On today's episode on Veritas Vantage, Supply Chain Leader Justin Maines sits down with Transportation Attorney Rob Hassman from Burns and Hassman as they discuss the yet often overlooked topic of broker carrier contracts. Rob thoroughly explains why these agreements are critical for legal protection and risk mitigation for brokers. He emphasizes the necessity of customized contracts tailored to individual brokerage needs and the importance of seeking specialized transportation attorneys. Rob shares insights on maintaining updated agreements and the value of including provisions that protect brokers in various scenarios, addressing both legal requirements and unforeseen industry challenges. Ideal for brokers and brokerage management, this episode provides essential tips for safeguarding your business.

The Logistics & Leadership Podcast, powered by Veritas Logistics, redefines logistics and personal growth. Hosted by industry veterans and supply chain leaders Brian Hastings and Justin Maines, it shares their journey from humble beginnings to a $50 million company. Discover invaluable lessons in logistics, mental toughness, and embracing the entrepreneurial spirit. The show delves into personal and professional development, routine, and the power of betting on oneself. From inspiring stories to practical insights, this podcast is a must for aspiring entrepreneurs, logistics professionals, and anyone seeking to push limits and achieve success.

Timestamps:

(00:34) -  Importance of Broker Carrier Contracts

(02:10) - Common Mistakes and Best Practices

(02:56) - Crafting Tailored Contracts

(05:58) - Ensuring Compliance and Updates

(12:03) - Sales Perspective and Legal Importance

(13:15) - Management's Role in Legal Protocols

(14:40) - Conclusion and Contact Information

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Watch the pod on: YouTube

Justin: 00:00:00

From a brokerage standpoint, how can you legally protect yourselves and eliminate risk or mitigate risk from the carrier standpoint backed by popular demand, Rob Hassman, if you have not heard him on previous episodes, I highly encourage you to go back and listen to those.

Justin: 00:00:24

Rob is starting to build a reputation for absolutely bringing some heat.

Justin: 00:00:28

So we wanted to bring Rob back and talk about something that is often overlooked but extremely important.

Justin: 00:00:34

Broker carry contracts.

Justin: 00:00:36

How important are those and what can brokerages do to protect themselves?

Rob Hassman: 00:00:39

Well, first and foremost, not only are they extremely important because they are, but quite honestly, they're going to be required and not because you're going to require them, which you are.

Rob Hassman: 00:00:51

As we talked about in former podcasts, you're going to have customers come at you with contracts, right?

Rob Hassman: 00:00:58

Inevitably you're going to see in these contracts that you are required to engage motor carriers that have signed a contract that say so when you work with your third party customers and you use carriers, inevitably in a roundabout way, you're going to be required to have broker carrier contracts with these carriers out there.

Rob Hassman: 00:01:19

And if you don't, you're going to be in breach of the contract with your customer.

Rob Hassman: 00:01:22

So you're going to need that.

Rob Hassman: 00:01:23

Just as importantly, if not more importantly, you're going to put a whole bunch of other stuff in there above and beyond what your customers want to see to just to protect yourselves.

Rob Hassman: 00:01:32

So I think it's hugely important to, you know, have a broker carrier agreement created early on in your brokerage.

Rob Hassman: 00:01:41

A lot of, I see a lot of times brokers pull the TIA form and just run with that.

Rob Hassman: 00:01:48

It is not a horrible document.

Rob Hassman: 00:01:52

I'm not even going to say it's a bad document.

Rob Hassman: 00:01:54

I would say it is a document that is designed to be a catch all maybe and doesn't it's not narrowly or specifically tailored to the particular client, you know, or particular brokerage house that is using the document.

Justin: 00:02:10

Let's say newer companies or newer brokerages, they go out, they're looking to get all their ducks in a row.

Justin: 00:02:17

Care contracts carry broker contracts from a broker standpoint.

Justin: 00:02:20

Again, if you're listening, brokers do not own any assets.

Justin: 00:02:23

Brokers contract to asset based companies.

Justin: 00:02:26

So they'll go online or they'll reach out to, you know, an attorney and say, hey, I need a contract between our, you know, contracted carriers.

Rob Hassman: 00:02:35

Sure.

Justin: 00:02:35

And a lot of times they're using something they find online or TIA contract.

Rob Hassman: 00:02:39

Well, a lot of times people starting out don't even call an attorney and they'll just join the TIA and pull their document.

Rob Hassman: 00:02:46

Sometimes they'll hire attorneys that maybe have the TIA or don't practice in this area and just have a cookie cutter form.

Rob Hassman: 00:02:52

And again, there's not necessarily anything wrong with that.

Rob Hassman: 00:02:55

But in my opinion, you're going to want to seek out a specific transportation attorney with a lot of experience in this arena.

