There’s Business Out There – Can Your Firm Get It . . . Legally?
By Jane M. Myers, Esq.
What should design firms do to survive this roller coaster economy?
How can they find more business and shore up their bottom lines ?
The economic pundits crow “only the strong survive”. They offer lots of survival strategy, much of it conflicting, along the following lines:
- Expand practice areas to increase business opportunities
- Stay loyal to your core business – now is not the time to experiment
- Cut overhead/downsize staff
- Hire more
- Compete by cutting fees
- Don’t lower standards by cutting fees
- Redirect focus on collecting receivables (the only sound advice in any economy)
Only the strong survive. What does that really mean for design firms in today’s economy?
In business, those who are able to adapt best to economic curveballs will survive…and thrive.
Successful adaptation = survival.
Have faith in Charles Darwin.
That means when your economic region experiences a downturn, your firm should be: (1) scouting new regions for familiar work; and (2) positioned to legally bid on projects and legally perform work in other states.
Some design firms merely cross state lines and work on projects without legal authorization. Ignoring another state’s requirements can have a devastating impact on the firm. In some states, it is actually a crime (ranging from a misdemeanor to a felony) to practice without authority. Many states also impose substantial fines. State authorities can stop the design firm from continuing work (that surely won’t score any “points” with the client). What may be even worse for the design firm is if a fee dispute arises with a client and they refuse to pay, the state will often punish the unauthorized design firm by not allowing it access to its courts to sue to collect fees. And do not forget how quickly bad news travels in small circles – not good for building client relations.
How can your firm legally get business in other states?
An individual who is licensed to practice in another state is only licensed to practice there as an individual. For a New York design firm to do business in another state, the firm must become qualified in that particular state.
Procedures to obtain authority vary from state to state. Some states have very few requirements while others are strict. Some states refuse to recognize New York professional firms at all. (In those instances, design firms can still pursue business opportunities by forming a new entity in that state.) Unlike New York, some states allow non-licensed professionals to be owners of design firms. This can be an added bonus for those firms who want to include unlicensed professionals as “owners”.
There is business in other states that New York firms can get as long as they are authorized to do so. Because it can take time to secure outside state approvals, it makes sense to investigate the approval requirements as early in the process as possible.
The bottom line is…when you find the work, minimize your firm’s risk and maximize your chances to get the work – legally.
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Please note that this article is intended only as a general discussion and that it should not be taken as creating an attorney-client relationship or as legal advice with respect to any particular person, business or situation. Circumstances and the applicable legal principles vary and you should consult with an attorney and/or other professionals regarding the facts of your particular situation.