Top Five Mistakes Business Owners Make at Depositions

Depositions are a discovery tool used in lawsuits that allow a party to gather evidence about the case. A party testifying at a deposition is under oath, and the entire session is transcribed into an official record by a court reporter. In a lawsuit, depositions can be very useful to learn what evidence the other party has and to force parties to answer key questions before the trial. If you are called to testify at a deposition, be sure to discuss the situation with a South Carolina business litigation lawyer beforehand.

MISTAKE NUMBER ONE: Failing to Prepare for the Deposition

Many business owners do not make time to meet with their South Carolina business attorney before a deposition. The demands of operating a business always take priority over the need to prepare for the deposition. Your attorney provides guidance about how to conduct yourself during the deposition, including the do’s and don’ts of depositions that could prevent you from making a costly mistake that could hurt your case. 

MISTAKE NUMBER TWO: Talking Too Much

Talented attorneys ask open-ended questions for a reason. They want you to continue talking after you provide the answer to the question. You are more likely to “spill” useful or incriminating information the longer you talk. 

Listen carefully to each question and answer “yes” or “no” whenever possible. If you must provide a longer response, answer only the question asked, and then — stop talking. If the attorney desires more information, she will ask for it.

Do not give in to the temptation to fill the silence. Attorneys often pause between questions as they wait for you to fill in the silence with additional information. 


MISTAKE NUMBER THREE: Don’t Treat the Other Attorney as Your Friend

You may be comfortable dealing with attorneys through your business. Therefore, attorneys do not make you nervous, and you do not automatically assume they are adversarial. The attorney in a deposition is adversarial. His job is to obtain information and evidence to help his client. 
Resist an attorney’s attempt to build a rapport with you during the deposition.  The goal of building a rapport is to make you feel at ease so you will commit Mistake Number Two (talking too much). 

 

MISTAKE NUMBER FOUR: Arguing with the Attorney

You do not want to be his friend, but you also do not want to fight with the questioner. Using techniques to put you on the defensive is another deposition tactic used by some attorneys to push you into committing Mistake Number Two (talking too much).  Are you beginning to see a pattern? If the attorney can keep you talking, he can get information to use against you. 
Do not argue with the attorney or allow the attorney to “push your buttons.” You need to remain calm and composed so that you can focus on the questions being asked and your response. Otherwise, the attorney may push you to commit Mistake Number Five (rushing to answer questions).

MISTAKE NUMBER FIVE: Rushing to Answer Questions


If you become rattled, you might forget to listen carefully to each question before you answer the questions. It is crucial that you listen to the question fully, make sure you understand what is being asked, and pause to think about your answer before providing your answer. If you do not understand the question or you are unclear what information the question is seeking, ask the attorney to clarify or rephrase the question. 

Rushing can lead to answers to questions that have not been asked. Rushing can also lead to providing a partial response to a question, which could hurt your case if you are asked the question at trial and provide a different answer.

Contact a South Carolina Business Attorney if Your Company is Being Sued

If you receive a lawsuit or notice of deposition, it is wise to schedule a consult with a member of our team at Willcox, Buyck & Williams, P.A. today to discuss your legal rights, obligations, and options for resolving the dispute. Ignoring the matter or attempting to handle the matter without legal counsel could result in a very poor outcome.

Should I include a mandatory arbitration clause in my business contract?

Arbitration is a way to resolve any disputes outside of the court system. Over the years, as court dockets have become impacted, arbitration clauses have become more popular in commercial contracts. By agreeing to binding arbitration parties agree to abide by the decision of one or more chosen neutral parties. The solution imposed is thus legally binding and does have the ability to be enforced in a court.

Arbitration In South Carolina

Arbitration has a long history in South Carolina, dating all the way back to the late 1700s. Throughout the last decade, the South Carolina Supreme Court has ruled on several decisions concerning the enforcement of arbitration agreements, and has generally ruled in favor of any agreements.

An experienced commercial contracts lawyer will serve as a valuable asset if you are considering an arbitration case, or if you are drafting a business contract. They will be able to review the requirements of South Carolina law and be able to give you the guidance you need to decide if a clause is desirable and what it should say.

Why Should I Include A Mandatory Arbitration Clause?

Arbitration clauses in business contracts have been regarded as an easy way to avoid formal litigation. Formal litigation is usually somewhat time consuming and an arduous process for everyone involved.

Arbitration is useful when:

1. A degree of privacy is needed: Arbitration cases are confidential, which means trade secrets are easier to protect and any judgment or award is not disclosed to the public.

2. Time is of the essence. In jurisdictions where the dockets are full, cases may not be resolved for years. If you are interested in having your issue resolved in the most expedient manner possible, arbitration may be an attractive option.

Why Shouldn’t I Include A Mandatory Arbitration Clause?

One situation in which you might want to avoid a mandatory arbitration clause is if the arbitration is non-binding. Imagine presenting your case, with countless exhibits and witnesses over several days or weeks of arbitration proceedings, winning an arbitrators award and then being sued in court when the other party is unhappy. Why would you want to try your case more than once?

