Arizona Business Laws

I’m Beth Cohn. I’m an attorney at Jaburg Wilk, and I work in the area of business transactions.

How Do I Prepare to Sell My Business

What people need to do first is to determine whether they have a buyer for their business. And a lot of times they’ll come in and they’ll say, “I want to sell my business,” and I’ll say, “Who are you going to sell it to?” And they don’t really have an idea of how to go about finding a buyer.

Can’t Find a Buyer

Sometimes they will sell their business, and other times they can’t find a buyer, so what they look at is that they look at the possibility of children coming into the business. Or they sometimes look at the possibility of employees buying their business.

How Should I Transfer Ownership to My Children

Sometimes what they’ll do when they’re transferring to their children is that they may sell interests in the business to their children, and what the parents will do is that they will decrease their own compensation so that what they’re getting is payments for their business interests instead of getting paid salary. So that works out really well, and it creates the cash that the parents need, and it gives the children the ownership in the business.

What Are My Options Outside of Family Members

The two choices are to try to find a buyer during their lifetime so that they can at least get the liquidity from the business and enjoy that part of their efforts and labor. Or after they die it’s sometimes very difficult to sell the business, because when the key person dies a lot of times the value of the business goes down significantly.

By: Beth Cohn

Hello, I’m Michelle Lombino, a partner at Jaburg & Wilk, and a business lawyer and certified understanding-based mediator.

Having a Positive Mind

Frequently when people are entering into deals, the positive mindset dominates. They’re very eager, they’re very excited to get the deal done. They’re willing to compromise with the other party. But at the same time– oftentimes that is, they will rush through things they don’t want to confront or address issues that they fear might derail their deal.

It is fashionable to tap the virtues of the positive mind; and the positive mind is beneficial. It focuses on what works, on results, it’s action oriented. But if the positive mind dominates, parties may be easily fooled. They may not consider the risks or the potential pitfalls of a problem. Over the years I’ve been involved in many a litigation involving Ponzi schemes, and I’ve thought that those Ponzi schemes might be the result of the positive mind dominating.

Having a Negative Mind

Yes, at its best, the negative mind sees the risks and potential downfall of a situation. However, taken to its extreme, the negative mind can lead to anger, intolerance, and a sense of frustration. Many a settlement negotiation has fallen apart because the negative mind has predominated.

Changing Your Mindset

Yes, first by recognizing the benefit of using both the positive mind and the negative mind, and using both approaches. And second, by cultivating a neutral mind that can consider both what could go right and what could go wrong, and from that place deciding the best approach.

By: Michelle Lombino

First Meeting With Attorney

I’m Neal Bookspan of Jaburg Wilk. I’m an attorney who helps businesses and business owners manage their legal risks. The first meeting between a new client and an attorney is very important. To prepare for that meeting, it’s always good if the potential client not only spends the time to outline their issues and know the facts and issues that they’re coming to the attorney about. But then to not only prepare the documentation or bring the documentation, but to actually review their documentation while they’re outlining it. Because the more that they remember and the more that they know, the more successful that first meeting can be in figuring out whether they have a situation that the attorney can help them out or not.

By: Neal Bookspan

Hi, I’m Kraig Marton and I do employment law here in the firm.

Why do you call employment law alphabet soup?

Employers have to know so much when they’re engaged in the field of employment law. And there’s so many acronyms that are used that just learning them becomes difficult. There’s things like FMLA. There is USERA. There is COBRA. There’s HIPAA. One can go on. Now there’s the  ACA, some call it Obamacare just keeping track of the initials for the laws is hard much less keeping track of the actual laws that govern the employment relationship.

Which types of employers are more susceptible to get sued?

