Archive for the ‘Business Matters’ Category

Contractors Get Good Insurance & Use It!

On January 12, 2012 Author By Seth Smiley

More and more in my everyday practice I encounter issues with contractor general liability insurance (GL). Whether I am defending a contractor or going after one, there tend to be issues with GL carriers. Here are some tips on coverage and others for contractors who have issues.

First and foremost, contractors need to get a solid policy, pay the policy premium form year to year and do not let it lapse. This is typically where contractors get it right. The bad thing is, that most think this is all they need to do in order to be “covered” in the event of a loss or occurrence. Unfortunately, I represent contractors all the time who never take it past this step.

Next, the most important and most often overlooked aspect is notifying the insurer when trouble starts. Every policy has notice requirements within it that must be strictly followed. If you are an electrician and a fire happens on the job, the first person you should call is the insurer and/or your insurance agent and put them on notice. This way you put the ball in the insurance company’s court, and legally they must do certain things in response, such as decline coverage and/or adjust the claim. If you ever have a lawsuit filed against you put the insurer on notice immediately! This is a must, and I’ve had insurers get out of cases the insurance company was not noticed timely.

A lot of contractors do not want to make claims to the insurance because they feel they policy premium will rise. While this may be an end result, the potential downside of litigation is much more harsh than an increased policy premium. Do not be afraid to make the claim because the insurer will not hesitate to deny your claim and/or fight you regarding coverage.

One huge benefit of notifying insurers when problems occur, is the insurers duty to defend. Even if there is the slightest possibility there may be coverage under the policy, the insurance company has s duty to defend a contractor in litigation. This aspect alone could save you thousands of dollars in legal fees. Insurers will defend the insurable interest, so it may be wise as a contractor to get separate counsel to assure that all of your interests will be covered. The counsel you retain personally can work in conjunction with the one provided by the insurer, whereby you get double the legal manpower for half the price.

Finally, most contractors know and all should know that GL policies do not cover bad work or defective workmanship. This would be covered in a totally different policy called builders risk. Courts here in Louisiana have decided on a number of occasions that GL policies do cover damage that is a result of bad workmanship. ie… a GL policy does not cover a poorly installed leaky roof, but it will cover all the water damage the house suffers as a result.

The moral of this story for contractors to not only get GL coverage, but to use it. There is no point in paying thousands of dollars each year for a premium, if you are not going to use the benefits of it. If you think the insurance company is going return the favor if an issue does arise, you will be sadly mistaken.

Wolfe Law Group fights for the rights of owners/contractors who are having issues with insurance companies and other players in the construction industry.

Posted in:     Business Matters, Damages, Insurance  /    /   1 Comment

New California Business? Knowledge is the key…

On July 26, 2011 Author By Seth Smiley

Most attorneys, myself included, take for granted how little most individuals know about corporation law and business entities. The distinctions between the different types of entities that can be created are substantial and have a tremendous legal effect on how the business operates from year to year.

There are four basic categories of business that can be formed by an individual or groups of individuals: 1) sole proprietor, 2) partnership, 3) limited liability company (aka LLC) and 4) corporation (aka Inc.). All of these entities have varying degrees of complexity regarding start-up and more importantly varying degrees of liability toward the persons in charge and who started the entity.

A sole proprietor is the most simple way one can start up a business, yet it can be the most dangerous for the person who starts it because the individual assumes all of the company’s liabilities. If the company gets sued or defaults on a loan then the assets of the sole proprietor is not protected. A sole proprietor is typically when you will have a person’s name, example: John Smith d/b/a Smith’s Painting. Any suit against Smith’s Painting will be against Smith personally. This is not a safe strategy if a person is trying to protect his assets. In the business world, sole proprietors are not the way to grow a strong and thriving business. For more click here.

