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Steps to Avoid Costly Litigation
Dec 8th 2009
Filed Under : industry
Steps to Avoid Costly Litigation
Anyone who has been through the litigation process, whether you are an attorney or party, can attest to the fact that litigation is not an inexpensive process. In fact, that is why in my practice as a litigator I see the vast majority of any lawsuit which crosses my desk settle. Sure there are the occasional “stubborn” cases caused by unreasonable attorneys or irrational parties, but even taking those cases into consideration, the overwhelming majority of business litigation cases settle. Why? If it is not based upon the merits of your case or the other side’s case, the answer is the cost of litigation. The cost of litigation, particularly discovery and dispositive motions, have become the driving force in settling cases. I often hear from clients who had previous experience with the litigation process with other firms state that they were shocked at not only the cost of litigation, but the time it took to secure the end result, whether by settlement or trial.
Our system of civil justice is founded on the notion that society benefits as a whole if courts or juries resolve disputes if people cannot settle a disagreement or claim among themselves. However, people frequently do not realize how time consuming and complex a legal claim can be and how long it may take to resolve a claim or a lawsuit. To get to a resolution can cost a substantial amount of money. While some costs may not be avoidable, it is possible to protect yourself before litigation and during the litigation process to maximize the value of the money you have to spend.
Whether contracting in your business or personal life, you must make sure that you put your entire understanding in writing. While it may not be possible to put every agreement you may have in writing, there are people and entities with whom you have important arrangements, or with whom more significant dollars are at stake, that mandate you put those agreements in writing. A written contract need not be complex, but there are certain provisions that should always be contemplated and wrtitten carefully.
Probably the most important of these protective provisions is the Attorneys' Fees clause. A Fees clause is a statement in your contract that provides you the ability to recoup your attorneys’ fees in a situation where the party you contracted with does not fulfill their obligations. Many business owners are unaware of the rules governing the recovery of attorneys’ fees expended by them to enforce their rights. Often, the only way for a party in a lawsuit to collect their attorneys’ fees is if such an award is provided for by statute or where the parties agree to such a provision in writing.
Another important protective provision is to provide for ADR. Alternative Dispute Resolution ("ADR") processes are alternative methods of helping people resolve legal problems before going to court. ADR often involves an independent third person, called a "neutral" who tries to help resolve or narrow the areas of conflict. The use of ADR early in a case can result in the more efficient, cost-effective resolution of disputes with greater satisfaction to the parties. A great majority of the civil cases filed in Minnesota state courts are settled by using ADR. Minnesota courts recognize the effectiveness of ADR as a tool for settling disputes, and in fact most Minnesota courts order ADR is some form.
As your legal counsel we can not only help to create a solid contract or legal document that protects all of your company’s interest, but if litigation is inevitable we pride ourselves in providing upfront advice and counseling on the costs and the predicted path of the litigation. We will also work with you to come up with the most effective and efficient strategy to maximize every dollar you and your business spends in either drafting your contracts or going through litigation. By apply this approach to counseling our clients we can help take the surprise out of the process.
If you have any questions, or would like to set up a free consultation, please call Jesse H. Kibort of Daniels & Wymore, PLLC at (763) 201-1215 or write him an e-mail at jkibort@dnwlawfirm.com. The Twin Cities law firm of Daniels & Wymore, PLLC offers two locations for consultation at 1100 One Financial Plaza, 120 South Sixth Street, Minneapolis, Minnesota 55402, and 3165 Fernbrook Lane North, Plymouth, Minnesota 55447. This article is a general discussion of certain legal matters and is not intended as legal advice. Readers are encouraged to contact competent legal counsel if they have specific legal questions or concerns about their businesses.
Want Your Attorneys' Fees Back?
Sep 29th 2008
Filed Under : industry
Want your attorneys’ fees back? Put it in writing!
Many business owners are unaware of the rules governing the recovery of attorneys’ fees expended by them to enforce their rights. For the uninitiated, the “American Rule” applies to recovery of attorneys’ fees – it allows for the recovery of fees in only two situations: (1) where there is a statute (state or federal) applicable to your dispute that allows for an award of attorneys’ fees, such as Minnesota Statute Section 322B.38, or (2) where the parties agree in writing that in the event of a dispute the prevailing party shall be entitled to an award of attorneys’ fees from the other party (a “Fees Clause”). Barring sanctions for the way the lawsuit is being handled or prosecuted, that’s it.
What that means is that if you are doing business with someone and you do not have a written contract with them or the written contract you have does not have a Fees Clause, you are likely out of luck with respect to getting your attorneys’ fees reimbursed from the other side, even if you win. That is because many of the disputes that arise in business are based on “common law,” not statutes (e.g., a party breached a contract, they did not violate a statute), and even if a statute was violated, not all statutes allow for an award of attorneys' fees to the prevailing party. Thus, you could find yourself embroiled in a business dispute, hire a lawyer, and win your case, but not be awarded a reimbursement of your attorneys’ fees because the American Rule does not allow such an award in your particular case. So, even if you won everything in your case and recovered all of your damages, if you may feel like your victory was not complete because your recovery was eroded by what it cost you to get there.
