6 Reasons Why a Business Should Hire a Lawyer

  1. Provides proactive legal solutions
  2. Provides protective legal advice
  3. Protection of assets
  4. Prevention of lawsuits
  5. Lesson liability
  6. Compliance with state/federal laws

8 Reasons to Use a Lawyer to Review and Draft Business Contracts

  1. Provide an in-depth understanding of the terms and conditions, including legal terms of art.
  2. Avoid risks such as pitfalls/loopholes in terms and conditions.
  3. Ensure best terms and/or neutral terms and conditions.
  4. Provide protections in case of breach.
  5. Provide alternatives for disputes in case of breach.
  6. Make sure document is legally enforceable.
  7. Incorporate laws and regulations as necessary in the industry.
  8. Negotiate the terms and conditions.

5 Things to Consider in Running a Business

Quite frequently, as an experienced business attorney, entrepreneurs have asked me what things they need to be conscious of and be knowledgeable in when owning a business.  Although many business owners are great at what they do, they do not necessarily have the know-how about business related subjects which will ultimately play an important role in their success in their business venture.  As such, I have come up with a list of areas that I feel are important for any business owner to be knowledgeable in or to at least have access to experienced legal counsel, a certified public accountant and a business related insurance agent or agency.

  • Business Insurance. Almost all businesses need some form of insurance to protect either themselves as owners or the company as a whole. A business owner should sit down and explore all the business insurance programs available to them consistent with their business operations and needs. Business insurance is an important part of protecting business assets and the owners from potential exposure. For example, if a company handles a lot of money, the company should consider getting employee dishonesty insurance to cover the potential exposure of an embezzlement claim.
  • Government Regulations. Business owners should be cognizant of all government regulations that could affect the workplace. This includes tax, employment, and conducting business in general (e.g. licensing). Some businesses, depending on the specific industry, are more regulated than others. For example, the trucking industry might be more highly regulated by laws than perhaps a pizza establishment.
  • Business Taxes. A general understanding of all taxes related to the company is important. Knowing how much tax will be assessed to businesses is as equally important as getting an understanding of when they need to be paid as well as what forms need to be filed with local, state and the federal government.  Failure to pay taxes when due and in the amount due could have a serious, detrimental impact on a business.
  • Business Contracts.  Ultimately businesses will be doing businesses with third parties (e.g. vendors, employees, individuals, other companies, etc.), and in many of those instances, a written agreement is important to protect the interests of the business.  In many instances, contracts will dictate what the parties have agreed upon.
  • Intellectual Property.  Protecting your name, product, slogan, or services are extremely important in business. Getting trademarks, patents, and copyrights protects you from competitors.

In my opinion, when running a business, business owners should have 3 “trusted” advisors which would include an experienced business attorney, certified public accountant and a business insurance agent or agency

“An Ounce of Prevention is Worth a Pound of Cure” in the Business World

Most of you have probably heard of the old saying of “An Ounce of Prevention is Worth a Pound of Cure” which was coined by Benjamin Franklin. That quote has been often used in the legal world for the general proposition that if we prevent a problem in the first place, it will save a great deal of time, effort and cost in trying to repair or fix the damage done later. In other words, it is better to keep a bad thing from happening than it is to fix the bad thing once it has happened. This is no different than things we do in our personal lives where we use preventative measures (e.g. vaccines, annual physicals and dental services) in order to protect us from potential harm or severe medical problems.  Unfortunately, and far too often in the business world, business owners and their employees try to do legal related things on their own, which are customarily meant to be done by an experienced business attorney, in order to save money. Many times, owners and their employees do not utilize business attorneys until they’ve got a problem, those problems normally being self-inflicted because they didn’t seek out legal advice in the first place and for which the problem is generally of a serious nature. Likewise, attorneys are not magicians or illusionists and normally can’t simply make a problem disappear with a “wave of wand” or “pixie dust” and, thus, the costs of fixing or repairing a problem are usually substantial as compared to doing something to prevent it in the first place. Business attorneys are generally engaged to provide business clients with preventative, proactive and protective measures so that problems won’t occur in the future, which, if in fact they do occur, will cost the business substantial risks and costs.

