For Those Wanting Forms: Legal Zoom Review

Many visiting here look for forms and that is not really the purpose of this blog. Instead, read What is LegalZoom? from eLawering Blog. I think the review does a good job of balancing the pros and cons of a service like LegalZoom.

The review makes a point of something I have noticed about these online sites:

The company claims that: "With LegalZoom's lawyer-free service, you can save up to 85% off the rates an attorney would charge for the same procedure. " This comparison misrepresents the contribution that an attorney makes when serving a client. It suggests that the LegalZoom service is equivalent to the services of an attorney, when it clearly isn't. The representation suggests that a consumer will receive the same result that they would get if they went to an attorney, which is clearly not the case. Moreover, there are many attorneys who charge fees which compare favorably with LegalZoom's fee structure, so the fees that lawyers charge for comparable transactions which are published on the LegalZoom web site are true of some law firms, but not all solo and small firms.

Cheap is cheap, and you need to keep that mind. A little research into what a local attorney will charge for forms and services would do you better than relying on a commercial with nationwide reach.

Employees Beware of What You Are Doing on Your Company's Computer

The Muncie Star-Press publishes another warning of employees losing jobs over what they do online at work. I think that we all would know that a company owns its own computers and employees have no privacy rights on those computers. Then I read something like Companies monitoring employees and realize that the word either is not getting out or not being heard:

"Employers have ways to monitor the e-mail you send and the Web sites you visit on your computer at work.

And some have fired workers who have surfed inappropriate Web sites or written harassing or offensive e-mails.

'In summary, employees really have no expectation of privacy at all in the workplace,' said Manny Avramidis, senior vice president of global human resources for the American Management Association. 'In many ways, their privacy is checked at the door.'

More than half of employers fire workers for e-mail and Internet abuse, according to the AMA's 2007 Electronic Monitoring & Surveillance Survey. In the survey, 66 percent said they monitored Internet connections and 65 percent block Web sites at work, up from 27 percent in 2001.

Companies are concerned about workers spending too much time on the Web, decreasin"

Justice Scalia on Persuading Judges

The American Bar Association Magazine excerpted parts of Justice Scalia's book on legal writing and argument in Making Your Case. I disagree with most of Scalia's jurisprudence but his advice about writing is spot on:

Value clarity above all other elements of style In brief-writing, one feature of a good style trumps all others. Literary elegance, erudition, sophistication of expression—these and all other qualities must be sac­rificed if they detract from clarity. This means, for example, that the same word should be used to refer to a particular key concept, even if elegance of style would avoid such repetition in favor of various synonyms. It means that you must abandon interesting and erudite asides if they sidetrack the drive toward the point you are making. It means that you should never use a word that the judge may have to look up

Trade secret Litigation News for the Week of May 24

Craiglist and eBay go at in California, Craigslist sues eBay and alleges corporate spy plan:

In a lawsuit filed in California Superior Court in San Francisco, Craigslist challenged allegations in an eBay suit filed in Delaware state court in April that accused Craigslist of discriminating against eBay as a shareholder.

EBay's suit in Delaware Chancery Court charged Craigslist had used "clandestine meetings" to dilute eBay's 28.4 percent stake in Craigslist to 24.85, or less than a quarter of the company.

In addition to unfair competition and fraudulent business claims, the countersuit accuses eBay of copyright infringement and using misleading advertising on Google to run ads for its rival Kijiji site that appeared to be Craigslist ads.

The lawsuit demands that eBay restore all shares of Craigslist owned by eBay or for the court to require eBay to divest its holdings in Craigslist. The suit asks eBay to disgorge profits tied to the business and for punitive damages.

EBay spokeswoman Kim Rubey responded to Craigslist's lawsuit against eBay, saying: "We regret that Craigslist felt compelled to resort to unfounded and unsubstantiated claims in order to divert attention from actions by Craigslist's board that unfairly diluted our minority interest."

