Top Legal and Client Relationship Mistakes for New Brokerages - With Rob Hassman | Ep 18

Host: 00:00:00

On today's episode, we're going to talk about the biggest mistakes that a younger brokerage can make early on in the process from a legal perspective as well as a client relationship perspective.

Host: 00:00:20

Today we have with us Rob Hasman from Burns and Hasman.

Host: 00:00:24

He's our transportation attorney here at Veritas.

Host: 00:00:26

And we're glad to have you on the show again, man.

Host: 00:00:28

Thank you for coming on.

Rob Hasman: 00:00:29

Thank you.

Rob Hasman: 00:00:30

Excited again to be here and hope that I can provide some decent information for the viewers out there.

Host: 00:00:36

Yeah, I think that, you know, this is something.

Host: 00:00:39

This is a topic that I call it like a secret society.

Host: 00:00:43

Right.

Host: 00:00:43

And it's not really a secret society, but I think it's.

Host: 00:00:45

These are things that nobody really understands fully in the brokerage side.

Host: 00:00:50

And I think if we can bring more of this out and bring more awareness to these type of topics, I think we'll be better off as a whole and we can try to protect ourselves, which is, you know, the name of the game.

Host: 00:01:00

Right.

Host: 00:01:01

How do we mitigate risk, especially when you're, you know, fighting for every penny.

Host: 00:01:06

Which is.

Host: 00:01:06

Which is a comment you just used a few minutes ago, so.

Host: 00:01:09

That's right.

Host: 00:01:10

What are.

Host: 00:01:11

Let's start from the top.

Host: 00:01:12

What are some of the biggest mistakes that you see from a brokerage that just started maybe 3, 412 months ago?

Host: 00:01:21

What are some of those big mistakes?

Rob Hasman: 00:01:23

I'm going to focus this on more with management and those that own the company and would make decisions on potentially, you know, what risks they're willing to agree to in terms of liability with customers, shippers and whatnot, rather than what your employees might do on a daily basis when there's a load out there?

Rob Hasman: 00:01:45

Because we all know how that goes.

Host: 00:01:47

What do you mean, man?

Host: 00:01:48

There's financial incentive to be gained.

Host: 00:01:51

You mean people are willing to cut corners from a legal perspective to.

Rob Hasman: 00:01:55

As long as they don't get cut, no one will know.

Host: 00:01:57

Right?

Host: 00:01:58

Got it.

Host: 00:01:58

Yeah.

Host: 00:01:59

Too many times in the past that.

Host: 00:02:01

Yeah.

Host: 00:02:01

You know, it's funny, I laugh because it's so many sales employees that are financially motivated come to me with questions and they say, hey, can I move this $600,000 load of whatever?

Host: 00:02:15

And it's like, oh, well, let's think about this.

Host: 00:02:17

Let's have another conversation.

Host: 00:02:18

But go ahead, back to the big mistakes.

Host: 00:02:21

What do you got, man?

Rob Hasman: 00:02:22

So, again, this is going to focus on the way you operate your business globally, not on a daily basis, you know, in the weeds.

Rob Hasman: 00:02:31

I would say that when you start out, it's a hugely important.

Rob Hasman: 00:02:36

And I'm And I mean before you've moved a load, it's hugely important, obviously to have adequate insurance.

Rob Hasman: 00:02:44

And when I say that, I don't mean, I do mean the coverage limit of your insurance, whether that be a million, five million, ten million.

Rob Hasman: 00:02:53

But I also mean your cut.

Rob Hasman: 00:02:56

Your customers are going to ask you to sign contracts.

Rob Hasman: 00:02:58

And we'll get into what I think you should accept and not.

Host: 00:03:01

Okay.

Rob Hasman: 00:03:02

In a minute, but it's going to happen.

Rob Hasman: 00:03:04

Customers are going to ask you to sign contracts.

Rob Hasman: 00:03:07

So the insurance provider that you seek in this industry needs to be a Gallagher or someone in transportation that is familiar with writing a policy that covers transportation issues and covers transportation contracts.

Host: 00:03:23

So real quick, so you're talking about the policy for a brokerage like ourselves.

Rob Hasman: 00:03:29

Correct.

Host: 00:03:29

We need to make sure that we're vetting out like a Gallagher or a Reliance Partners or a.

Host: 00:03:33

I know, Cottingham and Butler.

Rob Hasman: 00:03:36

Those are agencies.

Rob Hasman: 00:03:38

I'm your underwriter.

Host: 00:03:39

Right, right, right.

Rob Hasman: 00:03:40

Rather than buy an insurance policy from Progressive, you need to.

Rob Hasman: 00:03:44

And I'm not saying Progressive wrong.

Host: 00:03:45

Sure.

Rob Hasman: 00:03:46

I'm just saying the policy you buy should probably be from someone who specializes in insuring transportation.

Host: 00:03:54

Okay.