So, what is the solution? Put your agreements in writing! And include a Fees Clause in the contract. While it is not practical (or even possible) to put every agreement you may have in your business in writing, there are people and entities with whom you have important arrangements, or with whom more significant dollars are at stake, that mandate you put the agreement in writing.
Daniels & Wymore, PLLC is here to assist you in identifying which arrangements ought to be in writing and will draft contracts for your needs that not only makes sense, but include provisions that work to protect you in the event something goes wrong. Call Christopher M. Daniels, Esq., at (763) 201-1209 to help you put together a written agreement to accomplish your business objectives.
Finally, a practice pointer – if you are presented with a written contract drafted by the other side, and it does not contain a Fees Clause – proceed with caution! It is a red flag that could indicate that the other side thinks that if anyone is likely to breach a contract, it is them. Thus, they do not want you to be able to sue them for a breach of the contract, and get paid your attorneys' fees incurred to enforce the contract. While this is not always the case when a Fees Clause is missing, it should make you investigate further. One thing you can do is request that a Fees Clause be added to the contract. If that is refused, you should seriously consider whether you want to get into a business deal with them.
A Double-Edged Sword
Aug 23rd 2008
Filed Under : industry
A DOUBLE-EDGED SWORD
Beware: Employee Handbooks can cut both ways!
Many employers believe they need an employee handbook with their policies and procedures. The goal is reduce stress and uncertainty for employees, which will lead to a happier and more productive work force. If the handbook is properly planned, written, and consistently implemented, those desired results should follow.
Conversely, if the handbook is not artfully crafted to meet each employer’s specific needs, or consistently applied, an employer could encounter such problems as work force doubts, confusion, loss of productivity, employee tensions, conflicts, dissatisfaction, contested claims, and litigation. If a dispute arises, an employee questions a policy, wants to report discrimination, or poor performance review is given, an employee handbook will be the first place that the employee turns. We can help you avoid the pitfalls summarized above.
Historically employers believed they were protected from any shortcomings in employee handbooks if their employees were all at-will employees. At-will employment means either the employer or employee can terminate the employment relationship at any time, with or without cause. Several years ago the Minnesota Supreme Court ruled that an employee handbook could create contractual obligations between the employer and employee, which can change the at-will employment relationship. Not surprisingly, after that ruling attorneys began reviewing and writing far more employee handbooks.
The policies included in a handbook will vary from company to company, depending on its size, number of employees, and benefits offered. Regardless of the size or complexity of your business, the handbook should contain enough detail to avoid confusion, but not so much as to overwhelm the writer or reader.
The most important items for an employer to include in its policy or employee handbook include:
• A Statement of the company's goals and philosophy
• Working hours
• Statement of nondiscrimination
• Harassment policy
• Procedures and policies for absence from work
• Performance evaluation procedures
• Pay periods
• Safety and accident rules
• Use of company property
• Vacation and holiday policies
• Other key issues effecting the company
There is a wealth of information regarding employee handbooks available online for free or at very reasonable prices. These "one-size fits all" prototypes should only be a starting point in preparing the handbook. There is a vast array of complex laws, regulations, and court interpretations for each policy that needs to be considered before implementing any employee policy or handbook. Many of these online forms contain boilerplate language that may not be applicable to your business, Minnesota law in general, or the current status of Minnesota law, law which seems to change yearly if not sooner.
As your legal counsel we can help create a good first impression of your company in your new employees' minds. They will see you and your company as more professional and may consequently act accordingly. Your new handbook will be an effective tool for addressing employment issues, problems and concerns.
If you have any questions or need our help, please call us.
Joseph G. Thompson
Daniels & Wymore, PLLC
3165 Fernbrook Lane N.
Plymouth, MN 55447
Direct: 763-201-1217
Mobile: 612-812-9120
Fax: 763-201-1216
jthompson@dnwlawfirm.com
Setting up your business in the right way is a must.
Mar 14th 2008
Filed Under : industry
WHY PROPERLY INCORPORATING YOUR COMPANY IS SO IMPORTANT TO PROTECTING YOUR PERSONAL ASSETS.
Why should I properly incorporate or organize my company? Did I properly incorporate or organize my company? The answers to these questions are essential to fully protect your hard-earned personal assets. In answer to these questions, you want a properly formed and run company for two reasons: (1) personal liability protection that a properly formed and run business provide to you and your family, and (2) tax benefits associated with having a legal entity.
