Tag: Epiphany Law

Epiphany Law Manufacturing Law

Can You Lose Your Corporate Protection?

What Every Business Owner needs to Know

Ask any business owner why they incorporated their business and one of the reasons they’ll give is “to protect myself from business liabilities.” But incorporating doesn’t mean you can never be held personally liable. Although it’s rare, courts sometimes ignore the legal protection of a corporation to hold an owner personally liable (a process called “piercing the corporate veil”).

The good news is there are steps you can take to avoid having a court pierce the corporate veil. Piercing happens when the court decides that you, as a business owner, haven’t really treated the corporation as a separate entity. In Wisconsin, the same theory applies to LLCs and their members as well. Essentially, the courts are saying that if you want the protection of incorporating, you have to follow corporation rules.

To avoid piercing:

  • Always follow corporate formalities, like holding annual meetings, keeping minutes and filing with the state on time
  • Never mix corporate assets with your personal ones (or those of another corporation or LLC)
  • When setting up your business, make sure it’s adequately funded. Courts are more willing to pierce an “undercapitalized” business
  • Always identify your business as a corporation or LLC so customers and creditors are on notice that your business has limited liability. Also identify your title so they know you’re acting on the business’ behalf
  • Never use your business to engage in illegal, fraudulent or reckless activities

Having a court pierce your business’s veil can be devastating for you as an owner. But by following the rules, you won’t give the courts a reason to pierce. And, always make sure to get the advice of a trusted business attorney if you are unsure about any of the guidelines. That way you and your business can take advantage of the protections offered by corporations and LLCs.

 

Dispute resolution: litigation v. mediation

Litigation vs. Mediation

In business, it’s common for disputes to arise. Developing cost effective strategies for dispute resolution is critical for achieving a healthy bottom line. Because employers and business owners generally seek to avoid litigation (it is time consuming, expensive and emotionally draining), mediation has become more common.  The below summary compares the differences between mediation and litigation and provides insights as to why the popularity of mediation is on the rise.

Employers and Business Owners understand

Litigation – Refers to a formal process that uses either state or federal court to resolve the dispute. To determine the court, you must examine the claim(s) asserted, the amount at issue and where the parties reside. Though you filed your claim with the court, the judge may require the parties attempt to resolve the dispute through mediation.

Mediation – Refers to an informal and confidential process that uses a neutral third-party, the mediator, to help the parties discuss their differences and consider potential solutions to those differences. If the parties cannot reach an agreement “that both parties can live with,” you still have the right to file a claim with the appropriate court to have a judge or jury determine the outcome of your case.

Where is the process held?

Litigation – Hearings are held telephonically or in the court room.

Mediation – You and the other party determine if the mediation is held at your counsel’s office, opposing counsel’s office, the courthouse, the mediator’s office, or even virtually. Depending upon the mediator’s and/or the parties’ preferences, the parties may be placed in the same room or in separate rooms. If in separate rooms, the mediator will walk between the rooms and present each party’s positions, thoughts and arguments to the other party.

Are the conversations confidential?

Litigation – Correspondence is not confidential and can be used as evidence at a hearing unless the correspondence is related to negotiations between both parties’ counsel to resolve the dispute.

Mediation – Correspondence and evidence presented during a mediation session is confidential and cannot be used by the other party as evidence at a hearing.  The mediator cannot be called to testify and will maintain the confidentiality of everything learned through the mediation.

What is the length of the process?

Litigation – The litigation process typically takes 2-3 years to reach a court judgment. The case may extend beyond 3 years if multiple motions are filed and depending on how complicated the claims are.

Mediation – The mediation process typically takes less than a year, and can sometimes be resolved within weeks. It often depends on the mediator chosen and schedules of all involved. Sometimes, you may attend multiple mediation sessions if both parties are continuing to progress towards a resolution.

Who determines the outcome?

