Category: Business Law

It can be challenging to find the right candidate for a job. There could be a very small pool of qualified individuals in the area with the requirements and experience to handle the job. Some companies are tempted to hire employees who might be working for their clients or customers.

Before you hire one of your client’s best employees away from the company, you might want to discuss the matter with a South Carolina business attorney. Depending on the type of business you operate, hiring a client’s employee might cause several legal problems for your company. 

Benefits of Hiring a Client’s Employee

There could be some benefits of hiring your client’s employee. For example, the person is already familiar with the industry. They will require less training, which could result in quicker productivity. Because the person was on the other side of the business relationship, they could bring a unique insight into customer needs and desires that could improve your products and services. 

A client’s employee may already know the people on your team, which could ease the transition process. They also are familiar with your product or service. A client’s employee may even know or have relationships with other clients, which could benefit your company. 

Potential Issues When Hiring a Client’s Employees

Of course, there could be potential problems when hiring a client’s employee. In addition to the ethical dilemma of taking a client’s employee, there could be conflicts of interest that need to be explored. If you are not careful, you could find yourself a co-defendant in a lawsuit against the employee. 

The employee may have signed one or more employment contracts that could pose several legal problems. For example, they may have signed a noncompete agreement that could prevent them from taking a job with your company. Other employment contracts and agreements could prevent an individual from performing all tasks required for the job.

There is also the question about how your client or customer might react. The ethical choice would be to discuss the matter with your client before hiring the employee. If the employee approached you inquiring about a potential position with your company, they may be ready to leave your client and will do so when they find another job. If that is the case, your client may not view you hiring the employee as harshly as if you approached the employee about a job with your company. 

Whether you talk to your client beforehand or let the client find out after you hire their employee, the result could be disastrous. You could lose the client’s business. If the client is one of your best and most profitable clients, the potential loss for your company may outweigh any potential benefits of hiring the person.

Contact Our South Carolina Business Attorney for All Your Business Matters

Our South Carolina business attorney handles all types of business law matters, including issues related to employment law. If you have questions, contact our law firm today to speak with one of our attorneys. Prompt legal advice is the best way to head of a more significant legal issue. 

Although it can be tempting to say, “See you in court,” when you have a business dispute, it is often to your advantage to try to reach an agreement with the other side rather than filing a lawsuit. Being involved in a disagreement with a client, customer, vendor, or competitor can feel a bit like trying to pick your way through a minefield. 

A South Carolina litigation dispute attorney can help you navigate the process of dealing with these situations and advise you on settlement strategies. Here are some suggestions on resolving South Carolina business disputes out of court:

Tips on Settling Business Disputes Without Going to Court

When you try to avoid going to court to have a judge decide the matter, there are a few things you should keep in mind.

• Create a paper trail throughout the negotiation process. Email is an easy way to do this. You do not want to have the other side back out of an agreement or try to force you to accept different terms than you agreed to in the negotiations. Telephone calls are only useful if you back them up in writing, like emailing the other side and asking them to confirm the terms of the agreement that you specify in the email. Doing all of the deal-making in writing is a better approach.
• Have an attorney draft a formal document that contains all the terms of the agreement. South Carolina law requires specific items to be in a contract for the paper to be enforceable. If an attorney drafts the agreement, you should not have to worry about whether a judge will rule in your favor if the other side breaches the terms of the document.
• Consider having a lawyer negotiate on your behalf, particularly if you think that the other side is working with a lawyer on the matter. Although no one knows your business as well as you do, you might not know the law as well as an attorney. When the other side is getting legal advice, you should do the same. The other side might try to get away with less-than-honorable tactics if you do not have a lawyer looking out for you.

Depending on your situation, you might need to take additional measures to protect your interests.

Reasons to Try to Settle Business Disputes Out of Court

You can save yourself money and reach a quicker resolution if you can reach an agreement instead of going to court. Here are some additional factors that might persuade you to try to resolve the matter amicably:

• Preserve the business relationship. If the party on the other side is a long-term client or you want the relationship to continue after the dispute is over, an out-of-court resolution can do less damage to the situation than adversarial litigation.
• Keep business disputes out of the public eye. When you file papers with the court, they become public record. Most business people would prefer to keep the story out of the media when things do not go smoothly. 
• The risk of a counterclaim. Sometimes, the person who gets sued has a valid counterclaim that ends up costing the person who filed the lawsuit more money than they sought in the case.

