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Answers To Commonly Asked Business Law And Litigation Questions

At Brick Business Law, P.A., our litigation attorneys are asked a lot of questions at every stage of business ownership, including start-up, dissolution and everything in between. In our quest to become a preeminent business law firm for entities throughout Florida, we strive to educate as well as advise.

For your information, following are answers to commonly asked questions regarding various aspects of litigating business disputes and owning and operating a Florida business. If you have more questions after reviewing these FAQ, please schedule a free initial consultation with one of our lawyers by sending us an email or calling us at 888-708-4250.

Disclaimer: This FAQ page is published as a general information resource and shall not be construed as legal advice. Nor does it form an attorney-client privilege. All claims and cases are different, and this content does not apply to any specific facts, matter or person. 

Hiring A Business Lawyer

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Do I need a business attorney, or can I settle this dispute on my own?

If a matter is already in litigation, the business should consult an attorney immediately. However, even if the matter is likely to lead to litigation, there are a number of steps that can or should be taken to protect the interests of the business in preparation for anticipated litigation. The knowledge of a dispute that may lead to litigation could create certain legal obligations for the business, such as the requirement to preserve of records, to avoid additional liability. Also, getting the advice and guidance of an attorney early on in a dispute may help to develop an overview of legal rights and a cost-benefit analysis of different responses, such as settlement, litigation or other alternative dispute resolutions. Often times litigation can result simply from mismanaging a dispute that could have been resolved informally with less time and expense with appropriate legal guidance from the start. Many business owners who attempt to “do it themselves” to save money end up spending more on attorney’s fees after they have created or complicated their legal issues unnecessarily.

Common types of clients who hire us for business litigation

We generally serve businesses that are based in Florida or that are pursuing or defending a claim based in Florida. We represent businesses of all sizes, from sole-owner LLCs to multinational companies. We have represented large hotel chains, manufacturers, dealerships, consulting firms, marketing companies, professionals (such as doctors and lawyers), non-profits, gyms, schools, transportation and logistics companies, restaurants, software companies and others. We have also represented individual owners, executives, employees, partners, shareholders. The types of claims are various. See our page on “Business Litigation and Disputes” for more information.

What should I prepare to bring to an attorney?

We ask that new clients gather the following relevant documents and provide them to us prior to their consultation: (a) any signed contracts; (b) any papers served or filed in court; (c) any relevant documents; (d) relevant recordings, e-mails, text messages, photos, videos or other communications; and, (e) a summary of the people involved and a timeline of relevant events.

Why is it crucial to hire a business attorney for business litigation?

If a Florida business is a party to a lawsuit, the business cannot represent itself in court. It is required to have an attorney act as its representative under Florida law (in other words, employees, owners and others cannot act on behalf of the business).

The only notable exception is for a small claims court case. Many business owners will attempt to handle a lawsuit themselves by contacting opposing counsel, filing papers with the court or otherwise trying to resolve the matter before contacting an attorney.

While it is possible that this approach could work, it is not advisable. If a Florida business files a document in court through an employee, officer or other non-attorney, it may (a) be ineffective and (b) hurt the business’ case.

If a deadline is missed in a case, this could cause an adverse outcome. Sometimes the case may be proceeding in court against the business without the business owner understanding the circumstances or loss of legal rights. Also, the owner who takes matters into his own hands improperly may become liable to partners and others or may become engaged in the unauthorized practice of law.

Business Disputes And Litigation

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Are there any alternatives to litigation?

Yes, alternative dispute resolution options include mediation, arbitration and informal settlement discussions. Often times these techniques are used before or during litigation to try to resolve matters which have proceeded to a certain point which allows the parties to better assess and understand each other’s potential claims, defenses and exposure.

Can I sue for breach of verbal contract?

Verbal contracts are generally enforceable, with some exceptions. Verbal contracts can sometimes be difficult to prove, not because they have less effect than a written contract, but because the evidence of their existence is less certain. A Florida business litigation attorney can review a potential dispute over an oral contract and advise on enforceability, defenses and potential litigation strategies.

Can my business dispute be settled outside of court?

Yes, a business dispute can be settled informally by the parties to the dispute at any time. In fact, most cases are set up to cause the parties to formally mediate and informally discuss settlement prior to trial. Certain business disputes that are litigated and are then resolved by voluntary settlement do require the court’s approval by rule (such as, for instance, shareholder derivative litigation in Federal Court). It is important that settlement agreements are properly documented for the protection of the business. Having a capable and knowledgeable business lawyer assist with settlement discussions and documentation is highly recommended to avoid ambiguities or exposure to liability.

If my business is sued, is my personal property at risk?

