"An ounce of prevention is worth a pound of cure.” Benjamin Franklin said this many years ago, referring to fire safety preparation. This still holds so very true, however, in today’s startup climate.
The world of startups and small business ownership is a chaotic one. Entrepreneurs and small business owners typically focus on fundraising and marketing, assuming multiple roles to save costs where possible. Initial hires usually include members of the c-suite, perhaps a support team…but counsel often fails to make that list. For a startup, failure to hire counsel is a huge misstep, as small oversights in the beginning cause significant problems down the road, and once you’ve been sued, it’s sometimes too late to recover.
Some of the very common issues that we see include :
LLC vs LP vs S Corp…? A business owner's failure to choose the right legal business entity is a problem from the get-go. Certain types of business entities require that type-specific forms and documents be filed with the government. Compliance with government requirements becomes an issue from Day 1 if the wrong business entity is chosen. Starting an LLC can easily be done online, but if this is not the proper type of entity for a particular business and the necessary elections are not made upon filing, long-term tax and legal consequences very often result.
Asset protection. Many business owners do not know the broad differences difference between a copyright and a trademark. Or what the ‘Registered’ symbol means. Or when a cease and desist order is proper. Asset protection should be on the top of every business owner’s mind, but without the proper legal protections in place, innovations can be easily copied and trademarked by another party.
Employees. Most business hire employees. Some companies contract with independent contractors, some hire employees. In either case, without proper contracts in place, including necessary nondisclosure protections, and in the absence of compliant employment practices and regulatory policies, business owners open themselves to enormous amounts of risk and potential lawsuits.
Nondisclosure agreements. Using internet NDAs is NOT good practice, as most are not strong enough to hold up in court and fail to provide mutual protections. Non-compete agreements, if not precisely drafted to suit a specific business scenario and business purpose, do not hold up in court. Businesses should work with counsel to ensure NDAs are mutually beneficial and allow for necessary disclosure while also avoiding risk.
Have a website? Privacy policies and Terms of Service are required in many states to help protect user information.
Each of the issues above is one that counsel would typically easily manage. Startups and small businesses without internal counsel still need legal protection. Working with a lawyer from the early stages is critical not only to lay a proper legal foundation for the business, but also to maintain ongoing compliance. A bit of due diligence early on will save a lot of money in the end.
Any individual considering starting a business, or any entity needing legal support, should seek the assistance of appropriate legal and tax advisors. Work with Linnane & Associates to build a legal strategy to support your business growth goals! Consult us for some guidance.
There’s been a lot of buzz in the past few days about the “pet prenup” – happy to see this in the news just days after our last blog post! Pets are increasingly becoming a part of couples’ prenuptial agreements, because although a pet is often considered a part of the family, a pet is treated as an asset in a property division. And like a piece of art or a house, pets are often used as bargaining chips in a separation. You give this, you get that…more or less.
Couples are increasingly opting to sign prenups…a wise decision and smart move, for MANY reasons. Not because couples anticipate a failed marriage. Not because people don’t trust their future spouse. But…as the marriage age is creeping up, so is the accumulation of assets and other sorts of wealth acquired by individuals prior to entering a marriage. People entering modern marriages often have pre-marriage business interests, larger retirements accounts than in years past, and in the United States, people also have more significant debt.**
A prenuptial agreement functions to protect both spouses in the event of an unfortunate end to a marriage. How many times have we heard a friend say he or she was in complete shock when divorce papers were served? Even a quick internet search returns results showing people are interested in learning how to file for divorce without a spouse knowing beforehand. At the end of the day, no person can ever know what will happen tomorrow, two years, or ten years from now…and when the going gets rough and divorce gets emotional and irrational, divorcing spouses are known to deny the existence of assets or even fight over a spatula.
However, a prenuptial agreement should never be thought of as a pre-divorce contract, nor is it a tool to adopt in anticipation of having leverage in future disagreements. Instead, a prenuptial agreement is a tool that facilitates pre-marriage communication. Prenups force couple to engage in necessary discussions about financial expectations during the marriage, about spousal and family support during future growth of the family, and about taking on and handling future debts, among other things. A prenup enables these conversations, encourages them to occur when couples are happy and excited about the future, anticipating a long and successful marriage before the fighting has begun.
A prenuptial agreement is a modern, proactive tool all couples should strongly consider, as it fosters complete disclosure and peace of mind, and in the event of an unfortunate separation, provides a roadmap for a less conflicted divorce with no fighting over the spatula or the dog.
**Student debt follows the debtor in the event of a separation, but a prenup can specify that any marital assets used to pay off one party’s student debt during the course of the marriage must be taken into consideration in the property division.
Any person planning to marry or divorce, regardless of income or assets, should seek the assistance of appropriate legal and tax advisors. Work with Linnane & Associates to plan for your life and marriage goals. Consider pre-marriage counseling…consult us for some guidance.
A recent article in Vanity Fair boasts, “Jason Momoa, Lenny Kravitz, and Lisa Bonet have Mastered the Modern Divorce,” and goes on to discuss how the self-professed bros are the best of friends despite Momoa being married to Kravitz’ ex-wife, Lisa Bonet.
A truly modern family. We are not sure ex-spouse friendship rings are for everyone, but Bonet, Momoa, and Kravitz sure got something right…a modern approach to their relationships (or at least one that is making plenty of headline news!)