Rob Hasman: 00:03:54

Because there's going to be certain things that they cover and don't cover.

Rob Hasman: 00:03:59

And the policy is going to be written in a way to contemplate those things.

Rob Hasman: 00:04:02

But again, customers are going to ask you to sign contracts.

Rob Hasman: 00:04:06

And if your contract, if your policy of insurance isn't written in a way that it covers potential contracts you sign with customers.

Rob Hasman: 00:04:16

As I said on a former podcast, brokers are generally not liable for claims.

Rob Hasman: 00:04:20

Okay.

Rob Hasman: 00:04:21

If you pick up liability because you've signed a contract with a customer that says, hey, if a carrier damages a load of widgets, we'll make it whole.

Host: 00:04:29

Yeah.

Host: 00:04:29

So real quick, so with a lot of those shipper contracts, what you're saying or what I'm hearing is these shippers or clients, the people that pay our bills, they want us to sign a contract.

Host: 00:04:40

If there is a claim or a loss, then we as the broker are held liable.

Host: 00:04:45

Is that.

Rob Hasman: 00:04:46

That's going to be the starting point.

Host: 00:04:47

Okay.

Host: 00:04:47

Okay.

Rob Hasman: 00:04:48

And we'll get into a little bit about what I'd like to see or negotiate.

Rob Hasman: 00:04:51

Ideally, some of the.

Rob Hasman: 00:04:52

What I would accept.

Host: 00:04:53

Yeah.

Rob Hasman: 00:04:54

Because.

Rob Hasman: 00:04:55

And then what I would absolutely never tell you to accept.

Rob Hasman: 00:04:57

In a minute.

Host: 00:04:58

Love it, man.

Host: 00:04:58

Yeah, I want to hear about those non negotiables.

Host: 00:05:02

Yeah.

Rob Hasman: 00:05:02

But what again, at the end of the day, your insurance policy, when you start out, should be one that contemplates that it's going to have contractual coverage, contractual indemnity coverage.

Rob Hasman: 00:05:15

And what your insurance company is willing to give you is going to be less at the beginning, but at least you'll have that coverage.

Rob Hasman: 00:05:21

And if you, you'll know what it covers.

Rob Hasman: 00:05:23

And if you get a contract you're iffy about, you can send it to your agent and they'll be like, yeah, that would be covered by your policy.

Rob Hasman: 00:05:28

Or no, it wouldn't.

Rob Hasman: 00:05:29

And that helps you also to know what you can accept and cannot accept in terms of the contract itself.

Host: 00:05:35

Yeah.

Rob Hasman: 00:05:35

Because if it's never going to be covered, you know, you probably don't want to sign that contract.

Host: 00:05:40

Sure.

Rob Hasman: 00:05:40

So I think getting an insurance policy, the right one with the right terms in it is hugely important.

Rob Hasman: 00:05:45

Now, they're expensive.

Rob Hasman: 00:05:46

I get that.

Rob Hasman: 00:05:48

But the last thing you want to be one have happen is you be 10 months down the road making lots and lots of money.

Host: 00:05:54

Yeah.

Rob Hasman: 00:05:55

You have a death happen, you picked it up and your insurance is just out the window.

Host: 00:05:58

Sure.

Rob Hasman: 00:05:59

Okay.

Host: 00:05:59

Yep.

Rob Hasman: 00:06:00

So I think that's hugely important.

Rob Hasman: 00:06:05

The other thing that I would say is starting out and should bleed.

Rob Hasman: 00:06:10

Bleed into your policies forever.

Rob Hasman: 00:06:13

Brokers cringe when I, when I say this, but this is reality.

Rob Hasman: 00:06:17

You need to be as absolutely hands off as you can in terms of checking in with carriers.

Host: 00:06:25

Okay.

Rob Hasman: 00:06:25

Monitoring where carriers are on the road, provided you can look at that.

Rob Hasman: 00:06:31

But you don't want to have.

Rob Hasman: 00:06:32

You do not want to dictate.

Rob Hasman: 00:06:34

You need to be at this mileage by this point.

Host: 00:06:36

Hold on real quick.

Host: 00:06:38

So you like, are you talking about like, coercion?

Host: 00:06:41

Like you need to get to the delivery spot by Friday.

Host: 00:06:45

Is that what I'm hearing?

Host: 00:06:46

Or is that you can tell them.

Rob Hasman: 00:06:48

They need to deliver.

Rob Hasman: 00:06:49

You can tell them they need to pick up at certain times.

Host: 00:06:51

So we're talking about like a standard check call.

Rob Hasman: 00:06:54

You know, I know all brokers do that.

Host: 00:06:56

Yeah.

Rob Hasman: 00:06:56

And I know that that's something that you guys find valuable and so do customers.

Host: 00:07:01

Sure.

Rob Hasman: 00:07:01

But the law out there is ever changing.

Rob Hasman: 00:07:05

Judges and plaintiffs attorneys are ever changing.

