Tuesday, August 30, 2016

Requests for Production Under NC Rules of Civil Procedure

In this video litigation attorney Jason McGrath explains Requests for Production of documents (and other items) under the North Carolina Rules of Civil Procedure.


If you are facing a lawsuit in North Carolina please fill out our confidential client intake form for legal assistance.

Friday, August 26, 2016

Why does your Corporation or Company Need a Registered Agent?

In this video, business law attorney Jason McGrath explains what a registered agent is, what it does, and why it's legally required.

This discussion focuses on registered agents in North Carolina, but most of this information will *generally* apply to other states - but you need to study the specifics for your state, of course.


If you are in need of legal assistance for your business in North Carolina, South Carolina, Tennessee, Georgia or Florida please fill out our confidential client intake form.

Friday, August 19, 2016

Legal 'Claim and Delivery' Actions in North Carolina

Claim and Delivery, North Carolina, business, dispute, lawsuit
In this video attorney Jason McGrath explains 'Claim and Delivery' procedures for North Carolina under the rules of civil procedure.


If you are in need of legal assistance with a Lawsuit in North Carolina, South Carolina, Tennessee, Georgia or Florida please fill out our confidential client intake form.

Friday, August 12, 2016

Tuesday, August 9, 2016

New LLC: Maintaining Limited Liability Protection

Part 2 of the continuing series 'Your New LLC'

Once your LLC is formed, it is important to properly operate and conduct business through the LLC to best ensure that you benefit from the biggest legal advantage of the LLC – limited liability protection. In a nutshell, limited liability is what insulates you personally from the debts and liabilities of the LLC. In order to take advantage of this benefit, there are certain things you can, and should, do to give yourself the best chance of separating your business liabilities form your personal assets. While the limited liability protection provided by an LLC is not always absolute, it can be made as impenetrable as possible by proper advance planning and diligent operating procedures.

First, you should have a governing document, known as an operating agreement, that sets out the rules and details of the LLC and the relationship among the members. An operating agreement, similar to a shareholders agreement for a closely-held corporation or a partnership agreement for a partnership, is advisable even if there is only one member or owner of the LLC. It is a private, internal document that can include just about anything the members want, but at a minimum typically includes the ownership and voting percentages, voting rules, methods for operating the business, and the processes for the addition or removal of a member and for dissolving, or ending, the LLC. The operating agreement is the best way, particularly in LLCs with multiple members, to avoid or resolve internal disputes among the members once the business is up and running – it puts everyone on the same page and sets the expectations, rights and responsibilities of each member.

LLC, Limited Liability Protection, Limited Liability Company
You should also maintain a separate bank account for your LLC and should avoid “commingling” of personal and business funds. Basically, don’t buy your personal groceries with the LLC debit card and don’t deposit checks made out to the LLC in your personal bank account. Good bookkeeping is also important. Consider hiring a bookkeeper or accountant if you are unable to or not have the time to do so yourself.

Additionally, it is important to hold yourself out to the public as doing business through your LLC. Try not to let your personal identity and the identity of the business become interchangeable or appear as one-and-the-same. This can lead to a court decision that you are not entitled to limited liability protection and potentially lead to a judgment involving the personal assets of the members. So make sure all contracts and agreements are with your LLC and not you personally, and be certain to always execute or sign contracts and agreements in your “corporate” capacity as an LLC member or officer.

In summary, having the proper structure in place for an LLC and treating it like a true entity separate and distinct from its members, such as having a written operating agreement, maintaining a separate bank account, and entering into contracts in the name of LLC, is critical to maintain the main legal reason for forming an LLC – limited liability protection. As such, you should discuss your business goals as well as your own personal goals with your attorney before forming your LLC to ensure that you make the right choices from the start.

In the next part to this series of articles on LLCs, we will discuss licensing and permitting considerations that need to be addressed after you form your LLC.


Tuesday, August 2, 2016

Indemnification in Contracts: Should You at Least Have to be Guilty as Charged?

In my 20 years as an attorney, I have consistently found that indemnification clauses in contracts are among the most negotiated and sensitive contractual issues. I have also found that the law as it applies to indemnification is often misunderstood. This first blog post about indemnification will discuss whether an indemnification agreement requires the party being looked to for indemnification to actually be “guilty” of some omission or wrongdoing, while one or more additional blog posts will discuss the law as it pertains to indemnification. The bottom line upfront is that many parties to contracts do not appear to fully realize that they may owe a duty of indemnification even if they have done nothing wrong.

Let’s start out with a simple example of some indemnification language so that we are all on the same page. “Contractor shall indemnify Company and shall hold Company harmless for any costs, fees, damages, and liabilities incurred by Company because of any claim, suit, or allegation against contractor.” There are a number of things which we might collectively note about the clause above, but for purposes of this article we are going to focus on one of the most important – that pursuant to the plain language, the contractor would owe the duty of indemnification even if the Contractor performed its duties properly and did not do anything to cause the Company’s damages.

contractual issues, business dispute, contractor, business, IndemnificationWhat I have consistently experienced in my career is that the party in the Contractor’s position either simply didn’t know enough to think about this issue, assumed that it had no choice but to accept the language above, or assumed something to the effect of “Well of course we can’t be held responsible if we didn’t do something wrong….” For ease of further discussion, I will refer to this as the issue of “fault”.

From the Contractor’s perspective, having to indemnify without having done something wrong likely seems unfair, illogical, and something being imposed by the “larger fish” in the professional relationship at issue. When the party in the Contractor’s position is my client, I always want an indemnification clause like the one above to be tweaked such that my client does not have the duty of indemnification unless it is shown that an improper act or omission of my client caused the damages for which indemnification is being sought.

From the Company’s perspective, it makes sense and seems reasonable that the indemnification should be owed whether the Contractor is at fault or not. The Company is essentially saying “If we get stuck in some mess through no fault of our own, but rather because of something related to the Contractor, why should we ultimately be financially responsible? We shouldn’t, the Contractor should be.”

I suspect that due to my background as an assistant district attorney and then a litigator focusing on medical malpractice, business, and real estate disputes, it seems much more natural to me that some sort of fault or culpability should be required before someone owes indemnification.

While I, of course, cannot know what other experienced contract attorneys have seen during their careers, in my career I have seen a fairly equal division / frequency between indemnification clauses which include the “fault” provision and those which do not. Whichever one you prefer, just make sure that you and/or your attorneys are at least mindful of this very important issue.