Litigation – Judge or Jury. Besides presenting your case, the outcome is completely out of your hands and in the hands of the judge or jury.

Mediation – You. The mediator does not tell you who is right or wrong. The mediator does not render a decision. The Mediator is there to guide the conversation between you and the other party. Ultimately, you are the one presenting, crafting and responding to potential solutions. You are the one making the decision to accept or decline a solution. The outcome of the mediation is in your hands.

What is the potential outcome?

Litigation – The judge or jury determines a winner and a loser. The judge or jury determines the damages owed to the winner based on claims presented, case law and statutes.

Mediation – Both parties are winners. The parties, of their own accord, mutually decide to end the dispute and accept an outcome that both can live with at the end of the day.

What will the process cost?

Litigation – Below are conservative estimates of costs expected to reach a court judgment in Wisconsin courts. The costs will vary depending on the complexity of your claims and/or the dispute itself. For instance, if your case requires expert witnesses, you will pay more than the estimated costs. Also, the opposing party and/or counsel may cause your counsel to have to submit motions and briefs, which will increase your costs above the estimated costs. Remember, though, that you and the opposing party may settle the dispute prior to receiving a court judgment.

Court Filed in Represented by Counsel Costs
Small Claims Yes Filing Fees plus $5,000
Small Claims No Filing Fees
Large Claims Yes Filing Fees plus $25,000 – $50,000
Large Claims No Filing Fees
Federal Claims Yes Filing Fees plus $30,000 – $60,000

**Wisconsin and Federal Courts require companies be represented by counsel in Large Claims.

Mediation – Mediators usually charge between $250 – $350 per hour. If your case requires knowledge of a unique field or industry, the mediator may charge more than $350 per hour.

What about receiving my legal fees?

Litigation – Whether you receive legal fees depends on statutes, contract language and the discretion of the judge. If statutory or contract language allows the winning party to receive legal fees, the judge will determine the reasonable legal fees that the losing party will pay. The table below shows what you will receive if the judge awards legal fees.

Court Filed in Legal Fees
Small Claims $150 if judgment in favor; $300 if represented at trial and judgment in favor
Large Claims Reasonable fees – depends on contract and/or statutory language
Federal Claims Reasonable fees – depends on contract and/or statutory language

Mediation – Whether you receive legal fees depends on the other party’s willingness to agree to pay your legal fees. Most likely, the other party will not explicitly agree to pay your legal fees.

How do I locate a mediator?

The state bar association has a list of mediators who can be contacted for an appointment. However, it is advisable to work with your attorney first to determine if mediation is right for your case.  Your attorney will spend time investigating and selecting the right mediator for your case.

Would you like to learn more about mediation? Contact us here. Epiphany Law Partner Heather Macklin is an accredited mediator with over 20 years of litigation and dispute resolution experience.

Real Estate Law

COVID-19 and the Effects on Real Estate

 

On April 25, 2020, the Wisconsin Department of Agriculture, Trade, and Consumer Protection (the “DATCP”) enacted a new temporary law in response to Governor’s Emergency Order #72, the Health Emergency Order.  The new temporary law prevents residential landlords from enforcing or seeking late fees or penalties for nonpayment or late payment of rent against their residential tenants. This rule will be enforced from April 25 until the earlier of September 22, 2020, which is when the new temporary law expires, or 90 days after Governor’s Emergency Order #72 expires.

Because the DATCP did not enact the rule until April 25, residential landlords may charge their residential tenants late fees or penalties for nonpayment or late payment of rent for those days prior to April 25th.

In addition to the implementation of the new temporary rule, the courts themselves are beginning to adjust their processes to Covid-19. For example, the Outagamie County Courthouse released a statement that small claims plaintiffs, not the defendants, including landlord-tenant disputes, should not appear for the initial hearing. So, pay attention to your court’s local rules to determine how to proceed with your case.

