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Presentations and Publications

Publications

Ms. Natbony has authored and been published in the following:

Press / Blog Posts

Press and blog posts

Navigating HIPAA and CMIA Compliance in Medical Practices: How to Protect Your Patients and Your Practice

by Suzanne Natbony, Esq. 

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Patient privacy violations have become abundant among  medical practices recently. From a ransomware attack gaining access to a medical practice's naked patient photos, to a doctor illegally accessing patient records, to a patient accusation that the doctor discussed confidential patient information to a third-party, a medical practice must safeguard patient information. There are two major privacy laws that regulate patient information in California.

 

In 1981, California enacted the Confidentiality of Medical Information Act (“CMIA”) to ensure patients’ medical information is handled with care by healthcare providers, insurance companies, and other organizations.

 

In 1996, the federal government created their own privacy policy called the Health Insurance Portability and Accountability Act (“HIPAA”) Privacy Rule which established the national standards to protect sensitive patient data. Since the establishment of HIPAA, California CMIA has been amended to supersede the federal regulations and is considered one of the strictest state policies that exist.

 

With the incorporation of electronic medical record keeping in medical practices, healthcare practitioners, medical staff, and non-medical staff must secure patient health information (“PHI”) not only in the physical setting, but also in the digital setting to ensure patient privacy is fully protected.

 

Here are some guidelines to follow to help protect your patients and your medical practice.

 

I. Train All Staff on HIPAA and CMIA Compliance

 

All staff, including medical and non-medical staff who have access to patient information must be well-versed in HIPAA regulations and the specific policies your practice follows to protect patient information. This training should be provided during the onboarding process of new staff and repeated every 2 years. Supplemental training may be required in between if new guidelines were added. Online resources such as a payroll provider or HIPAA Training at https://hipaatraining.com are available and may be cost effective and invaluable. Attorneys that specialize in healthcare law may also provide HIPAA training.

Designate a HIPAA Compliance officer(s) to oversee HIPAA compliance. This officer(s) should be responsible for staying up to date on regulations, conducting training sessions, updating office policies, and ensuring policies and procedures are being followed.

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Training topics should include the following:

  • Patient rights under HIPAA and CMIA

  • What is PHI under HIPAA and Confidential Medical Information (“CMI”) under CMIA

  • How to properly handle and secure PHI and CMIA

  • Safe communication practices

  • Importance of password security

  • Reporting potential breaches

  • Civil and criminal penalties for violations

 

II. Develop Policies and Procedures

 

Every medical practice should have their own patient privacy policy and procedures that are customized to their practice. These policies and procedures should be documented and readily available to the staff. These policies should be audited bi-annually to ensure the policies are meeting current federal and state guidelines. Some key points to include in the policies are:

 

  • User Access Review: Regularly monitor who has access to patient data based on their position. Access should be limited as much as possible to a need-to-know basis to minimize exposure.

  • Secure Password Protocols: Implement strong password policies such as minimum character length, complexity requirements, two factor identification, and frequent password changes. Ensure passwords and accounts are not being shared among staff.

  • Data Encryption: Encrypt all PHI both in transit (e.g. email) and at rest (e.g. on servers) to protect patient data from unauthorized access.

 

III. Work with an IT Professional that specializes in HIPAA compliance

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Even though it may be more costly to hire an IT Professional who specializes in HIPAA compliance, it may be worth the cost in the end if it prevents any breaches in your network, which can be more financially detrimental. IT professionals can help maintain and update your software, computers, and servers to protect PHI and implement any necessary security measures. The IT professional can complete a comprehensive risk assessment to help identify any potential vulnerabilities in your system and monitor for any possible breaches. This risk assessment should include all areas where the patient data is accessed, stored, and transmitted. 

 

IV.   Medical Record Retention

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Medical records must be kept for at least 7 years (10 years for Medicare and certain Medi-Cal patients) from the date of service, discharge, or death in a secure environment with security protocols in place to prevent unauthorized access. CMIA requires medical practices to have policies and procedures that address medical record storage, destruction, and disposal that comply with current CMIA regulations. HIPAA has no medical record retention policy and defers to state laws.

 

V.    Secure Communication Practices

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Practices must obtain patient consent which specifically states what method of communication they approve of (e.g. mail, fax, email) and what information can be transmitted. Avoid emailing PHI as email is often not secure. A simple mistake like misdirecting an email with a patient’s note can lead to a breach. Using a protected portal or messaging system for all patient communication is the preferred method.

 

VI.   Physical Security

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Avoid discussing patient information in front of unauthorized personnel. Any discussions with the patient should be held in a private setting such as an exam room or a private room. It is inappropriate to have these discussions with a patient in a shared waiting room, hallway, or public place. This can lead to unintended consequences disclosures of PHI.

 

VII.  Shared Mobile Device Security

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If your practice uses shared mobile devices, such as an office iPad for patient intake forms, then make sure the device is secure. Implementing “kiosk mode” on these devices is one way to ensure that a patient using the device cannot access another patient’s data.

 

 VIII. Business Associate Agreement (“BAA”)

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Any third-party vendor or contractor who may have access to PHI must sign a Business Associate Agreement with your practice. These third-party contractors can be cloud storage providers, marketing companies, or billing services. The BAA obligates them to be compliant with HIPAA regulations. Department of Health and Human Services provides templates for BAAs. A healthcare attorney like Solve & Win can also help draft a customized BAA for your practice.

 

IX. Website Compliance

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Your website must also be HIPAA compliant and secure. The site should include a Notice of Privacy Practices (“NPP”) for website users. The website’s NPP is different from the Patient Notice of Privacy Practice that the patient signs in the office during intake. This NPP outlines how your medical practice handles user information collected through the website, such as contact information or appointment requests. By including the NPP, your medical practice demonstrates your commitment to protecting the user’s privacy and adhering to HIPAA regulations.

 

X.     Written Consent from Patients Required

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CMIA requires written consent from patients before releasing their health information versus HIPAA only requires verbal consent.

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California legislature in 2021 amended the CMIA. Under this new amendment, medical providers can share patient medical information with their family members or caregivers without patient consent if it is in the best interest of the patient. This CMIA amendment puts it in line with HIPAA’s policy regarding releasing medical information to family members or caregivers.

 

XII.  Penalties

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CMIA can implement both civil and criminal penalties for nonadherence to the privacy laws which can result in financial penalties and or imprisonment versus HIPAA only has civil penalties. CMIA maximum penalties are higher than HIPAA for certain types of violations.

 

In conclusion, medical practices, especially in California, need to be diligent and proactive regarding HIPAA and CMIA requirements to protect not only the patient’s privacy, but also to protect your medical practice. Staying informed regarding new patient privacy law requirements, creating and enforcing the policy and procedures, properly training medical and non-medical staff, and conducting regular risk assessments can help prevent potential breaches.

Navigating HIPPA and CMIA Compliance in Medical Practice
Non-litigator attorney prevails

Solve & Win Announces that A Non-litigator Attorney Prevails in Breach-of-contract Case Against Litigator Over Referral Fees

 

California business attorney prevails in Natbony v. Reccius et at., a referral fee case, under Rule 2-200 and Barnes, Crosby, Fitzgerald & Zeman, LLP v. Ringler. Suzanne Natbony, Esq. referred Mr. Benjamin Reccius a client because Mr. Reccius promised to pay Ms. Natbony a referral fee, but then refused to pay. Ms. Natbony filed suit for breach of a referral fee agreement against Mr. Reccius, and the case was decided by Judge Emma Castro. Ms. Natbony prevailed and was awarded her referral fee plus costs.

 

LOS ANGELES (PRWEB) August 04, 2021

 

Business transactional attorney-entrepreneur Suzanne Natbony, president of Solve & Win PC, has won a judgment against Benjamin Reccius, an associate attorney at Kimball, Tirey, St. John LLP over a breach of contract regarding referral fees.

 

Heard by Judge Emma Castro of the Los Angeles Superior Court, Suzanne Natbony v. Benjamin Reccius et al. (2021) Cal. Sup. 21STSC00537 hinged on whether a referral fee Reccius promised Natbony was enforceable under the California Lawyer Professional Rule of Conduct 2-200 and case law. Natbony was awarded the $9,000 fee entitled to her plus costs.

 

“How can an officer of the court who is charged with creating and enforcing contracts for the people not be held to the contracts that he himself makes?” said Natbony. “I am not a litigator and the amount at stake wasn’t that much, but it’s the principle.”

 

In Natbony, plaintiff Natbony referred a landlord/tenant matter to defendant Reccius, who agreed to take the case on a contingency basis, pay Natbony a referral fee of 25 percent of the fees earned on the matter, and include written disclosure of the fee division in his retainer agreement. The amount of the referral fee was confirmed in an email, and Reccius advised Natbony that he had included the required Rule 2-200 language in the client’s retainer agreement and that he had signed it.

 

Under these facts, Natbony had no reason to doubt Reccius’ representations as to compliance with Rule 2-200, which permits referrals fees paid between lawyers if two factors are met: The client must agree to the fee in writing and the legal fees may not be increased due to the referral.

 

California permits lawyers to pay and receive referral fees under the current Rule 1.5.1 and the “old rules,” which were in effect when the Natbony referral was made. Accordingly, in Natbony, Rule 2-200 was the operative rule.

 

While most California lawyers understand that lawyers can make or pay referral fees if both factors are met, these lawyers are actually unaware of the case law providing for an exception. In Barnes, Crosby, Fitzgerald & Zeman, LLP v. Ringler (2012) 212 Cal.App.4th 172, the court of appeal held that when a referring attorney is prevented from complying with Rule 2-200 by the attorney to whom she referred the client, the defendant attorney is equitably estopped from asserting Rule 2-200 “as a ‘sword’ to escape a written referral fee agreement.”

 

The Barnes Court held that the record demonstrated that the defendant had actively prevented plaintiff from complying with Rule 2-200 in obtaining written authorization from the client for the fee division. Id. at 175.

 

Like the defendant in Barnes, supra, the Natbony ruling equitably estopped Reccius from asserting non-compliance with Rule 2-200 as a defense to his fee-sharing agreement with Natbony.

 

Pleased with the judgment, Natbony explains that her focus is “preventive legal,” i.e., advising clients about regulations, protecting intellectual property, and drafting and negotiating contracts, but she also has to put out fires.

 

“This was a fire that couldn’t be contained,” Natbony said. “No amount of reasoning, demands letters, offers to settle or mediate, or mutual-connection influences were able to induce even a $1 settlement.

 

“So in that case, you have to do what litigators do and file a lawsuit when you have the facts and law on your side.”

 

Suzanne Natbony is a third-generation lawyer, with a focus on business transactional, regulatory/compliance and dispute resolution. She is licensed to practice in California, with her own law practice, Solve & Win, in West Los Angeles, in addition to being a Partner at the international law firm, Aliant LLP (AliantLaw.com) and Of Counsel to Merino Yebri LLP (MYlawLLP.com), in Century City, and she also serves as General Counsel for Beverly Hills Rejuvenation Center, a multi-state medical spa franchise (BHRCenter.com). Solve & Win is a solutions-oriented law firm comprised of practical, business-minded corporate lawyers, who are effective at closing deals, and creatively overcome legal obstacles through resolving disputes. Ms. Natbony is also founder and CEO of LawTake, the first online marketplace for lawyers to successfully commoditize legal information via videos and forms directly to consumers.

 

This press release was featured here:

 

Solve & Win announces that a non-litigator attorney prevails in breach-of-contract case against litigator over referral fees

Defamation Or Legal Free Speech

Defamation or Legal Free Speech?

How to Deal with Defamatory (libelous) or Negative Reviews on Yelp and some other Social Media and Review Sites:

 

Did you just get a very negative review about your business or practice?  Do you believe that the review was blatantly false or defamatory?  Perhaps you tried to contact the poster to no avail. If you are considering hiring a lawyer to assist with the take-down, you may want to look for one who does not just jump into sending a cease and desist letter, as that can backfire.  A lawyer can help you figure out if the content is actually defamatory, as there are several different types of defamation. Remember that truth and opinions are protected speech, so if someone has given an opinion, no matter how negative, you likely would not have a claim for defamation. However, whether something is an opinion or fact is a litigated area and you will need the guidance of an attorney. The following best practices are from a specific situation with a client (confidential information has been removed) and your situation may be different. This does not substitute for the legal advice of an attorney as your facts and circumstances may differ.

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General best practices in terms of dealing with negative or defamatory reviews and disputes are the following:

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  1. Get to the bottom of the facts as far as who is technically liable and what the possible claims are. This may require some investigation in conducting interviews with employees, online research to figure out who the review poster is, and other fact checking.

  2. Determine if the post is just a negative review or defamatory (libel). There are several types of defamation. You need to decide if you are a public figure or private individual. In general, in California, for the post to be defamatory, the defendant must have made an unprivileged false statement of fact (opinions are protected) to at least one other person (not you, the person being defamed), without using reasonable care to verify the truth of the statement, and that person must have understood the statement to be about you, with damages to the plaintiff, such as shame or loss of business. You may also need to request that the defamatory statement is retracted before initiating a lawsuit.

  3. If the post is just negative and only potentially defamatory, you can try to call the person who posted and try to reason with him or her and persuade him or her to remove the post in a sensitive and caring way. Hopefully this causes the poster to remove the post. Note: if you are hot headed, then you should not be the one to make this call. This is when you should consider employing an advocate to finesse the situation and persuade, such that the negative or potentially defamatory post is removed.

  4. If the review is false and defamatory, you can try to contact the Web Host of the Review site to explain the situation – be clear that the review is false. They should have a process for reporting defamatory or illegal content and you need to take steps to report it.

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However, if the above does not work, then:

  1. Email a positive follow-up to the poster, including empathy (try to understand their perspective and put yourself in their shoes) and possible solutions, such as compensation for the frustration or complimentary products or services.

  2. A lawyer could continue to try to call and email the defamer, or even send a text.  It does continue to add up legal fees, so the client could also start privately messaging through the review site, emailing, calling and texting.

    1. Consistency of follow-ups, every 2-3 days, or at least weekly (to keep putting pressure on the defamer) with something such as the following:

      1. “Thank you for speaking with our attorney last week and understanding that the [Google/Yelp/Facebook/etc.] review was [accidentally/full of misinformation/etc.] posted on our page, and agreeing to delete it. We were just wondering when you were going to please correct the mistake and remove it? Our attorney is $XXX an hour, so I hope you understand why I am following up! I am available for a call if you need assistance."

