Small Business Legal Questions with Carolyn Jahnke

Pat Miller: 00:00

I'm Pat Miller, and this is The Professional Photographer Podcast. We've got a great opportunity on today's show. We are going to do an ask me anything with a lawyer. You have a lawyer? Have you talked to–you know what a lawyer is? Yes. Okay. We know what a lawyer is, but you do have a contract. You don't? Okay. You got insurance. You don't have insurance? Okay. You've got people on staff. Have you legally protected them, and you know what questions to ask before you hire them? You've had a client ghost you. How are you gonna try and collect their money? These are things that come up in the course of turning your photography studio from a side hustle to a main gig. And to do all of this stuff right, you need to call a lawyer. They're really not as expensive as you think, and they're definitely not as expensive as the bad things that can happen to you if you're not legally protected. So on today's episode, we're gonna ask some very basic questions to a lawyer friend of mine, Carolyn Jahnke from Athena Legal Solutions. We're gonna talk through the basics of a contract and why you should have one. We'll talk through the basics of when you hire someone, what are some of the things you need to think about. We're gonna talk about insurance a little bit. We're gonna talk about copyright a little bit. We're gonna talk a little bit about a lot of things. So if you're just getting started or you haven't taken the time to legally protect the studio the way that you could and should, this episode is for you. Let's bring her in now. Carolyn Jahnke, welcome to The Professional Photographer Podcast. How are you today?

Carolyn Jahnke: 01:39

I am so good. Thank you for having me.

Pat Miller: 01:42

I'm excited to have you because everyone's got a question for an attorney, and not very many people decide to voluntarily pick up the phone and be proactive. So the chance that we get a chance to ask you some questions, maybe get ourselves thinking about how we can protect our photography studio, is a big service to the folks that view the show. So thank you for that. Before we begin, we need the big fat disclaimer. This is not technically legal advice. Correct?

Carolyn Jahnke: 02:10

Correct. I am a lawyer, but I am not your lawyer. So anything I say is for educational purposes.

Pat Miller: 02:16

So listen to what she says and then go to your attorney and ask about it if you need to because she's gonna help us think. But don't be like, hey, the person on YouTube said no. This is just for education.

Carolyn Jahnke: 02:30

If they don't have a lawyer, they should find a lawyer to talk to because we're not as scary as we seem.

Pat Miller: 02:35

No. You're not scary. You are actually really easy to talk to, and everyone will learn that in a minute. What we're doing on this show is we're helping the people that watch build a photography studio and win. That means making more money. So I wanna start with some business questions first because if we just started talking about how do we protect our images from being stolen, we could be here all day, and we will miss a lot of the opportunity for having you right in front of us. So you serve small business owners.

Carolyn Jahnke 3:08

Correct.

Pat Miller 3:08

What are the frequent things that they call you for?

Carolyn Jahnke: 03:12

They often call about contracts or someone stealing their IP, their clients not paying them, or someone didn't show up. I mean, wedding photographers during COVID, there were a lot of questions. Things got cancelled or moved around. Their contracts didn't contemplate it. What do we have to do to protect ourselves? I would say that's the big stuff, other than if we start talking about, like, what form should my business be? You know, how do I protect myself? Risk management kind of questions.

Pat Miller: 03:46

And contracts, I really wanna make sure we spend time on contracts. But you mentioned business formation. So let's do the business formation first, then we'll talk about contracts. So a lot of the folks that become photographers don't just wake up one day and say I'm starting a studio. It starts as a side hustle, and then it grows. So, if you're side hustling, when is the right time to form an LLC?

Carolyn Jahnke: 04:10

So I would say that's different for every person. And I mean, typical lawyer answer. Right? You'll hear this a lot. It depends. But the big thing is that your entity is about risk management. So if you're someone who's generally risk-averse, you should start an entity right away because an entity protects your personal assets from any liabilities that could arise in your business. If you're a person who isn't as risk-averse, you could go on for a little bit longer. But once you start making money at a point where you're doing enough business that you're worried, you don't wanna lose your car, you don't wanna lose your house, you don't wanna lose something personally, you should set up an LLC.

