BUSINESS AND EMPLOYMENT LAW

HOW YOU CAN HELP YOUR LAWYER PROTECT YOUR BUSINESS

• TIP # 1: Have The Bach Law Firm assist you in forming a legal entity through which to do business. Generally, a Limited Liability Company (LLC) or a Limited Liability Partnership (LLP) will be the most advantageous legal entity for smaller ventures. However, the "C" corporation still has advantages, particularly with respect to the availability of nontaxable fringe benefits and asset protected retirement plans.

• TIP #2: Because the corporate tax rate on the retained earnings is typically lower than the tax rates applicable to individuals, you and your attorney should carefully study the venture's projections and calculate the estimated after-tax financial performance of the venture before making a decision. An LLC taxed as a partnership cannot provide many of the fringe benefits that a "C" corporation can. Members are not "employees" for purposes of the fringe benefit rules.

• TIP #3: When drafting business contracts it is a good idea to include a prevailing party attorney fee provision. Such a provision calls for the loser to pay the winner's attorney fees if either party sues for breach of the agreement. The value to you is threefold: First, the other party will probably exercise more caution before deciding to harass you with a weak lawsuit - he does not want to be paying your lawyer. Second, if you win you will probably get reimbursed for some or all of the money you spent on lawyers defending you. Third, if you have a strong case, but cannot afford to pay all of the attorney fees required, you might be able to get a lawyer to accept less up front and gamble his time defending you on the hopes that he will collect against the attorney fee provision. The downside is that if you lose, you'll be ordered to pay the other parties attorney fees. If you lack the money to pay, you could be forced into bankruptcy.

• TIP #4: Unless you have a good reason to do so, a written employment contract is usually unnecessary. With an oral employment contract you don't unnecessarily limit your options by promising to keep an employee "as long as they do a good job." That should go without saying. However, if you do say it, "at-will" status may be defeated. If it later becomes necessary to fire the employee, he or she can bring an action for wrongful termination, claiming the termination was without good cause and therefore a breach of the promise not to fire. Keep your employees "at-will," and make sure that status is reflected in any contracts or employee handbooks.

• TIP #5: The most important business litigation tip is: Stay out of litigation!
  
  Litigation should be a last resort, not the first. Litigation is expensive and risky. It is often better avoided, even if it means suffering a modest loss. Litigation over one's "principle" is costly, and not recommended. Litigation should be reserved for those situations where the cost is worth the expected benefit. If the matter is small enough that you can afford to walk away, do it. Never litigate without serious deliberation.

However, when the matter is significant, and you cannot resolve it any other way, be sure you are represented by an attorney that will  fight for your rights.