Rush on Business

Shareholder Agreement Gotcha Under Iowa Business Law?

rush.nigut@brickgentrylaw.com (Rush Nigut) — Mon, 02 Nov 2009 06:00:00 -0600

Throughout this blog you will see posts that recommend business people enter into a shareholder agreement when they start a corporation with multiple shareholders. But did you know that unless your shareholder agreement states otherwise, your shareholder agreement may only be valid for 10 years pursuant to Iowa corporate law?

Chapter 490.732 of the Iowa Code seems to indicate exactly that (although I have never seen it applied in a case yet). I think this is something that maybe even some of the most experienced corporate attorneys may not realize. So don't be surprised. You should review your shareholder agreement. If it is more than 10 years old, it may no longer be valid and a new agreement may be necessary. If the agreement is less than 10 years old it may be a good idea to revise it so there is language indicating the agreement applies for more than 10 years.

What Employers Need to Know About H1N1

rush.nigut@brickgentrylaw.com (Rush Nigut) — Fri, 23 Oct 2009 06:00:00 -0600

In a recent interview I was asked about what employers need to know about the H1N1 virus as a follow up to my recent post on how employers need to be prepared for H1N1. I didn't have a lot of time to respond as the question came towards the end of the program and we ran out of time. As a follow up, I thought I would mention that Connecticut employment lawyer, Daniel Schwartz, has a great post on H1N1 and the workplace. Daniel lists some available resources and has several recommendations for employers to get ready for the flu season:

Update (or create) a Business Continuity Policy with specific provisions for H1N1 flu.
Encourage employees to get flu shots (both seasonal and H1N1) as soon as possible. To the extent that you offer health insurance to employees, determine if those shots are covered under the appropriate plans. And consider offering flu shot clinics if you have the resources.
Clarify what your absence and illness policies will be. Consider having flexibility in this situation if you can to encourage employees who are sick (who have someone that is sick in their household) to stay home.
Make sure your infrastructure can handle an increased telecommuting presence if need be.
Stay updated on the EEOC guidance.

I couldn't agree more that employers need to have flexibility in your policies. This is one time where it is likely okay to vary from your existing leave policies. However, it is imperative that if you do so, you treat all employees in a fair and consistent manner.

Education is a key to prevention. For more information please visit Flu.gov for helpful information on H1N1 including a business planning section.

Insight on Business Interview

rush.nigut@brickgentrylaw.com (Rush Nigut) — Thu, 22 Oct 2009 06:00:00 -0600

I had the pleasure of sitting down for an interview with Michael Libbie yesterday. We talked blogging, discrimination cases, franchising and other issues.

If you didn't catch it live you can watch the podcast here. (The interview begins at about the 30 minute mark).

If you haven't heard about Des Moines Local Live, you should check it out. It's an Internet radio station with 50 local radio hosts talking everything from business to sports. A real testament to Des Moines' Internet-blogging presence.

How to Catch the Business Investor's Eye

rush.nigut@brickgentrylaw.com (Rush Nigut) — Mon, 19 Oct 2009 20:25:14 -0600

Need capital for your business? Looking for an investor? If so, you should take the opportunity to attend a seminar from the Business Innovation Zone of Central Iowa (BIZ) on how to get your business into shape and attract an investor's eye.

Adam Claypool of DeWaay Investment Banking is the speaker. I have worked with Adam on several occasions so I know this will be a worthwhile opportunity to listen to one of central Iowa's more prominent investment bankers. The presentation is this Wednesday, October 21st at the Des Moines Partnership offices, 700 Locust Street, Suite 100, Des Moines, Iowa. It begins at 11:30 a.m.

Afterwards you can listen to me on the radio this Wednesday at 1:00 p.m. with Mike Libbie offering insights on business on Des Moines Local Live.

Negotiating Franchise Agreements

rush.nigut@brickgentrylaw.com (Rush Nigut) — Fri, 09 Oct 2009 06:00:00 -0600

Franchise attorney Charles Internicola busts the myth that franchise agreements are non-negotiable in his post, Myth: Is it Illegal for a Franchisor to Negotiate and Modify the Terms of its Franchise Agreement. This is one of the best posts on the subject that I have seen.

In addition to the fact that you should take your right to negotiate the franchise agreement seriously, I would encourage you to stay on the alert for other common red flags from franchisors (I have written about these previously but it bears repeating):

You don't need a lawyer to review the agreement.
I would prefer you don't talk with other franchisees. You should only talk with me.
Trust us, we can't (and won't) change the agreement but we won't really hold you to that provision anyway.