  3. If you have a friend or insider who works at Yelp, Google, RealSelf, etc., please contact them to make an internal complaint.

  4. A public response by the business to honestly acknowledge any shortcomings, clarify misunderstandings and express empathy without revealing any confidential information, such as HIPAA protected personal information. However, this can bring attention to the post and raise it to "recommended" (on Yelp) or "relevant" (on Google).

  5. Send a firm Cease and Desist demand letter that mentions claims for defamation and the risk of litigation.

  6. Send an even stronger demand letter, with a draft complaint attached with claims for defamation, telling the defamer that we are filing this compliant in 5 business days if the defamatory post is not removed.

  7. Advise client about potential defenses – here, it is the risk of an Anti-SLAPP motion in which client has to pay attorney fees if the post is not really defamatory – and also conduct hours of legal research to find similar cases and predict what might occur in court.

  8. File a lawsuit for defamation and other plausible claims. I have created a video, Should You Sue, which I recommend that my clients watch before deciding on litigation. The text and link to the video can be found under Press/Blog here: https://solveandwin.com/press#should-you-sue?-.  If you obtain a court order to remove the review, the Web Host should comply with the removal.

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Some clients prefer to jump from step #1 to #5 or #8 because they know that the steps in between are costly. If the review is by a competitor, someone without deep pockets or is a blatantly false allegation that can easily be proven, then a lawyer might suggest skipping steps. If it seems like it was possibly a misunderstanding, then it makes sense to employ the “honey then vinegar approach.”   Also, some clients may prefer to conduct the costly legal research (#7) at the outset if they are ready for litigation. Some lawyers may refuse to send a demand letter without first conducting legal research. It can depend on whether the words or writing are in a grey area or novel to the lawyer.

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The risk of sending a cease and desist demand letter is it can cause the “Streisand Effect,” which is when something blows up out of proportion and brings more attention to the situation.  The defamer could retaliate in various ways such as posting the demand letter on the review site or elsewhere, have friends post negative reviews, make complaints to professional boards, etc. Further, even a public response or getting a review removed can cause the reviewer to post a negative review on another site or through various fake accounts.

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In the interim of attempting to get the review removed (since the above process can take a long time), you can try the following options:

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  1. Bury the negative review with positive reviews from customers/patients, which I suggest as a best business practice to do anyway – *suggest* reviews to happy customers (as some companies prohibit, asking for reviews, and especially paying for them).

  2. You should ask your customers and friends to at least report the negative reviews for violating hosting company policies, but again, this could bring attention to the review, especially if a technologically challenged user accidentally clicks the wrong button to Like or give it a Thanks, etc.

  3. Again, responding to or restating the public response to the review to be 100% clear that the post is false, but also offer empathy and support, it must be carefully written to show potential customers how wonderful you are. “You are not defined by your failures – you are defined by how you overcame them.”

  4. There are a number of companies that offer to remove reviews for a fee. I am not certain how much that costs or whether they are successful but may be worth considering.

  5. Responding to the Web Host of the Review site again with the information that the post was defamatory and evidence and trying to persuade them to hide the review and mention their liability for failing to remove the defamatory post.

  6. Sending a formal and firmer demand letter to the Web Host of the Review site, similar to the type that Marty Singer sends.

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I understand that this is a difficult decision for the client. I personally and professionally prefer the “honey then vinegar approach,” but I have written numerous demand letters and have seen things go positively, some go nowhere and some lead to costly litigation. The choice is the client’s.  I wish I had a crystal ball to predict the future.  Thus, lawyers use research, analysis, investigation, negotiation and if necessary, litigation, to meet the client’s goals.

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General Counsel Opinion: Top Five Legal Issues That Can Derail a Small Business’ Efforts

*Suzanne Natbony, Esq.

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Most clients that I represent have the following typical top 5 business goals:

1) make a profit, if not maximize profits,

2) provide a useful/safe/top-notch product/service in that it provides customer/patient satisfaction,

3) minimize legal risks,

4) reduce costs, and

5) minimize tax exposure.

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As a general counsel attorney, I work very hard to achieve those goals for my clients, but the following are the top 5 legal issues that can derail our efforts:

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1. Doing Business with Bad People

  • I can’t emphasize this enough – business partners, employees, customers, vendors, etc. - if you end up dealing with a complainer, or someone who is vindictive, difficult, litigious, entitled, pesky, or even worse, criminal, such as a fraudster, your business will likely suffer. Lawyers can help you vet your contacts by conducting due diligence on potential deals. Also, the recommendation to have a “no jerk policy” cannot be emphasized enough.

 

2. When You Are the Bad Actor

  • Do not alienate, belittle, overpromise/underdeliver, fail to recognize colleagues, employees, customers, etc. Disputes can arise when my client, let’s say, has had a bad day and been rude to an employee, or failed to recognize an employee, causing a chip on a shoulder, or when the business overpromises about a product or service, or perhaps just falls short of providing the best service, then customers may complain, or people sue.

 

3. Not Being in Legal Compliance and Getting Caught

  • This could be seemingly innocent, such as your website was not in compliance with the ADA, and you get sued. You want to make sure to have a lawyer review your business plan, products, website, advertisements, etc. to make sure that you have legally required language protecting you or highly advisable language such as disclaimers.

 

4. Resisting Change/Failing to Adapt to Changing Technology/Customers/Growth etc.

  • Business success requires a certain degree of determination, which can include rigidity, but there needs to be room for growth, improvement, and change. A seasoned and experienced general counsel, with business experience, can assist by facilitating deals, rather than killing them.

 

5. Passing Up Opportunities.

  • Related to the above issues with resistance, clients have passed up on great opportunities. I have employed calculations to help my clients determine whether to partake or pass on these opportunities. Unfortunately, overlooking opportunities can be related to having an ongoing litigation as a distraction from growth.

 

As a general counsel, I cannot help prevent all of the above problems, but I do my best to help my client put mechanisms in place to prevent or put out fires, as swiftly and efficiently, as possible.

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* Suzanne Natbony is a licensed California lawyer, with an emphasis in healthcare law, and partner at Aliant LLP, with her own law firm, Solve & Win, PC, practicing transactional and regulatory-compliance law, while also being an entrepreneur with her own healthcare product company, with four patents in her name on a Class II FDA medical advice. She is also general counsel to a multistate medical spa franchise and other medical spas and physicians around the U.S. You may contact Suzanne by email at suzanne@lawyer.com.

top five legal issues that can derail a small business
legal compliance for peptides

Legal Compliance Guide for Medical Practices Offering Injectable Peptides: What Medical Practices Need to Know About GLP-1, BPC-157, and Related Therapies

*Suzanne Natbony, Esq.

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As the popularity of injectable peptides like GLP-1, GLP/GIP, and BPC-157 continues to grow, many medical practices are exploring how to integrate these therapies into their offerings. However, peptides occupy a complex regulatory space, and missteps can expose providers to legal, licensing, and malpractice risks. Below is a Q&A-format legal overview tailored for medical practices seeking clarity on FDA requirements and liability safeguards.

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Q1: Can we “recommend” peptides as supplements? Or do we need to prescribe them?

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A: Injectable peptides are classified as drugs by the FDA due to their method of administration. This means they must be prescribed by a licensed healthcare provider following a proper examination and documentation of medical necessity. They may not be referred to as “supplements” to avoid regulation.

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Some peptides are outright prohibited, while others may be prescribed under strict legal conditions. Referring to these treatments informally as “recommendations” may expose practices to:

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  • Malpractice liability

  • Disciplinary action by medical boards

  • Loss of insurance coverage due to off-label, non-FDA-approved use

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Q2: Where can we legally source peptides?

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A: Only from FDA-registered 503A or 503B compounding pharmacies. Peptides sold by research labs or labeled “for research use only” are not legally permitted for human use.

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Medical Practices should:

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  • Confirm the pharmacy is FDA-registered

  • Verify products are pharmaceutical grade

  • Use only base forms of active ingredients (e.g., no salt forms)

  • Request and review a Certificate of Analysis (CoA)

 

Q3: What should we look for in a Certificate of Analysis (CoA)?

 

A: Key items include:

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  • Source must be an FDA-registered or ISO/IEC 17025-accredited lab

  • Product name (e.g., GLP-1), batch number, expiration date

  • Purity (typically ≥98%) and potency confirmed via HPLC or MS - Endotoxin levels, sterility testing (USP <797>), and impurity screening

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Chain of custody is not required on a CoA, but it may be requested separately.

 

Q4: How do we document compliance?

 

A: Maintain:

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  • Medical necessity and treatment rationale

  • Patient-specific informed consent

  • Pharmacy CoAs

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Informed consent forms must be customized to address risks and the non-FDA-approved status of these treatments.

 

Q5: What are drugs, biologics, and investigational products?

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A:

  • Drugs: Chemical substances affecting body function or treating disease. Includes GLP-1 and NAD+.

  • Biologics: Made from living organisms. Peptides over 40 amino acids often fall into this category.

  • Investigational: Not FDA-approved; may only be used in research or specific compounding scenarios.

 

Q6: Can FDA-approved drugs like semaglutide still be compounded?

 

A: Yes, but only under specific exceptions:

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  • Allergy to commercial ingredients

  • Different dosage form or strength

  • Drug is on FDA shortage list

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Even after a shortage ends, compounding may continue if:

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  • Additional active ingredients provide added benefit (e.g., adding B12 for nausea)

  • Required dosage isn’t commercially available (e.g., 0.75 mg for titration)

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Q7: What are Category 2 Bulk Substances?

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A: These are ingredients the FDA deems unsafe or lacking sufficient data. Examples: BPC-157, CJC1295, MOTS-C. These may not be legally compounded.

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Q8: Can FDA-approved biologics be compounded?

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A: No. Biologics (e.g., Tesamorelin, IGF-1 LR3) are categorically prohibited from compounding under Sections 503A and 503B.

 

Q9: Can we inject supplements like NAD+?

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A: Injectables are always considered drugs, not supplements. This means:

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  • Must be prescribed

  • Must be compounded by a 503A/503B pharmacy

  • Must comply with sterile compounding rules

  • Must be administered by licensed professionals

  • Cannot be marketed with disease claims

 

Q10: Can we advertise compounded medications?

 

A: Marketing is highly regulated. Avoid:

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  • Claims that compounded drugs are “safe” or “effective”

  • Calling them “generics” (they are not FDA-approved generics)

  • Using brand names (e.g., Wegovy, Ozempic) in reference to compounded versions

  • Referring to peptides as “supplements”

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Use neutral language like “prescribed therapy” or “injectable medication” instead.

 

Final Takeaway

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Peptide therapies hold promise but come with significant regulatory and legal risk. Medical practices must ensure that all treatments are prescribed, sourced, administered, and marketed in strict compliance with FDA regulations and state medical board standards.

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If your practice is considering incorporating peptides or compounded injectables, our law firm offers full compliance reviews, informed consent drafting, and vendor vetting support.

should you sue

Should You Sue?

 

*Most of the contents of this article also appears as a video on YouTube.

**By Suzanne Natbony, Esq.

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Clients, friends, family members, even random people at the gym who know I’m a lawyer, frequently ask me if they should sue someone or a company because of a claimed wrongful act. The wrongdoing could include taking money and failing to perform the terms of a contract, getting injured on a property, a botched medical procedure, food poisoning, or being misled. You name it, I have been asked about someone’s legal rights pertaining to everything from a dog bite to revenge porn!

 

While people may want a simple, “yes” or “no,” the analysis that goes into this legal consideration is based on years and years of practice and law school.  Some lawyers refer to the legal analysis as the “4 Cs of case evaluation.” You must have the following 4 components of a case before even thinking of pursuing a claim, successfully:

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1) Claims

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Do you have valid legal causes of action, such that you can actually sue and likely win if filed?

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Frequent claims include, breach of contract, negligence (personal injury or professional malpractice), defamation, nuisance, and employment discrimination and wrongful termination.

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Each claim must have the elements fulfilled.  For example, if it’s personal injury which involves a claim for negligence, you have to have to have 4 elements – duty, breach, causation and damages. Even if you have all of those factors, your claims must be better than the other person’s and if your claims will not counter the other party’s possible claims or defenses, the litigation might not be worth it for you to initiate.

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You have to ask – will there be counterclaims or defenses to make a lawsuit not worth it?

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2) Compensability
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Can you even get compensation, which is provable money damages, or other meaningful remedies, given the harm caused?

 

Suppose a company made a mistake, but that mistake didn’t cost you any money, such as when an airline loses your bag for several hours, causing you no financial loss (just frustration).  The airline might have been at fault and you might win on a negligence claim if they broke a $10 souvenir in your bag, but is it worth the time, money and energy to sue?

 

You need to ask yourself:

  1. How much money have you lost?

  2. Are the damages compensable?

 

Suing in civil court can cost thousands of dollars.  Small claims court might cost only $100 to file and serve, but it can take hours and hours of time to fill out the paperwork, find a process server, figure out how to serve the person, file more paperwork, get ready for court, perhaps redo paperwork and sit there for hours.

 

The damages could be difficult to quantify and you may want what’s called, equitable relief, such as an injunction – an order to do or stop doing something.

 

For example, if someone threatens you, you may just want a temporary restraining order to keep him or her away. If someone has misappropriated your name or are using an image of yours without your permission, maybe you want an order for them to cease and desist instead.

 
3) Corroboration
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Do you have evidence, witnesses or experts to testify – to corroborate your story and help you prove your case?

 

You usually must have a written contract if you’re trying to show breach of contract. An oral agreement is much harder to prove.

 

If it’s products liability, you need to prove that it was this product that caused the damage and possibly have to conduct testing on that product.

 

If it’s medical malpractice, you’ll need an expert to testify that it falls beneath the standard of care – and you should expect the other side to bring its own expert.

 

4) Collectability

 

Will you be able to collect if you win? Does the person you’re suing have sufficient, accessible assets and, even if so, how difficult will it be to collect from that person? If you have to take the matter to “collections” or if the person might file bankruptcy, you have an issue.

 

In conclusion, you need to think through all of the 4 Cs.  If you don’t have positive answers for the four components, you should strongly consider not moving forward, and wasting your time, money and energy.  Even if you have all positive answers, be aware that there are many other risks to consider. You could have all of the above and your case could be decided by a judge who is in a bad mood or you could get a jury that doesn’t like you and then you can lose anyway!