Rob Hasman: 00:07:08

And when somebody dies on the road or a load of gold bars gets damaged.

Host: 00:07:15

Sure.

Rob Hasman: 00:07:16

Again, generally a broker doesn't have liability for that.

Host: 00:07:18

Okay.

Rob Hasman: 00:07:19

Two ways to get the broker liable for that are three ways.

Rob Hasman: 00:07:24

One, sign a contract, which we were just talking about, accepting that liability.

Rob Hasman: 00:07:29

Two, what they call negligent entrustment.

Rob Hasman: 00:07:31

So like, let's say your customer engages you to move a load of widgets and you hire someone with 10 DUIs.

Rob Hasman: 00:07:38

The law could say you were negligent.

Rob Hasman: 00:07:39

You should have never hired that guy.

Host: 00:07:41

Probably a safety rating in our terms or our world.

Host: 00:07:44

Right.

Host: 00:07:45

Twice the national average safety rating, which we should be vetting on the carrier selection front.

Rob Hasman: 00:07:51

And the third is what we call agency.

Host: 00:07:54

Okay.

Rob Hasman: 00:07:55

Okay.

Rob Hasman: 00:07:55

So when you, when you engage a motor carrier, you are from the start, especially in your broker carrier agreement, you have language that says you're an independent contractor.

Rob Hasman: 00:08:03

We're hiring you to a do a job.

Host: 00:08:05

Yeah.

Rob Hasman: 00:08:05

And when you have under the law, an independent contractor relationship.

Host: 00:08:09

Yeah.

Rob Hasman: 00:08:09

That means that independent contractor should have full ability to control the method in which it performs its services.

Host: 00:08:17

Okay.

Rob Hasman: 00:08:17

And so when you start to exert more and more control over how they do their job, the law can morph that or a judge can determine that they are now an agent of yours.

Host: 00:08:29

Okay.

Rob Hasman: 00:08:29

And under the law, a principal is liable for the actions of its agent.

Rob Hasman: 00:08:34

I get a journal once a month from what's called the TLA Transportation Lawyers Association.

Rob Hasman: 00:08:39

And every day these courts and plaintiffs attorneys are moving the needle to find brokers liable because you have C.H.

Rob Hasman: 00:08:49

robinson's out there, you have TQL's out there.

Rob Hasman: 00:08:52

And when 20 people die in a pile up, an owner operator is never going to be able to cover that.

Rob Hasman: 00:08:57

Someone with huge pockets can.

Rob Hasman: 00:08:59

So they're trying to find ways to.

Host: 00:09:01

Get more to attach to people from a liability perspective.

Rob Hasman: 00:09:06

Correct.

Host: 00:09:07

Do you like?

Host: 00:09:08

I guess my question here is.

Host: 00:09:10

So, you know, just from what I'm hearing you say is we should be.

Host: 00:09:15

You said we should be hands off.

Host: 00:09:17

How do we get daily updates from our driver to our clients?

Host: 00:09:22

I mean, how do we do that?

Rob Hasman: 00:09:24

I know it's a part of your industry.

Rob Hasman: 00:09:25

I know it's something that you're, that you want to do and everybody out here is wanting to do.

Host: 00:09:29

Yeah.

Rob Hasman: 00:09:30

I would tell you from a purely vacuum in my mind as a lawyer, if I could have a world where a broker sends someone in and doesn't know what happens until they deliver, that is the perfect liability vacuum.

Host: 00:09:44

You're gonna give a lot of brokers heart attacks here with daily updates.

Rob Hasman: 00:09:48

I'm just telling you that when you go from here to here, somewhere in the middle is where the scales tip.

Host: 00:09:54

Real quick.

Host: 00:09:54

I wanna hone in on this.

Host: 00:09:55

Cause I think this is pretty important.

Host: 00:09:57

So with that, is there any language?

Host: 00:09:59

industry for, you know, since: 2009

Host: 00:10:06

Check calls or daily updates have been part of the process throughout.

Host: 00:10:10

How do we navigate that?

Host: 00:10:12

Or is there any language that we can say?

Host: 00:10:14

Or do we just Go super caveman and say, you know, city, state, reefer, temp.

Rob Hasman: 00:10:19

And I mean, I would say this.

Rob Hasman: 00:10:21

I know it's going to happen.

Rob Hasman: 00:10:22

I know it's got to happen.

Rob Hasman: 00:10:24

The more that you require them to check in with you or to be at a certain point at a certain time seems more like you're dictating what they have to do, if that makes sense.

Host: 00:10:36

Got it.

Rob Hasman: 00:10:37

And that's going to feel more like control.

Rob Hasman: 00:10:39

The more that that happens, the more that they are required to call you or they have to do stuff that you're dictating to them.

Rob Hasman: 00:10:46

Yeah, that's going to seem more like control.

Host: 00:10:48

What about tracking everybody?

Rob Hasman: 00:10:49

That's what I was going to say.