If you have a question regarding landlord-tenant law, please contact Epiphany Law, LLC at 920-996-0000 and I am happy to answer your question.

Does Your Company Have a Return to Work Strategy?

Article co-written and researched by attorneys Tracy Melvin and Alexis Merbach.

Many businesses are still figuring out how to manage HR issues in a pandemic. They are following the changes in every order and stimulus/relief package passed, and effectively rolling with the punches. Among the confusion and uncertainty, they have found ways to persevere. However, as states and cities now start to reopen—in turn allowing businesses to do the same—there is one question that remains…is the business prepared to get back to work?

There are several policies to consider as a business reopens. Some policies may not be new to the organization and likely are already be in place. Regardless, now is a great time to dust them off. Having correct policy documentation in place is crucial to ensuring the organization is proactively approaching and appropriately responding to the impact of COVID-19.

Businesses should draft or update the following policies as they work to reopen their doors:
  • Telework – Have a clear policy that outlines expectations for remote workers.
  • Anti-harassment & discrimination – There have already been many stories of employees being treated differently because they have or suspect they may have contracted COVID-19. Ensuring anti-harassment and discrimination policies are in place can set expectations and help minimize any potential risk.
  • Reasonable accommodations – Have a policy in place detailing how you will engage in an interactive reasonable accommodation process.
  • Overtime – To combat any wage & hour issues, employers may want to consider a policy requiring overtime to be pre-approved.
  • “Off the Clock” Work – Considering some employees may still be furloughed, laid off, or on reduced-hour schedules, implementing an “off the clock” policy makes it clear that employees are prohibited from checking e-mail, making phone calls, etc. for free. Employees must be compensated for all time worked.
  • Safety – Document workplace safety measures, including policies for proper cleaning, protective equipment, and social distancing measures, that have been put in place to prevent spread of the virus.
  • Health & wellness – Draft policies related to any health questionnaire or temperature check process, including that any health information will be properly protected.
  • Leave – Consider implementing a temporary leave request policy related to the two paid leaves under Families First Coronavirus Response Act.

Drafting or updated workplace policies is a great first step; however, businesses need to ensure effective implementation of these new or updated policies.

There are a few ways to do so effectively:
  • Train supervisors and managers on current, updated, and new policies. This will ensure consistency across the management team and present a united front to employees.
  • Consider cross-training your workforce to accommodate employee absences.
  • Any new or updated policies should be communicated to employees to ensure compliance throughout the organization. Distribute current and updated policies, have employees sign an acknowledgement that they have reviewed, understand, and will adhere to the policies, and continue communication about policies regularly.

To learn more, make sure to watch the webinar below. If you have questions or would like assistance developing a strategy to reopen,  contact us here. 

Strategies for Maximizing the Value of Your Business

How will COVID-19 impact the M&A Market?

Whether you’re thinking about selling your business now or in the future, it’s critical to understand how a prospective acquirer might value your company, and how you can influence that valuation. Even if you’re not thinking of selling today, most business owners will receive one or more unsolicited offers at some point…and you should be prepared. Rob Macklin, Partner at Epiphany Law, and Corey Vanderpoel, Managing Director and Owner at Taureau Group, will discuss strategies you can use in order to maximize the value of your business from both legal and investment banking perspectives, and importantly, will discuss the impacts of COVID-19 on the M&A environment.

• Operational, financial and legal preparation for a business
• The transaction process
• Due diligence and legal imperatives
• Shareholder tax and estate preparation
• Assembling a team of advisors

You can watch the complete webinar here.

Epiphany Law, LLC represents Security Door & Hardware Co. and Security Builder’s Supply Co. on their sale to CIH

Epiphany Law LLC is pleased to announce the successful sale of its client, Security Door & Hardware Co. and Security Builders Supply Co. to Central Indiana Hardware, Inc. (CIH).

