Oct 19, 2021

Most civil cases never go to court. The estimated number of cases that end in settlements is close to 90%, and it can easily be higher. This might be shocking – to someone who has just walked away from a raw business deal, or a car accident, they want nothing more than to serve some papers and get the law laid down. You might be filled with righteous anger now – you need your day in court – but just wait until you’re in the third year of your case and thirty thousand dollars deep in court fees. Anyone who has actually gone through an extended court battle will quickly attest to how miserable a process it is.

So why do most cases settle before they ever get to court?

Court procedure is slow

The gears of justice grind slowly. We are used to shows like Law and Order (dut dut.), where we see a case come and go in the span of thirty minutes. Law and Order also deals with criminal cases, which usually have a quicker turnaround – we’re talking about civil cases, where businesses, insurance companies, employees, customers, anyone might fight over numbers and the minutiae contained within towering stacks of paperwork. The process is not a swift one.

It might help to understand the barebones of the process; a lawyer starts by drafting a complaint. That complaint needs to be written, reviewed, signed, then filed. That filed complaint needs to be served. Then the person on the other side of the case needs to have a fair opportunity to find legal counsel and respond. More documents are written, reviewed, signed, and then filed. The attorneys might try to speak to each other, they can play phone tag for weeks, and if they need information from their client, that’s another round of phone tag. Then you have court dates, depositions, discovery, these all add months to the process. It can take over a year to get to the point of settling – add another just to prep for a trial. Add another to go through with it. Add another year for appeals, if the opposing party isn’t happy with how that particular trial went down.

Court procedure stressful

This is a common issue in Personal Injury cases – a client will insist that they want to go to trial, but they forget that this includes giving testimony and turning over sensitive data about oneself. The opposing attorney will rise up to carefully pick through every detail of your story and medical history. This occurs a few times throughout the process – during discovery and trial, for examples. This can be difficult enough with just a judge and legal counsel in the room, let alone a jury. Whenever the opposing counsel is questioning you, whether it’s over your medical history, business decisions, or knowledge on certain subjects, it can feel combative and deeply personal. The opposing counsel’s job isn’t to make you feel bad, but it’s a common by-product of the court process.

One of the reasons cases end in settlements is because they’re a more private, quiet alternative to courtroom drama.

Court procedure is expensive

Filing fees. Lawyer fees. Deposition costs.  They add up very quickly. Clients are always quick to say that going into a legal case is about principle, and yet their tune changes when they realize just how prohibitively expensive principle can be. A relatively straightforward case can cost as much as ten thousand dollars, easily.

Say a lawyer gets a call – a potential client’s car has been ruined by a shady mechanic. This potential client wants to take the mechanic to court. But that car that the mechanic busted up is a 2004 Honda Accord. It’s worth $3,000. Of course, it’s worth more than that to the potential client. He already paid it off and put way more money into upkeep. But you can’t argue sentimental value in court. The lawyer has to sit down and explain to a justifiably upset client why their case makes no monetary sense – no matter how angry you are, paying $5,000 to get $3,000 (only after months of work and lots of stress) is not worth it.

Another note on the expenses of a trial: many clients think that, should the court rule in their favor, they will be exempt from legal fees. That is almost never the case. Everyone, absolutely everyone, asks for the court to award attorney’s fees. But in ten years of practicing law, the number of times we’ve seen this happen can be counted on one hand.

Conclusion

Court cases are prohibitively slow, stressful, and expensive. Any lawyer who claims otherwise is lying. A good attorney will be upfront about the difficulties in your case – and should you go forward with your case, it’s most likely going to end in a settlement.

In law, as in life, it’s best to keep to the wisdom of Kenny Rogers: you gotta know when to hold ‘em, know when to fold ‘em, know when to walk away, and know when to run.

Aug 11, 2021

Send in the nerds! I mean experts.

Opening a business is fun and takes guts. You gotta work long hours (usually) and take some chances. You will need to give more effort than you thought. Trust me, I’ve been there. But you also need some help. There are several experts you might want to consult before and during the start of a business. Here are just a few of them:

Accountant

Your own personal taxes can be difficult to navigate, and adding your business taxes on top of it can be an undue burden, especially when you’re just trying to get a business off the ground. Businesses in heavily regulated industries, like alcohol and tobacco, will also have a number of excise taxes to consider. While there are many accounting apps these days that might help streamline the process, you may find it much easier and less stressful in the long run to invest in a living, breathing human that can sit down and explain the numbers to you. Getting an accountant will allow you to take all the time and energy away from stressing about the tax return and pour it into the day-to-day running of your business. Not only can an accountant make sure your tax returns are sent in correctly, but they can look at cash flow, employee compensation, and margins for growth.