Rob Hassman: 00:03:05

Because if I were to show you the document that I have developed over many years, you're going to see a lot of stuff in there that's a bunch of legal stuff that would be the same stuff you see in the TIA document or in, you know, a document you might find online, which is very important stuff.

Rob Hassman: 00:03:22

But you're going to also see a whole bunch of provisions in there that you may think, well, I don't, you know, maybe this isn't important.

Rob Hassman: 00:03:30

Or that doesn't seem like a legal thing.

Rob Hassman: 00:03:32

And the reason those provisions have been crafted or inserted into this document is because over 17 years I've been in thousands and thousands and thousands of crazy scenarios in this industry.

Rob Hassman: 00:03:44

You guys are in this industry, you know that it never ceases to amaze you the kind of crazy shit that happens.

Rob Hassman: 00:03:52

So I have developed ways and provisions that go into these documents to address a lot of those things and quite honestly to combat the way that insurance processes claims, to combat the way that motor carriers potentially try to argue you against claims or against obligations and things.

Rob Hassman: 00:04:14

And these documents can be created.

Rob Hassman: 00:04:17

And I have one that may be for a hazmat broker.

Rob Hassman: 00:04:19

I have another one that may be purely produce.

Rob Hassman: 00:04:22

I have one that's a catch all.

Rob Hassman: 00:04:24

So the document, just like if you're going to buy a house, ideally you could use the realtor contract, but it may not be specifically tailored to your situation.

Rob Hassman: 00:04:36

If you come to me and you're the buyer, I'm going to have a contract written the buyer's favor.

Rob Hassman: 00:04:40

If you come to me and you are the seller, I'm going to have a seller favored contract.

Rob Hassman: 00:04:45

I'm going to try to craft a document for you that meets your brokerage house's needs.

Rob Hassman: 00:04:49

And again comes with all the knowledge, experience and expertise that I've developed over the years.

Rob Hassman: 00:04:55

Because one, one perfect example customer says, well, I don't want to salvage this.

Rob Hassman: 00:05:00

Insurance says, well, we have the right to.

Rob Hassman: 00:05:02

I might have crafted a document or a provision that states the motor carrier has to require its insurance to abide by that.

Rob Hassman: 00:05:08

Or you know, a lot of times insurance companies say I'm not talking to you brokerage because you don't own the cargo, therefore you don't have any rights to a claim in the first place.

Rob Hassman: 00:05:18

I have provisions in there where the motor carrier has agreed that a broker can process the claim on behalf of its customer and that it has to require its insurance to speak with and facilitate the claim on behalf of the broker.

Rob Hassman: 00:05:31

That way you can stay in the process.

Rob Hassman: 00:05:33

And those are just two examples of things.

Rob Hassman: 00:05:35

But you're going to want to come up with a contract that not only deals with all the legal things that you're going to be required to make sure the carrier does like have its insurance safety rating, comply with laws carb.

Rob Hassman: 00:05:48

You know, the list goes on and on and on, waiver of certain things.

Rob Hassman: 00:05:52

But you're going to want to make sure you address things that maybe a document off the Internet hasn't thought about.

Rob Hassman: 00:05:58

So getting a great broker carrier agreement in place is very important.

Rob Hassman: 00:06:03

You want to make sure that that gets signed by all your carriers before they pick up any loads.

Justin: 00:06:09

So how does that work for people listening?

Justin: 00:06:12

There's various carrier onboarding platforms.

Rob Hassman: 00:06:14

Right.

Justin: 00:06:15

However you want to do it, you have your contract in place.

Justin: 00:06:18

Anyone that you are going to work with, let's say a carrier, it's their first time load, they you are onboarding this carrier, they must sign your contract and be onboarded into your company in order to run that shipment.

Justin: 00:06:31

Correct?

Rob Hassman: 00:06:31

Sure.

Justin: 00:06:32

Okay.

Rob Hassman: 00:06:49

So.

Rob Hassman: 00:06:49

And I get what you're.

Rob Hassman: 00:06:50

I understand what you're getting at, Justin.

Rob Hassman: 00:06:52

You're getting at.

Rob Hassman: 00:06:53

I don't want to have to call these carriers every time there's a change or every time, you know, I get a new contract.

Rob Hassman: 00:06:59

So what I like to do for my clients is some will get a wet signature.

Rob Hassman: 00:07:03

Some of them have an online portal that people go, carriers go in and sign up on.

Rob Hassman: 00:07:08

They click a box, they sign an electronic affidavit or whatnot, and they have agreed to, you know, there's a timestamp at the bottom of the document they agreed to.

Rob Hassman: 00:07:16

It might be broker carrier agreement version seven.

