Business Law

Published on: July 15, 2013

Requirements Before Settlement Funds May Be Disbursed

Litigation can often be a long and painstaking process resulting in two parties who ultimately just want to see the dispute come to an end, and hopefully with a resolution that they are satisfied with. Indeed, perhaps as high as 97 percent of cases are resolved before trial. However, once a case is settled, the time between an initial agreement to settle and an injured party receiving money is almost never instantaneous.

First the attorneys must draft settlement documents. Depending on the complexity of the case, this can be anywhere from a page long to over thirty pages, and the exact language is important. While a plaintiff may not understand why her attorney is fighting with the defense attorney over what she may think trivial, the settlement agreement becomes a contract that will ultimately decide the entire resolution of the case and, in many cases, direct the parties’ actions in the future. Failure to adhere to the settlement agreement’s terms could lead to the case being reopened, a new action being brought, or a forfeiture of everything gained in the settlement. Therefore the specific language is essential to the parties’ security and the integrity and power of the settlement agreement itself.

Once the language of the settlement agreement is finalized and the parties all sign off on their agreement, assuming that the settlement results in one party paying money to another, there will likely be a waiting period for the funds to be delivered. However, even if the money is delivered to the injured party’s attorney immediately, the attorney cannot immediately release the money. The attorney must first ensure that the amount being forwarded to the client is correct and is being legally distributed.
Continue reading

Published on: May 16, 2013

The Value of a Buy-Sell Agreement

by Jennifer C. Meusel

Every owner of a closely held small business should have an up to date buy-sell agreement.

A buy-sell agreement is a written agreement between business owners. The purpose of the agreement is to ensure that the current owners are protected from ending up owning a business with an unwanted partner (or shareholder). It restricts the owners’ rights to sell or transfer their interest in the business to a third party. The agreement dictates what will happen in the event of the death of an owner, the disability of an owner, the retirement of an owner, the withdrawal of an owner, the bankruptcy of an owner, the divorce of an owner, or one owner’s desire to sell her share of the business.

A buy-sell agreement is the most effective mechanism to ensure for: the smooth transfer of ownership of the business in the event of death, divorce, bankruptcy or retirement of one of its owners; or an agreed upon method for valuation of the business; payment terms and method of funding the payment for the business interest of one of the owners for the buyout of a departing owner; eliminating or minimizing disputes between owners who are retaining ownership and those leaving the business, or between owners and heirs of a deceased owner or other possible unwanted business partners; ensuring that the remaining owners retain control over who their future partners may be; and ensuring that upon the death or disability of an owner, their family is financially secure.

It is crucial that each year after a buy-sell agreement has been finalized and signed that the owners review certain key provisions of the agreement to ensure they still reflect their wishes and changed circumstances:

The valuation formula – the owners should ensure that it continues to reflect the value of the business and their own intent;
The effect of any changes in tax laws upon the terms of the agreement;
The funding mechanisms of the agreement – regardless of the funding scheme contemplated, be it through insurance maintained by the business on the lives of the owners, or through payments over time from the earnings of the business, it is crucial to review and ensure that the funding will be available to effectuate the terms of the agreement;
The structure of the agreement – a redemption agreement, a cross purchase or a hybrid; and
The triggering event – while buy-sell agreements typically include various potential scenarios including death, divorce, disability, voluntary termination, involuntary termination or bankruptcy of an owner, it is important to consider the specific circumstances of the owners of the closely held business and ensure that each triggering event is addressed in a way that is satisfactory to all owner’s actual needs.

Published on: March 25, 2013

Mediation, Arbitration, Litigation: What is Best?

by Boris Peyner

There are three forms of formal dispute resolution to resolve a legal dispute which informal negotiations have fulfilled: mediation, arbitration, or litigation. Understanding the benefits and drawbacks of each is important to decide which method is best to resolve a dispute.

Mediation.

Mediation is a process where a neutral third party assists in resolving the dispute. Mediators are typically lawyers or retired judges who have extensive experience in the field in which parties have a dispute. The decision to settle is always up to the parties. Mediators do not have the power to issue a binding decision. Instead, mediators can often provide their opinion on how they believe matters will be resolved through a litigation or an arbitration and lead the parties to agree by explaining the strengths and weaknesses of each others’ case.

Mediators will often ask the parties to submit confidential written statements and documents that support the parties position to the mediator before the mediation. On the day of the mediation, the parties will meet at a pre-arranged location with the mediator. The process typically involves the parties providing a short explanation of their side of the case to the mediator. The parties will then break into separate rooms and the mediator will shuttle between rooms to discuss the dispute and a resolution.

