Lawyers need client approval for settling cases

A bit tardy reporting on this news from August 28, but things are a bit hectic back here at the ranch. I am a little bit surprised at this news and need to find time to read the case. I thought it was generally understood that one cannot settle any case without the client's approval. The following is from the Indiana Lawyer Daily news report, Attorneys cannot agree to settlements for clients.

The fact a party authorizes an attorney to enter settlement negotiations and knows the negotiations are occurring does not mean that the attorney has authority to approve a settlement, according to a ruling today by the Indiana Court of Appeals.

In Carol and David Bay v. Michael Pulliam and Cardinal Transportation, LLC, 49A05-0612-CV-704, the Court of Appeals reversed a Marion Superior Court decision that granted a motion to enforce settlement agreement in favor of Pulliam and Cardinal Transportation. At issue was whether a settlement between an attorney for the Bays and Pulliam's insurance company could be binding if the Bays did not agree to it.

Business blogs

I do read business related blogs. After all, I am also in business. I want to pass along what I find useful or interesting. I figure that if you find the business information helpful then you will take a look at the legal information. I also hope that the information creates a stronger business for you. With a stronger business, the more need for a lawyer.

MSNBC has a rather lively business blog, YOUR BIZ. What I like is it has a good tone - no business professor lecturing - and it is directly targeted towards small businesses. Here are the recent posts as of today:

• Take my blog, please
• Home-based entrepreneurs get their 15 minutes
• Size 2 is better for you
• Santa's looking for a few good American elves
• E-mail made me stupid

I think the Internet can do one thing very well if we know how to use it. That thing is getting us together with like-minded people from different places. We learn there are others like us out there doing what we want to do or what we are doing. Then it lets us communicate with those people. I think anyone who is wanting to start their own business, is starting their own business or has their own business can learn something at The Indie Business Blog. I cannot copy and past their latest posts, but I do suggest this as a good start: The Power Of One.

Indiana winery law unconstitutional

So reports The Indiana Lawyer, Judge: Wine shipping law unconstitutional. Here is a good portion of that article.

Indiana's law prohibiting out-of-state wineries from shipping to Hoosier customers without face-to-face contact is unconstitutional, a federal judge in Indianapolis has ruled.

U.S. District Judge John D. Tinder issued a 71-page decision , and a separate four-page judgment and injunction late Wednesday in Patrick L. Baude et al. v. David L. Heath and Wine and Spirits Wholesalers of Indiana , No. 1:05-cv-0735-JDT-TAB.

At issue in this case was whether state statute involving direct wine shipment violated the out-of-state wineries rights by barring them from newly created direct wine seller permits. The law went into effect in March 2006, and this federal suit came the following month.

Plaintiffs include a major Michigan winery, Chateau Grand Traverse, and five consumers. They challenged the law, part of which mandated they have at least one face-to-face transaction to allow the winery to verify the customer's age. The winery contended the rules discriminated against out-of-state wineries by preventing them from competing in the direct-sale market, and the consumers argued they were barred from obtaining many wines because of the impracticality of traveling outside the state or to complete the in-person requirement.

Defendant Heath, commissioner of the Indiana Alcohol and Tobacco Commission, contended the laws do not discriminate and are needed to prevent the sale of alcohol to minors - the state's interest in protecting its youth outweighs any incidental burdens on interstate commerce.

Judge Tinder disagreed, noting that the requirement creates a trade barrier for wineries by requiring them to set up shop in Indiana or limit their potential market to buyers willing to travel to them.

Taking Down Words has a post at Sour Grapes: Tinder Strikes Down Indiana's Latest Wine Shipment Law and The Indiana Law Blog posted the story under Ind. Decisions - More on: Federal Judge Tinder rules for plainitiifs in Indiana wine shipping suit.

I suppose we should expect an appeal to the Seventh Circuit Court of Appeals unless the Governor wants to save a bit of our tax money for a better purpose.

Franchising news: Noble Roman's

If you are coming in here from somewhere besides Indiana, then you might mot know about Noble Romans. Before Dominos changed all pizza places into fast food delivery places, Noble Romans bloomed in Indiana. A Sicilian deep dish pie and a window to watch the pizzas made was the chain's claim to fame. Now it is making its comeback.

The Indianapolis Business Journal has an article on Nobles Romans strategy used in its return. For those interested in franchising and/or opening their restaurant, I think it has some very good points. The article is Noble Roman’s rebuilds empire.

The Mobleys got back on their feet by shuttering nearly all the full-service restaurants and instead focusing on franchising outlets in non-traditional locales like convenience stores, airports and military bases.

