This week, we are joined by Cory Sterling, a lawyer and the owner of Conscious Council, a law firm focused on servicing health and wellness businesses.
In this episode, Cory explains the origins of Conscious Council, the biggest legal risks fitness business owners can face, and how using a legal service allows you to really focus on the important areas of your business.
As mentioned in the episode, Cory has kindly offered a discount for his excellent course: Don’t Get Sued: Legal Essentials for Wellness Professionals, which covers the core issues we’ve seen our clients have the most questions about, and the least clarity on, including:
- Business structure
- Operating online (privacy, T&C, disclaimers)
- Waivers of Liability
- Trademarks + IP
- Membership/service agreements
- Employee & Independent Contractor agreements
Use discount code GLOFOX to access it for FREE!
Episode link
This episode of The Fitness Founders Podcast can be found on Spotify, Apple Podcasts, and anywhere you get your podcasts.
Transcript
Alex: Hi everyone. Welcome to this week’s Fitness Founders Podcast. I’m Alex, I’ll be taking the questions this week. I’m absolutely thrilled to have an incredibly interesting guest who has been doing amazing things to transform the legal space in the fitness industry. He’s going to help us explore why studio owners need to adopt a more legal mindset for their fitness business. Here we are welcoming Cory Sterling from Conscious Counsel. Welcome Cory.
Cory: Cheers, Alex. Thank you for having me.
Alex: Welcome. Cory, it would be great if you can kick-off a little bit and tell us about your background and how your journey has been into the fitness industry.
Cory: I was a group fitness trainer, and I was a yoga teacher, and I was just always at the gym and all about finding the coolest classes. Fitness was really a lifestyle and still is for me. At the same time, I was coming up and becoming a lawyer. I’m working for a big law firm. I realized that all of my friends who rent studios or who were personal trainers do want to start their own businesses, they didn’t understand anything about the law. I saw a couple of them actually getting some trouble over it. All of this started out by helping a couple of friends, and over time has grown into a full practice really focusing on helping fitness studio owners, and gym owners, and online fitness professionals in getting them with legal documents and raising awareness on legal issues that they otherwise will not turn their mind to.
Alex: Fantastic. I mean, it certainly sounds like something that needed to be done. Have you found across the board that there’s quite a lot of lack of awareness within the legal space within the fitness industry?
Cory: Yeah. I would say it’s quite rare to meet a fitness studio owner or business owner who is aware of all of the issues. I’d say that almost never happens. I think the bigger difference is that a lot of them just don’t really care. Because when you’re an entrepreneur and you start a business, they don’t really turn your mind to these particular things. It’s not like someone hands you a manual with all of this important information. But that being said, usually where I come in is when a problem arises and someone has to deal with something, and then as such I’m a prior to come in and fix the problem and then they realize the importance of learning about this.
Alex: Would you say that a lot of the time when businesses first get you involved it is in a very reactive capacity? And actually what you’re trying to help these business owners do is actually set up their business models so it’s much more preemptive rather than reactive?
Cory: Yeah, exactly. The cool thing is when I first started this business, I would say, 80% of what I was doing was reactive just because it seems business owners weren’t turning their minds to this. But because I’ve made online courses, I’ve written books, and I’ve worked so hard to share this information and put it out there. But now I say it’s more like 60% preventative and 40% reactive, which is really cool. I’m hoping that with more time and in sharing more information, providing more free resources to business owners that they at least turn their mind to it. And then, at least understand that, okay, there’s certain things that I need to make sure are organized properly so that my business can continue to thrive and that I can continue to run it, and that it can support me and that it can support my community. The whole ethos behind what we do, why we do what we do is that I know that all of these fitness professionals are making the world a healthier and better place. From a legal perspective, if their business is set up in a healthier and more confident structure then I feel I’m doing the service that I really want to be contributing.
Alex: Absolutely. Totally understand that. I think it certainly adds a lot of value to these businesses. As you say, who perhaps are lacking that previous information or education about how it can really support their business. I suppose coming back to absolute basics, when you are first meeting with a new studio owner, how do you ease them into this, I guess, what could be considered a complex world of law?
Cory: The first thing always is just letting people know that it’s not as intense or challenging or difficult as they think it is, right? And that is part of what our firm does in the way that we communicate. Our whole thing is that we make law fun, we make it a positive and empowering experience. Basically because I’ve just done this for 5 years and I’ve worked with thousands of people and have thousands of conversations with studio owners or fitness professionals. There are really 3 or 4 main documents that they need and it doesn’t need to be more complicated than that. And if I can convince them to trust us. And as long as they’re transparent in the type of relationships they have, and the type of business they’re building, and the way that they are building it, and they are clear on how they want to work with the people they work with – whether it’s the instructors who work for them, whether it’s with their clients, whether it’s with a fellow business owner, whatever it is – it’s not as difficult or challenging as people think it is.
