Willcox, Buyck & Williams, PA Blog

Tuesday, March 22, 2016

The Perils of Litigation for a Small Business

How Can I protect my small business from litigation?

Small business owners typically focus their attention on achieving success in the marketplace without giving much thought to the possibility of being hit with a lawsuit. However, by failing to prepare for the potential of litigation, entrepreneurs jeopardize their businesses, and possibly their personal assets.

The best defense is to avoid litigation by not being negligent and exposing your business to a personal injury or other civil lawsuit. In order to minimize the risk of litigation, small business owners should start by choosing the right business organization, obtain liability insurance, and retain an attorney.

Creating a Limited Liability Corporation

By creating a Limited Liability Corporation, a small business owner can separate his or her personal assets from the business. In this arrangement, the business exists on its own and is responsible for any legal liabilities or debts it acquires. In some cases, however, an aggrieved client or customer can pierce the corporate veil and sue the business and the owner individually. In particular, a business owner who personally guarantees a loan will be liable for the debt.

Liability Insurance

Business owners typically need to obtain an array of insurance policies, such as workers' compensation insurance and errors and omissions coverage. However, in order to protect a small business from the financial damage of a lawsuit, it is essential to have liability insurance that provides a source of funds in the event that a successful lawsuit is brought against the business.

Hire an Attorney

In spite of all the preventive steps a business owner can take, lawsuits and business disputes are sometimes unavoidable. These may include: a breach of contract, infringement of intellectual property, trade secret theft, or various employment claims such as discrimination, harassment and wrongful termination. It is also possible that a class action will be brought by customers, or that conflicts among the owners and minority investors may arise. In order to ensure business continuity, a business owner must be prepared to handle any of these disputes.

Often it is possible to settle disputes through negotiation and avoid going to court. If negotiation is not successful, there are other methods to resolve conflicts including mediation and arbitration. In any event, the best way to minimize the potential damage that can result from litigation is to hire an attorney who specializes in commercial litigation and has knowledge of local customs and laws.


Monday, February 22, 2016

Judge Rules South Carolina Biotech Firm Tricked Workers into Accepting

Incentive Plan Changes that Depleted their Wealth, Awards them $53.5 Million.

Did a company’s change in its employee compensation package amount to fraud?

When employers use incentive-based compensation plans to motivate their employees, the result often benefits all involved. But not when a company decides it has been too generous and tries to reduce compensation covertly. According to a recent legal ruling, this is what happened at ArborGen in Summerville, South Carolina.

 The court entered judgments against the company, several related companies, and board members of these companies, for conniving to reduce the value of options promised to 10 of its employees without their realizing it. The judge's award of $53.5 included punitive damages and interest.

The employees had participated in a lucrative stock option plan designed to enable them to benefit from the growth of ArborGen. As the company grew, members of the board of directors decided they had been too generous. They came up with a plan to dilute the option plan of the employees, a goal they accomplished through misrepresentations and false information, according to the lawsuit. Instead of receiving $11.3 million in equity based on a $550 million valuation of the company after its growth, the employees received a mere $414,330 in incentive compensation. ArborGen was worth even more—$650 million—when it was converted to a C-corporation.

The case illustrates the importance of care and deliberation when creating employee incentive and compensation plans. It also is a reminder of the need for full disclosure and for abiding by legal rules when seeking to make changes. A qualified corporate attorney can advise on the best approach. Attempting to correct mistakes through shortcuts or subterfuge only results in negative outcomes:  legal liability and even greater costs for management, board members and the company as a whole.

 


Friday, February 19, 2016

Corporate Law Policy Updates in South Carolina

With the new year well underway, it is always important to take a look at the new and pending policies set to impact South Carolina business owners and those involved in the corporate world. On Tuesday, January 12th, the South Carolina General Assembly convened for the first time in 2016, and the year promises to bring about a number of important changes.

For those in the healthcare field, the Assembly has begun its review of an important bill targeted at those facing severe illness, known as the Right to Try Act (Senate Bill 929). Under this act, patients seeking alternative courses of treatment – particularly those who are facing a terminal illness – may be able to access drugs that have not yet met full approval from the FDA, but have passed the first phase of approval.

