rifkindlaw

The Importance of Including Arbitration and Mediation Provisions During the COVID-19 Pandemic

Mon, 13 Jul 2020 21:53:29 GMT

For businesses and individuals entering into agreements with any risk of the other party failing to adhere to its obligations - perhaps all contracts - it can be more important than possibly ever to include well-drafted arbitration provisions.

In other words, if you should already have an arbitration clause in your contract, we recommend to make sure it is in there, now.

The state of the State Court backlog in Illinois and many jurisdictions nationwide is perhaps the largest in decades. Since many states have reopened from the COVID-19 shutdowns of 2020, we are only now seeing the actual rescheduling dates of many cases. In Cook County for example, Illinois' largest county court system, cases are proceeding on a case-by-case basis, with some case status hearings being held now by video conference, but others being rescheduled to the fall of 2020 or even as late as February of 2021. This means if you are a Plaintiff attempting to recover a debt, compensate for damages or achieve specific performance, you will need to take your place in this increasingly long line.

However, there is a solution that predates the COVID-19 outbreak. Arbitration firms have been offering alternative dispute resolution by phone or video conference for some time. Mediation and arbitration have continued at a faster pace than their State Court alternatives. Currently as of July of 2020 plaintiffs have been achieving outcomes in mediation and arbitration in a time where it would be impossible to obtain a similar judgment in State Courts. As many of you know, federal law mandates that arbitration awards may be enforced in Court, and in a rather more efficient way than filing the entire case in Court. Executed settlements from mediation, properly drafted, are also typically upheld by courts of competent jurisdiction.

Be careful however to properly draft and insert mediation and arbitration provisions into contracts. Failing to specify certain conditions or process can invalidate the arbitration provisions. For example, in Illinois a business or individual engaging in residential home repair and remodeling must allow for a home owner to specifically acknowledge and agree to the arbitration provision in writing, not just in the final signature line for the contract, along with other requirements. Finally, it is important to note that arbitration provisions may not be optimal for every contract or dispute.

Preparing for a Consultation with Your Business Attorney

Thu, 10 Aug 2017 21:51:49 GMT

If you are in need of a business attorney, you want to be certain that you hire the right one to handle your case. Since most attorneys will provide a free consultation, giving you the chance to determine if he or she is the proper fit, it is crucial to prepare for this meeting. Going into this meeting without the right preparation will not be helpful, so make the most of this opportunity by considering some of the following tips:

Finding the right one: Before you even schedule a consultation, you need to find an attorney who seems like the right fit for you. Look for a law firm that focuses on your type of legal questions, or a firm that lists your type of case as an area of practice they frequently handle. If you have used an attorney in the past for a different issue, you can even consider asking for a referral.
Learn some background knowledge: During your consultation, one of your most important questions will be in regards to the attorney’s background. Remember, this consultation is like a job interview, except you are the one doing the hiring. This is a person whose services you are going to pay for and you deserve to have someone who has the expertise necessary to assist you. Ask how long the attorney has been practicing law and if he or she has practiced in your county or area. How many cases like yours has he or she handled? These are important questions to ask.
The legal plan: Another critical question is in regards to the strategy the attorney would use for your case and what outcome he or she expects. No one can foretell the future, but an experienced attorney will be able to provide a general idea of how long your case should take. It is crucial for your attorney’s strategies to align with your needs.
Money matters: Oftentimes, a deciding factor in whether or not you choose to hire an attorney is the question of affordability. During your consultation, ask about legal fees. If different individuals are working on your case, they might all bill different rates, so you need to find out what they are.

While your consultation will allow you to figure out if an attorney is right for you, it is usually not the time to ask in-depth legal questions, so make sure you focus this meeting on choosing the best attorney for your case.

Business Attorneys in Chicago

If you own a business, having skilled legal counsel is imperative for dealing with issues that might arise. At Rifkind Patrick LLC, our Chicago business attorneys have the skill and experience to assist you in navigating your legal concerns.

Closing a Business in Chicago

Wed, 07 Jun 2017 21:45:10 GMT

Have you decided to close one of your businesses? If so, perhaps the business has not been profitable. Perhaps you want to move on to something else, or perhaps you want to move to another state.

Whatever your reason for shutting down operations, there are legal steps that you will need to take before your business can be fully dissolved.

When you take the proper steps, you can shield yourself from future legal issues. Winding down a business properly can protect your credit, reputation, and help reduce or prevent litigation regarding the dissolution of a company. This is very important if you plan on starting or running other businesses down the road.

The following are just some of the steps you will need to take to close down your business:

If you are in a partnership, LLC, or have a corporation, you must have your business associates’ agreement to dissolve the company (or the majority of the owners must agree to close the business).
Pay your business’s debts and taxes
Notify your employees, vendors, creditors, and customers
Cancel any licenses or permits
Cancel any applicable fictitious business names
Ensure the business is dissolved with the local and state government agencies
File final employment tax returns (if you have employees)
Report sales of business assets to the IRS
Report any exchange or sale of property used in your business to the IRS
Report your company’s capital gains or losses
File IRS Form 966, Corporate Dissolution or Liquidation
File IRS Form 8594, Asset Acquisition Statement

Paying Business Debts

More than likely, you are going to have numerous business debts, such as money owed to suppliers, the landlord, vendors, utilities, credit card companies, marketing companies, banks, etc.

When you notify your creditors that the business is closing, arrange to pay off or settle all of the business debts actually owed. If a creditor agrees to accept less than you owe, be sure to obtain a letter from the creditor stating that the debt is paid in full.

If you are dissolving your business in Illinois or Wisconsin, you should speak directly with a business law attorney from Rifkind Patrick LLC, especially if you don’t have the capital to pay all of your bills. It is important that you know your options so you can minimize any risk to your personal assets.

Contact Rifkind Patrick LLC today to learn more about business dissolution!

Illinois Freedom to Work Act

Thu, 01 Jun 2017 21:46:09 GMT

Are you considering having your employees sign a non-compete agreement? If so, you will need to familiarize yourself with the Illinois Freedom to Work Act, signed into law by Governor Bruce Rauner in 2016.

The law was created to discourage and prohibit the misuse and abuse of non-compete agreements for low-wage employees. A low wage employee is, “an employee who earns the greater of (1) the hourly rate equal to the minimum wage required by the applicable federal, State, or local minimum wage law or (2) $13.00 per hour,” according to the Act.

The Act does not apply to non-compete agreements entered into prior to the law’s effective date, which was January 1, 2017. Instead, it applies to all non-compete agreements entered into after the effective date.

Who is Affected by the Act?

While the Act is relatively brief, it is having a significant impact on private sector employers who were in the practice of having all employees, regardless of wage, sign non-compete agreements.

Under Section 10 of the Act, private sector employers are expressly prohibited from having their low-wage employees enter into non-compete agreements. Section 10(b) of the Act states, “A covenant not to compete entered into between an employer and a low-wage employee is illegal and void.”

Under the Act, a covenant not to compete refers to any agreement between an employer and a low-wage employee that bars the low-wage employee from:

Performing work for a different employer for a certain time period,
Working within a specific geographical area, and
Accepting a job with another employer, performing work that is similar to the low-wage employee’s work for their current employer.

However, the Act does not expressly affect employer non-solicitation agreements on employees who make $13.00 an hour or less. Further, the Act does not affect confidentiality or non-disclosure agreements between employers and employees.

Only non-compete agreements signed after January 1, 2017 are within the Act’s scope. If you are looking to have your employees enter into a non-compete agreement, consider having a Chicago business law attorney from Rifkind Patrick LLC review your situation and determine if a non-compete agreement is necessary to protect your company and its interests.

If you have questions or concerns about non-compete agreements in Illinois and Wisconsin, contact our firm to speak with a knowledgeable lawyer right away.

