Scott Ritzheimer
Brilliant, Richard. Thank you so much for being on, being here with us today. It was a privilege and honor having you here today. I really appreciate it. And for those of you watching and listening, you know your time and attention mean the world to us. I hope you got as much out of this conversation as I know I did, and I cannot wait to see you next time. Take care. Hey everyone, ScoreTimer here. Thank you so much for listening to the Start Scale and Succeed podcast. I hope this episode gave you exactly what you need for the level you’re in right now.
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Contact Richard Gearhart
Richard Gearhart, Esq., is a leading intellectual property attorney, entrepreneur, and nationally recognized speaker dedicated to helping innovators protect and scale their ideas. He is the founder of Gearhart Law, an international law firm focused on patent, trademark, and copyright matters for startups and growing businesses worldwide. He has presented to Fortune 50 companies, top colleges and universities, and legal audiences nationwide, and has spoken alongside New Jersey Supreme Court Chief Justice Stuart Rabner. Richard is the co-host of the nationally syndicated iHeartRadio show Passage to Profit – Road to Entrepreneurship, airing on 35 radio stations.
Want to learn more about Richard Gearhart’s work at Gearhart Law, LLC? Check out his website at https://gearhartlaw.com/
Connect with Richard though his LinkedIn at https://www.linkedin.com/in/richardgearhart