Category: Business Law Blog

Ambiguity is the Fertile Soil of Litigation

Don’t ever think that a comma is not powerful.  Recently a court in Maine found wording of Maine’s overtime rules ambiguous due to the lack of that humble oxford comma. That ambiguity cost a company millions in overtime pay.

Ambiguity is the fertile soil of litigation.  A former law school professor used to say, “Words are the tools of our trade.”  She would make us chant it with her.  When we use language that leaves itself open to interpretation, we are inviting people to challenge us as to what our words actually mean.  In the context of a contract, that challenge can put us and our businesses in a very bad place.  That is what we saw in this highly publicized case with the Oxford, or Serial, Comma.  For the record, I love the Oxford Comma, and I have no idea how it became something that people felt was optional.  Some examples of problems that arise from misunderstandings that spring from lack of an Oxford Comma:

The Book Dedication:  To my parents, Ayn Rand and God.

You get the idea.  While there are other ways to edit that list to make it clear, the Oxford Comma should/could have been used to clarify.  A mastery of language is not just a legal vocabulary, but also a grasp of grammar and basic words and grammar and stuff…  Did I say that right?

In the end, how you use the comma isn’t the issue.  If your contract doesn’t use the Oxford Comma, but is otherwise clear and concise, then you don’t have the same problem this company did.  The big problem here is that a missing comma could have such an impact on a company’s liability.  When you hire a lawyer to protect your business, make sure they know how to use their tools properly.

Avoid Piercing the Corporate Veil

Piercing the Corporate Veil

A corporate veil is like a “bubble” that will surround an LLC or Corporation and protect its owners from being personally liable for the company’s actions. The veil is normally very secure; however, there are times when that “bubble” can be popped and owners of a company become personal avenues for law suits normally reserved for the LLC or corporation.

Tips to avoid personal liability: Continue reading “Avoid Piercing the Corporate Veil”

Exit Planning: It Takes a Team

Exit Planning is very comprehensive.  Accordingly, several key players must be involved including your financial advisor, CPA, banker, insurance professional, business broker, or investment banker and attorney.  When selecting your team of advisors it is important to identify players that will work well together and will be able to help with any of the issues in a comprehensive plan.  No one person or advisor has the expertise to design a comprehensive plan.

Continue reading “Exit Planning: It Takes a Team”

Exit Planning vs. Succession Planning?

Often times the terms Succession Planning and Exit Planning are used interchangeably but they should not be.  Both Succession Planning and Exit Planning should be addressed as separate plans.

Succession Planning is planning for leadership continuity.  It identifies and fosters the next generation of leaders within a business. It’s a process because it requires a company to develop internal people with the potential to fill key positions within an organization. With a proper Succession Plan, a business will seamlessly transition leadership.

Continue reading “Exit Planning vs. Succession Planning?”

Employee Policies and Procedures: Costly if Not Monitored

There’s been a lot in the news lately about huge settlements that big companies have made for employment law issues. Whether it be for misclassification of workers or violation of wage and overtime laws, businesses continue to pay large fines for not following employment laws. For example, Uber drivers recently filed a class action lawsuit claiming they have been misclassified as independent contractors and are entitled to be reimbursed by Uber for expenses such as gas and vehicle maintenance. This lawsuit was costly. Uber agreed to pay $100 million to settle independent contractor misclassification claims.

Continue reading “Employee Policies and Procedures: Costly if Not Monitored”

Buying and selling real estate. Do I need an attorney?

The process of buying and selling real estate can be complex and it often represents one of the most substantial investments made by an individual or a business. Although using an attorney to assist with the process will not be free, the fees are a minor expense in relation to the significance of the transaction, and is certainly money well spent.

Handling a real estate transaction without an attorney may complicate the process in the short-term and increase risks and expenses long-term.

So, how can an attorney assist you in the buying or selling process?

  • Attorneys are able to negotiate the terms of the real estate purchase agreement to ensure your interests are protected, whether you are buying or selling.
  • Attorneys are able to structure the transaction in a way to minimize present and future tax liability and limit personal liability for matters relating to the real estate.
  • Attorneys are able to prepare agreements between partners in a real estate investment, as well as lease agreements with potential tenants.
  • Attorneys are able to conduct due diligence with respect to the real estate, to help you fully understand what you are buying and identify issues ahead of time. This includes reviewing the title work relevant to the property.
  • Attorneys are able to coordinate with other parties to the transaction, including real estate brokers and title companies, to ensure that the closing happens in a timely and efficient manner.

