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Contingent Fee Cases

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I don’t work on a contingent fee basis, which means take a percentage of the recovery obtained for the client. It is legal to be paid that way and in some instances, the only way a client can afford representation. In some types of cases, types that I do not typically do, it is almost the only way to get the attorney paid. I certainly don’t oppose them.
HOWEVER, far too often, I seem to see situations where the client perhaps should have had an attorney assist them in deciding whether contingent fee was right for them and, more importantly, the terms of that arrangement. Suppose, for example, you have already been offered a certain sum of money. Do you really want to give an attorney a third to a half of that guaranteed amount to perhaps obtain more? What if you end up with less? Perhaps the attorney should have agreed to take a percentage only if the recovery was over a certain amount.
Let’s face it; when you enter into negotations with an attorney for how much he or she is going to charge you, at that moment, they are not representing your best interests, but theirs.


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The Business Divorce

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Well, I am motivated to take keyboard in hand once again. A businessman came to see me about his partner, who had simply walked away from their business partnership. He did not care for any of my answers to his questions.
A business partnership is very much like a marriage – perhaps too much. When you hold yourself out to others as a partnership, you tell those third parties that you are together and each partner, just like each spouce, has authority to incur debt on behalf of the partnership. Thus, if one partner runs up alot of debt and then leaves, the other partner also owes the debt – all of it, just like in a marriage. It’s not half yours and half theirs, it is all yours and all theirs too. And if you are the one with the money, you are the one that will be paying the debts. Yes, you can pursue reimbursement from your partner, but unless you chose one that has property or cash, good luck with collecting.
So, just as it is easy to get married and hard to get divorced, it is easy to go into a partnership, but the “divorce” is just as painful. Oh, and as always, a good lawyer can always help.


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Its why they call it WORK

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Posted In: General Info, Small Business News

I have lost count of the number of recent articles I have seen relating a theft in the workplace by an employee, typically one who had access to the company funds. It is usually a “trusted employee” or one who had worked there for many years. The problem for a small business is that the vast majority of small business owners do not want to deal with the accounting aspect of the business. They went into business because they are plumbers, or contractors, or truck drivers and not because they wanted to be bookkeepers. So, as important as the money is, even in relatively large businesses, this aspect is all but ignored. And the people being ignored eventually figure that part out.
What to do? Well, first, consider a regular audit by an outside agent or firm. Just the knowledge that one is coming will cause most people to think twice before “borrowing” from the till. Second, never have just one employee handling all of the financial aspects of the business. Third, force yourself to do the work! Take a regular look at the bank statement, sign all of the checks yourself, close some of those little used credit accounts, and study your financial statements on both income and expenses. It may not be the part you like to do, but, again, that is why they call it work.


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The Contrarian

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Posted In: Small Business News, Texas Business

It has been a difficult time for business and especially so for small business. Many saw this prolonged downturn coming and prepared by cutting expenses, limiting purchases and increasing cash reserves. However, the depth and breadth of this downturn has made it impossible for many businesses, even well run, sound ones, to survive.
Just as good stock investing strategy is to buy when “they” are selling and “sell” when they are buying, so also is this a strategy in business. Or, in less polite terms, there is blood in the water. If your business has been slow for awhile and it has been hard to stay in the black, you are probably wondering how your less well run competitor is staying afloat. The simple answer is that he probably is not. Now is the time to make him an offer. You will buy him out for a little down, assume his trade debt and have him carry the note. When this passes, and it will pass, make sure you are in the best position to capitalize on backlogged demand with less competition.


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Isn’t This Gambling?

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Posted In: General Info, Government, Small Business News

The State of Texas has now brought us the Donate Zone Charitable Sweepstakes Kiosk! The Texas Alcoholic Beverage Commission (for some bizarre reason) is now authorizing what are essentially eight-liner machines to be placed in any business that meets the qualifications for the pleasure of the citizens of our state. The very small pay-out limit on these machines has been removed when partnering with the state. This is of course otherwise illegal, but if the state operates it and takes a majority of the profit to give to “charity”, it is now completely legal! It is all explained at www.thedonatezone.com. Perhaps we can have casino gambling if we just have the casinos operated by orphanages. Be the first business on your block to offer this new form of legal gambling, or the business across the street from you will.


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Knock, knock. It’s the FTC

Are you a Creditor? You need to know the answer to that question before someone from the FTC asks you. If you loan money, make car loans, etc., you are a creditor and are now a part of the government’s identity theft police. You, as a business owner, are required, not requested, required, to set up a program to detect identity theft, or identity theft attempts, against your customers. Now, while identity theft is a serious concern, and one that I am sure most business owners would be pleased to assist in thwarting, it is no longer your option and there are some pretty stiff penalties in place that can be imposed by the FTC against businesses that do not have a “red flag” program in place. You will, with your time and your resources, assist the government or be penalized.
Your Opportunity to Comment (from the FTC site)
The National Small Business Ombudsman and 10 Regional Fairness Boards collect comments from small businesses about federal compliance and enforcement activities. Each year, the Ombudsman evaluates the conduct of these activities and rates each agency’s responsiveness to small businesses. Small businesses can comment to the Ombudsman without fear of reprisal. To comment, call toll-free 1-888-REGFAIR (1-888-734-3247) or go to www.sba.gov/ombudsman.


