Rush on Business : Iowa Corporate Lawyer & Attorney : Rush Nigut of Brick Gentry Law Firm : Serving Des Moines, Cedar Rapids, Davenport, & Sioux City

When you buy a business you should consider setting up a corporation or limited liability company (LLC) to buy the business. You should avoid signing any contracts, loan agreements and leases in your personal name. In certain cases you may be required to personally guarantee the loan or other debts but it is still recommended that you place those agreements in the company name. It is often surprising how your start-up documents may impact litigation issues down the road. If those agreements are in the business name it may help you avoid personal liability in the future. One of the main purposes of a corporation of LLC is to protect your personal assets from the risks of the business. It is smart to start right from the very beginning.

Click here for more information on setting up a corporation or LLC for your Iowa business.

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Thirty TouchPlay businesses have sued the State of Iowa claiming the state breached its contract with the businesses when the legislature banned the TouchPlay lottery machines earlier this year. The lawsuit does not request specified damages but the businesses will be seeking millions. Earlier this year five businesses unsuccessfully fought for an injunction to stop the state's ban. Legislators are confident they will again prevail in this latest legal fight.

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If you are interested in buying an existing Iowa business you should take a look at this due diligence checklist provided by Kauffman eVenturing and developed by finance expert Corey Schwartz. Using a due diligence checklist can help you compile the necessary information to investigate a business and negotiate effectively.

For more information regarding the legal issues involved with buying an Iowa business please contact Rush Nigut of Sullivan & Ward, P.C.

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The Iowa Secretary of State's Office is hosting the 1st Annual Iowa Notary Conference on Friday, September 15, 2006 at the Iowa Events Center in Des Moines. This one day conference will cover several topics of importance to Iowa Notaries including:

* Immigration Law
* Health Documents
* Notary Signing Agents
* Electronic Notarization
* Combating Fraud and Theft

More details about the conference will be posted on the Iowa Secretary of State's website later this summer at www.sos.state.ia.us/notaries.

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For over fifty years, the Sullivan & Ward law firm has represented rural electric cooperatives and generating electric cooperatives in the state of Iowa, as well as several electric cooperatives from across the country. Our attorneys, including John Ward and Michael Joynt, have gained national recognition for their expertise in the area of rural electric cooperatives and public utility law and are often speakers for various seminars throughout the country. Sullivan & Ward also represents many telephone and water cooperatives throughout Iowa.

In its capacity as general counsel for these organizations Sullivan & Ward advises companies and their boards on issues of corporate governance, general business functions, employment matters and litigation. The firm has extensive experience with matters unique to electric cooperatives including formation and organization, voting rights, tax issues, FERC issues, RUS programs and other regulatory matters.

Click here for more information concerning Sullivan & Ward's rural electric cooperative and public utility law practice.

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Seattle, Washington lawyer D. Jill Pugh recently wrote an interesting blog post regarding the fact employers are increasingly using Google to find out information about employees and applicants. Employers are able to find out all kinds of information on the Internet including the sorts of information that are illegal to ask in an interview. (Such as age, marital status, whether or not the individual has children, arrest record, value of your home and more).

Pugh raises a valid point that it would be difficult for an applicant to prove that the decision maker did an online search or that the information influenced the decision. She recommends that job seekers should keep tabs on their online "profile" - especially if it contains embarassing or false information.

To find out more please visit Pugh's Employment Law Blog and the article she cited from Business Week.

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Iowa Secretary of State Biennial Report Revocation Deadline

If you have not filed your biennial report with the Iowa Secretary of State the revocation deadline is fast approaching. If you fail to comply with filing the report your Certificate of Authority to operate your business in Iowa will be revoked on August 7, 2006. This year limited liability companies are required to file biennial reports for the first time. Many unsuspecting LLC owners may not be aware of the requirements.

If you have any questions please make sure to contact the Iowa Secretary of State's office. The online filing method is easy and less expensive. It costs only $30.00 to file the online report as opposed to $45.00 for the paper filing. You will need a corporation number and a pin number for the online filing which can be obtained through the Iowa Secretary of State's office.

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Your (Law Firm) Management Sucks

I recently read Your Management Sucks by business consultant Mark Stevens. It's a great book that I highly recommend. (It is the sequel to Your Marketing Sucks which I also recommend). In his latest book Stevens advises that you should declare war on your business management philosophy. Here is his seven-point declaration of war:

1. Unleash the Power of a Personal Philosophy: Don't just rock the boat of your business, be prepared to capsize it.

2. Challenge the Oxymoron of Convential Wisdom: The so-called smart thing is all too often stale thinking masquerading as truth.

3. Take a Good Look in the Mirror . . Do You See a Leader? The worst damn thing in the world you can do is copy a success. Be an original.