Like many people you may considering an investment of your retirement savings in a franchise. You absolutely owe it to yourself to do the best job possible investigating that franchise and performing the most due diligence possible. That includes hiring experienced franchise counsel to review the franchise agreement and disclosure document. You need to talk with as many franchisees as possible but be sure to visit with those in your area. The success of a franchisee in New York, for example, may differ significantly than the success of a franchisee of Iowa especially when franchises are more of a regional flavor.

Some franchisors won't negotiate the terms of the agreement but that can be okay. Hopefully the franchisor can explain their reasoning for not negotiating a provision rather than hiding behind a blanket statement that they cannot negotiate because it is illegal. You definitely want to deal with a franchisor that is willing to listen and consider your needs.

And never, I mean NEVER, believe the franchisor that tells you they won't hold you to the terms of their written agreement. You can be assured that the franchisor's lawyer in any lawsuit will never acknowledge that statement was ever made and most franchise agreements are written so that any such statement could not be used as evidence in court.

Social Networking Law Blog Sure to Be Busy

rush.nigut@brickgentrylaw.com (Rush Nigut) — Tue, 06 Oct 2009 06:00:00 -0600

Megan Erickson of the Dickinson Law Firm has started Erickson's Blog on Social Networking and the Law. Now that's a blog that will have a never ending flow of posts. She already has an interesting array of posts including one where a business owner got slapped with a $2 million libel lawsuit for Facebook and Twitter posts.

This is one blog I'll be sure to follow.

Does Anyone Form an S Corporation Anymore?

rush.nigut@brickgentrylaw.com (Rush Nigut) — Mon, 05 Oct 2009 06:00:00 -0600

The title of this post may be a little tongue-in-cheek, but I would say at this point I am forming perhaps 2-3 times as many LLCs as S corporations.

It still doesn't mean you should rule out the S corporation as your entity of choice. It could be the entity for your situation. Joe Kristan, an accountant with Roth and Company in Des Moines, explains in a recent post who can and should own a S corporation.

It's important to note that a decision to form an s corporation or LLC is often as much a tax driven question as it is a legal decision. That's why I encourage all new business owners to contact an accountant, in addition to a business lawyer, to determine which business entity to form.

Employers Need to Prepare for H1N1

rush.nigut@brickgentrylaw.com (Rush Nigut) — Fri, 02 Oct 2009 16:56:06 -0600

Liz Overton of Sullivan & Ward, P.C. has a timely post on how employers should deal with the H1N1 virus.

While it's true that employers are currently under no obligation to allow additional time off to employees who do not have available time off or have exhausted their available leave, I could easily see employers facing a tough dilemma about whether to adjust their leave and/or PTO policies if a significant outbreak of H1N1 occurs at work, or perhaps even in our schools.

Have you considered what you will do as an employer if a significant outbreak occurs? Will you make changes in your policies? Whatever you decide, consistency and fairness are keys to avoiding legal problems.

Watch Out! Your Kid Could Get You Fired

rush.nigut@brickgentrylaw.com (Rush Nigut) — Tue, 29 Sep 2009 06:00:00 -0600

A few weeks ago I posted on how your spouse could get you fired. Well, its not just your spouse you need to worry about. What about your kids?

A recent Family Circle article discussed how a teen's post got her father fired. The father apparently could not get time off to attend his daughter's school musical. The daughter was upset and vented about it on her MySpace page. The article says she stated she didn't want to work for someone like dad's boss: "He yells all the time, treats my dad like dirt, won't let my dad spend time with his family even though he gets to take time off constantly, and doesn't even know how to do his job."

Unfortunately, the rant went out to several hundred of the girl's MySpace friends, including kids at school, one of whom was the boss' son. The boy showed the post to his father and the girl's father was fired.

All of this underscores the importance of discussing with your kids how "public" information can become. Even if an account is private, that doesn't mean that one of your kid's friends won't share the information with the rest of the world.

P.S. Sorry I couldn't find a link to the article online but check out the October 17, 2009 edition of Family Circle magazine for the article, Share Tactics. There are several examples of how today's teens have no problem revealing every detail of their lives online.

Contract Law: Read Your Agreements

rush.nigut@brickgentrylaw.com (Rush Nigut) — Thu, 24 Sep 2009 06:00:00 -0600

Okay, you have decided you can do it on your own. You don't need a lawyer to review your agreement (at least until the proverbial you know what hits the fan). But let me give you some MasterCard commercial-like "priceless" advice:

READ YOUR AGREEMENTS.