Banker

Most small businesses will need a bank loan or a line of credit to get off the ground, as well as a business checking account. It’s best to find a bank and a banker with whom you feel comfortable. Many bankers will have firsthand experience with small businesses, and will likely be able to provide guidance to you as you move forward month by month. A strong, healthy relationship with your bank can only help your business. Be upfront with what you can and can’t do. If business isn’t going well, hiding your financial struggles won’t help to solve them. A good banker will appreciate your honesty,

Lawyer

No list is complete without mentioning how we get paid! There are many reasons you might need a lawyer for your startup. If you’re forming a corporation or an LLC, you might need help with the State paperwork. If you need specialized, carefully-worded contracts, you’ll want someone trained to read, write, and enforce them. If you plan to deal in heavily regulated industries, it’s a good idea to have someone familiar with the laws concerning them. There are also considerations for hiring employees, such as non-compete agreements. There are a number of ways to protect yourself that you might not even consider, but a lawyer versed in small business litigation can often point out red flags. It’s important to deal with a lawyer that you can trust, and one that appreciates that your small business is your livelihood.

Entrepreneurs

We didn’t just add “Entrepreneurs” so we can have a pithy acronym (though, it is pithy, isn’t it?). In the world of social media, it’s never been easier to get firsthand accounts of peoples’ experiences. For whatever business issues you might have, there’s a good chance that there’s already someone who has stood in your shoes. Your local area is most likely going to have a Chamber of Commerce or some other kind of business organization. These are great resources for you to mine.

All of these experts can help provide peace of mind, something that can often be hard to find when setting up a new business. Accountants, Bankers, Lawyers, and other Entrepreneurs are all good experts to have in your corner.

As always, please feel free to contact us for more help in starting your business.

Jun 30, 2021

You’ve finally built up the resolve to do it; you’re going fulfill your lifelong dream of opening a kitten grooming salon. Or some other brilliant business venture. Let us assume that you’ve already done research on the market and have indeed verified that the kitten grooming industry is booming.  The business plan is drafted. It’s time to decide what the legal structure of your new business will be.

Here we will explore some of the most basic legal structures that a small business can choose from. The most likely for a small business are Sole Proprietorships, General and Limited Partnerships, and LLCs.

Sole Proprietorship

A Sole Proprietorship is the simplest form of business entity, the easiest to form and easiest to dissolve. If you have no employees, it’s as simple as starting to work. Legally, being a Sole Proprietorship means that you and your business are one and the same. Your business is not a distinct entity, rather a part of yourself. All income and losses are filed along with your own personal tax return. Being the only arbiter of your business keeps things streamlined, but the other side is that there is no protection for debilitating losses. If the kitten grooming industry tanks, all losses are your own. In addition, there are no protections from liabilities you may incur (like when you get sued for giving Mr. Muffins a perm).

This kind of structure makes the most sense for businesses with no employees, no physical storefront, and should mostly be considered for industries where specialized regulation or personal liabilities aren’t a major concern. Kitten grooming can most likely swing it as a Sole Proprietorship. Tobacco sales or chainsaw manufacture had best look elsewhere.

General and Limited Partnerships

Partnerships pertain to businesses owned by two or more people. A general partnership has ownership/operations split equally, while a limited partnership states that one person is in control of the day-to-day handling of the business, while another contributes capital or services that warrant a cut of the profits. In a way, Partnerships are as simple as Sole Proprietorships – the business is still not a distinct entity, which means that taxes are filed on each co-owner’s personal income tax returns. But just like Sole Proprietorships, there’s no liability protection. Under a General Partnership, you and Auntie Brenda can open up your kitten grooming salon and divvy up the work and profits relatively easily. But Partnerships can come with interpersonal issues, and while Illinois and the US government might require relatively little paperwork to form a General Partnership, you’re most likely going to want to safeguard your business with clearly defined contracts. A third-party mediator, such as a lawyer, can help draft and enforce these contracts, and they can do it without bringing up whatever Auntie Brenda did at the last family reunion.

Limited Liability Company

Also called an “LLC,” a Limited Liability Company is the easiest business entity to form and operate. Unlike Partnerships and Sole Proprietorships, the LLC is well and truly a separate business, which needs its own bank account and tax returns. Forming an LLC is a bit more complex, but it comes with its benefits. Under an LLC, members are protected from liabilities of the company, so long as the business is operated in a legal, ethical, and responsible manner. If the kitten grooming industry unexpectedly tanks due to a catastrophic shortage of cat combs, you can fold your LLC with less losses than you might have under a Partnership or Sole Proprietorship.

Our legal assistance can help guide new businesses through necessary government registration, forms, and licenses. Generally speaking, the more money and people involved, the more difficult things can get, and the more you’ll want to get concrete details down in writing. When dealing with your own livelihood, it is important to get these details right.