What does a Corporate, Business or Entrepreneurial Client Need? How do you help them succeed?

This is a difficult task for any lawyer.  The reality is there are many egos involved and most Corporate, Business and Entrepreneurial Clients are used to always trusting their judgment.  However, sometimes the Clients must be provided an explanation of the best legal strategy and must follow your recommendation.  It is an extremely hard thing for a professional adviser to do, but it must be done.

Sometimes the successful clients get so used to no one questioning their judgment that they forget the value of criticism and how to make sure that they are receptive of input from others.  It is not something that is easy to do when your clients are going to be busy, brush you off, or not take the time to understand the problem.  Therefore, as an adviser and counselor you must require their attention on key issues and important matters.

You must insist on having your calls and voicemails returned to allow you to discuss matters and protect the clients’ best interests without having to document everything in an email.  However, one thing all malpractice carriers will tell you as that you follow up that phone call with an email that confirm the essential points of the recommendation.  You cannot allow a single client to jeopardize your professional license or your firm.

Moreover, it is extremely important that you do not make arguments or claims in a lawsuit that are not supported and run afoul of Rule 137 and Rule 11.  It is not, ok to allow another attorney that is not the Lead Attorney to prevent you from having direct client contact.  If that attorney is not the lead attorney and is not signing on to the Complaint, Answer, Motion or related matters, then that attorney will not bear the brunt of a Rule 11 or Rule 137 motion.

Also, Clients will routinely request that you make any arguments that they want, but sometimes–they may expose you, your other clients, your professional reputation, your future business, and your reputation with the local bar and judges or image to be hurt or tarnished.  This is not something that you can measure and failure to comply with the IL Rules of Civil Procedure and Federal Rules of Civil Procedure will cause a litigator to become a problem for his client in the long run.

Allowing a client to do this may create the expectation that the clients’ business judgement will always take precedence over the Federal or Illinois Rules of Civil Procedure.  More importantly, the local bar, the local courts or judges’ application of the Federal or Illinois Rules of Civil Procedure.   This is not an easy or enviable task, but sometimes it is something that requires a litigator to disappoint their clients or partners.  It can be tricky managing these personal relationships and egos, but that is the nature of litigation.  Eventually, your clients or partners have to at some point listen to the judge even if, they are not willing to listen to you.

For more go to: www.chicagobusinesscounsel.com, www.vrplawgroup.com, www.bipeblawg.com, www.eebrunchclub.com

Warner Brothers Entertainment-The Dark Night: A Trademark Infringer or Clean Slate?

Warner Brothers Entertainment was recently sued and the matter was dismissed and appealed to the Seventh Circuit Court of Appeals.  The matter involved a motion to dismiss based on the failure to plead the proper facts to allege a claim for trademark infringement for consumer confusion and reverse confusion.   Unfortunately, this was a unique case involving facts that may not qualify for traditional infringement of trademarks.

The owner of the “Clean  Slate” software program Fortres Grand was suing, because of an alleged decrease in sales caused by the use of the term “Clean Slate” to refer to a software program for hacking computers.  In the Dark Night Movie, Cat Woman uses a hacking software program called “Clean Slate” to hack and clear the criminal history of an individual.  Fortres Grand was making the claim for trademark infringement in a traditional sense without alleging any facts in support of harm or tarnishment of the Clean Slate brand.

The difficulty with Fortres Grand’s claim was that the “Clean Slate” mark was being used in a descriptive sense by Warner Brothers as to how a software program could be used to clean the slate of a criminal’s records.  Unfortunately, there are significant hurdles and challenges to this claim, because first the software program sold by Fortres Grand was not losing sales, because of confusion between the clean slate software program in the movie and its traditional “Clean Slate” mark.

The real claim at issue was the claim for tarnishment of the image of the “Clean Slate” mark based on the potential reference or association with the illegal hacking software with its Clean Slate Software.  Fortres Grand was attempting to assert the claim that it was suffering a loss of sales from the potential illegal activities that its software could be used to perform.  In particular, hacking of another individual’s computer by Cat Woman to become synonymous with the “Clean Slate” brand.  This is actually not traditional trademark infringement, but the harm that is generally remedied by a dilution claim.

However, under the plausibility standard the Complaint for trademark infringement had to be dismissed, because it failed to allege sufficient facts to demonstrate that the descriptive use of the terms clean slate caused harm in the nature of tarnishing the “Clean Slate” brand.  Thus, the Seventh Circuit affirmed the district court’s dismissal of the complaint for trademark infringement by Fortres Grand.   For more go to:  trademark dilution  or go to www.vrplawgroup.com, www.bipeblawg.com or www.iptrialattorney.com

Material Misrepresentation in Pharmaceutical M&A Deal and Insurance Claim for Product Recall!

