"I don't know the key to success, but the key to failure is trying to please everybody."
Bill Cosby
Month: March 2011
The Frustrated CFO Is Looking for a Litigator to Defend an Employee – Part II
…Continued from previous post (published on June 30th)
Unfortunately, even with all this tremendous efforts, business continued to contract. First of all, the economy was unraveling: the global credit crunch was at its peak in 2009 and consumers did not have money to pay their debts. Secondly, the new government regulations helped debtors not to pay and settle at a fraction of the value instead. In this conditions the bosses decided to go on the other side of the business - to open a set of new companies operating in loan modification and debt restructuring sector.
They have approached MJ with this idea and promised her that she would continue to carry out all financial executive responsibilities in the new business as well. While still taking care of the old business, she helped them to set up all new companies. Of course, there were not enough capital to start it up at a full speed. The two businessmen approached MJ and asked her for a $150,000 120 days personal loan to help the new business to catch a breath.
Dear readers, please don't judge my friend. Let me tell you that MJ is one of the most brilliant people I've ever met. She fully understood the risks. However, it was clear to her that if she refused, they would have fired her right away: these are average entrepreneurs we frequently discuss – just like the rest of them, they let their emotions run their brains. This was (and, as we know, still is) a very bad time to be an out-of-job CFO approaching 50. It was also inconceivable to think that these two people, whom she helped to survive, would cheat her out of her personal savings. So, she landed the money to the new law firm.
Ninety days later, one month before the loan was due for repayment, they fired her using an independent consultant, locked her out of the offices and built a Chinese Wall between themselves and her.
Now, out of job and out of money, she tried to work with the attorney they appointed to deal with her on their behalf. She was told that they could not repay her money in full on the agreed due date. All kinds of unacceptable installment deals were suggested to her with various crazy conditions. Of course, their lawyer employed all the tricks up her sleeve to drag the matter as long as she could – the delaying tactics were unmatchable. And as soon as she agreed to one of their installment plans, the communications stopped altogether.
Meanwhile, all the aggravation of her predicament and anxiety affected her health – she had an acute cardiac episode and ended up on a surgeon's table. Her condition is managed by several medications now, but it was concluded by her doctors that she must not deal with this tragic matter directly.
So, MJ is looking for an attorney to represent her in order to get these amoral bastards to pay her back. By the way, she has a multi-page list of misdeeds, violations, and frauds these people has committed against their business partners, clients, etc., etc.
The most heartbreaking thing is that this woman has immigrated into the US as a political refugee 20 years ago with $90 in her pocket. She has built herself up from ground zero only to be robbed of her hard-earned money and thrown out on the street by two ruthless monsters who still enjoy all of their businesses, multi-million dollar residences and summer houses in the Hamptons.
If any of my readers know an attorney who might be interested in this case, please email me at the.frustrated.cfo@gmail.com.
Note: the law firm that borrowed the money has presence in PA, NJ and NY.
The Frustrated CFO Is Looking for a Litigator to Defend an Employee – Part I
Let me say right away that it is impossible to even come up with a short definition for an attorney who would act on behalf of an employee. That is why I had to devise such an expository title for this post. But I am trying to help my fellow financial professional and a good friend MJ who has a very unique and quite a complicated case against her former employer. What happened to her is strikingly unfair (there are details below) and I figured I would try to put a word out there through my blog in hopes of may be receiving some legal referrals from my readers.
It appears that 99% of the lawyers listed as "labor litigators" work for the other side (the one with the deeper pockets), defending corporations against employees in court and advising them on preventative measures to make sure that they don't get sued in the first place. Of course, there are plenty of injury specialists ready to jump on a work-related-accident case and civil rights defenders on a lookout for sexual harassment claims. But apparently it is difficult to find somebody to stand on the side of an employee with a less obvious case.
I am pretty confident that MJ's case is one of a kind combination of various legal matters and an intelligent attorney may find it to be an interesting challenge. It would possibly require ten posts to cover all details, and I don't find it necessary or productive. Instead, I will try to stick to main facts only and present them in two consecutive installments.
The employer in question was a consumer debt management entity, which consisted of multiple collection agencies with a national law firm at the head of the structure. Two business partners helmed the operations – an attorney (senior partner at the law firm) and a shrewed businessman who handled all operational and commercial activities. Remarkably they have managed to ride the wave of debt securitization and succeeded, in spite of themselves, without any executive support - growing into an organization that employed over 500 people in 10 states, while all their accounting and financial functions were "handled" by an outside service of a one-person CPA firm!!!
By the end of 2007, though, the company started experiencing difficulties. In the absence of budgets, cash flow projections, profitability analysis, and, more importantly, an insight of a seasoned expert, they couldn't even understand what was going wrong.