Pat Miller: 04:51

You talked about risk. That makes me think of insurance. So we set up an LLC. Should we be insured straight away? What kinds of insurance should we carry?

Carolyn Jahnke: 05:02

So absolutely, you should get insured because just because you're positioned to, you know, protect for when you get sued, it still costs money to be sued. So insurance is good to have to help cover some of those costs. It depends on what type of photographer you are. Are people coming into your location, or are you going to people's locations? You wanna think about the risks and then what types of liability insurance you would want with that. You know, is it a slip and fall if someone's coming into your studio because they're coming there? And so maybe you're gonna need some broader coverage. But if you're always going to other places, you know, are you accountable or are they accountable for the liability of what's happening at those locations? You know, you're going to a church for a wedding. You know, who has the liability there? So your insurance should cover those types of things. And I always recommend you just talk to an insurance person and explain explicitly how you do business, and they can give you the right ideas.

Pat Miller: 06:02

Now insurance agents, don't listen. I'm just gonna have a one-on-one consultation with my attorney here. Umbrella policies. What are they, and are they a scam or should we have one?

Carolyn Jahnke: 06:17

I mean, ideally, you would just have business insurance.You don't really want to mix your personal liability with your business liability. So a lot of people, you know, if you do business in your home, they're like, put an umbrella policy on your house. And, you know, it kinda covers every activity that happens there. I always think about it being more specific to the business you're doing and keeping those things separate. Because you don't want your house insurance costs to go up because your business had a risk.

Pat Miller: 06:48

If we had an umbrella on the business, is that possible?

Carolyn Jahnke: 06:52

You know, honestly, I don't know. I'm not an insurance expert.

Pat Miller: 06:57

If we have an umbrella policy, it can kind of back up our other policies. That's the concept of having an umbrella that if one policy runs out, the umbrella can come in for up to a certain dollar amount. It's like insurance for your insurance.

Carolyn Jahnke: 07:10

Absolutely. So, I mean, I think you wanna think about the ways things that can go wrong. Right? And then have those types of insurance. You know, you're not really in cybersecurity unless you're doing something really unique as a photographer. So you don't need to have multi-million dollar cybersecurity policies. You might work with a corporate entity that wants you to, but it doesn't make sense for your business. So it's how do you have those conversations with anybody who might want you to have more insurance than you really need.

Pat Miller: 07:40

One more question on LLCs, risk, and that kind of stuff. It's very intimidating to me being a civilian. Like, I'm gonna form an LLC. That just seems like, oh well, I need to whip out my Harvard Law degree even to think about it. Is it hard to do? Is it an easy process to do? Talk to us about the concept of forming the LLC.

Carolyn Jahnke: 08:03

So forming an LLC, if you're a single member, it's just your business. Right? You don't have any partners. It's super simple. It can be done in a day. It's very, very easy in Wisconsin. Other states are a little more complicated. New York is definitely one of those where it's more complicated. But it's easy and it's not that expensive, and it goes a long way to giving you protection.

Pat Miller: 08:27

So if you're walking around side hustling, making some money, you may be exposing yourself to risk if you don't have an LLC. You might be exposing your house and everything you own to risk if you're out doing business, making money, if you're not an LLC. Think about insurance. Think about that. Thank you for the feedback on that. Now the other thing that happens when we go from side hustler to real business. I'll show up on Tuesday, and I'll give you about this much stuff and a handshake, not a contract. Talk to me about contracts because you mentioned people often call about contracts. How important are they when you start doing business with your photography clients?

Carolyn Jahnke: 09:06

I would say it is the number one important thing you need to have. Like, even if you didn't have an LLC, I would tell you to spend the money on your contract before you spend the money on an LLC because it's that important. It is your lifeblood of how you do business. Right? It explains who's gonna do what on each side of the table to make sure that you're achieving what it is you wanted to achieve. And so if you don't have that, how do you hold somebody accountable? Like, how do you go after them? Or in general, I like to think that people are good people. And so if they've written down that they agree to do something, they're more likely to do it. And then you don't have to take them to court.

