Attorneys & Lawyers & Counselors

Lawyer agrees to five-year suspension for advising client to clean up his Facebook photos

Don’t you think that maybe he should of advised his client to dump the Facebook page before starting the litigation?  Just sayin’ …… MKT

 

A Virginia lawyer who advised a plaintiff suing over the death of his wife to clean up his Facebook photos has agreed to a five-year suspension. Matthew Murray was unavailable for comment on his suspension because he was volunteering with a group performing maintenance on the Appalachian Trail, relatives told the Daily Progress. The Legal Profession Blog notes the July 17 suspension order, published online on Aug. 2. Murray’s client, Isaiah Lester, had sued Allied Concrete for the death of his wife caused when a cement truck crossed the center line and tipped over on the Lesters’ car. Murray had instructed a paralegal to tell Lester to clean up his Facebook page after lawyers for Allied Concrete sought screen shots and other information, the Daily Progress says. Lester deleted 16 photos, including one in which he held a beer can . . .

via Lawyer agrees to five-year suspension for advising client to clean up his Facebook photos.

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Attorneys & Lawyers & Counselors

IMPORTANT LEGAL NOTICE–PLEASE READ!

I have been reminded that I must have one of those fancy legal disclaimers on this blog so that no one thinks I am offering or providing legal advice over the intertubes. So please click on the following link to review my new legal disclaimer page and help me to comply with this mandatory request (my legal disclaimer is also prominently linked to on the menu located above). Thank you.

LEGAL DISCLAIMER

 

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Attorneys & Lawyers & Counselors, Contractually Bound, Litigation of Business | Business of Litigation

I Personally Guarantee It!

1-satisfactionOver the past few months, I have had a few different cases where my client, an incorporated small business, either needed help with drafting (landlords) or negotiating (tenants)  a commercial lease agreement. In each case I try to impose, or conversely prohibit, a personal guarantee being a condition in the lease.   It is so standard to see a personal guarantee included in a lease that I am always amazed when it is absent. The exception, rather than the rule.

Most personal guarantees in commercial leases are the result of the landlord trying to minimize the inherent risks involved in renting property to a small business.  Since most small businesses have few, if any, liquid assets, the personal guarantee creates an extra level of protection for the landlord and helps assure that the lease will be fulfilled. Quite simply, the landlord is trying to make the agreement as secure as possible.

When a personal guarantee is agreed to it makes the individual signing the guarantee personally liable under the lease. This is prudent for a landlord just in case the tenant goes out of business, files for bankruptcy or otherwise can’t meet its financial obligations.  It is also a slick way to sidestep the personal liability shield that would otherwise insulate the owners of an incorporated business from this liability.

A savvy tenant, with something  to offer (even services or labor) can sometimes negotiate its way out of the requisite personal guarantee. But a sophisticated landlord will insist upon something else of value be put at stake instead. You can use UCC filings that cover a tenant’s business equipment, other assets, or even personal  property, and designate the landlord as the secured party. It is also possible to successfully omit personal guarantees under the right conditions. These situations may exist where the rental property is unique, yet fit for a tenant’s particular use, when the tenant has previously honored a lease with the same landlord and, of course, when the landlord has no concerns about the tenant’s solvency.

After all is said and done, a personal guarantee won’t be worth more than the paper it is printed on unless the guarantor is financially viable.  This brings me to the “moral of the story” got from an article I read today. It demonstrated a perfect example of a landlord doing everything possible, albeit somewhat after the fact, to try to make sure he would be able to collect the losses allegedly suffered from a default in a commercial lease. This applicable law in the case is technically distinct from a personal guarantee and is due to the particularities of partnership law (and demonstrates a darn good reason to operate as a corporation or LLC rather than as a partnership).

So, yesterday, the Am Law Daily reported on a case where a landlord is currently suing 450 attorneys, who were formerly partners at a large Manhattan law firm. In the lawsuit, the landlord alleges all of the partners are personally liable for the default in a commercial lease involving six floors of a high-rise office tower.

The lease runs through 2020 and, at one point in time, the landlord believed the default resulted in a loss of more than $45.45 million. Although the landlord only claims about $1.6 million damages now, there is still a lesson to be learned. That lesson is that you can never go overboard when trying to tie people personally to a lease in order to secure it.

You can read more the whole article here:  http://www.americanlawyer.com/PubArticleALD.jsp?id=1202621080749&Deweys_New_York_Landlord_Sues_450_Former_Partners#ixzz2g9PTUBqJ

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Contractually Bound, Litigation of Business | Business of Litigation

CONTRARY TO PUBLIC POLICY–Unenforceable and Void Contracts

“Judicial decision on one contract can rarely help us to the understanding of another.”  Lord O’Hagan, Rhodes v. Forwood, L. R. 1 Ap. Ca. 275 (1876).

contract imageI think one of my favorite contract clauses is when the drafter inserts language that tries to make the agreement exempt from any laws whatsoever. They usually go something like this:

 

“Party A agrees to pay this ‘service/labor/consulting/alternative/termination/whatever’ fee, despite any statutes or law to the contrary.”

 

When I see one of these clauses, I just know there’s something fishy in the agreement.

Why else would anyone go to all the trouble of trying to make it so no laws can apply to the contract? Or even wanting such an application? I suppose, after all, those pesky laws always get in the way and . . . just won’t let me get my way!

 

I have litigated a number of contract cases with similar clauses that purport to contract around the law. And not once have I ever ran across an attorney willing to argue the clause to the court. Just think about trying to make that argument with a straight face.

