 |
 |
Learning From Others To Benefit Your BusinessFebruary 6, 2012
In a recent article entitled “When Mark Met Don” from the Wall Street Journal, the author discusses the benefits of a friendship between Washington Post’s Don Graham and Mark Zuckerberg of Facebook. This article brought to mind how many of our business clients (and ourselves) learn from others.
Often times, our business clients derive valuable knowledge and wisdom from others in their industry and from similarly situated trade groups. This is natural. Many of these people have gained experience in their business/industry which they are willing to share with others. What a valuable way to learn from the mistakes and fortunes of others.
We all can also learn from people who may appear to be different. These differences are likely unlimited but could include age, business industry, socially, economically, politically, etc.
As we talk with our business clients about strategy, business growth, business opportunities, etc., it becomes even more obvious that most business owners enjoy learning and enjoy the challenge of business management. Thus, it seems evident that at times we all could learn from those around us who are not even in our own industry.
As you ponder this year on how to grow your business, how to better manage your business and employees, how to improve your company profitability, and how to overall get better at what you do, consider seeking out those business leaders who may be totally different from you or your industry. What might you learn? 
LEGISLATIVE PROCESSJanuary 30, 2012
The past year has been most interesting for a former social studies teacher turned lawyer. As Chair of the North Carolina Bar Association’s Construction Law Section, I found myself shepherding an effort to update the North Carolina Lien Law. Many do not realize that there have not been substantive changes to that portion of the general statutes since the 1960’s. There have been numerous patches to address specific cases, but each effort to review and revise the full statutory scheme to ensure that it addresses changes in the construction industry over the past 40 years has run into a brick wall. This effort may yet be no different, but this particular article is not about content, but about process.
What has fascinated me on a purely academic level is the realization that as legislators, our politicians are asked to become instant experts in so many different aspects of life, business, and the world. Those reading this who have occasion to dabble in or delve into the lien law will understand that there is nothing easy about understanding the full range and the minute details of Chapter 44A, Article 2. Add to that the public’s misperception that the legislature is filled with lawyers (it is not) and you are asking citizens who most likely have had no dealings with the construction industry to tease out the details and decide what is best for the industry. The next element to add to the mix involves the lobbyists who represent the myriad of different trade associations in the construction industry. These folks come from all walks of life. Some have experience in the industry while others are learning on the fly, but in all cases, they are paid to protect the interests of their group. While the term “lobbyist” generally brings to mind very negative thoughts, I have been impressed with the diligence I have witnessed as some of these folks work to learn the issues and to understand the various aspects of the problem. I may not always agree with their positions and I always wish for more willingness to give and take, but I have gained an appreciation for the homework many of these folks are willing to put in.
What I have learned and the purpose of this article is that knowledgeable public input truly can make a difference. The legislature has hundreds and probably even thousands of bills placed before them every year. They cull to some extent by how much real interest they perceive from the relevant constituencies – if the groups or industry involved are not willing to get actively involved in the process, why should the legislature care? Politics absolutely plays a role. I have seen the “if you’ll vote for my bill, I’ll vote for yours” deals come to fruition where clearly there is no effort to understand the import or possible impact of bills and we have all seen the parties put their weight and considerable influence behind certain hot button items. My keenest disappointment early in this process was to be told that the issue was “too complicated” for the legislature to tackle. I would hope that there is a mechanism within the legislative process to create a commission, committee or task force to spend the time necessary to handle the really hard questions. However, I have been heartened by the incredible work done by the staff attorneys in the Legislative Research Division who have done an amazing job in getting up to speed on the lien law in order to assist the legislators.
The moral of this story is that if you care about a piece of legislation, you need to be active and stay the course. Things can happen, but you matter.
Your New Year’s Legal CheckupJanuary 23, 2012
The end of the year is often a busy time for business owners and other individuals. It is easy to let some seemingly less pressing business and personal legal updates get pushed aside until the new year. Of course, when the new year starts, different challenges and time commitments can cause people to forget about those basic, yet important, legal matters. So as 2012 begins, perhaps it is time for a legal checkup Some key items that should be periodically reviewed and updated include:
Corporate filings/meetings- Corporations and limited liability companies are required to file annual reports with the Secretary of State each year. The failure to make this simple filing probably causes more administrative suspensions and dissolutions than any other mistake. In addition, each corporate entity needs to hold an annual meeting, and minutes should be recorded and added to the corporate record book. Taking the time to make sure these items have been done will ensure that your corporation or limited liability company maintains its effectiveness and protects you from personal liability.