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What’s a poor boy to do?

With the wave of new legislation coming now in huge bills that few people get to read until after they are passed, we inevitably get the later, quieter, revisions to parts of those bills to “correct” the oversights that did not get discovered until after passage. If you are in business, what do you do when you feel sure “corrections” are coming, but have not been passed yet? Do you spend time and money to comply, or do you wait on the correction and save the money? When money is tight, that is a tough question. Perhaps the better question is: Would the government enforce penalties against a business for non-comnpliance with a provision when that provision was later “corrected” and that correction put you back into compliance? Sadly, I think they would.


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With Friends Like Technology, Who Needs Enemies?

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Posted In: General Info, Small Business News

I recently purchased an upgraded office computer, as the one I had was rather old. I understand I am supposed to do that. I don’t really know why as my old one was working fine. The new one is still sitting in the box.

I now have to upgrade my software, see what is compatible, clean out the old saved items that at the time seemed important and perhaps purchase other hardware to “accessorize” my new computer. I am not doing that now, as I am feeding my website by blogging.

I had to stop blogging as my office phone was ringing at the same time my cell was. While on the phone, I checked my e-mail and saw that my unread e-mails were accumulating rapidly. Perhaps I can read them as I listen to my phone messages.

However, I have a growing pile of received faxes that supposedly need my attention. I still need to respond to a text from one of my children and I am concerned that I have not embraced tweeting, but my facebook page keeps distracting me from it.

I am suddenly very tired of all of this helpful technology.


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The Business of Business

I read a newspaper article recently that discussed several local restaurant closings with the comment that the town was hard on new restaurants. While that may be so, I would suggest another explanation; doing business is hard on businesses, especially new ones.

While you may be able to cook a mean hamburger, or you may be the best electrician in town, having your own business these days is extremely difficult. While small business may account for most of the jobs in our economy and most of the new job creation, successful operation of a business in today’s climate is not for the faint of heart.

While I am privileged in my practice to help many people go into business, I also represent too many people that are going out of business. The majority of the time the problem was simply an inabity to avoid the pitfalls of operating a business.

Be it a restaurant, a car dealership, a fence company or a law practice, there are taxes to file, debts to collect, employees to support and and excessive amounts of governmental requirements. Add to that the need for marketing, cash management, and time management, finding time for your area of expertise in making that pizza or building that cabinet is nearly impossible.

Good luck and God bless all of you small business owners, you will certainly need it.


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Being Your Own Lawyer

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I had mentioned in an earlier post about the problems people can encounter in preparing their own legal documents. While forms are easily obtained, and do-it-yourself legal software is plentiful, it is what you don’t know that will get you. Just recently, I have dealt with several of these misguided attempts.

There was the deed to the church, except that the church legally does not exist, it is just a name they use. So, who is authorized to sign for the “church”? Or, the instance where they put the church in the pastor’s name – and he died. His wife and children now own the church.

I saw a Will recently that did not actually name any heirs. A contract to sell real estate was used as if it actually transferred title when it only set out what was to be done before title was transferred; so, the property wasn’t actually sold. And the examples go on and on.

Utilize forms at your own risk – which would be the warning that an attorney would have given you, if you had consulted one!


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Thanks for the Help?

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Posted In: General Info, Texas Business

President Obama’s recent nod to assisting small business only serves to further demonstrate his lack of understanding of how small businesses work. His recent proposals to make more loans available and cut the capital gains taxes for certain investments completely miss the attitude of small business owners in this market.

It is too slow and the outlook to unstable to risk expansion. The only potential benefit from the President’s proposal is the reduction in unemployment taxes, except that states such as Texas have just raised the state part of that tax considerably.

Until the constant drumbeat of ever increasing taxes in amount and number stops coming from Washington, small business owners are going to stay bunkered down, not hiring, not expanding, not investing and not building inventories. The government can continue to predict a better financial climate for the Spring of 2010, but small business owners are not sold on it.


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Recession – Waiting for the Other Shoe to Drop

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Posted In: General Info, Texas Business

Advising small business owners on legal matters, I get a unique perspective on the economy from their position. And, since 60 percent of all new jobs are generated by small businesses, that perspective is quite relevant to the question of when this recession might end, assuming you don’t believe it already has.

What I am seeing is many businesses that know they will not survive, but as their business is their sole livelihood, they are staying open as long as possible. You can stay in business a surprisingly long time by simply putting off paying creditors or making minimal payments while the debt increases when you know that you ultimately will be closing the doors and walking away.

We even have a name for it: Pre-Bankruptcy Planning. These businesses are not hiring employees, not investing in their businesses and not spending any money not absolutely necessary.

The ultimate failure of these businesses could significantly prolong this recession.


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Appraisal District Battles

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Each Spring, our 254 counties in Texas go about the unpopular task of determining how much each parcel of real estate, as well as business related personal property, is going to be valued for the purposes of determining how much tax its owners will have to pay.