Most Important Part of a Commercial Real Estate Transaction

Tue, 16 May 2017 21:41:31 GMT

Do you know the most important part of a commercial real estate transaction? It is the “contract of purchase and sale,” which many attest is the road map of the real estate transaction. If a contract is properly negotiated and focused on eliminating any ambiguities, most problems will be avoided and the parties can move towards closing.

A contract can be:

Bilateral, where both parties are bound to contract conditions, or
Unilateral, where only one party is expected to perform under the contract.

Generally, a contract of purchase and sale involves the following elements: letters of intent, bilateral contract requirements, the offer, acceptance, and consideration (without a consideration passing between the parties, it is not binding), such as a promise for a promise, etc.

Premises Considerations

In a commercial real estate transaction, the property should be well-described in the contract itself, and the contract should contain a legal description of the property. When entering a commercial real estate contract, one should ask:

Are there any ingress or egress? This refers to the right to enter, leave, and return to a property.
Are parking easements required?
Will any furniture or equipment be included?
Will overhead cranes be included? (warehouses)
Will any movable loading docks be included? (warehouses)

Often, the seller will put a provision in the contract that the property is being sold “as is.” This means the seller is not stating that the property is any particular condition. However, selling a property “as is” will not protect a seller against fraudulent concealment of fact, or fraudulent misrepresentations.

In order for buyers to protect themselves, they should allow 10 days from signing (or longer) to inspect the property, or to have engineer inspect it for them. Usually, it is the engineer’s job to check the structural soundness of the property and any improvements that were made.

In Conclusion

When it comes to a commercial real estate transaction, it is important to cover all of your bases, and it all starts with a well-executed contract of purchase and sale. If you are looking for a Chicago real estate lawyer to assist you in this endeavor, contact Rifkind Patrick LLC today. With over 40 years of collective experience, we are qualified to represent you.

Startup Checklist for Entrepreneurs

Tue, 09 May 2017 21:42:55 GMT

You have decided to start a business – congratulations! Before you apply for that SBA loan, or tap into your 401(k) for funding, you want to break down the startup process into manageable steps, so you can begin your entrepreneurial journey with ease and confidence. If your to-do-list is daunting, do not let it discourage you. Being your own boss can be very rewarding, it is just a matter of organization and systematic execution.

As business law attorneys, we help startups launch their new ventures every day. If you are feeling overwhelmed by the number of tasks that lay ahead, here is a startup checklist that will help you prioritize, so you can tackle the primary issues first and address the secondary tasks at a future date.

Get your family’s support.

When going into business for yourself, it is important to have your family’s support. If you are single, this is not an issue, but if you are married, it will be a lot easier to build a business if you have your spouse’s support. If your startup requires you to move and you have a spouse and older children, it will be a lot easier if their goals align with yours.

Create a detailed business plan.

A solid business plan is a blueprint for your business. If you are planning on getting a loan, a business plan will be required of you. Even though your business plan will be a road map for at least the next two years, you will need to revisit it regularly to make adjustments and amendments as needed.

Figure out the funding.

Are you creating a lean startup, or will you need tens of thousands, if not hundreds of thousands to get your business off the ground? Will you be looking for investors? In any case, you have to figure out the funding. Often, new business owners fund their businesses through investors, SBA loans, and Rollovers for Business Startups, otherwise known as ROBS. If you need to find financing, it is best to start looking sooner than later.

Decide on a business name.

You will need to do research once you decide on a business name. You want to make sure that someone else is not already using it; you can find out by searching the name on Google and by using a corporate search name tool to ensure the name you came up with is not already being used by someone else. Be sure to check the proposed business name on the state and federal level.

Select a legal structure.

How you structure your business is critical; certain structures, such as the LLC, shield your personal assets, while others do not. We recommend discussing the different legal structures with a business law attorney.

Apply for the required business licenses.

Depending on your industry, you may need more than one business license. You will discover that most business licenses are handled locally and on the state level.

Obtain an Employer Identification Number (EIN).

You will need an Employer Identification Number (EIN) so you can avoid having to give out your Social Security number, so you can be separated from the business, and so you can open a business bank account.

Create a website.

These days, virtually all businesses need a website so they can establish an online presence, be found on Google, and so they can be credible. We suggest creating a website sooner than later, even if you have not launched the business yet.

We are only scratching the surface in regards to what needs to be done to launch a startup. If you are taking the leap into entrepreneurship, you will benefit by speaking with a Chicago business law attorney from our firm. Contact us today to schedule a free 30-minute consultation with an experienced member of our legal team.

CoManaging Partner Aaron E. Rifkind Receives Premier 100 Designation from National Academy of Jurisprudence

Wed, 12 Apr 2017 21:40:27 GMT

The National Academy of Jurisprudence (NAJ) has recently recognized Aaron E. Rifkind as one of 100 premier trial attorneys in the state of Illinois. This is a distinction reserved for attorneys who have established themselves through their professionalism and excellence in service. Membership into NAJ’s Premier 100 requires the satisfaction of stringent criteria and standards as established by the NAJ’s Board of Directors. Less than 1% of the 1.2 million attorneys currently practicing in the U.S. will be selected to receive this important and prestigious designation.

Criteria for membership may include, but is not limited to, the following:

An individual attorney’s commitment to ethics and professionalism
Notable verdicts, achievements or settlements
Board Certified Specialization as designated by the State Bar or other leading organization
Nominations from the Board of Directors, industry leading trial attorneys, and existing Premier 100 Trial Attorney membership
Membership and executive positions held within state trial attorney
organizations or other leading organizations
Any Current ratings or ranking profiles as identified by reputable and credible online or local evaluations

Aaron E. Rifkind has been in practice since 2009 and focuses his practice to business litigation and business transaction. He has been recognized for his commitment to providing excellent representation for clients both inside and outside of the courtroom. For more information about Aaron, check out his profile by clicking here.

What is Tortious Interference?

Wed, 25 Jan 2017 22:37:07 GMT

If one party (defendant) intentionally interferes with another’s (plaintiff’s) contractual relations with a third party, the defendant can be liable for damages in a tort action. This is referred to as “tortious interference” in business law.

In simple terms, a tortious interference claim for damages can be filed by a plaintiff against a defendant who decides to wrongfully interfere with the plaintiff’s business or contractual relationship with another individual or company.

For a plaintiff to prevail in a tortious interference claim, he or she would need to prove the following elements of the claim:

A valid contract existed between the plaintiff and a third party
The defendant was aware of the contract between the plaintiff and third party
The defendant’s actions were both intentional and improper
The defendant’s actions directly caused injury to the plaintiff
The plaintiff must have suffered damages

In our experience, tortious interference claims frequently combat wrongful competition or immoral conduct by a former employee. For example, an employee could improperly use a confidential, proprietary data set belonging to a former employer to win the business of a former client of that employer. When a defendant wrongfully interferes with another’s business relationship or economic opportunity, he or she can be held liable for damages.

If you are considering filing a tortious interference claim, please understand that these claims are highly-factual, rely heavily on the evidence, and it will be necessary prove the aforementioned elements of the claim to prevail in court.

Three Most Common Tortious Interference Claims

The courts generally recognize three members of the “tortious interference family,” including: 1) tortious interference with an existing contract, 2) tortious interference with business relations, and 3) tortious interference with an economic advantage.

If there is no valid contract between the plaintiff and a third party, it can be more difficult to establish the business relationship; however, that does not mean it is impossible.

Some jurisdictions, such as Illinois, are willing to recognize that a defendant interfered with the plaintiff’s “economic advantage” when it can be proven in court.

To establish a claim in the absence of a contract, the plaintiff must show they had “reasonable expectation” of economic advantage, and the defendant knew about it.

The plaintiff would also have to prove the realistic probability that he or she would have received the economic benefit, if it were not for the defendant’s interference.

To learn more about tortious interference in Illinois or Wisconsin, contact our business litigation firm today!

Tax Advantages of an LLC

Fri, 23 Dec 2016 22:34:11 GMT

As tax season approaches, naturally our firm receives more calls from business owners with tax questions, however, tax questions come year-round.