The Coca-Cola case from a few years back resurfaced, Federal Court of Appeals Affirms Sentences in Theft of Trade Secret Case

In a federal criminal case that was prosecuted in Atlanta, Georgia, the Eleventh Circuit Court of Appeals recently affirmed the sentences of two individuals convicted of conspiracy to commit theft of trade secrets. This federal case received a lot of media attention because it involved an allegation that a Coca-Cola Company employee and others attempted to sell confidential documents and materials to one of Coke's main competitors, Pepsi. After learning of the alleged scheme, an FBI agent posed as a Pepsi employee who was interested in purchasing the documents.

I mentioned the Fisker/Tesla case in Trade Secrets Litigation News. Green Car Advisor reports Fisker wants the case to go to arbitration. AS the report notes, arbitration takes the case out of court and out of public scrutiny.

Starting a Business: Where to Incorporate

I say where you live is best. The students of the University of Illinois College of Law agree.

They published Home Is Where the Most Economically Beneficial Laws Are: Finding the Best Location to Incorporate Your Business on their blog, The Illinois Business Journal.

For the majority of small businesses, incorporation in one's home state is often the easiest and least expensive option. This is because most states have laws that require entrepreneurs to re-register a Delaware company in the state where it is actually doing business, and unfortunately, re-registration involves more than a few hours of paper work. Not only will the new business be subject to all the same taxes and fees as an in-state company, but there is also the added expense of registering as a "foreign corporation" in the home state and any annual fees in both states. (Footnotes omitted)

On Craig's List, I see companies offering to incorporate Indiana businesses in Delaware. If you are thinking of hiring one of these companies, contact an Indiana attorney for advice. There are many who will be able to advise you throughout the state. I am available throughout Indiana for anyone wanting to incorporate a business.

Collections: Indiana Court of Appeals and Bank Garnishments

Time being short, I am relying on The Indiana Lawyer's Bank not required to restrict withdrawals for now:

"In JPMorgan Chase Bank, N.A. v. Laura and Dennis Brown, c/o Green, Richard & Trent and Rebecca Recht, , No. 02A03-0801-CV-2, the appellate court had to interpret I.C. Section 28-9-4-2 to determine whether a depository financial institution that has received notice of garnishment proceedings is required to restrict the withdrawal of money that is subsequently deposited into the account."

The case looks like one of those that turns on a very technical point but one that is of importance to many debtors and may affect how collections counsel approach garnishing bank accounts.

I promise a follow up over the weekend.

A slightly different estate planning: Pets

I suggest anyone interested in the topic take a look at Danny Meeks' Pet Trust Law Blog. To the best of my knowledge, this is the first blog on this topic.

Employment Law and Public Employees

Constitutional issues appear more easily with government employees than with private employees. Constitutional rights apply against the government and rarely against private employers. Still, there are limits to constitutional protections for government employees. The Indiana Lawyer reports on a recent case from the federal Seventh Circuit Court of Appeals:

In Gregory G. Samuelson v. LaPorte Community School Board, et al., No. 06-4351, Gregory Samuelson filed an action under 42 U.S.C. Section 1983 against his employer LaPorte Community School Corporation (LSC), alleging violations of the First and 14th Amendments, and the Indiana Constitution, following his removal by the school board as coach of the girls' varsity basketball team.

***

The 7th Circuit affirmed the ruling, finding Samuelson's First Amendment rights were not violated because the school corporation's chain-of-command policy doesn't constitute prior restraint because it doesn't restrict speech protected by the First Amendment. The speech addressed in the policy is speech grounded in the public employee's professional duties and is not protected, wrote Chief Judge Frank Easterbrook.

Samuelson couldn't present concrete evidence to show his contract as basketball coach wasn't renewed as a result of his circumventing the chain-of-command policy on various school-related issues, so summary judgment on his claim in favor of LSC was correct, wrote Chief Judge Easterbrook.

Collections: Fraudulent Transfers, New Case from the Indiana Court of Appeals

The Indiana Court of Appeals held in Hoesman v. Sheffler (pdf) format that a debtor is not a necessary party to a fraudulent transfer suit (pages 8 -9). Hoesman involves a trustee converting money in a trust. Those thinking of a trust with a relative should read this case. Cases like Hoesman are why I recommend an institution instead of an individual as trustee.