Mediation is typically confidential. Mediations resolve disputes quickly and are far less expensive than arbitration or litigation, and allow the parties to control the outcome.
Continue reading

Published on: February 11, 2013

Considerations Before Filing Collection Suit In New Jersey Filing

by Boris Peyner

People or businesses seeking to collect money in New Jersey can file a suit in the Superior Court to obtain a judgment. An experienced New Jersey litigation attorney should be consulted before suing, however,because there are many factors that should be considered. For example, a decision needs to be made about which division of the court to file in and what county the suit can and should be filed in. In addition, the suing party must decide which parties should be named as defendants. Finally the suing party must also decide the type of relief sought and properly request it (i.e., compensatory, attorneys’ fees, prejudgment interest, etc.)

A lawsuit is started with the filing of a complaint. A complaint is the legal document that sets forth the facts and legal reasons why the suing party should recover the requested relief. Complaints must correctly identify the parties being sued. The party filing suit, otherwise known as the plaintiff, is legally responsible to accurately and properly name the correct defendants. Failure to properly name a defendant can later preclude post-judgment collection efforts. Failure to include all responsible parties in one suit can later preclude collecting from parties that were not initially named.

After deciding which parties to name, the plaintiff should decide which county the suit should be brought in. New Jersey Court Rules require a complaint to be filed in the county where the cause of action arose or the county in which any party to the action resides. Corporations are considered to reside in any county in which the corporation either does business or its registered office is located. A plaintiff can hire private investigators to perform a search to identify the address where a potential defendant resides; a good lawyer can often do this also. A plaintiff can also search the New Jersey Department of the Treasury website to determine where a corporation is registered or does business. It is critical to file the complaint in the proper county. Failing to file to file the complaint in the proper county can lead to a dismissal of the lawsuit.

After picking the county in which suit will be filed, the moving party must decide which division of the court to file in. If a matter involves an amount in controversy of $15,000 or less than it may be brought in the Special Civil Division of the Superior Court. If the amount in controversy is greater than $15,000 then it must be brought in the Law Division because Special Civil Part monetary recovery is capped at $15,000, exclusive of court costs and attorneys fee (if allowed by law). There are advantages to filing suit in either the Law Division or the Special Civil Part.
Continue reading

Published on: January 21, 2013

Antitrust Law – Promoting Fair Competition in Commerce

by Pauline M.K. Young

Published on: December 18, 2012

The Best Business Structure for Your New Jersey Business

by Boris Peyner

Business owners must choose a structure for their organization when starting a business in New Jersey. Choosing the right structure is the first of many decisions towards running a successful business.

Business owners have the option to form a sole proprietorship, a partnership, limited liability company (“LLC”), or a corporation. Each business structure offers different types of liabilities, expenses, and tax treatment. Choosing the right business structure generally depends on the type of business, how it will be run, and the number of owners.

Owner/Business Liability
Generally, the more risky the business activity, the better it is to operate the business through a corporation or an LLC. Corporations and LLCs provide New Jersey business owners with limited liability. This means that anyone seeking compensations for anything related to the business will have a hard time placing personal liability on the business owner.

On the other hand, owners of sole proprietorship and partnerships can normally be held personally liable for business debts. Owners of sole proprietorship will always be responsible for claims against the business. Similarly, in a partnership, every partner can be held personally liable for claims against the business. This means that if someone won money in a law suit against the partnership, that person could collect from any one of the partners. Therefore, if one of the partners filed for bankruptcy or simply did not have any money to pay, the remaining partners would be responsible to make payment.

Expenses

Sole proprietorships and partnerships are the easiest to form and maintain with minimum expense. There is little special paperwork that needs to be filled out to establish these business structures, and there are rarely any fees associated to maintain them.

Conversely, corporations and LLCs are more difficult to form and can be expensive to establish and maintain. Businesses that establish a corporation are required to file “articles of incorporation” with the secretary of state and pay fees associated with the incorporation. Similarly, LLCs must register with the secretary of state, designate an agent for service of process, and pay associated fees for registration. Businesses that operate as corporations and LLCs must also have separate business bank accounts and keep detailed records of all business finances.
Continue reading

Published on: November 26, 2012

Post Sandy: FEMA Extended To All Residents of New Jersey

by Boris Peyner

Recently New Jersey was impacted by a storm the likes of which has never been seen before in this area. In fact, the storm was so powerful and damaging that it was nicknamed Frankenstorm. Hurricane Sandy’s destruction was unimaginable, causing many of its victims to lose power for days and many others to lose everything. Hurricane Sandy’s victims will now have to start the recovery process. This will require rebuilding, for which they will need dedication, resilience, and financial assistance.

Many will seek financial assistance from their insurance companies. Filing insurance claims will therefore be the first step for most people who were affected. Sadly, many will find themselves uninsured or underinsured. Many other will be denied coverage because of policy exclusions. Another problem that will plague many New Jersey residents is that their damages were caused by a flood in areas that were never prone to flooding. These homeowners therefore did not carry flood insurance. All hope, however, is not lost.

New Jersey residents who do not have sufficient insurance coverage or were denied coverage should seek assistance from the Federal Emergency Management Agency (“FEMA”), assistance was recently extended to all twenty-one New Jersey counties. FEMA will cover losses which include damage to homes, personal property, and vehicles.