Pat Miller: 09:49

But what about the folks that say, yeah, I don't wanna have a contract. But you know what? My word is my bond, and my clients, we're different. You know, the people I work with, they get me. What would you say to those people?

Carolyn Jahnke: 10:03

I would say a contract is a way of you showing how much you value the relationship with your client. It is actually how you create trust. It's how you build a relationship. It is not like a negative, nasty, like, I don't trust you thing. It's actually the complete opposite. Because the way relationships work is when everybody knows what they're accountable for, and you can't know that unless you've written it down. And so whether that's in an email or a contract, having those things written down, I will do this, you will do that, that is what creates success and a solid relationship with your client.

Pat Miller: 10:45

I don't know if you can do this because of confidentiality and such, but maybe you have to generalize, but you work with a lot of small business owners. Can you think of a time when someone that you heard of or maybe worked with or learned about in law school didn't have a contract that ended up biting them in the backside? Like, can you give us an example of walking around without a contract biting them in the backside list?

Carolyn Jahnke: 11:06

I mean, there are so many different ways. You know, it's making sure that your contract protects you from the scenarios that are likely to occur and how you do business too. It's not just, hey, you do this. I'll pay you that. It's what are the things that could go wrong in that scenario. I mean, even if you say, hey, someone's gonna pay you money up front. It doesn't mean that they wouldn't be able to charge you back. Like, do a chargeback. You know, they've paid you the money. You're so excited to do the work. Like, you've shown up. You're at the wedding. And all of a sudden, they're like, we don't like our wedding pictures, and so we're just gonna cancel that charge on our card. If you don't have a contract that explains what can happen with chargebacks and things like that, what are you gonna do? Or if someone doesn't show up or the wedding gets called off, and you've invested all this time, energy, and money into things, or if you are a photographer who's selling their art. You know, if you don't have a contract that makes it really clear what someone can do, they can take the photo that you gave them. And if you've given them rights, they can do whatever they want with it. They could reproduce it and sell it and license it. Right? So you've lost all that licensing revenue. So being very clear what people can do with the product you create is really important.

Pat Miller: 12:34

Now if you're watching this in your yeah yeah-ing, we know contracts are important, you probably have one. But there is an entire legion of photographers walking around that don't have a contract, and we are trying to grab you by the shoulders and say, you need to have a contract. It's super important. Let's talk about money for a second. So in the contract, we would have a schedule of payment, and we would tell people when they will pay what. In your experience working with small business owners, do you want all the money up front? Do you want 50 down, 50 on delivery? I know it kind of varies by the client. It all depends. But if you were thinking about a photographer, what would you think would be a reasonable payment schedule?

Carolyn Jahnke: 13:14

So I would say it's based on if you never got the payment, what would it take to make you whole? Right? I mean, obviously, we all set our fees at an amount that gives us profit, right? For our time and energy and on things that we spend money on. So if you have to do a lot of upfront work where you've spent a lot of money and you've spent a lot of time ahead of it, you're gonna wanna make sure that those costs are covered. So that if you never got the rest of the payment, you'd be okay, or at least not in a world of hurt where you had no money. So figuring out what that is or if there are stages. Right? Like, as you come up to an event and you're gonna be doing it, you know, there's minimal work here. There's a whole lot of work at this stage, and then it's just, you know, a little bit at the end. So thinking about where you do your work and then timing payments according to that.

Pat Miller: 14:10

It's interesting to think about getting paid in advance before the delivery because it's somewhat similar to what you do. You have to charge for your time. So how much time does it take to take the pictures, prep the set, manipulate the images, and do all the stuff you have to do in order to sell it? So maybe money down and then money on delivery, or like you say, a chance to be made whole, even if you don't get anything else, would be the way to go.

Carolyn Jahnke: 14:35

Absolutely. Particularly if someone's been all of a sudden like, I don't like what you created, and you've put all that time and energy in. People are gonna be more apt to continue forward if they have some sunk costs already.

Pat Miller: 14:48

Yeah. Absolutely. What happens when they don't pay? So someone owes us money, and they just decide never to pay their invoice. I'm sure you face that sometimes. How do you counsel the entrepreneur? Do you send them to collections? Do you send your cousin Vinny? What do you do? Like, how do you collect?