The first reason for forming a company, tax benefits, will be handled by your CPA in conjunction with our formation of the business. If you do not have a CPA or wish make a switch to another CPA, we can point you to well qualified accounting firms that we have worked with and trust. By and large this first reason for forming a company is the one that most of our clients know and was the initial impetus for forming their companies. Often, our clients with existing business come to us after someone has “helped” them start their business by filing the Articles with the Minnesota Secretary of State. While this does form the company for tax purposes, simply filing the one page form found on the Secretary of State website may not give you personal liability protection in a lawsuit. There is much more to properly forming a business than simply filing the Articles.
The second reason one should properly form and run you company is arguably the more important of the two reasons, to protect your personal assets. In a lawsuit against your company, the other side will often attempt to bring the business owners into the lawsuit. This may be attempted for numerous reasons. First, in small businesses, there is always the fear that the company will not have any money once a judgment is gained months after the commencement of the lawsuit, and that the “real” deep pockets are the owners. Second, there may be allegations of fraud or misdeeds on the part of the owners. Finally, some attorneys will throw everything, including the proverbial kitchen sink into the case and see what works. Once the business owner challenges their personal inclusion in the case, the judge must decide, by looking at a complicated calculus, whether or not to “pierce the corporate veil,” that is, whether to disregard the corporate entity and hold the owner personally liable because the business is, in legal terms, a sham entity.
In a broad sense, the court will look to two areas to determine whether the business protecting the owner’s personal assets is sufficiently separate enough from the owner to dismiss the owner from the lawsuit. Our firm helps you create the documents and practices needed to shield yourself from this liability. First, the court looks at whether the company is properly set up. This process not only includes the filing of the Articles, but also should include the drafting of bylaws, written actions by the owners, written actions by the board of directors or governors, subscription agreements, and other documents that give the business a depth that will help deter a court from looking through the business to you. These documents, and later additions as your business operates, may prove to a court that your business is separate from yourself, with its own rules, jobs, job descriptions, voting procedures, determinations of tax planning, proof of ownership and in what percent, and approval of critical decisions and expenditures. None of this is adequately captured by simply filing the Articles. A court could easily look through that one document and find you and your hard-earned assets.
The second area that a court looks at is how the business is run. At Daniels & Wymore, PLLC, we help new and often “sophisticated” business owners learn the dos and don’ts of properly running a business once the correct documentation is put in place. Examples of properly running your business include, but are certainly not limited to, setting up a separate checking account for your business, not intermingling personal and business funds, not paying company debts with personal money or personal debts with company money, not purchasing personal property with company funds (jet skies are a no no), having a separate business address and contact information, and many others.
Every business risks spawning lawsuits that could find the owner fighting to protect their personal assets. Once the lawsuit starts it is often too late to create the protections needed. This work must be done beforehand to help ensure that you are prepared for this fight.
If you have any questions, or would like to set up a free consultation, please call David J. Wymore of Daniels & Wymore, PLLC at (763) 201-1215 or write him an e-mail at dwymore@dnwlawfirm.com. The Twin Cities law firm of Daniels & Wymore, PLLC offers two locations for consultation at 1100 One Financial Plaza, 120 South Sixth Street, Minneapolis, Minnesota 55402, and 3165 Fernbrook Lane North, Plymouth, Minnesota 55447. This article is a general discussion of certain legal matters and is not intended as legal advice. Readers are encouraged to contact competent legal counsel if they have specific legal questions or concerns about their businesses.
Department of Commerce Complaints
Mar 12th 2008
Filed Under : industry
The Softening Residential Real Estate Market is driving up the incidence of complaints to the Department of Commerce over “inflated” appraisals
Do you own a real estate appraisal company? Has a lender or mortgage broker blamed your appraisal for being too high after a foreclosure left them with a deficiency? Have you received a letter from the Department of Commerce requesting a response to a complaint filed by an unhappy homeowner whose home equity line was denied? Has a competitor sent in a complaint in an underhanded attempt to remove competition? Are you worried this will happen? If you answered any of these questions “yes,” you're not alone. With the downturn of the housing market and the increase in interest rates, many investors are defaulting on investment property and many homeowners are now finding that they can no longer afford their dream house bought on a 5% ARM. More and more often, these homeowners, and the lenders that financed them, are blaming the appraiser for over appraising the value of the home. Every day we see more and more claims made that sound like this: “If the appraiser had not over appraised the home, I never would have (bought/lent money to buy) the home,” or “I would have been able to sell the home more quickly.”
The Department of Commerce is increasingly threatening investigations, and starting them, not only with respect to the appraisal in question, but of contemporaneous appraisals. Through this investigation the Department may attempt to revoke the appraiser’s license, suspend the license, and/or charge a hefty fine. We routinely assist appraisal companies in the defense of these complaints. While every case is different, having an attorney familiar with the Department advocating your position is a must.
At Daniels & Wymore, PLLC we help many real estate appraisers, mortgage, real estate, and insurance agents and brokers deal with Department of Commerce complaints and investigations. Please call David J. Wymore if you have any questions, or wish to set up a meeting to discuss your particular case, at (763) 201-1211 or email him at dwymore@dnwlawfirm.com.