The first thing I do is, “Look, everyone is going through the same problem and has the same issues.” We’ve prepared this package of documents. We’re going to draft them for you. We’re going to show you exactly how to use them, and then you don’t have to think about the law ever again. In the microscopic event that an issue comes up, we’re here to support you and take care of it for you. What I found is that most of what my clients are really looking for is that peace of mind and that comfort to know, “Okay, now I can focus on training my clients better or growing my business because I don’t have to worry about this legal thing holding me back.” One thing I’ve observed is that a lot of these professionals will always be, in the back of their mind they’re like, “I really want to grow and I want to open a second location, I want to do more and more things but I’m afraid because I don’t have this legal background set up.” I just let them know, “Hey, we got your back. I’ve done this thousands of times. And go out and build an amazing business and do all the things you always dreamt of.”
Alex: That sounds absolutely fantastic. I can totally see how I suppose the legal infrastructure around how you expand outside of that maybe one location can actually be really daunting for a lot of people. I guess, you’re making it sound like it’s always very positively received and it is always a very easy process to get these operators in a position to go along with everything that you set out. But are there any usual or typical points of resistance that you sometimes find with some of these owners in terms of getting on top of their legal affairs?
Cory: I think it’s usually something along the lines of confronting something that you don’t want to confront. The most important thing for me is to make a safe space with my client. I’m like, “I do not judge you however you’ve been running things in the past. That’s awesome. We’re here now. We’re here today. What we can do is we can take positive action today to improve your situation.” Once you can demonstrate to people what is at stake because I’m not a fear monger by any means but I’ve seen businesses go under. I’ve seen people lose everything that they worked for because they didn’t have the appropriate legal documents in place. I don’t really find that I met with any resistance other than maybe initially a little bit of embarrassment. But I’ve flipped better around and I say, “Cool. Let’s be empowered by the opportunity that we have now.” I’m never really met with any resistance just because I let people know, “Look, my goal is for you to not have to think about this and for you to outsource all of your legal needs totally.” No one is ever against that when so much is at stake.
Alex: You’re simplifying their life, right? You’re simplifying their business and streamlining it all for them. That totally makes sense. Regarding, I suppose, risks that fitness business owners face. What are the biggest ones that you have perhaps seen?
Cory: The biggest issues we always come up against, one, it’s always going to be a liability. They basically put the way that it works in law across every jurisdiction is that when you are facilitating an activity for someone, you have a responsibility to ensure that they do not suffer damages or they don’t get hurt while you are facilitating something for them. And that’s called the duty of care. What I think a lot of people don’t understand is in what context they do have a duty of care and also that they are responsible for that. If you’re making an effort of opening a space or having on-demand video content that someone will access and may get injured in doing it, at law, you have a responsibility to make sure that they’re going to be safe and that you did everything a reasonable person would do to not get hurt. I think liabilities are the biggest one.
And just another quick thinking about liability, why it’s so important is just because if it comes to something like, okay, I work with clients, they sign an annual membership for $2,000, whatever it is. And let’s say, something goes terribly wrong and they want a refund. Or I have to give them their money back or something happens. Going into that relationship, you have an idea of what your exposure to liability is because, okay, it’s only really going to be the amount that they paid. I’m going to have to make them whole again as if they’ve never paid for it and that’s fine. But what I’ve seen liability be a bigger issue is when clients don’t have the appropriate legal documents, something happens, someone gets hurt, it might be for a way they didn’t have insurance, and then the amounts that you have to pay to make them whole again are completely unforeseeable and a lot more than $2,000. And that’s one instance where things could become a really big problem.
If I could get my clients to focus on liability, on the relationships they have with either contractors or employees. I’ve had some clients who had some issues categorizing what contractors and what an employee is, and there are a lot of ramifications to that. And then also just protecting themselves for how they operate online is always really important.
Alex: I was actually going to ask about that as well. Obviously, you mentioned liability in more of a physical sense, right, to physical health. But I suppose what would be the biggest risk factor in terms of how the operator is running its business online or say handling customer data, things like that?