It then moved into stand-alone restaurants branded as both Noble Roman’s and Tuscano’s Italian Style Subs. The pizza and sub shops operate in the same location, much as some Pizza Hut and Taco Bell outlets do.

Including all its formats, the company now has more than 1,200 outlets in 45 states and abroad. It operates just three of its own restaurants, all in the Indianapolis area.

So what is your business' software policy?

Or does your business have one? What about your own personal computer? Are you sure that you have not violated the law? If you have any doubts, take a look at Rise of the armchair thieves - web - Technology - theage.com.au:

"Hew Griffiths, a 44-year-old NSW man is serving a 15-month sentence in a US jail for software piracy. Griffiths had never set foot in the US before he was indicted there. Indeed he had never owned a passport. Yet he was convicted under US law for copyright breaches he committed while in Australia. And the Australian Government agreed to extradite Griffiths to the US to be sentenced and jailed there. Surely Griffiths must have been some sort of software piracy godfather to warrant an international extradition and High Court challenge? Here's a sobering thought: rather than making any money out of his piracy activities, Griffiths cracked security codes on proprietary software and made that software available free on the internet. He wasn't raking in bundles of cash for his activities but he allowed thousands of people to get free software that otherwise would have been protected."

Same-sex retirement planning

Thanks to The Indiana Law Blog for pointing out Same-Sex And Worried About Retirement from the Washington Post.

Unmarried couples lack the automatic legal protections that kick in when one member of a married couple dies. And they lack other advantages in planning for financial security in retirement that are taken for granted by most couples.

How true that is for Indiana.

Illinois - ne proposed winery law

For those interested in wineries and the interstate shipping issues may want to look at the proposed Illinois law. Here is a description from The Chicago Tribune:

The new law, which was passed by the Senate last week and now awaits the governor's signature, would allow smaller wineries making under 25,000 gallons of wine -- that's 98 percent of all the state's wineries -- to sell up to 5,000 gallons (about 2,100 cases) directly to stores and restaurants. Larger wineries that make more than 25,000 gallons have to sell via wholesalers. Currently, they can sell up to 10,000 gallons to retailers and restaurants.

For Illinois consumers, though, one of the biggest changes will be that they can now buy up to 12 cases of wine per person per year directly from any Illinois winery; same holds for buying from out-of-state wineries that obtain the necessary permits. The old law allowed unlimited shipping of wine by Illinois wineries to state residents but limited to two cases the wine that could be sold directly to Illinois consumers from wineries in states that had so-called reciprocal shipping privileges with Illinois.

I have not written much on this blog about Indiana's law on interstate shipping of wine. I have written a post on the subject on another of my blogs. That post is here.

What's so important about corporate bylaws?

Or the limited liability company's operating agreement? Or a partnership agreement?

First and foremost, these documents set out how the legal entity will operate internally. Think of them as a blueprint or like a disk operating system. I used the analogy to tailor made goods in an earlier post. The by-laws set out the rights and responsibilities of the owners to one another and to the business. The by-laws need to meet the needs of the owners and the business.

Secondly, the agreement - if it is any good - sets out the process for splitting up the business. For a bit more on this topic you might want to read Like a marriage, a new business partnership needs a 'pre-nup' written by an Illinois attorney and published in The Napierville Sun.

Collecting debts - what not to do

From today's Muncie Star-Press:

BREAK-IN: A Muncie man was arrested Saturday afternoon, accused of dealing several thousand dollars worth of property from acquaintances.

The suspect, Stephen E. Nipper Jr., 27, 2611 S. Tacoma Drive, was preliminarily charged with burglary, a class B felony, after police found him trying to sell property stolen from a home at 307 E. Harvard Ave.

The victims said Nipper had dropped his son off at their residence and apparently came back and took property that included a shotgun, gold and diamond jewelry and cameras, police officer Melissa Pease reported.

Nipper claimed the victims owed him money for work. He remains in jail without bond.

Folks, small claims does not cost that much and if you are owed more than $3,000.00 then a lawyer is still cheaper than sitting in jail. Think about it.

Blogging for business plans

You want to start a business. You read everything you can about starting a business. You probably have read enough about needing a business plan. Well, you do need a business plan. Whether you have a business plan is one of my first questions for clients wanting to start a business. So, now I offer more reading on business plans: this is a search page for business plans under Blawger. Which means you may get some irrelevant posts from law related blogs on business plans but Blawger gives a pretty good preview so separating wheat from chaff is not too hard.

