Scott Smith, founder of Royal Legal Solutions, protects his clients from lawsuits and makes them “judgment proof”. With over 5 years experience in litigation, Scott works on proactively building tax advantaged companies which double as defensive asset holding structures to stop lawsuits before they are ever filed. Scott is a real estate investor himself and 100% of his clients are are also investors.
Time Stamped Show Notes
[6:19] Statistically if you’re in real estate you’re going to get sued because of the nature of business but there’s no need to scare people to show them and instead, Scott made a system that allows you to scale for maximum protection.
[8:18] It is better to have some sort of insurance that prevents you losing your whole asset portfolio when a lawsuit comes. Not having this is a higher risk.
[9:27] Being in law school, Scott and a friend bought his friend’s family transmission auto repair shop.
[10:38] Bought for $10,000 after no one wanted to run the shop. It was a good deal and they did their due diligence but didn’t know what they didn’t know.
[11:52] The auto shop was an old gas station and at some point they heard about the possibility of having the gas tanks still underground, which is a biohazard.
[12:55] Thought of selling it disclosing the biohazard because if you’re the owner, you’re legally responsible for the clean up.
[13:38] Scott and his friend were making money and until they were to receive a formal notification, steps were being taken to protect their personal wealth. There were no records of the tanks being removed.
[14:53] After sheltering a few thousand dollars, Scott worked with the city to turn the property over to them and not being pursued for the cleanup.
[15:31] 30 years went with the property being untouched regarding the biohazard. Some things we can’t control and are bound to happen anytime, like the city contacting Scott about the property.
[16:53] After having it two years with a steady income of around $3,000 monthly each, Scott and his business partner got off lucky by not having to pay the city.
[19:40] As soon as they were out of the business, Scott wasn’t looking to stick around and went back to Texas.
[20:25] A lawsuit follows us all your life and it’s almost as awful as a divorce to happen in your lifetime.
[22:50] Scott now coaches people to set up steps to compartmentalize so when a lawsuit comes, there’s not the possibility of losing everything.
[24:52] Failing Forward Segment
- Why did this failure experience happen to you? – “Because there’s information outside of what we could have research ahead of time and we didn’t anticipate that we were going to run into a situation where we didn’t have perfect information, which we realize now, it’s impossible to have.”
- What is the single most important lesson you learned from this? – “Always hope for the best and if it’s affordable, plan for the worst.”
- How do you protect yourself from failing in this way again? – “What I typically do is look at every opportunity and crunch the numbers for any investment that I do and then I’m gonna say if everybody out here is was out here to screw me and everything was gonna go wrong, how would that happen? And how could I mitigate risk around that?”
- Who do you turn to when you need help? – “I turn to a couple of close advisors that I have and my mastermind group. I have a small group of people that I meet with every week. I also turn to online communities for detailed information.”
- What advice would you give to someone in a similar position? – “The first thing we end up doing was run in to see our attorney that were more experienced guys from us about what was our potential downside risk and what was going on and how would we mitigate that.”
[31:44] Running the business through an LLC when using it correctly is a way to protect the personal life from the business.
[33:08] Royal Legal Solutions works with investors nationally and in Canada on setting up structures reserved to the rich to prevent losing everything in a lawsuit.
[35:09] The best to reach Scott is going to www.royallegalsolutions.com for a consultation and more information about company structures.
[38:23] Scott’s final thought: “Never stop networking. The more you can learn about what people have done, the smarter guys that you can hang out with to be able to help you get where you need to go, the more you engage with everybody else, doing deals, the more successful you’re going to be.”