In a recent case, the First District Court of Appeals provided an interesting opinion and analysis relating to a complex pharmaceutical product recall by the Italian Government.  In this case, one of Abbott Laboratories subsidiaries purchased a foreign pharmaceutical company and was accused of making false misrepresentations in the purchase relating to the Potential Risks involved relating to pharmaceutical drug that was subsequently subjected to a product recall.

The Insurer’s Claim for false and misleading representations relating to the risks involved in pharmaceutical drug was denied after a bench trial at the trial level. In this case, the pharmaceutical company had purchased a product recall policy and filed a claim for benefits under the policy based on the recall by the Italian Government.  The Insurer attempted to deny the claim by asserting fraud and material misrepresentation of the product recall risks and requested rescission of the insurance contract or policy.

However, in this case, the Underwriters were apprised of the possible risk of a product recall and provided approval of the insurance policy over and in light of the risks of a recall.  Thus, the Appellate Court found that the Underwriters had ratified and approved the Company’s application and endorsement.  Company was allowed to recover over $85 million in damages under the policy, but was not able to recover the vexatious delay or bad faith insurance claims. Although the Appellate Court was willing to award the Company damages, it was not willing to allow the Company to assert that there was no good faith basis for a coverage dispute.

Since the trial court’s findings were supported by the evidence the Appellate Court refused to overturn its decision based on the bench trial.  The Appeal may have turned out differently if, the claim did not involve a claim of intentional misrepresentation, but a negligent misrepresentation claim.  In this instance, the Appellate Court limited the coverage to the policy limit of $85 million damages, including costs and prejudgment interest.

For more go to:  Underwriters Laboratories and Abbott_072414

Formation of a Business Entity and Development of a Parent and Subsidiary Relationship.

It is often difficult for a business owner, entrepreneur, startup, and technology venture to decide how to organize itself and acquire the capital and funds the owners and executives will need.  Another important consideration is the need for equity or sweat equity as a method of incentivizing and ensuring that each employee has the motivation needed to be able to grow and develop as a professional.

Also, each individual investor must be provided assurance against the risk of loss from investing in the venture by a method that satisfies the owners, executives, without dilution of the employee’s sweat equity, and the investor’s ability to offset the gains or losses and the tax consequences of how the company is organized.  One of the methods of quickly organizing a company and still having the ability and flexibility of reorganizing or restructuring the Company is either, as a Corporation, a Limited Liability Company, and electing to be taxed as a partnership or an S-Corporation.

Without understanding the business plans of an individual, the entrepreneurs, the clients, or the individuals participating and undertaking the venture there is no way for any corporate Attorney to advise counsel or guide a client on the proper method of organizing a company and how to structure the first company.   Once, the first company is created it can be reorganized into a holding company and an operational entity, or a spin off and a subsidiary for purposes of testing a new market, product or service that may allow your clients to continue to grow and develop their own business, retain key employees, provide a return on investment to the first and/or key investors, and foster loyalty and trust among the key parties.

Making sure that each individual is allowed to have the most flexibility to grow, acquire the professional guidance, mentorship, develop key business, professional and personal relationships of their own without inhibiting or stifling the growth of the company, key employees, officers, and contribution from investors with additional capacity to provide capital or funds the business is merely setting itself up for failure in the long run.  To find out more about the Chicagoland entrepreneurship community see: www.eebrunchclub.com, www.bipeblawg.com or www.vrplawgroup.com, or www.vrplaw.com

Raising funds for your new ventures-is Kickstarter right for you?

In 2013, Kickstarter was able to acquire over 1 billion dollars in pledges and funds for new projects and ventures. Not bad for a site and service that is primarily used to help artists, muscians, film producers, game developers, designers and other creative types to acquire funds for their projects!

The pledges provided can be as small as 100 dollars, and there is a very good opportunity for artists to engage their fans with innovative methods of connecting fans to creative types.  However, if you are a retailer, manufacturer or tech start up looking for that 250000 dollars or more in funding, then Kickstarter may not be the best route for raising funds.

In addition, to concerns about registration of your offering of investmet opportunities or securities with the Securities and Exchange Commission-SEC, qualifying for a Reg D exemption and the need for a private placement memorandum-PPM; there is a disconnect between Kickstarter’s subscribers and the entrepreneurs for these types of projects.  Many individuals on Kickstarter are not interested in getting equity or a percentage of the profits from the atists, game developers, authors, musicians or film producers for their new projects.

Also, if you lose a 100 dollars on a failed project and you may just be happy to walk away. You lose a 1000, 10000, or a 100000 dollars and it may be harder to walk away. Quite simply, there is a different mindset for individuals providing pledges for projects on Kickstarter: a) they are not as concerned with ROI, b) they are concerned with encouraging and supporting the crative arts, and c) they are looking for projects that inspire them and resonate with their creative and artistic preferences.