A South Carolina business attorney can advocate for you in business disputes and try to reach an amicable resolution of the differences. When a conflict does not settle, the lawyer can file a lawsuit to go after the justice you deserve. Contact our office today.

Regardless of the type of business you own or your business’s size, you can benefit from a succession plan. Succession planning allows you to ensure that your business continues if you cannot operate the business or you exit the business suddenly. However, business succession planning also gives you the chance to address issues that may have been overlooked that could impact your day-to-day operations now and in the future.

Business succession planning does not need to be a complicated, time-consuming process. It is not just for large corporations. Business succession planning can help smaller companies that might need to develop better organizational structure and effective job design. Our South Carolina business attorney helps companies of all sizes develop a business succession plan that meets their goals and needs.

Goals of Business Succession Planning 

The goal of business succession planning is to identify individuals who can be trained to take over key positions when the leaders in those positions leave the company. It ensures continuity and the availability of employees who have the knowledge and necessary skills to run the company. 

Business succession planning is the act of investing in employees or individuals so that they are ready to take over crucial responsibilities required for the successful operation of the business. However, before you can identify critical positions within the company that are essential to the company’s continuity of operations, there are a few things that you need to evaluate. 

For example, what needs to occur to keep the business operating on a day-to-day basis? Identify the essential and non-essential processes and operations. After identifying the essential processes and operations, analyze how the loss of employees in various positions would impact operations. How easy would it be to replace employees in each of those positions? 

Could another employee step into that role seamlessly to ensure continuity of operations? If not, there must be a plan for training replacements for those roles to ensure there is always someone ready to step into that role to ensure a sudden loss or unexpected situation does not impact the business operations. 

For small business owners, the owner’s role is generally one of the company’s most vital roles. The owner needs to identify someone to train to step into the role if the owner suddenly dies or becomes incapacitated. Planning also ensures that the owner has someone in place when the owner decides to retire or exit the company. The person or persons trained to take over the company may be family members or employees who are invested in the company. 

Benefits of Business Succession Planning

In addition to ensuring that there is a pool of individuals who are prepared to assume key roles of leadership and management within the company, business succession planning also provides other benefits for the company. 

You can preserve your brand identity because you do not need to hire new people who might not be familiar with your company’s brand, mission, and vision. You also reduce the expenses of searching for a successor. The process of hiring new employees can be time-consuming and costly. Business succession planning identifies employees within the company who can learn new skill sets to grow into leadership roles.

Business succession planning also eliminates the need to choose replacements for leaders and managers without much thought. You have time to evaluate potential successors and train them instead of being forced to pick someone on a whim because of a crisis.

Contact a South Carolina Business Attorney for More Information 

If you do not have a business succession plan, we can help. Companies of all sizes benefit from a business succession plan. However, small business owners need a plan to ensure that the company they worked hard to build does not crumble and fail when they exit the business. Our South Carolina business attorney can help you develop a succession plan for your business that meets your goals and needs. Contact our office today.

Starting a business in South Carolina is an exciting venture that can lead to great success and financial security. But for many, building and running a successful business doesn’t include thoughts about the end-game…when it’s time to walk away.

South Carolina business attorneys advise that comprehensive business plans account for how to leave your business when the time arrives. When reflecting on your business plan and essentials, do you have an exit strategy?

4 Business Exit Strategies

Here are four exit strategies you might want to consider:

1. Leave It to Family

If you have a family-owned business, an attractive option may be to leave the business to your family upon your retirement. 

Not only will you be happy to see your legacy continue, but your family will continue to work in a stable and familiar environment. Additionally, customers and employees will feel confident that the business will proceed with little disruption. 

2. Leave It to Your Employees

An increasingly popular option among business owners is transitioning ownership to company employees through a qualified retirement plan known as an ESOP.  

Through an Employee Stock Ownership Plan, employees earn ownership interest in the company.  This plan allows the owner to transition ownership while incentivizing workers through ownership interests. 

This option works best for businesses that have a stabilized employee base. Likewise to leaving a business to family, customers and employees will have the confidence of minimal disruption to operations. 

