The Business Dispute Law Blog by Bill Garrison

Blogging is so prevalent and popular right now that Google decided to launch a blog search engine.

As the number of blog-only search engines increases, law bloggers will have even more opportunity to promote their blogs. For example, Kevin O’Keefe at LexBlog reports that his client’s blog, Delaware Litigation Blog, appears in the first ten search results under Delaware litigation.

 A search for business disputes law yields a post link from Weblogs Work about this blog. Under a search for business dispute law without the “s”, yours truly appears under “Related Blogs” at the top. Not bad. Legal Blog CEO has helpful search engine tips.

Ah, yes. This is why people hate lawyers. When a business files bankruptcy, creditors typically lose money, but lawyers usually make a profit. From Law.com:

It’s the business of bankruptcy, and these days, with four major airlines in Chapter 11, it’s big business.

The litany of firms that will provide professional services to Delta and Northwest as they wade through bankruptcy court will rack up fees of tens, perhaps hundreds of millions of dollars over the next few years. A partner at one of the firms helping Delta charges $795 an hour.

Businesses filing bankruptcy have interests to protect, and lawyers are needed for a variety of reasons, such as making sure companies adhere to bankruptcy law and helping to draft reorganization plans that are proper. Lawyers have to earn a living like any other professional, and the bad rap is often undeserved, but $795 an hour certainly strikes a chord amongst those creditors who are recovering only a small percentage of what they are owed.

The Limited Liability Company (LLC) business structure is perhaps the most appealing business form there is. Unlike sole proprietorships and partnerships, LLC owners have limited personal liability for the debts and actions of the corporation. Assets are the lifeblood of a business, and protecting them should be the highest priority.

Unlike corporations, LLCs are not double taxed. For tax purposes, LLCs are classified as partnerships. One of the biggest disadvantages of LLCs is that state laws regulating this type of business structure vary, but they’re still quite popular. Some states are making it easier to form LLCs. In Missouri, companies can register online:

[Secretary of State Robin] Carnahan said in a written release Thursday that the move is part of her office’s plan to reduce government red tape and streamline business operations.

More than 26,000 LLCs were formed in Missouri in 2004, more than any other business type, Carnahan said. (Source)

Chris Allison of the California Estate and Business Law Blog gives two examples of the benefits of LLCs.

The last potential perk of "supersizing" yourself, a lawsuit blaming your failed health on the Jack in the Box drive-thru, may be nearing its end.  The "Cheeseburger Bill" seeks to eliminate lawsuits alleging harm based upon the fast food industry’s selling of, well, fast food.  The bill has passed the House and is being considered by the Senate.

According to Insurance Scawl, a blog focusing “on the law of insurance, the insurance of business, and the business of insurance,” businesses located outside the Gulf Coast may still be able to file insurance claims for losses caused by Hurricane Katrina:

An increasingly common add-on to coverage in recent years has been "contingent" business-interruption coverage (or contingent business-income coverage). These policies are limited in what types of event trigger coverage; typically, only those hazards that are insured against with respect to the insured’s own assets qualify as covered events when they befall the insured’s supplier or the insured’s customer.

Blogger Marc Mayerson outlines a few steps businesses should take now if they want to take advantage of this type of coverage in the future.

Technorati Tags: business+insurance, business+interruption, katrina, recovery2

One of our friends at Weblogs Work, Brian Oberkirch, was featured in the Washington Post recently for his efforts to connect people through the Slidell Hurricane Damage Blog and provide neighborhood-specific information:

I was able to get to my apt at the Anchorage Sat 09/03/05," said one message posted yesterday. "Came in thru Eden Isles off Hwy 11 — the beautiful white anchor at entrance is covered in about 7 ft of debris and there is only a one-lane path to enter/exit until over the little bridge."

Also featured is fellow law blogger Ernest Svenson, also known as Ernie the Attorney, who is from New Orleans and evacuated to Houston, Texas and later to Baton Rouge. Svenson began posting notes via a friend out of town, to whom he would text messages from the city. Information-sharing during a natural disaster is only the tip of the iceberg of what blogs can and are doing. No longer just a place to rant about politics or tell readers what you ate for breakfast, blogs are dynamic marketing tools, news portals and interactive message boards. They’ve been a blessing to people looking for missing loved ones. Bloggers are posting photos and e-mails from readers, trying to reunite families and friends. Since the disaster began, new and existing blogs are helping refugees and other survivors find places to live, work, and regroup after losing everything in the hurricane, an unexpected but valuable function.