The Court of Appeals also discusses the issue of getting value for an alleged fraudulent transfer (pages 10- 12) and the "badges of fraud" (pages 12 - 15). Reading the discussion at page 10 -12 about good faith purchasers, I am of the opinion that this case will bear directly on Indiana's assignment for benefit of creditors statute.

The opinion also discusses IC 30-4-3-22(c) and the priority of liens.

Employment Law: The Dangers of Non-Compete Agreements

Unlike Virginia Non-Compete Law Blog, I represent both employees and employers in regards to non-compete agreements. I emphatically agree with my Virginia colleague on the following:

1. Do not sign a noncompete contract without first discussing with a knowledgeable attorney the impact the agreement can have on your and your family's future.

2. If you have already signed the agreement and are contemplating changing jobs to go with a potential competitor of your present employer, better have a chat with that same lawyer!

Read their post, The NonCompete Quandary, regardless of your location. Read the article on which is based, too.

For the Hoosiers reading the article, I would say there are some important differences in the law (which you can read more of by clicking the link below next to "Labels") which make no difference in connection with its themes: be careful of what you sign and do not sign without consulting a lawyer.

I would add one comment to employers, be careful where you get your non-compete agreements. I am seeing many downloaded from the Internet without editing for our local, Indiana law. Our law views non-compete agreements as a necessary evil that will be permitted only in narrow circumstances (which you can read more of by clicking the link below next to "Labels"). Used willy-nilly without concern to the facts of the situation only debases their proper uses.

Online Resources - Public Citizen and FOIA cases

Public Citizen provides information on the following Freedom of Information topics (yes, it is a portal page):

1. Drafting FOIA Requests
   
2. Legal Research & Litigation Resources
   
3. Speeches, Reports, Comments and Articles

Business Law: The Contract from Hell

What makes a badly written contract? Business owners who think the better contract brims with legalese needs to read How To Earn Undying Loyalty From Business Clients (Part 1) - Guest Blogger Anita Campbell.

I came through law school after the start of the Plain English movement had begun but I think even without that education my natural impatience would have gravitated towards plain English in legal writing. Think about it. A contract acts as a blueprint for a contract. What happens if the people to that contract cannot understand what they are supposed to do under the contract?

Employment Law: Avoid Problems When Hiring

Worforce.com has a rather long but worth reading piece under the headline, The Hiring Process: A Primer of Legal Do's and Don'ts. Bookmark it, print it out, but reading it is worth the time.

Business Groups Bash Pivotal 401(k) Suit Filed Against Deere | workforce.com

Off the beaten path for me and this blog but Business Groups Bash Pivotal 401(k) Suit Filed Against Deere from workforce. com has some interesting news on 401(k) plans :

"The ERISA Industry Committee, the American Benefits Council and the National Association of Manufacturers have filed a joint brief stating that the lawsuit should be dismissed in appeals court, where the case currently resides."

“This case is ripe,” said Quentin Riegel, the vice president for litigation and deputy general counsel for the National Association of Manufacturers, the trade association that represents more than 11,000 companies in the U.S. “It’s on appeal, so we feel that the time is right to voice our view and reaffirm that this case should be dismissed.”

Last summer, a federal judge granted Deere’s motion to dismiss the case, in which Deere workers alleged that fees in the company’s 401(k) plan were excessive. The suit also named investment manager Fidelity as a defendant, and alleged that both parties breached their fiduciary obligations by providing mutual funds and 401(k) services to participants with unreasonable, and undisclosed, costs attached.

Consumer: Eco-Funerals

When I saw the title Eco-Funerals - Green to the Grave at the Toronto Estate Law Blog, I knew I had to read it. I heard of these on NPR several years back but I did not recall any mention of Canada, only of England and Arizona (if I recall correctly). What are they? This is a good description.