Labor law blog: The Labor Law Center Blog

I ran across this blog last week and think it is worth taking a look. Its origins are not clear to me but it is a group blog and labor law seems a bit of a misnomer. Most often labor law tends to mean only the law governing unions and an union relations with employers. This blog goes beyond that narrow definition to include employment law issues such as overtime pay and EEOC discrimination matters. On top of all that, the writers write clearly about the subjects. So take a look at The Labor Law Center Blog.

More prenuptials for businesses

I usually discuss prenuptial agreements on my Indiana Divorce and Family Law Blog. I use Google news alerts to keep track of news on prenuptial agreements and that is why I am writing about them on this blog. The latest alert came laden with references to stories from the business page. This might be a trend as an earlier post here mentioned. Certainly, it is good for the business writers to acknowledge the importance (and impact) of family law on businesses.

The New Hampshire Business Resource has a fairly good article Protecting your business assets with a ‘prenup’. I do take issue with part of the following paragraph, though:

Stock in a family business owned by one spouse is marital property, and absent a valid prenuptial agreement would technically be subject to division under New Hampshire’s statutes. As a practical matter, however, it is unlikely that a court would order one spouse to transfer shares in a closely held business to the other spouse upon divorce, since judges and marital masters are mindful that post-divorce joint ownership of a business venture is unlikely to succeed. Accordingly, the court is likely to award all shares of stock in a closely owned family business to the spouse related to that family.

After nineteen years, I think that anyone can say what any judge will do about any matter in any particular case. Judges in divorce cases think that if both parties are equally angry then they have done a good job. What makes a prenuptial so useful is removing the surprise inherent in any judge's decision of what makes an equitable division of property.

Best wishes to Marcia Oddi

I have been remiss but Marcia Oddi of The Indiana Law Blog is ill. My best wishes go out to here. The Indiana Law Blog was the first blog on Indiana law that I was aware of and it is the best.

Starting a corporation

The law require three things for starting a corporation:

1. Corporate by-laws.
2. Articles of Incorporation.
3. An Employer Identification Number.

I suggest a fourth is necessary from the business side of things: a business plan.

How to get these things done? First, option has you doing all the work. You cna find corporate by-laws online by just googling the term. Indiana Secretary of State has a online method ff starting new companies here. You can go to irs.gov and get a EIN number. You will also be trying to get your business up and running at the same time. And what is an incorporator? Why do you need a resident agent?

You can go with a company who may or may not employ a lawyer, offering low cost incorporations in Delaware or somewhere exotic for some very low fee. I am not sure I understand the allure of these companies. Your corporation will be governed by the laws of the state in which you incorporated and you will be in Indiana. What happens if a question comes up about the corporations law in this other state? Either you find an Indiana lawyer licensed in that other state and knowledgeable about the other state's corporations law, or you hire an attorney in that other state.

I have said for many years that the reason for lawyers is so that people like you do not spend your time in a courthouse. The same idea applies here. What makes life easier for us in a business start up situation. You will find it a more efficient use of your time to turn over to a lawyer the tasks of getting the Articles of Incorporation done and getting the EIN number. Just as if you have downloaded those corporate by-laws and read them can lead to more efficiently using the attorney's time. (By the way, let me say that my view is that online bylaws are only good as a starting point. Think of the difference between wholesale and retail. Online bylaws epitomize wholesale when what you need is not only retail but tailored work. Bad bylaws pose a grave danger to any corporation.)

Having an attorney on hand at the start can get you through the meeting of incorporators and first meeting of the corporation so that the corporation begins its life in full legal propriety.

And why is all this so important? Erroneously setting up the corporation can rob the shareholders of what they wanted: protection from personal liability.

Indiana Blog: Indiana Commercial Foreclosure Law

I ran across this blog in the past week and with more time I would have mentioned it earlier. The writer is John Waller from Indianapolis' Wooden & McLaughlin. Well, that is what his About Me section tells me. The main entry for the blog is here.

However, not everything is about foreclosures.

What If A Borrower Ignores A Lender's Foreclosure Suit? does a very good job describing a default judgment. Too many people think that they must appear in court before any judgment can be entered against them.

One that hits home to me (especially since I am trying to research the issue of corporate piercing) was More On Piercing The Corporate Veil In Indiana, And The UFTA.

Dying without a Will in Indiana versus England

I will take Indiana. This story from the Times of London, Wills injustice: fit for Dickens?, is worth reading if only to make us appreciate what we got. Here is the key difference between dying intestate (without a Will) in Indiana and in England: Indiana would have let this spouse take only 25% of the estate while in England the surviving spouse got everything.

Do not think I am suggesting that dying intestate is a good thing. It is not. It is just a bit better here than in England.