Meanwhile, a subcommittee continues to discuss the Certificate of Need bill, which would place limits on the amount of equipment facilities can purchase with the use of state and federal funding – which would require a detailed statement explaining why the equipment is necessary for the successful operation of the business or facility.

Other interesting legislation up for debate in the House includes various amendments to the state’s Educational Tax Credit For Exceptional Needs Children, as well as various other taxation amendments. Also, the Senate heard testimony from various individuals involved in the construction industry, particularly those who feel greater oversight of independent contractors is necessary to ensure proper work environments for sub-contractors.

As well, the South Carolina Governor’s Office unveiled its 2015-2016 budget, which includes nearly $1.3 billion in unallocated funds. According to Governor Haley, this extra money will likely be used to enhance South Carolina’s infrastructure, as well as a $300 million cash push toward the various education initiatives at work around the state.

If you have questions about legal policy in South Carolina, particularly with regard to corporate and real estate matters, please contact a preeminent South Carolina law firm today!


Thursday, January 28, 2016

South Carolina's BMW Plant Settles Employment Discrimination Suit

What can happen to a business engaging in discriminatory hiring and employment practices?

As a South Carolina small business, it is vital for your organization to have a keen understanding of federal and state anti-discrimination laws – as the penalties for violating these mandates are steep. While most well-meaning businesses do not engage in intentional discriminatory misconduct, office policies or protocols that have even the effect of possible discrimination could amount to a violation. By having knowledge of the law, you have a powerful means to protect you business.

BMW plant settles discrimination suit

By way of example, South Carolina’s iconic Spartanburg BMW plant recently settled a two-year old racial discrimination lawsuit for $1.6 million. The case involved nearly 70 former plant applicants, all of whom claimed to have been unfairly discriminated against by the plant’s criminal background check policies. More specifically, the BMW plant had implemented a policy requiring an in-depth criminal background check of any applicant for a job, and also implemented a rule prohibiting the hiring of any applicant with any criminal history within the past seven years.

To make matters worse, the plant further amended its guidelines in 2012 to prohibit the employment of any worker with any criminal history from any year – and promptly fired 88 current employees, some of whom had worked at the plant for over ten years. Of the 88 employees terminated for criminal background issues, 70 were African American – prompting an immediate discrimination lawsuit by the Equal Employment Opportunity Commission (EEOC).

As this story shows, an employment policy need not be blatantly discriminatory to violate the law, so long as the policy has an adverse impact.  In addition to the seven-figure settlement offered by the company, BMW agreed to rehire all employees who were terminated as a result of the policy change. In a statement by the regional EEOC agent, “[w]e are pleased with BMW’s agreement to resolve this disputed matter by providing both monetary relief and employment opportunities to the logistic workers who lost their jobs at the facility….We commend BMW for re-evaluating its criminal conviction records guidelines that resulted in the discharge of these workers.”

If you would like compliance advice for your South Carolina business, you should consult with a qualified employment and labor law attorney.


Wednesday, January 20, 2016

Lifelock Pays Massive Settlement Involving Consumer Fraud

 What are the implications for a business caught dabbling in fraud? 

As a business owner, you're likely engage in a substantial number of transactions with third-party vendors, manufacturers or suppliers -- all of whom you rely on to engage in upstanding and ethical conduct. However, corporate and consumer fraud continues to run rampant in the U.S., with agencies like the Federal Trade Commission (FTC) regularly announcing settlements, lawsuits and penalties imposed against unscrupulous, dishonest businesses.

Case in Point: LifeLock's Fraudulent Behavior

In today’s case, the consumer identity protection company LifeLock was recently slapped with the largest order enforcement action in FTC history: $100 million. As a bit of background, the company was penalized in 2010 for false advertising and various other consumers’ rights violations. More specifically, the company was alleged to have falsely guaranteed its identity theft protection products, and even displayed the CEO’s social security number on its delivery trucks – stating it “protects against [identity theft] ever happening to you. Guaranteed.”

Upon investigation by the FTC, however, it was revealed that LifeLock only protects against certain types of identity theft, not including the misuse of an existing account – which is the most common form. The company also did not insulate against employment or medical records theft, as well as a slew of other fraudulent scams abounding in the post-digital age.