Rob Hasman: 00:10:51

If you could get to a situation where you could just see where they are at any time and you're just passing that along and you're your just checking on them, I feel okay about that.

Rob Hasman: 00:11:02

I feel like that's fine.

Rob Hasman: 00:11:03

And I hope that that makes the customer satisfied.

Rob Hasman: 00:11:06

And again, I'm not.

Host: 00:11:08

It'll.

Host: 00:11:08

It'll make some satisfied but I'm not.

Rob Hasman: 00:11:11

The one dictate or choosing.

Host: 00:11:13

No, it's good information whatever of control.

Rob Hasman: 00:11:15

Is going to get you in trouble or not.

Host: 00:11:16

That's great information.

Rob Hasman: 00:11:17

But the less you can do to stick your hands into how the carrier does its job, the better you're off you're going to be because you know, I have customers that will tell their carriers that they need to do this, this and this and you're then creating the way they do their job.

Rob Hasman: 00:11:36

So I'd say those are two things starting out.

Host: 00:11:39

Okay, you mentioned a couple of those.

Host: 00:11:40

What's the third thing or what's we mentioned?

Host: 00:11:43

You know, the shipper broker contract also is the least amount of touches possible.

Host: 00:11:51

I think that's paired with the insurance piece.

Rob Hasman: 00:11:54

Right.

Host: 00:11:54

You want to make sure that you get a, an insurance company that you partner with that has a reputation, has a brand name that everybody recognizes and is going to pay out on claims.

Host: 00:12:07

If that happens, what's the third piece or what's another piece of that?

Host: 00:12:10

And then I want to dig in here to the shipper broker contract because I think that's so important today.

Rob Hasman: 00:12:18

That's going to be the third thing is and broker shipper contracts, co broker contracts, contracts in general play a role in this.

Rob Hasman: 00:12:27

But the third thing is the amount of risk you take with respect to any circumstance has to out be outweighed by the benefit of the situation you're undertaking.

Rob Hasman: 00:12:42

So when a customer comes to you and says and puts this Contract in front of you, and it says you're going to do all these things.

Rob Hasman: 00:12:49

And the two most important things in there in terms of my job are you're going to pay us when a load of widgets gets damaged.

Rob Hasman: 00:12:57

I would love to have that change to say we're going to hire a motor carrier by contract and they're going to agree to pay you and we're not liable.

Host: 00:13:06

One thing that I think you've brought to light in our scenario is a lot of these shippers, they send over contracts and they say shipper carrier.

Rob Hasman: 00:13:13

Correct.

Host: 00:13:14

Right.

Host: 00:13:14

And the language in there represents us as a carrier.

Host: 00:13:17

And I know you've always disputed that and said, hey, this looks like a shipper carrier contract.

Host: 00:13:22

Can we get a shipper to broker contract?

Rob Hasman: 00:13:24

Correct.

Host: 00:13:25

Where that language is different.

Host: 00:13:26

Just like you were saying, we're going to hire a motor carrier to do the job, which I think is something that a lot of people and a lot of brokers out there, they oversee.

Host: 00:13:35

Right.

Host: 00:13:35

And they say, oh, well, it looks good.

Host: 00:13:37

I'm going to go ahead and sign this.

Host: 00:13:38

There's opportunity, but to close a deal.

Host: 00:13:40

Right, right.

Host: 00:13:41

But go ahead.

Rob Hasman: 00:13:42

So you're right.

Rob Hasman: 00:13:43

You want to have a broker shipper contract, because if you have a carrier shipper contract, you're going to have all these various things that you're supposed to do that a carrier is supposed to do that you just can't because you're not a carrier.

Rob Hasman: 00:13:53

You're not going to have equipment, you're not going to have eld, you're not going to have a satisfactory writing rating, but you need to have a broker shipper contract.

Rob Hasman: 00:14:02

And when it comes to picking up losses to the widgets, ideally we'd like to just take it out.

Host: 00:14:08

Sure.

Rob Hasman: 00:14:08

If the customer says no, then second position would be we would like to enforce our broker carrier agreement on your behalf and have the carrier pick up liability to you.

Host: 00:14:21

Okay.

Rob Hasman: 00:14:22

If they still say no.

Rob Hasman: 00:14:23

Okay.

Rob Hasman: 00:14:25

Then I have a.

Rob Hasman: 00:14:26

Then I would have a conversation with you, Brian.

Rob Hasman: 00:14:29

How big of a customer do you think this is going to be?

Rob Hasman: 00:14:32

We might do 20 loads.

Rob Hasman: 00:14:33

Well, then let's get rid of this contract.

Rob Hasman: 00:14:34

Let's not do business with, oh, we're going to do a million dollars this year.

Rob Hasman: 00:14:37

Okay, well, then we can live with this.

Rob Hasman: 00:14:39

You know, if you have two.

Rob Hasman: 00:14:41

Two claims this year, 100 grand apiece.