3. Management Buy-out

If you have a senior management team in place, an MBO may be another available avenue to explore. In this option, the executive management team would pool their resources and purchase all or part of the company. 

Valuing the company and securing financing can take time, so planning ahead of your retirement years is essential. However, this option is another that presumes the long-term stability of the business under the existing leadership of senior management.   

4. Outside Buyer

If you don’t feel confident that your family, employees, or management team would want to carry on as new owners of the business, seeking an outside buyer may be the right move. 

When you consider selling to an outside buyer, you will need a valuation of your business, which, again, can be a lengthy process.  It is best to plan for this option years in advance of retirement. 

Your company’s customer base, profitability margins, assets, debts, and cash flow will be largely taken into account.  You do not want to sell in a downturn if you wish to get top-dollar for your years of hard work. 

With early planning, you will have a position of strength to sift through potential buyers and negotiate the structure and terms of the sale that best benefit you.

Working with a South Carolina Business Attorney

A well-crafted business plan that includes forethought of how to exit a business is essential to selling profitably and ensuring your legacy.   

Knowing your business exit strategy will guide many other business decisions such as branding, marketing, management selections, employee responsibilities, and family involvement, to name a few.  It will also guide financial decisions regarding leveraging assets and debts, business expansion, and tax mitigation. 

An experienced South Carolina Business Attorney is best positioned to advise you regarding your specific business situation and options best suited for your exit strategy.  

Contact our office today for a complete business review and consultation with a leading South Carolina business attorney.

Business interruption insurance or business income insurance is a clause or endorsement either within another policy or added on to an existing policy. We will refer to both types as business interruption insurance (BII) within this blog article. We buy insurance to help us through times of difficulty.

Business interruption insurance provides money for business owners when they lose money because of a covered peril. The current “hot topics” for BII are losses from COVID-19 suspending operations and civil unrest resulting in property damage and looting.

With so many claims recently, many insurers will try to find any argument to avoid paying benefits to their insureds. The language in the policy will control which losses have coverage. A South Carolina business attorney can help you prepare your claim to meet the requirements of your BII carrier and advocate on your behalf.

Six Things You Need to Know About Business Interruption Insurance Clauses and Extensions

There is no standard template for business insurance policies. Your policy might include some of the following types of coverage within the main policy, as a clause or extension of the main policy, or not at all:

1. Service Interruption Coverage

When a covered peril causes an interruption in the delivery of utilities like electricity or other vital service providers, and the policyholder sustains a loss as a result, service interruption coverage could provide financial compensation. There are waiting periods before the coverage kicks in. Most policies require the interruption to last at least 24 or 48 hours. The language in your policy will control the length of the waiting period. 

2. Contingent Business Interruption

If you lost business income because someone else could not engage normal business operations because of a covered peril, you might have a contingent business interruption claim. This extension addresses problems with suppliers and those who receive your product in the supply chain.

3. Business Interruption by Civil or Military Authority

Sometimes a business owner gets denied access to his premises by civil or limitary authorities. When this happens because of a covered peril, the owner might have a claim under this type of extension.

4. Reduction in Business Income

BII policies typically cover situations in which the company’s net income got reduced by a covered peril that caused the business to suspend or decrease operations. Usually, business income in these policies includes the ordinary operating expenses the company continued to pay during the suspended operations, like payroll, and the net income the owner would have earned but for the shut-down. Net income generally means the net profit or loss before the payment of taxes.

5. Actual Loss

BII policies only have to pay benefits if the policyholder sustained an actual loss from a covered peril. For example, a business that lost 90 percent of its sales during COVID-19 could be eligible for compensation, while a company that saw a surge in its revenues and profits during that time would not.  

6. Restoration Period

Typically, a business cannot conduct operations while damaged or destroyed property gets repaired or replaced. “Period of restoration” coverage provides cash benefits to replace some of the income the owner loses by not being open for business during that time. Many policies define the restoration period as running for a reasonable period after the damage. 

Some policies give additional benefits to cover the slow return to operations after the restoration period, since many businesses need time to return to the level of activity they enjoyed before the damaging event. The amount of time depends on the coverage purchased, which can range from 30 to 720 days after the completion of repairs or replacement. 

We understand that insurance policies can be challenging to interpret. Contact us today. Our South Carolina business attorneys can review your business insurance policy and provide guidance on your coverage.