All yearlong entrepreneurs ask, “How should I form my small business?” After all, the format of a business not only impacts financial performance, but it can either shield a business owner’s personal assets, or it can leave them vulnerable to liabilities and lawsuits.

Since shielding assets is usually a priority for business owners, we are going to focus this post on the Limited Liability Company (LLC), which is one of the best ways to “wall off” a business owner’s personal assets from the debts and other liabilities of their business.

Many startups are structured as LLCs and for good reason. LLCs offer some of the positive attributes of partnerships, sole proprietorships, and corporations, without some of the drawbacks of these entities. One of the distinct advantages of an LLC – the business is not taxed on its profits, as corporations (C-Corps) are.

With an LLC, the owner of the company reports the profits and loss on their personal taxes returns, which is similar to the reporting requirements of a general partnership or a sole proprietorship.

This process is referred to as “pass-through” taxation, and business owners do not file corporate tax returns with LLCs. Instead, the business owner reports their share of the company’s profits and losses on their personal tax returns.

LLCs Don’t Have a Residency Requirement

LLCs do not have “residency requirements,” which means the owner of an LLC does not have to be a U.S. citizen, nor do they have to be a permanent resident (green card holder). As a matter of fact, the absence of the residency requirement is one of the main reasons why so many immigrant-owned businesses are structured as LLCs.

LLCs Limit Personal Liability

An LLC is a legal entity that is separate and distinct from the owner of the company or the owners. Like the shareholders of a corporation, the owner of an LLC is not personally liable for the company’s debts or other legal liabilities.

While the LLC owner may lose the money they invested in the company, unlike a general partner or sole proprietor, the owner of an LLC does not risk losing their home or their personal bank account because they are shielded.

Other advantages of an LLC include:

It’s less complex than other corporate entities
There’s less paperwork involved than other corporate entities
More flexibility in profit-sharing
LLCs avoid double taxation
LLCs allow entrepreneurs to run their own show

If you are interested in learning more about the benefits of an LLC, please contact Rifkind Patrick LLC to speak with a Chicago business attorney. We would be glad to discuss LLCs, and all other types of business entities with you.

Why Avoid Business Litigation?

Wed, 23 Nov 2016 22:17:15 GMT

When you are running a successful business, you are in the public eye. While you can control how you handle your vendors and customers, you cannot control the actions of outside influences.

At some point, someone will probably try to sue your business. Many business owners would agree that it’s just a “matter of time” before your business is sued.

We live in a highly litigious society, so when you are running a financially viable company, it becomes more of a target. If you ask any small or large business owner who has been running a company for a while and they will say that there are definitely appropriate situations where you must litigate.

Benefits of Avoiding Litigation

While litigation is sometimes necessary, if you can find a way to defuse a situation before it goes to court, you are better off if you can avoid litigation altogether. What are the benefits of avoiding litigation?

There are too many to count, but one of the reasons is litigation can drain the business of its funds. Most business owners have zero interest in going down a torrential path that their business cannot recover from.

Trials are unpredictable, so there are risks involved. One of a business owner’s jobs is to properly identify risks and mitigate them as much as possible. Another factor that many executives fail to consider is the fact that litigation is stressful and it takes the employees’ attention away from doing their jobs.

When employees are distracted by going to court, not only are they taken away from their jobs, but they experience the emotional consequences as well, such as fear, anger, and anxiety.

Not only are these negative distractions, they are time-consuming, they lower employees’ morale, and they hit a company where it hurts – in their production.

Litigation directly and indirectly affects business relationships. If you end up in court with a major player in your industry, other players will take notice.

A single lawsuit can have a ripple effect and impact current and future business for years to come. Litigation can also damage a company’s reputation within its industry, among consumers, and even industry leaders.

How do I avoid litigation?

As you can see, there are numerous advantages to avoiding litigation if at all possible. How do you avoid litigation? There are different ways, one of which includes taking steps to avoid disputes, such as including litigation avoidance provisions in your contracts, such as arbitration or mediation provisions.

Executives frequently miss an opportunity to avoid litigation because they have not given a dispute adequate attention when it was in its early stages – they need to be educated on litigation avoidance techniques.

We found that business owners generally prefer to avoid litigation whenever they can achieve their objectives through alternative means, especially when they can save valuable resources.

If you need legal advice on a business litigation issue, contact our Chicago business litigation firm to take advantage of more than 40 years of combined experience.

Tax Advantages of Hiring Veterans

Mon, 14 Nov 2016 22:18:25 GMT

Each year in November, the nation celebrates all the brave men and women who served our great country – living and dead – on Veterans Day. We wanted to take a moment to not only thank our veterans for defending our freedom and for making free enterprise possible, but to reflect on some of the benefits of hiring veterans.

Many business owners have discovered that veterans can make excellent employees. They are trustworthy, hardworking, loyal, responsible, and eager to learn – all attributes that make the best employees. These characteristics make veterans attractive candidates, but the tax laws make hiring veterans even more appealing.

As a business owner, did you know that the tax laws reward employers for hiring veterans in certain groups? Under the Work Opportunity Tax Credit Act (WOTC), small business owners may qualify for the work opportunity tax credit if they hire veterans in one of these categories:

The veteran has a service-related disability
The veteran has been unemployed
The veteran is receiving SNAP benefits (food stamps)

Even if a veteran does not fall into one of the above categories, he or she may qualify as a member of another targeted group. If the veteran falls into another specified category, you still may be able to take advantage of the tax credit.

How does the tax credit work?

Under the WOTC, if you hire a qualifying veteran, your tax bill would be reduced dollar-for-dollar. Under the program, each dollar of WOTC saves you one dollar in taxes. The tax credit applies to the first year of wages paid to an eligible veteran, and the maximum tax credit is fixed by law.

For example, if the veteran worked between 120 and 399 hours, the basic percentage for their first year of wages would be 25%. If the veteran worked 400 or more hours, the tax credit is 40% of the veteran’s first year of wages.

Maximum tax credit allowed for a veteran that worked 400 or more hours:

If the veteran was unemployed or suffered a service-related disability for at last 6 months in the year the veteran was hired: $9,600.
If the veteran has a service-related disability and it’s been 1 year since their release or discharge from active duty: $4,800.
If the veteran has been unemployed for at least 6 months: $5,600.
If the veteran has been unemployed for at least 4 weeks: $2,400.
If the veteran has been receiving SNAP benefits: $2,400.

If you enjoy hiring veterans, the good news is that there is no limit on the number of eligible veterans you can hire for the tax credit. If you were to hire just 3 veterans with a service-related disability, who were out of work for at least 6 months, your tax credit would be $28,800.

Note: if a veteran employee is eligible for the tax credit, you must submit IRS Form 8850 to Illinois’ workforce agency within 28 days of the veteran’s first day of employment.

Consider the WOTC When Hiring

When you are expanding your workforce, you may want to keep the WOTC in mind. While the WOTC won’t be the primary force behind your hiring decisions, it may help make a section faster when it is between two job candidates.

Do you need legal representation in a business law matter? Contact Rifkind Patrick LLC to speak with a Chicago business law attorney!

Privacy: Major Concern for Businesses

Tue, 27 Sep 2016 20:17:07 GMT

In recent years, there have been massive, widely-publicized data breaches, as well as many less-publicized cybersecurity occurrences that have affected American businesses large and small.

Today, privacy is something that all companies need to be aware of. If you have a company, whether it’s run out of your home or located in a large office building downtown, it is a target.

Since we cannot stop breaches and hacks from continuing, the best thing that businesses can do is prepare themselves and be ready to recover after experiencing a breach. What can you do?

Within your company, you need to assemble a team that knows how to handle privacy and security matters. Depending on the size of your company, your team should consist of representatives from different departments, not just IT personnel.

You must take a proactive approach, and one way to do this is to assign an employee to be responsible for the company’s privacy and security. For examples of how others are doing it, you can look to companies who have appointed a chief privacy officer, or a similar position.

