Our latest newsletter.  Not so much about legal issues but practical advice on whom not to do business with. Warning Signs of Difficult People. 

This month, the U.S. Supreme Court ruled that California employees can waive the right to bring legal actions on behalf of other employees.  Read my article on this important case.

 

Good Time to Update Plans and Policies

     We are advising our clients to revisit their business plans and policies.  Read the article here.

Enforcing Non-solicitation Agreements

Attorney Eric Morton, of Clear Sky Law Group, will answer questions about non-solicitation agreements. Recent court cases have significantly restricted the enforceability of non-solicitation contracts (or such terms in employment contracts). Many businesses have non-solicitation agreements or terms that are invalid. When such an agreement is invalid, then an entire employment contract can be found invalid. Business owners need to understand the limits of the law in the area.
April 17, 2019 at 8 a.m. at Peets Coffee 1615 Broadway, Oakland, California.

Organizing your corporation or limited liability company - Event

Attorney Eric D. Morton will answer questions regarding organizing corporations and limited liability companies on January 16, 2018 in Oakland.  Business owners face many issues when organizing a business entity. Should they have a corporation or LLC? What should they contribute to the business? These and many other concerns face business owners when starting a new entity. Eric will discuss the issues business owners need to address and how to think about them.

Click here for more details. 

Is Your Business Ready For 2019?

I'll be at Peet's Coffee in downtown Oakland on December 11, 2018 for a question and answer session on planning for 2019.  Click here for more details: Is Your Business Ready for 2019?

Breaking up is hard to do

Our September 2018 newsletter.  The article is on business relationships ending and how business owners can plan for them.

New model for business litigation.

I am thinking of an experiment in business litigation that could save considerable attorneys fees for business owners.  Essentially, teams of contract attorneys would handle cases on an as needed basis.  The client's documents and all documents generated by attorneys would be digitally stored and shared.  The attorneys would be billed at considerably lower rate than prevailing rates. The teams would be managed on a project management basis by the lead attorney.  The client would save considerable monies in attorneys fees. 

My idea comes from a few sources.  One is the fact that there is a lot of legal talent available that is unemployed or underemployed.  My wife has been an attorney for a little more than a year and she knows a lot of attorneys who aren't working or working as contract attorneys.

The other inspiration is technology.  The use of the Internet, including cloud computing and digital vaults make it possible for professionals, especially attorneys, to collaborate on projects without the need to be collocated.  

The idea is to assemble a team of contract attorneys for each lawsuit.  Each attorney would work on a particular project, such as research, drafting a pleading, discovery response, etc. as needed.  Each project would have a deadline and a number of hours allotted to it.  The case would be handled on a project management basis so that the client knows the cost in advance.  The contract attorneys would be billed at a going contract rate plus overhead and a small profit.  The lead attorney would bill at a higher rate.  I am also considering billing the contract attorneys for cost during the course of the case with the client owing the remainder at the end of the case.

The key to the model is payment by the client.  The client would need to make a commitment to pay a certain amount each month since the contract attorneys and the costs of the suit would have to be paid each month.   This amount would be considerably less than the retainers paid monthly to dedicated litigation firms, particularly large firms.  But, the client would need to understand and commit to pay.

Another key is that the contract attorneys would need to have to have strong writing and research skills.  And, they would need to be able to work on a project/limited hours basis with little direct supervision.  They would have to understand that they can't milk the file and, if a project was more difficult and might take longer, they would have to immediately communicate that fact to the lead attorney/project manager.

Documents, including client documents, would be cloud stored or stored in digital vaults.  There is no need a lot of paper or attorneys collocated in a firm.  Everything would be digital. Obviously, the lead attorney/project manager would have to have excellent communication and management skills.  And, frankly, that attorney would have to be ruthless about contract attorneys who couldn't do quality work within a reasonable amount of time.  Those attorneys would have to be cut out or, preferably, not hired in the first place. 

I calculate that in a business litigation case, the project management model might reduce the attorneys fees by as much as 70% over dedicated litigation firms, particularly larger firms.  That is a huge savings.  I have discussed it with a few attorneys and they think it is a great idea.  One even said that he didn't understand why someone wasn't doing it already.

Change in California Business Entity Reporting

The California Secretary of State reminds California business entities to file their annual Statements of Information.

Statements of Information are filed with the Secretary of State annually by entities such as corporations and limited liability companies. The statements are the public records of those entities. An entity that does not file a statement can be suspended and/or fined $250.00.

In the past, the Secretary of State would, every year, send a Statement of Information and a self-addressed envelope to each entity 90 days before the statement was due. Starting earlier this year, the Secretary of State only sends a postcard reminder to each entity. This is a cost cutting measure.

A corporation or a limited liability company must now either download the Statement of Information from the Secretary of State's website, fill it out and mail it to the Secretary of State, or a corporation can file one electronically through the Secretary of State's website.

I have a few clients who did not timely file their Statements of Information this year because they were waiting for their Statement of Information forms in the mail. They failed to take note of the postcard informing them of the new policy. They were quickly fined $250.00 - much faster than in the past. Since the state is hurting for money, it is cutting costs and enforcing penalties more harshly.

The following is a link to the Secretary of State's website explaining the policy. http://www.sos.ca.gov/business/be/forms/si-mailer-format-change.pdf

If you own a corporation, a limited partnership or a limited liability company, please ensure that your entity's Statement of Information is timely filed. It is a mundane but important chore in keeping your entity in good standing.

If you have any questions about Statements of Information, or anything else, please contact us. Remember, we do not charge for initial consultations.

Please also visit our website.

Happy New Year! 2010 was a difficult year for almost every business owner and professional that I know. I hope that everyone enjoys a more prosperous 2011.

Don't let your employees sign contracts.

I recently settled a lawsuit in which my client was sued because an employee of my client, a small business, signed a contract. The contract was a services contract that my client thought could be terminated at will.

After my client terminated the service, the service company produced a contract that had been signed by an employee of my client. The employee was an administrative assistant who was little more than a glorified receptionist. The employee signed the contract in the name of the President of the company - which was a corporation. The employee had no authority to sign the contract. The contract was for five years and my client's President would never have agreed to that term.

After brief litigation. we settled the case for the price of continuing to litigate the case to trial. We had an excellent defense to the lawsuit but it was better to settle than continue to spend time and money on the matter.

This was a very unhappy experience for my client to say the least. We are not sure why the employee signed the agreement since the employee left the state over a year ago. We think that the customer service representative for the other party lied as about the meaning of the document.

A few lessons from the case:

1. Instruct all employees that they are not authorized to promise anything on behalf of the company. Even if they are directed to negotiate a deal, they should be clear that they final approval for anything binding the company must come from its officers/owners.

2. Instruct your employees that they are not to sign anything on behalf of the company. Tell them that they should not sign any document other than receipts for deliveries. Tell them to be careful of sales persons or customer representatives who want them to sign something. Ofter those persons will say that the document is just to finish up the paperwork. Employees must be firmly instructed to not any such document.

3. Employees should inform representatives of vendors and customers that the only authority to make a decision for the company is with the officers/owners of the company. They should be trained to make that clear up front in any negotiations with outside parties.

A little training and instruction of your employees can save your company a lot of grief.