by Robert Fojo | Sep 8, 2015 | Litigation, Small Business, Starting a Business |
Business owners often (rightfully) decide to form a limited liability company (LLC) through which to conduct their business. LLCs offer many advantages for business owners. However, while these individuals will file the necessary incorporating documents with the state to form their LLC, many of them forget to prepare a critical internal document: the LLC operating agreement. Many states do not require LLCs to prepare or file an operating agreement. (New Hampshire, Massachusetts, and Florida do not require operating agreements, but, for example, California and New York do.) Even if your state does not expressly require an LLC operating agreement, however, business owners should still consider preparing and executing one for several reasons. What is an LLC Operating Agreement? An LLC operating agreement is a contract between the members of an LLC. It sets forth specific terms and guidelines for the operation of the business, the distribution of profits and losses, the addition and withdrawal of members, how the business will be taxed, and other internal issues. 6 Reasons for an LLC Operating Agreement 1) Business Owners Can Avoid Disputes The greatest advantage of an LLC operating agreement is that it allows business owners to set clear expectations and guidelines for their business, and those expectations will help them avoid disputes. Partnership disputes can be nasty, exhausting, and cost a business and its owners a lot of time and money. The benefits that follow, below, all help business owners outline, in as much detail as they want, how they will conduct themselves and their business. The best operating agreements leave no stone unturned and contain few, if any, areas of ambiguity....
by Robert Fojo | Aug 11, 2015 | Litigation, Small Business |
Many businesses have policies and practices in place for preserving documents and information. After all, it is good to err on the side of caution and retain important documents, records, and other information. Given the amount of information that is generated today, however, preserving every bit of it indefinitely is impractical. Thus, businesses often implement document retention policies, whereby after a certain period of time, certain categories of documents are destroyed. There are circumstances, however, when a business has a legal duty to preserve documents and other information because it might be relevant to a lawsuit. The actual preservation of information for this purpose is called a “litigation hold” or “legal hold.” What is a Litigation/Legal Hold? A litigation hold, or legal hold, is a process used by a business to preserve forms of relevant information when litigation (a lawsuit or arbitration) is reasonably anticipated or has already commenced. Usually, a business’s attorney will initiate the legal hold with a notice or communication to the business that requests the suspension of the business’s normal document retention or disposition policy as to documents that are potentially relevant to the lawsuit at issue, or otherwise requests that the business stop disposing of such documents. A business will then communicate the same information to relevant employees. Must a Litigation/Legal Hold Be Communicated in Writing? Yes. A business should always ensure the legal hold process is communicated to its employees in writing. Likewise, an attorney should communicate the same to the business in writing. This ensures a business can prove it satisfied its legal obligation to preserve information. Why Does a Business Need...
by Robert Fojo | Apr 1, 2015 | Employment Law, Litigation, Small Business, Starting a Business |
Businesses and people often treat lawyers like plumbers or firemen: you only call when there is a problem. This is an understandable reality: Whether you are starting a business or operating a business on a day-to-day basis, many other tasks require attention (and money), like marketing, sales, staffing, and other administrative matters. The last thing a business owner often wants to think about is a lawyer. Smart business planning, however, should include calling and using a lawyer to prevent problems. A lawyer can help a business protect itself from a variety of problems (like partnership disputes and lawsuits). Businesses often do not realize that spending a little time, effort, and money on an attorney to identify and resolve potential problems could save that business numerous headaches (and a lot of money) down the road. Here are 7 ways a lawyer can help a business protect itself from trouble. 7 Ways a Lawyer Can Help Your Business 1) Incorporation Individuals often incorporate and start their businesses themselves without the assistance of an attorney. While that may be fine for a simple business (such as a single-owner LLC), it may not be ideal for a business that has multiple owners or transacts business across state lines. In these situations, a lawyer can help a business owner choose the right corporate structure (LLC, S-Corp, C-Corp), choose where to incorporate (in your home state or in Delaware), understand whether by-laws or other documents are needed, and – for multi-owner companies – understand the need for an operating or partnership agreement. Generally, the more complicated the business, the more likely an attorney should be...
by Robert Fojo | Feb 19, 2015 | Competitive Bidding, Litigation, Small Business |
Protesting and disputing government contract awards can appear intimidating at first glance. If you are a business that either has a contract with the state or federal government, a state or federal agency, or a municipality, or has pursued obtaining a government contract with any of those entities, you have probably been involved in a public bidding (or government procurement) process. This process is where the government issues a request for proposals or request for quotes (otherwise known as an “RFP” or “RFQ”), and then you, the business, submit a proposal for the services or products being requested. What happens if your business submitted a proposal for the contract, but the government declined to award the contract to you, and you believe the process was unfair? For example, a vendor that should have been disqualified wasn’t, or another vendor forgot to submit a critical portion of the proposal, or the government awarded the contract to a vendor whose proposal was not scored properly or whose proposal was more expensive than yours. Fortunately, despite the fact that the party on the other side of this equation is the government, you can protest and dispute government contract awards. In any of the situations above, the government likely violated competitive bidding standards. Here is a simple step-by-step process for protesting and disputing government contract awards: What are Competitive Bidding Standards? Regardless whether the government contract that was awarded was a state contract or a federal contract, a public bidding process administrated by the government usually must comply with certain standards. These standards are known as “competitive bidding standards” or “public procurement...
by Robert Fojo | Feb 3, 2015 | Arbitration, Litigation, Small Business |
Last year, the United States Supreme Court reaffirmed its view that arbitration agreements are valid contracts and must be “rigorously enforced.” This decision means businesses can better manage their legal risk by requiring their employees and customers to enter into arbitration agreements. In this article, I briefly outline the existing law on arbitration agreements, and then I identify and explain 12 reasons why businesses should use them. Download a FREE Guide That Reveals The 10 Things Every Business Needs To Know About Business Law The Law on Arbitration Agreements In April 2011, the United States Supreme Court upheld an arbitration agreement (that included a waiver of the right to pursue a class action) in AT&T’s consumer agreements. In a case called AT&T Mobility, LLC v. Concepcion, the plaintiff filed a class action against AT&T. The case made its way up to the Supreme Court. The Court concluded the plaintiff had to proceed to individual arbitration pursuant to the requirement and waiver in the arbitration agreement. The Court held that the Federal Arbitration Act (FAA) not only favors arbitration, but also disfavors class action proceedings. The Court relied on the FAA and stated that “requiring the availability of classwide arbitration interferes with the fundamental attributes of arbitration and thus creates a scheme inconsistent with the FAA.” Last year, in American Express Co. v. Italian Colors Restaurant, the Supreme Court confirmed what it stated in the Concepcion case. The Court made it clear that, because “arbitration is a matter of contract,” its terms must be “rigorously enforced by courts.” The plaintiffs in that case disputed a rate American Express charged merchants...