 

**My background is in business law with a broad range of experience that runs from contract drafting to resolving disputes – I deal with almost all of the legal issues that businesses encounter.  I have worked at law firms and in house for several startups.  My focus is on helping clients grow their business. If you’d like to learn more, visit my profile on LinkedIn, LawTake.com or suzannenatbony.com.  I am a cofounder of LawTake and I created several other videos on the website. You can also email me at SUzanne@lawyer.com if you have additional questions about suing. As someone whose felt terrible over injustices, I can relate to what you’re going through and offer unique legal advice and experience with resolving disputes.

 

Before you break down and sue, call SUzanne – to the rescue!

The Trials and Tribulations of Using Online Legal Forms

By Suzanne Natbony, Esq. and  Zolo Mundur, Esq.*

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Whether you’re a CEO or businessperson without a law degree, you may have searched online for a legal form to use for a deal.  No one wants to or should draft a contract from scratch if there’s a rather comprehensive form with tried and tested verbiage that can protect you and your deal.

 

As a result, online document databases have popped up online with free and low-cost legal documents for both lawyers and consumers. Business transactional lawyers regularly search online for legal forms to use or go to Westlaw, Lexis Nexis, Practical Law, Lexub, LawTake, and other websites, even law firm websites.

 

A new player in online document database industry is “legal document marketplaces”, like Lexub. These marketplaces are democratizing the supply of legal document forms and templates which means anyone can publish their legal document templates, like Amazon or eBay for legal document templates. Users can choose from documents from various sources instead of relying on big (and expensive) publishing companies. Lawyers and small to mid-sized law firms can generate additional revenue and improve their online presence with their quality document examples. They can also productize their services without the need to bill additional hours. 

 

However, since anyone can publish their documents, there’s the issue of quality when purchasing documents from marketplaces. Lexub, for example, advises their users to examine the document publisher’s profile and document details before purchasing, like you would when you are about to buy something from eBay. In addition, after the purchase, if the document doesn’t match the description or is scam, they have a refund policy.

 

For consumers and small businesses, finding low-cost documents online can save a lot of money in legal fees, especially for a startup that has limited funds. However, even if you are experienced and educated with a degree in writing, you can make a mistake. For example, one experienced and brilliant CEO, who had been able to cherry pick excellent clauses to add to an independent contractor agreement and clearly explain the services that he provides and the expectations of his independent contractors, made a grave mistake trying to draft a release with a client. The intent was to cure a breach with a client by releasing each other of all obligations, except for one obligation – a key obligation – worth tens of thousands of dollars.

 

However, the release didn’t say that. Instead, the release stated: “the Parties desire to amicably terminate their professional relationship and any agreements reached.” Further, the “Client is hereby freed from any and all obligations under all previous agreements.” Unfortunately, the CEO went to his lawyer a few months later after the client had failed to perform the expected services, and was advised of the challenge of using a very good contract that the CEO found online, but failing to tailor the release to his situation by excepting the client’s remaining obligation from the release.

 

The moral of the story – for both lawyers and consumers – is to carefully read your documents, and if you’re unfamiliar with what something means, you need to research it or talk to the document creator or an expert in that field.

 

*Zolo Mundur is a lawyer licensed in Mongolia and CEO/co-founder of Lexub, a legal document marketplace where lawyers and law firms around the world can create their online legal document shop.

Trials and Tribulations of Using Online Legal Forms

Returning to Work Post-COVID: What Employers Should Know

By Suzanne Natbony, Esq.

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​Most states are planning to reopen (or already have reopened) public spaces and workplaces that were restricted due to social distancing guidelines put in place to mitigate the spread of COVID-19. Meanwhile, many companies are extending their work-from-home policies where it makes sense. The White House and the U.S. Centers for Disease Control (CDC) released new guidelines to help facilitate these transitions in a safe and responsible manner.

 

Employers should realize that reopening their physical workplace may be controversial, since most states have not met the criteria for initiating a phased reopening, which generally consist of:

  • A downward trajectory of flu-like illnesses and covid-like cases within a 14-day period;

  • A downward trajectory of documented COVID-19 cases and positive tests as a percentage of total tests for 14 days; and

  • A robust testing program in place of all at-risk health care workers, including antibody testing.

 

Since federal guidelines are not binding, nor has the federal government issued a stay-at-home order, decisions that would allow employers to reopen workplaces are being made at the state and local levels. Your company’s managers and other people leaders will need to be particularly astute before reopening in order to adequately protect workers and other stakeholders, while minimizing legal exposure.

 

We’ll discuss the main legal issues you need to consider for your company’s return-to-work plan, such as bringing back furloughed employees, taking necessary health precautions, and maintaining safe physical distance in the workplace. 

 

What are the legal consequences of reopening early, if there is still a shelter-in-place order where I operate? 

 

You may have seen in the news recently that local officials allowed electric automaker, Tesla, to re-open its Fremont, CA plant in defiance of the local shelter-in-place mandate. Since Tesla has a market value of $150 billion and employs 11,000 people at its Fremont plant, it has a lot of clout and was able to force the county's hand by threatening to relocate its facility.

 

Your small business most likely doesn’t have that kind of leverage. For the vast majority of businesses, defying a county or state order carries substantial punitive and legal risks, including:

  • County/state fines

  • Revocation of your business license

  • Interruption of utility services (such as electricity)

  • Arrest for violation of an emergency order

  • Negligence lawsuits by workers exposed to COVID-19

 

If you are considering defying state or local mandates, you should consult an attorney to fully understand the legal risks that you may be undertaking. In addition, your attorney should prepare a memo to be able to argue that you are acting legitimately, which should be provided to any authority. Lastly, you should have counsel on retainer in the event that the police do appear at your site, as you would not want to make any admissions, rather remain silent, and enable your lawyer to attempt to properly defend your action.

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What are some of the most important things to remember when bringing furloughed employees back to the workplace?

 

If you furloughed any of your employees due to a stay-at-home order, then they most likely anticipate a return to work once state or county officials give the green light for your type of business to reopen. Alternatively, you may have set a specific date or some other condition (such as an uptick in business) that must be met prior to their return. 

 

Some furloughed employees may have found other work or otherwise don’t intend to return to your business. Perhaps they have additional family responsibilities or have relocated due to the COVID-19 crisis. In these cases, you may terminate the employee as if they have quit the job, including payment of any contractually guaranteed severance pay or other benefits. 

 

In any event, you should typically provide a one- or two-week notice (or whatever is feasible) to furloughed employees prior to their return, including a date by which you require a response. This not only gives employees a fair heads-up, but will also help you determine which furloughed employees actually will return. The other thing to consider is that a furlough lasting more than 30 days may trigger an obligation to provide a 60-day notice of layoff pursuant to the California Cal-Warn Act.  

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What if a furloughed employee declines my invitation back to the workplace?   

 

One or more of your furloughed employees might prefer to stay unemployed and collect unemployment insurance (UI) benefits. However, if they decline an invitation to return to work, then it would be considered a refusal of a bona fide offer of suitable work—which means they may be disqualified from UI benefits. Actual consequences of a refusal may vary, since UI benefits are administered at the state level.     

 

What if I’m unable to bring furloughed employees back to the job for purely business reasons, even though a stay-at-home order has been lifted?

 

Since furloughed employees are still technically employed (although they’re not being paid), they may be laid off if you're unable to bring them back. This will allow them to continue collecting unemployment benefits after you sever the employment relationship.

 

However, any layoffs you do will need to be conducted in a legally sound manner (following both state and federal laws). This includes avoiding disparate impact discrimination and providing advance notice if it’s a large scale reduction in force. 

 

If you are uncertain about how to manage a layoff, a business or employment lawyer can help.

 

As an employer, what are my paid leave responsibilities to employees under the Families First Coronavirus Response Act?

   

The Families First Coronavirus Response Act (FFCRA) requires covered employers to provide all employees with paid leave for certain reasons related to COVID-19. The effective date of this requirement was April 1. You’ll also need to conspicuously post or distribute the Dept. of Labor’s new FFCRA poster so your employees are fully informed of their rights.

 

All employees may qualify for up to two weeks (or 80 hours) of paid leave (through Dec. 31, 2020) if they are unable to work because:

  • They are quarantined (pursuant to federal, state, or local government order, or advice of a health care provider) or experiencing COVID-19 symptoms and seeking a medical diagnosis—paid at their regular pay rate

  • They have a bona fide need to care for an individual subject to quarantine or a child (under 18) whose school or care provider is closed or unavailable for reasons related to COVID-19—paid at two-thirds of their regular pay rate

 

Employees that you have employed for more than 30 days are eligible for up to 10 additional weeks of paid leave (at two-thirds of regular pay rate) to care for an individual subject to quarantine or a child whose school or care provider is closed.

 

A “covered employer” is a private employer with fewer than 500 employees within the United States or its territories. Certain businesses are exempt from this requirement, including critical parcel delivery services, businesses that already have generous leave policies, and businesses with under 50 employees for whom this would create a financial hardship. 

 

States or cities may provide additional benefits that affect a wider range of employers. The City of Los Angeles, for example, mandates supplemental paid leave for employers with 500 or more employees in the city (or 2,000 or more nationally).

 

If you have questions about whether your business counts as a covered employer under the federal law, or you are unsure about any additional local guidelines, ask a lawyer.

 

How do I maintain the privacy of employees who have contracted (or may have been exposed to) COVID-19?

 

You may inquire about the health status of your employees, given how contagious COVID-19 is, but you also need to respect their medical privacy. Some applicable federal laws include the Americans with Disabilities Act (ADA) and the Health Insurance Portability and Accountability Act (HIPAA). However, you will also need to comply with any relevant state and local laws that provide a greater degree of privacy protection. 

 

These laws generally restrict you from inquiring about employees’ medical history and specific medical conditions (or sharing that information with other parties). However, the following guidelines for pandemic preparedness in the workplace were provided by The U.S. Equal Employment Opportunity Commission (EEOC) to address the most common medical privacy concerns:

  • You may send employees home if they have “flu-like symptoms” (i.e. fever or chills AND cough or sore throat)

  • Limit inquiries to the extent practical and keep medical information confidential

  • Comply with EEOC, CDC, and HIPAA guidelines for employee medical information

  • If an employee tests positive for COVID-19, notify the CDC and other employees (while maintaining that employee’s confidentiality)

 

What can I do to protect my employees in the workplace, in terms of personal protective equipment (PPE), face masks, and other preventative measures? 

 

Since the virus that causes COVID-19 may be spread in a roughly six-foot radius through tiny droplets released from the mouth and nose (and even further if spread through a sneeze), PPE including face masks is recommended by the CDC. Since individuals also may contract the virus through contaminated surfaces, you’ll want to ensure access to handwashing stations and sanitizer, as well as more frequent cleaning and disinfecting of frequently touched surfaces such as copiers, fax and other office equipment.  

 

Simply providing protective gear and access to sinks for handwashing isn’t enough, though. You’ll need to implement a company-wide policy to ensure compliance—refer to COVID-19 workplace preparation guidance provided by the Occupational Safety and Health Administration (OSHA) for more details.

 

OSHA guidance includes (but is not limited to) the following:

  • Promote frequent handwashing and make sure that quotas or time constraints don’t interfere with this important guidance (make sure visitors and customers, if applicable, also have access to handwashing and/or sanitizing).

  • Encourage workers to stay home if they feel sick, without fear of adverse action.

  • Discourage use of other employees’ phones, computers, desks, or other personal items.

  • Practice routine cleaning and disinfecting of surfaces.

  • Mandate the use of clean face masks or other acceptable facial coverings, gloves, and/or face shields where necessary.

  • If an employee provides their own PPE in the absence of employer-provided gear (in the event of a shortage, for example), you must reimburse them for the reasonable cost. 

 

What are the best practices for ensuring that previously sick or exposed employees are healthy enough to return to work?

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You may refer to the EEOC’s guidance for pandemic preparedness, which states that an employer may enact certain requirements for when an infected or potentially exposed employee may return to work. 

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As an employer, you may legally: 

  • Ask an employee to provide proof of their health by requiring them to submit to a medical exam.

  • Provide a physician's note stating the employee is fit to return to work.

  • Demand the employee indicate they have been free of symptoms for a specific time period.

  • Demand temperature checks. 

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In order to prevent their return to the workplace, you must be able to provide objective evidence that their condition would prevent them from adequately performing their job duties or that it poses a direct threat to others in the workplace.

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What are the best ways to screen employees for signs of COVID-19?

 

Under the guidance of the EEOC, you may ask your employees to be tested for COVID-19 before they’re allowed back onto the worksite, assuming you’re reopening after having closed shop. However, keep in mind that employers can’t single out a “class” of employees for such testing; so you’ll need to apply any such testing procedures equally.

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You also have the right to inquire as to whether an employee:

  • Has been exposed to someone with a positive diagnosis of the novel coronavirus 

  • Is living with someone who is experiencing symptoms of COVID-19

  • Has received a diagnosis or has any Covid-19 or flu-like symptoms

 

Additionally, you may choose to implement screening procedures that include taking employees’ temperature prior to their entry. A temperature of 100.4 degrees (F) or higher may be a sign of COVID-19 infection. If you keep a record of these readings, however, they must be kept confidential.

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Any testing or screening of employees must be compensated (i.e., no off-the-clock testing or screening).  

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How do I maintain safe social distancing in the workplace?

 

Social distancing guidelines provided by the CDC suggest the importance of maintaining a distance of at least six feet from other individuals and avoiding large gatherings, which presents a challenge for many workplaces. If your current workplace configuration doesn’t provide this much social distance, then you may want to have staggered shifts (e.g., portions of the staff come into the office at different times) or provide more work from home options where it makes sense.

 

Other suggestions include:

  • Reassigning vulnerable workers (such as older workers or those with compromised immune systems) to tasks where they have less contact with others

  • Ensuring that customers, vendors, partners, and other third parties also comply with social distancing guidelines (for instance, use tape or other visual cues to illustrate how far people should stand apart from one another while waiting in line)

  • Implement partitions and physical barriers to help maintain safe distances

  • Prohibit hand shaking or any other forms of direct human contact

  • Use remote services, such as video meetings, whenever possible, even when in the same office, rather than gather in a conference room

  • Make sure your facilities have adequate ventilation and improve where you can, such as opening windows or purchasing air purifiers/washers

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Seek counsel

 

As an employer, your decisions about returning to work can have serious implications for the health of your workforce and for your business. It is important to talk to a lawyer to understand your obligations in relation to your local shelter-in-place mandate, workplace safety, and employee leave policies, in order to avoid disputes or other consequences. If you have questions, visit Rocket Lawyer’s COVID-19 Legal Center and ask a lawyer for free, or use any of the free legal documents offered to help you manage your business.