You want to hire a trained professional who will proactively address all of the company’s privacy issues. Whenever your company develops any new products or services, this individual should be involved to ensure that all privacy and security issues are properly addressed before launch.

Generally, companies refer to this approach as “Privacy by Design” because the company addresses privacy during the development stages, not after the product has been developed.

Taking External Steps to Protect Your Business

Externally, there are steps that can be taken as well. Businesses can prepare themselves for a privacy breach by having legal counsel, by having a team of specialized IT consultants, and by having a public relation’s firm and a forensic technology firm secured before the company is breached.

As a business owner, think ahead. Know what you are going to do and who you are going to call. For instance, if there is a privacy breach, get your attorney on the phone immediately after discovering the breach.

Your attorney can advise you on critical steps to take, such as contacting the Federal Trade Commission (FTC), the attorney general, or other regulators who have jurisdiction over such matters.

As far as the FBI is concerned, we’ve found that before a company learns of a security breach, the FBI already knows about it.

Learn more about privacy and security breaches and how they can impact your business. Contact our Chicago business law firm to schedule an initial case evaluation.

Tips for Avoiding Business Litigation

Thu, 08 Sep 2016 20:19:46 GMT

If you are a new business owner, you may have heard that it’s only a matter of time before you face litigation in some shape or form.

While litigation can seem unavoidable to small and large businesses alike, there are certainly things that you can do to reduce the likelihood of being sued. After all, you can save your business a lot of money if you can avoid litigation.

By seeking the guidance of an experienced business law attorney, you give yourself the opportunity to proactively make business decisions that help you avoid litigation.

When you follow your lawyer’s litigation-avoidance advice, you are reducing the chances of being sued, even when you cannot avoid it entirely. When you don’t follow such advice, your chances of litigation are significantly higher as well as the litigation expenses that follow.

Using Good Judgement in Your Business Decisions

Unfortunately, business owners can become very emotional about their businesses, much like the way people treat their divorces. In effect, business owners can forget about common sense when they are making a business decision.

When running a business, you must stay calm, focused, and use your best judgement as these will give you the upper hand in the face of litigation.

We recommend that you are mindful of the following suggestions for they will help you minimize the chances that your business will become the target of unnecessary litigation.

1. Nurture your business relationships.
One of the best ways to shield yourself from litigation is to nurture your business relationships. You don’t want to end up suing a business partner, a friend, or a peer who’s taken your family to dinner. In business, relationships are critical and they are valued.

If you have developed a solid relationship and something goes wrong, the other party will be less inclined to file a lawsuit because you have a long-standing relationship with them.

2. Be cautious about going to battle.
If you haven’t figured it out by now, soon you will realize that not every business relationship will end well.

Evaluate your battles and whether they’re worth litigating over. Sometimes even if you do win, they are not worth the cost of litigation. You have to look at the big picture and whether it will be worth the time and expense in the long run.

3. Be polite and professional.
As a business owner, you will have to make many tough decisions, and occasionally, your decisions will not sit well with other people. If you have to address an issue or terminate a business relationship, treating the other person disrespectfully will only escalate an already stressful situation.

Often, using a polite, professional and cordial tone will go a long way in defusing such situations. If you, or your team uses harsh language, your chances of being sued are much higher and any foul language will not look good to the jury who eventually learns about it.

4. Don’t increase the odds of litigation.
Often, as soon as there is a dispute, a business owner will automatically threaten litigation, thinking it will get the other side to quickly give in. However, this can have the opposite effect, causing the other party to immediately have their attorney take legal action.

Threatening litigation often increases the odds of litigation, when a more cost-effective solution could have resolved the dispute.

6. Take responsibility for errors.
Running a business is a lot about failure, after all, that is how business owners learn and grow. Usually, errors are made unintentionally due to lack of experience with a particular problem. When that inevitably happens, take responsibility and fix it.

Before you fix the problem, however, you should seek advice from a business law attorney. If you can fix the problem to the other party’s satisfaction, you may be able to avoid litigation.

You cannot avoid all litigation – that’s just business. At least if you have to respond to litigation, you do it because it’s the best way to handle an issue, or because it was your last resort – not because of a poor business decision without a purpose.

If you have a business dispute, contact our Chicago business law attorneys for sound legal advice.

About Business Dissolution

Wed, 10 Aug 2016 20:15:33 GMT

Are you considering dissolving your company? Shutting down operations goes beyond shutting the doors and disconnecting your phone lines. While these will play small roles in the process of ceasing operations, there will be many more steps involved.

You will have to deal with assets and liabilities, much like an executor or personal representative settles the debts and taxes of a decedent’s estate during probate proceedings.

To begin closing down operations, first you will need to create a practical plan for dissolving your business.

Once this process is decided, you will have to file an articles of dissolution with the Illinois Secretary of State. You have to file this paperwork in the same state where you incorporated your business.

Liquidating the Company’s Assets

The next step is to liquidate any property that is owned by the corporation. This means that you will have to sell off any assets that are not being used as collateral for any of the business’s loans. If you have property that is being used as security for a loan, it must:

Either go to the lending institution that loaned money against the property, or
The company must pay it off before it can be liquidated.

Will your company be able to liquidate all of its assets? It depends on whether your business is insolvent at the time that you dissolve it, the liquid assets available, and how much cash is on hand.

Settling the Company’s Liabilities

Next, you will need to settle all of your company’s outstanding liabilities, which refer to any financial obligations incurred by the business before dissolving, such as debts, employee pay, and goods or services that have been paid for by customers, but not delivered.

Once you settle all debts and liabilities, if there is any remaining cash value in the business, what happens next is it is distributed among the owners or shareholders.

Interested Parties Receive Legal Notice

Lastly, once all debts and obligations have been resolved, final legal notice is issued to any individual or entity that may have an interest in the company. Such parties that would receive this legal notice include creditors, employees, customers, and owners or shareholders.

Each state has its own laws regarding who must receive legal notice, but in all states companies are required to notify the Internal Revenue Service that their business is dissolved and will not be filing future tax returns.

If you plan to dissolve your business, contact Rifkind Patrick LLC to meet with one of our experienced Chicago business law attorneys. We can guide you every step of the way.

Business: Handling Legal Concerns

Mon, 25 Jul 2016 20:11:25 GMT

Whether you are starting or buying a business or franchise, you will need a crash course on the legal concerns involving your company, of which there will be many. As an entrepreneur, it makes “good business sense” for you to familiarize yourself with all of the legal issues that affect your business.

While you can certainly do your own research and educate yourself on the laws pertaining to your business, you will shorten the learning curve if you enlist the advice and support of an experienced business law attorney from the onset.

When you are not 100% certain about an area of your business, the best way to protect yourself and your company is to be proactive and know when to ask for professional legal advice. As a business owner, here are some of the legal concerns that you should become acquainted with as soon as possible:

Taxes
Contracts
Antitrust laws
Employment law
Business litigation
Healthcare for small businesses
Alternative Dispute Resolution (ADR)
Growing your business
Industry laws and regulations

Are you starting your first business? Or, are you buying your first business or franchise? Whether you’re a new business owner or a serial entrepreneur, your business will be constantly evolving and you will have to grow and evolve with it.

You must be able to adapt to the changing conditions, otherwise, you could face legal battles, which could affect the success of your business and your bottom line.

Protecting Your Business as it Grows

Whether you need help with a business startup , a business transaction, or business litigation, our Chicago business law attorneys can guide you every step of the way.

As your business evolves, please keep in mind that you will have to deal with: contracts, employment matters, business finances, accounting, marketing, human resources, taxes and insurance.

Don’t let a lack of knowledge or understanding in any of these areas impact your profits or the success of your business.

Need a Chicago business law attorney? Contact Rifkind Patrick LLC for all of your business and employment law needs!

Causes of Construction Litigation

Mon, 11 Jul 2016 20:12:44 GMT

Considering the complexity of a construction project and the number of individuals involved, it is no wonder why construction litigation is common in our litigious society.