Security Door & Hardware (SDH) and Security Builders Supply (SBS) provide full Division 8 commercial door and hardware products through four IL locations. The companies will continue to operate under the Security Door & Hardware and Security Builders Supply names as divisions of CIH.

Russ Benson, a member of the founding family said, “We are proud of our accomplishments and feel that CIH will only expand on the legacy our family began.”  Tim Johnson, VP and General Manager of SBS added, “Being part of the Security family has been a fulfilling and educational part of my career and I am proud of what our team has accomplished. I now look forward to a new family team at CIH to grow and expand services to our longtime customers.”

“I have been a part of a great team of individuals and am very proud of what we have been able to accomplish together. We welcome the opportunity to provide additional offerings to our clients over time and are confident that we will improve on the excellent service they have come to expect. Becoming a part of CIH will allow us to better serve our customers in all aspects of the business,” said Greg Rolnicki, VP and General Manager of SDH.

“We are excited to welcome Security Door & Hardware and Security Builders Supply to the CIH family,” said Ron Couch, President & CEO of CIH. “As a company focused on delivering exceptional customer service through innovative programs, we are excited to support the SDH & SBS teams with resources to expand opportunities and accelerate growth in their market.”

“We were thrilled to be able to help the companies transition to new ownership while maintaining their core values,” said Rob Macklin, a Partner at Epiphany Law.  He added, “We think that Epiphany has one of the best track records – and best legal teams – in the country for helping small to mid-sized family businesses maximize their value in a sale or recapitalization, while maintaining the culture that they’ve worked so hard to achieve.”

Epiphany Law, LLC, served as legal counsel to Security Door & Hardware and Security Builders Supply. WCF Advisors, LLC, acted as exclusive financial advisor in connection with the sale.

 

Avoiding Constructions Lawsuits

3 Tips for Avoiding Lawsuits in the Construction Industry

The construction industry faces unique challenges. Disputes over quality, timing and non-payment are common between project owners and contractors. But, the good news is there are several strategies your company can use to avoid costly lawsuits. Review the list below to learn how you can protect your construction company.

1 – Clear Communication is Key 

If you want to avoid disputes with clients, employees and competitors, good communication is essential. You should always take time to clarify expectations and make a habit of doing the following.

  • Never over promise.
  • Keep the promises that you make. However, if you cannot keep your promise for some reason, let the person know. Offer a plan on how you will resolve the issue and make it right. Call first, then follow up with an email detailing the agreed-upon terms to resolve the issues.
  • Don’t avoid difficult situations or conversations. Avoidance is more likely to cause the problem to escalate.
  • Evaluate how your tone may be perceived. And remember that email or text messages can make it difficult to effectively convey your desired tone.
  • Don’t be afraid to swallow your pride. Doing so could help you resolve an issue before it becomes a legal matter.
  • Evaluate and enforce best practices regarding how your employees should communicate.

2 – Make Documentation a Priority – especially when it comes to change orders

To help protect yourself and your business, take time to document important communications and commitments. A few best practice tips for keeping appropriate documentation:

  • Don’t do handshake deals. All contracts should be committed to writing – even if it’s a simply one-page agreement setting forth the most basic terms, like price, scope and timing.  In particular, when dealing with change orders, it is especially important to get everyone’s approval in writing.
  • Be sure to have key customer contracts reviewed by counsel, in order to help you understand the relevant provisions. It is also best to hire legal counsel for, at a minimum, reviewing and/or drafting of custom deal contracts, settlement agreements, employee handbooks, document retention policies, sexual harassment policies, and non-compete agreements.
  • Be sure to have counsel review your company’s standard contracts every 2 to 3 years.
  • Save only what is important, such as contracts, loan documents, key documents underlying contracts and relevant negotiations, proof of payment, calendars, and tax information.

Important note – If you are anticipating business litigation, you must implement a litigation hold (also known as a preservation order or hold order).  Once you know of the existence of a dispute or even a potential dispute, save all information. The loss of relevant evidence because of failure to institute a litigation hold can result in negative sanctions against you by the Court in any related litigation.