6 Reasons to Hire The Right Business Attorney

Below is a non-exhaustive list of when business owners should seek out legal counsel in business related transactions in order to explore what preventative, proactive or protective legal measures should be taken:

Seth T. Seidell, Attorney at Law, is an experienced business attorney in Michigan. For more detailed information on the types of business legal services provided, visit the Business Legal Service page on the website at www.seidell-law.com.

Starting a Business-Things to Consider

Below is a non-exhaustive list of things to consider when starting a business.

1. Before starting a business, do you have a business plan which encompasses both short and long term goals and objectives?
2. Where to conduct business activity (what state and community) and what type of business structure should you utilize (e.g. corporation, LLC, etc.).
3. Will you need financing to start up the business and what are the projected start-up costs?
4. What type of insurance coverage will the company need?
5. What type of licenses or permits will the company need?
6. Federal, state or local registration requirements for business taxes?
7. If hiring employees, information on payroll taxes and labor and employment law compliance.

If you plan on starting a business it is highly recommended that you seek out a business attorney, CPA and/or accountant, banker and insurance broker who can assist you in the process and answer questions. Seth T. Seidell, Attorney is an experienced business attorney in Michigan.

Buying or Selling a Business in Michigan

For many years my law firm has represented both buyers and sellers of small to medium sized privately held businesses in Michigan. Although “hybrid” options are available, in general, there are normally two options in a structured sale of a business. Business sale transactions consist of either an asset or stock/membership sale.

Business Asset Sale

In an Asset Sale, specified assets (some or all) are transferred from the entity to the purchaser while the corporation and/or limited liability company entity that sold the assets remains in place and continues to be owned by its owners. Often times, although agreements can be modified accordingly, although assets are sold to a buyer, the entity who sold the assets still retains the liabilities. In most cases, depending on the facts, buyers generally prefer the asset purchase method since they will not be taking on past liabilities and the buyer can normally use the purchase price of the assets as the assets basis for tax purposes.

Business Stock Sale

In a Stock Sale, the buyer purchases the equity (stock or membership) interests from the owner(s) of the entity to be sold. There is no change in the status of the entity itself and the new equity owners take on, unless otherwise agreed to, all of the entity’s liabilities and contracts and the assets remain with the entity. Government authorizations, permits and licenses may not be transferable, and, therefore, in some industries because of the restrictions, a stock sale may be the preferred method amongst the parties. In most cases, depending on the facts, sellers generally prefer the stock purchase method as, unless otherwise agreed to by the parties, the seller will no longer be liable for the entity’s liabilities.

This article is a mere synopsis on the types of transactions that are normally done in a privately held sale of a business in Michigan. Generally, facts will dictate the type of sale that should be contemplated. This is just one area of discussion when contemplating a sale of business transactions and many other facets are involved in such a transaction. It is important to seek legal and accounting professionals when contemplating a business sale or purchase. Seth T. Seidell, Attorney at Law, concentrates his legal practice in the area of business law.

Pre and Post Employment Documents that should be reviewed by an Attorney

The following are a non-exhaustive list of Michigan related employment documents that employees should consider having reviewed by an attorney before executing them. These types of documents normally involve pre and post-employment matters and can often involve intricate legal terms of art which the general lay person may not understand. Having an attorney review these legal documents to assist in the negotiating process, which may include proposing modifications and changes to the documents or to merely consult with the employee on what all the terms and conditions mean would be a wise decision for any lay person.

  • Restrictive Covenant Agreements:  Restrictive covenant agreements commonly involve a written document drafted by the company or their legal counsel which  normally encompass clauses pertaining to confidentiality, non-solicit, non-disclosure, trade secrets, innovations and non-compete and are commonly often required to be signed in conjunction with an offer of employment.  These types of agreements restrict an employee’s ability to do certain things while employed and after employment.
  • Employment Contracts:  Employment contracts are commonly found in areas involving highly compensated individuals or those who will hold upper management positions or who have professional degrees.
  • Severance Agreements:  Severance agreements are commonly offered at the time of separation of employment. Severance agreements will normally provide additional money to the employee in exchange for a release by the employee not to sue the employee for any reason involving their past employment with the company. Severance agreements may also include restrictive post-employment covenants.