Another thing to consider is that most cases settle out of court. If you are forced into arbitration, you will have to provide a significant amount of money to the arbitrator to start the case, which in complex commercial litigation can be in the tens of thousands of dollars. In contrast, filing a case in South Carolina State Court will typically cost less than $1,000.00. Parties are more likely to settle if the initial financial outlay is modest. If significant money has already been paid in arbitration, there is less incentive to settle early.

Thinking of Arbitration?

Willcox, Buyck & Williams, P.A. serves individuals and organizations involved in a wide array of legal transactions and disputes. Our attorneys regularly assist clients in drafting and negotiating business contracts and can assist you in determining whether an arbitration clause is right for you. Contact us today to schedule your free initial consultation by calling us in either of our offices in Florence at (843) 536-8050 or Myrtle Beach at (843) 461-3020.

Lawmakers Pass the Defend Trade Secrets Act

How can my business protect its trade secrets?

Certain forms of intellectual property such as patents, trademarks and copyrights have long enjoyed protection under Federal law. Until recently, this has not been the case for trade secrets. Now that Congressional lawmakers have passed the Defend Trade Secrets Act of 2016 (DTSA), however, owners of trade secrets will have a Federal private cause of action for the misappropriation of this highly sensitive information.

What are Trade Secrets?

Information such as formulas, designs, practices, processes or patterns that are not widely known outside of a business are considered to be trade secrets. These can include things like the formula for Coca-Cola or any of Google’s search algorithms. Essentially, the information must provide the holder with a monetary benefit or a competitive advantage in the market place. The holder must take steps to keep the information private, however, otherwise it will lose its designation as a trade secret and the owner will lose exclusive rights to the information.

Legal Protection of Trade Secrets

Previously, trade secrets had limited protection under the Economic Espionage Act if 1996 (a criminal statute) and a patchwork of state laws that were often contradictory and subject to jurisdictional disputes.  The DTSA provides holders of trade secrets with powerful legal recourse to pursue a civil action in federal court if a trade secret is misappropriated. In addition, a court may issue an ex-parte order for the seizure of stolen property to prevent dissemination or transmission of the trade secret.

Further, the DTSA provides holders with the ability to seek limited injunctive relief to prevent the actual or threatened misappropriation of the trade secret. Most importantly, plaintiffs may seek actual damages as well as unjust enrichment. Finally, pursuing a federal cause of action, does not preempt state trade secret protections.

In short, the DTSA has a number of provisions that will provide business owners with new rights as well as new responsibilities, particularly with respect to their role as a employers. For example, employment contracts will need to include provisions regarding confidentiality and the remedies available to employers in cases of trade secret theft by employees.

Both chambers of Congress approved the bill in April and the president is expected to sign it into law. In the meantime, businesses still need to be proactive in protecting their trade secrets and prepare for the new law by ensuring their protocols are up to date. Those seeking advice on how to keep their sensitive information secret or have had their intellectual property misappropriated should engage the services of an experience business law attorney.

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.

South Carolina Judge Rules Subscription Charges ‘Count’ as Taxable Income Against Cable Conglomerate

If an out-of-state business collects subscription proceeds from a South Carolina resident, must it pay South Carolina tax on that income?

With subscription-based services all the rage nowadays, the concept begs the question: What about taxes? Based on a recent case holding, it is clear that cable provider DirectTV had hoped to circumvent this minor detail – but was instead slapped with an $8.5 million income tax bill for failing to pay taxes on revenues from consumer subscriptions in the state of South Carolina. The case, which was decided by a state administrative judge within the Department of Revenue – hinged on the concept of “income-producing activity,” and whether the cable company actually engaged in taxable activity within the state of South Carolina. The case also serves as a glaring reminder of a foundational principle that, in life, only two things are inevitable: death and (federal and state) taxes.

Basis of DirectTV’s claims: It never actually made money in South Carolina

DirectTV asserted throughout the course of the litigation that the monthly subscriptions maintained by South Carolina residents did not “count” as the source of its income. Rather, its income is derived from “national marketing, content development, broadcast operations and customer service — business activities that are conducted outside of South Carolina.” By that reasoning, the company shouldn’t have to pay income tax in any state outside its state of incorporation, right?

Not really. Invoking a much more thorough level of reasoning, the administrative law judge concluded that the actual revenue-producing activity conducted by DirectTV involved its “delivery of the signal into the homes and onto the television sets of customers….[and] all of those income-producing activities related to South Carolina customers occurred entirely within South Carolina.

Thankfully, the judge also took a moment to rebuke the respondent for its argument, stating that it was of “no practical value.” Between 2006 and 2011, DirectTV has generated over $2 billion in subscriber fees from South Carolina homes and businesses, including $136 million in revenue from cable equipment and boxes.

If you are struggling with a state taxation issue or would like to discuss a general business matter, please do not hesitate to contact the Florence and Myrtle Beach business law attorneys at Willcox, Buyck & Williams today: 843-536-8050.