4. Develop Your Personal Killer App: Become greater than the sum of your parts.

5. Unleash Your Manhatten Project: Implement the plan that will change your world and life.

6. Capture Ideas with a Butterfly Net: Seek out what you need to know and use it for personal growth.

7. Apply C+A+M, the Universal Equation for Perpetual Growth: Win customers and make them deliriously happy.

So that got me thinking. How do lawyers rate in this equation? Do lawyers and law firms suck?

Does your law firm:

Return phone calls promptly?
Send personal notes to thank clients for their business?
Give clients anything to acknowledge their loyal patronage?
Invite your clients to anything that doesn't involve charging a fee?
Do anything fresh, powerful and unique?

If not, your law firm missing the opportunity to stand out. So take Mark Stevens' advice - declare war on how you practice law today. For more information about Mark Stevens and his books you can visit his Web site at www.msco.com.

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Rush on Business Included in the Taxonomy of Legal Blogs

Rush on Business was recently included in the Taxonomy of Legal Blogs. This worthwhile and ambitious project is the creation of Ian Best who is a recent graduate from the Moritz College of Law at Ohio State University. Ian's work was recently mentioned in an American Lawyer article and has obtained significant notoriety.

Rush on Business is listed as a speciality blog in the Taxonomy of Legal Blogs under business and corporate law.

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Six Questions to Consider Before Firing an Employee

You should consider the following in deciding whether to fire an employee:

1) Do you have documentation of the employee's poor performance and/or poor behavior? What is in the employee's personnel file? You should also conduct a thorough investigation of the events in question including the employee's version of the events. Consider whether a judge or jury would find the employee's version plausible.

2) Does the employee deserve to be fired? Again, consider whether a judge or jury would find it reasonable for the employee to be fired.

3) Is the decision to terminate the employee inconsistent with the previous actions of the company? Review whether the employee recently received a favorable performance review, promotion or pay increase. If so, is the current issue severe enough to warrant termination?

4) Have you followed your progressive discipline policy? If you have a progressive discipline policy the judge and jury will expect you to follow it unless the employee's actions are so severe at to warrant immediate termination. You need to make sure you follow your handbook in these instances. Judges and juries want to know that you are being fair.

5) Is the employee a member of a protected class or recently made complaints? Consider whether the employee is 40 or over, a woman, minority or in another protected class. Did the employee recently make any complaints where you could be accused of retaliation if you fire the employee?

6) How have you handled similar situations in the past? Consider whether you have terminated other employees for similar infractions. Are you consistent? Make sure you treat employees in a protected class in the same as employees outside the protected class.

For advice in a particular situations where you are firing an employee please be sure to contact your lawyer.

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Review Study Before Purchasing an Iowa Franchise

In our last blog post we discussed the fact that there is no longer any validity to claim that franchised businesses are less likely to fail than independent businesses. Now the International Franchise Association (IFA) President recommends that all potential franchisee review a comprehensive study profiling the franchise industry.

For more information concerning the study go to the Franchise.org Web site and click on the Profile of Franchising before purchasing an Iowa franchise.

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I recently read an article in Trial Magazine entitled, "Litigating Fraud Claims for Franchisees" by lawyer Jeff Haff of Minneapolis. It is an excellent article. One of the more interesting points in that there is no validity to the claims that franchised businesses are less likely to fail than independent businesses. In fact, many franchisors stopped making this claim after the International Franchise Association (IFA), an organization compromised of mainly franchisors, issued a letter urging members not to use this sort of data to sell franchises. You should beware if a franchise salesperson still attempts to use this claim in order to sell a franchise.

Click here to see the full text of the IFA President's letter regarding the lack of validity to claims franchised businesses are less likely to fail.

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Iowa Corporate and Business Attorney to Write "The Entrepreneur's Guide to Starting a Business in Iowa"

Des Moines,Iowa corporate and business attorney Rush Nigut is currently working on an online handbook entitled, "The Entrepreneur's Guide to Starting a Business in Iowa". The handbook will appear on the Web site of Sullivan & Ward, P.C.(a law firm located in West Des Moines, Iowa) and the rushonbusiness blog. The guide will aid entrepreneurs in the formation of their Iowa business and will include the following information:

1) Choosing a structure and forming your business;
2) Iowa state requirements for officially forming your business;
3) Nonprofit corporations;
4) Selecting your business name and how to protect it;
5) Iowa state responsibilities for maintaining your business entity;
6) Key terms and information for your business;
7) Iowa tax information;
8) Small Business Development Center information;
9) Financing your Iowa business;
10) Duties as an Iowa Employer;
11) Writing a business plan;
12) Human resources management;
13) Insurance issues;
14) Iowa state licensing issues;
15) Governmental regulations;
16) Environmental issues;
17) Successfully marketing your Iowa business.
18) Iowa Business Resource Links;

Click here for more information if you are interested in forming an Iowa business entity.