Rob Hasman: 00:14:43

Well, you still made 800 grand.

Host: 00:14:44

Right.

Rob Hasman: 00:14:45

If we go that scenario, we would want to add in language that the maximum we're picking up is 100 grand per shipment, because that's going to be the requisite amount of insurance that generally is going to be out there.

Host: 00:14:55

And I think.

Host: 00:14:56

I mean, you nailed it, man.

Host: 00:14:57

Like, is you nailed on the client side?

Host: 00:15:00

If we're going to do business with this customer, how many loads a week or how many loads a year are they doing?

Host: 00:15:06

Like, is the risk.

Host: 00:15:08

It's the risk versus the reward.

Rob Hasman: 00:15:10

Correct.

Host: 00:15:10

Does the risk outweigh the rewards in these types of contracts?

Rob Hasman: 00:15:14

Well, I can't tell you how many times that I've gotten into a stalemate with the other side on.

Host: 00:15:19

Yeah.

Rob Hasman: 00:15:19

Why would we pick this up for you?

Rob Hasman: 00:15:20

This is the first load we're going to.

Rob Hasman: 00:15:22

And they're like, well, this is what we require.

Rob Hasman: 00:15:23

And I've said back to them, all right, we'll pick this up.

Rob Hasman: 00:15:27

And I do this on behalf of my client.

Rob Hasman: 00:15:28

We'll pick this up for you.

Rob Hasman: 00:15:31

But you're.

Rob Hasman: 00:15:31

And they'll say to my client, yeah, my clients.

Host: 00:15:34

The brokerage.

Rob Hasman: 00:15:35

The brokerage, or the salesperson who's beating on you.

Rob Hasman: 00:15:38

Brian, one of your people upstairs, we need to get this signed.

Rob Hasman: 00:15:41

We're going to do 500 grand this quarter.

Host: 00:15:43

Huge opportunity.

Rob Hasman: 00:15:44

I'll go back to them and I'll say, we'll put this language in here because you say we have to.

Host: 00:15:48

Yeah.

Rob Hasman: 00:15:49

Can we put in a caveat that if you don't provide this level of revenue, then this provision doesn't kick in?

Rob Hasman: 00:15:55

Because if you're telling me that I gotta pick this up because of the business you're gonna give me.

Host: 00:15:58

Yeah.

Rob Hasman: 00:15:59

Then shouldn't you have to commit to me, to that business?

Rob Hasman: 00:16:01

And sometimes they'll give it to me.

Rob Hasman: 00:16:04

A lot of times they won't.

Rob Hasman: 00:16:06

But that's a way to kind of play devil's advocate to them.

Rob Hasman: 00:16:09

Okay, you know what?

Rob Hasman: 00:16:10

We'll make this fair.

Rob Hasman: 00:16:11

You want me to pick this up for you?

Rob Hasman: 00:16:13

But you have to make the commitment to me it's going to be worth my while.

Host: 00:16:15

I love that.

Host: 00:16:16

I think.

Host: 00:16:17

So you mentioned a couple, like, provisions in the contract.

Host: 00:16:20

If I'm a younger brokerage and I've got eight to 10 people and, God, I can't really afford an attorney, you know, for 300 bucks an hour.

Host: 00:16:28

And maybe I just want to.

Host: 00:16:29

I'm pretty smart, you know, I scored high on my act or whatever.

Host: 00:16:33

Not me personally, other.

Host: 00:16:34

Other people.

Host: 00:16:35

But if I'm looking through this contract, what section is that usually under that you're talking about?

Rob Hasman: 00:16:41

USC: 14706

Rob Hasman: 00:16:53

But it'll be all your stuff about the claims.

Rob Hasman: 00:16:55

But to.

Rob Hasman: 00:16:56

But to your point.

Rob Hasman: 00:16:57

And this concept is going to apply across the board forever.

Host: 00:17:03

Yeah.

Rob Hasman: 00:17:04

No matter what any client I have in the broker industry, I get it.

Rob Hasman: 00:17:08

On day one you have no customers, you'll sign anything.

Host: 00:17:12

No, we haven't done that.

Host: 00:17:14

What are you talking about?

Host: 00:17:15

Rob, come on.

Rob Hasman: 00:17:15

So if this provision is in there and you signed it on day one, so what?

Rob Hasman: 00:17:19

You don't have anything to lose.

Rob Hasman: 00:17:20

Yeah, but once you get to a point where there's a nest egg or a good business or whatnot, this provision can sink the biggest something to go after.

Rob Hasman: 00:17:29

There's a provision in every contract you're going to see called indemnification.

Host: 00:17:33

Yes, that was my next point, man.

Host: 00:17:34

I had it written down here.

Host: 00:17:35

I wanted to ask you about it, but I'm glad you brought it up.

Rob Hasman: 00:17:37

So what that means is your customer or whomever is the other party.