In these uncertain times, many business owners face multiple challenges from different directions. We have never been in a situation quite like this before, and we do not know whether it will be safe to resume ordinary business operations in a month, six months, or even a year. The U.S. Chamber of Commerce predicts that over 40 percent of the small businesses in America might close their doors forever by the end of 2020.

When a business cannot open its doors because of the pandemic, its revenues can plummet. Some expenses continue, like the rent on the shop you cannot use to sell your products or services to customers. You probably have questions about running a business during a pandemic and knowing when to call it quits. A South Carolina business attorney can guide you through the decision-making process and draft the documents you need.

The Vast Unknown

It is practically impossible to engage in business planning when you do not have all the facts you need. In this pandemic, your business might be struggling to determine answers to these issues:

• When the government will allow you to re-open your office or store.
• How long you will stay open until the next shut-down.
• What restrictions you will have to follow to re-open, and how those things will impact your business.
• How to keep your workers, customers, and yourself safe during the health crisis.
• How you will get enough revenues to keep your business going.
• Whether you can pivot your line of work into a COVID-19 related enterprise to generate income.
• What legal liability you might have if a worker or client gets sick.

Traditional business planning cannot function without answers to those questions, so we have to develop a new way of thinking about business viability in a pandemic.

Some Options for Staying Open or Closing

One of the first things to ask yourself is whether you want to stay in business. If you lost the passion for having your own business because you are nearing retirement, do not want to try to retrofit your company to the new economic realities during and after this pandemic, or lost a close loved one to COVID-19, you might want to talk to an attorney about wrapping up operations.

If you think your company has a future, you have some options for riding out this storm. Here are a few suggestions:

• The new Chapter 5 bankruptcy, also called the Small Business Restructuring Act, helps small companies with a quicker, simpler bankruptcy process. If your company has less than $2.73 million in debt, you can reorganize and keep the business in operation. The creditors do not have the option to veto the plan.
• Filing a Chapter 11 bankruptcy can help if you have a larger company. These bankruptcies cost more and take longer than a Chapter 5, but might be a good choice if your company owes more than $2.73 million.
• A Chapter 7 bankruptcy can wipe out your debts, but you could lose your personal assets. If you pledged your house as collateral for a Small Business Administration (SBA) loan, for example, a Chapter 7 might force you to sell your home.
• You can close your business without filing for bankruptcy if you have enough assets to pay off your debts or work out a deal with your creditors. Be sure to have your lawyer draft enforceable agreements.
• Think carefully about borrowing money to stay afloat in this pandemic. If your company will not have the resources to pay the debt when it comes due, borrowing money could be digging a deeper hole instead of helping you.

As part of your analysis, you might want to write a new post-COVID-19 business plan. You will have to speculate about several factors, so you might write up several “what if” scenarios. A South Carolina business attorney can advise you about bankruptcy, restructuring, and remaining viable during this pandemic. Contact us today.

Splitting decision-making 50/50 with your business partner can cause a multitude of conflicts for your company. Many business partners end up splitting decision-making equally by default because their partnership documents do not clearly define the roles and responsibilities of each partner. A South Carolina business attorney can guide you through the formation of your partnership or another business entity and draft documents to help you avoid these and other foreseeable issues.

How Equal Decision-Making Can Cause Problems for a Company

When both partners have 50 percent of the decision-making authority in a company, they can become deadlocked when they disagree on a topic. As a result, production can get halted until the partners resolve the conflict. The entire commercial entity can collapse.

There are several solutions to this situation:

• Set up the company as a 51/49 partnership instead of 50/50. When there is no consensus on a decision, one partner can make the call on the issue and avoid downtime for the company.
• If the partners absolutely will not agree to a 51/49 partnership, then allocate specific 51/49 control to the partners for certain types of decisions. For example, the partner with an IT background could make the final decisions about applicable tech issues if the two partners cannot reach an amicable agreement after extensive discussion. You will want to put the details of this arrangement in writing.
• The combined shares of partners who get added after the initial setting up of the company should be less than half of the total shares of the business. Let’s say that the founder takes on two partners a few years into the enterprise. The founder should retain a greater than 50 percent ownership of the company to keep the new partners from causing a stalemate. A 60/20/20 arrangement could prevent such problems.
• If the business entity is already set up, and the partners are experiencing problems or want to avoid these situations, it is possible to change the arrangements. For example, the partner who wants decision-making control could buy one share of the other partner to achieve a 51/49 partnership. 