One of the main purposes of incorporating is to shield the owners of the business from the debts and creditors of the business. In general, a properly formed and maintained entity will act to shield its owners from liability. However, there several ways in which this protection could be lost. A professional cannot use an entity to shield himself/herself from their own negligence or malpractice. An officer or director may be personally liable to the business itself, other owners or even third parties for improper distributions or other actions which involve a breach of fiduciary duty. A business which is used for an improper purpose, such as to defraud creditors, may be ‘pierced’ to allow creditors to reach the assets of owners. A business which is insufficiently capitalized may also be subject to being pierced. There are certain business structures which do not provide the owners any protection from liability. If a business makes fraudulent or otherwise improper transfers to owners after knowing of a claim against the business, this could also lead to the owner becoming liable.

My business partner breached our contract. What steps should I take?

There are many variables to assess to come to the conclusion that a business partner committed a legal breach of contract, the potential damages and defenses to the claim of breach. It is recommended that you gather all evidence, such as the contracts themselves, communications and other tangible evidence and speak with a business attorney to establish whether there was in fact an actionable breach. Options to explore will likely include informal demand and resolution, demand for business records, board-level resolutions, formal litigation or alternative dispute resolution either on behalf of the individual or the business. Potential remedies might include monetary or other damages, injunctive relief, declaratory relief, expulsion or judicial dissolution, depending on the type of business and particular circumstances.

What are some common misconception people have about business litigation?

People often underestimate the expense, time and effort that is required to litigate complex business issues. Very few business litigation matters get to trial. Those which do get to trial often take several years to resolve due to complex discovery issues, appeals or other procedural and scheduling matters. Getting the case to judgment does not equate to obtaining relief. Many times, a judgment is difficult if not impossible to collect. Post-judgment collection procedures can often be as difficult, time-consuming, and expensive as getting a case to trial. However, despite these issues, many cases do resolve while a case is being litigated, through informal settlement discussions, mediation, or other summary proceedings.

What are common types of business litigation?

Common types of business litigation can be found on our litigation and disputes page.

What does it mean to “pierce the corporate veil”?

“Piercing the corporate veil” is a legal mechanism which allows for judgment holders or other creditors of a business to collect against the owners of the business. Such claims can come up for several reasons, such as a business being used for improper purposes. (See response to “If my business is sued, is my personal property at risk?).

What Is “business litigation”?

The term “Business Litigation” relates to the litigation of controversies in court arising from commercial and business relationships. These relationships may be with a business’ vendors, customers, clients, suppliers, creditors, debtors, competitors, government agencies, financers, officers, directors, members, shareholders, advisers, fiduciaries, employees or third parties. Disputes which arise in the context of these relationships are often based upon contracts, fraud, misrepresentations or other disagreements.

Litigation is a dynamic process involving many complex decisions and considerations. A business should take great care in selecting a litigation team that understands the process and can advise and execute on a path towards the optimum resolution.

Our approach to business litigation is to research and fully understand our clients’ situation (prior to litigation, if possible), to consult with the client regarding alternative business litigation strategies and to assess the cost-benefit of those strategies. Finally, we set out a customized strategic course of action for litigating each client’s case based upon its unique strengths and weaknesses, the needs and desires of the client and the applicable law. See our page on “Business Litigation and Disputes” for more information.

What is a complex business dispute?

The Florida Rules of Civil Procedure consider several factors in deciding whether litigation is “complex” and, therefore, would require certain additional case management rules to move it forward.

Generally, determining that a matter is “complex” under the rules involves one or more of the following factors: (A) numerous pretrial motions raising difficult or novel legal issues or legal issues that are inextricably intertwined that will be time-consuming to resolve; (B) management of a large number of separately represented parties; (C) coordination with related actions pending in one or more courts in other counties, states, or countries, or in a federal court; (D) pretrial management of a large number of witnesses or a substantial amount of documentary evidence; (E) substantial time required to complete the trial; (F) management at trial of a large number of experts, witnesses, attorneys, or exhibits; (G) substantial post-judgment judicial supervision; and (H) any other analytical factors identified by the court or a party that tend to complicate comparable actions and which are likely to arise in the context of the instant action.

The parties may move to designate a matter as complex, and the court will then conduct a hearing to consider these factors and what case management tools to implement.

In Florida, there are also specific courts set up specifically for complex business litigation matters which generally have rules that are in addition to the normal rules of procedure. Judges in complex business litigation divisions often have some level of specialized expertise in business litigation to allow for such matters to be handled more efficiently than by those judges who do not have such expertise.

What is commercial litigation?

Commercial litigation is a broad term which addresses litigation in the business context which includes breach of contract, business torts, fiduciary/shareholder litigation, UCC, civil theft and others. Brick Business Law practices in virtually all areas of commercial litigation.

What types of business disputes does your firm handle?