So what exactly makes a funeral eco-friendly? Green funerals do not embalm bodies with chemical preservatives, but rather dress them in clothes made from natural fibers and place them in cardboard coffins. Although they are more challenging to handle (especially when they are wet), they biodegrade within 3 months. Trees or shrubs are often used to mark individual plots, rather than marble tombstones, as marble is not a renewable resource. Irrigation and pesticides are not used.

If you do read the original post, remember that the Indiana cemetery may not be able to accommodate this sort of burial.

Justices split on rental restriction case

The Indiana Daily Lawyer reports The Indiana Supreme Court came down on the side of a homeowner/landlord against a homeowners association. The following is from Justices split on rental restriction case:

"The state's highest court has been quiet on the issue since hearing arguments in October 2006, but it simultaneously decided to grant transfer and issue an opinion in the case of Villas West II of Willowridge v. Edna McGlothin, No. 34S02-0805-CV-266. The case involved a covenant that the Indiana Court of Appeals described as being 'subterfuge for excluding minorities from renting homes' and a case of first impression that could affect how neighborhoods across the state implement no-rent provisions."

What makes this case even more interesting is the Indiana Supreme Court sent this back down to the trial court to determine if there was intentional discrimination.

Following up on "More Fall Out From the Nelms/Memory Gardens Case"

I noticed Cemetery trust money should go to a third party from The Grand Rapids (MI) Press and realized I had not followed up on More Fall Out From the Nelms/Memory Gardens Case. HB 1026 did become law is now effective according to the Indiana Bill Info site.

Businesses and Contracts and a Follow up to "Looking Outside the Sandbox"

Rush on Business's Writing the Better Contract from Anita Campbell- Part II lead me to How To Earn Undying Loyalty From Business Clients (Part II) - Guest Blogger - Anita Campbell. I agree with Rush emphasizing the points about what makes a good contract:

First and foremost, the better contract protects the client.

The better contract is written in plain English. (A novel concept indeed!)

The better contract is written for a 12th grade education or lower.

The better contract incorporates standardization.

I came to law school in time for the Plain English movement. Oddly, I find clients who think if it is covered with legalese the contract must be defective. There is another point where the Bar is ahead of the clients and we need to educate our clients.

How To Earn Undying Loyalty From Business Clients (Part II) - Guest Blogger - Anita Campbell also has some points related to my Looking Outside the Sandbox:

Now, all of this standardization may sound counter to earning a living. But I suggest just the opposite -- if you make it as easy and painless as possible for clients to deal with you, they will be eternally loyal. They will so enjoy interacting with you, that they will find a recurring need for your services. And they will value your services more, because they know you value THEIR time -- and their budget.

Contrast that with the lawyer who insists that every contract or document must be written from scratch; who makes legal mountains out of molehills – and makes everything so complex that the small business owner cannot even delegate to staff, but has to get personally involved each time.

What happens to that lawyer? Clients get frustrated. They avoid coming to the lawyer even when they know they should. Why? They know the process will not be efficient. They fear their business goals will be delayed. They start making lawyer jokes. That’s when they start going bare, without legal counsel. Or worse, they start pulling out old agreements or downloading contracts from places like www.DocStoc.com and playing attorney without the benefit of proper advice.

I view lawyers who do not standardize their documents as being ignorant of computers. I began standardizing legal documents in 1994. This allows me to charge flat fees in many cases, if not most, and I do not know how I could operate nowadays without having computerized my practice.

Clients have a similar problem by not allowing their lawyers the opportunity to standardize the clients' documents. If clients give me a supply of work that can be standardized, I give the client a different fee rate than for one-off jobs. The only time I am using an hourly rate for document preparation is when I am faced with a job unique in content and a client from which I cannot expect repeat work. With any sort of volume, it is more practical for the lawyer to standardize the documents and which makes the work economical for both lawyer and client.

NDA's

Start Up Lawyer Blog's What is important in a confidentiality agreement or non-disclosure agreement (NDA)? should be read by a business owner, employer or lawyer looking at a confidentiality agreement. Here are two examples.

Need for an agreement. Entering into an NDA increases the risk that the recipient may face charges of trade secret misappropriation if it develops similar information in the future or inadvertently discloses or uses the information. This is the primary reason that VCs will not enter into NDAs.