Legal claims and litigation are frequently associated with construction, but that does not mean that there aren’t things that can be done to reduce unfavorable scenarios, such as delays, disruptions, and additional costs, which can lead to lawsuits.

History has taught us that the players and the projects vary widely, but the disputes themselves do not.

By knowing how and where a conflict can arise, you can plan carefully to reduce the risk of conflict, and if one does surface, you can address it swiftly and effectively.

Construction conflicts can often be traced back to the following:

Owner-Drafted Contracts: In such contracts, the owner uses exculpatory language, as well as waivers and limitations designed to shield the contractor from virtually all claims. These one-sided contracts do not necessarily prevent claims due to their lack of fairness.

Unclear Project Delivery Systems: An unclear project delivery system can blur the traditional responsibilities of the parties involved. Owners should be aware that using a non-traditional contract increases the risk of misunderstanding, especially when aspects, such as the scope of work or the compensation are frequently changing throughout the course of a project.

Poorly-Coordinated Design: If a design is inaccurate or poorly coordinated, it can easily lead to unanticipated costs, delays, and conflicts among parties. One of the best ways to reduce the risk of litigation is to have a complete and accurate design.

The owner who does not give the architect sufficient time to complete a plan and specifications, or adequate compensation for an adequate design can run into unwanted costs and delays. Conversely, fast-track construction increases the risk of litigation.

Site Conditions: Some experts believe that contracts should allow for additional compensation for differing site conditions; this clause protects prudent contractors from competing contractors underbidding them because they were too negligent to include such a reasonable clause.

Contractors know that hidden site conditions can mean the difference between a profitable project and a complete financial loss.

Regardless of the approach towards “site conditions,” the wise landowner will conduct a subsurface investigation so they have a good understanding of the site’s conditions before hiring a contractor. Further, the owner shares the information with the contractor before executing a contract.

Other Factors to Consider

We are only scratching the surface in regards to things that should be addressed in a construction contract and what can go wrong. Other factors to consider include site services, site monitoring, determining who is in charge, and subcontractor and supplier submittals, etc.

Construction contracts should be clear so it is easy for all parties to know their responsibilities. Contractors should provide quality work, and architects must provide quality designs.

Owners should pay a fair price for these services in a timely fashion. When these responsibilities are not met, disputes can arise, leading to litigation.

If you are involved in a construction dispute, contact Rifkind Patrick LLC to schedule a free case evaluation. With four decades of collective experience in construction law, we are qualified to help you – call today to get started!

Business Owners: What is Your Exit Strategy?

Tue, 21 Jun 2016 19:34:00 GMT

If you built a successful business, or if you purchased an existing business and it continued to grow, you, the business owner, are probably thrilled with the fact that your business is viable and has achieved measured growth since it was established.

When you started or first bought your company, you might have worked long hours and burned the candle at both ends as many entrepreneurs do. Your energy and focus were on building a successful business, and you probably weren’t thinking about how or when you would step away.

As you know, the business climate changes on a daily basis. Technology advances, the economy ebbs and flows, and competitors come into play.

Even some of the most sophisticated serial entrepreneurs will say that they have not perfected their exit strategies, or they will say that each exit is different based on the circumstances.

In some cases, business owners will want to hand down their businesses to their children. Sometimes, they have a difficult time leaving the company they built, other times a business owner gets bored and simply desires to move on to the next big challenge.

Whatever the circumstances, having a practical and feasible exit strategy is important for all small business owners as it protects their financial interests and allows them to leave their companies on good terms.

Small Business Owners Unprepared to Exit

According to an April 19, 2016 article in Business Wire , small business owners who are planning to exit their business may be in for a rude awakening.

The latest research from Securian Financial Group, found that the vast majority of small business owners do not have an exit strategy.

“While 54 percent of business owners plan to leave their business in the next 10 years, 72 percent have taken no exit planning action,” said Andrew O’Brien, of Securian Financial Group.

According to O’Brien, the largest asset that most small business owners have is their business. When business owners fail to properly plan for the sale or transfer of their business, the business owner can be left in a very difficult position, said O’Brien.

The study found that:

50 percent of small business owners intend to sell their business to one of the following: 1) their partner, 2) a key employee, or 3) to a third party.
37 percent of small business owners intend to transfer their business to one of their family members.

If an entrepreneur wants to step away from their business, the best plan of action is a written exit plan developed by a business law attorney collaborating with the business owner to ensure a seamless and successful transition.

If you have questions about creating an exit plan, contact the Chicago business law attorneys at Rifkind Patrick LLC today.

3 Types of Partnership

Tue, 24 May 2016 19:30:21 GMT

There are many reasons to go into a partnership. Each business partner brings his or her unique strengths to the table, and this can be invaluable.

If you are looking for someone other than a family member or spouse, you may be looking for a trusted, nonbiased person who can help you build a successful business.

Perhaps you have a strong background in marketing or PR, and you’re soon-to-be partner has a strong background in accounting; it’s a match made in heaven.

Obviously, one of the biggest perks of partnership is having someone to share the financial burden with. Also, more work can be done with partners than with one business owner, as well as more cash flow – a plus, especially at the beginning when a new business cannot yet afford to hire employees.

What types of partnerships are there?

You have found your partner – that is half the battle. Now, you need to decide which type of partnership is right for your business: general, limited, or joint venture.

The decision will come down to the strengths and resources of each partner, the type of business, and your long-term goals for the business.

1. General partnership. This is a 50/50 partnership where everything, from the responsibilities down to the profits are divided equally between the partners.

2. Joint venture. A joint venture is almost identical to the general partnership, however, it is for a single project as opposed to a business. With a joint venture, the nature of the partnership can change as time passes.

If the venture is successful, it can be made into a general partnership if the partners decide that they want to work on new ventures together.

3. Limited partnership. Limited partnerships are different than general partnerships and joint ventures because the partners do not share equally in the responsibilities. For instance, one partner may contribute capital, but not be involved in the daily business activities.

The partner who only invests money may have a limited liability, and is only risking the money that he or she invested in the business. In the meantime, the partners who are involved in the daily operations of the business are liable for the profits and losses of the business.

Formally Establishing a Partnership

While all an entrepreneur has to do to establish a general partnership or become involved in a joint venture is make a verbal agreement with their partner, it’s not the best way to enter into a partnership.

The savvy partners formalize the terms of their agreement in writing to protect themselves legally.

If you are looking to establish a limited liability partnership, it is important that you document how the partnership would be legally dissolved among other things. However, to do this right you will need to talk to an experienced business law attorney.

Whatever type of partnership you are contemplating, it’s important to have legal guidance. As you are probable already aware, it’s not uncommon for problems to arise with partnerships at a later date.

Partners will start out on friendly terms, but things can easily get complicated when it comes to each person’s contributions, money, and how the business is being run.

Consult with a Chicago business law attorney from Rifkind Patrick LLC regarding the three types of partnership. We can help save you as much trouble as possible in the future.

Understanding Construction Disputes

Wed, 20 Apr 2016 19:14:33 GMT

In the realm of business, construction disputes are a common event. Considering the nature, size and complexity of any given project, it is understandable how disputes can arise.

The modern construction project involves many integral parts, which requires the orchestration of engineers, construction site managers, materials, suppliers, tools, equipment, and subcontractors.

For the business owner, if a construction dispute is not resolved promptly, it is a lot like a Hollywood film production where the star has failed to show up on set.

It quickly become expensive because employees and materials cost the business money. A construction dispute siphons profits.

In addition to the obvious costs for workers and supplies, you have litigation costs, such as expert witnesses and court fees, which can be significant. Then there are the unsuspicious costs, such as lost productivity, lost business opportunities, damage to business relationships, loss of referrals, etc.

Construction litigation in the United States reached an annual cost of roughly $5 billion in 2003, according to the American Bar Association.

Since that time, the construction industry has made strides towards resolving disputes more cost-effectively and efficiently. However, despite this progress, many experts agree that there is still room for improvement.