Rob Hassman: 00:07:19

Okay.

Rob Hassman: 00:07:19

And at the time that they agree that agree to that broker carrier agreement, it's all stored in metadata.

Rob Hassman: 00:07:25

Well, I like to include a provision in that broker carrier agreement that also says that by signing this and continuing to move loads for my client, you agree that any changes to this broker carrier agreement found at the broker's terms and conditions of services found using this link will be incorporated into this document.

Rob Hassman: 00:07:49

And this terms and conditions are also important for motor carriers who won't sign your broker carrier agreement.

Rob Hassman: 00:07:55

We'll get into that in a minute.

Rob Hassman: 00:07:57

But that way you can develop a Set of terms and conditions, laws change, things change.

Rob Hassman: 00:08:06

We have new circumstances like this theft issue we were talking about a couple podcasts ago.

Rob Hassman: 00:08:13

We have seal issues that are constantly evolving.

Rob Hassman: 00:08:16

Anytime you change this, if you have a living set of terms and conditions on your website that can be found at a link and the motor carriers agreed in the version it signed that anytime you change that, if they pick up a new load and sign a rate con they will have agreed to changes to the document.

Rob Hassman: 00:08:33

You can update the broker carrier agreement to a current version that they will agree to in real time.

Rob Hassman: 00:08:39

You should probably have that looked at every year to two years for changes in law and changes in circumstances.

Rob Hassman: 00:08:46

So again, you're going to have your broker, you're going to have your carrier sign the current version when they sign up.

Rob Hassman: 00:08:52

Again, not all brokers do this.

Rob Hassman: 00:08:54

There's a lot of expense that goes with these things.

Rob Hassman: 00:08:56

Things can be added over time.

Rob Hassman: 00:08:58

But you're obviously always going to have your, you're going to try to have your carrier sign a rate confirmation anytime you broker a load with correct same thing in the bottom of that you would embed a link and say by moving this load you agree to our terms and conditions found at Umpty up on our website.

Justin: 00:09:16

And this is for, let's say we've been working with a carrier for years.

Justin: 00:09:20

You update our carrier broker contract the next load that they run.

Justin: 00:09:24

Once that's updated, they are acknowledging when.

Rob Hassman: 00:09:26

They sign that rate con in real time to move a load tomorrow.

Rob Hassman: 00:09:30

It will have I like this is something I've developed with my clients.

Rob Hassman: 00:09:34

I like to have a link at the bottom of that that says when you agree to move this, you're agreeing to the most current version of our terms and conditions which supplement your broker carrier agreement by moving this load and signing this rate convert.

Rob Hassman: 00:09:46

So when they sign your raycon they have re agreed to your terms and conditions found on your website in real time.

Rob Hassman: 00:09:52

That's also important for motor carriers who do not sign your rate con or your broker carrier agreement because if they say I don't sign that and they sign your rate con and has that link, we have an argument that they have agreed to all your terms and conditions.

Rob Hassman: 00:10:05

And by the way, your terms and conditions are really just a reorganized form of your broker carrier agreement.

Rob Hassman: 00:10:12

So that's another way to get them bound to that sort of thing.

Rob Hassman: 00:10:16

You know, it's important not only for the legal things, but let's say that you, you know, you end up having an issue by having them on the hook to Your broker carrier agreement, your terms and conditions for you guys, you can haul them into court here in Hamilton County, Ohio.

Rob Hassman: 00:10:29

You don't have to go somewhere else to change chase them.

Rob Hassman: 00:10:32

You can get your attorney's fees, court costs and expenses paid if you have to go after them.

Rob Hassman: 00:10:36

Those are hugely important things on a $10,000 claim.

Rob Hassman: 00:10:40

So those are ways to keep your broker carrier agreement current.

Rob Hassman: 00:10:43

Now, the other thing that this is, this isn't bulletproof, but let's say you have a motor carrier.

Rob Hassman: 00:10:50

But we have used this our law firm and it is held up.

Rob Hassman: 00:10:54

You know, I'm not saying that every judge in the country is going to hold this up, but we've used it.

Rob Hassman: 00:10:58

You can also create, you know, terms and conditions at the bottom of your email that you send out.

Rob Hassman: 00:11:04

And you could do this for customers and for carriers.

Rob Hassman: 00:11:07

And you could say, as a customer, if you book us for a load, you have agreed to all of our terms and conditions found and you can create terms and conditions of shipment.

Rob Hassman: 00:11:16

Theoretically, your customers will have agreed to that if they book you.

Rob Hassman: 00:11:19

Now, I've not gone that route, but you could also have in those terms and conditions at the bottom of your email that by moving this load for us, you agree to our terms and conditions.