In summary, if you are buying or selling real estate, a real estate attorney will work for you to ensure you get the most out of your investment.

New Overtime Guidelines – Mitigate Penalties and Employee Lawsuits

We’ve all probably read about the new overtime guidelines for “white collar” workers that the Department of Labor released on May 18, 2016.  But do you know what your business needs to do to be compliant with the new rules by December 1, 2016?  First, you need to understand the new rules. Information about the new rules can be found on the Department of Labor’s website: https://www.dol.gov/WHD/overtime/final2016/faq.htm#8.   These rules can seem overwhelming, but an attorney at Epiphany Law can verify that you are interpreting the law correctly.

Secondly, employers must understand how the changes will affect their current workforce and understand their options if an employee is subject to and does not meet the salary threshold. For example, in response to the new rules, employers way want to make changes to how they pay employees.

To avoid penalties or even worse, a lawsuit, we suggest you consult your Epiphany Law employment attorney before implementing any changes. The attorneys at Epiphany Law will review your classification of employees, overtime procedures and employee handbook to ensure your risk for penalties and employee lawsuits is mitigated.

Trademarks: Selecting the Right Name

Trademarks: Selecting the Right Name

One legal topic we at Epiphany Law often advise businesses on – whether a New London startup, or a Neenah multi-national company – is trademark protection. Trademarks are one of the “big three”( intellectual property rights, along with copyrights and patents.) A trademark is a brand name. Trademarks include any word, name, symbol or device used to identify and distinguish the goods/services of one business from those of another. In other words, a trademark indicates the source of goods/services (such as your Appleton, Wisconsin headquarters!). Many businesses rely heavily on their brand name, because it signifies the quality, reputation, or other characteristics of the business and its products or services. It is important for these businesses to ensure their trademarks are on solid legal ground.

The best time for a business to seek legal advice regarding the strength of a potential trademark is before the trademark is used. The relatively small upfront investment in researching a trademark is worth the peace of mind in knowing that your trademark is protectable and not already being used by someone else. Litigation and disputes about trademarks once already used in commerce can be a very expensive distraction.

Although there are many nuances involved in analyzing a trademark, the two most crucial factors are (1) likelihood of confusion and (2) distinctiveness. The likelihood of confusion essentially means that a trademark cannot be too similar to an existing trademark that is in use by another company for a similar set of goods and services. Distinctiveness means that a trademark cannot be too generic. For example, a Kaukauna bakery named “The Good Bakery” would not receive much, if any, trademark protection.

Some trademark rights can be automatically “earned” simply by using the mark. However, those rights are generally limited. For example, if your business only does business in Menasha, it likely won’t have rights in Little Chute, Kimberly or Waupaca. In order to secure stronger protection your trademark should be registered with the United States Patent and Trademark Office (USPTO.) Start by searching the Trademark Electronic Search System (TESS) on the USPTO.gov website to determine the viability of your trademark. Then contact Epiphany Law to assist with your registration. Using a knowledgeable law firm will ensure success and keep costs at a reasonable level (generally $1,000-$2,000 per trademark).

How to Get Paid on an Overdue Bill

A reality of doing business is that, at some point, you’ll have a customer who can’t or won’t pay their bill. Which approach is best depends on the situation, the customer and your overall goals.

A contractor’s first and best option is a construction (mechanic’s) lien. The best way to protect yourself is to make sure you follow your state’s requirements, including advanced notice to the customer, to ensure you can file one. If you cannot get a construction lien for some reason, there are generally five other options available.

 

1. Send a collections letter: A collections letter is sent by you or your attorney to the customer and details the services provided, specifies the amount due and the consequences of non-payment. It is usually the first option to use when an account becomes overdue. In some cases, a collections letter is enough to prompt the customer to pay or to start negotiating a payment plan. However, some customers will simply ignore them. The best collections letters are more than empty threats–you have to follow through on the consequences.

2. Negotiate: The chances of collecting the full overdue amount are reduced the minute the account becomes overdue. For that reason, it might be cost-effective to negotiate a deal to accept less than the full amount. This is a particularly good option if the customer is truly unable to pay the full amount or you’d like to keep their business.

3. Use a collections agency: A collections agency is a third party that will attempt to collect the debt for you. Some agencies will buy the debt from you for a percentage, while others charge a flat fee. While using a collections agency frees you up to concentrate on your business, the costs can often be high. Make sure to do your homework and find a reputable agency.