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This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.

Returningtoworkpostcovid

Obtain Patient Permission Before Using Video

By Suzanne Natbony, Esq.

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Video production has been increasing at an expansive rate. What used to just include videos on television, has expanded to videos on websites, social media, phones and more. Increasingly, people want to appear in videos and not just actors. More and more physicians who have appeared on TV shows either consulting with a patient or performing a procedure on a patient.  Top reality physician shows include, NY Med, Trauma: Life in the E.R., Boston Med and Mystery Diagnosis. Further, many physicians are creating videos of patients having procedures done to post on their websites, YouTube and social media.  Before jumping into appearing on video with a patient, you must have the patient sign a written release that includes a robust host of waivers and authorizations.

 

It is always essential for a physician to get informed written consent from patients prior to performing a procedure. Similarly, production companies and TV shows need to obtain a signed release from anyone who is filmed. As such, anyone that wants to display protected health information or have a patient’s medical privilege waived on TV should obtain informed, written consent prior to filming.

 

Without proper releases, a physician may be fined and even jailed.  The United States Department of Health and Human Services, Office for Civil Rights (HHS) is the enforcing entity of the Privacy, Security and Breach Notification Rules (HIPAA Rules).  HHS ordered New York-Presbyterian Hospital to pay $2.2 million and to create a comprehensive correction plan with two years of monitoring after failing to obtain proper authorizations and leaking video to the media for the show, “NY Med.”

 

A few standard provisions that are recommended include confidentiality, non-solicitation/compete, liability, governing law, and release of rights. However, many different forms of releases exist and some may have legal pitfalls because they fail to include additional mandated provisions related to HIPAA compliance.

 

In addition to these standard provisions, a form involving a patient should include release of protected health information, patient compensation, patient/physician relationship, and an indemnification.

 

In conclusion, a lawyer experienced in healthcare and entertainment law should draft the release, waiver and authorization that must be signed prior to a patient appearing in a video or on TV. A simple draft sample release appears on LawTake, which is a database of legal videos and documents, created by lawyers, at http://www.lawtake.com/index.php/release-and-nda-for-an-event-pdf.html. Any documents found on the web, should still be reviewed by a lawyer.

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Obtain Patient Permission Before Use
Legal terminology for civil claims

Legal Terminology for Civil Claims

 

If you are new to the civil legal system, you may feel like everyone around you is speaking a foreign language. There are probably some words that are totally new to you and many more that you have heard before, but that you do not have a good understanding of what they mean. Having a basic understanding of common terms used in civil law can help you feel more comfortable navigating your claim and talking with your attorney. Here are a few terms and phrases to get you started:

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  1. Liability: Liability, very basically, means “responsibility.” For example, if a defendant is liable for a plaintiff’s injuries, the defendant is legally responsible for the plaintiff’s injury. If a plaintiff can prove that a defendant is liable for the plaintiff’s injury, the plaintiff may be entitled to money damages in civil court. Defendants have the opportunity to assert defenses to refute plaintiff’s claims that the defendant is liable.

  2. Party: A party to a civil case is anyone listed in the name of the case. Every civil case will have a plaintiff and a defendant. Some civil cases will also have third-party plaintiffs, third-party defendants, and cross-claimants.

  3. Pleading: A pleading is a document that is submitted to the court on behalf of any party for the purpose of letting the court know what issues are involved in the lawsuit, and stating a party’s opinion regarding such issues.. Pleadings are often filed at the beginning of a case and include the “complaint,” in which the plaintiff states his or her claim against the defendant, and the “answer,” in which the defendant responds to the plaintiffs complaint, typically denying that the defendant is liable to the plaintiff.

  4. Preponderance of the Evidence: In most situations, a plaintiff must prove his or her civil case by a “preponderance of the evidence” before he or she will be able “win” the lawsuit. By a “preponderance of the evidence” means that a judge or jury is more likely than not that the defendant is liable to the plaintiff. In other words, it is more than 50% likely that the defendant is liable to the plaintiff.

  5. Tort: Tort is another word for “civil wrong.” It is any action taken by or caused by a person that injures another person, and that has remedies available under the civil law. For example, rear-ending someone in a a vehicle accident likely constitutes the tort of “negligence.” Note, many actions that constitute a “tort” may also constitute a crime. A defendant may be charged with a crime and also be sued by a plaintiff in civil court for the same incident.

 

If you have questions about any of the terms above, consult with a qualified and competent attorney from a reputable law firm. 

foreign qualification difficulty

Foreign Qualification Can Be Easy, Or It Can Be Difficult

 

Foreign qualification is how a given state permits an entity, such as a corporation or limited liability company, from elsewhere to do business in that state. In this context, “foreign” can mean from another state or from a different country.

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This post explains how easy, or how difficult, various states makes the foreign qualification process.

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Easy Foreign Qualification

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States have an incentive to make qualification easy:

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  • The easier the process,

  • The greater the number of entities that will go through the process, thus

  • The more business those entities will conduct in the state, and

  • The more revenue the state will receive from fees, taxes, and the like.

 

Indeed, most states do make foreign qualification easy. One need simply:

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  • Provide six or eight pieces of information (entity name, date of formation, etc.) on a printed form or online;

  • Choose a registered agent; and

  • Pay the registration fee.

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Somewhere between one day and several weeks later, the entity has qualified to do business in that state.

 

Not-So-Easy

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However, some states make foreign qualification difficult. Three of those states are below.

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Arizona

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Arizona’s Application for Authority requires up to 18 fields of information for each entity. This is much more than most other states demand. Furthermore, that form requires full contact information for each director and each officer!

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In addition, Arizona requires:

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  • A Certificate of Disclosure, concerning key individuals (officers, directors, major equity holders, etc.). One must note whether any have been involved in a variety of types of legal proceedings. These include felony convictions, court orders concerning fraud, involvement in another corporation’s bankruptcy, etc.).

  • The registered agent needs to sign a Statutory Agent Acceptance form.

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None of this is terribly difficult, but it is time-consuming.

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Louisiana

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Louisiana requires that all business registrations be done online using geauxBIZ.

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Hassles include the following:

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  • The state’s printed Application for Authority, which is available solely for reference, is misleading because geauxBIZ requires more-detailed information.

  • One must provide full contact information for all directors and officers.

  • One must enter the president’s social security number. Not only is this is an uncommon invasion of privacy, but it is a problem for clients who are not  U.S. citizens and —thus lack a SSN.

  • An officer must submit the application, and the officer’s signature must be notarized! This would be a deal-killer if said officer is not in the U.S.

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Ohio

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Ohio’s Application for License is not overly demanding as concerns providing information.

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However, like Louisiana, Ohio requires notarizing the officer’s certification.

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In summary, most states make foreign qualification reasonably straightforward, but a few outliers make the process significantly more difficult.

what are liquidated damages

What Are Liquidated Damages?

 

Sometimes a contract specifies an amount that a party must pay for breaching that contract. The legal terms for that amount is liquidated damages.

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Liquidated Damages Example

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As an example, let’s assume that Caroline and I enter into a contract that states the following:

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  • Caroline will serve as a bartender at my party next weekend.

  • At the end of that party, I will pay Caroline $200 for her services.

  • If Caroline does not show up at the party, she will pay me $100 for the inconvenience I incurred by having to tend bar myself.

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That last provision, specifying the amount Caroline must pay if she breaches the agreement, is a liquidated damages provision.

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Not Always Enforceable

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Courts will not necessarily enforce all liquidated damages provisions. For example, if the provision discussed above stated that Caroline would pay me $1 million, that damages amount is absurdly high, thus a court would not enforce it.

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In California, the applicable statute is Civil Code Section 1671. Although that statute specifies various exceptions, the relevant portion states:

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[A] provision in a contract liquidating damages for the breach of the contract is void except that the parties to such a contract may agree therein upon an amount which shall be presumed to be the amount of damage sustained by a breach thereof, when, from the nature of the case, it would be impracticable or extremely difficult to fix the actual damage.

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In simpler terms, a California court will enforce a liquidated damages provision only if:

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  • It would be difficult to determine actual damages resulting from a breach; and

  • The specified amount is an estimate of what actual damages would be, rather than an arbitrary amount.

what does represent and warrant mean

What Does "Represent" and "Warrant" Mean?

 

Distinguishing Representations from Warranties

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To understand what the contractual terms “represent” and “warrant” mean, we need to know what representations and warranties are.

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  • A representation pertains to the state of affairs at the time the parties enter into a contract. Here is an example of a representation in a stock purchase agreement: “Purchaser represents that Purchaser has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of holding the Shares.” The purchaser makes this representation concerning the purchaser’s status to help the issuing corporation satisfy its securities-law compliance obligations.

  • In contrast, a warranty pertains to a requirement during the contract’s term. Here is an example of a warranty in a stock purchase agreement: “The Company warrants that the Shares will be duly and validly issued.” The Company makes this warranty so the purchaser will be assured that they will receive what they paid for.

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“Represent and Warrant”

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It is cringe worthy when lawyers fail to distinguish between representations and warranties. For example, they might write, “Party X hereby does represent and warrant….”

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Then they follow that introduction with a mixed list of representations and warranties. The problem is that such an approach ostensibly makes each representation and each warranty both a representation and a warranty – which is not correct!

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So, if you see an agreement that presents representations and warranties separately, you can take comfort in knowing that a lawyer exercised great care and precision in preparing that agreement.

assignment and delegation in contract law

Assignment and Delegation in Contract Law

 

Assignment and delegation are terms that have specific meanings in U.S. contract law. In contract law, “assignment” can have a narrower meaning and a broader meaning. To start, I will discuss the narrower meaning.

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Assignment and Delegation as Opposites

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The terms “assignment” and “delegation” are opposite sides of the same coin.

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“Assignment” refers to transferring some or all of one’s rights under an agreement to someone else. Example: I assigned my right to receive payments under the contract to my mother.

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“Delegation” refers to transferring some or all of one’s obligations under an agreement to someone else. Example: I delegated my performance obligations under the contract to a subcontractor.

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Assignment as a Broader Term

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The broader meaning of “assignment” is to transfer an entire contract, including all rights and obligations, to someone else. Example: Once our company was purchased, all customer contracts were assigned to the acquirer.

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For an idea of how assignment and delegation are defined and treated in contracts among merchants, see Section 2-210 of the Uniform Commercial Code.

california corporate officers are employees

California Corporate Officers are Employees

 

This post discusses why – especially now that Assembly Bill No. 5 (AB-5) has taken effect – in California corporate officers are considered employees rather than independent contractors.

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California Corporate Officers Employees by Statute

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The starting point is California Unemployment Insurance Code Section 621. This Section states, in relevant part:

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“Employee” means all of the following:

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(a) Any officer of a corporation.

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In the past, one reasonably could argue that Section 621 does not apply to the extent that an individual is providing services that are outside the scope of his or her responsibilities as an officer.

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For example, a corporate secretary is responsible for maintaining corporate records. If that individual is also leading the development of the company’s software product, then one reasonably could consider such work to be the services of an independent contractor.

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Effect of Assembly Bill No. 5

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But AB-5 has obliterated that argument. That legislation is reflected in several statutes, including Unemployment Insurance Code Section 621 referenced above. In particular, Subsection (b) states that a worker can be an independent contractor only if:

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(2) The individual performs work that is outside the usual course of the hiring entity’s business.

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Naturally, the individual will be doing work that is within the usual course of the corporation’s business. As a result, California will consider that individual an employee even while performing non-officer duties!

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Incentive to Misclassify and Associated Risks

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Of course, there are strong financial incentives for a small corporation to misclassify employees as independent contractors:

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  • There is no need to pay personnel the applicable minimum wage. (Founders often are willing to accept unpaid “sweat equity” in their startups.)

  • There is no need to make unemployment or social security contributions or incur the overhead of withholding taxes.

  • There is no need to provide mandatory sick leave (at least one hour per 30 hours worked, or three days per year – Labor Code Section 246).

 

So, what are the risks if a company misclassifies a California corporate officer as an independent contractor? If a state or federal governmental entity learns about the misclassification, the company may have to pay all of the amounts described above, plus interest and penalties.

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Furthermore, California Labor Code Section 226.8 provides that willful (i.e., voluntary and knowing) misclassification of employees as independent contractors can result in:

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  • Civil penalties of $5,000-15,000 per violation.

  • If there is a pattern or practice of such misclassification, civil penalties of $10,000-25,000 per violation.

  • An obligation to display to the public and to employees a notice acknowledging the violation and providing information for employee reporting of suspected misclassification.

 

Nevertheless, many startup and early stage companies in California will continue to misclassify their officers, either knowingly or unknowingly. And so long as relations among founders remain harmonious, there will be no incentive to bring such misclassification to the attention of any governmental authority.

shareholders are number 1

Stakeholders Matter, but Shareholders are Still #1

 

The Business Roundtable describes itself as an association of chief executive officers of America’s leading companies. On August 19, 2019, the Roundtable garnered headlines when it announced that it had redefined the purpose of a corporation to promote an economy that serves all Americans. But perhaps, that characterization is not accurate.

​

Roundtable Statement about Stakeholders…

​

Here is what the relevant portion of the Roundtable’s Statement on the Purpose of a Corporation says:

​

"While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders. We commit to:

​

  • Delivering value to our customers. We will further the tradition of American companies leading the way in meeting or exceeding customer expectations.

  • Investing in our employees. This starts with compensating them fairly and providing important benefits. It also includes supporting them through training and education that help develop new skills for a rapidly changing world. We foster diversity and inclusion, dignity and respect.

  • Dealing fairly and ethically with our suppliers. We are dedicated to serving as good partners to the other companies, large and small, that help us meet our missions.

  • Supporting the communities in which we work. We respect the people in our communities and protect the environment by embracing sustainable practices across our businesses.

  • Generating long-term value for shareholders, who provide the capital that allows companies to invest, grow and innovate. We are committed to transparency and effective engagement with shareholders.