Cory: Privacy is a very, very trendy issue. The rules are constantly changing and constantly being scrutinized more, and observed more, and pursued more by different governments just because the nature of e-commerce has changed so significantly. I had something with a client whose information got hacked. Obviously, I can’t stand in specifically about it. But one of the big issues is that they didn’t have the appropriate privacy policy in place or the appropriate document to support that potential situation unfolding. That’s something that you would never think about as a business owner. It’s amazing because when it comes to even liability for online providing of services having things like a privacy policy, a terms of service and relevant disclaimer is really important because you want to let people know. The whole point of law with all of this is just to let people know very clearly what they’re getting themselves into. If I’m giving you my credit card information and my email address, how are you using it, are you sharing it with someone? What happens if something goes wrong during that process? It’s the same with all of your membership agreements. The clearer you can be in communicating your expectations openly and honestly, the easier the relationships you have will be and the more you’ll be able to avoid the potential problems from unfolding.
Alex: Right. Okay. And then, I guess, we’ve talked quite a lot about obviously the negative impacts that can happen for businesses when they don’t have this legal infrastructure in place. But with those things in place, what are the benefits to other areas of the business from having that legal foundation?
Cory: One is that you’re not thinking about your legal stuff or belittle the value of that. It is the same with me and my accounting. I have an accountant and I have a bookkeeper. They take care of everything related to my finances, books, and my taxes. I’m focusing on growing my businesses and helping as many people as possible, and I’m never thinking about my numbers, when I make this payment, or whatever I do. I just have someone who helps me with it.
The real benefit is having the best relationships with the people that you work with. One exercise that I coach all of my clients in doing is, you write the name of your business down on a piece of paper and you draw a line to all of the different relationships you have in your business. The goal for each of those relationships is to communicate expectations openly and honestly. What I’ve seen happen with clients is they are more confident, they are more secure, they are more authentic when they’re using documents that are written in their language for them and their business. But also it is an avenue for better relationships with everyone who you work with. Imagine, Alex, in your life, if all the relationships you’ve had, before you get into them, you gave someone a two piece of paper and you’re like, “What’s up? This is where I’m at, and this is what I’m expecting of you, and this is what you can expect of me, and this is what we’re doing with each other.” You just proactively tackle some of the issues that will arise or inevitably happen down the road.
The thing that I’ve learned is even though it’s an unsung benefit or something that you don’t explicitly think about. The benefit of communicating expectations openly and honestly in your relationships is just better overall health or for everything that you do. For me, even just personally, it’s always a reminder about communication and the importance of letting people know what you need, what the boundaries are, and what people can expect from you. And if it’s going to be a problem, it’s better to figure it out at the start that it’s a problem than investing all of this time and money in someone or in a relationship only to realize, oh whoops, I probably should have mentioned, this thing that would inevitably be a deal breaker.
Alex: Absolutely, and I guess that’s particularly poignant for businesses as they are looking to scale and grow as well, right, as they add more people to the business, as their membership grows. Perhaps even as they start to pivot and open up new locations.
Cory: Sorry, I just want to touch on that point for a second, Alex. And just that whole issue of intellectual property as well when you’re looking to grow your business and you want to take it to the next level, and you bring on a trainer who you are now giving them access to all of your intellectual property making sure that all of that is legally set up and protected. Because I’ve seen that happen where unfortunately a fitness business will invest a lot of time and money in the person. But then that person just turns around and basically takes the ideas and does something with it on their own. Subjective to any written agreement, you can easily lose control of that situation and things that you’ve worked so hard for for a long time.
Alex: Right. I think that’s a particularly interesting point for a lot of people that listen to this and certainly are smaller businesses who are very much starting out and looking to grow. Regarding, I guess, once you’ve surpassed that initial growth period. Are there any particular pain points you see that come up in particular whether it’s regarding business to member relationships or whether it’s regarding the more operational side of how to run a business as a business has grown a little bit further it’s a bit more mature?
Cory: I think the big point in that is just documentation around your operations and your systems from a legal perspective. Because at the start it’s pretty all over the place and you don’t know what is going on so you don’t have systems or processes. But I think as you’re growing and as you’re maturing, one thing for sure is making sure that your intellectual property is protected properly. And that if you are offering training, making sure that all of that documentation is taken care of. But also just for example like an employee handbook and employment agreement is something that… Once the business is established and you have a regular inflow of customers and you’re creating a schedule, I’ve seen issues around sexual harassment and other problems that studios can come up with when it comes to growing the business. Because ultimately what happens is in the first phase you know everyone, everyone is your friend, your clients are your friends. But if you really are looking to grow your business and take it to the next level you are going to be working with a lot of strangers and you’re going to be hiring strangers. That’s where it’s important to have the documentation behind all of your systems and processes because remember at law it doesn’t matter what happened, it matters what you’re able to prove. If someone works for you does something egregious, and awful, and terrible you would want to show that that goes against the specific policies that your business had and that you had someone sign an agreement stating that they weren’t supposed to do that. And that all of the culpability ultimately is there because they broke a contract they had with you and that you had with the clients.