Rob Hasman: 00:17:43

Well, one is provision in there that says anything under the sun that happens out there, if it's caused by a carrier, you whatnot, including deaths, personal injury, whatnot.

Rob Hasman: 00:17:55

And you're going to indemnify us for that?

Host: 00:17:58

Indemnify means.

Rob Hasman: 00:18:00

It means defend them for the cost of a lawsuit and reimburse them for any and all cost, expenses, judgments, liabilities, whatnot they incur.

Host: 00:18:08

So if you sign off on the indemnification piece of that contract and you sign it, you are liable as a broker to pay if something happens, God forbid, you are liable for all of the loss that happens within that scenario.

Host: 00:18:24

Is that accurate or is that any.

Rob Hasman: 00:18:26

Losses that may be imposed upon the carrier or your customer?

Rob Hasman: 00:18:30

So let's say you have a carrier down there or out there hits a bridge, kills five people.

Host: 00:18:35

Sure.

Rob Hasman: 00:18:36

Your customer gets brought in and is looking at a potential $15 million judgment because 10 people died pretty decent, you might be on the hook for that.

Rob Hasman: 00:18:43

So those provisions can sink the whole thing.

Host: 00:18:46

Sure.

Rob Hasman: 00:18:46

And again, when I went back to the insurance at the beginning, anytime you have indemnification, you need to make sure that your insurance company blesses that indemnification you're signing.

Rob Hasman: 00:18:56

Okay, so when I said a while ago, the things I would like to see versus what I would accept versus the no nos like to see is no cargo liability, no indemnification.

Rob Hasman: 00:19:06

What I would accept is ideally cargo liability.

Rob Hasman: 00:19:10

We shift to the carrier.

Rob Hasman: 00:19:11

We'll make sure by contract they pick it up.

Host: 00:19:13

Sure.

Rob Hasman: 00:19:14

Or we'll pick it up and give us A good amount of business.

Host: 00:19:18

Yeah.

Rob Hasman: 00:19:18

Or you know what, we'll take a risk.

Rob Hasman: 00:19:19

We'll pick it up.

Rob Hasman: 00:19:20

Limited to 100 grand.

Host: 00:19:21

Yeah.

Rob Hasman: 00:19:21

But what I never want you guys ever to take on is indemnification across the board if your customer.

Host: 00:19:27

Because you.

Host: 00:19:28

What if it's Walmart?

Host: 00:19:29

What if it's Target?

Host: 00:19:30

What if it's Costco and you have.

Rob Hasman: 00:19:32

To make a decision whether to do business with them.

Rob Hasman: 00:19:35

But you know what you can always try to do is pare that indemnification down to say we'll pick it up to the extent our direct employees were negligent.

Host: 00:19:43

Sure.

Rob Hasman: 00:19:44

Because what happens out there is a motor carrier did something.

Host: 00:19:47

Yeah.

Rob Hasman: 00:19:48

And the language says you're going to pick up the negligence or indemnification for yourself, your employees, your agents, your subcontractors, the carriers on the road, anybody you hire.

Rob Hasman: 00:19:57

If you can limit that to only people in your office, that doesn't mean one of them is not going to make a mistake.

Rob Hasman: 00:20:03

But you can, you can narrow that ball of yarn down a ton.

Host: 00:20:23

Yeah.

Host: 00:20:23

So what I'm hearing there is like some 100%, no nos, some, you know, scenarios where it's like bend but don't break, where it's advantageous to you as the broker and then some other scenarios where you know you're signing it as is.

Rob Hasman: 00:20:36

So to your, to your point on the first two.

Host: 00:20:39

Yes.

Rob Hasman: 00:20:39

Because you can always make a decision on how much business or revenue from a customer is going to justify $100,000 claim.

Host: 00:20:47

Sure.

Rob Hasman: 00:20:48

I mean, you can make, you can quantify that or you can say, you know what, I don't even know that I'm going to get this much business, but I'll take the risk because I might.

Rob Hasman: 00:20:55

And I know that worst case scenario, I can lose 100 grand.

Rob Hasman: 00:20:58

What you don't know is if you open this global situation out there, or you can't quantify whether it's going to be a $20 million nuclear situation.

Host: 00:21:07

Correct.

Rob Hasman: 00:21:08

And that's just going too far because when you own something like you guys do, it's your livelihood, you got a good thing going, you don't want one.

Rob Hasman: 00:21:15

You know, one scenario.

Host: 00:21:16

Yeah.

Rob Hasman: 00:21:17

$5 million this year from this customer.

Host: 00:21:20

Sure.

Rob Hasman: 00:21:21

5 million every year.

Rob Hasman: 00:21:23

It doesn't justify the one situation where you lose your whole brokerage.

Host: 00:21:26

Well, I even think like you just said it, like even with the hundred thousand dollar mark, it takes a lot of loads to get up to that hundred thousand dollar mark in profitability perspective.

Host: 00:21:36

So even the risk that you do take, what does that look like.

