California Business Formation Laws

Many clients come to my office, and they have a stack of papers from a letter writing campaign between their prior council and another attorney or the other side where they say, nothing came of this. I spent hundreds if not thousands of dollars and all that happened is they wrote letters back and forth. Maybe there’s an agreement reached, but everything fell through. To me, the saddest thing about that is that there was no lawsuit filed. If there’s a lawsuit filed with a backstop of litigation and with the thundering cloud of a trial moving and advancing steadily forward, settlement is a beautiful thing because settlement, with that backstop of litigation in place and with the case number in hand, any settlement that’s reached has the forces if a judge or a jury decided it. Without that case number, without the lawsuit, without a filed complaint, you have nothing more than a breach of another agreement. Then you’d have to go in to still in to the lawsuit, still in to the discovery, the depositions, the trial, everything that costs so much and gives attorneys a bad name as far as the expenses.  What I suggest is shoot first, ask questions later. We already know that by the time you, as a client, are in our office, the problem is not resolvable on a client to opposing party level and then an attorney is necessary. For the $435 of hard costs that it costs to file with a State Court, with the $70 that most process servers take to do up to three attempts at the service of a summons and a complaint, the amount of monies have attorneys spend a couple hours drafting a complaint and getting all the other accouterments of documents that need to be filed, that’s the best way to start your litigation. At that point, you have something if you reach a settlement agreement and you propound discovery along with the demand letter for settlement, even if there’s payment plans involved right at the inception. Instead of a defendant lawyering up, often times you can encourage them to enter in to a settlement or a payment plan or the terms that are sensical and make sense for all parties involved. That’s just another example of what we do to manage litigation costs.

By: Attorney Lenden Webb

There are two different attorneys as far as most legal work. There’s transactional, and litigation.  At our firm we focus on litigation. The type of transactional work we typically do is a by-product of litigation. Oftentimes, a client may come to me during litigation and realize that their transactional house, their corporate compliance work, their governance documents are in a state of disrepair.  I’ve been in law suits both on the giving end and on the receiving end of looking down the barrel of an alter ego or a successor corporation liability suit, where there is a piercing of a corporate veil; going into someone’s personal accounts, based on corporate malfeasance. There is a list of about 23 different factors. You could narrow them significantly if you group them together in different theories.  But the courts look at these different factors in ways to pierce the veil, and it’s not a pretty sight. I’ve been in court rooms when judges have granted me the right to go into people’s personal bank accounts for something that a corporation was doing. And I’ve also been on the receiving end, when a client is just doggedly determined to fight to the bitter end for something where there is a significant risk, based on their corporate paperwork and handling.  What I’m getting at here is, even though we’re not a transactional firm, we do have someone on staff who handles and focuses on the corporate compliance work, and making sure that your paperwork is in order before you go to trial; and that things are taken care of and you have a fair assessment of what kind of liabilities you may face individually, even though you’re doing business as a corporation.

By: Attorney Lenden Webb

A big motivator in lawsuits is expense. One of the primary expenses for smaller lawsuits, and when I say smaller lawsuits, I’m referring to something that’s between 50 and a $100,000 or less in sums. The big factor is attorneys’ fees. Attorney’s fees are incredibly expensive. They’re prohibitive. They’re why attorneys have a bad name sometimes, but, to be honest, all the attorney has to sell is his time. And so an attorney deals with your matter for 12 minutes, 6 minutes, 18 minutes, they have to bill somebody for that time. Sadly enough, the clients are at the receiving end. What we do is we make sure that the client gets value for those attorney’s fees, and the time is spent. At the end of the day, these attorney’s fees are noted in a row by row, detailed accounting each month, as far as what you’ve spent and why – what value did you get for it as a client. The explanation is kept that way, not just for your benefit, and also a Dear Diary of what’s happened through the month, but also at the end of the lawsuit there is in many cases either a statute or by contract a provision that someone is going to pay the prevailing party their attorney’s fees – either an insurance company, a defendant, someone else is going to pay. The main kicker there is make sure your defendant or your opposing party is not judgment-proof – either bankruptcy, have they filed bankruptcy in the last six, seven years? Do they have property that has equity in it? Those kind of background research reports are available and those are things we can do during these courses of litigation to make sure that we do our best to predict, because there’s never any assurances, but you want to do your best to predict what’s going to be the outcome of litigation, and if you do win, do you have something more than a pretty piece of paper on your wall, but actually money that’s going to go back in your bank account to refund you the attorneys’s fees you’ve spent.