3 – Protect Yourself: Review your insurance, business formation and employee classifications regularly. 

Insurance isn’t a popular topic of conversation, but it is an important aspect of risk mitigation especially in the construction industry. Review the following points to help ensure your business is accurately covered.

  • Make sure that all current policies are correct and appropriate for your organization.
  • Investigate your options with multiple brokers.
  • Determine if the insurance company you are working with focuses on your niche business needs. Are they industry-specific to you?
  • Understand your potential need for multiple types of policies, including general commercial liability, errors and omissions, auto, property, workers comp, product liability, and other riders/endorsements.
  • Understand the obligations you owe to your insurance company, such as notice requirements, providing documents and cooperating fully in any investigation. Don’t settle with the other side without first getting your insurance company involved if you expect your insurance company to contribute funds toward the settlement.

Business Formation – Occasionally, business owners are surprised to learn their business structure is not aligned with their type of work. To help minimize liability, you should engage counsel to help determine the appropriate corporate entity for your business. You will also want to keep corporate records, annual reports and minutes if your business formation requires it. Make sure to follow all the formalities of your business structure in order to ensure protection from personal liability. And don’t commingle funds or use the company bank accounts as your personal piggy bank!

Employee classifications and wage issues – The Fair Labor Standards Act and the US Department of Labor (DOL) have established strict criteria for determining how your employees must be paid. On January 1, 2020 the DOL announced an updated overtime and salary level threshold. It’s important your company stays up-to-date and adheres to all labor laws.  Unfortunately, many employers (especially in the construction industry) haven’t correctly classified their independent contractors and employees or are engaging in “banking” of hours that directly violates the overtime laws. Often employees are thought to be exempt from receiving overtime pay when they actually should have non-exempt status and be paid 1.5 times for any overtime hours earned each week. Payroll errors can lead to potential lawsuits (including class actions) from either past or present employees.

To learn more about business litigation and how you can proactively protect your construction business, you can contact us here or call us at 920-996-000.

SCAM ALERT: Payment Fraud Warning

It is no secret that schemes and scams designed to fraudulently separate you from your money abound.  Every day it seems we learn of new and creative ways criminals have devised to defraud innocent people. Sometimes the schemes are brand new, sometimes they are recycled.  Whether new or old, however, they can hurt the people who fall prey to them.

Recently, we have learned that banking institutions have seen increased activity surrounding a fraud scheme that has been around for a while.  You may be aware of this particular scheme, but we believe it can’t hurt to remind you to be vigilant and use best practices to protect yourself from fraud.

Here’s how the scam plays out.

You receive a fraudulent email or letter disguised as one of your current suppliers.  In the communication, the “supplier” informs you that they have recently changed their payment processes or their banking relationship and provides new wiring, ACH or other payment information to be used on all future orders.  The communication seems entirely legitimate, so you direct your accounting department to input the changes and your next payment is made accordingly.  Unfortunately, the criminals now have your money and it will be withdrawn from the account before you catch on and can get it back.

How you can protect yourself.

ALWAYS double-check directly with your suppliers BEFORE you change any information in your company’s payment system.  Make a phone call directly to a trusted contact at your supplier to confirm whether the communication and new payment instructions are legitimate or not.  A phone call to a direct contact is better than email.  Email can be hacked and/or redirected.  A phone call will take only minutes but will provide you with significant protection against scams.  It will also signal to your suppliers that you are vigilant and care about your relationship with them.

Long story short: Do NOT make any changes to how you pay your suppliers or vendors until you first confirm with them that the change of payment instruction is legitimate.

Fraudsters often target businesses, trying to steal money or personal information. Make sure your business is taking proper steps to avoid scams. Employee education and cyber security are paramount  for defending your business from fraud.