Carolyn Jahnke: 15:06

So it's a business decision, and this is what I tell people. And I mean, people don't pay their lawyers. So it's something that I have to decide for myself, too.To me, it's a cost-energy analysis. How big is the dollar amount? If it's under $5,000, you're gonna need to go to small claims court. Right? You're not gonna just take them to court for suing. You can always have a lawyer send them a nasty letter, which scares some people into paying. Sometimes it doesn't. And so that would be a minimal cost to maybe get a payment. Would rather see some money or no money? Do you go to them and say, hey, I just need you to start making $20 payments. Right? I don't care how long it takes. Just pay me $20 a month, and you know, we'll get there. Or I'd rather just have half of it, and we'll wipe away the other half. So if you get to the point where you wanna sue somebody because they violated the contract, be prepared to spend five figures in litigation. So, your expense, what they've paid you needs to be worth more than that. So in my scenario, a client who hasn't paid me $500 probably isn't worth going after because my time that it would take just to do that is gonna be more than what they owed me. You know? You're drafting a letter, sending it to them, things like that.

Pat Miller: 16:33

I always had a question about how nice lawyers like you make the letter sound so mean. Like, do you have to put on your mean lawyer pants that day to write a letter that makes it sound like you're from a TV show? Because you're such a nice person. How do you get your head around writing that nastygram that lawyers are so good at?

Carolyn Jahnke: 16:51

It's a lot easier to do it for other people than it is to do it for yourself because you're so indignant on somebody else's behalf. It's like if your best friend gets hurt, it's really easy to be mean to somebody else and be like, how dare you hurt my person? They've done such good things for you. So it's easier when it's not you. It's hard when it's yourself.

Pat Miller: 17:13

Do they teach that in law school? Is there a Nastygram 301 that you have to take or something?

Carolyn Jahnke: 17:18

I wish, but no.

Pat Miller: 17:20

No? I always figured that was the type of thing that they'd have to coach you up on. Let's talk about images because when we take pictures, pictures can easily be right-clicked-saved. It's the nightmare of everyone who takes a picture for a living. So let's start with the basics. I take a picture of you. Who owns the image?

Carolyn Jahnke: 17:40

Well, it depends on what the contract says, if you have a contract. If you don't have a contract, it is owned by, well, I mean, this is a unique situation. If you take a picture of me, I own all the rights to my own images. But the person who takes the picture also owns the rights to the picture they took, but they can't profit off of my image without my agreement. So it gets really tricky when it's just that onetoone scenario. And so it would depend on who wanted to make a stink about it. Right? So, say you took my picture and then you put it on your social media. If I wasn't okay with that, I would have the right to ask you to take it down legally. But now, let's say we had talked about this and you're like, I'm gonna take a picture of you and we're gonna use it to promote this podcast, and are you okay with that? And I say, yes. Now you have every right you want to use it.

Pat Miller: 18:40

So let's put that into real world sense. You hire me to take your pictures. I have a contract that says I'm gonna take pictures, and I own the images. That's why contracts exist. Correct?

Carolyn Jahnke: 18:51

Yep. Absolutely.

Pat Miller: 18:52

Okay. So let's say this happens. I deliver the images to you, but they still have the watermark on them. And the person who gets it removes the watermark and starts running around with the image on social media and advertising. I mean, that's foul play.

Carolyn Jahnke: 19:11

That's theft.

Pat Miller: 19:12

Right? You can't do that.

Carolyn Jahnke: 19:11

That's theft. So that would be copyright infringement. And so you would have every right to go after them. Send them a cease and desist. That's the place you would start. The tricky part with copyright is that to actually sue someone over copyright, you have to have gotten a formal copyright for a true infringement, and that's not worth doing, like, on a day-to-day basis. To me, the cost that goes into doing that is when you're, like, using a photo and then you're licensing the usage of, like, reproduction rights. You know, you can make a big print of it. You can make a small print of it. You're selling it as art to different places. That's when you wanna get that copyright right away so you have those true legal protections where you can sue for infringement. Other than that, it's just like a cease and desist that you go back and forth, and kinda would argue about with them.