Alex: Okay. And then moving on, obviously, everyone refers to this at the moment but it is so relevant. The past 18 months obviously with the pandemic has seen a huge impact on the fitness industry and the businesses operating within that space. It forced a lot of businesses to go hybrid, alter that offering to their members, all sorts of different changes. What would you say is the biggest lesson you’ve learned in the past year with all that?
Cory: The most important thing is being open to change. That’s not really a legal answer but for sure the businesses that were able to pivot the quickest and understand a new mindset of their customers were able to succeed. I think the biggest thing that I’ve seen from a legal perspective is just understanding that your agreement should reflect the current relationship you have with our clients and your team members.
As an example, one example that we saw coming up was that insurance companies would not cover on-demand content. And a lot of our studio owners when they were forced to shut down, they immediately built online digital libraries with pre-recorded content but they are actually uninsured while they were providing all of these activities in which they still provide. To me it’s just an example of making sure that your agreements, or whatever you’re doing even as you change, make sure that the agreements capture what the current relationship is with your clients. Also as an example, a big issue that we saw with a lot of our clients was chargebacks. Someone who signed an annual membership or biannual membership and then was able to go to their credit card company and say, “Well, actually this business has shut so now I want my money back.” So making sure that the agreements are drafted in a way that whether you are providing the services in-person or online you will still be deemed to be offering the services in full.
Those are just small examples of obviously a massive question of how things have changed. The reality is that everything has changed because the way that we are doing things has changed. And so the only thing I care about legally is that your agreements accurately reflect the way that you’re currently doing things.
Alex: That makes sense. I guess, a key takeaway there then is understanding that actually the legal setup of your business is never finished. As you evolve, as the landscape evolves, as you perhaps expand your offering or add something new or change something, there is always going to need to be a legal consideration there in terms of how that impacts you as a business, and how that impacts your employees, and your members. With that, how do you go about maintaining that ongoing relationship with your customers?
Cory: You are right. Again, the whole point is we go for simplicity and my rule always is that having something customized in specific to your relationship is way better than having nothing. Sort of like, I can go to the gym 3x a week or I cannot go at all. Obviously, the benefits of going 3x a week over a long period of time will help. But to answer that question, we do a lot of things for our communities. For example, when everything changed online, we sent an email out to everyone who ever purchased the waiver of liability with us and we said, “Hey, we understand this is a crazy time and we are going to do a waiver tune up for you for free. Send us your waiver. We’ll make sure that it covers you for online and then we’ll keep moving forward.” I am constantly posting videos to our group, our mailing list, then I share different things that I see. The goal isn’t all of these is like, “Oh, every single person who sees this is going to become a client of ours.” That’s not why we do it. The reason why I do it is, hey, there has been a change in the rules about having a non-complete clause in an agreement with an independent contractor. What does this mean? Why does this matter?
Again, my whole play is that as long as people are turning their mind to these legal issues, creating awareness around it is the most important step. Because there are people who really need the help who still don’t take it. And that’s fine. It’s not my job to help every single person irrespective of whether they want that help or not. Again, I think you’re right that law does not exist in a vacuum and it is constantly changing. The most important thing is just turning attention to these issues so that if there are business owners out there who wanted to take action and wanted to turn their mind on this, we’ll share information about a change in the industry and then they can research it on their own or they could reach for help, whatever it is that they want. But it will never change. It’s funny because in some way it’s juggling. It is like, okay, the waiver of liability, we understand what is happening with pre-recorded materials, and we understand online and COVID, and then the privacy laws will change. So then we have to do this whole thing about privacy and then we’ll fix privacy. And then the independent contractor will change.
That’s the nature of something as fluid as law, and by design it is the government’s meeting and deciding what is the best and what is the most reflective of the ethics and the relationships that we want to have. That’s how laws change and evolve. It is an ongoing process. I think at a minimum, if people can turn their mind to these issues, if someone is listening to this and thinks, “Oh, I only work with contractors but really with their employees.” For me, that’s a win. And then at least they are going to take some action that will help protect them and their business based on that. It never changes and we just try to share all the information that we can.