Business Insurance

During my many years of legal practice in Michigan I have come across numerous situations where businesses lacked insurance coverage when they tried to file a claim with their insurance carrier and/or was denied coverage when a claim was filed because it was excluded from their policy. Many of the owners have asserted to me an “I didn’t know I didn’t have the coverage, my insurance agent never told me that my policy wouldn’t cover the type of claim involved or my insurance agent didn’t advise me that I needed additional coverage for certain types of potential claims.” In many instances, I have come to the realization and conclusion that the business owner merely didn’t want to pay for the additional coverage or didn’t think that type of coverage was needed. I always tell my business clients when they plan on purchasing business insurance they should review the policy in its entirety before signing on the dotted line, and to especially review and take notice of the area that usually is entitled “exclusions” from the policy. In many instances, and depending on your state’s insurance statute, an insurance agent must inform you of all coverages available to the business. Many insurance agencies and agents are now requiring you to fill out waiver forms if you do not wish to take certain additional coverages for your business so they can avoid potential malpractice claims. Depending on the type of industry a business is involved in may determine the type of extra or additional coverage the business should look into.  A business owner would be wise to spend time reading a property and casualty policy or any other business related policy in advance of binding coverage with the insurance carrier in order to verify what is covered and what is excluded from coverage.

Michigan Unemployment Misrepresentation and Fraud

Between 2013-2015 the Michigan Unemployment Agency assessed thousands of Michigan workers with claims of fraud pertaining to unemployment benefits. Although the state claims it was doing everything by the book, those who have filed suit against the state of Michigan and Michigan legislators have indicated that the problem with improper adjudications pertaining to unemployment matters started when the state switched over to a new computer system and laid off approximately 400 people in the process. Estimates indicate that approximately 60,000 filed claims during this period should be re-reviewed by in person unemployment adjudicators. A high percentage of the Michigan unemployment fraud cases brought before administrative law judges have been summarily dismissed on multiple grounds.

The law firm of Seth T. Seidell, has specialized in Michigan unemployment matters since 1998, including many cases involving misrepresentation and fraud. Although each case is unique based on its own facts, the Seidell law firm has been highly successful in winning many of those cases. If you believe that you have been mistakenly charged with fraud and/or misrepresentation by the Michigan unemployment agency, and whether or not your appeal period has run out, you may still be entitled to a review of your claim by a state administrative law judge or otherwise.   

National Labor Relations Board (“NLRB”) Scrutinizes Employer Handbook and Other Written Policy Language of Private Non-Union Employers

Section 7 of the National Labor Relations Act (“NLRA”) guarantees employees “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection,” as well as the right “to refrain from any or all such activities.” One of the great misconceptions in the business world is that the NLRA does not apply to private employers who are non-union. The NLRA applies to both union and non-union private sector employers and is regulated by the National Labor Relations Board (“NLRB”) as well as the federal courts. Generally, disputes in this area arise when a private non-union employee has been disciplined, suspended and/or terminated for violation of company policies and procedures which have been generally noted in employer handbooks.

Recent rulings of the NLRB include the following handbook provisions and/or written policies and procedures that were deemed unlawful under the NLRA:

  • Provisions defining “confidential information” as “personnel information, including, but not limited to, all personnel lists, rosters, personal information of co-workers” and “personnel information such as home phone numbers, cellphone numbers, addresses and email addresses.”
  • A blanket rule that bars employees involved in worker misconduct probes from discussing the proceedings with their colleagues.
  • Language that called for “courtesy” on the part of employees.
  • “At-Will” employment clause that states the employment relationship cannot be amended, modified or altered in any way.
  • A general policy that suggests that employees must first take a complaint through an open-door policy, dispute resolution or human resources and does not allow employees to complain to each other or outsiders (e.g. NLRB).
  • No-loitering rules after finishing a shift.
  • Statements that indicate that the employer is “non-union.”
  • Dissemination of information during non-work hours or in break rooms.
  • Requiring employees to represent a company in a “positive and professional manner” and to “avoid negative comments.”
  • Certain types of social media postings.

When it comes to employer handbooks and/or other written policies and procedures there is no substitute to having those documents reviewed periodically by trained professionals such as legal counsel.