Pat Miller: 20:03

And I know PPA has lawyers on staff. They have all the answers for copyright infringement and how to protect yourself. Carolyn's helping us with the basics, which is great. But if you want all of the deep dive, refer to PPA and all the resources they have. But I do wanna hit one more thing. When we talk about contracts, we wanna promote our own work on our social media. Having a publicity release inside our own contract, it should be in there. Right?

Carolyn Jahnke: 20:29

Critical. Using your stuff for portfolios is I'd say this for not just photographers, but anybody who creates something as they're living like graphic artists, people like that. You always wanna be able to use what you've created to sell your services to somebody else. So I always recommend people put that in their main contract. It can be something that gets disputed and discussed, and you can tweak it and agree that you won't use it unless they agree in writing. So you could send them an email saying, hey, it's gonna go on my website like this, and they write back and say, yep. Okay. That's enough to, like, get it done. But it's always easier to start with that there so you have that protection.

Pat Miller: 21:11

Alright. Let's change topics. We sometimes need help. We get hired for a big wedding or we're doing volume shoots for a 1,000 kids at a baseball tournament, and we need to bring in helpers to hold lights and pack gear and talk to people and lug stuff. What do we need to consider before hiring people to help us either formally or informally? How do you talk to business owners about that?

Carolyn Jahnke: 21:36

So you talk about what they're gonna be doing and how much control they have over it. Most states have a test of what's a contractor, what's an employee. And like in Wisconsin, it's a 9-point test, and you kinda go through that. So you need to think about, is this, how they make their main income? Is this what they do on a regular basis? Are they using their own equipments? You know, is this one hour, once a year, that you use them for this one big event? Or are you using them on a regular basis, and they depend on this for their income and things like that? You wanna talk through those things because a lot of people will automatically go to the, I should make them an employee, but there's a lot of expenses related to having employees, and not every person, if you use them very randomly and they're using their own equipment, needs a contract. But the important thing based on what we talked about earlier is that your contract talk about who owns if they're actually taking photos. You know, are the photos they own owned by you or do they own by them? Or you've kind of double complicated the issue we were talking about earlier in copyright.

Pat Miller: 22:47

Humor me. You hire someone, and you said all these expenses when you hire someone, like what? I pay them $10 an hour to stand there and hold a light. But if I hire them as a part-time employee, what are some of the new expenses we get to pay because we hired somebody?

Carolyn Jahnke: 23:02

You have Workers' Comp. You have to pay Unemployment Insurance. You have to file with the state. You have to file with the federal government. It is so complicated that I let my accountant do that, because it is complicated. And then now they're an employee. What are the policies? Do you give them paid time off? You know, do they get holidays? Are there rules they have to follow? Do you have to give them a laptop or do you have to give them a camera? Because, you know, most people don't. You know, if I go to work at a job and I'm an employee, I'm not gonna think, oh, I have to bring my own equipment to that. Right? So what are the expenses now you need to do to cover those things? Like, I had contractors, and I switched them to employees. So that meant I had to start doing a technology stipend because now I have to cover their Internet for doing the things that they do. And I had to get them devices because they're employees, so I have to give them the devices. So there was all these extra expenses that come with having someone as an employee that I don't know that if you use people kind of ad-hocly that people think about.

Pat Miller: 24:19

Ad-hocly?

Carolyn Jahnke: 24:20

Yeah. That's just fancy words.

Pat Miller: 24:21

That's a fancy word. I'm far too simple to use a word that good. It is kind of a pain in the neck to hire someone as an employee. But when you do, there are some benefits that get unlocked. You can tell them where to be and when to be and what to wear and like all of these things. Right?

Carolyn Jahnke: 24:38

And automatically, everything they create belongs to you because they're your employee.

Pat Miller: 24:44

Okay. So there are pros and cons, but make sure you know what you're getting into when you start bringing others onto the team. Let's give you a free space. You get to help small business owners every single day, and the folks watching the show are small business owners who happen to take pictures. So if you had a chance to talk to millions, easily millions of photographers at once, what do you wish they better understood about protecting their business?