The modern marriage is becoming less and less about traditional roles, and more about compromise and equality between marriage partners. A marriage is about merging two lives. And with that, merging assets, planning for the future, and choosing a person to be your closest relative. Your spouse is the person you choose to share your life, whom you designate to inherit from you, and who will make decisions for you in the event you are unable to do so. Mastering the modern marriage is all about setting the stage for these and other important life decisions.
Modern pre-wedding preparation must include more than flower choices and cake flavors. We all love cake!! But we, as human beings, also love knowing that important life decisions are in our control. Pre-wedding prep should always include sensible legal counseling to build a foundation that enables choices that align with what couples really want.
Wills, for example. Every couple should have a will. Not out of a fear of death, but for estate planning. A will designates where assets will go. Without a will, a couple’s assets can end up in probate court and sit there for YEARS.
Children? Who will be a child’s caretaker in the event that a couple is no longer able to care for the child?
Surgery. In the event of a standard surgical procedure or in an emergency, a patient’s spouse is responsible for making any decisions that need to be made when the patient cannot make them (i.e. under anaesthesia). Oftentimes someone other than the spouse would be a better decision-maker. An understandably emotional spouse is very often unable to make the best choice, or the choice that the patient expressed before 'going under'. Sometimes another family member has medical expertise and is known by the couple to be the better decision-maker...the responsibility still falls on the spouse. In any event, unless medical decisions or designated decision-makers are specified in a living will or medical proxy, any harrowing medical choice is left to a distraught spouse.
Pets? Who will take the dog in the event of a split?
Couples need to think beyond the party. Life happens after the party, and so do life decisions. It’s not only about a prenup, which is also important, but about SENSIBLE, real-life legal conversations that each couple should have before they marry. Celebrate and dance and have cake, and maybe trade BFF skull rings, but master the modern marriage by preparing for a successful future!
If you are one of the almost two million New Yorkers who each year use the state courts without assistance of a lawyer (DIY justice!), you may have first-hand experience with the vast inefficiencies of the system. In fact, New York State for some time has been making efforts to streamline access to justice… attempting to enable access to the courts with a “DIY” process. DIY forms, DIY filing, DIY representation.
This isn’t particularly a new concept. Legal forms have always been accessible to the public. Enter the courthouse, fill out a form with the necessary information, file or dismiss a case! However, a DIY process will rarely enable true justice or streamline accessibility. DIY encumbers an already overburdened court system. And too often, DIY = DI-SASTER.
The right to self-representation has been protected in the United States since the country’s founding, and the breadth of this right has been debated all the way up to the Supreme Court. A person accused of a crime is entitled to representation, but is also entitled to refuse that representation. Criminal courts have decided that while perhaps unwise for an accused to refuse assistance of counsel, the court has no right to force a lawyer upon a defendant. In civil courts, those courts dealing with non-criminal matters including divorce and child custody, business disputes, tenant rights, and personal injury, courts where there is no such entitlement, some people choose to hire lawyers while others believe that self-representation is efficient, cost-saving, time-saving, and empowering.
In New York, where legal services are in high demand, representation can be quite costly, and many people involved in civil litigation choose to represent themselves. Most assume taking a DIY approach will save costs and save time.
This assumption might seem to make sense. However, DIY forms and self-representation are inefficient and often ineffective for a person seeking justice. DIY forms and self-representation are inefficient for the court system. DIY forms and self-representation tend to cost litigants substantially more time than if a lawyer had been used. In short, DIY can spell disaster, and the DIY approach has significantly contributed to New York’s years-long backlog in its civil court system.
Legal forms are not easy for most people to understand. They are difficult to fill out. Legal forms require that a person decipher complex legal language and understand confusing questions. Most types of legal matters involve the use of multiple forms, and these forms require precise answers that if incorrect or missing, will result in the form being rejected. In the absence of a properly completed and filed form, a DIY litigant cannot even take the first steps to enter the legal system and access justice.
Inside the legal system, DIY litigants with inadequate knowledge of rules and processes regularly consume hours of the court’s time by, among myriad other things, appearing without proper information, by making inappropriate or impossible requests of the judge, or by presenting “evidence” and arguments inefficiently and overlooking key points. Courts are rules-driven, and procedural rules are not flexible. Judges and clerks are regularly forced to postpone hearings once a litigant has already appeared in the courtroom due to faulty paperwork or missing parties. Postponements can be for periods of months. More importantly, because most DIY litigants are not versed in the nuances governing the presentation of facts, presenting and questioning witnesses, or even of making objections, the DIY litigant will not prevail in the courtroom or the case will be dismissed.
DIY filing and representation can have serious consequences. In matters where even a clear-cut matter can have a significant outcome, such as a child custody dispute or a business-related litigation, navigation of the legal system by a self-represented litigant can result in an unsatisfactory, unjust ruling that might take years to appeal. Failure to properly present a simple piece of evidence can result in lost custody. Failure to reply on time to a simple suit received from a business competitor can result in a lost trademark. Tip the scales in your favor and choose to work with counsel, whether just for filing paperwork or fully navigating the process. It’s more efficient and cost-saving than working to fix a bad outcomes after a DI-SASTER.
Any person involved in a legal matter should seek the assistance of appropriate legal advisors. Linnane & Associates is a multi-practice firm offering expertise and advice for a range of legal issues. Consult us for some guidance.
*For most recent updates to figures and research used herein, consult www.nscs.org
Kathleen Linnane is the Managing Partner of Linnane & Associates. Check back for our weekly blog updates about current legal issues of interest, and how changes and updates to the law might affect you and your community.