This month’s post on Silicon Bayou News shares some important lessons learned by both investors and project creators in a failed Kickstarter project. Head on over to Silicon Bayou News to read the full story.read more
Goodbye 2012, hello 2013. After my first full year as a business attorney in New Orleans, I’ve compiled a short list of New Year’s Resolutions for a small business owner. Generally, each of these recommendations is based on my conversations with business owners about how to avoid trouble, or be in a better position to handle trouble when it arises.
Keep an Accurate Accounting of Income and Expenses
Keep an accurate accounting of your business income and expenses. This year, I’ve been dealing with many business owners who want to file claims in the BP Oil Spill Settlement. Some have the documentation they need to show their losses, and they’ve been able to make significant recoveries. Other businesses do not have any financial records, and it’s harder for them to make claims because they can’t prove their income or expenses.
The BP Oil Spill Settlement isn’t the only reason to keep track of financials. If someone wants to buy your business, or if you need to plan for litigation, you need to know these numbers. Quickbooks will only set you back about $150, but having a clear financial picture of where you’ve been and where your business is going is worth well more than that.
Organize your Business Documents
Some business owners have documentation all over the place. All your business docs, such as leases, insurance forms, employment records, corporate minutes, and any other thing related to your business should be in one easy-to-find place. Also, someone else business the one business owner should know where these docs are, or how to find them, just in case something happens to you.
Put it in Writing, and Have it Reviewed by an Attorney
Without a doubt, the biggest issue I’ve faced this year is business owners who made an agreement without putting it into writing. It’s very hard for an attorney to help you if something goes wrong with that agreement. The second biggest mistake is not having that agreement reviewed by an attorney. Sometimes, the business owners do have contracts in place, but the contract doesn’t spell out their rights properly, or puts the client at potential disadvantage. Although all those “boilerplate” clauses at the bottom of contracts often seem unnecessary, they are there for a reason, and it’s important that your contact spell them all out.
So, that’s my suggestions. Keep your books in order, organize your legal documents, and put everything in writing (and make sure it’s in your favor). These steps do require a small investment of time and money, but they’re just that, investments. If trouble does arise, you’ll be glad you made them.
Happy 2013, Everyone!read more
I had a court appearance this morning but had to wait for several other cases to go before the judge first. One case in particular caught my attention. As best I understand it, a landlord and tenant had a dispute over a commercial lease. The parties had made promises to each other to extend the lease, but had never actually done so. Eventually, the landlord evicted the tenant, who filed suit.
The tenant was a bar that had live music and held big events. The tenant also made significant improvements to the building, which were never reimbursed. The tenant’s suit was based on the fact that he had relied on the landlord’s promise to extend the lease, and he lost out on income because of the broken promise. The parties were in front of the judge today to, first, argue whether or not the tenant had brought his suit within the statute of limitations (in legal parlance: whether or not the tenant’s claim had prescribed)and, second, whether the landlord should personally be named in the suit.
Both parties operated as Louisiana Limited Liability Companies. Both were small, closely held businesses, which were probably only owned by one or two people. The landlord asked the judge to strike his name personally from the pleadings, arguing that his LLC was the one who was liable, not him personally. In response, the tenant argued that the landlord had made several representations and had referred to the company by his own name several times, and therefore should be at least partially personally liable.
The judge granted the tenant’s motion, and ordered that his name be removed from the proceedings. This is a win for the landlord, because now only the LLC is involved in the litigation, and the business owner is no longer personally involved. Even though that could change down the line if discovery reveals that the business owner was commingling or otherwise ignoring corporate formalities, he’s at least safe for the moment.
Moral of the story? When you’re doing business, make sure you’re doing business as your business, not in your personal name.read more
A week ago, most of southeast Louisiana was “hunkered down” while Hurricane Isaac passed through the area. As expected, a large portion of the residents of the state eventually lost their power. Trees fell, wires became disconnected, and things break. Whatever, it happens. But several days later, residents became irate that Entergy, the local utility provider, still had not connected power to their homes.read more
A few months ago, I had a client tell me that he wanted to resolve a dispute quickly, even if it meant he would have to spend a bit more money. I recommended a meditation. The other side agreed to mediate, and the mediation was held a couple of weeks ago. Now, a case that could have lingered in the court system for a few years and cost thousands of dollars in attorneys is fees is settled and completely finished. So, what is mediation?read more