Mutual versus one-way. Some agreements only cover disclosure of confidential information by one party. Other agreements are mutual and cover disclosures by both parties. Generally speaking, mutual agreements are less likely to have provisions that are one-sided.

Be sure to read all of this post.

For those Indiana business wanting a NDA, feel to give me a call. I will also review NDA's for employees.

Interstate Trucking: New Regulations on Driver Qualifications

I know I am a day late on this but see the following post for why the posts here are a bit untimely. You can access the proposed regulations - with the deadline for making comments - at the following:

Qualification of Drivers; Exemption Renewals; Vision

Silence is not always golden

I am back from about 40 hours of misery. The doctor told me that it was some kind of allergic reaction. I told him I never used to have allergies. He say, these things happen when you get older. That got me thinking of atrophy and entropy - two subject that always get me depressed. I think the doctor has no idea why the room was spinning when it ought not have been but that has stopped. Everything has pretty much stopped except an aversion to food other than cottage cheese. No, we are not having fun in Anderson, but I hope that you are.

Online Resources: Open Source for Lawyers

Probably you have some idea of open source software, but whether you do or do not take a look at Open Source for Lawyers - Home. The site describes itself this way:

"If you are a lawyer or legal worker who is interested in implementing open source software in your practice, you have come to the right place."

Can we continue to compete as lawyers with the increased costs of software? I do not think so. I suggest taking a good look at this site, keep looking at it, and ask questions if you do not see the need or the cause of the fuss.

Looking Outside the Sandbox

Let me be frank that this post has little to do with law but a lot about lawyers, clients, how lawyers practice law and how I think clients perceive lawyers. After twenty years of practicing law in Indiana, having been computerized for the past 15 years, being connected to the Internet for the past 12 years and running this blog for the past year, I have some opinions and ideas.

First, I think that clients have certain misconceptions about lawyers. Most lawyers do not resemble the characters seen on television or in the movies. We follow our ethical rules and work for the best interests of our clients.

Second, I think that clients have misconceptions about how lawyers practice law. As a former partner once pointed out to me, we exist on the clients' post tax dollars. What does this mean? That too many clients buy on the sole criterion of price.

I say computers and then the Internet have disrupted the practice of law in ways many clients do not know and lots of attorneys do not like to admit. What I am writing about here applies not to us in Indiana but further afield in places like Scotland. The following comes from Dressed for Success published by Scotland's The Firm magazine:

“Our first purpose in creating Oracle was to achieve greater operational efficiency – by reducing overheads, for a start. This has been our greatest success. It was plain that previously we were all paying a lot for quite an extensive bureaucracy to answer phones, keep our diaries, issue invoices and collect fees for us. These are all straightforward functions and need not be expensive. We also believed that solicitors wanted to deal directly with Counsel. Rightly or wrongly, the existing arrangements were seen as cumbersome and inefficient for all involved.

“The stable system is really based on a world that has passed into history. Counsel cannot afford to be remote. Mobile phones, PDAs and e-mail have transformed our ability to communicate. Most solicitors now instruct us electronically. It is rare for us to deliver work in paper format. Electronic document control transforms turnaround times and makes diaries work for us, not the other way round. We believe our evolving business model to be both sustainable and efficient.”

We will not see more change until lawyers feel comfortable that they will not lose clients and income and clients must understand what they are getting from their lawyers.

With disruption does come opportunity and that is how I view JD Supra as a good reaction to the Internet.

Many years ago, I interviewed with a lawyer who had bought the local Indiana Bell building. Two lawyers and a secretary in a rather large building tastefully decorated for the purpose of impressing clients. He made a point of emphasizing the connection between putting on a good front that impressed clients and income. Over the years, I have come to agree with him even if I am annoyed at the idea that clients are so easily bamboozled. Being online has lead me to some strange encounters with potential clients - I am not sure if they think that being online means I am a charitable organization or not.

