Hello, this is Michael H. Cohen, president of Cohen Healthcare Law Group. And I’m standing here giving you this lovely background. When I flip it around, you can see that I’m at a parking lot outside of Costco. And so, if the reason you’re looking at this video is because you’ve tried to engage our legal services and you’ve asked, “How much does it cost?” If you want to know how much does it cost, you can come right here to Costco and you can get discount prices on TVs, refrigerators, furniture, clothing, food, it goes on and on. It’s a wonderful place to shop. Also, gasoline, if what’s most important to you is fuel economy.
However, if you’re a typical client and you’ve invested tens, hundreds of thousands of dollars or possibly even millions into your business, then, of course, you want to be a sensible business person and have a reasonable guesstimate of a range of legal fees, but that can be a broad range within a very reasonable amount compared to your overall investment in your business. And our goal is to give you three to five or many multiples more in value for your investment.
One client recently came to us, she had actually purchased a health and wellness clinic, she’d invested $500,000. And our legal advice was initially one hour, which gave her a lot of direction and sense and sensibility going forward. And then between $5,000 and $10,000 more on the lower end as our normal, at this stage of the game standard retainer, and we gave her a 15 page drill down line-by-line memo telling her exactly what the risks were with respect to her business venture and what she could do about risk mitigation.
And so she spent 99% of her budget on everything, but legal, and 1% on legal later, only to find out that had she spent the 1% on legal at the beginning and possibly even 0.1% starting with the legal strategy session, she might not have invested the 99%, half a million.
So, I’m going to face away from Costco now, and you can have me in nature and see these lovely trees and blue sky so you can do some blue-sky thinking. Sometimes people come to us for answers, as I’ve commented on another video and elsewhere on our Healthcare Law and FDA Law blog. Sometimes we have very definite answers. The statute says, “You can’t do this.” Sometimes it’ll say, “You can do this.” More typically it says, “You can’t.” If it’s that easy, you can look it up. And with artificial intelligence, a lot of times you can ask a question and some very smart machine can tell you there’s X percent probability the answer is why.
So, we try to give answers if we can, but as just as Cardozo said, certainty is an illusion and repose is not the destiny of man. We can happily make that gender neutral, certainty is an illusion and repose is not the destiny of humanity.
Let me introduce you to the idea of your Healthcare and FDA lawyer as a coach.
I have coaches, I have coaches in business, I don’t know everything, and benefited a lot. Let me talk about a priest. The analogy between a lawyer and a coach, lawyer, and a priest. There are four different things that you could get from a priest. You could confess your sins, “Hey, I spent half a million dollars on my business and I’m afraid that I’ve wasted it because I didn’t understand all of the legal and regulatory compliance hurdles and deep exposures that I have, and now I need you to explain those to me.” I confess and I feel better.
And then secondly, they might say, “I need answers.” And the priest might say, “Well, God does this, or God does that, or God does not do this, or God is not that.” And great. You get answers. Of course, I don’t know that the priest actually knows, but maybe they have a book of codification of the law, and the law tells you that that’s how it is. So, you couldn’t find the particular verse so the priests gives it to you.
The priest might give you a blessing. Yes. It’s okay to move forward with your business model, you will get what’s called a formal written legal opinion, if you go to say, a tax lawyer or an SCC lawyer. They might opine that the authorities won’t move against you in a specific configuration. And you’ll pay a lot for that letter, tens of thousands of dollars, maybe even six figures, because what they’re doing is they’re transferring the liability of regulatory enforcement from you on to them. That’s a legal Opinion. We give opinions, I have an opinion about how good the prices are at Costco, but those aren’t legal, formal legal Opinions. So, we rarely give those, but we give people a sense.
And last, a priest can give you counsel. Which way do I go? Which way do I go is really about strategy. So we talk about legal strategies. That’s what we do. We provide legal strategies, and solutions to businesses that accelerate health and wellness.
Let me talk to you some more about this client. Again, I’m keeping this very anonymized and confidential. The client had actually been successful making a franchise out of a health and wellness product. And so this person, this man, powerful executive, believed that he’d be successful in this new venture. But what he fail to realize is that there were two big issues. Actually, three.