Carolyn Jahnke: 25:16

I would say the contract. Have a contract. Make sure the contract covers the different scenarios of what you do. Don't use the same contract as the photographer next to you because you might do business differently. I think that's something in broad industries that are very collaborative is they tend to share contracts, but they don't understand what's in those contracts when they get them. So they don't understand that maybe they're not actually being protected from the things that they wanna be protected from because they don't understand the language in the contract. They're just like, well, my friend's a photographer, and so I'm just gonna use this. It'll be great. I would say that, and I would say it's easy to get caught in the Google void of legal issues. And then, if you ever are spending more than 10 minutes on a legal question, just stop and ask a lawyer. Like there's a 1,000,000 lawyers who do free consults. Not every lawyer charges ridiculous amounts of money just to answer a quick question. And so ask that rather than getting sucked down the rabbit hole, or God forbid, going on to Facebook and saying, hey, I have this question. And then getting 45 answers from people who don't understand your situation and can't give you the right advice. I'm in a number of entrepreneurial groups, and that's one of the things that scares me the most is when people are looking for legal or financial advice, and they just kinda take what everybody says, and they don't understand how tailored that advice was to that person when they received it.

Pat Miller: 26:50

Alright. You wanna have some fun? Check this out. Can we just go to Chat GPT and have it write our contract, Carolyn?

Carolyn Jahnke: 27:01

I think it's the same thing as using your friend's contract. If you don't understand what the words in it mean, you shouldn't be putting it in front of your clients, especially when there is always that client who's like, what does this mean? Tell me why you put this in here. And if you have no idea what it means, you're already violating the trust with your client when you're like, my lawyer, so Chat GPT said I had to have that in there. I guess it's not important. We'll just take it out.

Pat Miller: 27:29

Let's cross it off. Yeah. Whatever.

Carolyn Jahnke: 27:32

So, I mean, to me, it's that if you don't understand it, it's a problem.

Pat Miller: 27:39

I do wanna continue to crush the concept that calling lawyers is expensive and you don't wanna start the meter running. I know you do a good job of that. Can you just talk on that for a minute? Because you say people don't call lawyers because they're afraid of how much they cost. Can you just address that for a second?

Carolyn Jahnke: 27:56

Sure. So some lawyers charge, right? For consultations, but there's a whole bunch of lawyers who don't. Because until we talk to somebody, we don't even know if we can help them sometimes. So it's easier just to say, hey, tell me a little bit about what your situation is, and we can figure out if this is a broader conversation. Okay, maybe we're gonna need to charge you then. Or is this, you don't actually have an issue and go on your way and take care of it? Lawyers are here to help people. And so, generally, if they can help you and it's not gonna cost you a lot of money, they're happy just to help you.

Pat Miller: 28:35

If there's one thing that you took away from today's show that better protects your business, it made it a success. Carolyn Jahnke, Athena Legal Solutions. Thanks for joining us on The Professional Photographer Podcast. I appreciate it.

Carolyn Jahnke: 28:47

Thank you so much.

Pat Miller: 28:48

Thanks for tuning in to this week's episode of The Professional Photographer Podcast. I'm already looking forward to the next time we get a chance to talk. But before you go, before you go, can I ask a small favor? If you liked the show, subscribe and leave us a comment. We wanna know what about today's episode resonated with you. It also helps us know what to do for future episodes. It's really our way of communicating with you. And if you wanna communicate further, you can always email me podcast atppa.com. That's a podcast@ppa.com. If you're not yet a member of Professional Photographers of America, you're missing out. We're talking all the great benefits that they provide, like equipment insurance, top-notch education, and a supportive community of photographers ready to help you succeed. It's perfect for photographers who are serious about growing their business in a sustainable and profitable way. At PPA, you belong here. Discover more about membership atppa.com. That's ppa.com. I'm Pat Miller, Founder of the Small Business Owners Community and host of the show. Thanks for tuning in again this week. We'll be back soon with more tools to help you build your business with The Professional Photographer Podcast. See you next time.