Take a look at Virtual Law Practice Blog. This blog complements the Kimbro Legal Services website. Which turns the idea of a large front on its head.

Business clients have the same problems. Bigger is not always better. Once upon a time there was a virtue to throwing bodies at a legal problem. Computers and the Internet changed all that. With a high-speed connection, I can get access to the news and case law just as quickly as a Big Firm without all the expense of those other bodies or the overhead of a large building for housign all those lawbooks. Take a look at Bigger Isn’t Always Better When It Comes to Outside Counsel from the ABA Section of Litigation. That article covers how business clients overlook smaller firms but also the marketing problems of lawyers.

Like James, Curley left a large firm to form his own office. He says that he and other solo and small firm practitioners have benefited from the increased use of technology. For example, many benefits that were traditionally available only at the larger firms “can be replicated through an artful use of technology in the hands of a competent solo. You don’t need the 100,000-volume law library that the big firms heavily invested in years ago. You don’t need the trappings of a class office space in a landmark building like people used to insist on years ago.” Also, with the availability of remote access, he says, clients have realized there is no need to pay for the overhead of a big firm.

What other ways are lawyers changing how they practice? Bay State Legal Services, LLC offers evening appointments. Note that they have a trademark on After-Hours Law. Which might be a little bit much but it does emphasize the seriousness of the firm. I know that many lawyers in this area offered the same kind of service for many years because of the client's have to work for a living. (One of my favorite comments about the Net is "what is old is new".)

Lawyers cannot meet clients' needs without knowing what clients think of the services they are getting from lawyers. Most clients have no idea what kind of service they are supposed to get from their lawyers. Clients have two metrics (if not only one): the lawyer's reputation for success and are the fees less than the competitors? Both are seriously flawed for judging legal services but especially looking for the lowest rate of fees. A potential client puzzled me when she asked me my hourly rate and then did not ask me to estimate the hours needed to complete the case. (I puzzled her by explaining my practice was largely flat fee). I suggest reading The State of the Legal Profession, Part 1 - Client Driven Innovation for a background on how businesses have been changing their relationships with law firms. This paragraph has given me a lot to think about:

In return, the outside firms are encouraged to advise Cisco on how to be a "better" client, in terms of communication, prioritization, and other matters aimed at increasing efficiencies related to the SLA. "Flexibility on both sides is required," Chandler said.

How do we advise our clients to be better clients? Lawyers, there is one great idea in there.

I think we need to educate our clients about what we do and how we do it. However, the clients need to help in this endeavor. I intended this blog as a way for me to expose the law and myself to the wider world. I am not sure but what I have failed in that endeavor and there are probably several good reasons for this failure. I will accept my shortcomings - a blog with a diffuse subject, posts too long, legalistic writing - if the potential clients will accept that they are looking for quick answers about something that does not provide quick answers. You, the non-lawyers, taking the time to read this must also start thinking outside of the sandbox.

Let me give an example of something related to my business practice, I have tried for years to promote a preventive law practice for my business clients without success. I do not understand why business owners are willing to pay a large fee to litigate case that might have been prevented with less in fees. If anyone cares to explain, I am quite eager to listen.

Which takes me back to The Firm's article:

At the time of the launch of Oracle Chambers Campbell and Carruthers were seen as mavericks, which in the often conservative legal profession is not always conducive to winning business. So, any regrets?

“Oracle Chambers was the best commercial idea we have ever had,” they say. “In just a year, we have seen our fee income grow significantly, and our administrative costs are now very, very low - it is the perfect economic equation. We think this is the future for Advocates, who above all must be fiercely independent, yet accessible. We are adaptable and responsive, easy to consult, and approachable. ”

I think both sides of the attorney/client relationship would benefit from changes in how we practice and with clients knowing more about what they are getting (or should get) from the profession.

New Business Blog and Some Comments on Business Partners

I think some will find RICHDAD interesting reading for business owners and investors even thought it is not a law blog. But as my long time readers know, I like to make mention of business blog that give practical advice and I think RICHDAD's Finding the Right Business Partner has some practical advice:

"Finding a great partner like Ken is similar to finding a great husband or wife -- you have to kiss a lot of frogs before you find the prince or princess of your dreams. I don't know of a magic formula other than to keep kissing."