 

About the Author

Heather Macklin

Heather J. Macklin is an experienced corporate litigator. She has spent her legal career helping businesses and business owners find practical and economic resolutions to legal disputes. You can learn more about Heather here.

Three Common Myths about HR and the Attorney’s Role

Most people understand the attorney-client privilege is a rule that protects the confidentiality of communications between lawyers and clients. This rule encourages transparency and allows an attorney to provide effective representation. But, not everyone understands that there are limitations and that the rule may be applied differently depending on a specific situation.

The attorney-client privilege rule can be especially complex in the world of human resources. There are some common misconceptions among employers. The following can help clear up some of the confusion.

Myth Since the head of our HR department happens to be an attorney, any of her notes from internal investigations will be protected.

Reality – Not exactly. Employers sometimes believe that having an attorney as the head of their HR department will protect their internal investigations from being disclosed. However, the privilege only applies to confidential communications between attorneys and their clients made for the specific purpose of obtaining or providing legal advice. This rule can not be applied to documents that were created in order to comply with a company’s policy or procedure. So, there is a chance that internal documents prepared by the HR department may be disclosed during litigation procedures.

Myth – My company has taken the appropriate steps to ensure that HR issues within the company will not become public knowledge.

Reality –Probably not. While thorough planning is essential and can certainly help limit your company’s liability, it still can’t guarantee that any documents created during an internal investigation will remain private. You’ll want to keep that in mind while creating all communications. Information from interviews that took place during a discrimination or harassment investigation could very well be considered ‘discoverable’ should there be a subsequent lawsuit.

Myth – Since my company has invested in knowledgeable and experienced HR professionals, hiring an outside attorney is unnecessary.

Reality – The best way to protect against legal claims is to hire a lawyer. Employers should keep in mind that discrimination and harassment suits are on the rise. But, when you hire an attorney for the specific purpose of providing legal counsel surrounding HR concerns, then all those communications between your company and lawyer would not be allowed to be disclosed.

The relationship between an employee and employer is heavily regulated and often difficult to navigate. Employment attorneys can help make sure you are in compliance with state and federal laws and often stop matters from escalating. To learn more about how an attorney can help protect your company’s best interest, visit https://epiphanylaw.com/contact-us/

Sarah Coenen, Employment Attorney

About the Author

Sarah M. Coenen is an experienced business attorney with Epiphany Law. She focuses her practice on employment services including: non-competition agreements, employee handbooks, hiring and termination. Sarah enjoys educating and empowering her clients to help them achieve their personal and business goals.

Epiphany Law Welcomes Attorney Robert Macklin

Appleton, WI – Epiphany Law, LLC, is pleased to announce that Attorney Robert Macklin has joined the firm. The addition of Robert Macklin is due to the firm’s ongoing growth and commitment to provide valuable service offerings to its clients.

Rob brings over 20 years of experience advising clients of all sizes, both domestic and international on complex business matters. Serving as General Counsel to several successful private and public companies, in industries including manufacturing, medical, telecommunications, healthcare and consumer goods has given Rob knowledge on what a business needs to be successful. In addition, Rob took time from his legal career to serve with the US Navy as Part of Operation Iraqi freedom, running intelligence operations for SEAL Team 8.

Epiphany Law’s founder, Kevin Eismann said, “The volume and complexity of our transactional work continues to grow. Our clients can benefit tremendously from the vast business experience that Rob brings to the team.”

As an experienced lawyer, small business owner and Department of Defense certified interrogator, Rob’s diverse skill set can help business owners mitigate risks and promote business success. More specifically, Rob focuses on the areas of proactive law, commercial contracting, mergers and acquisitions, compliance and investigations, business processes, strategic governance and capital formation, and international law.

 

Attorney Robert Macklin

 

Rob earned his J.D. from the one of the top law schools in the country, the University of Chicago Law School and his undergraduate from UCLA. To learn more about how Rob’s expertise can benefit your business, please contact us.