What I find is that an employer with (50) to (100) employees – who’s grown fast because it was a family run business – are those who are most likely to get sued. And the reason for that is, they grew fast and the controller or the sister is handling the HR functions instead of a HR professional. And so what happens is that if you’re not familiar with all of the laws that govern employment law, you’re going to make a misstep. You know the cost of a lawsuit these days is tens, probably hundreds of thousands of dollars to defend when an employer gets sued. And it’s a no-win proposition for the employer because if the employer loses, they not only have to pay the other sides attorney’s fees, they also have to pay whatever damages the jury assesses. On the other hand, if the employer wins, almost for sure, they don’t get back their attorney’s fees nor do they get back any real benefit other than vindication. And so what occurs is the cost of a lawsuit can be tremendous in administrative cost, in financial cost, and just in morale. And so if an employer pays attention to employment law in advance, and does things right, and follows the law, and treats employees fairly, they’re not going to get sued. Proactive is the way to go.

By: Kraig Marton

About Donald Hudspeth

The Law Offices of Donald W. Hudspeth. The business of our firm is business.  We started the firm in 1992 after the large law firm that I worked for had dissolved. And because I had prior business owner experience, I decided to start a firm and target business owner plans. The business of our firm is business. Only practice area is business law. That includes transactions and litigation. We do start ups. We do contracts of all kind both locally and internationally. We also have a first rate commercial litigation department.

I think one fundamental advantage that we had over other business law firms is the fact that we have been on the other side of the desks as business owners before we became attorneys. That gives us hands on real time practical experience on what it is like to run a business.  The Law Offices of Donald W. Hudspeth. The business of our firm is business.

By: Donald Hudspeth

My name is Neal Bookspan. I’m a partner at Jaburg and Wilk. I help my clients manage their legal risks in the area of litigation, transactional work, and creditor’s rights.

How do you approach advising businesses or business owners about the legal risks they face?

I try to help my clients manage their legal risk. I consult with them on all aspects of their business and legal issues. This can include their employees who are both an asset and a burden, the contracts they have with customers and vendors, insurance issues. In doing this, I talk to them about what they’ve got in place, documents they could need, documents they have that might need to be revised, and try and figure out whether there’s something I can help them with, or possibly one of my partners can help them with because of the various specialties that we have within our firm.

What types of legal risks do businesses or business owners face?

Business owners face all kinds of legal risks. One of the initial things that jumps out usually is the risks relating to employees. In many businesses, they have a lot of confidential or trade secret information. It could be just the processes they use to work or their customer list. In looking at these items, a lot of times they’ve not put documentation in place to protect them if an employee leaves or is terminated. So a lot of times, we’re looking at how can we do things to help protect the business owners in the event that something does happen.  What we live in is the hypothetical world of the what ifs and so we want that when it comes to the real world and the reality of what the employers have to deal with, that they’re able to have the best position to maintain their business, and make sure people like former employees are not trying to take their business from them.

By: Neal Bookspan

My name is Neal Bookspan. I’m a partner at Jaburg and Wilk. I help my clients manage their legal risks in the area of litigation, transactional work, and creditor’s rights.

What is an Alternative Dispute Resolution?

Here in Arizona, our superior state court has an alternative dispute resolution department. And what that is, it’s about trying to get cases resolved in some manner.   When it comes to state court it involves settlement conferences but it also can mean mediation, arbitration, and then there’s a whole bunch of different variances of these type of situations. And what it is, is it’s a method for parties to try to take control of their disputes and get them resolved in a manner that is hopefully more efficient, less expensive, and lets them move on in their business.

What are mediation and arbitration?

A lot of people get mediation and arbitration confused. Mediation is where you use a neutral third party to help resolve or settle a dispute. It would also be referred to as shuttle diplomacy. Usually parties are put into separate conference rooms and the mediator shuttles between these room trying to help people resolve their disputes.   Arbitration is where you use a third party to serve as a judge. These people usually are retired judges or a very experienced practicing attorney. And what they do is they actually serve as the judge. It is a much more informal proceeding. It is usually held in a conference room and – while it has all the seriousness of a real trial in front of a judge, and the same results – it usually can be done in a manner that will make it happen faster than you can get to trial in court, hopefully, less expensively. And they’re also other possibilities including making it a binding arbitration so that no one can appeal and there’s finality. Which even when parties aren’t happy with the decision, it at least allows them to move on and move forward from the dispute.