We generally handle any type of business-related dispute in Florida or under Florida law. This would include litigation, arbitration or informal disputes related to advertising, business theft, employment, contracts, shareholders and other fiduciaries, defamation, business interference, non-compete, intellectual property, real estate, collections and other areas. Please see the page on our website entitled “Business Litigation and Disputes” for more information.

Business And Corporate Entities

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How do I dissolve a corporation?

Florida statutes set out the procedure for dissolving a corporation. In general, there are certain statutory and corporate requirements (contained within the corporations’ articles of incorporation or by-laws) which set out specifics for adopting articles of dissolution. A meeting of the appropriate people (generally directors or shareholders) should be noticed. If quorum and voting requirements are met, the Corporation may adopt articles of dissolution. If the procedures are followed and documented and the corporation does adopt a plan of dissolution, the company should file the Articles of Dissolution with the Secretary of State and file all applicable statutory procedures necessary to pay debt of the corporation, provide notice to creditors, and wind up the corporations’ affairs. If there is disagreement regarding the dissolution of a corporation, or procedures are not followed, corporate representative should speak with a business attorney to address the appropriate next steps.

How do I form a corporation?

If a corporation is the chosen entity, the basic steps are to choose the state of incorporation, file electronic articles of incorporation with the appropriate secretary of state, obtain an EIN number from the IRS and file any appropriate tax election, create by-laws, have an initial meeting of the founders/incorporators to adopt the by-laws, approve and adopt pre-incorporation actions, elect the board, appoint officers, distribute shares, allocate responsibilities, create and open bank accounts, obtain and recognize ownership contributions, create and execute a shareholder agreement and other appropriate documents (such as NDAs, non-competes, assignment of IP, employment agreements, etc.) and begin operations.

My business partners and I have agreed to dissolve our business. What are our risks of doing it on our own?

It is certainly possible for partners to dissolve a simple business by following the statutory framework. However, the associated legal fees for a corporate dissolution are likely insignificant compared to exposing the owners to liability for improperly noticing creditors, distributing property, or improperly documenting the dissolution. Like other business-legal decisions, those who do them without legal guidance do them at their own risk.

What is the best business entity for me?

The main factors to consider when choosing a business entity are tax, liability, applicable law and required corporate formalities. We generally defer to your CPA to help you establish the best type of tax set up for your business. Liability refers to the level of personal asset protection provided by the entity to its owners. Applicable law refers to how and to what extent the law is established as applied to various factors for each entity type. For instance, some types of entities require that every owner must hold a certain professional designation. Required corporate formalities refer to the level and extent of corporate procedures are generally required to operate a particular business. The determination of the ‘best fit’ for each person’s new business should be made on a case-by-case basis.

Why are so many businesses incorporated in Delaware?

Delaware provides a corporate tax, filing, administrative and legal system that many people find appealing when compared to other states. Delaware offers limited public disclosure of owners and related parties on its public filings. Delaware statutes and caselaw are very robust, allowing for a lot of guidance and predictability on internal corporate legal issues. Delaware also has a number of tax provisions which may be favorable to incorporating in Delaware for certain types of companies. Where to incorporate is a decision that must be made on a case-by-case basis.

The Business Of Running A Business

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Can I stop a former employee from working for a competitor?

If you had your employee execute a valid and enforceable non-compete agreement, you can sue to have them stop working in such a way that violates your agreement. The enforceability of a non-compete agreement involves an analysis of various factors. Whether to file a lawsuit to prevent a former employee, owner or third party from working for a competitor is an issue that should be reviewed by a capable business litigation attorney.

Can I sue when a business interferes with my clients?

Some forms of interference with clients, customers or employees are actionable and support a claim for damages in court. Other forms of “interference” are lawful and permissible competition. The two general types of actions that are brought for interference with a business are for interfering unlawfully with an established business relationship or a contractual relationship.

Do I need a physical office for my business, or can I conduct it entirely online?

A business which is registered as an entity (such as an LLC or corporation) must designate a ‘principal office’ when it registers. This could be a home address, a physical office or even a physical “virtual office” location such as a space-sharing or executive office location.

Do I need an employee handbook?

Employee-related lawsuits are a significant source of liability exposure for businesses. This is especially true of small businesses, which generally have not established, communicated or enforced appropriate employment strategies. Although not necessarily required, it is recommended that a company has an employee handbook to establish and set out guidance and protections as soon as it starts to hire employees. The process of creating the employee handbook is also a good exercise for business owners to identify and address areas of potential legal exposure.

How do I protect my business ideas?

There are several ways to obtain legal protection for business-related ideas. Ideas that are unique, not generally known, have been safeguarded, have value and are the result of investments of time or money may be considered trade secrets. Trade secrets can be protected from misuse or disclosure pursuant to an agreement, normally called a non-disclosure agreement. Parties considering entering a business relationship which would require disclosures of the protected information generally sign such an agreement to provide protections to the disclosing party.