 

Courts commonly call these types of contract provisions that try to skirt an established law or statute an illegal contract or that the clause is contrary to public policy. When found to be illegal or contrary to public policy, the clause is usually found to be void and unenforceable. In other words, don’t waste your time and any ink or paper writing one of these up and thinking you can bind someone with it.

 

This issue does come up for me from time to time. Usually I get a situation where someone has committed a crime and wants the victim to agree to a contract prohibiting the victim from reporting the crime. I always shoot these down because I won’t draft a contract that is clearly an illegal contract, unenforceable and void anyways.

 

On the flip side, certain statutes specifically permit “drafting around” it. A perfect example is in Minnesota’s Business Corporation Act (“MBCA”) found at Minnesota Statutes, Section 302A.111 (2013). The first section of this statute sets out provisions that are required to be in a corporation’s articles of incorporation. Then in Subdivision 2, the statute explicitly lists particular sections of the MBCA that will apply, unless you modify them in the corporation’s articles of incorporation or in a shareholder control agreement.

 

So, don’t waste your time, money or energy on drafting a contract that would clearly violate a statute or other law making it contrary to public policy/illegal. After all, it will be declared void and won’t be enforceable. However, like most legal issues, there are always exception that  may apply and it could be worth it to figure that out in advance of getting into any agreements where the exception could apply.

 

MKT

www.mktlawoffice.com

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Uncategorized

Give Yourself 5 Stars? Online, It Might Cost You

September 22, 2013

Give Yourself 5 Stars? Online, It Might Cost You

By

“I celebrate myself, and sing myself,” wrote Walt Whitman, America’s great bard of self-promotion. As the world goes ever more digital, quite a few businesses are adopting that philosophy — hiring a veritable chorus of touts to sing their nonexistent praises and lure in customers.

New York regulators will announce on Monday the most comprehensive crackdown to date on deceptive reviews on the Internet. Agreements have been reached with 19 companies to cease their misleading practices and pay a total of $350,000 in penalties.

The yearlong investigation encompassed companies that create fake reviews as well as the clients that buy them. Among those signing the agreements are a charter bus operator, a teeth-whitening service, a laser hair-removal chain and an adult entertainment club. Also signing are several reputation-enhancement firms that place fraudulent reviews on sites like Google, Yelp, Citysearch and Yahoo.

A phony review of a restaurant may lead to a bad meal, which is disappointing. But the investigation . . .

 

Read the whole article here: http://www.nytimes.com/2013/09/23/technology/give-yourself-4-stars-online-it-might-cost-you.html?smid=pl-share

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Litigation of Business | Business of Litigation

Comparing Minnesota LLCs, Corporations and Partnerships

For anyone who has wondered about what some of the significant differences are between forming your business as a S corporation or C corporation, as an Limited Liability Company (LLC), and as a Limited Partnership, below is a handy-dandy chart explaining some of these differences. If you have more questions after reviewing this, make sure you contact a Minnesota Business Law Attorney (I come to mind). Enjoy!

Comparing Minnesota Business Entities

Characteristics

C Corporation

S corporation

LLC

Limited Partnership

Limited Liability

Yes

Yes

Yes

Limited Partner- Yes

General Partner-No

Continuity of Existence  i.e., perpetual existence

Yes

Yes

Varies

Varies

Maximum  Number of Owners Allowed

Unlimited

1-75

Unlimited

Unlimited

Variable Interests in Profits and Losses

No

No

Possible

Possible

 Single Owner Permitted

Yes

Yes

Yes

No

 Entity Taxable, i.e. No means pass through taxation allowed

Yes

No

No

No

 Classes of Ownership

Multiple classes permitted.

Only one class of stock permitted however, can be differences in voting rights.

Multiple classes permitted.

Multiple classes permitted

 Types of Owner(s)

Any

Ownership limited to U.S. citizens and residents and to certain U.S. trusts; no corporate (except S corp. which is 100% owner) or partnership shareholders.

Any

Any

Day to Day  Management Structure

Board of Directors (unless reserved to shareholders in Articles of Incorporation).

Board of Directors (unless reserved to shareholders in Articles of Incorporation).

Members or Managers

General Partner

Formality of Structure

Meetings of directors and shareholders, with minutes, required.

Meetings of directors and shareholders, with minutes, required.

Failure to hold meetings of members or managers  or to observe formalities regarding meetings may result in piercing of corporate veil

Per partnership agreement; limited partner engaging in management loses limited liability.

corp org

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Litigation of Business | Business of Litigation

Customers sue LinkedIn, say company hacked their external email for marketing contacts

Customers have sued LinkedIn Corp. in federal court in San Jose, Calif., contending that the professional networking company hacked into their external email accounts in order to obtain email addresses of contacts to which to market its services. The suit seeks class action status and asks for a court order barring the alleged practice and disgorgement of profits, Bloomberg reports. LinkedIn spokesman Doug Madey said that the lawsuit has no merit and that the company will fight it vigorously. “LinkedIn is committed to putting our members first, which includes being transparent about how we protect and utilize our members’ data,” Madey told Bloomberg via e-mail. A Main Justice post provides additional details from the Tuesday complaint. It contends that LinkedIn essentially stole email addresses of friends, associates and business adversaries, among others, then sent emails, “including the name and sometimes the photo, of the LinkedIn customer” asking . . .

via Customers sue LinkedIn, say company hacked their external email for marketing contacts.

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