By: Neal Bookspan

Can an Employer Require a Drug Test?

My name is Kraig Marton, and I practice employment law here at Jaburg & Wilk. You know, an employer can require drug testing. In fact, an employer may have a duty to require drug testing because the employer has an obligation to make the workplace safe to the employees, to customers, and to anyone else who comes there. Maybe. An employer generally should have what’s called reasonable suspicion in order to require a drug test, although if an employer wants to randomly drug test, and it’s done randomly and uniformly, an employer could do that too. If an employee is told to take a test and they think they’re going to pass it, they probably should take the test. If an employee thinks they’re going to fail the drug test, they need to think carefully about why that is.

What if You are Required to Take a Drug Test?

If an employee is going to fail a drug test, possibly they should take it anyway, and turn themselves in for treatment. Many employers are humane, and will deal with the issue, allow the employee – with monitoring and treatment – to continue working.

Employer Protocol if Alcohol/Drugs Use is a Problem

One thing an employer should do is adopt a drug policy. There is a statute in Arizona that basically gives an employer what’s called a Safe Harbor from lawsuit if they have a policy and they follow it, so if an employer thinks that there is a problem with drugs or alcohol in the workplace, again, they have a duty to do something about it. They should adopt a policy followup, and occasionally a drug test. Drugs and alcohol have become a problem, and have been for many years, but many see an increasing problem in the workplace. It costs productivity, it costs time, it costs energy, it costs money, and drugs and alcoholism are a disease that needs treating, so I hope that if somebody has a problem, that they seek treatment. And I hope, if you’re an employer, that you’re humane with how you deal with the situation.

By: Kraig Marton

If I Won my Case, Should I Worry About an Appeal?

Hi. I’m Kathi Sandweiss at Jaburg & Wilk. I’m an appellate lawyer here. Congratulations on winning, first of all. But if your opponent appeals, you are going to have to defend the judgement. By defending the judgement, what we’re talking about is we need to tell the Court of Appeals that your trial judge didn’t make any reversible errors. The process as the appellee is simpler. It basically involves only one brief as opposed to the two briefs that the appellant would have to file, so there would be an answering brief that’s based completely on the record that was presented to the trial court. And at that point, we’re telling the Court of Appeals that, based upon the evidence presented, the fact finder, either the jury or the trial judge, did not make any errors, and that based upon the legal issues presented, the trial judge made no legal errors, and that’s very important because we’re looking at what’s the standard of review on appeal. If it’s a legal error that the appellant is urging, then it will be reviewed de novo. If there’s a factual error alleged, then the court of appeals will defer to the fact finder, which would be either the trial judge if it was a bench trial or a summary judgement motion, or it would be the jury. In that case, you’ve got a much better chance of it being affirmed on appeal.

If My Lawyer Made a Mistake, Can I Challenge the Appeal Outcome?

There’s a big difference between lawyer mistake and trial court mistake, and a big difference between lawyer malpractice and then appeal. Clients are always coming to me and saying, “I told my lawyer he should look for these financial records, and he never did, and he never presented them.” And clients will say, “I told my lawyer we had a fraud case, but he never raised that issue in the trial court, so can we appeal this?” And what I am telling you is, that’s not an appeal unfortunately. An appeal is based solely on the record that was presented to the trial court. If we don’t have that evidence in the record, we’re not going to be able to present it to the Court of Appeals. What the appellate court say is that they want the trial court to correct its own errors first. Therefore, if an error hasn’t been presented to the trial court, it’s not going to be presented to the Court of Appeals. The Court of Appeals can’t reverse it. What we’re looking for is an error by the judge. I know it sounds kind of funny, we’re looking for judge-made errors, but that’s what an appeal is. We’re looking at a three-judge panel, a higher court reviewing what one judge did in the lower court.

By: Kathi Sandweiss