Follow up on powers of attorney and home healthcare workers

Just a few passing thoughts on the previous article Powers of Attorney - uses and problems and Times of London article I was commenting on Power of attorney: what can go wrong? emphasizing the employment law issues.

The original article made the following points about the employment law issues:

The case has important implications for anyone arranging domiciliary care. Consideration should be given to making it a condition of employment that the employee does not discuss legal or financial matters with the person being cared for. If possible, this could be made a term of a written contract. If there is firm evidence that the term is being breached, the contract can be terminated.

I do not know enough about home health care contracts to know if they do include these kind of terms. I do know that temporary agencies have contracts that address these issues with employers. I would not be surprised that in-home medical care providers do not have contracts with similar provisions.

For those receiving in- home care - check the contract carefully about your responsibilities of mixing the care provider with the client's business affairs.

For those companies providing in-home care: 1) check on your employees' background and 2) get your contracts lined up. No, one cannot contract away one's negligence but that is not quite the need or purpose for lining up the contracts.

Powers of Attorney - uses and problems

I sum up a power of attorney as creating an alter ego for the person making the power of attorney. Let me throw in a couple of terms here. The principal is the person creating the power of attorney and attorney-in-fact is the name given to the person getting the power of attorney. The General Assembly set out the powers in a whole chapter under Article 5 of Title 30 and include about everything that anyone can do with money and/or property. Those powers go into effect at a certain time or upon the occurrence of an event.

Along with these powers of attorney there are health care powers of attorney. For this type, the principal designates someone to make medical decisions for the principal.

Generally speaking, a durable power of attorney finds it greatest use when the principal becomes incapacitated so that they cannot carry on with their affairs. With health care powers of attorney that incapacity may be that one is unconscious while the ordinary power of attorney could go into effect when the principal cannot travel to the bank.

During the discussion with the lawyer, one needs to discuss not just the need for the power of attorney but how you want to use the power of attorney. Think about this - how are the bills to get paid if you are in the hospital or Africa? Go beyond bills and think about every sort of activity that requires you to do something by yourself and substitute that for bills. Powers of attorney give someone else the authority to do these things instead of you but only when you let them (that is the designated time to start power of attorney) or when you cannot do them for yourself (occurrence of an event power of attorney).

I think the same reasoning applies to health care powers of attorney. Do you want a certain sort of treatment and want to make sure you get it even when you cannot tell the doctors your wishes? If yes, then you need to get a health care power of attorney.

One thing forbidden the attorney-in-fact is executing a Will for the principal. I bring this up because of an article I ran across in the Times of London: Power of attorney: what can go wrong? The subheadline actually got me to read the article: What happens if your mother leaves all her money to her new home help? What is that a in-home healthcare worker got what would be a durable Power of Attorney and then used it to get a Will. Not likely to happen in Indiana because our statute explicitly states the attorney-in-fact cannot execute a Will. However, other things can happen.

Taking the same outline as the Times' story, I see a potential problem happening without any need for a Will. The power of attorney creates enough power for the attorney-in-fact to make a lot of mischief. I will outline in the near future the ways Indiana protects the principal, but in the meantime I will suggest a simple expedient. Give copies of the power of attorney to the banks handling the principal's money and also to anyone holding money or assets of the principal.

Interesting post on flat fees - for the client

Until I read How to prove savings from a fixed-fee arrangement,I had not considered what flat fees look like from a client's perspective. I thought clients only considered - should consider maybe - that a flat fee brings some predictability to legal fees. Maybe I am wrong about this as I find it hard convincing business clients that some services can be handled on a flat fee bases.

I am looking at overhauling the fee structure for my family law/divorce side of my practice. I have enough of the documents automated that an hourly rate is unjustified. I know what work needs to be done in what circumstances and I want to restructure my fee agreements to reflect this reality. I want to follow up this idea on the civil and business side.

Businesses and going to court

The following are from The Legal Thing and hit the nail so hard on the head that I am just going to quote them:

No. 1 - You only litigate when you have an important interest to protect. Litigation is costly. Incredibly costly. But it is not the expense that is the real issue, it's the diversion of resources. Time employees spend reviewing e-mails and documents, educating lawyers and preparing for depositions is time away from the business. That's the real cost of litigation.

No. 2 - A non-judicial resolution is almost always preferable. When you file a complaint, you are turning over resolution of an issue to a third party - be it a judge, arbitrator or jury. To a great degree you lose control of the outcome.

No. 3 - You litigate when you have a high degree of confidence that you will prevail. Bluffing is for weekend games of Texas Hold'em . When you file suit, you need to have fully evaluated all aspects of the case to ensure that the outcome will be favorable.

