Importance of Corporate Records Most companies conduct their businesses through a legal entity such as a corporation, limited liability company or limited partnership. Why? The primary purpose of doing business through one of these entities is to insulate owners from liability arising out of company activities. For example, if someone is injured as a result of a company activity or product or on its premises, presumably the owners are shielded from personal liability. Nevertheless, the injured person could seek to reach the owners’ personal assets by attempting to “pierce the corporate veil” of the company. Likewise, a plaintiff in a contract dispute can also seek an owner’s personal assets in this manner. In determining whether to pierce the corporate veil, a court generally will not [...]

RIGHTS OF CONTRACTORS IN GOVERNMENT CONTRACT DISPUTES Many companies – particularly in the northern Virginia and Hampton Roads areas of the Commonwealth – provide support to federal government agencies. If your company is one of these, do you know what to do in the event there is a dispute – how to you prepare in advance and how do you proceed after a dispute arises? Like everything with federal government contracting, disputes are governed by federal statutes. In 1978, the Contract Disputes Act (“CDA”) was enacted to set forth procedures to deal with disputes. This CDA process applies to all disputes arising under or relating to a government contract. A federal contractor that has a dispute must follow the CDA's [...]

Use of Confidentiality Agreements Are you in the process of planning the sale of a business unit? Is a consultant ready to advise you on a different marketing strategy? Perhaps you are simply getting ready to have a technician come into your shop to upgrade your computers. The fact is, whenever the likelihood exists that a third party will need to see your company’s secrets or talk to your employees about a proprietary business matter, that party will have access to information that likely needs to be protected. The common way to protect company secrets is by use of a confidentiality agreement. Simply put, a confidentiality agreement is a contract permitting the disclosure of certain non-public proprietary information to a [...]

CODE OF EMPLOYEE CONDUCT Your company’s reputation is one of its most valuable assets and your employees’ conduct – both on and off company premises – will directly reflect on that asset. Accordingly, it makes sense to protect your good name with some simple and straightforward written guidelines. Many assume that most rules of behavior are so obvious that employees should understand and comply with them even without writing them down, but too often varying interpretations and inconsistent enforcement of acceptable behavior versus what the company expects lead to disgruntled employees, and ultimately can lead to grievances or lawsuits. A set of written rules – a code of employee conduct – will help to guide both the manager and employee [...]

Avoid Common Legal Mistakes to Achieve Business Success This article will outline some of the important ways to avoid common legal mistakes that can adversely affect companies. Choose the Proper Legal Entity Operating your business as a proprietorship or general partnership without the liability protection that another form of entity provides can expose you to unnecessary personal liability. Keep Proper Corporate Records Improper record keeping can cause problems with the IRS, hamper your ability to raise equity capital and could result in personal liability by “piercing the corporate veil” of the company. Safeguard Equity Successful owners safeguard their equity by choosing co-owners carefully. If a co-owner doesn’t work out, changing the arrangement can lead to substantial legal fees and costs [...]

ADVERTISING 101 – A LEGAL PERSPECTIVE What is advertising? Wikipedia’s online definition says advertising is a “paid communication through a non-personal medium in which the sponsor is identified and the message is controlled.” Black’s Law Dictionary gives a more technical definition, but all would agree that sales pitches in newspapers and magazines are included in the traditional definition of advertising. The same goes for TV, radio and internet promotions. But what about a business’s message printed on a sales receipt? How about itemized store pricing? Does a price ticket or shelf tag constitute an ad when accompanying the goods offered for sale? The point is that advertising can take many forms - publicity, public relations, product placements, sponsorships, underwriting and [...]

Benefits of a Legal Audit (with checklist) For many entrepreneurial companies, a lawsuit or other legal problem can have catastrophic effects on the continuing viability of the company. Many companies conduct legal audits to minimize the possibility of legal issues disrupting their companies’ progress. As we get near to closing the book on 2010, you might want to consider a legal audit to start 2011 on a confident footing. The legal audit lays the groundwork for the establishment of an ongoing legal compliance and prevention program in order to ensure that the company's goals, structure and ongoing operations are consistent with the latest developments in business and corporate law. A comprehensive legal audit will examine a wide range of issues [...]

Legal Protection of your Brand Establishing a strong brand is pivotal to business success. Protecting that brand is equally important. Yet many small businesses overlook an important first step in securing their brand: trademarks. What Can Be Trademarked? A trademark is any unique word, symbol, name or device used to identify and distinguish the goods of one seller from the goods of another--think Nike's swoosh, for example. A trademark allows the seller to protect what's trademarked from use and/or misuse by competitors while building brand loyalty among repeat customers. Trademarks also help prevent confusion or manipulation of consumers, who come to associate distinct attributes--in particular, quality--with a distinct brand. From a branding perspective, the following are assets that can be [...]