I am honestly not trying to be a smart aleck when I say this. I cannot tell you how many times I have seen really smart business people fail to follow this simple plea. Just reading and actually understanding your agreements will help you avoid a great deal of trouble - with or without a lawyer.

Contract Law: Miscellaneous Provisions Shouldn't Be an Afterthought

rush.nigut@brickgentrylaw.com (Rush Nigut) — Tue, 22 Sep 2009 06:00:00 -0600

You've probably seen them in your contracts. Miscellaneous provisions such as choice of law, litigation venue, successors and assigns provisions, no waiver, entire understanding, or supersede clauses. They tend to always appear at the end of the contract and are almost always an afterthought by the parties. After all, those provisions don't mean anything, right?

Wrong.

Often when a contract claim proceeds to litigation these miscellaneous provisions are outcome determinative. Take for example the litigation venue provision. Let's say you are a small Iowa company and the contract specifies that your case must be heard in the courts of Los Angeles, California. This means you must be prepared to fight the case in Los Angeles or you may automatically lose your case. The California venue will almost assuredly drive up the costs of litigation over an Iowa venue. First, your Iowa lawyer, unless he or she is licensed in California, will need to get local counsel in California. Chances are the California local counsel will charge a substantially higher hourly rate than here in the Midwest and you will likely need to travel for court hearings and other proceedings. WIthout the money to fight, you are doomed from the outset regardless of how good your case may be. Plus, without a history with the judges in that state it is often difficult to predict the outcome of issues which could put you at a real disadvantage.

That's just one example. The other miscellaneous provisions in your contracts can come back to bite you in other ways. My recommendation is to carefully consider these provisions and don't treat them as an afterthought. If litigation occurs, you may be very happy you did.

Brick Gentry Lawyers Win Highly Publicized Case in Union County, Iowa

rush.nigut@brickgentrylaw.com (Rush Nigut) — Fri, 11 Sep 2009 06:00:00 -0600

A jury recently found a Union County Board of Supervisor, Mike King, not guilty of disorderly conduct after half hour of deliberation. Brick Gentry's Matt Brick and Doug Fulton defended King in the case.

For details on the case please read Matt's blog post regarding the intersection of employment law and criminal law.

Navigate the Internet's Legal Minefield

rush.nigut@brickgentrylaw.com (Rush Nigut) — Tue, 01 Sep 2009 06:00:00 -0600

Brett Trout, author of BlawgIT, offers his take on how you should navigate the Internet's legal minefield in a recent post on IowaBiz.

Trout's Cyberlaw: A Legal Arsenal for Online Business is a book I highly recommend if you currently operate (or plan to operate) an online business. It's a great desk reference rather than one you would read from cover-to-cover. I have referred to mine on several occasions as Internet legal issues come up. But keep in mind that the Internet continues to evolve so quickly, particularly with the explosion of social networking sites, that the book can't cover all nuances even though it was published just two years ago.

As Trout says, you won't become a Cyberlawyer by reading the book but you likely will have a better understanding of the legal issues involved with the Internet and also will give you leg up when the need arises to consult a lawyer.

Trial Law: Tiger's Loss Offers Good Lesson

rush.nigut@brickgentrylaw.com (Rush Nigut) — Fri, 21 Aug 2009 06:00:00 -0600

Tiger Woods is the greatest golfer of his time. He was such a lock going into the weekend of the PGA Championship that an Irish bookmaker actually paid out the winnings on Tiger before the third round even started -- oops! I'll admit that I never could have imagined Y.E. Yang would actually pull it out for a victory.

But all of this provides a good lesson about trial law. You just never know what will happen when you go in front of a jury or judge. The case you thought was a lock may not be so. When we are in the role of representing the underdog (which is often the case) I love it when the other side says we can't win. It motivates us, and frankly, it takes much of the pressure off. If you're not supposed to win you have nowhere to go but up!

So thanks, Y.E.. You proved why the game must be played, no matter who is in the lead (or who thinks they have the case that can't be beat).

Repeat After Me: Get it in Writing

rush.nigut@brickgentrylaw.com (Rush Nigut) — Wed, 12 Aug 2009 06:00:00 -0600

A recent case reported in the Des Moines Register discusses how a handshake deal on the sale of a home went awry for a man that apparently invested over $100,000 in a home - only to learn the home was not his.