No. 4 - You litigate to win. This means that your employees, board and management team fully understand and support the commitment (both financial and time) required to prevail. It also means having seasoned litigation counsel who understand your business and objectives.

I suggest reading all of the post - regardless if you are potential client or another lawyer. Something in there for anyone to learn from.

For the view from the client's side of counsel table is this post Juries, Courtrooms and Linear Thinking.

Business resource - Business Plans

The Small Business Administration has courses on starting a business and business plans here.

Small Business Lending Corporation has a page on Developing a Business Plan.

Getting your day in court

Anderson Community Schools faced a lawsuit on its school uniform policy. The plaintiffs were parents acting as their own attorneys. As I wrote before and elsewhere, ACS' attorney moved this to federal court from Madison Circuit Court for a quick kill and it looks like his strategy was a good one. The Indiana Daily Lawyer reported here that the case was dead even though The Herald-Bulletin reported the plaintiffs/parents filed an amendment to save the case.

The parents did not seem to realize that they are federal court and not in small claims:

In the objection, the Bells state that as pro se litigants they are required to have their “day in court.”

We do not have a right to "a day in court" but only a right of access to the courts. Under federal law that right is one of those implied rights - like privacy. Trial rules operate to keep weak or wrong-headed claims from trial. Think of separating wheat from chaff and you have got the reason for procedural rules. Trial is reserved for those cases where there is no other choice - no weak legal claims, a genuine dispute of fact - other than trial.

Yesterday, United States District Court Judge Tinder dismissed the federal claims and sent the state law claims back to Madison Circuit Court. The Indiana Law Blog noted the decision here and provides a link to Judge Tinder's decision.

Business resources - Competitive Intelligence

Check out Competitive Intelligence - A Selective Resource Guide on LLRX. com. Geared for the legal profession but also having uses for the layperson. I spend so much time online that I forget that not everyone knows even what is Google. If you want to learn a bit about online searching, then you need to check out this page.

The Cluetrain Manifesto

I got to admit I have read bits and pieces and a lot about The Cluetrain Manifesto and I am still not sure how to put it all into effect for my business. If you are going into business or have a business, then check out this site.

Franchising - reading around

Today, I found a new franchising resource: FranchiseBrief.com. I have not examined the site in any depth but it seems fairly sober in its approach. The site also has a blog here.

Frannet says it is the franchise connection. This appears to be a for-profit site, so take that into consideration.

Entrepreneur magazine has its site here. It has free tools but you need to sign up for them. So so if you are interested in franchising and/or starting your own business.

I cannot emphasize enough that there are dangers to franchising. Franchise circulars may meet the legal criteria and still not tell the whole story. Get all the information you can before even looking at the franchise circular.

I had trouble a few weeks ago with Blue MauMau. Today everything seems to be fine and I am glad. The MauMau site may not be sober and its bloggers may not either but I find it has not sacrificed seriousness for its lack of a sober front. No reason business needs to be dull. Take a look at this example Some Franchise Agreements Make Debt Recovery Tough:

In a continuation of the opportunity to look at the financial frustrations of a failing or failed franchisee, I’m learning that all birds of a feather do in fact have different frailties. Yes, some franchise agreements are so very tough that the appearance of recovery of anything is dim. But wait. Having served tens of thousands of businesses, those franchisees served always had personal pressing obligations. Most had lease obligations, personally guaranteed. Many owed money to their ZOR. The majority had loan obligations to banks, family, or credit card debt. Vendors, other than ZOR were almost always owed some money. These liabilities appeared overwhelming, which they were.

Here’s a true story: Though I can’t use names.

Restaurants - serious money

I call $1.9 billion serious money. Considering that what it may be used for is even more surprising. Wiggin and Dana's Franchise Law Blog posts a report that this is the asking price for Applebee's. I generally like Applebee's, but it is not a chain I would think would be worth that much money. The Blog's links to the article are dead but here are some more:

• IHOP Buys Applebee?s for $2.1 Billion

• Baby-back ribs, pancakes and a side of real estate

What makes Applebee's valuable is not the pizzaz of its menu but its menu and its real estate. This quote is from the second article:

“The value is in the restaurants and the real estate. You’ve seen this play in Sears-Kmart, Toys R Us and elsewhere. The companies may have problems, but the land they are sitting on still has value and the brand names still have value that can be leveraged,” said one consumer investment banker who declined to be named.

For legal issues, the purchase shows the value of trademarks.

Both the second article and the Blog post remark that IHOP intends to franchise the Applebee's chain. That I find very interesting - if I am understanding IHOP's intentions. Franchising would seem to be a good method to work off some of the debt incurred in the purchase and one that might be a useful tool for similar sales.