Typically done by Appraisal Districts, quasi-governmental entities, they assess the values that each taxing unit will use on each piece of property that the particular entity may tax. Thus, the District will tell the city, county, school, etc. what value to use on your house and then the city, county, school, etc. will tax you on that value. The District does not set taxes, just value.

To argue with the Distict, you argue value, not taxes. And, that argument is usually just two-fold. First, what is your property and the property supposedly like yours worth? Second, is your particular property different from those supposedly just like yours that makes yours worth less? So, your commercial building, or your house, is going to be valued using the same formula as used on the surrounding peoperties, such as by square footage, age, type of building material. etc. In that way, the property values are equalized.

So, for example, you would argue that you and your neighbors are all worth less because the recent sales in your area show values are lower than assessed. Then, is there something about your property, like an easement or a bad foundation, that is unusual and makes your particular property worth less than your neighbors.

This is usually accomplished at a hearing before a three member review committee after you have sent in your appeal notice. The members are people from the community who usually have some real estate knowledge, and they will be open to a reasonable explanation from you. Most people, unfortunately, just complain that their property is assessed to high but have no real basis for their opinion.

Thus, most people are not happy with the opinion they get from the committee. With a little kowledge and planning, you can do better.


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I want to be a corporation!

In my law practice, I give advice to many people who are starting their own businesses and the question that comes up most often is whether they should form a corporation. While it is a good question to always ask, my answer often is “no”, which is too bad as “yes” would make me more money. And, after all, this is how I make my living. There are times, however, when the answer is “yes”.

There are really only three ways to do business. The first is by yourself. We call that a sole proprietorship, just to make it sound complicated. The second, a partnership, is with one or more people. A partnership is like a marriage. They are relatively easy to start, everybody shares everything and getting out is much like a divorce. I am a much bigger advocate of marriage than I am of partnerships.

The third way is to incorporate. A corporation really is nothing more than a new legal person. It exists separate from the person or people that started it. We have all kinds of them – general Corporations, Limited Liability Corporations (although that is really what they all do), Professional Corporations, Non-Profit Corporations, and so on. So, why would you want one? Generally, if you are looking at the possibility of a lot of liability and you cannot insulate yourself with insurance, a corporation might help. If your CPA tells you to incorporate to save some taxes, do it. Finally, a corporation is a good way to avoid that partnership thing.

So, by all means, inquire. But, don’t be too quick to spend the money and obligate yourself to spend more than a little bit of time on a corporation that may not give you any benefit. That new business will keep you busy enough anyway.


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You Can Be Your Own Lawyer, Sometimes…

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Posted In: General Info, Starting a Business

With the advent of legal forms available from various internet sites, many people have decided that they can be their own lawyer. There is an old adage in legal circles that anyone who represents himself has a fool for a client. True to that statement, I have made a lot of money correcting people’s mistakes in their do-it-yourself legal work. However, there is one place where the non-lawyer is welcomed in Texas, the “people’s court” – Justice of the Peace Courts and their Small Claims Courts.

These courts, present in all 254 counties in the state, are entry level courts of generally low jurisdiction (the maximum you can “sue for” is low) and simple relief (what the Judge can do). However, most of the Rules of Civil Procedure that apply in the County and District Courts do not apply in the Justice Courts. Thus, most deadlines, pleading requirements and all of the little things that trip up non-lawyers, just aren’t there. You do get to just go to court and tell the judge (or the jury if you so choose) why you think you were harmed. The filing fees are generally inexpensive and you can get a trial relatively quickly.

While all Justices of the Peace receive instruction on being a judge, there is no requirement that a Justice of the Peace by a lawyer, and many are not. All are elected officials and are generally responsive to any voter appearing before them. So, if somebody cheated you or didn’t pay you and you can’t afford a lawyer, give your local Justice of the Peace Court a try!


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But, What is your Question? It has been a long time since I posted to this blog, although this website is still mine and active. With so many sources of information on the web, posting just seemed redundant. But, I spent some time volunteering at the local veteran’s clinic answering individual questions face to face. Alot of the problem people seem to have with legal matters is formulating the question or questions. It kind of relates back to law school training, where the emphasis was to identify the legal problems, the issues, in a person’s story. So, I guess there a large number of answers out there in webland, but it is difficult for people to know which of these fits their question. I wish I could post an easy answer to that one, but I spent many hours in law school learning how to “see” those questions.

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I’m Still Here

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As the web culture matures, we gain the opportunity through extended hindsight to see for ourselves what predictions were accurate and which were not so much. For myself, while I spent a little time posting my thoughts on various legal topics several years ago, I kind of ran out of things I wanted to put out there. And so, my posting has gone dormant. But, at the same time, I have not seen the tidal wave of reasons to post that I was “told” would be forthcoming. I am sure these are there for some people, and surely many more people do post, but it seems the actual flowering of this seed has been underwhelming from this little corner of the world. So, I throw this out onto the webwinds. Perhaps before it blossomed, it was overrun by more recent technology such as Twitter. Perhaps the sheer volume of those that did, and do, post, has satisfied what ever appetite was out there. Maybe, in 10 or so more years, hindsight will reveal that answer as well.


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