Alternative Dispute Resolution (ADR)

The construction industry uses several different methods of Alternative Dispute Resolution (ADR), with the most common being:

Step negotiation, which is a process whereby the parties try to directly negotiate a resolution to the dispute.
A Dispute Review Board, consisting of three neutral experts monitor the site for any possible issues. If the parties request it, the board will conduct an informal hearing, and shall issue an opinion that the parties may use to negotiate further.
Mediation is a process where an impartial third party, the mediator, assists the parties in reaching a settlement or resolution.
Arbitration is where the parties present their case before the arbitrator, who decides on a specific remedy or award.

We hope this gives you a basic picture of how construction disputes are resolved. If you are presently dealing with such an issue, we encourage you to contact Rifkind Patrick LLC to meet with one of our Chicago construction lawyers.

With over 40 years of collective experience, we are prepared to help you resolve your dispute as swiftly and cost-effectively as possible. Call today to schedule your consultation!

Connect with Our Team Online

Thu, 07 Apr 2016 19:15:50 GMT

The Chicago business attorneys at Rifkind Patrick LLC are skilled in business and real estate law. We handle a wide range of practice areas from business litigation to start-up businesses to commercial transactions. Our team has experience in high-stakes legal matters and seeks to protect your best interests. With over 40 years of experience, we know how to get the results you deserve Get in touch with our Chicago firm today to schedule a free case evaluation!

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In addition to contacting our firm, connect with us on a variety of social media platforms across the web. Our Chicago business lawyers want to keep clients updated on firm news and information related to ever-changing business law. Connect with our team on your favorite social media platform today:

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Need legal representation for a business law matter? Contact our Chicago business attorneys today!

Ways to Avoid a Partnership Dispute

Wed, 06 Apr 2016 19:18:09 GMT

Going into business with a longtime friend or a coworker at your former job can be a great idea. Your partner’s strengths may compliment your weaknesses, and two heads are often better than one.

It also helps to have someone whose financial resources can help you start or buy a business or franchise.

A partnership can be an excellent collaboration, however, it is not uncommon for disputes to arise between even the closest of partners. One can even have a dispute with a partner who they have known since grade school, someone they deeply respected and trusted.

Much like a painful divorce, a partnership dispute can turn into one of the bitterest disputes you will experience in your lifetime.

Can you avoid a partnership dispute? Absolutely, however, it will require patience, a small financial and time investment on your part, and some effort in the early stages of your partnership.

Here are some things that you can do to prevent a partnership dispute and potentially resolve one if it does arise:

1. Establish a written agreement.

If you are entering a partnership, ensure that you have a written agreement in force. Depending on the type of business you have, you will need a partnership agreement or an operating agreement.

Such an agreement will clearly define each partner’s role, compensation, and under what circumstances the partnership will be terminated etc.

2. Retain an attorney to assist you with preparing the partnership agreement.
To prepare an ironclad operating or partnership agreement, have an experienced business law attorney assist you in preparing the document.

We advise against creating an agreement from scratch or using a template found online. You should have an attorney assist you in tailoring a legally sound agreement that clearly defines your goals.

3. When you discuss the dispute, focus on finding a solution.

If you encounter a dispute, set aside a time outside of the busy work day to sit down and have a calm, rational conversation that is free of distractions.

During this conversation with your partner, make an effort to focus on solutions rather than pointing fingers and focusing on the problem. A good faith effort at resolving the dispute may stop a legal battle in its tracks.

4. If the dispute won’t resolve, consider hiring a mediator.

If you and your partner cannot resolve your differences, consider hiring a neutral mediator to help you resolve it. In fact, many operating agreements contain provisions that require mediation to resolve differences among partners.

5. If you cannot resolve your differences, contact a lawyer.

If you and your partner simply cannot see eye to eye and your disagreement is taking a turn for the worse, contact an attorney right away. The sooner you get legal help, the better.

If you need professional guidance creating an operating agreement or partnership agreement, or resolving a partnership dispute, contact the Chicago business law attorneys at Rifkind Patrick LLC today.

Common Legal Mistakes Made by Startups

Thu, 10 Mar 2016 20:13:02 GMT

If you recently established your startup , congratulations on your new business. Whether you left Corporate America and this is your first company, or you’re a serial entrepreneur, you will be faced with certain legal challenges that are unique to startups, and you want to ensure that you navigate those properly.

As attorneys who represent business owners, we have seen first-hand some of the biggest legal mistakes made by the owners of startups, and here they are:

Not laying the groundwork with co-founders early.
If you have co-founders, it’s critical that you all agree on the deal early on. If you fail to accomplish this, you can face massive legal problems down the road.

For an example, consider the Zuckerberg/Winklevoss Facebook litigation where two brothers sued Zuckerberg for $65 million.

You'll need a founder agreement, which is similar to a prenuptial agreement; you want to ask key questions, such as:

What percentage of the company will we each get?
Is that percentage dictated by continued involvement in the business?
What are our roles and responsibilities as the founders?
If one of us wants to back out, can the other founders buy back our share of the company?
Are the founders entitled to salaries, and if so, how much?
How would we decide on selling the business?

Not choosing the right entity.
As a founder, one of the first decisions you make will be about how to form your company. Often, founders don’t consult a lawyer and they choose the wrong entity.

In effect, they are subject to liabilities and higher taxes, which could have been avoided if they formed a corporation or a limited liability company (LLC).

Failing to maintain proper employment documentation.

Many startups fail to maintain proper employment documents. What they should have done is created stock option documents and “at will” employment offer letters.

Other commonly missed forms, include:

Employee handbook
IRS Form W-4
USCIS Form I-9
Benefit forms for health and dental insurance and 401(k)s

Failing to account for all tax issues.
When you start a company, you must be aware of your tax liabilities, which begin with your choice of legal entity. You must also consider sales tax, payroll tax, tax incentives, reduced tax rates on qualified business stock etc.

We are only scratching the surface when it comes to the legal issues faced by startups. Others include noncompliance with security laws, failing to consider intellectual property protection, confidentiality agreements and much more.

If you want your startup to have the greatest chances of profitability and success, contact the Chicago business law attorneys at Rifkind Patrick LLC for all of your legal needs.

Resolving Construction Disputes

Mon, 22 Feb 2016 20:07:04 GMT

No matter what industry you are in, no two construction projects will be identical. That is because there are so many variables, such as site conditions, construction methods, suppliers, and even character differences that come into play.

Today’s construction projects are notorious for being complex, and the technology more advanced than ever before. The days of the “handshake” agreement are long gone, only to be replaced with complex documents that if drawn up correctly, seek to set forth solutions in case a dispute arises.

Despite earnest efforts and the best intentions, construction project failures arise, often because a lack of early stage planning or a fallout in communication. Often, the risk is passed to one of the parties and the risk-shifting falls upon the ones that are unable to withstand the burden.

A survey by the National Construction Dispute Resolution Committee was conducted upon more than 150 professionals in the construction industry, including engineers, architects, general contractors, arbitrators and business law attorneys.

The survey discovered that nearly 90% of the respondents had participated in alternative dispute resolution (ADR) at some point in their careers, a strong indication that ADR is frequently used to resolve disputes in the construction industry.

The survey also found that there was an emerging desire among industry professionals to find a more effective way to avoid and resolve construction disputes.

The respondents concurred that overall, it was understood that each project has its own unique circumstances, any of which may require the stakeholders to explore tailored processes for addressing issues as they arise and resolving disputes swiftly and cost-effectively.

Alternative Dispute Resolution (Arbitration)

With arbitration, a form of ADR, the parties’ dispute goes before an impartial third party or a panel for a binding decision, although the parties may prefer to opt for a non-binding arbitration.

If you are involved in a construction dispute, we suggest that you contact a Chicago business law attorney from Rifkind Patrick LLC. We can answer your questions and help you explore all of your legal options, including ADR.

Advantages of an LLC

Thu, 11 Feb 2016 20:08:17 GMT

If you are going into business for yourself, you should consider the advantages of a limited liability company, otherwise known as an LLC.