As a startup and venture capital attorney, I often get clients telling me that they will get funds from Kickstarter to fund their new projects, and I have to bring a dose of reality to their business plans. So, consider your audience, your ability to engage Kickstarter’s audience or subscribers and the social or creative contribution to the arts, film, books, music, and entertainment industries before making a pitch for funds on Kickstarter. For more on funding your startup or new venture try www.startupbusinessattorney.com or www.chicagoentrepreneursattorney.com

Commercial Agreements, Escrow Provisions, Conditions for Payout and Liquidated Damages Provisions, Really?

In a recent First District Court Of Appeal’s Decision that seems to be more of a policy based decision than anything else-A buyer was prevented from enforcing an escrow provision, because it was viewed as an unreasonable liquidated damages provision.   In this case, the Buyer had entered into a construction contract that provided for an escrow provision that paid out funds based on the Defendant’s completion of different stages of the construction contract.

In esence, the entire purchsae price of $4.3 Million dollars was placeed in an Escrow Provision and was subject to satisfaction of certain conditions.   One required that construction permits be acquired, another required the complete project to be completed.  However, there was no difference in the amounts of the Payouts based on the type of delay or the stage of completion of the project.  Thus, the First District Court of Appeals throughout the entire provision as an unreasonable liquidated damaqges.

The First District Court of Appeals found that since the full 4.3 million dollars would not be paid out if, any condition was not satisfied, it was deemed to provide with Plaintiff with too much of a windfall.  A hard lesson learned by the Buyer, sometimes when you try to overreach another party may be able to invalidate what you thought you were able to neogtiate and drat for a client.  Thus, it pays to make sure that you have your agreements reviewed to ensure that they are enforceable and to make sure that you are attempting to cover a legitimate risk, as opposed to acquire a windfall.

This is a common mistake in drafting agreements, often, in trying to draft bullet proof agreements what is standard in the industry and what Courts routinely enforce is ignored to impress a client.  However, often, that bullet prooft agreement or contract may not be as enforceable as you thought.  See:  Commercial Construction Contract_010214

Of Course, if you have any concerns or questions, then please feel free to contact us at: www.vrplawgroup.com

The ADA, Heart Conditions, Blood Pressure Spikes, Strokes, and other Transitory or Controllable Medical Conditions–Are They a Disability or Not Under the ADA?

In an interesting opinion, the Seventh Circuit, recently declared that transitory or medical conditions that can be controlled with medication may still qualify as a disability.  The Seventh Circuit overruled and reversed a District Court Opinion finding that the Employee’s blood pressure, stroke and heart conditions were not a disability, because they were transitory.  The District Court stated that the spikes or fluctuations would ebb and flow, thus were not a disability, as defined, under the Americans with Disabilities Act (“ADA”).

Moreover, the District Court found that the conditions can be controlled by medications and do not qualify as a disability.  However, the Seventh Circuit, reversed and found for the Employee and stated that the circulatory problems, blood pressure spikes and periodic vision loss, may qualify as conditions that substantially limits or impairs the major life activities of blood circulation and eyesight.  The Seventh Circuit further held, that the Plaintiff’s Chronic Blood Pressure Condition could qualify as a disability, if, the Employee could demonstrate that without medication the condition would substantially limit a Major Life Activity.

In making its Ruling, the Seventh Circuit relied heavily on the 2008 Amendments to the ADA.  However, now, Business Owners or Employers have to be careful about the impact that stress may have on blood pressure, poor circulation and/or its related symptoms to their Employees.  Even if, such conditions are treatable with medication, the Seventh Circuit’s recent Ruling allows the employee to claim a disability, if, they suffer from circulatory problems, poor vision or similar debilitating ailments.   For more please see the following: Blood Pressure Condition a Disability_121913

Of Course, if you have any concerns or questions, then please contact us at: www.vrplawgroup.com

Breach of Contract in Loan Agreements and Subordination Agreements with Corporate Creditors!

The Seventh Circuit reversed a Ruling by the District Court granting Summary Judgment in favor of the Plaintiff relating to a breach of contract action based on a subordination agreement.  The District Court held in favor of the Plaintiff, because there were funds that were transferred from the Individual Defendant to the Corporation.

However, the Corporation had accepted the funds and returned them to the Defendant.  But, the Corporation had noted that the funds were received from the Defendant and listed them on its corporate books. Moreover, there was some evidence of use of the funds provided to the Corporation to pay some of the Corporation’s liabilities prior to return of the funds to the Defendant.

As a result, there was a triable issue of fact relating to whether the loan from the Defendant to the Corporation amounted to a breach of the subordination agreement–the Defendant entered into with the Plaintiff.   Based on this Ruling Creditors or Lenders should ensure that the subordination agreement proscribes transfers of funds or loans from an individual debtor to a company that he or she creates.   Thus, the funds loaned by the Creditor are not siphoned into a corporation that is not liable to repay the funds to the Creditor.

If you have any concerns or questions, then please contact us at: www.vrplawgroup.com For more go to:  Wells Fargo v. Hindman

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