That was when MJ got hired as a Chief Financial Officer. Putting all the necessary functions and instruments in place, dissecting the business's performance and fixing incorrectly kept books, allowed her to discover the weakest links in their falling apart system. She suggested drastic restructuring, shut down the sectors that were bleeding money and got them out of disadvantageous financing relationships – in other words, saved their assess from going under several times over.
To be continued…
We Are All “Up in the Air”
Back in the Fall of 2009, when "Up in the Air" was released, I didn't see it, but people told me I should have. I watched it the other day. Wow! It is not just an excellent movie and the most realistic piece of American cinema I've seen since 2005. It is also a gold mine of occupational themes that hit so close to home, it's unreal. You know, the subtle truths about corporate existence, which are so familiar to those of us, who have been boiling in that soup their entire lives. Thank you, Jason Reitman!
Our new economic reality of depressed businesses and desperate people serves as a recognizable background to the personal stories unfolding in front of us. The uncertainty of survival in the contemporary corporate world is so pervasive, nobody knows what tomorrow shall bring. "Living in the Now" is not a conscious choice of enlightened individuals anymore. Whether a CFO or a receptionist, in companies large or small – every wage-dependent person lives one day at a time.
As the matter of fact, George Clooney's character, Ryan Bingham, is sent to large companies. These companies can still afford to hire an outside firm to conduct the "separation" exercise for them, with fancy folders and severance packages.
In small business environment, even during the best of times, you wouldn't think of spending money on protecting yourself from the brutal necessity of firing people with whom you worked side by side. As a CFO/Controller, I've had my share of sitting across the table in a conference room, looking into a person's eyes and delivering the bad news. I developed my own style as well: do it gently, make them feel better, give them hope… Some even thank me at the end. Just doing my job, like Ryan Bingham.
He, actually, works for a small company owned and managed by his boss (Jason Bateman), who (how typical!) changes his mind about the company's direction three times in a few depicted weeks. Ingeniously, the filmmakers reduce smooth and dashing George Clooney to a powerless subordinate: his entire way of life is about to be changed by his boss's decision and there is nothing he can do about it. "…Here's the boat?.. Do you want to be in the boat?" You are either in or out. You have no choice. You swallow your pride and you go along. Just doing your job.
What are we doing? How do we go on and live with ourselves when we fire someone who is good at his job? How do we sleep at night after dismissing hundreds of hopefuls' resumes? And what happens when our own resumes get swept into trash? Do people feel anything at all? Those are our hopes that get dismantled. Do we register the weight of what we do? I don't know.
Everyone's life is up in the air, with no help coming. Help ourselves? We can try to stay positive and continue struggling on – that's the best we can do.
CFO’s IT Conundrum: Owner’s Expectations
In many companies, CFOs and Controllers have absorbed the responsibilities of Chief Information Officers. Unless the company is in business of creating technology or relies on it as the primary operational tool, it's only natural for the senior financial person to keep IT under her wing. Even if the entire value chain is integrated into an ERP, 70% of the modules are ours anyway.
Moreover, a lot of companies are not there yet. At best, most smaller businesses today have integrated systems that cover all of their Accounting and HR functions, plus a bunch of special-purpose software for other needs.
Leading IT function is a difficult undertaking for a CFO. It is plagued by conflicting tendencies:
1. On one hand, you want to be a strategic thinker. You want to be an agent of change that will propel your company into the future. You envision information seamlessly flowing from product design to financial statements. On the other hand, you are the one standing guard over the company's purse. Ideally, you don't want to spend any money at all.
2. On one hand, you don't want to meddle in other VP's business. They run their departments to the best of their abilities. On the other hand, if you are to make decisions about informational support of their functions, you will have no choice.
3. On one hand, you adore technological progress and you love trees. You dream of paperless offices. On the other hand, you cannot let go of the comfort the filing room with all the source documents gives you.
This list of woes can go on and on. However, none of the IT management issues can compare with the pain of your Boss's Expectations. I am not talking about a techy entrepreneur here. I am talking about your all-other-industries business owners.
Small business CEO's software expectations are usually focused on two aspects: implementation time and reporting capabilities. In their minds, both are in direct correlation with money.
As soon as the money are paid to the software vendor, they expect "all systems go" status. The customization, the setups, the data transfer are all expected to happen with installation, which, by the way, is taking too long ("What are these people are still doing here?").
The reporting expectations are proportional to the amount of money spent. Here are typical examples:
- if you've spent around $100,000, the system is expected to "print" a report with any combination of randomly chosen data ("What do you mean, the data needs to be exported into Excel and analyzed? What did I pay all that money for?")
- if you've spent around $500,000, the system should estimate December cash availability in March; the answer is expected while he is on the phone with you ("Can't you just look it up in YOUR system?")
- if you spent over $1,000,000, the system must initiate a daily call to the boss's personal phone reporting in a soothing voice, how much profit was generated yesterday.
Anything short of that is "UNACCEPTABLE!!!" And it's all your fault!
The Frustrated CFO 