Impasses are not the only reason that equal partnerships are usually not advisable. A 50/50 ownership scheme is often not the best use of each partner’s unique skills and experience. Let’s say that one partner is an innovator, and the other partner is a natural manager. 

If the person with managerial skills has an equal say on setting up the subject matter of the business, the product could suffer. Also, the innovator should probably take a back seat to the decisions of the manager when it comes to handling administrative details after the product launch.

While it is possible to modify the business arrangement after the initial start-up of the company, it is a better practice to address these matters during the initial formation of the company. 

Contact Willcox, Buyck & Williams, PA today to learn more. Our South Carolina business attorneys can answer your questions and advise you on the best approach for your situation. Every commercial entity is unique, and “one-size-fits-all” templates are rarely a good fit. 

Businesses all over America are facing challenges that we have never seen before. Companies are trying to stay afloat and position themselves to be ready for customers when the lockdown restrictions get lifted. In addition to surviving financially, your business needs to be mindful of potential liability claims down the road from clients and employees. A South Carolina business attorney can help you navigate through these uncertain times. 

The economic and public health situations are changing daily. This COVID-19 business update can provide some guidance about measures you can take now, with the understanding that you will need to stay on top of new developments as they arise. You should always do what makes sense in your situation. Here are a few suggestions of things you might consider:

Reach Out to Your Customers 

You can use email, your website, Facebook, Instagram, and other social media to stay connected to your customer base. Let them know that you are still in business and eager to provide the goods or services they need. Post a prominent COVID-19 update on all the pages of your website.

Tell them how they can connect with you and obtain your goods or services. Explain the steps you are taking to keep them safe. Assure them that you are following the applicable government regulations and guidance about COVID-19. Let them know which apps they can use to make purchases and get your goods delivered to them.

Place a large sign in the windows of your “brick and mortar” office or store. People need to be able to read the information from their cars or at least 10 feet away. Let the public know:

• Your new hours
• Any restrictions, like wearing masks, the required distance between shoppers, whether children are allowed in the store, how many people can be in the store at one time, arrows that direct the flow of traffic inside the store, purchasing limits, whether you accept cash, and whether you have a “one shopper, one cart” rule.
• Special arrangements, like the hours during which only people over a certain age or those in a high-risk group can shop.

NOTE: If you had to close temporarily, you might want to update your Google My Business profile to let people know that fact. If you are offering delivery, curbside pickup, or selling items through a shopping or delivery app, you should not mark your Google profile as temporarily closed.

Protecting Your Revenue Stream

Some companies can adapt to the current situation and keep some money coming in to stay in business. These suggestions will not work for everyone, but this is the time to use creative thinking. Some people have been able to obtain Small Business Administration (SBA) forgivable loans, government assistance, and other funding. Stay informed about new financing opportunities for your business.

A few of the assistance programs are federal, but do not overlook possible state, county, or municipal measures that could help. Mortgage and rent forgiveness, loan payment forgiveness, delayed or deferred interest on loans, and a moratorium on utility shut-offs for nonpayment are a few examples of measures that could buy your company some time during this pandemic.

Instead of the ways that your business generated income before the pandemic, you might want to think about offering:

• Curbside sales
• Online sales
• Gift cards for purchase through your website
• Online classes or consultations with clients

If you have not already done so, consider establishing an account with a local shopping or delivery service like Instacart so that your customers can make purchases with relative safety and convenience, and local individuals can earn some income by working as shoppers and delivery people.

Try to find functions that your employees can perform while working from home. You might find that you need less office space after this pandemic because some of your staff can work from home in the future.

Manage Potential Liability

You should take every reasonable step to keep your employees and customers safe. Before long, we are likely to see stories in the news about lawsuits from people who contracted COVID-19 visiting a store or office, making a curbside purchase, or having goods delivered to them. It will be a challenge to prove who was at fault in these cases, but the litigation could cost you massive legal fees. 

Contact Willcox, Buyck & Williams, PA today for assistance with local and federal directives for your business. Our South Carolina business attorneys can help you plan your operations to minimize your risk.