One is, actually on the Service Healthcare services side, corporate practice of medicine and fee splitting, anti-kickback prohibitions – which affected the extent to which the businesses itself could be regarded as intruding into clinical practice, or medicine, or psychology, or another profession, and or unlawfully splitting fees with that professional.
Healthcare startups, including telemedicine and mobile health startups, can unwillingly trigger unlicensed and corporate practice of medicine legal tripwires.
The second was FDA law regarding the regulatory classification of these products. So, we’re the products simple consumer products, and could they be exempted from FDA medical device regulation as general wellness devices? Or were they actually medical regulated, and regulable medical devices? And if there were medical devices, that would subject the company to all sorts of FDA regulatory challenges and hurdles. Or if these were regulated medical devices, would they require a Premarket Approval a PMA? Or could they be cleared with a 510K? Because those kinds of medical devices are not approved by FDA, they’re cleared, FDA cleared. So, somebody objected, “Well, these devices don’t have approval.” Well, they don’t need to be approved. They’re not drugs, and they don’t require a PMA, they can be cleared with a 510K. Or would they be exempt, so in which case they could go to market without a 510K.
And the second issue was, what about the claims? You see, claims are more than just statements, they are more than just things that you’re marketing person tells you to put on a website. Claims can make or break a company, claims can be worth a million dollars, and those very same claims can come to the attention of the Federal Trade Commission, FTC, and you can find yourself out-of-pocket having to disgorge the unlawful profits, which means cough up everything you made in the business because your claims are not substantiated and or they don’t reflect truthful and not deceptive advertising.
Substantiating claims matters whenever you bring a dietary supplement, cosmetic (or skin care product), or medical device to market – why?
So, there are significant FTC issues with claims. Piggybacking off of that, claims can get you into trouble with class action plaintiffs, and those can be complaints that will request six figures, seven figures, even, in damages, and those can be quite damaging to company. So, every time you put some marketing copy out, when your health and wellness product, or health and wellness service, a clinic, a manufacturer, a distributor, you have to check for FTC liability and class action liability and have the language reviewed by an attorney. And the more you say, the more claims, the more there is to do.
So, this client had underestimated these issues. Now, so what we did is in a lawyer priestly coaching function is we uncovered the holes, we identified the gaps and we talked about risk mitigation, both in our legal strategy session and our legal strategy memo. Again, this is not a comprehensive thousand page operational plan with every scrap of law in there telling you the do’s and don’ts to the N-th degree, this is a strategy document that really maps out the foundations of the business, and you need it just like you need a marketing plan. You need a marketing plan, then you need execution of marketing ideas. And those are two different things. You can’t just say, “Hey, I paid you $5,000 to be my marketing consultant.” And by the way, those marketing consultants, they’ll eat it up in a month, and I don’t know. I don’t want to insult marketing consultants, they can be very valuable.
FTC’s aggressive enforcement of federal law prohibitions against false and deceptive advertising have hit marketers of healthcare products hard, while class action lawsuits are reaching the […]
But the point is that legal fees are very modest when you consider that other kindred professionals in your business armament area, will charge you that on a monthly basis for months on end. Not to mention your advertising budget, which could be multiples of that.
So, we identify risks, we help mitigate the risks. We can tell you, for example, are these products regulated medical devices? How are they classified by FDA? We can look at your claims. We can whittle the claims down. We can tell you, these are the claims that are going to be on the lower end of the spectrum. These are the ones that we would red light, and these are the ones we would yellow light, and we can talk you through. When you get to the yellow, or you’re coming up to the yellow, do you screech on the brakes or step on the gas? That’s what we do.
So, I have much, much more to say. This client, after the work with us said,
I’m devastated. Not by your advice, your advice is outstanding. I’m devastated that I trusted everyone that I worked with and took things on faith and didn’t do my legal due diligence. So, thank you so much for doing the legal due diligence. At least now, I have a very clear picture and it’s sobering, and you’d have not given me the priestly blessing on my business, but you’ve told me that I’m an exile from the Eden of my naivete, and I have to take a real sober business look, and let’s work together to figure out the strategy for how I can reconstruct exactly what I want to do in the health and wellness world.
This is Michael H. Cohen, Cohen Healthcare Law Group. And it’s a delight to talk to you today.