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We were given the opportunity to interview an accounting professional that would give their perspective on why business law is important to know in their field of work. I had the privilege of interviewing Matt Iagovino who is the Vice President of Finance at Labor First, LLC/ Retiree First, LLC. Labor First LLC deals in retiree benefits for unions and laborers all over the United States. They also have a sister company called Retiree First where that deal with retiree benefits for school systems, towns, and municipalities. Labor First has staff dealing with clients on rates for insurance and then have staff who are advocates for retires and help them with any benefits issues that are needed.
Mr. Iagovino has over 20 years of accounting knowledge from working in the private, public, and nonprofit accounting industries. He graduated from a Holy Family University with a BA in accounting in 2002 and a Master of Business Administration in 2012. He handles all the accounting functions within Labor First and helps the executive team with making key investment decisions, contract negotiation, and partnership analysis.
Business Law is the way “law intersects with business from legal to employment and can effect every department in a company” (M. Iagovino, VP of Finance, August 4,2021). Mr. Iagovino talked about how employment contracts can be violated and then a lawyer would need to get involved even on the back end to make sure the company is handling issues legally. Some of the legal issues that could also affect the company are CMS regulations, HIPPA, Insurance law and making sure guideline on terming members of their health insurance.
Contract law was discussed due to the number of contracts that flow through Labor First. “The basic elements required for the agreement to be a legally enforceable contract are mutual assent, expressed by a valid offer and acceptance; adequate consideration; capacity; and legality” (Blokhina Gilkis, 2019). At Labor First the contract that will start the offer process is a template contract that has been reviewed by their legal counsel. When a client negotiates before the acceptance process, they may ask for changes in the language or other specific part. Each client will have their own individual requests. (M. Iagovino, VP of Finance, August 4,2021) The process of the contract will go from the proposals team to the CFO and COO to get approval. The CFO at Labor First is also a CPA. He will look over the contract to make sure they are getting the right amount of money and make sure that it covers all the areas that Labor First offers. Making sure that you will be able to support the needs of the client, Labor First has a sales team that is integrated into the contract process. “The idea of ‘discreteness’ thus encompasses both the genuine ‘one shot’ deal between complete strangers who do not expect to engage in repeat trades and a quality that contracting parties familiar with each other may deliberately seek to impose upon their business relations” (Mitchell, 2009, Pg. 681)
Labor First collects and pays the health care benefits for groups that have retirees and provide a service to their members. Recently the company has been put into a predicament where they may have to term a client due to nonpayment. If this happens all the retirees in the group will lose their benefits. The executive team got into touch with legal to see what their options were and then brought it to the client’s attention. Labor First has never had to term any clients before and this would have been a first. The client was obligated to pay back what was owed and pay 1 future month in advance to keep their business. The company had to take into consideration if this was a deliberate breach of contract. “Deliberate breach is in fact a term without a conclusive meaning, whereas some authors at least let the reader believe that is a settled term” (Van Kogelenberg, 2014, pg. 142). When the final terms came back it was a misunderstanding on the client’s side thinking they sent the payment but never approved the wire through the bank.
In addition to contract law, we discussed the ways a company can grow with investments. Mr. Iagovino stated that Labor First has taken on a new investor to help the company continue to grow. The investor will help lead Labor First to more opportunity. This affects the accounting department more due to changes that need to be made. There will be more reporting and the month end closes will have to be stricter. There is one mandatory change that the investors wanted to occur and that is to have more trust accounting. Trust accounting is the “separation of expenses will help determine the proper treatment for tax and accounting purposes” (Bertsch, 2020). This is to show our investor and new investment the net worth of the company at one time. They want to see the difference between what Labor First must pay the carriers for health care and administration fees they earn per member.
The interviewee was asked if learning business law in college was important to his career in the accounting field. His answer was yes. He stated that it would give you a broad view of the business world and legal implications that could happen (M. Iagovino, VP of Finance, August 4,2021). It also gave him the knowledge that he knew when to seek legal counsel for any pitfalls and employment issue that could arise.
Business Law has an importance in accounting due to all the underlining issue’s that can arise from a legal standpoint. There are always contracts happening daily even if you do not see them. Having the knowledge of business law can help when there are employment issues, violations of compliance, and more. The main take away I got from interviewing Mr. Iagovino was that you need to look at all the details and properly examine them. You need to know the basics of business law to proceed in accounting to know some of the in and outs of contracts that you may need to look at. Having the knowledge will set you apart from other in the accounting field.
“Do not deprive one another, except perhaps by agreement for a limited time, that you may devote yourselves to prayer; but then come together again, so that Satan may not tempt you because of your lack of self-control” (American Bible Society, 2010, 1 Corinthians 7:5). This versus tells me you need to overlook a contract before accepting the terms. There is a set time for the person receiving the contract to look over and negotiate terms. Make sure you are not making a split-second decision which could be related to Satan in 1 Corinthians. Always take the time to take into consideration all the details and agreements that are being offered. Negotiations is part of the process and if a company is not willing to make an exception for a certain thing then they are not the fit for you.