A $1.888 million dollar judgment in favor of a Delaware bankruptcy trustee stresses the importance of careful consideration before deleting electronic records from your company’s computer system.  In the case of In re Quintus Corp., 2006 WL 3072982 (Bankr.D.Del.Oct. 27, 2006), the Bankruptcy Court of the Delaware District imposed a penalty of summary judgment against a party the Court found intentionally deleted documents, including electronic records, that would have been harmful to the party’s position in the case.

Electronic Discovery Law Blog has a complete summary of the case and a link to the opinion.

If you are interested in learning more about electronic records retention and discovery issues you may also want to check out the Fios white pages and articles on electronic discovery.  Legal consultant Dennis Kennedy also has an excellent electronic discovery resources page. 

As pointed out in an earlier post, the new federal electronic discovery rules become effective December 1, 2006.   Fed. R. Civ. P. 26, 33, 34, 37, and 45 are being amended to take into account the importance of electronic records in the discovery process.

   

Rush Nigut and Des Moines patent attorney Brett Trout are featured in an article this week in the Des Moines Business Record for their upcoming YBlawg seminar.  According to LexBlog’s Kevin O’Keefe, the seminar is believed to be the first full-day CLE devoted to lawyer blogging in the country. 

The location of the seminar is the Hilton Garden Inn in Johnston on November 10, 2006.  The seminar begins at 8:15 a.m. and is pre-approved for 7.0 hours of CLE including 1.0 hours of ethics.

Click here for our easy online registration and an outline of the seminar.  Just mention that you saw the article in the Des Moines Business Record and you can attend for the early bird rate of $249.00. 

Perhaps often overlooked, the Iowa Secretary of State Web site is an excellent resource for the Iowa start-up entrepreneur.  In the Iowa business services section of the site a business person can find information about a wide variety of topics including:

1.  A guide to the most commonly formed business organization options.  The guide has information on sole proprietorships, general partnerships, limited partnerships, limited liability partnerships, for profit corporations, nonprofit corporations, professional corporations and limited liability companies.

2.  A frequently asked questions section including information about domestic and foreign corporations in Iowa, registered agents and office, trademarks and service marks, trade names, and whether you should reserve a business name before forming your Iowa corporation.

3.  A section on the most common reasons documents are rejected by the office.

4.  A section on the tax aspects of an Iowa business which links to the Iowa Department of Revenue.

5.  A link to the Iowa business license information center.

And of course the disclaimer:  The information provided on the Iowa Secretary of State’s site is intended to give you a basic understanding of some of the various types of entity formation you may choose for your business or your organization. This information is not complete and is not a substitute for the advice of an Iowa business lawyer or any other professional advisor.

The information on the site was provided with the assistance of respected Drake University Law School Professor Matthew Dore. 

In pre-trial rulings, Polk County District Court Judge Scott Rosenberg has thrown out the "loss of innovation" damage claim alleged against Microsoft .  Plaintiffs’ counsel, Roxanne Conlin, had alleged that Microsoft’s market dominance prevented other software companies from developing products that competed with Microsoft’s web browser Internet Explorer and other Microsoft products.

The Judge sided with the plaintiffs’ on seven other pre-trial motions but the ruling on the loss of innovation theory appears to be a significant blow to the plaintiffs’ case.

Thanks to Des Moines Patent Attorney Brett Trout for the heads up.

See also a Des Moines Register article on the ruling. 

Next Tuesday we will elect a new Governor in Iowa.  Will it be Chet Culver or Jim Nussle?

Be sure to check out both sites and examine their positions on Iowa business.  Culver’s site includes a 10 point plan to promote Iowa small business, entrepreneurs and access to capital.  Nussle’s site includes a plan to create jobs and grow Iowa’s economy. 

So examine the issues and make sure to vote next Tuesday, November 7th.

In the last post I discussed incorporation and asset protection.  An often overlooked area of asset protection is estate planning.  My partner, Matt Gardner of Sullivan & Ward, P.C., has started a new Wealth and Estate Planning blog.  In his blog Matt will discuss estate planning, probate, small business planning and asset protection.  Matt’s clients include business owners, farmers and even professional athletes.

Many advertisements on the Internet tout the benefits of forming a corporation.  The first benefit typically mentioned is that a corporation provides "limited libility".  Many of these companies would have you believe that if you form your own company for $99.00 you can magically protect your assets from creditors.  But asset protection is more than that.  It is true that limited liability is a major reason for incorporting your business.  The overlooked issue by many of these online companies is that filing the articles of incorporation is only the very beginning in protecting your assets.

The basic concept of a corporation is that a creditor will not get to the shareholder’s assets unless there is a reason to "pierce the corporate veil".  One reason for piercing the corporate veil is the failure to follow corporate formalities.  This may include the failure to hold shareholder and director meetings, documenting those meetings with corporate minutes, segregating corporate funds from personal funds and the failure to sign documents as a corporate officer.  Managing your small business corporate governance is a key factor in maintaining your corporate limited liability.

If you are interested in learning more about asset protection you may want to check out the Asset Protection Blog.

I recently had some criticisms of a recent article published on Entrepreneur.com regarding advice for business contracts but I still believe the site is an excellent resource for the business start-up and beyond. 

A recent article included the 11 pitfalls of start-up.  The site regularly has information on the following topics:

1.  Starting a Business;

2.  Money;

3.  Marketing;

4.  Franchises (a sales approach to franchises but an excellent place to gather information on the costs and operations of franchises);

5.  Human Resources and more. 

The downside to this site is the number of ads you must sift through in order to read the materials.  But overall, this is a site any entrepreneur should consider adding to their favorites list. 

Do you have a favorite business resource?  I would like to know about it.

Judge Scott Rosenberg delivered yet another blow to Microsoft in the Iowa consumer case when he refused to limit the size of the Iowa class-action lawsuit.  Microsoft had argued the interests of volume buyers were not the same as consumers who made individual purchases.  Microsoft also argued that the plaintiffs could not show "that all class members were injured by the alleged anti-competitive conduct".

Judge Rosenberg ruled that the Iowa Supreme Court already had addressed the issues raised by Microsoft.  Rosenberg said the Iowa Supreme Court has ruled that as long as there was a "common nucleus of facts" the plaintiffs group can be broad-based and include different classes of plaintiffs.

The lawsuit is set to go to trial November 13, 2006.  Microsoft had recently tried to have plaintiffs’ attorney, Roxanne Conlin, removed from the case.  Judge Rosenberg denied that motion as well.

Interested in more about the defense of class actions?  Check out the Class Action Defense Blog.

An often neglected agreement in the formation of a small business is the buy-sell agreement.  Every business that has multiple owners should consider having a buy-sell agreement.  Such an agreement covers how an owner can sell shares and how to value those shares.  Further, a good buy-sell agreement sets forth what happens in the event of death, disability, retirement, divorce, bankruptcy or other considerations. 

Effective buy-sell agreements will generally require a right of first refusal.  This means if one owner finds an outside buyer for his shares the owner must first offer those shares to the other existing owners.  This protects the owners from suddenly running the business with someone they did not intend to have as a partner.

The time to enter into a buy-sell agreement is at the beginning of the business relationship when everyone is excited and getting along.  It is often very difficult to negotiate a deal when something has gone wrong.  Without a buy-sell agreement, owners may end up in court and the business may suffer.  So in the formation of an Iowa business remember to include the buy-sell agreement.