Partnerships at one time were very popular and they are very easy to start. Partners share liability according to their partnership agreement, which is the framework for how the partnership operates. In the absence of an operating agreement the business code (Title 2 of the California Business Code) has default rules on how this type of entity operates. Here, liability is still personal but it is shared between the partners only involving partnership business. If one partner commits a tort or acts outside of the partnership agreement other partners may not be liable for the faulty partner’s debt.  Over the years there have been many types of variations to the partnership model including, general partnerships, limited partnerships and limited liability partnerships. For more on how partnerships function in California click here.

The next two types of business entities are the limited liability company (“LLC”) and corporation (“Inc”) can be very complex and warrant a much further in depth analysis that this medium can offer. Luckily for all non-lawyers who did not have to sit through hours of class on the subject, the California Secretary of State offers a wealth of information on existing LLC’s and Inc’s but more information on how to start your own business. The glory of the LLC and the Inc is that there is a corporate shield of liability for members (LLC) and directors/shareholders (Inc.). This means that if the entity is sued then the individuals who started have their assets protected. The only way this shield can be breached is through a theory called piercing the corporate veil.

Overall the Inc is much more complex and has many more formalities than does an LLC. The LLC was created in the 1990’s hybrid of the partnership ease of formation and lack of formalities and the Inc’s limited liability status. Today the LLC is vastly becoming the most popular entity formed California and nationwide, for good reason. Unless you plan on starting a complex, potentially large company the LLC is the way to go. Contact an attorney to best advise you on which entity is best for your new business. See Title 1 for Inc and Title 2.5 of the California Corporations Code for more detailed information.

 

Posted in:     Business Matters, Licensing  /  Tags: , , ,   /   Leave a comment

How To Challenge An Unemployment Claim in Louisiana

On January 19, 2011 Author By Scott Wolfe Jr

When an employee is terminated and claims unemployment benefits in Louisiana, the claim is associated with your business’ account and will affect your unemployment insurance rates in the future. It’s no secret that people can abuse the unemployment benefits system. Unfortunately, the burden really falls on employers to prevent abuses.

In Louisiana, unemployment claims are administered by the Louisiana Workforce Commission. Whenever an employee is terminated, the employee will be entitled to receive benefits unless: (i) The employee was terminated for misconduct that makes them ineligible for benefits; or (ii) The employee voluntarily quit the employment.

La. R.S. 23:1601 explains what qualifies as “misconduct” or “voluntary termination.”

Misconduct means “mismanagement of a position of employment by action or inaction, neglect that places in jeopardy the lives or property of others, dishonesty, wrongdoing, violation of a law, or violation of a policy or rule adopted to insure orderly work or the safety of others.”

Voluntary termination requires leaving an employment post “without good cause attributable to a substantial change made to the employment by the employer.”

If a former employee has applied for unemployment benefits and you contend that the employee does not qualify, you’ll need to provide the Louisiana Workforce Commission with sufficient information to justify your position. We’ve created an Avvo.com Legal Guide on this subject, giving you a step-by-step guide on how to challenge these unemployement claims.

Read the Avvo Legal Guide here. We’ve summarized the steps below.

  1. Determine Whether The Unemployment Claim Has Merit:  An obvious first step, as there’s no use in fighting an unemployment claim that is eligible for benefits.
  2. Pay Attention to Deadlines: The deadlines can be super short (10-15 days), and failing to meet a deadline is fatal to opposing a claim.
  3. Document Your Position: The more you provide to support your position, the better chance you have. Send your story to the commission in a letter, but also send statements, emails, photos, videos, documentation, payroll records, etc.
  4. Consider Hiring Counsel: If the going gets tough, you may want to hire an attorney to help prepare your position.
Posted in:     Business Matters, Labor Law  /  Tags: , , , , ,   /   Leave a comment

Guidelines For A Successful Construction Project

On February 25, 2010 Author By Scott Wolfe Jr

Every construction project starts with good intentions and a shared goal:  successfully deliver the project to the owner on time and on budget.   Of course, that’s much easier said than done.