By: Attorney Lenden Webb

California has at least 58 counties in the whole city of California. Each County has different judges, men and women sitting on the bench and almost all of them are good people who are trying to make decisions possible. By and large though, each judge may have their own peculiar tendencies and may have a little bit of a unique take on the law or some procedural differences that are sometimes noticeable. Even to the point of many local judges in their County court houses have webpages and they have what– instead of just local rules, they have what’s called, “Local-Local” meaning that specific judge’s take on how their court room is to be run. This is completely understandable. We deal with this on a day-in, day-out basis but above and beyond that, the general tendency throughout the city of California is that the California rules of court, the California code of civil procedure, the California civil code, and all the other [?] of the codes that are out there are statewide. So we can practice law in the city of California throughout in any county and have an assurance that the law is going to be interpreted in a similar fashion regardless of which judge you’re in front of. Now, fast forward to right now, in this [?] age with fax filing, with e-mail tend of rulings where the judges are sending their tend of rulings to the attorneys the day before the law of motion matter, to video conferencing, to telephonic appearances. There are so many ways for a client to save their dollar with the attorney not having to drive to the lawsuit and be able to appear telephonically, work on a client’s other matters at the desk or even other client’s matters. There are so many savings that are out there that we’ve been able to take advantage of these savings and practice throughout the State. I think I practiced in upwards of about 18 or 19 different counties in California. I’ve been in trials in San Diego, Orange County, LA County, Riverside County, Kerman, Kings to Larry, Merced, Madera, San Joaquin, San Francisco, Alameda and the surrounding counties all because of the uniformity throughout the State of California. When clients come in and say, “Can you handle a matter that’s in another County?” Well, the fact is I’m going to handle that matter the same that I would handle a matter in any County because California’s laws are statewide and the processes and the technology or such, that you can have conference, that you’re going to be taken care of regardless of which County your matter is in.

By: Attorney Lenden Webb

Clients have often asked me about contingency cases versus hourly cases. They’re something that I firmly believe in because there are risks in both hourly cases and contingency cases. In hourly cases, you have the risk of an attorney, and I’ve seen it time and time again, where attorneys are billing by the hour. They’re racking up a legal fee that is just going to pad their budget. In the contingency land, there’s a risk with clients, because sometimes clients are not telling their attorney all the skeletons that are in their closet. An attorney and their staff may do diligent work on a case, only to find out that there is a fatal flaw in their client’s defense or offense far too late down the road. The law firm has risked their livelihood in order to prosecute or to defend the matter to no avail. So those are concerns on both the contingency side with unscrupulous clients, and on the hourly side with some unscrupulous attorneys. In my mind, from a plaintiff’s point of view, and a plaintiff’s point of view only, you can choose to do a hybrid of the two. This works fairly well for many of our clients, where the client pays a percentage of our hourly rate, and the firm has an interest in the outcome. In this relationship, in my mind, there is a truly mutualistic relationship, where the client has an invested interest, the attorney has an invested interest. There is skin in the game from both sides to make something work, and to make it work as quickly and as rewarding as possible. This is something that I think is under utilized in the legal industry. As long as you’re a plaintiff, or you’re a defendant seeking a recovery in a cross complaint, this can be a very meaningful and sensical way to draft an engagement letter and have a fee agreement.

By Attorney Lenden Webb