As a result, the company was ordered to pay $12 million and cease engaging in false and deceptive trade practices. Now,5 years later, the company has paid $100 million for violating the terms of the 2010 order. Specifically, LifeLock deceptively advertised it used the same safeguards as banking institutions. In addition, it failed to promptly send alerts when identity theft was suspected. The company is also alleged to have failed to keep adequate corporate records, wrongfully charged users excessive fees, and failed to protect its own customers’ sensitive login and payment information.

The company’s original order has been extended an additional 13 years, provided it can manage to stay in business that long.

If you are dealing with a wayward business, or would like to ensure that your company strictly complies with advertising and marketing laws, you should consult with a knowledgeable business attorney.  


Thursday, December 31, 2015

Dupont and Dow set to merge their businesses

I've heard that this has been a big year for mergers and acquisitions.Is this true?


The short answer to that question is, yes. Recently another big merger was announced. Dow Chemical and DuPont are planning to combine their businesses. If the merger is approved by regulators in each of the individual countries, it will be the 18th largest merger ever completed. The estimated time required to complete the process is 2 years. The resulting combined company would be worth $130 billion.

One might ask why the two companies would bother merging at all. It turns out that the combined companies have identified $3 billion dollars in annual cost savings. The companies suggest that such a figure would translate to $30 billion in market value. In addition, DuPont will be shedding $700 million in costs before the process starts. Dow will cut $300 million. Until the process ends, shareholders of each company will hold 50 percent of the combined company.

All is not said and done with this agreement, however. Regulators have shown that they are not comfortable with the enormous number of mergers this year and may look to intervene here in the United States. The reason would be that mergers can be seen as anticompetitive. Regulators have stepped in between Office Depot and Staples recently because that deal was seen as anticompetitive. To try to head off any potential interruption from regulators, the merged company would plan to split into three separate companies: an agricultural company, a material science company and a specialty products company. However, the new agricultural company would still be the industry’s largest.

This potential deal ranks fifth in terms of value of all potential deals announced this year. The largest so far is a potential merger between Pfizer and Allergan, valued at $160 billion. The next is a potential merger between Anheuser-Busch, InBev and SABMiller valued at $117.4. The third largest is a potential merger between Royal Dutch Shell and BG Group valued at $81.5 billion, and the fourth largest is a potential merger between Charter Communications and Time Warner Cable valued at $79.5 billion. All of the aforementioned deals are still pending.

If you have questions about the best way to manage your business, corporation or shareholders, please do not hesitate to contact one of our skilled business and corporate attorneys. 


Monday, December 14, 2015

Charleston Aims to Compete with Silicon Valley

What are some of the ways Charleston is helping start-ups start up?

In a city famed for old-fashioned grace and hospitality, it may be difficult to picture start-up companies moving into the millennial age of computer technology, but that is exactly what's happening in Charleston. The movement to promote technological businesses is not limited to South Carolina, but is occurring in cities and states all across the country. In many locations where the Great Recession hit hard and many small and large businesses caved in under the financial pressure, new tech companies are beginning to take root.

Teaching Business Students to Create Businesses

In Charleston, with the help of a $250,000 grant from the South Carolina Commerce Department, the Interdisciplinary Center for Applied Technology (ICAT) program at the College of Charleston has raised another quarter of a million dollars from private companies and private donors. In the initial class of the ICAT program, six of eight students have turned their educational projects into incorporated businesses!

"Accelerators" Putting the Pedal to the Metal


In other parts of Charleston, "accelerators" are also incentivizing start-ups. The Harbor Entrepreneur Center, a nonprofit with four locations in the city, is providing free or inexpensive office space, as well as mentors and training for startups in any industry. What is the incentive for the incentivizer? If the start-up successfully reaches $100,000 in investment or $250,000 in revenue during its first two years, the nonprofit takes a $5,000 cut.

Clearly, it is to everyone's advantage for the start-up to be successful. Another accelerator, The Charleston Digital Corridor, expects to open its third start-up space downtown. It has already given 92 start-ups its support.