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U.S. SUPREME COURT LIMITS WHISTLEBLOWER RIGHTS

A recent United States Supreme Court ruling limits protections for government workers who blow the whistle on official misconduct. New Justice Samuel Alito cast the deciding vote in the 5-4 decision.

Critics have said the ruling silences millions of workers who fear retribution for reporting corrupution or problems with government preparedness.

Supporters believe the ruling will protect governments from frivolous lawsuits filed by disgruntled whistleblowers.

The ruling was also the first sign of a shift in the Supreme Court's balance since the departure of Justice Sandra Day O'Connor. Last year, O'Connor wrote an opinion encouraging whistleblowers to report sex discrimination in schools. The decision in the most recent case split along traditional conservative-liberal lines.

In the ruling, Justice Kennedy said that exposing government misconduct is important but he rejected the notion that the First Amendment shields from discipline the expressions employees make pursuant to their professional duties.

The ruling overturned an appeals court decision that said Los Angeles County prosecutor Richard Ceballos was constitutionally protected when he wrote a memo questioning whether a county sheriff's deputy had lied in a seach warrant affidavit. Ceballos had filed a lawsuit claiming he was demoted and denied a promotion for exposing the lie.

Kennedy said the prosecutor's superiors could discipline him if they thought the memo was inflammatory. "Official communications have official consequences, creating a need for substantive consistency and clarity. Supervisors must ensure that their employees' official communications are accurate, demonstrate sound judgment, and promote the employer's mission," Kennedy wrote.

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A Des Moines Business Record article discussed the growing number of franchises in Iowa. The article also discusses some of the pros and cons of franchising. A critic of franching described it as "indentured servitude by contract". He stated that some franchisees have a tough time continuing in the business after the end of the franchise relationship. While the criticism does have some validity most franchises are agreeable to extending the franchise beyond the initial term if the franchisee is not in default.

The pros of franchising include access to a network of similarly situated business owners. You can also gain market share quickly with an established name. Many frachisors will also provide marketing and management support.

The key is to thoroughly investigate any franchise opportunity. You need to talk to as many franchisees as possible to determine if the franchisor will keep their word. I usually tell clients to keep talking to franchisees until you hear something bad (that way you can avoid mistakes and get an honest assessment of the opportunity). Review the UFOC and franchise agreement carefully. It is a good idea to have the UFOC and franchise agreement reviewed by an experienced franchise attorney. A franchise is a substantial investment so do not take the decision lightly.

Click here to read the franchising article at The Des Moines Business Record's Website.

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SPAMMER TO REINVENT HIMSELF: MOVIE TO FOLLOW?

I recently read an article about the The State of Texas and Microsoft filing a lawsuit against one of the world's worst purveyors of spam, Ryan Pitylak. Pitylak apparently admitted to sending out 25 million spam emails a day at the height of his business operation. Pitylak was fined $1 million and has been forced to sell his house and BMW. Things would not seem to be going his way, right? Not so fast.

In taking a page out Frank W. Abagnale's book (you remember the movie, Catch Me If You Can)Pitylak is reborn as an anti-spammer and is offering is services to Internet companies so they can stop folks like himself. If he's lucky maybe there will even be a movie made about him.

Only in America.

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BIG BROTHER IS WATCHING

Tech companies are getting ready for a big fight. The Bush administration is calling for Internet and telephone companies to keep detailed records of customers' online activities for a period of at least two years. Frankly, that is scary.

The government wants more than just terrorism and child porn searches. According to the experts the government is saying keep everything on everyone and we will sort it out later. Companies such as Google and Qwest have been resistant to such requests. I hope other companies will follow suit.

In my opinion, the chances of exploitation are considerable. Fighting criminal activity and terrorism is one thing but opening up everything to the government is going too far.

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It is a common misperception that franchise agreements are not negotiable. Often the franchisor will negotiate on certain terms and conditions. You may, however, run into a franchisor who will not negotiate the terms and conditions of its agreement. Is those instances should you still hire a lawyer to review the agreement? The answer is . . . (you probably guessed my response) yes.

Even if the agreement is not negotiable it is important that you fully understand your legal rights and your responsibilities under the franchise agreement. Most franchise agreements contain a significant amount of legalese that may be difficult for non-lawyers to understand. Further, there are important franchise laws in Iowa which you should become familar with to help you deal with a franchisor. (See Iowa Code 523H) Some of these Iowa laws are pro-franchisee and may be particularly helpful in the event you have a dispute with a franchisor. A lawyer can help you understand these laws.

An experienced lawyer who reviews franchise agreements and Uniform Franchise Offering Circulars (UFOC) frequently may also be able to assist you in determining whether the agreement is fair - even if it is not negotiable. The lawyer should be able to tell you whether the agreement and the UFOC complies with applicable laws and whether it contains the information franchisors are required to provide to franchisees.

Click here for more information about franchise UFOC and agreement review services.

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