  • ​

Each of our stakeholders is essential. We commit to deliver value to all of them, for the future success of our companies, our communities and our country."

​

…is not Radical

​

There is nothing radical about this agenda. Any company that wants to be successful and stay in business for the long term needs to treat each of its constituencies fairly.

​

What the document does not say, however, is that a corporation’s directors and officers have a fiduciary duty to look out for the best interests of the corporation and its shareholders.

​

  • Generally, this fiduciary obligation is compatible with respecting other stakeholders’ interests, because looking out for all stakeholders helps move everyone toward long-term business success.

  • But if there ever is a conflict between various stakeholders’ interests, the interests of the corporation and its shareholders – the last stakeholders listed – will override the interests of the other stakeholders.

 

In summary, the Roundtable’s statement may have earned PR points, but it is of little legal significance.

which personnel records can an employee inspect

Which Personnel Records Can an Employee Inspect?

 

This post describes California employees’ rights to inspect, and receive copies of, their personnel records.

​

The relevant statute is California Labor Code Section 1198.5(a), which states:

​

“Every current and former employee, or his or her representative, has the right to inspect and receive a copy of the personnel records that the employer maintains relating to the employee’s performance or to any grievance concerning the employee.”

​

Who, and Which Rights?

​

Right away, we see two important points:

​

  1. These rights apply to both employees and former employees.

  2. There is the right both to inspect and receive copies of their records.

 

But then there is a problem – no definition of “personnel records”!

​

What are Personnel Records?

​

The Division of Labor Standards Enforcement (DLSE) provides some help. In a FAQ, the DLSE states:

​

Categories of records that are generally considered to be “personnel records” are those that are used or have been used to determine an employee’s qualifications for promotion, additional compensation, or disciplinary action, including termination. The following are some examples of “personnel records” (this list is not all inclusive):

​

1. Application for employment

2. Payroll authorization form

3. Notices of commendation, warning, discipline, and/or termination

4. Notices of layoff, leave of absence, and vacation

5. Notices of wage attachment or garnishment

6. Education and training notices and records

7. Performance appraisals/reviews

8. Attendance records

​

Simple Guidance

​

Some simple guidance for a business to determine personnel records:

​

  • Personnel records are those that bear on the (former) employee’s employment relationship with the company.

  • Non-personnel records are those that pertain to the (former) employee’s day-to-day business operations.

  • If a record appears to be on the border between personnel and non-personnel, or if it addresses both personnel and non-personnel matters, then the company should treat it as a personnel record. (It is safer to provide more documents than are required, rather than to omit documents that should be included.)

what is dissociation

What is Dissociation?

 

This post explains what dissociation is.

​

Definition of Dissociation

​

Dissociation is the process by which one:

​

  • Stops being a member of a limited liability company (LLC); or

  • Stops being a partner in a partnership

​

Alternatively, this process is sometimes called withdrawal.

​

How One Dissociates

​

This process is governed by applicable state law and, if it exists, the LLC’s Operating Agreement or the partnership’s Partnership Agreement.

​

For example, in California, a member can dissociate from an LLC pursuant to Corporations Code Sections 17706.01 – 17706.03, and a partner can dissociate pursuant to Corporations Code Sections 16601 – 16603.

​

How one can dissociate differs somewhat between LLCs and partnerships. There are, however, some common bases for dissociation. These include:

​

  • The member/partner providing notice of dissociation to the LLC/partnership.

  • Occurrence of an event that, pursuant to the relevant agreement, results in dissociation.

  • Expulsion of the member/partner in accordance with the applicable agreement.

  • Pursuant to a judicial order.

 

Effects of Dissociation

​

In California, there are differing consequences depending on whether a member or a partner dissociates. To simplify it a bit:

​

  • In each case, the dissociating member/partner loses any voting or management rights.

  • However, a dissociating member retains an economic interest in the LLC, whereas a dissociating partner has the right to have his or her partnership interest purchased pursuant to a statutorily defined procedure.

what is reincorporation

What is Reincorporation?

 

There are a few different ways to move a corporation from one state to another. This post describes in more detail one of those ways: reincorporation.

​

Three Ways to Move among States

​

There are three ways to move a corporation to another state as follows:

​

  1. Form the new-state corporation. Transfer assets and liabilities of the existing corporation to the new-state corporation. Dissolve the existing corporation. (This sometimes is called reincorporation.)

  2. Form the new-state corporation. Merge the existing corporation into the new-state corporation.

  3. Convert the existing corporation to a new-state corporation. (This sometimes is called redomestication or redomiciliation.)

 

Reincorporation – Documents and Procedural Steps

​

Let’s say the founders of a relatively new California corporation wanted to convert to a Delaware corporation to make it easier to attract institutional investors.

​

As the corporation is still in early-stage, the first option, reincorporation, will not have significant adverse tax effects.

​

Once the founders have already reserved the same corporate name in Delaware, here are the documents and procedural steps that will be required to complete this particular reincorporation:

​

  1. The board of directors approves resolutions pertaining to the reincorporation process, including a Reincorporation Agreement by which the shareholders approve reincorporation as well as dissolution of the existing corporation once reincorporation takes place.

  2. The corporation and the shareholders sign that agreement.

  3. The existing California corporation’s officers form the new Delaware corporation, which has the same directors and officers as the existing corporation.

  4. The existing corporation assigns its assets and liabilities to the new corporation. The existing shareholders then become shareholders of the new corporation, and they no longer are shareholders of the existing corporation.

  5. The officers dissolve the existing corporation.

 

Not every reincorporation necessarily will take place this way, but the foregoing summary provides a good idea of those major tasks that one needs to address.

protect your ip when you are a freelancer

Protect Your IP When You Hire a Freelancer

 

This post explains how to make sure that you own work product and intellectual property (IP) when you use a freelancer service.

​

When you use a freelancing platform, you need to ensure that you have an agreement with each freelancer. And that agreement must assign to you all work product and all intellectual property rights.

​

Let’s take Upwork as an example.

​

Create a Freelancer Contract

​

Section 3.1 of Upwork’s User Agreement states, in part, that the parties are responsible for putting such an agreement in place (emphasis added):

​

If a Client and Freelancer decide to enter into a Service Contract, the contract is a contractual relationship directly between the Client and Freelancer; Upwork is not responsible for and is not a party to any Service Contract and under no circumstances will any such contract create an employment or any service relationship between Upwork and any User.

​

With respect to any Service Contract, Clients and Freelancers may enter into any written agreements that they deem appropriate (e.g., confidentiality agreements, invention assignment agreements, assignment of rights, etc.) provided that any such agreements do not conflict with, narrow, or expand Upwork’s rights and obligations under the Terms of Service, including this Agreement and the applicable Escrow Instructions.

​

You and the freelancer need to enter into such a contract. And the contract must ensure that you own the freelancer’s work product and IP!

​

Include the Right Contract Terms

​

Upwork provides Optional Service Contract Terms that the parties may use, if they wish. Section 6.4 of those Terms addresses this post’s central issue:

​

6.4 OWNERSHIP OF WORK PRODUCT AND INTELLECTUAL PROPERTY

Upon Freelancer’s receipt of full payment from Client, the Work Product (except for any Background Technology), including without limitation all Intellectual Property Rights in the Work Product (except for any Background Technology), will be the sole and exclusive property of Client, and Client will be deemed to be the author thereof. If Freelancer has any Intellectual Property Rights to the Work Product that are not owned by Client upon Freelancer’s receipt of payment from Client, Freelancer hereby automatically irrevocably assigns to Client all right, title and interest worldwide in and to such Intellectual Property Rights. Except as set forth above, Freelancer retains no rights to use, and will not challenge the validity of Client’s ownership in, such Intellectual Property Rights. Freelancer hereby waives any moral rights, rights of paternity, integrity, disclosure and withdrawal or inalienable rights under applicable law in and to the Work Product. If payment is made only for partial delivery of Work Product, the assignment described herein applies only to the portion of Work Product delivered and paid for.

​

In summary, the freelancer service will not automatically ensure that you own all work product and IP rights. Only you can make sure that you protect yourself!

misclassifying employees

ABC Test for Employee Misclassification in California

 

In a landmark decision, the California Supreme Court has embraced the ABC Test to address the misclassification of employees as independent contractors. This pivotal change stems from the case Dynamex Operations West, Inc. v. Superior Court, decided on April 30, 2018. The adoption of this test marks a significant shift in how worker classification is determined, aiming to provide clearer guidelines for distinguishing between employees and independent contractors in California.

​

Pre-Dynamex Multi-factor Test

​

Prior to Dynamex, California, like the federal government, considered many factors when deciding whether an independent contractor really is an employee. For example, those factors include:

​

  • If the company can tell the individual how to do the work, the individual looks more like an employee; an individual who decides how to do the work looks more like an independent contractor.

  • An individual who already has the necessary skills and training looks more like an independent contractor; one who needs training looks more like an employee.

  • An individual who is doing work for only one company looks more like an employee; an individual with multiple customers or clients looks more like an independent contractor.

  • An individual who always works at the company’s location looks more like an employee; an individual who works elsewhere looks more like an independent contractor.

  • An individual who works on the company’s normal day-to-day business looks more like an employee; an individual who works on occasional special projects looks more like an independent contractor.

  • An individual who is paid a fixed fee for a defined scope of work looks more like an independent contractor; an individual who is paid based on time may look more like an employee.

  • An individual who is working under an appropriately drafted agreement looks more like an independent contractor; an individual without an agreement looks more like an employee.

 

California Adopts ABC Test

​

In Dynamex, the Court modeled California’s version of the ABC Test after that used in Massachusetts. The Court characterized that test’s three components as follows:

​

Part A: Is the worker free from the control and direction of the hiring entity in the performance of the work, both under the contract for the performance of the work and in fact? 

​

Part B: Does the worker perform work that is outside the usual course of the hiring entity’s business?

​

Part C: Is the worker customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity?

​

If you wish to classify an individual properly as an independent contractor, rather than an employee, then you need to satisfy all three components.

​

The significance of this decision is that some businesses may have to reclassify independent contractors as employees. For example, Uber and Lyft drivers are part of, rather than outside, those companies’ usual course of business. Accordingly, it now appears that those drivers are employees rather than independent contractors.

​

On September 18, 2019, Governor Newsom signed Assembly Bill No. 5, which, effective as of January 1, 2020, applied the Dynamex ABC Test to most California workers. Something to keep in mind!

key provisions in ic contracts

Key Provision in Independent Contractor Agreements

 

Key Provision in Independent Contractor Agreements

​

Independent contractor agreements encompass numerous vital terms and conditions. This post lists some essential provisions to consider.

​

Business Terms in Independent Contractor Agreements

​

When it comes to business terms, the most crucial provisions in an independent contractor agreement focus on the following aspects:

​

  • Specification of the products or services to be provided

  • The amount, frequency and nature of the payments to be made (fixed fee, time and materials, time and materials with a not-to-exceed amount, etc.)

​

Legal Terms in Independent Contractor Agreements

​

Apart from the standard contractual “boilerplate” clauses, independent contractor agreements focus on the following aspects:

​

  • Acceptance criteria and warranties

  • Ownership of deliverables and associated intellectual property rights

  • Confidentiality obligations

  • Resolution of payment, and other types of, disputes

  • Remedies for default

  • Limitations of liability and damages

  • Indemnification rights and obligations

 

Of course, do add anything else that might be relevant to your line of business and work!

how to redomesticate

How to Redomesticate When Your State Won't Permit It

 

In this post, I explain how to redomesticate an entity when the existing state’s law prohibits redomestication.

​

California Corporation Cannot Redomesticate

​

Let’s say a CEO of a California corporation was going to relocate to Pennsylvania. The existing corporation has a long history and existing contracts with major corporations. The CEO could not just throw that corporation away and start a new one, so it would make sense for her to move her corporation to PA, too. Unfortunately, California does not permit its corporations, in contrast to limited liability companies (LLCs), to redomesticate. (Please see the CA Secretary of State’s Conversion Information page.)

​

Multi-step Plan

​

You could consider converting a corporation into a LLC, which you can then redomesticate. The main tasks included the following:

​

  1. CA lawyer prepares a Plan of Conversion by which the CA corporation would convert to a CA LLC, and Unanimous Written Consents by which the corporation’s directors and the shareholders would approve the Plan.

  2. Then CA lawyer prepares Articles of Organization – Conversion by which the CA corporation becomes a CA LLC and they file the Articles with the CA Secretary of State.

  3. Have the PA lawyer prepare a Plan of Conversion by which the CA LLC would convert to a PA corporation.

  4. Then CA lawyer prepares a Unanimous Written Consent by which the CA LLC’s managing members approved the Plan.

  5. Have the PA lawyer prepare the Articles of Incorporation and a Statement of Conversion by which the CA LLC would become a PA corporation and have them file them with the PA Secretary of State.

  6. The PA lawyer can then arrange for a Notice of Conversion to be published in accordance with state requirements.

  7. The CA lawyer prepares a Certificate of Conversion stating that the CA LLC had been converted to a PA LLC and files it with the CA Secretary of State.

 

The entire process may take around two months – in contrast to a straightforward redomestication, which might take just a couple of weeks, but this could get the job done!

entity obligations

What Are My Entity's Compliance Obligations?

 

After forming a new legal entity (corporation or limited liability company), one's first question may be, “What are my entity’s compliance obligations?” This post provides a high-level answer to that question.

​

Corporate Compliance Obligations

​

As concerns compliance obligations, the greatest difference between corporations and LLCs is that corporations are obligated to have annual shareholder meetings.

​

The required action at an annual shareholder meeting is to elect a board of directors. Of course, other matters may be considered, as well. (See next article "Annual Meetings: The Basics" for more information.)

​

Generally, the board of directors meets immediately after the shareholder meeting. At that meeting, the board typically appoints officers and conducts any other business it deems appropriate.

​

For LLCs, meetings of members or managers to address important issues are appropriate. However, annual meetings are not required.

​

Conducting Business as a Legal Entity

​

It is essential that the entity, rather than its founders, enter into contracts and identify itself as the author of business communications. So, for example, the signature block of a contract might appear as follows:

 

[Name of Corporation or LLC]

By: ____________________________

[Individual’s Name, Title]

​

Equally important, the entity must have its own bank account, separate from that of its founders. And the entity must process all transactions through its bank account. (The entity may reimburse personnel for amounts they spend on the entity’s behalf, so long as the entity accounts for those amounts properly.)