Actually there was a one-line agreement in this instance which read, "I Floyd A. Schake agree to put 1500 E. 9th on contract with Billy Erico Stockbauer on 1 Feb. 1989." Schake argued successfully to the court that the language meant he intended to sell the home on contract in the future but the deal was never made.

While the axiom is to get a contract in writing, it is especially critical in real estate deals where oral contracts are generally not valid. The judge in the case ruled that the language did not set out the terms necessary to convey the property. It's fairly easy to criticize Stockbauer for not having an agreement that set out all the terms but this type of thing happens much more than anyone would ever imagine.

That's why the old adage holds, "get it in writing."

How Business Gets Done Hits Virtual Bookshelves

rush.nigut@brickgentrylaw.com (Rush Nigut) — Fri, 31 Jul 2009 06:00:00 -0600

How Business Gets Done, Words of Wisdom from Central Iowa Experts has hit the virtual bookshelves at www.lulu.com. I am honored to be a contributing author with several respected peers in our business community. My chapter is on the Partnership Prenuptial where I discuss the importance of drafting a buy-sell agreement from the beginning of your business relationship.

The costs of litigating a business dispute can easily run in excess of $100,000 per side while a buy-sell agreement usually costs less than a a couple of thousand dollars. Unquestionably most business owners would rather concentrate on running their business than spending time in court.

Watch Out! Your Spouse Could Get You Fired

rush.nigut@brickgentrylaw.com (Rush Nigut) — Fri, 24 Jul 2009 06:00:00 -0600

The case of Scott Janke, the former town manager of Fort Myers Beach, Florida has many people talking. It's no ordinary employee termination. Janke was terminated because his wife is an adult entertainment star.

A good article on the subject comes via Jonathan Turley's res ipsa loquitur blog. Turley's blog has been included in the Top 100 Legal Blogs in the ABA Journal and the Best Blog in Legal Theory. As you will read in the article, employment terminations of this nature are becoming more and more common.

Employee Relations from the Red Sox

rush.nigut@brickgentrylaw.com (Rush Nigut) — Fri, 17 Jul 2009 06:00:00 -0600

Major league baseball teams have not exactly been known for their employee relations over the years. But the Boston Red Sox are an excellent example of how treating employees the right way can pay big dividends.

Read attorney Jay Shepherd's post on Division-leading employee management to find out why.

Blogging to Resume Soon & Check Out Mixed Martial Arts Law Blog

rush.nigut@brickgentrylaw.com (Rush Nigut) — Fri, 10 Jul 2009 06:00:00 -0600

Due to a fantastic baseball season as the coach of nine year olds the posts have been few and far between the last couple of months. (I routinely write at night and it's been tough to fit it all in). I'll resume more regular posting very soon. Frankly, I am flattered by the number of people that continue to read this blog even though the posting has been sparse lately.

In the meantime, be sure to check out Iowa's newest law blog, David Nelmark's Mixed Martial Arts Law Blog. It's a fascinating niche blog and David is a great writer. He is also not shy about taking on bloggers he doesn't agree with. Should be a fun blog to follow. It's great to see some great new Iowa law bloggers getting into the action.

U.S. Supreme Court Rules on Iowa Age Discrimination Case

rush.nigut@brickgentrylaw.com (Rush Nigut) — Wed, 24 Jun 2009 06:12:17 -0600

The U.S. Supreme Court recently handed down a decision in Gross v. FBL Financial Services. The Court ruled that a plaintiff bringing a claim under the Age Discrimination in Employment Act (ADEA) must show by a preponderance of the evidence that age was the "but for" cause of the employer's adverse employment decision, and that an employer need not show that it would have made the same decision regardless of age, even if the employee produces some evidence that age may have been a contributing factor in the decision. Accordingly, plaintiffs must now prove that age was a factor in a decision. The burden of proof no longer shifts.

The case is widely viewed as a big win for employers but some employment lawyers, like Daniel Schwartz, believe employers should largely ignore the decision. Daniel says that while it will be "technically" harder for plaintiffs to establish a claim, it is only marginally so, and he also expects "corrective" legislation at some point. From a practical perspective he does not see a huge change in the way employers will defend age discrimination claims or the way in which plaintiffs will bring those claims.

Ross Runkel of Law Memo says it is the biggest employment law case of 2009 and considers it a big surprise because the issue decided by the Court was not briefed and argued. But, like Schwartz, he too expects action from Congress so the impact may be short lived.

Read the decision here.