Alex: I guess touching on the fact that you mention different governments, and different occasions. How do you work with any fitness business anywhere in the world? How do you manage that?
Cory: We do. But we only do very, very specific types of agreement. We boiled it down to a package of 3 or 4 documents for any gym owner, any part of the world. What I always say about our documents is that they are very industry specific and they are less jurisdiction specific. What that means is, because of the sheer volume of conversations that I’ve had with gym owners all over the world. We’ve got clients in Singapore, South Korea, Croatia, Holland, South Africa, Australia, New Zealand, Canada, USA, United Kingdom, and Ireland. Typically, what we’ll do is we’ll look at the relevant rules and see on a general level if they will apply. There are a lot of things that we won’t do. There are more things that we won’t do than things that we will do. Again, because I just had all these conversations with gym owners all over the world I see the trends and I see the problems. It’s very much like Pareto principle 80/20 where 80% of gym owners around the world are going to come into the same 20% of problems. If we can have our documents that address those 20% of the problems then we’re doing a great service and we’re helping business owners out.
The other reality as well is when you actually think about the practical implementation of these agreements and anytime you sign a contract. People will sign contracts all the time and they are like, “Yeah, I’m signing a contract.” But if you really want to use something in the contract, if you really want to sue someone based on something that happened, that is an incredibly long and painful and expensive process. I think that a lot of people just assume that maybe it’s not or they don’t know the inner workings behind it. I’ve been a part of so many settlement agreements where someone is going to sue someone. We got an email about a complaint and we ended up settling for x thousands of dollars, or whatever it is. I’m a practical lawyer and that’s a part of how we are able to help fitness business owners all over the world. Again, we look at the particular issues that are coming up because what I’ve seen is 95% of the time the issue can be resolved with the agreement itself. Neither parties are really going to be going to get a lawyer, and going to file papers, and going to court and making discoveries. In our world, that doesn’t really happen. But what does happen is someone has a complaint, someone has an injury, and someone is going to threaten something against you that the easier it is for you to show, “Hey, before we allowed you to workout with us, we provided this document to you. You signed this agreement. We included the equipment that you got injured on. We included the risk of what you’re doing and you agreed that you will relinquish your legal rights to sue us. We hope that you feel better and we are really sorry. But we can’t pay you $37,000 and you forfeited your legal right to bring this action.” When it’s in that position and when it comes from that perspective what I find is more than 9.5 out of 10 times the issue just goes away because someone looks it and they are like, “Yeah, I did sign this and this is exactly what happened and so I wouldn’t be able to successfully bring an action.” It is like that with membership agreements. It is like that with contractors and employees. It is across the board because I want business owners to be empowered to use their documents to stop an issue there.
Conversely when you don’t have those documents or you are using a boilerplate waiver that’s not specific to you and your business and someone makes that compliant to you, and you’re not able to respond with the same solidified legal position, that’s when the other side gets momentum. That’s when they can get a lawyer to look into it. If another lawyer is looking at the file and they are like, “Oh, this is a crappy waiver of liability. We could definitely succeed against this.” Then they might dig further and then you could be in real trouble.
Alex: Yes. It can be an [unclear] effect basically. I think a lot of what you’ve discussed today, a lot of our fitness operators will certainly identify with and out listeners here. If they want to find you, how can they find you? Do you have anything coming up that might be of interest to them? You mentioned various educational things you put out.
Cory: We’ll include it in the show notes. We’ve come up with a special discount code for the Glofox community. Yeah, I just recorded a new online course that’s called Don’t Get Sued: Legal Essentials in a COVID World for Fitness Professionals. Everyone can get an access code who listens to the episode and builds through it and lives into the information. Now all of it is free and the point again is just learning more and more about the specifics around these different areas. I’m sure we’ll include our email address, our Instagram, our website in the show notes as well. Whoever is listening around the world, say hi. I’m happy to work with anyone or at least here about what is going on wherever you are in the world. Thank you for the opportunity and taking the time to chat with me today. I really appreciate it.
Alex: Thank you, Cory. It’s great. I think you really showed the light on an area that as you say a lot of fitness operators shy away from. Thank you so much for your time and for sharing all your knowledge. If you are listening out there, do take a look at Cory’s website Conscious Counsel. He’s got some fantastic content out there and a lot of free stuff as well so you can educate yourself without signing up to any fees. But, yeah, thank you so much, Cory. We will be keeping an eye on what you’re doing moving forward.
Cory: Cheers! Thank you so much. Have a great day.
Alex: Indeed. Take care. Bye.