Wills/estate planning- A surprisingly substantial number of individuals have never had a will prepared or have one that is decades old and outdated. If there have been substantial changes in your income, assets or marital status, if you have added children, or if your children have reached adulthood, it is time to have your estate planning documents reviewed and updated. Otherwise, if something happens to you, the distribution of your estate, the disposition of your assets and even the custody of your children could be something other than you desire.
Other issues- Perhaps some of your company’s contracts are unfavorable or have expired. This may be an opportunity for you to negotiate in order to obtain more beneficial terms. Maybe your corporation has never adopted bylaws or your limited liability company has never adopted an operating agreement. If you have business partners, you may need a buy-sell agreement. The new year is an excellent time to make sure you are getting the most out of your business endeavors.
Making sure your legal matters are in order can help you position yourself and your business for a profitable 2012.
The Start of 2012 Brings New Laws to North CarolinaJanuary 16, 2012
As we turned the calendar to January 1, 2012, certain news laws have come into effect here in North Carolina. These new laws have resulted in changes to the purchase of gas or certain medicines in the State, while others affect North Carolina’s teen drivers.
Gas Tax Increase: Commencing January 1, North Carolina’s state motor fuel tax grew an additional 3.9 cents per gallon to a record of 38.9 cents per gallon. This increase is in addition to July, 2011’s increase of 2.5 cents. The new law requires that the tax be recalculated twice annually based on a formula related to wholesale gas prices.
Cold Medicine Purchases: Beginning on January 1, North Carolina pharmacies and other retailers will be required to electronically submit a customer’s information to the National Precursor Log Exchange (NPLEx), administered by the National Association of Drug Diversion Investigators, before completing a sale of a product containing a pseudoephedrine product. North Carolina already requires that these products be kept behind the counter, that the purchaser show a photo ID, and that the retailer record the buyer’s information. The intent of this new law is to further track the sale of products which can be used in the manufacture of methamphetamine.
Revisions to Graduated License Program for Teens: As of January 1, before obtaining a driver’s license in North Carolina, teens with a learner’s permit are now required to log 60 hours of drive time under the supervision of a parent or experienced drive before advancing to a the next step in the graduated process . Teens must then log an addition 12 hours of driving time before obtaining their provisional driver’s license.
Attorneys’ Fees in Federal Miller Act LitigationJanuary 9, 2012
Federal bond claims have recently increased as a result of construction spending at North Carolina military facilities. Previously, suppliers to federal projects could usually rely on prompt payment from the bonding companies after making a claim. Suppliers now experience a trend of delay tactics from numerous sureties on federal projects. These delay tactics force suppliers to initiate federal litigation in a higher percentage of bond claims than in years past. Additional federal bond claim litigation mandates that companies protect themselves by taking steps to recover attorneys’ fees in such cases. The Miller Act provides the ground rules for litigating federal bond claims. Unlike North Carolina’s payment bond scheme, the Miller Act is silent as to attorneys’ fees.
In the F.D. Rich Co. v. United States ex rel. Industrial Lumber Co. case, the United States Supreme Court applied the “American Rule” to federal Miller Act litigation. The “American Rule” provides that each party typically pays its own fees and costs. The court explained that federal courts should not incorporate state law to the federal cases as a national rule would “extricate the federal courts from the morass of trying to divine a ‘state policy’ as to the award of attorney’s fees.” Years later, the Fourth Circuit created an exception to the national rule for North Carolina’s federal courts. In U.S. ex. rel. Maddux Supply Co. v. St. Paul Fire & Marine Ins. Co., the court adopted the standard which provides that “interest and attorney’s fees are recoverable if they are part of the contract between the subcontractor and supplier.”
In short, North Carolina businesses may claim attorney’s fees in a federal Miller Act lawsuit if they originally included appropriate language within the project subcontract or credit application. Contractual attorney’s fees language is key.
Serving on Board of Directors for Non-Profit Organizations: Beneficial and CautiousJanuary 2, 2012
In previous years, serving as a board member for non-profit and/or charitable organizations was perceived as prestigious and a great way to give back to the community. Sure, you were expected to attend a few galas and a board meeting every now and then, but it was all doable, feasible, and most of all – monetarily sensible. Now however, in the midst of our nation’s significant economic downturn and sharp decrease in government funding to charity organizations, such organizations are relying on board members more than ever for their knowledge, contributions, and time. So before hastily accepting a board position for a non-profit or charitable organizations, there are a few things to consider. Below are some key points to ensure that such a decision is the right one.