 

Most cities or counties require that an entity doing business there obtain a business license.

​

Other Financial Matters

​

Not too many surprises, here. The entity typically must:

  • Obtain its own Employer Identification Number (EIN).

  • File annual state and federal tax returns.

  • Make quarterly estimated tax payments.

  • If there are employees, withhold and pay employment taxes .

  • As applicable, pay sales, use, or real or personal property taxes.

 

Employment Compliance Obligations

​

Employees dramatically increase a business’s administrative overhead. Additional internal paperwork includes:

  • At-will employment offer letters (or employment contracts for senior executives).

  • Proprietary Information and Inventions Agreements.

  • An Employee Handbook.

 

Employers need to be especially careful to comply with state wage-and-hour laws and to post required workplace notices.

​

annual meeting basics

Annual Meetings: The Basics

 

Sometimes, in an effort to reduce legal fees, clients conduct corporate annual meetings, and prepare minutes, on their own. Regrettably, if they do not know what they are doing, they can make a mess. Here is a quick overview of how to do things right.

 

Both California (Corporations Code Section 600(b)) and Delaware (General Corporation Law Section 211(b)) require that every corporation hold an annual meeting of its shareholders to elect directors for the coming year. (In the case of a Delaware corporation, however, the directors may be elected by written consent without calling a meeting.) Any other proper business may be transacted at the shareholder meeting.

 

The newly-elected board of directors should meet immediately after the shareholder meeting to appoint officers, who will serve at the board’s pleasure for the coming year. Any other proper business may be transacted at the board meeting.

 

The corporate secretary should attend, and should prepare minutes for, both meetings and should file the minutes in the corporate records book. The minutes should include the following:

 

  • The type, date and location of the meeting

  • Attendees (and, in the case of shareholders, the number of shares represented) and whether they attended in person, electronically, or by conference telephone (Please note that California and Delaware law differ as to the circumstances under which participation electronically or by conference telephone are allowed.)

  • A statement as to whether the meeting was held pursuant to notice or notice was waived (As applicable, copies of notices, waivers or shareholder proxies should be attached to the minutes.)

  • A record of all resolutions that were approved and all other business that was transacted at the meeting

  • The secretary’s signature

​

Once these logistics have been complied, you're all set!

a corporations incorporation date

What Is A Corporation's Incorporation Date?

 

This post explains how a state assigns a corporation’s incorporation date and how you can find the incorporation date for a given corporation.

​

Assigning an Incorporation Date

​

Generally, the incorporation date is the date that the state receives the Certificate or Articles of Incorporation for filing.

​

Please note that one typically learns about the filing, and that date, sometime later. For example (and unless one requests and pays for expedited filing):

​

​

Finally, please note that it is possible to request (within limits) a later effective filing date. For example, assume that you want to have a corporation in effect as of January 1 of the new year. You can submit a Certificate or Articles of Incorporation in mid-December with a request that filing be effective on January 1. The returned document will be provided after January 1 and will have January 1 as the filing (incorporation) date.

​

Finding an Incorporation Date

​

A straightforward way to find the incorporation date for a given corporation is to do a search for that corporation at the applicable Secretary of State website. Examples:

​

  1. Delaware General Information Name Search

  2. California Business Search

​

That date typically appears immediately when you retrieve the corporation’s record. If not, you can obtain it with an additional click or two.

​

Alternatively, if you have a copy of the filed Certificate or Articles of Incorporation that was returned by the state, the filing date (and other information) will appear at the top of the first page. And there you have it!

what does it mean to hold shares

What Does It Mean To Hold X Shares?

 

Before addressing the significance of the number of shares, I will address the significance of shareholding, generally.

​

Shareholder Rights Generally

​

Shareholders’ rights vary, somewhat, from state to state. They may include, for example, the right to inspect and copy the corporation’s books and records and the right to inspect and copy the corporation’s shareholder list

.

Perhaps the most important shareholder right is the right to vote for the corporation’s directors and on other corporate matters.

​

Then, the question is: How much voting power does a given shareholder have?

​

In this respect, the number of shares that a given shareholder holds is, by itself, meaningless.

​

Voting Power and X Shares

​

Generally, decision-making power requires that a shareholder, or a group of shareholders, control a majority of the corporation’s voting shares. So, how does one determine the percentage of shares that one holds? 

​

Let’s say a client formed a Delaware corporation with 10 million authorized shares. Of the authorized shares, 8 million had been issued to the founder. The founder and an independent contractor had agreed on equity compensation for the contractor. The agreed-upon share ownership percentage was 2%.

The contractor thought that he should receive 200,000 shares (2% of 10 million). The rest of this post explains how and why the contractor was incorrect.

​

Authorized vs. Issued Shares

​

When one discusses a corporation’s shares of stock, two numbers are important: the number of authorized shares and the number of issued shares.

  • The corporation’s Certificate of Incorporation specifies the number of authorized shares. This is the maximum number of shares that the corporation can issue to stockholders at a given time. This number is somewhat arbitrary. Perhaps most significantly, with required approvals the number of authorized shares can change at any time (for example, if a major investor is found). One need simply amend the Certificate of Incorporation. So, while the corporation currently is authorized to issue 10 million shares, that number could increase to 100 million next week, and to 1 billion next month.

  • The number of issued (sometimes referred to as “issued and outstanding”) shares is the number of shares that the corporation, pursuant to board of directors approval, has granted to the various stockholders. This is the number that determines, at a given time, the percentage of a corporation’s shares that are held by a given stockholder.

​

Calculating Share Ownership Percentage

​

At present, the corporation has issued 8 million shares. To determine the number of shares that should be issued so the contractor will hold 2% of all issued shares, we need to solve the following equation:

​

X / (8,000,000 + X) = .02

​

The solution:

​

X = 163,265

​

So, “163,265” is the number of shares to be issued so the contractor’s share ownership percentage will be 2%.

​

In Summary

​

To summarize and to simplify a bit:

  • You determine the percentage of shares that you hold by dividing the number of shares that you hold (as stated in the question, “X shares”) by the total number of issued shares.

  • The greater (or smaller) that percentage is, the greater (or smaller) your voting power.

can you stop being a shareholder

Can You Stop Being a Shareholder?

 

This post explains why, in the U.S., one can’t just stop being a shareholder.

​

Ways to Stop Being a Shareholder

​

Corporate law does not permit a shareholder to unilaterally dispose of his or her shares. As a result:

​

  • One cannot “abandon” shares.

  • One cannot simply stop being a shareholder.

  • Instead, one must find someone to take (or buy) the shares.

​

One needs someone else’s cooperation to transfer shares. Potential candidates for taking one’s shares include the following:

​

  • The corporation might redeem or repurchase the shares, perhaps paying a nominal sum.

  • Another existing shareholder might take or buy the shares.

  • A non-shareholder third party might take or buy the shares, if no share transfer restrictions prohibit the transaction.

​

LLCs are Different

​

Limited liability companies, in contrast, allow members to withdraw (in effect, terminate their LLC equity interests).

​

In California, for example, Corporations Code Section 17706.01(a) states the following (emphasis added).

​

A person has the power to dissociate as a member at any time, rightfully or wrongfully, by withdrawing as a member by express will pursuant to subdivision (a) of Section 17706.02.

​

Section 17706.02, in turn, states the following (emphasis added).

​

A person is dissociated as a member from a limited liability company when any of the following occur:

​

(a) The limited liability company has notice of the person’s express will to withdraw as a member….

what are nonvoting shares

What are Non-voting Shares?

 

This post explains what non-voting shares are and why a corporation might want to authorize them.

In this post, I will focus on non-voting common shares. Preferred shares raise issues that go well beyond voting rights.

​

When you receive shares, you probably assume that, as a shareholder, you will have the right to vote on matters such as election of directors. Indeed, that normally is the case.

​

Non-voting Shares = Founder Control

​

However, it is possible for a corporation to issue shares that do not have voting rights. For example, founders of an early-stage company might wish provide equity-based incentives to employees, yet maintain control by the founders.

​

Snap Inc.’s initial public offering in 2017 was an extreme case of this phenomenon. Here is part of Snap’s Registration Statement (emphasis added):

​

This is an initial public offering of shares of non-voting Class A common stock of Snap Inc.

Snap Inc. is offering to sell 145,000,000 shares of Class A common stock in this offering. The selling stockholders identified in this prospectus are offering an additional 55,000,000 shares of Class A common stock. We will not receive any of the proceeds from the sale of the shares being sold by the selling stockholders.

​

We have three classes of common stock: Class A common stock, Class B common stock, and Class C common stock. The rights of the holders of Class A common stock, Class B common stock, and Class C common stock are identical, except with respect to voting, conversion, and transfer rights. Class A common stock is non-voting. Anyone purchasing Class A common stock in this offering will therefore not be entitled to any votes. Each share of Class B common stock is entitled to one vote and is convertible into one share of Class A common stock. Each share of Class C common stock is entitled to ten votes and is convertible into one share of Class B common stock. The Class C common stock, which is held by our founders, each of whom is an executive officer and a director of the company, will represent approximately 88.5% of the voting power of our outstanding capital stock following this offering.

​

Both S&P Dow Jones and FTSE Russell considered this so extreme for a publicly held corporation that they excluded Snap from their major indexes!

​

Rights Beyond Voting

​

Even if shares do not have voting rights, they may have other rights under applicable law. Most prominently, such rights typically include:

​

  • Economic rights, such as to receive any dividends that the corporation may declare;

  • Inspection of accounting books and records and the shareholder list; and

  • Directors’ fiduciary obligation to look out for all shareholders’ best interests.

​

Check and see which shares you have!

should we authorize preferred shares when we incorporate

Should We Authorize Preferred Shares When We Incorporate?

 

This post explains what non-voting shares are and why a corporation might want to authorize them.

In this post, I will focus on non-voting common shares. Preferred shares raise issues that go well beyond voting rights.

​

When you receive shares, you probably assume that, as a shareholder, you will have the right to vote on matters such as election of directors. Indeed, that normally is the case.

​

Non-voting Shares = Founder Control

​

However, it is possible for a corporation to issue shares that do not have voting rights. For example, founders of an early-stage company might wish provide equity-based incentives to employees, yet maintain control by the founders.

​

Snap Inc.’s initial public offering in 2017 was an extreme case of this phenomenon. Here is part of Snap’s Registration Statement (emphasis added):

​

This is an initial public offering of shares of non-voting Class A common stock of Snap Inc.

Snap Inc. is offering to sell 145,000,000 shares of Class A common stock in this offering. The selling stockholders identified in this prospectus are offering an additional 55,000,000 shares of Class A common stock. We will not receive any of the proceeds from the sale of the shares being sold by the selling stockholders.

​

We have three classes of common stock: Class A common stock, Class B common stock, and Class C common stock. The rights of the holders of Class A common stock, Class B common stock, and Class C common stock are identical, except with respect to voting, conversion, and transfer rights. Class A common stock is non-voting. Anyone purchasing Class A common stock in this offering will therefore not be entitled to any votes. Each share of Class B common stock is entitled to one vote and is convertible into one share of Class A common stock. Each share of Class C common stock is entitled to ten votes and is convertible into one share of Class B common stock. The Class C common stock, which is held by our founders, each of whom is an executive officer and a director of the company, will represent approximately 88.5% of the voting power of our outstanding capital stock following this offering.

​

Both S&P Dow Jones and FTSE Russell considered this so extreme for a publicly held corporation that they excluded Snap from their major indexes!

​

Rights Beyond Voting

​

Even if shares do not have voting rights, they may have other rights under applicable law. Most prominently, such rights typically include:

​

  • Economic rights, such as to receive any dividends that the corporation may declare;

  • Inspection of accounting books and records and the shareholder list; and

  • Directors’ fiduciary obligation to look out for all shareholders’ best interests.

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Check and see which shares you have!

how to calculate your share ownership percentage

How to Calculate Your Share Ownership Percentage

 

An equity agreement between a company founder and an independent contractor highlights a common misunderstanding about calculating share ownership. The contractor expected 2% of the company’s authorized shares—but ownership percentages are based on issued shares, not authorized ones. This post explains the distinction and walks through the correct calculation.

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Let's say the company forms with 10 million authorized shares. Of the authorized shares, 8 million were issued to the founder.

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The founder and an independent contractor had agreed on equity compensation for the contractor. The agreed-upon share ownership percentage was 2%.

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The contractor thought that he should receive 200,000 shares (2% of 10 million). The rest of this post explains how and why the contractor was incorrect.

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Authorized vs. Issued Shares

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When discussing a corporation’s stock, two key figures matter: authorized shares and issued shares.

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  • Authorized shares are the maximum number of shares a corporation is permitted to issue, as specified in its Certificate of Incorporation. This number is flexible and can be increased with the necessary approvals by amending the certificate. For example, a company authorized to issue 10 million shares today could increase that number to 100 million or more in the future if needed.

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  • Issued shares (also called “issued and outstanding”) are the shares that have actually been granted to stockholders, as approved by the board of directors. This number forms the basis for calculating ownership percentages at any given time.

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Calculating Share Ownership Percentage

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With 8 million shares currently issued, determining how many additional shares to grant in order for a contractor to hold 2% of the company requires solving for X in the following equation:

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X / (8,000,000 + X) = 0.02

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Solving for X gives:

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X = 163,265

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Therefore, 163,265 shares must be issued to the contractor to achieve a 2% ownership stake based on the total issued shares.

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Understanding the difference between authorized and issued shares is essential when calculating ownership percentages in a corporation. Basing calculations on issued shares ensures accuracy and avoids costly misunderstandings in equity agreements.

How to reinforce terms if no one reads them

If Nobody Reads Terms, How Can They Be Enforceable? Here’s the Answer

 

This post explores the legal concept of constructive notice, which addresses why terms of service can be enforceable even if users never actually read them.

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Why the Law Doesn’t Require You to Read the Fine Print

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The question often arises: if no one reads terms of service, how can these agreements legally bind users? The assumption might be that terms should only be enforceable if explicitly read, but this would render all terms ineffective and unenforceable—making it impossible for providers to create any binding agreements.

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Constructive Notice Is Legally Enough

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Instead, the law requires that terms of service be made sufficiently conspicuous to users. If a user is given reasonable notice of the terms but chooses to ignore them, that user is considered legally bound by those terms. This principle, known as constructive notice, balances practicality and fairness by placing responsibility on users to heed the terms once properly presented.

