New York Small Business Law

Nice Try Holland & Knight Partner!

Here is another reason why you should keep a close watch on your (big) law firm's billing practices:  lawyers cheat!  If you don't believe me, check out this story:

Today's WSJ carries a story about bill padding at the Chicago office of law firm Holland & Knight.  Apparently the junior partner in charge of a trial blew the whistle on the senior billing partner, who was inflating the bills.

Actually, if the client had followed my tips in this earlier post, I think he or she would have spotted the fraud without the junior partner's help.

New York Limited Liability Companies FAQ

What is a New York Limited Liability Company ("LLC")?  Who can form an LLC?  How do I form an LLC?  How much does it cost to form an LLC? What ongoing requirements are there for maintaining an LLC?  How does an LLC pay taxes?  Is an LLC a good choice for my new business?

Read on for answers to  such common questions about  LLCs.

Five Steps to Buying a Small Business in New York - Part 3: Due Diligence

(Part 1 here - Part 2 here)

Due diligence is the process of investigating the business you are planning to buy inside and out;  lots of files to look at, numbers to crunch and agreements to review.  You want to know that the price you are paying for the business is fair, and that there are no hidden secrets about the business that could haunt you after you become its owner.

Here is a list of the most common issues for investigation when doing due diligence for a small business purchase:

Don't be a Victim of your Law Firm's "No Small Business" Policy

Via MyShingle I learned about this telling article by a leading law firm consulting company.   According to the article, small businesses are bad news for big law firms.  Short of telling the client to hit the road, they recommend these ways to get rid of small business clients:

• Eliminate discounts. Most businesses provide price discounts based on volume. But in law firms, often the lowest rates are charged to the smallest clients. With the next bill simply charge the client at full rates. Explain that the firm has large clients who expect to enjoy most favored nation rates, which forces the firm to bring the small client's rate up to standard. Either the client will pay the higher rates or they will seek other counsel--both good results.
• Push work down. Hand off small client relationships to a junior associate. The associate will charge lower rates and gain experience in client relations and billing management. A year later if the firm still wants to fire the client, it can do so with less political flack.
• Refer it out. Refer the client to a smaller law firm. Set up a referral relationship and explain to the client that they will be charged less and get better service from the smaller firm.
• Cut out small clients at the source. Change client acceptance procedures to eliminate small matters. Prohibit acceptance of work that particularly attracts individuals and small clients. If the firm must accept some individual work, establish a fixed fee minimum for individual services such as will preparation or residential real estate closings (and make it pretty high).

Emphasis (in red) added by me.   Need I say more?

Picture courtesy of Fotomele protected under CreativeCommons Attribution-NoDerivs 2.0 License.

Top Ten New York State Info Resources for Small Businesses

Courtesy of New York State, my top ten  legal info and research resources for small business issues:

1.  Find out about licenses and permits for your New York business:  NY State Online Permit Assistance and Licensing  Website

2. Search New York Business Entities:  Department of State, Division of Corporations, Entity Database

3.  Learn about forming a corporation in New York:  Department of State, Division of Corporations, Brochure

4. Learn about forming a limited liability company in New York: Department of State, Division of Corporations, Brochure

5. Learn about filing an assumed name certificate in New York:  Department of State, Division of Corporation, Brochure

6. Search for UCC liens in New York: Department of State, Uniform Commercial Code, Public Inquiry System, UCC Lien Search

7. Search tax liens in New York: Department of State, State Tax Warrant Notice System

8. General info about starting or growing a small business in New York:  New York Loves Small Business

9. Business tax info:  New York State Department of Taxation and Finance, Business Taxpayer Home Page

10. Names, Addresses and info about all county clerks in New York State:  NYS County Clerk List

If you need help beyond these Top Ten New York State Info Resources, call a licensed small business attorney.

Keep Your Legal Fees in Check!

Most attorneys and law firms still charge  by the hour.  Even though flat fees seem to be more common nowadays for certain routine agreements and matters, the meter usually starts running as soon as you start talking to your attorney.  Here are a few tips on how to keep legal fees under control.

Promissory Notes - What, When, How & Sample Form

What:

A Promissory Note (also known as "note" or "negotiable instrument") is a written statement  that evidences that money is owed to you by the author (also known as "maker") of the statement.  You can transfer the note to other people who can then demand payment from the person or entity that owed money to you originally.  Your attorney might say  that  the note is "negotiable."  Another benefit of a note:  You can enforce the note in court without further evidence of the underlying reason why money was owed to you in the first place.  You also don't have to worry that the debtor will raise issues in court based on the underlying transaction, since the court won't consider any of those issues.

If you want to look up the code that governs promissory notes in New York look here:
Article 3 New York Uniform Commercial Code.

When:

NY Business Certificates - Know Your "Doing Business As" Responsibilities

D.B.A. or "Doing Business As" is not only a cool bar in the East Village, it also refers to individuals (sole proprietorships), partnerships, corporations and other entities that do  business under a name different from their real name.  For example, Joe Smith operates a computer service business under the name "Computer Geeks to the Rescue," (fictional example) and Town Sports International, LLC operates a popular gym under the name "New York Sports Club" (real life example.)

When you do business under a name different from your real name, you have to file a business certificate either with the county clerk of your county or with the Secretary of State in Albany.     Here are the rules:

Second Income Stream for Attorneys

Via Sui Generis  I learned that a woman attorney was awarded $310,000 for some nerve damage on her foot.

The attorney, Alice Grifffin, 42, said she bought a large decaf on Feb. 10, 2004 from a Starbucks on Seventh Avenue. She said the clerk did not put an insulating sleeve on the cup, and slid the coffee on the counter so it fell on her foot.

  Well, I am off to the nearest coffee house to get a  Starbug stuck in my throat. 

Five Steps to Buying a Small Business In New York - Part 2: Negotiating the Terms of the Deal

Once you have found a business that seems like a worthwhile acquisition (a “target”), you are ready to negotiate the terms of the transaction.  But what are the typical terms of a small business purchase?  What is there to consider? In other words, what are you in for?

Enter:  the “term sheet,” also known as a “letter of intent” or “memorandum of understanding.”