Time: Charity organizations today generally require a greater amount of time from their board members. Given the economic and community decisions which need to be made, it generally requires more time to consider situations and options for the organizations. Most charity boards, on average, hold seven board meetings a year – each of which generally last three to four hours. On top of such meetings, other options for service of the board members includes responsibilities to attend auctions, fundraisers, galas, entertain people, serve as the face of the organization to the media, attend retreats, and the list goes on and on. While giving back to the community through such organizations is often rewarding, know that it is a tremendous investment in terms of time.
Money: Many non-profit organizations today share the common idea that board members should be leaders in the fundraising efforts for the non-profit. Thus, there could be a responsibility that their board members are to sponsor events, buy tables, and donate funds to the respective non-profit , etc. Additionally, non-profit groups often look to board members to share their personal contacts for fundraising, and even request that board members personally call their friends and colleagues to ask for money. This has proven beneficial for many organizations and is a great way to increase fundraising efforts. Just be sure to know the expectations ahead of time.
Liability: What many do not know is that in serving as a board member, you have a fiduciary duty to the organization and could become liable if funds or the organization is mismanaged. Depending upon the type of organization it is, how it is managed, how the by-laws are written are a few things to consider regarding potential liability. In order to avoid such liability, board members need to be aware of their fiduciary duty, and keep a close eye on the charity’s finances and accounting books. Likewise, purchasing insurance to cover any liability as a board member is also a wise decision.
If you should have any questions about your potential liability while serving in a board member capacity, please contact us.
“Going Legal”December 12, 2011
It is well publicized that the single most common complaint about lawyers is a failure to communicate. Communication is a two-way street and provides much fodder for contemplation.
Representing a number of different corporate entities provides an interesting view of the diverse policies corporations have once a case is sent to a lawyer. Some clients send us a case, but continue working the case as well. Other corporations have a policy that once the case is referred to “legal” then all communications with the debtor must run through the lawyer. And other entities somewhat split the baby – they do not actively chase the debtor, but will deal with a debtor who contacts them.
Is one policy better than another – probably not. The key remains communication between the lawyer and the client. If the client is going to continue active pursuit, then it is imperative that they keep the lawyer’s office in the loop when communications occur with a debtor.
Frequently we encounter confusion when clients continue sending statements to a debtor after referring the case to our office. Generally, once we make demand, we set the date from which interest will accrue so that the principal amount is fixed and interest accrues from a date certain. Clients’ statements essentially do the same thing except that they show the interest added each month which gives the impression of a shifting balance and can cause confusion, especially with less sophisticated customers. And, client’s statements do not show attorney’s fees or costs which might be recoverable.
The biggest problems often arise when a client accepts a payment but fails to inform their attorney. This can lead to documents being improperly filed with the court and grand confusion in the middle of a court case.
The moral of this story is simple: we as lawyers need to be diligent in checking and double-checking with our clients to make sure our information is current, but clients who have retained counsel need to be equally diligent in terms of keeping their attorney up to date. We are working towards the same goal – a successful outcome hopefully as quickly as possible.
Foreclosing Deeds of Trust: Another Collection ToolNovember 7, 2011
Over the past couple of years, there has been a substantial increase in foreclosures in North Carolina and around the nation. Certainly, the poor economy has been a major reason for the increase. However, according to the Greater Wilmington Business Journal, foreclosures in North Carolina declined in September. Many of our clients make use of Promissory Notes secured by Deeds of Trust on real property as a means of securing past due balances and establishing a payment plan from delinquent customers. Despite the security given by the Deeds of Trust, our clients are often hesitant about seeking enforcement through foreclosure. Most would rather file suit for the unpaid Note in order to obtain a judgment. Often, this is a good approach as a lack of equity in the property securing the Note makes foreclosure an unappealing option. However, in certain situations, foreclosure may be the most effective option for recovering the debt. The foreclosure process is simple and clearly defined by statute. First, the creditor sends a letter providing notice to the debtor of default under the terms of the Note. If the debtor does not resolve the issues, the foreclosure proceeding is filed and the debtor is served with notice of the foreclosure hearing. At the hearing, the debtor has the opportunity to object to the foreclosure. If the clerk allows the foreclosure, the sale date is set and all interested parties are given notice. At the foreclosure sale, the trustee accepts bids and the highest bidder must deposit funds immediately with the clerk. After the upset bid period, where anyone can make a better bid, the sale is finalized and title passes to the high bidder upon delivery of the full amount of the bid. In the event the highest bid does not cover the full amount owed, the creditor is able to file a lawsuit to cover the deficiency. However, this option is not available in certain situations.