A few groups collaborated to publish some guidelines on how to make this happen.

The Associated General Contractors of America (AGC), the American Subcontractors Association (ASA) and the Associated Specialty Contractors (ASC) published the updated guidelines at http://www.constructionguidelines.org.   Or you can download the PDF directly here.

Contractors of all sizes can benefit from having these guidelines desk side.  Keep them handy, and pick them up whenever you have a question or concern about a certain phase of work.   While it may not answer your problem directly, it may get you thinking in the right direction.

Posted in:     Business Matters  /  Tags: ,   /   1 Comment

Organization: A Secret To Managing Legal Messes…Start 2010 on the Right Foot

On December 28, 2009 Author By Scott Wolfe Jr

Happy New Year.

Did you make it through 2009 alive?  It certainly was a tough year.  Perhaps your legal bills were more than ever before, or maybe you got by without spending much or anything at all on counsel.   In either case, let’s make a resolution to avoid expensive legal bills in 2010.

How do you do it?

Ask an attorney how to avoid legal messes and expensive litigation, and they’ll likely start discussing legal precedent, contractual provisions and other technicalities.   Sure, all of that stuff is important when you’re knee deep in litigation.  By that point, however, you’ll already have an attorney to handle those issues.

What about before you’re knee deep in litigation; how do you avoid legal messes?

The most valuable piece of advice I give clients who ask me how to avoid legal fights and messes is to be organized.

Organization is your best friend when entering a litigation scenario.   It proves your case when you’re right, and it paints a clear picture of your risk and exposure when your wrong or possibly wrong.   And insofar as your contractual and legal duties are concerned, if you’re organized and know what they are, you’ll have a much better chance of fulfilling them.

Now, you’re quite lucky that it’s now 2010.   That’s because the World Wide Web has been improving for over 20 years now, and it’s got a million ways to help you organize your construction business (large or small) in the new year.

Here are a few of our favorite web applications out there that can help you stay organized, and avoid legal bills and messes.

Keep Your Files Organized

Construction projects can have tons of paper exchanged.   Contract documents, job specs, change orders, correspondence…the list can go on.   And, to top it off, all these documents are being exchanged between you and your employees, and your subcontractors, suppliers, their subs and suppliers, the property owner…the list can go on.

How do you manage all that collaboration, and all that paper?

SugarSync:  This works with PCs, Macs, on iPhones and Blackberrys, on just about anything else…and it’s easy as pie.   Add a file to a folder on your computer, and it instantly gets added to that folder on everyone else’s computers.  You can share files or folders with other companies, allowing them to just see the docs or edit / trash it.

The possibilities are endless, and the cost is low.  This program can single-handely change the way you exchange documents on your construction project.

Box.Net:  Like Sugar Sync, this is another document management system to help you organize documents to a construction project and collaborate with others on the documents.  Insofar as features and collaboration are concerned, Box.net gets the edge.  You can sign documents electronically, send documents via fax, edit docs, send docs via postal mail, and more…all within the box.net interface.   Box.net is entirely web-based, however, meaning you can’t just drag and drop a file into a folder on your PC and let it do its magic.  On the ease of use, SugarSync gets the edge.

Notice and Lien Deadline Management

It doesn’t matter if you just work in one state, or if you work in every state.  Notice and lien requirements are confusing, and the effort required to comply with these requirements can feel constant.   How do you keep up?

ExpressLien:  Enter Express Lien.   This company provides two different sets of services.

First, it helps you manage your lien and notice requirements and deadlines.   You put in your project data, and it calculates your requirements and deadlines and displays it to you all on an easy to read online interface.    How much?  It’s free.

Second, if you want, you can order your notice and lien documents directly through Express Lien.   They will take your project data, create the documents, file/send them, and keep track of all the delivery and filing data in your online profile.   Document filing is done for a low flat fee.

Posted in:     Business Matters  /  Tags: , , ,   /   1 Comment
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