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Constructive notice ensures that providers can enforce reasonable terms without requiring every user to actually read them. This legal principle maintains order and predictability in digital agreements while protecting service providers and users alike.

How the law now shields online reviews from retaliation

How the Law Now Shields Online Reviews from Retaliation

 

In December 2016, the U.S. Congress passed the Consumer Review Fairness Act, and it was signed into law by President Obama. This federal law protects consumers’ rights to post honest reviews—written, oral, or visual—about goods and services. It specifically targets the use of form contracts that attempt to limit or punish consumer feedback.

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The federal legislation echoes similar protections that California enacted two years earlier, but with more detailed provisions. However, one key difference is that the Consumer Review Fairness Act only applies to reviews involving interstate commerce, which expands its reach beyond state lines but introduces jurisdictional limits.

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“Covered Communication” Means Consumer Review

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Under subsection (a)(2) of the Act, a “covered communication” includes any review or performance assessment—whether written, oral, or pictorial—by a consumer who is a party to a form contract. This includes posts on websites, social media, or anywhere else a consumer might express their experience with a business.

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The other critical definition is that of “form contract”. The term form contract refers to standardized agreements that are:

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  • Used by a seller or service provider during transactions; and

  • Presented to the consumer without any real opportunity to negotiate the terms.

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This definition ensures that common click-through or take-it-or-leave-it terms are covered under the Act.

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Civil and Criminal Protections

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The law voids any clause in a form contract that:

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  • Prohibits or restricts consumer reviews

  • Imposes penalties or fees for leaving a review

  • Transfers intellectual property rights of a consumer’s review to the business

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In addition to voiding such clauses, it is a criminal offense to offer a form contract (Subsection (c)) with these prohibited terms. The law is enforceable by both the Federal Trade Commission (Subsection (d)) and state attorneys general (Subsection (e)), giving it real teeth.

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The Consumer Review Fairness Act ensures that consumers can freely share their honest opinions without fear of retaliation through unfair contract terms. It also puts businesses on notice: trying to silence reviews is not just unethical—it’s now illegal under federal law.

Parent vs. Subsidiary: Untangling Ownership Rights

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Entrepreneurs and clients often ask about how ownership works between a parent company and its subsidiary. On the surface, it seems simple, but confusion is common—especially when founders want their individual ownership percentages to “flow down” automatically into a subsidiary. Let’s break this down with an example.

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Example Scenario

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Suppose Jane owns 80% of Parent Corp., while Joe owns the other 20%. Parent Corp. then forms a wholly owned subsidiary, Subsidiary Corp.

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The common question is:

“How do we make sure Jane owns 80% of Subsidiary Corp. and Joe owns 20%?”

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The short answer: You can’t.

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Why Not?

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By definition, a subsidiary is an entity whose shares are held by the parent company—not by the parent’s individual shareholders. If Parent Corp. owns 100% of Subsidiary Corp., then Parent Corp. is the shareholder. Jane and Joe are not shareholders of the subsidiary; they are shareholders of the parent.

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Where Jane and Joe’s Influence Lies

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Because Jane and Joe own Parent Corp., they influence the parent’s decisions through their rights as shareholders—most notably, by voting on directors. The board of Parent Corp. then oversees Subsidiary Corp.

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So, while Jane’s 80% stake in the parent gives her significant say in how the parent is run (and indirectly how the subsidiary is managed), she does not directly own 80% of Subsidiary Corp. Joe, with 20%, is in the same position.

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In other words:

  • Parent Corp. owns Subsidiary Corp.

  • Jane and Joe own Parent Corp.

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Their ownership is indirect when it comes to the subsidiary.

Parent vs subsidiary

When Is a Work Original Enough for Copyright?

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When people think about copyright, they often imagine a high bar for originality. In reality, U.S. copyright law requires only a very modest level of creativity for a work to qualify for protection. Let’s look at how this standard works.

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The Role of the Copyright Office

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The U.S. Copyright Office publishes a reference manual known as the Compendium of U.S. Copyright Office Practices. This guide explains how the Office interprets Title 17 of the U.S. Code (copyright law) and related federal regulations.

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Two sections of the Compendium are especially useful for understanding the link between creativity and copyright protection: Section 302 (general requirements for copyrightability) and Section 308.2 (the creativity threshold).

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Basic Requirements for Copyright Protection

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To qualify for copyright, a work must meet several conditions:

  • It must be eligible for copyright in the United States.

  • It must be “fixed” in a tangible form—written, recorded, or otherwise captured.

  • It must be created by a human author.

  • It must fall within subject matter protected by copyright law.

  • It must be original, meaning:

    • The work is independently created (not copied).

    • The work contains at least a small amount of creativity.

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If these boxes are checked, and no other issues arise in the registration process, the work can be registered with the Office.

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How Much Creativity Is Required?

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The legal standard is low. Courts have said that only a minimal degree of creativity is needed. Even a small spark of originality is usually enough.

  • A work doesn’t need to be groundbreaking or surprising, but it can’t be completely mechanical or routine.

  • Something “ordinary” or “expected” that lacks any creative contribution won’t qualify.

  • If the expression is obvious, inevitable, or so trivial that it adds nothing, copyright law won’t protect it.

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Most works—whether simple poems, doodles, or short phrases—clear the bar without difficulty. But there remains a narrow set of creations that are too routine or generic to receive protection.

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Everyday Examples

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Questions often arise about specific scenarios:

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  • Song lyrics: A single line might or might not qualify depending on how creative the expression is.

  • Dictionary examples: Each sample sentence must be considered on its own; some may show creativity, others may not.

  • Computer-generated music: If a program mechanically generates every possible sequence of notes, that output is not protected because no human creativity is involved.

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Takeaway

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Creativity is the heartbeat of copyright—but only a small pulse is required. As long as a human author contributes some original expression, the work is likely to be protected.

when is a work original enough for copyright

One Lawyer’s Take:  Dealing With Difficult Clients

 by Suzanne Natbony 

 

We’ve all had difficult clients. The issue is how best to deal with them.

 

One easy mantra is to prevent the problem before it occurs.  But that is easier said than done.  Even so, here are a few tips on how to diagnose a potential “problem client” and a method to deflect the inquiry.

 

By way of background,  the LawTake website (lawtake.com) was created by a business lawyer and is a place where attorneys can upload documents and videos to help resolve various legal issues.  The site was created to help make legal services more affordable for potential clients and—news flash—to attract more clients.  For example, LawTake has  a 30-minute video on business formation for people who inquire about starting a business.  Business lawyers can tell cash-strapped entrepreneurs  to watch the Business Formation video first as it will help them save money on legal fees and make any potential representation more efficient.  Corresponding business formation documents are also available for purchase,  such as bylaws, an independent contractor agreement and a simple non-disclosure agreement.

 

What started as a resource for potential clients has now also become a resource to deflect potentially difficult inquiries. 

 

Lawyers routinely divert inquiries to the LawTake website in those instances where an inquiry comes in from someone:

 

  • With whom the lawyer has no connection to (i.e., if you can’t find them in your personal contact management system or locate a connection or social media relationship via LinkedIn or Facebook).

  •  Who has gone through several lawyers and now needs you to be their latest representative (unless, of course, they have a good reason for switching counsel, such as the fact that their former lawyer(s) lacked the special knowledge in order to properly handle their case).

  • Who has unrealistic expectations about the outcome of the matter at hand or how much it should cost (red flags in this area are the flip recitation that “this is an easy case” or “it will easily settle”.

  • Who tries to over-negotiate a fee or retainer amount (hint:  when this happens, the client often will not want to pay in the future.

  • Who wants to fight for principle as opposed to money (more often than not, this type of person will not want to pay the bill either; in these instances, ask for an initial consult fee or refer them straightaway to a competent Legal Aid or pro bono organization).

  • Who needs help at the last minute (but if the client can afford to pay a higher price for emergency services and seems otherwise good to work with, perhaps help them out; these cases require great thought and discretion).

 

Lawyers can also refer favorite current clients to LawTake.  For example a client settled a case on her own using a settlement agreement sold on the site,  which the lawyer can review after she took a stab at creating the first draft. 

 

Rather than having to learn the hard way about difficult clients and how to cope with them, use creative ways to cope with the classic situations lawyers likely encounter.  LawTake is a beautiful foil that is also helpful to any client – difficult or not – who chooses to use it. 

Dealing With Difficult Clients

Evaluating Law Schools and Expanding your Educational Opportunities through Visiting and Studying Abroad

 by Suzanne Natbony 

 

I. Introduction

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I graduated from law school in the standard three years and still had the opportunity to study at five different law schools by participating in a study-abroad program, enrolling as a visiting student, and taking classes as a special student.  I may be one of the few students to have attended law school at opposite ends of the United States (Los Angeles and the District of Columbia), in different hemispheres (the U.S. and Australia), and three law schools in greater Los Angeles.  My unique educational experience led me to gain a better appreciation for my home school, seek exposure to coursework unavailable at one single law school, and widen my life-long networking circle.  I was also able to travel to different parts of the world and gain experiences that will have a lasting impact.  Accordingly, I highly recommend taking advantage of the myriads of benefits that come from enrolling as a visiting student or studying abroad.

This article benefits prelaw students in determining which law school to attend and helps law students determine whether to obtain credits as a visiting student.  This information can also assist any bitter law school student or graduate with recognizing the positives of a legal education and appreciating their law school surroundings through discovering benefits that they were unaware of (rather than ruminating over and retaining bitter memories of law school).  My narration of my experience at the five schools I attended should help prelaw and law students make informed decisions when selecting law schools or considering whether to pursue courses outside of their home school. 

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As this article is intended to guide others, I discuss the benefits and disadvantages associated with attending different law schools from my own experience studying at five law schools: Southwestern Law School in Los Angeles (“SW”), of which I am a graduate.  In addition to SW, I studied at the University of Technology, Sydney (“UTS”) through a Santa Clara University study-abroad program, Loyola Law School in Los Angeles (“LLS”), Georgetown University Law Center in Washington, D.C. (“GULC”), and Pepperdine University School of Law in Malibu (“Pepperdine”).

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II. Studying Abroad, Visiting and Auditing

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A. Expand Your Horizons!

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Due to my constant thirst for new experiences and upward mobility, I attended three high schools, four colleges, and five law schools because I think one should aim high, keep progressing and try to get into the best school possible.  If you cannot transfer to a better law school after the first year, you should try to study abroad or attend classes at another school as a visiting student in order to have an unsurpassable experience.  From listening to an Australian professor compare abortion laws in the U.S. and Australia while demonstrating a mastery of both legal systems, to hearing a D.C. prosecutor decry California’s “crazy, liberal laws” in comparison to those of conservative Washington, D.C., my legal education was greatly enriched by my coursework at other institutions.

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Furthermore, you will widen your network of contacts by not only meeting people who live in your selected city of study, but also those that, like you, have chosen to travel there.  In addition, you will be able to show future employers that you are able to function well outside of your comfort zone and to embrace challenges.  While some may argue that employers prefer students who stay in one place because it predicts future commitment to one employer, you can readily counter such doubts in two ways.  First, you can explain that because you were interested in a comprehensive education, you took classes as a study abroad or visiting student to learn certain legal subjects were not offered at your home institution.  For example, as former President of the SW Law and Medicine Society, I first petitioned my school to offer additional health law courses.  When I was unable to register for such a course at SW, I took it at Loyola.  When prospective employers interviewed me, they were all impressed with my initiative in seeking creative ways to deepen my understanding of this practice area.   Thus, I was able to take the course of interest to me, but remained loyal to SW through attempting to have additional Health Law courses taught at SW.  Second, you can say that you believe that you are a renaissance man/woman and rainmaker who will consistently continue to improve the services and increase the clientele base of the firm.  Those qualities are valued in a firm, but are not easily channeled and rewarded in law school.

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B.Challenges

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There are several potential issues with studying abroad and visiting another institution.  First, law schools will not accept transferred grades into students’ GPAs; instead, transcripts just show credits as either a “pass” or “no pass.”  Depending on how a student performs, this policy could affect a student’s GPA positively or negatively.  For example, my high grades from GULC and UTS were not incorporated and I was unable to increase my cumulative SW GPA, but because my less favorable Pepperdine patent law grade was not incorporated either, my overall GPA was not significantly affected in either direction.  Additionally, the administrative burden of the application, enrollment, and orientation process can aggravate students.  Students have to get an I.D. card for each school, go through new parking procedures, and obtain wireless configurations.

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As a continuing student, problems can also arise for students who do not start in the fall (traditionally the first semester) because students miss orientation and key events.  Accordingly, it can be harder to acclimate as easily in the spring and summer semesters.  Indeed, during the summer, the campus can feel more isolated because fewer students are attending classes.  The available courses may also be limited for three reasons.  First, some schools have their students register for their courses during the spring of the prior year; so many classes may be full if you attempt to register during the preceding fall or summer.  Second, fewer courses are available because fewer students enroll in the summer.  Finally, some classes are limited because they are in high demand, taught infrequently and only during the summer.  For example, SW only offers a Sports Law class during the summer.

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Someone who really wants to study abroad in a particular location or through a certain program should verify that his or her home school will approve the program before applying for the program or before applying to your home institution.  For example, LLS only has a few summer abroad programs it sponsors, and my friends who were enrolled there complained that the administration would not approve outside institutional study-abroad programs for credit. I considered transferring to Loyola, but I found out that they would not accept my units from the Santa Clara University study-abroad program in Sydney.  LLS only has a few summer abroad programs and my friends complained that their administration would not approve outside institutional study-abroad programs.  Accordingly, in order to get credit, they had to participate in a LLS study-abroad program.

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C. Auditing

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Auditing is enrolling and paying to take a class for no credit.  Because students will not get credit for any audited classes, this option should be viewed as a last resort.  For example, I wanted to attend law classes at every major university in Los Angeles, but UCLA does not allow visiting students, although it allows auditing.  I did not consider auditing the UCLA law course because, to me, auditing a course was not worth the trade-off.  The time spent auditing an extra course, in addition to maintaining full-time status would offset the benefit of learning a unique subject area. On the other hand, a friend benefited from auditing a course at his home school because it was an inexpensive way to learn a subject of great interest to him.