Right of First Refusal; What Does It Mean?October 3, 2011
Often times, business owners want to include a provision for a right of first refusal to buy or sale a portion of a business interest or asset. There can be many variables of provisions for the right of first refusal to consider. In the recent North Carolina Court of Appeals case, Taylor v. Miller, the Court held that rights of first refusal may be enforceable, even if such provisions contain fixed price options. According to the facts in Taylor, Mr. Taylor and Ms. Miller were married in 1982 and separated in 1993. In 1994, they both executed a warranty deed to Mr. Taylor for a piece of property in Morehead City, NC which contained a provision giving Ms. Miller the right to repurchase the land should Mr. Taylor sell it. More specifically, the provision gave Ms. Miller the right to repurchase the property: (1) on the same terms and conditions as another bona fide offer; or (2) for the sum of $41,500 plus the costs of repairs and improvements made since the execution of the deed. In 2009, Mr. Taylor and his current wife filed a complaint seeking a declaration of rights under the deed and a determination of whether the 1994 warranty deed’s right of first refusal was enforceable. The term “right of first refusal” means that before a piece of property is sold, it must be offered to the person holding the right of first refusal. While rights of first refusal fall under the category of restraints on alienation (which are generally disfavored by the Court), rights of first refusal are not automatically void per se. However, to be enforceable, the right of first refusal must be shown to be reasonable. In making such a “reasonable” finding, the Court considers: (1) the duration of the right; and (2) the provisions for determining the price of exercising the right. In Taylor, Mr. Taylor argued that the right of first refusal failed the reasonableness test’s second prong, for the right of first refusal’s fixed price of $41,500 showed no relation to the property’s fair market value or what Mr. Taylor would have accepted from another buyer. The Court addressed this argument by holding that in determining whether a fixed price is reasonable, all circumstances that existed at the time the contract was entered into should be examined. In this instance, the 1994 warranty deed was actually part of Mr. Taylor and Ms. Miller’s separation agreement. As such, the $41,500 could be deemed a bargained for amount in relation to the terms of their separation, making the right of first refusal price reasonable and enforceable. This case helps us understand some of the issues to consider when drafting rights of first refusal. Many times, business owners include similar provisions. Knowing how a Court interprets this type of provision should be helpful. If you have any questions, please let us know.
Electronic Information-Hacking for Business (Make it a Dream and Not a Nightmare)August 23, 2011
Our lives have been irrevocably changed by technology. We use technology every day and rely upon the usefulness of it. The technology which businesses utilize is normally designed to make work easier, more effective and efficient. As technology advances, so do the minds of those who want to use technology dishonestly or for the wrong purpose. An article in the Wall Street Journal pointed out how technology being used dishonestly can cripple your business. http://online.wsj.com/article/SB10001424052702304567604576454173706460768.html As a business owner, we all want to provide better and memorable service to our customers. Providing memorable service to our customers generally requires the use of software and/or digital information which often times saves and stores information about our customers electronically. This can and should be a dream come true as a business owner! If your business is collecting personally identifying information on your customers such as social security numbers, corporate EIN numbers, drivers license numbers, date of birth, credit card numbers, banking information, etc, North Carolina law and Federal regulations require you to take actions to safeguard that information. The North Carolina law was enacted to protect identity theft. The Federal regulations are referred to as “Red Flag” policy and was designed to identify activities, inquires, inconsistencies and information which should be considered “red flags” regarding customer information. Hacking into business data is no longer only for the big companies. Each and every small business needs to be proactive in protecting the information collected on behalf of your customers. If you have questions regarding the North Carolina law or Federal regulations, please feel free to contact us. Make the use of your technology a dream for your business!
|
 Blog Menu |
 |
1720 Hillsborough St | Suite 200 Raleigh, NC 27605 919-510-8585 919-510-8570 fax |
1200 East Morehead St | Suite 251 Charlotte, NC 28204 704-496-7495 704-496-7480 fax |
The information contained on our website, video blogs, newsletters or blogs is provided as general information as a public service. Neither the presentation of this information or the use of this information creates an attorney-client relationship with the firm or any of the attorneys at Vann & Sheridan, LLP. The information provided in the website, blogs, video blogs and newsletters are based upon general information for North Carolina law.
The information contained in this website, video blogs, newsletters or blogs is not intended to create an attorney-client relationship and is therefore not legal advice. Legal advice should be tailored to the specific situation and fact pattern of each case, thus, nothing provided herein should be used as legal advice given the general nature of this information. Please note that Vann & Sheridan, LLP and Attorneys are unable to provide legal advice via email for people or companies who are not established clients of Vann & Sheridan Attorneys at Law. Sending us details of your legal issue(s) via email does not constitute an attorney-client relationship.