Other Small Cities Encouraging Startups as Well


All over the country, in cities from Chattanooga to Chapel Hill, from Kansas City to Salt Lake City, similar programs are being put into motion. Frequently, they are centered on large universities. The "innovation district" of Chattanooga, sponsored by a city-private partnership that will spend $500 million on the project, is being designed to include 400 apartments, many of them tiny, to put out the welcome mat for millennials, the young adults they want to attract.

Other cities as well are trying to attract millennials to open start-ups by building receptive communities; bike paths, restaurants, bars, and musical venues are part of the package. So is access to high-speed internet. Nine cities so far are part of Google Fiber which provides internet service 100 times faster than average.

Government Assistance for Startups


State and federal governments are also providing financial help for entrepreneurship. President Obama's TechHire Initiative will disperse $100 million in grants to cities, states, universities and community colleges to train employees through coding boot camps. Twenty cities have also committed to working with regional companies to provide such training.

If you are planning a start-up business, technological or otherwise, you should engage the services of a skilled business attorney.

Wednesday, December 9, 2015

Preparing for the future is an uncertain business...

Estate Planning Don’ts

Preparing for the future is an uncertain business, but there are steps you can take during your lifetime to simplify matters for your loved ones after you pass, and to ensure your final wishes are carried out. Planning for what happens to your property, or who cares for your family members, upon your death can be a complicated process. To simplify things, we’ve created the following list to help you avoid some of the pitfalls you may encounter before, or even long after, you create your estate plan.

Don’t assume you can plan your estate by yourself. Get help from an estate planning attorney whose training and experience can ensure that you minimize tax implications and simplify the process of settling your estate.

Don’t put off your estate planning needs because of finances. To be sure, there are upfront costs for establishing the estate plan; however establishing your estate plan is an investment in the future well-being of your family, and one which will result in a far greater cash savings over the long term.

Don’t make changes to your estate plan without consulting your attorney. Changes in one area of your estate plan could impact other provisions you have made, triggering legal or tax implications you never intended.

Don’t assume your children will intuitively know your wishes, and handle the situation appropriately upon your death. Money and sentimental items can cause a rift between even the most agreeable siblings, and they will be especially vulnerable as they deal with the emotional impact of your passing.

Don’t assume that once you’ve prepared your estate plan it’s set in stone. Estate planning documents regularly need to be revised, often due to a change in marital status, birth or death of a family member, or a significant change in the value of your estate. Beneficiary designations should be periodically reviewed to ensure they are up to date.

Don’t forget to notify your family members, friends or other beneficiaries of your estate plan. Make sure your executor and successor trustee have access to your end-of-life documents.

Don’t assume your spouse will handle everything if something happens to you. It’s possible your spouse may be incapacitated at the same time, for example if you both are injured in the same accident. A proper estate plan appoints alternate representatives to handle your affairs if both you and your spouse are unable to do so.

Don’t use the same person as your agent under both the financial and healthcare powers of attorney. Using the same individual gives that person an incredible amount of influence over your future and it may be a good idea to split up the decision-making authority.

Don’t forget to name alternate agents, executors or successor trustees. You may name a family member to fill one of these roles, and forget to revise the document if that person dies or becomes incapacitated. By adding alternates, you ensure there is no question regarding who has the authority to act on your or the estate’s behalf.


Saturday, November 21, 2015

Tips for Handling Contract Legalese

What are some contract buzzwords I should be aware of?



These days, we sign large and complex contracts routinely. For example, have you signed an iTunes user agreement? A cell phone plan contract? A “terms and conditions” contract for software or use of a website? You may not understand everything that is written in the contract, but there are a few red flags that should grab your attention.

Watch out for clauses that provide that the contract will automatically renew without any input from, or notice to, you. You’re probably familiar with contracts of this type, as they have become ever more popular. Many streaming video websites, for example, have automatic renewal clauses in them. Many gym memberships have automatic renewal clauses as well. Be on the lookout for these, because you may not realize your contract includes this type of clause until you see it many months or even a year later, on your bank statement.

Another important phrase to be on the lookout for is early termination fees. This is especially true when it comes to purchasing a cell phone service contract, but this phrase can be found in other types of contracts as well. You’ll want to note exactly what the penalty is for leaving the agreement at an earlier date than you’ve agreed to.