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III. Nontraditional Programs

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If you are looking to enroll part-time, you should research different school’s part-time programs. Usually, part-time programs are offered in the evening, but some schools have part-time day programs if you are a certain type of student, such as a parent.  Further, many third year law students want to finish their last year of law school taking evening classes on a part-time basis because they want to work part-time during the day.  Thus, you may want to check if evening courses are available and if there is an evening program.  My Patent Law class at Pepperdine was in the evening, but because there was not an official “Evening Program;” after class the school felt like a ghost town with everything closed except for the library.  Another type of nontraditional program is a two-year law school program, such as one offered at SW.  Although on-line courses might seem like a good way to obtain credit while working part-time, prospective students should note that ABA requirements prohibit law students from taking classes at on-line schools unless they are enrolled students of those on-line schools.

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IV. Location

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Four of the five law schools that I attended were located in major world cities: Los Angeles, Washington D.C., and Sydney.  The fifth law school, Pepperdine, is in Malibu, one hour from downtown Los Angeles.  You should absolutely consider whether you want to live in a metropolis, suburban, or rural area.  Personally, I advise being in a city because you want to be close in proximity to the courthouse for externships, major law firms for associate positions, major legal organizations for internships and, of course, diversions from law school.  Some of my friends who went to University of Georgia Law School in Athens, Georgia, an hour and a half from a major city, felt they graduated law school lacking the practical experience from clinics, externships and internships, which are readily available in a major city.  One of my Pepperdine friends had an internship in downtown L.A. and complained about the one-hour drive each way.  However, there are tradeoffs: while Pepperdine is an hour or more from downtown L.A., it is probably the most beautiful law school campus in the world, situated at the foothills of the Santa Monica mountain range, atop Malibu bluffs, looking out over the Pacific Ocean.

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V. Campus Size

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Another factor to consider is whether the law school is a part of a university with other schools and the law school’s proximity to the main campus.   For example, UTS is a large, public university, in a major city, with the law school and other graduate and undergraduate schools located within walking distance.  Pepperdine is a large, private university, outside a major city, with the law school located on the main campus.  LLS and GULC are large law schools located in a major city, separate from the main campus and SW is a private law school in a major city without university affiliation. 

Each type of campus has various advantages and disadvantages to consider.  The positives of having a larger university within walking distance is that you reap the benefits of the main campus – health center, joint degree programs, larger food court, more people to meet, museums, auditoriums, events, and the like.   The downsides include an inconveniently dispersed administrative support structure where you have to walk 20 minutes to the other side of campus to visit the International Studies Office.  Thus, trying to complete administrative tasks can be inefficient when departments are in different buildings, not co-located within the law school.  For example, to find the Pepperdine student ID card office, I felt like I was on a scavenger hunt around a campus that is so large it has a tram system.  However, a Pepperdine employee told that if I had started at the beginning of the school year, I could have gotten one from a satellite office in the law school.  SW had just two buildings to accomplish most tasks that could be taken care of at a large university.

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VI. Law School Facilities

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A. Technology

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Most law students are technologically savvy and have laptops, yet some schools have not installed desktop outlets or more convenient outlets.  While someone told me Pepperdine has high-tech classrooms, my Patent Law class was technologically challenged.  The classroom was located in the basement with no windows, limited outlets to plug in laptops and 70’s-looking chairs and tables.  In LLS, SW and GULC, we had outlets on top of or attached to the desks and advanced audio and video capabilities in some of the classrooms.  Pepperdine, however, gets an A+ for ease of use of its wireless connection.  Guests and students have instant online access without needing a password.  In contrast, the systems at LLS and SW were more complicated because they required entering a password each time one wanted to get online and necessitated several trips to Tech Support at each school to get my laptop working.  GULC used a bizarre, hilarious password that you entered just once (which I am certainly not permitted to give out).  I also thought that SW was technologically advanced because it had flat screen TVs broadcasting campus, local, national and international headlines above the elevators and in the rooftop cafeteria and modern stadium seating classrooms with close and convenient tabletop outlets.  Finally, ample and state-of-the-art campus computers and copiers can make a difference when you and every other first‑year law student are rushing to print out copies of your brief for Moot Court. 

 

B. The Law Library

Choosing a school based on the size of the law library or how many books it holds need not be a central consideration because other law school factors are more important.  For example, the ABA requires each law school to have a large law library. Almost all research can now be done online and most class assignments do not require library research (Legal Research and Writing and certain Seminar classes being the exceptions).

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If you prefer to study in the library, then you should consider a school’s library rules and whether you would be comfortable in the environment.  For example, while SW’s library was stunningly large and elegant, the rules prohibited food and beverages.  For people who like to eat while they study, that rule may be aggravating.  I also had SW friends who said that they studied at LLS because SW was too cold.  My GULC friend told me that their library was enormous, but I never once had to use it.  Library safety should also be a concern – ask if you can leave your laptop unattended.  Pepperdine and Loyola were considered safe because people told me that it was okay to leave your laptop at your desk to go to the restroom.  If you study long hours, you should also consider the hours of operation and convenience to a coffee shop and other nearby, extended-hour establishments.  In addition, schools handle the free Westlaw and Lexis printouts differently, which are similar to the way drug companies would give physicians free samples (kickbacks).  At SW, our research was organized for students by last name, whereas at Pepperdine, our printouts were disorganized and gone if not retrieved immediately.

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C. Fitness Centers

Everyone should exercise regularly - yes, even law students; so, I feel your school should have a gym.  LLS is a satellite campus, with the main campus about 30-minutes away.  Thus, Loyola Law School does not really have a gym because having to drive that far is too inconvenient. Some law schools with satellite campuses have their own gym.  For example, Georgetown University Law Center’s gym, which is just for law students, was nicer than Pepperdine’s gym for the entire campus-wide student body.  SW has a large gym with lots of new machines and equipment although it is not affiliated with a large university.  I really enjoyed having a gym at SW because after exams, I could do a lot of cardio to release all of the adrenaline pumping through me (unlike some other students who wanted post-exam booze on campus). 

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D. Parking

The parking situation is also something to consider.  Many students complain about expensive and limited parking in major cities; but even in smaller cities, such as Malibu, parking can be limited and far from your destination.  While Pepperdine’s law school had ample parking for students in the evening, when I had to drive around to other parts of the campus to accomplish administrative tasks or get tea and coffee, it was difficult to find parking.  I did not have to worry about GULC’s parking because I did not have or need a car.  Many LLS students complained about the parking situation because of the parking lot’s poor design, but I thought it was fine because I usually found nearby, free street parking.

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VI. Exams

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Every law student should know the importance of exams – virtually every class grade is determined by one single grade from your final exam.  So, pay attention to the test taking rules and law school environments.  My most enjoyable exam experience was at GULC because there was NO Examsoft.  I hate Examsoft because my computer stopped working during one of my first year law school exams and Examsoft would not work.  LLS, Pepperdine and SW all use Examsoft, but GULC trusted students and used a Microsoft Word template.  At GULC, I took professional responsibility and was happy that our exam was open notes, book and Internet – anything was accessible, except specific knowledge from another on that particular exam question, so emailing and instant messaging were prohibited.  Accordingly, GULC students gave me the impression that they were more relaxed and confident exam-takers.  Regardless of the reason, the students I saw were more at ease than students at other law schools. 

Examsoft is an aggravating software program that you have to download to take your exams. It prevents students from cheating by locking out the computer from the internet and other programs.  It can freeze your computer and malfunction and when it does, the student is generally unable to type the exam and instead given a bluebook and forced to handwrite.

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VII. Reputation

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U.S. News & World Reports (2005 edition) ranks the top 200 law schools and the law schools that I attended ranged from top 15 to top 150.  Many people despise the report and ranking system.  However, while I am hesitant to admit it, I do feel that the rankings are somewhat indicative of how easy it will be to find a job, how much money you will make and how technologically advanced and ostentatious the law school’s facilities will be.   Accordingly, I chose GULC over the other three major D.C. law schools – American University, Catholic University and George Washington, not only because GULC has the best reputation (and a relative went there), but because  I knew that the quality of my education and experience would probably be better.  I wanted to work and study in Washington, D.C. during the summer after my second year of law school, so I first obtained a job at the Federal Judicial Center as a Legal Researcher and then began to investigate the four, major D.C. schools.  Ultimately I chose GULC because I believed it was probably the best D.C. school and the content of the course I wanted to take was not geared towards D.C. law (unlike George Washington’s class); rather, GULC’s class focused on the Model Rules, which would be more useful for my future practice in California.

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While reputation is an important consideration when selecting a course to take at another school, you also have the added advantage of choosing a good professor (rather than a boring or disorganized one).  If you are considering studying at another school and do not know anyone, you could find students on Facebook and ask them about a professor whose course you are considering taking.  I happened to have a friend from college at American University Law and was able to ask her about my GULC professor because the professor had also taught at American.

 

VIII. The Faculty

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The best law professors may not have joint degrees or Ph.Ds; rather, they deliver their lecture in an organized and engaging fashion.  They provide practice test questions and answers and give helpful feedback.  Visual aids, repetition, practical experience, and animation are a necessity, and comedy also helps.  Two professors stand out as having all of the above.  At GULC, Professor Stacy Ludwig provided practice exams and feedback and was very accessible outside of class.  At SW, Professor Catherine Carpenter used photos in her PowerPoint presentation with the key points and rules.  Despite both professors’ classes being either earlier later than what I would have preferred, I felt that they were both highly effective professors.  Further, Professor Carpenter made the subject matter more rousing, even though I lacked interest in Criminal Law.

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When studying abroad, you should not only try to determine how renowned the professor is, but whether the program has professors who are citizens of the country in which you are studying.  Indeed, choosing a study-abroad program with foreign professors is more important than considering a school based on its reputation and ranking.  Why travel halfway around the world and spend thousands on travel expenses to be taught by an American professor?  With narrow exceptions, such as the lack of English speaking professors in the host country, I can think of few reasons that merit being taught by an American professor when studying abroad, such as having a notable number of guest lecturers from the country.  

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When I looked into study-abroad programs in Sydney, Australia, two were of interest to me.  One was hosted by a top U.S. law school, University of North Carolina at one of the top schools in Australia, University of Sydney, and the other program was hosted by Santa Clara University at the University of Technology, Sydney by Australian professors.  I chose the latter because I thought it was likelier that I would learn more about Aussie culture if my professors were Australian (and I wanted to try to pick up the Aussie accent).  I will never forget when one of the Australian professors became upset because a fellow classmate was playing Sudoku for the second time.  In the United States, where American law students frequently surf the internet or play computer games in class, I found it very refreshing that Australian law students demonstrated a greater respect for their professors and class material, such that our Australian professor was shocked by the behavior of several U.S. visiting students.

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IX. Career Services Centers

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You will have at least some access to the career service centers at the law schools that you attend as a visiting student or by studying abroad.  Indeed, I was able to get numerous counseling sessions and advice from career services counselors at my home school and LLS, Pepperdine and GULC.  If a SW counselor was not available, I could call GULC, LLS, or Pepperdine.  For example, GULC was able to schedule phone sessions with me early in the morning when my west coast law schools were not open yet.  LLS permitted me to meet with counselors but I could not participate in recruitment.  As a part of my study-abroad experience, UTS and its host school, Santa Clara University, set up an informational session with a biotechnology firm in Australia that was looking to hire American law students.  I considered moving to Australia and working for the firm. 

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In addition, the career services counselors at all the L.A. schools were able to give me feedback on correspondence from prospective employers.  Similar to a panel of three judges writing opinions on a case, I was able to get detailed feedback from three different institutional counselors.  For example, I received different opinions from counselors about whether a thank you note following an interview could be handwritten or whether it always needed to be typed.  The experience demonstrated to me that career advice, like any other, varies among schools and individuals.  Indeed, sometimes I would get a dissenting and concurring opinion to what I believed to be the best communication to an interviewer.  While this was initially frustrating, it helped me to place more trust in my own judgment.

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X. Competitiveness

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If you are competitive, selfish and cold, then you will find other people just like that wherever you go because I feel that you get what you project.  While SW may be rumored to be one of the most competitive schools, I found it to have a supportive and friendly learning environment (with a little healthy competition during moot court, negotiation drills and other educational attorney simulations).  Indeed, SW has a low attrition rate, which is under 15%.  I really could not rate the competition level of the other schools that I attended because the student bodies all had a sense of camaraderie. Whenever I sought help at SW, GULC, LLS or Pepperdine, such as needing outlines or notes, people were willing to help.  Although people bent over backwards when I was a visiting student and studying abroad because I was in an unfamiliar city, I truly feel that a smile, reciprocity and a friendly personality bring out fairness and teamwork in others. 

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XI. Religious Practice in Law School

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If you are religious, consider choosing a school that at least has your community nearby.  Some law schools have chapels directly on campus.  GULC has a modest room in the basement.  Pepperdine has a large, stunning chapel that is used for weddings.  A religious presence on campus may be of interest as well, such as having a Jewish Law Students Association.  Typically, these organizations have holiday events and meals with professors.  Being a part of a religious organization can also assist with networking.  I heard my Pepperdine classmate tell another that he was hired through someone he met at church.  Indeed, Pepperdine, being a private, religious university, not only asks for an essay responding to its Christian Mission Statement, but also has many events sponsored by the Christian Law Society.  For example, when talking with Pepperdine students about their plans for the weekend, several said that they were going to a Christian Law Society beach BBQ.  I doubt I would have received an invitation to a beach BBQ by SW or LLS students.  

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XII. End Note

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I want to thank all of the people at Southwestern for their support and approval of my unique educational experience.  I love the experience that I had in law school and hope this article is helpful in advising students through this narration of my unique educational experience.  I have been whole-heartedly interested in attending law school since my first semester in college.  Thus, I was Vice President of the Pre-Law Club at Georgia State and Professional Development Chairperson of USC’s pre-law fraternity, Phi Alpha Delta.  I also took Barbri’s week-long Law School Prep course and read many of the major pre‑law publications, which included various issues of US News and World Reports on the Best Grad Schools, the ABA Guide to Law Schools, Barron’s Guide to Law Schools, Law School Confidential, Planet Law School, Becoming Gentlemen, OneL and I regularly read pre-law Insider, Student Lawyer and other ABA publications.  Finally, I admit, I come from a family of lawyers – both uncles and grandfathers and my father all went to law school and I am the first female to attend law school in my immediate family.  Accordingly, I wrote this based on my law school knowledge and experience, which was enhanced by growing up in a family of lawyers.

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