If trade secrets or other confidential information will need to be shared with employees or others who perform work for the business, and NDA and/or other restrictive covenants may be appropriate.

Other common-sense business operational protections should also be implemented, such as username/password protections, limitation of disclosure and other appropriate measures.

There are other general legal protections appropriate for intellectual property such as trademarks, copyrights and patents. Anyone seeking to protect valuable and confidential business information or ideas should seek the guidance of an experienced business attorney to address related issues.

My startup expanded significantly, but my partner and I disagree about the future. Can you help?

There is a saying that the best time to do something was 5 years ago and the second-best time to do it is right now. We see this situation often – business partners find success, which leads to greed or disagreement, which leads to litigation. The longer the situation persists, the more difficult it is to remedy. If you have a successful business, there is a significant downside to running it “from the hip” without legal guidance. There is very little downside to hiring an attorney at the beginning of the problems, rather than when they have exploded.

How can my business enforce protection of its trade secrets with recent staff changes?

Florida law allows for the enforcement of non-compete agreements which are signed, protect a legitimate business interest and are reasonable in terms of time, geography and scope. Brick Business Law drafts, enforces and defends cases related to restrictive covenants such as non-competes, non-disclosures and non-solicitation agreements. Enforcement of such agreements often requires swift action and thorough analysis to ensure that the business is adequately protected from any improper action of current or former employees and owners.

What are some of the biggest mistakes investors and business owners make?

We see many business cases that stem from the use of online form documents or business documents drafted by non-attorneys which create ambiguities or other situations that lead to litigation. As an example, owners of an LLC may use an online “partnership agreement” which creates some ambiguity as to whether a separate partnership was created or whether the document applies to the operations of the LLC. This simple drafting issue may cause a matter to go to trial instead of providing the certainty and guidance that was intended by the parties. Because of this, we often ask new business owners and entrepreneurs to find an attorney when they start their business, consult with them regularly and invest in having custom business documents created by your own attorney who understands your business.

What are the benefits of buying an existing business?

There are many reasons to consider buying an existing business. First, purchasing an established business saves you a considerable amount of time by not having to deal with any of the startup process. Additionally, the business will have already gathered important information about the nature of the business, how to improve success and what mistakes to avoid. When time is one of the most valuable assets in a business, purchasing a business can save you a lot of it.

What does it mean to “write off” business expenses?

One of the biggest financial benefits of owning a business is that taxes are imposed after expenses are incurred. This means that the business earns revenue, then pays expenses, then gets taxed on the profits. When someone “writes off” an expense, this generally means that they have determined that the expense is a legitimate business expense which may be used to reduce taxable income. Another way people use “writing off” something refers to a receivable which they determine is not collectable.

What is a business divorce?

When business partners no longer want to remain in their partnership, they will often engage in a “business divorce” to go their own ways. This term also applies when a business splits up into smaller businesses for various reasons. When these divorces occur in your business, it is wise to have an experienced business attorney help you through your business divorce.

What is the difference between consumer law and business law?

While these areas of law may seem similar, they actually have many differences. Business law involves statutes that regulate the actions and abilities of businessmen, merchants and anyone else who is involved with trade, sales and commerce. Consumer laws have regulations that focus on target buyers and protect them from sellers and their potentially fraudulent actions. Simply put, business laws mostly apply to businesses and consumer laws relate to those who consume the business products.

What’s the difference between an independent contractor and an employee?

The distinction between an employee and a contractor can often be difficult to determine in many circumstances and is the subject of substantial amounts of legislation and litigation. However, in general terms, an independent contractor retains the freedom and control to choose the means and method for completing a task. In an employment relationship, the employer gets to control how the employee completes the task. There are often a number of other factors that are relevant, such as who (a) controls the schedule of the person performing the work, (b) the payment of employment taxes, (c) the provision of benefits, (d) the regularity of the work, (e) the existence of training and other miscellaneous factors. The determination of whether someone is an independent contractor or employee is relevant for determining what potential rights and responsibilities that the employer owes to the individual who performs the work.

Why is it important to have partnership agreements and operating agreements?

Business agreements often act as shields for those who make them. A proper business agreement can function in a similar manner to a prenuptial agreement, which can dictate the terms of a business dissolution or business divorce. Additionally, these agreements can also save time, money and energy for everyone involved by streamlining any processes in a business divorce while also reducing the opportunity for any kind of business dispute.

Get The Answers You Need Regarding Your Business Issue

At Brick Business Law, P.A. we know that every case is different. It may be difficult to understand what to do next and know what your viable options are. We offer a free initial consultation so that you are able to fully understand the issue and know what to do to protect your interests. Call 888-708-4250 or complete the contact form below with a summary about your issue, and we will be in touch.