In certain types of contracts, such as those for gym memberships you’ll want to be on the lookout for liability waivers. Is your gym telling you that they will not agree to be responsible even if they negligently injure you? Have you found this term in an agreement for your child’s summer camp? You’ll definitely want to consider the implications of such waivers before agreeing to the terms.

Lastly, keep in mind that contracts now commonly use arbitration clauses. These are clauses that specify that your grievance with the company cannot be heard in a court of law, but rather via a process called arbitration. Arbitration is essentially a privatization of the court system. It is often significantly faster and cheaper, but at the same time questions of neutrality can be raised. Is the arbitrator being paid by your adversary? Keep this in mind if you see an arbitration clause.

Before signing contracts of importance, it is wise to consult with an experienced attorney who will guide you and protect your personal and/or business interests.

Saturday, November 7, 2015

The Importance of Maintaining Environmental Compliance as a South Carolina Business Owner

What can happen to a business when it is in violation of state and/or federal environmental standards?

When starting a business, the regulatory impositions often seem overwhelming. From taxes to licensing to zoning, the number of state and federal requirements placed on the backs of a business owner can quickly lead to confusion and anxiety – particularly when facing an audit or inspection. However, among the various regulatory mandates imposed on business owners, environmental guidelines and laws can reap some of the highest penalties for the unsuspecting industrialist – and an ounce of prevention is always worth a pound of cure.

Take, for instance, a highly publicized (and embarrassing) story published about one of South Carolina’s most notorious polluters: Utilities, Inc., a national corporation maintaining several subsidiaries in South Carolina and surrounding states. According to an exposé of the company published in 2013, it has fielded over 55 environmental sanctions by South Carolina authorities alone – not to mention an untold number of violations against EPA standards.

Most notably, companies owned by Utilities, Inc. are named in dozens of sanctions involving improper sewage treatment, violations of the health code, and unlawful dumping of deadly chemicals into surrounding bodies of water. In 2013, the company was blamed for the elevated arsenic levels in local drinking water, levels that caused many area residents to experience bouts of severe illness.

The company has since paid $645,000 to South Carolina’s Department of Health and Environmental Control. However, dabbling in this sort of environmental laziness can lead to much higher penalties in the event individuals begin filing personal injury lawsuits stemming from their exposure to harmful toxins. What’s more, failing to properly address environmental concerns can lead to a costly public relations disaster, causing an offending company to go out of business altogether.


Wednesday, October 21, 2015

Legal Terminology in Contracts Explained

What do these words mean? How does they affect the meaning of the contracts?

All of us sign contracts on a routine basis, whether we work under contract or sign contracts for personal reasons, such as during a purchase. You may, for example, have signed a contract when you signed up for cell phone service. If you took the time to read the entire contractual agreement to determine exactly what you were agreeing to, you may have found yourself stumped by certain of the terms. In this post, we'll define some of the terms that appear frequently in contracts. Remember, however, that the best way to interpret a contract is with the expert advice of a seasoned business law attorney.

In general, contracts are formed after the acceptance of a valid offer. The party extending the offer is called the offeror, and the party receiving the offer is called the offeree. Much of contract litigation focuses on the offer -- the offeror’s willingness to enter into a contract with the offeree that provides the offeree with the power to accept the offer and create a contract. In addition, much litigation is devoted to the acceptance -- the moment that the contract is created.

Contracts often have conditions. Depending on the language used, the obligations of one or more parties to do something pursuant to the contract may not come into effect until a particular condition has been satisfied. All contracts, however, must have what is called consideration. Consideration is the bargained-for exchange of the parties -- “this for that”  which the parties perform pursuant to the contractual exchange.

When a contractual agreement is breached, that is when one or more parties fails to do what they have agreed to do, the non-breaching party can seek a remedy. One type of remedy is damages -- the financial adjustment the court can order one party to make to right the wrong. Damages are computed in many different ways, but are always designed to attempt to make the non-breaching party whole again after the breach, by, for example, ordering the breaching party to pay compensation. Another type of remedy is an injunction, which forces one party to take a particular action.

This post is just a limited overview of very common contractual terms. To go further in depth speak with an attorney at Willcox, Buyck & Williams, P.A. Contact us at our Florence office at 843-536-8050, or our Myrtle Beach office at 843-461-3020.


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