Rob Hasman: 00:21:39

But even if you decide to take that risk.

Host: 00:21:41

Yeah.

Rob Hasman: 00:21:42

And you have one claim, all these contracts are going to say you can terminate.

Host: 00:21:46

Right.

Rob Hasman: 00:21:46

So at least I'm not saying do it.

Rob Hasman: 00:21:49

But at least you know that if I get $0.

Host: 00:21:52

Yeah.

Rob Hasman: 00:21:52

I'm only out 100.

Rob Hasman: 00:21:53

At worst case scenario, I'm at 100.

Rob Hasman: 00:21:55

What you can't quantify is if I get $0, could I still be out 20 million?

Host: 00:21:59

Sure.

Rob Hasman: 00:22:00

So again, indemnification is very important.

Rob Hasman: 00:22:04

You don't want to voluntarily agree to pick up everything under the sun with respect to any liability out there that could depend on your customer.

Rob Hasman: 00:22:14

So try to limit that, Try to eliminate it.

Rob Hasman: 00:22:16

Try to limit it to only negligence of your employees.

Rob Hasman: 00:22:20

And again, regardless if you're signing a contract that has that in there, you need to make sure that your insurance company is going to cover that contract because if you don't have any insurance for it, then you're writing a check.

Host: 00:22:31

Yeah.

Rob Hasman: 00:22:31

So that's a big pitfall I think everyone needs to be aware of.

Host: 00:22:35

Okay.

Rob Hasman: 00:22:35

The only other thing, there's so many things that you need to be aware of.

Rob Hasman: 00:22:38

But the, you know, the other big thing that I think we should talk about right now because I know all of you are seeing it, is this concept of stolen loads and stolen identity.

Host: 00:22:48

I think we need another like three part series on top of this.

Host: 00:22:52

It's a hot topic, man.

Host: 00:22:53

It is, it is, you know, running rampant in the industry.

Host: 00:22:56

We've done a couple episodes on it.

Host: 00:22:58

I love that you brought it up.

Rob Hasman: 00:22:59

So I'm not going to get into what's happening because I've actually been on a webinar where I've seen video of people from the Ukraine and I mean, there's a lot going on with this.

Rob Hasman: 00:23:12

But I would just say that there are things that brokers can do to whittle this down and cut down, try to eliminate this.

Rob Hasman: 00:23:23

First and foremost, be smart.

Rob Hasman: 00:23:24

You know, you need to have someone in charge of customer intake and carrier intake.

Rob Hasman: 00:23:30

If you see broken English in an email, if you see, you know, something looking weird, if it doesn't smell right, it might not be right.

Host: 00:23:38

Yeah.

Rob Hasman: 00:23:39

And you know, if you, whoever's in charge of setting carriers up when they get the insurance cert, call that agent, make sure that that is a company that exists.

Rob Hasman: 00:23:48

If you call John Doe Insurance agency and they say we've never heard of, you know, whomever.

Host: 00:23:53

Yeah.

Rob Hasman: 00:23:54

That's a good red flag.

Host: 00:23:55

Yeah.

Rob Hasman: 00:23:55

Now that's all stuff on the front end.

Rob Hasman: 00:23:57

There's still gonna Be things that can slip through the cracks.

Rob Hasman: 00:24:00

And I tell all my customers this, nothing's ever gonna be perfect.

Rob Hasman: 00:24:04

And they all tell me, rob, there may just not be enough time.

Rob Hasman: 00:24:07

And I said, maybe for you, but you have employees out there brokering.

Rob Hasman: 00:24:10

And by the way, a lot of you have load coverage, people below them that are just in charge of making sure who picks up and doesn't pick up.

Host: 00:24:17

Sure.

Rob Hasman: 00:24:18

When you know that Acme company is going to.

Rob Hasman: 00:24:21

Is supposed to pick up your load at John Doe shipping yard.

Host: 00:24:25

Yeah.

Host: 00:24:25

Yeah.

Rob Hasman: 00:24:26

Pick up the phone, call John Doe and say, read me the MC number off the side of that truck.

Host: 00:24:32

Sure.

Rob Hasman: 00:24:32

If the MC number for the motor carrier that you were supposed to send in doesn't.

Rob Hasman: 00:24:36

Doesn't line up with that.

Host: 00:24:37

Yeah.

Rob Hasman: 00:24:37

Stop the damn thing.

Host: 00:24:38

Yeah.

Rob Hasman: 00:24:38

If you're better off get having an upset customer over a late load than you are $100,000 worth of beef tenderloin gone.

Host: 00:24:46

Yeah.

Rob Hasman: 00:24:47

So if you, if you can get someone to tell you what truck is actually there, you're going to cut down on this a lot.

Rob Hasman: 00:24:53

Now I get there are shippers out there going to say, I'm not doing that.

Host: 00:24:56

Not for every single load.

Host: 00:24:57

I 200 loads a day.

Rob Hasman: 00:24:59

Right.