Rob Hassman: 00:11:29

So if they haven't signed your broker carrier agreement and have not sent back a signed rate con, you have an argument that by accepting the load and by email from you with those terms and conditions, they have accepted them.

Rob Hassman: 00:11:42

And we, we as attorneys, if we have to, can theoretically go to court and say, hey, they moved this load.

Rob Hassman: 00:11:47

It says right here they've agreed to it.

Rob Hassman: 00:11:50

Again, I'm not going to say that that's 100% bulletproof and couldn't be challenged, but it gives you a very strong argument and at least gets you far enough down the path where you can usually get some sort of conversation with the other side because you have some leverage at that point.

Rob Hassman: 00:12:04

So that's kind of in a 10, 50,000 foot view, what I would say would be a good way to lock down motor carriers on the intake and make sure that they're abiding by all the legal terms, conditions and provisions that you would want to see.

Justin: 00:12:19

No, that's extremely valuable.

Justin: 00:12:22

In previous episodes, a lot of these things from a sales standpoint, we don't think about.

Justin: 00:12:28

We're running.

Justin: 00:12:29

You see me walk plenty of times.

Justin: 00:12:32

We're running a million miles.

Rob Hassman: 00:12:34

I couldn't keep up.

Justin: 00:12:36

I have a lot of things to do in places to be Rob, but I'm a fast walker.

Justin: 00:12:40

If you're listening and wondering, I'm a very fast walker.

Justin: 00:12:42

But from a sales standpoint, we're moving a million miles per hour.

Justin: 00:12:45

The last thing we're concerned about is a contract with a carrier.

Justin: 00:12:50

Those things are just minute in our world.

Justin: 00:12:54

But having that mentality and changing that to no, those things are extremely important because at the end of the day, if something does go awry and this goes to court or we have to take legal action, we have to have that buttoned up.

Justin: 00:13:07

So we're protecting ourselves and the company, correct?

Rob Hassman: 00:13:09

Well, not only with your action against the carrier, but if it isn't and you have a customer contract that says you would have done this and this and you didn't, oh, you breached our contract.

Rob Hassman: 00:13:19

Now we're going to hold you liable for the whole ball or yarn.

Rob Hassman: 00:13:22

If it says you will have a contract with a carrier that says it's going to have this, this and this, even if the carrier didn't comply.

Rob Hassman: 00:13:28

If you can say to your customer, I have it, well, then you're off the hook.

Rob Hassman: 00:13:31

Now, to your point about moving a million miles an hour as a salesperson, I get that.

Rob Hassman: 00:13:37

But Brian and I had a conversation, I believe, in the very first podcast that we did.

Rob Hassman: 00:13:42

These are things.

Rob Hassman: 00:13:44

The topics I'm going to talk about are the things that I would probably tell management and owners of brokers that are very, very important.

Rob Hassman: 00:13:53

None of your on the floor brokers are going to care or really concern themselves with any of this because all they want to do is say anything they can and do anything they can to get a load moved and get their commission.

Rob Hassman: 00:14:06

They want you to sign anything and do anything they can to get their customer on the hook.

Rob Hassman: 00:14:11

And they want to get any motor carrier they can to pick up that load and get it moved as quick as they can.

Rob Hassman: 00:14:16

So all these concepts, while hugely important, should be things that are concerning to two guys, you know, setting up a brokerage with no employees, those two guys moving down the path, getting employees underneath them while they're still brokering.

Rob Hassman: 00:14:33

And then ultimately, what I see is two, six, seven guys that own a brokerage who have moved into more operations, managerial and sales managerial roles.

Rob Hassman: 00:14:44

Their jobs are to put the protocols in place and make sure that the employees work within them.

Rob Hassman: 00:14:49

The employee's job really isn't to make sure these things are in place.

Rob Hassman: 00:14:53

You know, that's kind of where I'm coming from with this.

Justin: 00:14:55

Definitely makes sense.

Justin: 00:14:56

Rob this insights.

Justin: 00:14:58

It's phenomenal.

Justin: 00:14:59

We appreciate you joining us again.

Justin: 00:15:01

If you are looking to learn a little bit more or are interested in potentially working with Rob.

Justin: 00:15:06

We'll include all of his contact information in the show notes you can find at the bottom of this episode.

Rob Hassman: 00:15:11

Thank you very much.

Rob Hassman: 00:15:12

And anyone out there by any means, if you ever need any assistance or have questions or whatnot, just shoot me an email or give me a call.

Justin: 00:15:18

I mentioned this already, but history of promotion.

Justin: 00:15:20

Someone that's like never settling, does not accept mediocrity, they're willing to put in the work to continue moving up or that's career wise, financially, personal development, whatever it may be, someone that wants more and hungry for more.

Justin: 00:15:34

Those are the type of people that want.