Technorati Tags: blogs, law blogs, katrina, ernietheattorney

The United States has accused the European Union of illegally subsidizing Airbus, an aircraft manufacturer. In response, the E.U. says it’s prepared to sue Boeing for benefiting from illegal subsidies. Both cases would go to the World Trade Organization.

The two sides have operated since 1992 under an agreement allowing Airbus to receive a certain amount of "launch aid" — loans from the British, French, German and Spanish governments to finance the cost of developing new planes. But that arrangement came under strain in the past several years as Airbus passed Boeing in worldwide sales, and the Bush administration escalated the dispute by filing its WTO case in October 2004, prompting an immediate counterclaim by Brussels. Source

Both sides had hoped to avoid what’ss considered a ‘mutually destructive confrontation,’ but since billions of dollars are at stake, a peaceful and litigation-free resolution appears unlikely.

Technorati Tags: international disputes, WTO

Recently, during the course of a lengthy jury trial in Austin, my California co-counsel and I discussed what each of us considered to be the most important elements of successful litigation.  We both agreed that successful litigation — or at least efficient successful litigation — is all about knowledge management, i.e., "accessing, evaluating, managing, organizing, filtering, and distributing [knowledge regarding the facts and the law of a case] into actionable knowledge via a technology platform."  An attorney can come up with all kinds of great strategies, and discover all kinds of wonderful facts but, unless such information is contained and managed in a way that it can be readily and thoughtfully presented to a judge or jury, it is just intangible and useless clutter.  An attorney seeking to master knowledge management must always ask him- or herself, every step of the way, "How am I going to memorialize and later readily use this piece of information in conjunction with other pieces of information to tell a convincing story?"  The sequential answers to this question mark the path toward effectively prosecuting a client’s case.

Non-compete agreements.  They need not be particularly complicated nor difficult to create, yet these employment contracts are very often the subject of controversy and even litigation.  Why? 

Simply this … such agreements are seldom audited, i.e., considered and crafted in light of the circumstances to which they are meant to apply.  More often than not, neither the employer nor the employee exercises any diligence in formulating these agreements in accordance with basic legal requirements.  Employers use form agreements that they attempt to apply in varying jurisdictions to every new hire, no matter what the new hire’s position.  (I personally have reviewed prominent defense contractor non-compete agreements that were entirely unenforceable.)  On the other side, employees sign "new hire" documents without reading the contents.

So who pays the price for this lack of diligence?  Well, usually the employer — both in not being able to prevent a former employee from harming the business by competing, and in the form of significant legal expense trying to "undo and redo" a bad agreement.  For if the employer fails to sufficiently and orginally customize the restrictions set forth in a non-compete agreement, then the agreement is thereafter unenforceable.  Further, in such states as Texas, a defective non-compete agreement remains unenforceable and cannot be unilaterally fixed by the employer (by concession), but only by judicial order or agreement with the former employee, i.e., the employee is not legally bound in any way by the subject non-complete agreement until the employer devotes significant time and money to the problem. 

Believe it or not, while the above "defect and reformation" consequences seem bad enough, these can lead to other, perhaps unforeseen, problems in the hands of a knowledgeable attorney.  For example, what happens if a business has attempted to restrain 10 employees from competing but, for reasons of defective agreements, has only successfully restrained 7 of those employees?  The 7 restrained employees can make the argument that, given the harm the business will lawfully suffer from the 3 un-restrained employees, it is of no benefit to restrain the other 7 employees, i.e., since there are 3 leaks in the boat that can never be fixed, there is no point devoting resources to fixing 7 other leaks in the boat.  The boat is going to sink.  That a non-compete agreement be of real benefit to the employer is a requirement, in Texas for example.  Peat Marwick v. Haass, 818 S.W.2d 381 (Tex. 1991). 

Why endure such uncertainty when these problems can be avoided with a little advance consideration?  Audit your non-compete agreement(s), whether you are the employer or the employee.  Know your rights and obligations under the agreement.  It could benefit you down the road in ways you never imagined.

Attorneys are frequently overcompensated in circumstances where they subject themselves to little financial risk and invest little effort in a case.  Someone pays for this unearned benefit.  Usually, that someone is the client.  Class action lawsuits are frequently the setting for such abuse.  In one prominent case, the recent Cox Enterprises buyout of minority shareholders, the Delaware Chancery Court reviewed the plaintiff’s counsel’s request for fees and stated,   "I can discern no appreciable risk taken by the plaintiffs’ lawyers."  The Court then dramatically slashed the attorney’s fee award.  The lawyers in that case has sought what amounted to more than $2,000/hour.  The lesson?  It  pays to carefully review requests for payment of attorney’s fees and, where appropriate, challenge such requests on the basis of the attorney’s undertaking of time and financial risk.