Host: 00:24:59

I'm not doing shipper verification on, or, you know, truck verification on every single shipment.

Rob Hasman: 00:25:04

Right.

Host: 00:25:04

I do think.

Host: 00:25:05

I mean, to your point there, I think there is.

Host: 00:25:08

I have a couple clients that we work with today where they are very stringent on the, on the.

Host: 00:25:13

The driver check in.

Host: 00:25:14

They do driver first name, last name, CDL picture.

Rob Hasman: 00:25:18

Because they're getting hit with it too.

Host: 00:25:19

Correct.

Host: 00:25:19

And like, one of them is a meat wholesaler, and they do a great job with all the care.

Host: 00:25:25

Like, I've had drivers call me before, like, oh, my God, man.

Host: 00:25:27

Like, I did everything minus the fingerprinting.

Host: 00:25:31

Right.

Host: 00:25:31

And I'm like, well, they want to make sure that, you know, they want to make sure that they know who's picking up their product.

Rob Hasman: 00:25:38

All that stuff's awesome.

Rob Hasman: 00:25:39

Don't get me wrong.

Rob Hasman: 00:25:40

Especially in my world.

Host: 00:25:41

Yeah.

Rob Hasman: 00:25:42

I can't tell you how often I need.

Rob Hasman: 00:25:44

When I'm trying to do a claim, I need to prove who the driver was, what the VIN on the truck was.

Host: 00:25:48

Lord.

Rob Hasman: 00:25:48

And if I can get that stuff, that's great.

Host: 00:25:50

Yeah.

Rob Hasman: 00:25:50

But regardless of that, it all boils down to the.

Rob Hasman: 00:25:54

The motor carrier engage.

Rob Hasman: 00:25:56

Not really the driver.

Rob Hasman: 00:25:56

The driver's an employee of that motor carrier.

Rob Hasman: 00:25:59

So if you send in xyz, it needs to be xyz.

Rob Hasman: 00:26:03

I don't really care who's behind the wheel.

Host: 00:26:04

Yeah.

Rob Hasman: 00:26:05

The MC number on the door is how you verify that.

Host: 00:26:07

Yeah, yeah.

Rob Hasman: 00:26:08

And I get.

Rob Hasman: 00:26:08

There's not, there's, there's never going to be a global policy that all your shippers or customers are going to do that for you.

Host: 00:26:14

Sure.

Rob Hasman: 00:26:14

But let's say you can even get it to 30%.

Rob Hasman: 00:26:17

Yeah, 30% is better than nothing.

Host: 00:26:19

Yeah, that's true.

Host: 00:26:20

And I think that's, you know, that is a huge step in our industry, getting verification of that to make sure that, you know, like you said on the back end, the people that are dealing with the claims, especially if you're a younger brokerage, usually, usually you have a founder or a.

Host: 00:26:34

The best salesperson out there dealing with this, taking away from time that they could be setting up new clients.

Rob Hasman: 00:26:40

Correct.

Host: 00:26:40

So I think more vetting on the front end is huge.

Host: 00:26:44

Rob, I really appreciate you joining us today, man.

Host: 00:26:47

There's so much information here that you've been able to share with us and our guests.

Host: 00:26:51

If you've enjoyed the content today, please put any questions, comments that you see fit.

Host: 00:26:56

And you know, for your sake, man, how can we get ahold of you?

Host: 00:27:01

If somebody is looking for a legal opinion, hopefully they've listened to the past, you know, 30 minutes to an hour of this and gained so much information.

Host: 00:27:10

How do they get a hold of you, man?

Rob Hasman: 00:27:11

-: 0900

Host: 00:27:18

Okay.

Rob Hasman: 00:27:18

Just ask for Rob Hasman.

Rob Hasman: 00:27:20

You could also get us at the website, which is www.

Rob Hasman: 00:27:25

Burns hasmanlaw.com, which is b U R N S H A S as in Sam S as in Sam M A n l a w.com and my email is very similar.

Rob Hasman: 00:27:39

It's R Hasman, which is my, the first initial of my first name.

Rob Hasman: 00:27:42

Rob.

Rob Hasman: 00:27:43

R H A S as in Sam.

Rob Hasman: 00:27:45

S as in Sam M A N at that same domain.

Rob Hasman: 00:27:49

Burns hasman law.com awesome, Rob.

Host: 00:27:52

Appreciate it, man.

Host: 00:27:53

Thank you.

Rob Hasman: 00:27:54

Thank you.

Host: 00:27:54

What roles does your organization have?

Host: 00:27:56

What roles does your team have?

Host: 00:27:58

What are the expectations for each role?

Host: 00:28:00

What is the end goal?

Host: 00:28:01

Whether it's quarterly, annual, whatever it may be, what's your goal as a team?

Host: 00:28:05

And then how do you squeeze the absolute potential out of each individual?

Host: 00:28:09

So if there isn't role clarity, there's going to be a lot of confusion.