The U.S. Small Business Administration calls the LLC a “hybrid” legal structure. That’s because it offers limited liability protections similar to a corporation while offering the tax efficiencies and flexibility of a partnership.

The individuals who own an LLC are called members, and depending on the state, those members can range from a single owner, to two or more individuals, to corporations or even another LLC.

The advantages of an LLC, include:

Protection from personal liability. Under an LLC, the members are protected; they are not held personally liable for any actions of the LLC. This means that if the LLC is a subject of a lawsuit, or if it incurs debt, the members will not have to worry about their personal assets being taken to pay the LLC’s debt or a jury award. Their personal assets are shielded, however, that is not the case of a “wrongful act,” committed by an employee or by the members.
Operational ease. One of the greatest advantages of an LLC is its operational ease. Not only is there less paperwork, but it involves lower start-up costs.
Less restrictions for profit-sharing. When it comes to profit-sharing, the LLC has fewer restrictions. This means that the members can distribute the LLC’s profits according to their wishes. In effect, the members decide who gets what percentage of the LLC’s profits.

While there are definite advantages to an LLC, it’s not for everyone. One of the greatest disadvantages of an LLC is that the members are technically “self-employed,” and therefore responsible for the self-employment taxes towards their Social Security and Medicare.

Another option is to request S-Corp status for an LLC.

A Chicago business law attorney from our firm can advise you on the pros and cons of going this route. In that case, you would have to make a special election with the IRS to ensure that the LLC is taxed as an S-Corp.

Contact Rifkind Patrick LLC to learn more about LLCs and S-Corps.

Legal Concerns of Owning a Business

Wed, 13 Jan 2016 19:24:06 GMT

Taking the leap into business ownership certainly has its perks. You get to control your career, your income, and your family’s financial future. While the advantages are many, you cannot enjoy the fruits of your labor unless your business is legally sound and well-insulated from lawsuits.

Once you establish a business, it makes sense to understand the legal issues that impact the viability of your company. While not all legal matters need to be addressed by a business lawyer , you are required to understand them.

Still, the vast majority of business owners will agree that the best way to protect one’s business is to seek guidance from a qualified attorney. Here are some topics that we can help you address:

Partnerships
Buying a business
Business contracts
The best way to start your business
Choosing the right business structure
Registering your business
Acquiring a business license
Business taxes
Hiring employees
Labor laws
State business laws and regulations
Healthcare requirements
Workers’ compensation requirements

Whether you are buying or starting a business , it can be rewarding and surprising at the same time, but you don’t want a lawsuit to be one of those surprises.

If you ask other business owners about what they wish they had done in the beginning, often they will say that they wish they had an ironclad contract that gave them legal recourse when a client refused to pay for their products or services as agreed.

Other legal issues to be considered include: trademarks, non-disclosure agreements, misclassifying employees, intellectual property rights, accounting and finance, and international trademarks.

When going into business there are a number of legal issues that should not be overlooked. For the novice entrepreneur, they may not know which questions to ask or which actions to take.

Generally, business practices are closely regulated, and government oversight ensures that companies are in compliance with all state and federal laws. In effect, the business owner needs to be acclimated with all applicable laws, otherwise they stand to encounter costly legal challenges.

At Rifkind Patrick LLC, we are committed to helping entrepreneurs and business owners navigate through complex litigation issues. With over 40 years of combined experience, our Chicago business law attorneys are qualified to guide you every step of the way.

Call (312) 313-0234 to learn how we can help you achieve your goals.

Chances of Settling Without a Trial

Tue, 05 Jan 2016 19:25:03 GMT

The majority of legal claims arising from business disputes do not reach a courtroom. That is because there are other options available that are less expensive than filing a lawsuit and going to trial, namely Alternative Dispute Resolution or ADR.

ADR refers to a series of methods used by parties to resolve their legal disputes outside of court.

Generally, people choose ADR over a formal court trial because they are less time-consuming and more cost effective, which therefore makes them a favorable alternative to individuals and entities who are engaged in legal disputes.

Methods of ADR include:

Arbitration
Mediation
Private Judge
Pre-trial Settlement Conference

In Illinois, the two most common methods of ADR are arbitration and mediation.

Arbitration is a process where an arbitrator (a neutral third party), or an arbitration panel, considers the arguments and facts presented by both parties. Though arbitration is not as formal as a trial, there are procedures that are followed, and the arbitrator’s decision is usually binding.

Mediation also involves an impartial third party, however, this method is more flexible. The confidential process is informal, non-adversarial and non-binding.

With mediation, the mediator does not render a decision, nor do they make a finding of fault or liability. Rather, he or she helps guide the parties to a resolution and helps them explore their settlement options.

Why choose ADR over litigation?

Sometimes the reasons for choosing arbitration or mediation are cost-related or because of the need to preserve a business relationship. While mediation can be completed in one or two sessions, some parties will proceed to arbitration or litigation if the dispute failed to resolve.

Arbitration is similar to a trial, except there is no judge or jury and the hearing is conducted in private. Since this procedure is simpler, faster, and more cost-effective than a court trial, it’s an attractive alternative.

What are the chances that your case will be settled out of court? Relatively high, however, without knowing the facts we cannot give a definitive answer. We will need to review the merits of the case before we can determine whether your dispute would be better served by ADR or litigation.

Contact Rifkind Patrick LLC to schedule a free consultation with a Chicago business law attorney.

Can I Sue for Breach of Verbal Contract?

Mon, 21 Dec 2015 18:24:19 GMT

Let us say that two parties entered into a verbal or “oral” agreement over the exchange of services. One of the parties holds up their end of the deal, while the other party refuses to provide payment or deliver what was promised.

Is the debt valid in spite of the fact that there was no written agreement? Is a handshake required to make the agreement enforceable?

Are verbal contracts enforceable in Illinois? Yes, they are, and no handshake is required for them to be legally binding. If the services were provided by one of the parties, and those services were accepted by the other party, then it is likely that the parties reached an enforceable agreement.

Even if a clear agreement cannot be found, as long as one party accepted the other’s services, the receiving party benefited and the party who delivered those services should expect reasonable payment for them.

Essentially, verbal contacts are as valid as written contracts in Illinois, but they are more difficult to prove. While something such as a handshake has no legal significance, having witnesses can strengthen a case.

One aspect that can strengthen an argument is the fact that one of the parties fully performed their end of the agreement. Performance makes an oral contract case easier to prove.

Statute of Frauds (SOF)

While oral contracts are enforceable in Illinois, there are exceptions and these are determined by the Statute of Frauds (SOF), which governs which types of contracts must be in writing. The contracts governed under the SOF include:

Contracts involving selling an interest in land;
Contracts where the performance is longer than one year;
Contracts assuming the responsibility for another person’s debt;
Contracts involving the sale of goods valued over $500; and
Certain promises made by executors and administrators of an estate.

While it is always best to put a contract in writing, you still may have a valid claim against the breaching party. To determine if your verbal contract is enforceable in Illinois, contact a Chicago business law attorney from Rifkind Patrick LLC.

What Remedies Are Available for a Breach of Contract?

Mon, 23 Nov 2015 18:21:27 GMT

In business, to “ breach a contract ” means the failure to perform any term of a contract without a legitimate excuse, whether such a contract is oral or written. Examples of this, include but are not limited to:

The failure to complete a job
The failure to pay on time
The failure to pay in full
Not delivering all of the goods
Being late without a legitimate excuse
An act which shows a party will not complete the work (anticipatory breach)

In the business world, breach of contract is one of the predominant causes of lawsuits.