4. File a lawsuit: Collections lawsuits are often a last resort. If you’re lucky, filing a lawsuit can scare the customer into paying. On the other hand, lawsuits (even in small claims court) can be time-consuming and expensive. They can be especially frustrating if you win your case only to find out that the customer is “judgment proof” (i.e., has so little that he or she is protected from having to pay) or files bankruptcy. Lawsuits are most effective against debtors who have the ability to pay you, but won’t. And remember: if you hope to continue a relationship with your customer, a lawsuit will probably put an end to that.

5. Write off: Ultimately, there will be some debts you simply can’t collect, either because you decide it’s not worth it or because other options fail. In that case, you should write off the debt on your books and chalk it up to a learning experience.

When choosing an option, you’ll need to weigh the amount of time and effort it would take to pursue a debt and the chances of success. There are also “big picture” issues to consider: for example, you could sue every customer the day after their account become overdue, but that probably won’t help your business reputation.

Understanding your options in the event a customer doesn’t pay can help you deal with the situation efficiently so you can get back to running your business. There’s no way to guarantee you’ll get paid, but you can reduce the chances of overdue accounts and increase your chance of collecting debts if you take a proactive approach.

Regardless of which option you choose, make sure you document all of your interactions with the customer: contracts, change orders, invoices, e-mails, phone calls, and payment arrangements should all be written down. Given the nature of home improvement, it can also be a good idea to include pictures of the work you’ve done as it progresses, including “before and after” photos.

Ultimately, the most effective tool to prevent overdue accounts in the first place starts at the beginning of the relationship, with solid terms and conditions and detailed, written contracts that let everyone know what to expect. It continues with timely invoicing and consistent follow up on overdue balances. And all of the options above work best when they’re part of the system. A good business or real estate attorney can help start you in the right direction

Contracts: An Underused Contractor’s Tool

Before you begin work for a customer, it’s crucial to have a contract in place. A contract protects you and your customer by setting out, ahead of time, the expectations you both have. While some parts of your contracts will change depending on the type of work, the size of the project, or your business preferences, there are some basic parts that should always be in your home improvement contracts.

First, you should always have a written contract with your customers. Many states actually require home improvement contracts to be in writing if certain criteria are met. For example, Wisconsin’s Home Improvement Practices Act (Wis. Adm. Code ATCP 110) requires contractors who accept payment before the job is completed to have a written contract that contains certain key parts. Regardless of whether it is required, a written contract can reduce the chance of a dispute (for example, over what work was included) later on and also serve as evidence to support your claim if a dispute does crop up.

 

So, what should be in your written contract? Many states have specific legal requirements and limitations for home improvement contracts. You should consult a local attorney to make sure you comply with your state’s laws. Generally, however, there are seven things all home improvement contracts should have:

1. Price: The contract should include the total price, plus any finance charges (particularly if you allow payment plans). If the project is for time and materials, specify the cost of materials, the hourly rates involved, and any conditions that might affect those prices.

2. Work description: A good work description lists not only what you will do, but what materials you will use. More detail is better. For example, if you install windows, identify how many windows you’ll be installing, who manufactures them, their make/model, their color and size, and so on. The work description is also a good place to note if something isn’t included. Using the same window example, you might want to note that you do not install shutters on the new windows.

3. Time period: Identify the start date and completion date. If you don’t know specific dates, include the time period during which the work will take place. It’s also a good idea to note if there are factors (i.e., weather) that could alter the schedule and how that will be handled.

4. Contact information: Your written contract should include your name, address and phone number. If you want customers to contact you by email, include that as well. You should also include the name and business address of the salesperson or agent who worked with the customer.

5. Security interests/construction lien rights: If you plan to take out a lien, mortgage or other security interest (usually as part of financing), then you should make sure it’s clearly stated in the contract. Additionally, some states require certain notices be given to homeowners about contractors’ and subcontractors’ construction lien rights. A local attorney specializing in construction law can set you on the right path.

6. Guarantees and warranties: If you make any guarantees or warranties about your products and/or services, they should go in the contract, along with any conditions or, just as importantly, limitations on them. In some cases, you may also want to note or include any guarantees or warranties made by manufacturers of the products used.

7. Signatures: Ideally, you want a contract signed by both you and the customer. Ultimately, the most important part is to have the homeowner sign, as that is the party against whom you could potentially end up enforcing the contract in court.

We highly recommend that you work with a local attorney to customize your basic terms and conditions in the contract for your business.

Even with all of the advantages of having a written contract, many contractors resist them because they know that a project often changes as it goes along. The good news is that there’s a simple way to address this issue: change work orders are additional written and signed documents that can be incorporated into your contract if changes need to be made. Together, they can help you stay on the same page with your customers and protect you from disputes down the road.