Selecting a partner cautiously will save on legal fees. And like the post above, I am not using partner in its technical term but in the olloquail sense as having a business with another person or even two more. I do not know how to help potential business owners than with this advice.

Online Resources: The IT Law Wiki

Need to know more about the law and information technology? The IT Law Wiki describes itself this way:

This wiki is an encyclopedia of the legal issues, cases, statutes, events, people, organizations and publications that make up the global field of information technology law (often referred to as “computer law”).

What business, what lawyer could not use such an introduction/guide to computer law?

Indiana Limited Liability Companies and Fiduciary Duties

Reading Chancery Gives Victory to "Freedom of Contract" and Refuses to "Find" Fiduciary Duties in LLC Agreement When Not Clearly Stated from Delaware Corporate and Commericial Litigation Blog gave me a reason to tout Indiana as a place for forming a limited liability company. The Delaware Chancery Court decided that Delaware law imposes no fidicuiary duty other than what is specifiied in the LLC's operating agreement.

Importantly, the court found no provision in the LLC Agreement at issue that: "create[d] a code of conduct for all members; on the contrary, most of those sections expressly claim to limit or waive liability."

Here is the money quote:

"There is no basis in the language of the LLC Agreement for Segal's contention that all members were bound by a code of conduct, but, even if there were, this Court could not enforce such a code because there is no limit whatsoever to its applicability".

The "implied covenant of good faith and fair dealing" claim was carefully examined and dispatched with one of the more lucid and cogent treatments I can recall of this amorphous cause of action.

Finally, the breach of fiduciary duty claim was confronted by first reciting the provisions of the Delaware LLC Act at Section 18-1101(c) that allow for complete elimination of all fiduciary duties as part of an LLC Agreement. The court read the parties' LLC Agreement in this case to eliminate fiduciary duties because it flatly stated that:

"...members have no duties other than those expressly articulated in the Agreement. Because the Agreement does not expressly articulate fiduciary obligations, they are eliminated."

Indiana's Court of Appeals decided in Purcell v. Southern Hills Investments, LLC (pdf format) that an implied fiduciary duty existed for Indiana LLC's. The Court of Appeals relied upon Credentials Plus LLC v. Calderone, 230 F. Supp.2d 890 (N.D. Ind. 2002) (see Purcell at page 9 -10).

The Delaware blog finds no problem with this situation while I have serious qualms. My qualms fall into two categories. First, having been involved in cases where the mistreatment of an LLC's minority members amounted to a breach of fiduciary duty and with an implied fiduciary duty there was no protection for the minority. Secondly, I see too many people relying on do-it-yourself sites to create their operating agreements and those can lead them into the first category.

All of which means one thing for the non-lawyer: get a lawyer to draft or review your LLC agreement.

Trademarks and Larry Bird

News from The Indiana Daily Lawyer about a new trademark case out of Indiana. Larry Bird sues over use of name and I am hard put to think of another name in this state and especially in French Lick which lead to this kind of lawsuit.

"Bird filed the suit, Larry Bird v. Legend of French Lick LLC, No. 4:08-CV-0070-DFH-WGH, in the U.S. District Court, Southern District of Indiana, New Albany Division Monday against Georgianna Lincoln and Christopher Cooke, who purchased Bird's childhood home in French Lick from the Larry Joe Bird Revocable Living Trust.

The two marketed the property as a bed and breakfast, promoting the house as, 'Legend of French Lick, the Former Home of Larry Bird Resort.' The two also attempted to purchase memorabilia from Bird and wanted to use his name to identify the house; those requests were denied.

The lawsuit seeks to stop Lincoln and Cooke's unauthorized use of Bird's name in violation of federal trademark laws and state publicity laws. Bird has registered his name as a trademark with the U.S. Patent and Trademark Office, according to the suit. The suit also seeks damages for the improper use of his name and for the impoundment and turnover of certain properties the defendants used improperly."