FEMA, however, will provide coverage to people who do now have insurance coverage or have insufficient insurance coverage to provide safe, sanitary, and functional housing. Additionally, FEMA will not provide financial assistance for homeowners who are making claims for secondary homes.
Continue reading

Published on: November 13, 2012

New Jersey’s New LLC Law

by Pauline M.K. Young

Since the entity known as a Limited Liability Company, or “LLC” came along in New Jersey in 1993, it has quickly become one of the most common business forms. LLCs are popular largely because of their flexibility, limited liability, and tax advantages.

For example, as long as they meet the requisite qualifications, an LLC may elect to be taxed as a sole proprietor, partnership, C corporation, or S corporation, which means it may avoid the double taxation of a C corp wherein both the owners and the company are taxed. Also, although an LLC is not incorporated, in many instances, LLC owners – called “members” – are protected from personal liability for the company’s debts the way a corporation is.

New Jersey’s Limited Liability Company Act was enacted in 1993, and while it has been revised in 1996 and 2006, revisions have been minor until recently. On September 21, 2012, Governor Christie signed the Revised Uniform Limited Liability Company Act which is scheduled to go into effect for new LLCs on March 20, 2013. (For existing LLC’s it will become effective in March of 2014.)

The new law will include several revisions and additions, including the following:

Duration: Under the prior law, an LLC has a default duration period of thirty years unless the members designate otherwise on the certificate of formation. Under the new law, an LLC will have an unlimited or perpetual duration period unless otherwise indicated on the certificate, which is more like a corporation which is also considered to have perpetual existence.

Not-for-Profit: The new law allows LLCs to be formed for any lawful purpose regardless of whether they are for profit or not-for-profit or formed to own non-income-producing property.

Published on: November 9, 2012

Hurricane Sandy Insurance Claims

by Maurice W. McLaughlin

Hurricane Sandy has inflicted unprecedented damage on New Jersey. Homes have been destroyed. Businesses, homes and schools have lost power. Tens of thousands of people in New Jersey are homeless. Homes and buildings were destroyed by fire, trees, waves and other casualties. Many homes, especially in the evacuated Shore communities, have been looted. Losses in the Tri-State area expected to exceed fifty billion dollars.

That, of course is the big picture. On the ground, however, the storm had a devastating impact on individual homeowners, renters, and small businesses. The first thing each of these homeowners, renters and small businesses should do is make a claim with their insurance companies.

This first question is, will there be coverage? This depends on two things: First, the type of insurance policies you have and, second, the type of damages you incurred. For instance, many homeowners and business policies exclude coverage for damage caused by flooding. However, flood insurance should obviously cover this.

Therefore, you should get a copy of your insurance policy, including the declaration page. The declaration page is a one or two page summary of the types of coverage you have, the amounts of coverage, and the amounts paid for each type of coverage. The policy itself, to which the declaration page is usually attached, is much larger, often twenty pages or more. If you do not have a copy of your policy, or if your policy was destroyed in the storm, you should contact your insurance agent or broker, or the company with whom you have the insurance.
Continue reading

Published on: November 5, 2012

New Jersey’s Teacher Effectiveness and Accountability for the Children of New Jersey (TEACHNJ) Act Adopts New Procedures for Fighting New Jersey Tenure Charges

by Maurice W. McLaughlin

The Teacher Effectiveness and Accountability for the Children of New Jersey (TEACNJ) Act was recently enacted by the New Jersey Legislature and signed by New Jersey Governor Chris Christie. The TEACHNJ Act creates drastic changes to the process for fighting tenure charges by New Jersey teachers and other public school “teaching staff members.” In short, the TEACHNJ Act eliminates the hearing process before the Commissioner of Education and places the decision in the hands of an arbitrator.

When a New Jersey “teaching staff member” achieves tenure, she receives protections that most other New Jersey employees do not. Tenured teaching staff members can be dismissed or reduced in compensation “during good behavior” only for “incapacity,” “inefficiency,” or “conduct unbecoming” a teaching staff member, or some other “just cause.” However, they can be laid off for budget reasons or enrollment losses at any time as long as their seniority is honored.

For the purposes of tenure, “teaching staff members” includes a wide range of employees, including: Assistant superintendents, teachers, principals (but not administrative principals), vice-principals, assistant principals, school nurses, athletic trainers, business administrators shared by more than one school district, and other employees requiring appropriate certificates.

Left unchanged are the initial procedures. Tenure charges are instituted by the local board of education. They are filed in writing with the board’s secretary together with a sworn statement of evidence. The employee is promptly given a copy and the opportunity to submit a written statement in response. The board will then consider the charges in closed session and decide by majority vote if the evidence supports probable cause for the charges, and whether the charges are sufficient to warrant dismissal or reduction in salary. If so, it then forwards the charges to the Commissioner of Education. If the board does not make a determination within 45 days, the charges are dismissed.
Continue reading