When one party fails to adhere to one of the terms of the contract, the innocent party may seek a legal remedy, which may include one of the following:

Restitution: The breaching party is ordered by the court to pay the other party back.
Compensatory damages: When the court awards compensatory damages, it is ordering the breaching party to pay the other party enough money to obtain what was promised in the contract from another source.
Punitive damages: Usually when something immoral occurred, punitive damages are awarded to punish the breaching party.
Nominal damages: These are awarded when a breach of contract occurred, but neither side suffered any harm.
Liquidated damages: These damages are paid when the parties agree to pay in the event of a contract breach.
Quantum meruit: A court awards money to one of the parties for work that they performed, even if it was not completed. In Latin, it means “as much as he deserved.”

What does ‘remedy in equity’ mean?

When the court orders a party to do something, it is called a “remedy in equity,” but it can also be called “injunctive relief.”

In a breach of contract case, a remedy in equity can involve: 1) cancelling the contract and deciding that neither party is bound to it, or 2) the court can force the breaching party to deliver the goods or perform the service that was promised in the contract.

This is called “specific performance,” and usually applies to cases where the goods or services are unique and it is the best legal remedy available.

Contact a Chicago business law attorney at Rifkind Patrick LLC today.

The 4 Major Business Organization Forms

Mon, 02 Nov 2015 18:22:50 GMT

Business organization is the single-most important choice you’ll make regarding your company. What form your business adopts will affect a multitude of factors, many of which will decide your company’s future. Aligning your goals to your business organization type is an important step, so understanding the pros and cons of each type is crucial.

Your company’s form will affect:

How you are taxed
Your legal liability
Costs of formation
Operational costs

There are 4 main types of business organization: sole proprietorship, partnership, corporation, and Limited Liability Company, or LLC. Below, we give an explanation of each of these and how they are used in the scope of business law .

Sole Proprietorship

The simplest and most common form of business ownership, sole proprietorship is a business owned and run by someone for their own benefit. The business’ existence is entirely dependent on the owner’s decisions, so when the owner dies, so does the business.

Advantages of sole proprietorship:

All profits are subject to the owner
There is very little regulation for proprietorships
Owners have total flexibility when running the business
Very few requirements for starting—often only a business license

Disadvantages:

Owner is 100% liable for business debts
Equity is limited to the owner’s personal resources
Ownership of proprietorship is difficult to transfer
No distinction between personal and business income

Partnership

These come in two types: general and limited. In general partnerships, both owners invest their money, property, labor, etc. to the business and are both 100% liable for business debts. In other words, even if you invest a little into a general partnership, you are still potentially responsible for all its debt. General partnerships do not require a formal agreement—partnerships can be verbal or even implied between the two business owners.

Limited partnerships require a formal agreement between the partners. They must also file a certificate of partnership with the state. Limited partnerships allow partners to limit their own liability for business debts according to their portion of ownership or investment.

Advantages of partnerships:

Shared resources provides more capital for the business
Each partner shares the total profits of the company
Similar flexibility and simple design of a proprietorship
Inexpensive to establish a business partnership, formal or informal

Disadvantages:

Each partner is 100% responsible for debts and losses
Selling the business is difficult—requires finding new partner
Partnership ends when any partner decides to end it

Corporation

Corporations are, for tax purposes, separate entities and are considered a legal person. This means, among other things, that the profits generated by a corporation are taxed as the “personal income” of the company. Then, any income distributed to the shareholders as dividends or profits are taxed again as the personal income of the owners.

Advantages of a corporation:

Limits liability of the owner to debts or losses
Profits and losses belong to the corporation
Can be transferred to new owners fairly easily
Personal assets cannot be seized to pay for business debts

Disadvantages:

Corporate operations are costly
Establishing a corporation is costly
Start a corporate business requires complex paperwork
With some exceptions, corporate income is taxed twice

Limited Liability Company (LLC)

Similar to a limited partnership, an LLC provides owners with limited liability while providing some of the income advantages of a partnership. Essentially, the advantages of partnerships and corporations are combined in an LLC, mitigating some of the disadvantages of each.

Advantages of an LLC:

Limits liability to the company owners for debts or losses
The profits of the LLC are shared by the owners without double-taxation

Disadvantages:

Ownership is limited by certain state laws
Agreements must be comprehensive and complex
Beginning an LLC has high costs due to legal and filing fees

If you need assistance with any aspect of your firm's business organization needs, reach out to our firm for the legal assistance you need. We can help clients clarify their business choices, so call now !

The Difference Between Subchapter S & C Corporations

Fri, 30 Oct 2015 17:19:14 GMT

When beginning a corporate venture, owners ought to keep in mind their long-term goals for the business. Is the idea to take on more shareholders? To go public? To offer different classes of stocks? If these are questions you are asking, you’ll need to know the difference between C and S corporations.

In both cases, they are separate legal entities created by filing documents with the appropriate governing body—these are often called “Articles of Incorporation,” or a Certificate of Incorporation in some cases. Owners are shareholders, sharing both profits and losses together, but both structures offer limited liability. This means that the debts, profits, and losses of the corporation are not the personal responsibility of any one owner.

How S and C Corporations Differ

Single-Taxation vs. Double-Taxation

C corporations are standard corporations, which means that they pay taxes at the corporate level. The business’ profits are reported as taxable income at the year’s end, and the income of the corporation is taxed. Then, any profits that are distributed to the shareholders as dividends are taxed a second time as income for each owner. As a result, the profit of a C corporation is taxed twice: at corporate level and at shareholder level.

S corporations, however, are only taxed at the shareholder level. At the S corporation’s year-end, all profits or losses are “passed-through” to the owners. The owners then report any profits or losses on individual tax returns. Essentially, the taxes owed by the corporation are divided proportionally among all owners. In this sense, while there is not double-taxation, shareholders are more liable for the taxes owed by the corporation.

Ownership Limits

S corporations are subject to specific limitations on the ownership of the company. All S corporations must have 100 shareholders or less, and they must all be US citizens and current residents. In addition, S corporations cannot be owned by other entities, including C corporations, other S corporations, partnerships, LLCs, or the majority of trusts.

S corporations can only offer one type of stock—in contrast, C corporation stocks come in multiple classes, allowing for a wider and varied group of owners. Selling means that future owners must also abide these constrictions.

Many growing businesses opt to file as a subchapter S corporation due to the fewer tax burdens on their profits. However, if you are planning on growing, selling, or bringing on a large number of shareholders and investors into your business, S corporation ownership limits may constrict your ability to do so.

Each type of corporate filing has its advantages, but for more specialized advice regarding your corporation, contact our Chicago business attorney. We offer no-cost initial consultations for your business legal needs, and our firm’s 21 ^st -century approach ensures our clients are benefiting from the cutting edge of business litigation and insight.

For more legal answers, call our Chicago business lawyer at 312-313-0234.

What Does a Non-Compete Agreement Do?

Thu, 27 Aug 2015 17:17:57 GMT

Non-compete agreements or clauses are a frequent addition to new employment contracts. Essentially, these agreements will prevent one of your employees from directly competing with your business, or working for a competitor, for a specified length of time after the employment is terminated by either party. However, because these agreements impact an employee’s right to employment, they are often rejected by the courts if they are not carefully prepared.

What Are Some Examples of Non-Compete Restrictions?

There are generally two restrictions put forth in a non-compete agreement. The first is essentially a confidentiality agreement, which restricts your employees from sharing any confidential information or trade secrets while employed and for a specified period of time after the employment.

The second component is the portion that actually restricts the employee’s ability to compete directly with your business. This will limit their right to own, manage, consult with, operate, or even work for a company that is a direct competitor of your business. This will also last for a specified length of time after the employment ends, but smartly constructed agreements will also set a specific geographic restriction. For example, an employee who leaves your straw manufacturing business can work for a competitive brand, but only if it is more than 50 miles away from your headquarters.

Make Sure Your Agreement Is Valid. Call Our Firm.

At Rifkind Patrick LLC , we have more than 40 years of collective experience in drafting rock-solid employment contracts, including non-compete clauses and agreements. Our practice handles a wide variety of business law matters , giving us unique insight into the importance of a properly constructed contract. If you’re trying to defend against a lawsuit related to non-compete agreements, trust our skilled business litigators to protect your company.