I wish I had a bit more time to dig into this one. I am a bit surprised that the seller did not impose some limitations on the buyers that might have prevented this suit. Does it seem like such a stretch of the imagination to think the buyer of Larry Bird's childhood home would not try to use the home to make money based on that association? Or that the seller would react in this way? I think not.

Indiana Law on Breach of Fiduciary Duty

First, what is a fiduciary duty? Where one is in a position of trust to others then that person has a fiduciary duty to those others.

Second, when can one sue for a breach of fiduciary duty? When the person having the trust commits an act clearly in his own interest and against the interest of the corporation, a breach of fiduciary duty occurs.

More specifically, the law sets out three elements the plaintiff must prove for a successful breach of fiduciary duty case: (1) the defendant had a fiduciary duty to the plaintiff, (2) the defendant breached the duty, and (3) the breach of duty caused injury to the plaintiff.

See Hartung v. Architects Hartung/Odle/Burke, Inc., 157 Ind. App. 546, 552, 301 N.E.2d 240, 242 (1973). For a more accessible case involving the fiduciary duty of a shareholder and relying on Hartung, see Linden v. Coco (html format).

Premier Bankruptcy News

The Indianapolis Business Journal shows some problems with the Premier Chapter 11 Bankruptcy case. With Trustee to intervene in Premier bankruptcy, the story highlights some problems of many Chapter 11 case. Albeit, this case seems an extreme example:

"The U.S. Trustee's office plans to file a motion to intervene in a Chapter 11 bankruptcy case brought by Premier Properties USA Inc. because the development firm is insolvent."

***


Two court hearings last week made it increasingly clear that Premier is in no position to work its way out of bankruptcy: None of its employees have been paid for at least eight weeks, and the firm's operating account balance has fallen to $14.33.

U.S. Bankruptcy Court Judge Basil H. Lorch III said he will consider Trustee Mark Drummond's request to convert or dismiss the Chapter 11 filing at a hearing May 30. Drummond had not filed the request as of this morning.

Creditors familiar only with Chapter 7 bankruptcies would do well to consult with their lawyers when they receive notice of a Chapter 11 bankruptcy.

A New Idea to Aid in Caring for Aged Parents

I keep saying that everyone needs to think about advanced directives: a power of attorney, healthcare power of attorney, and a Living Will. I am now intrigued by an idea I found via You and Yours Blog's Family Contracts to Make Siblings Get Along for the Care of Aging Parents in the Dallas Morning News Caring for pops: Put it in writing:

"To manage that familial strife, Mr. Hofheinz has come up with what he calls a 'memorandum of understanding' between siblings. The contract spells out each adult child's responsibilities and holds that person accountable for them."

It is a good idea and one worth contemplating.

Speaking of Defamation - A Georgia Case and Indiana Law

I wrote a bit about Indiana defamation law in Business Defamation/Trade Secrets. Reading the following from Quick Takes -- April 15, 2008 from Workforce.com made me think I should repeat myself:

"You Can’t Say That: Slander allegations made by an ex-employee of Amerisave Mortgage Corp. will be heard in court after all, following a decision by the Supreme Court of Georgia that overturns a lower court’s ruling to dismiss the lawsuit. The case stems from allegations made by Stephen Scouten that Amerisave and its business associates allegedly “defamed him by disseminating false information” to employees that he was terminated for theft, according to court transcripts and published reports."

This certainly sounds like the defenses of May v. Frauhiger (WP format) and Dietz v. Finlay Fine Jewelry Corp. (html format) would not apply. Without knowing more , I would say the best defense would be on the issues of damages and malice. Remember the elements for defamation are a defamatory communication; made with malice; publication of the communication; and damages.

Online Resources: Estate Planning and Elder Law

Credit Wake Forest Law School's Elder Law Clinic with a compact collection of links to books, articles, and newsletters relating to estate planning and elder law.

No, it is not legal advice but legal information. Like this blog, it is a place to start your legal research and not its end.

Happy Mother's Day

I wish all of you a Happy Mother's Day.