WALK LAW FIRM, PA Named a 2017 Law Firm 500 Honoree for Fastest Growing Law Firms in the United States

We are very proud of the growth our firm has experienced over the last 3-years, but our record only stands because of our tremendous clients, dedicated team and passion for providing practical and timely legal counsel for businesses and their owners.

“Although we have grown quickly, we have worked hard to be measured by  results for our clients, not growth for growth’s sake,” commented Rochelle Friedman Walk, Esq., President of the Walk Law Firm, PA. “Our team has been dedicated to providing excellence in customer service resulting in many happy clients. In doing so, our commitment and focus has taken us on a fabulous journey of growth – both personally and for our business,” she continued.

We are pleased to announce that our law firm has been named a 2017 Law Firm 500 Honoree awarded to the fastest growing law firms in the US. It began earlier this year when we were nominated for our growth, operational excellence and commitment to client service. To our surprise, we were ranked 74th, which was stunning for a firm of 3 lawyers.

A significant area of growth for us has been in advising buyers and sellers of e-commerce businesses, especially Amazon.com, Jet.com, Ebay.com and other well known online retail. We strive to understand the current state of the art and the best methods for transferring, funding and managing the sale of these types of accounts and businesses.

We believe our focus on what we do best has enabled clients and referral sources to stick with us and rely on us. We exclusively represent businesses and their owners with a passion for quality, practical counsel. Whether the project is an acquisition of a new business, the sale of equipment, company agreements, partnership and shareholder agreements or simply practical counsel on how to handle a sticky situation, employment matter or intellectual property license, we are ready and willing to jump in and help.

The Law Firm 500 Award is an honor for our firm to receive and a tribute to our team. We are proud to serve our clients and delighted to be including in this list of growing and dedicated law firms.

As we continue to grow we encourage you to follow our progress, and stay in touch! You can view the full list of Law Firm 500 Honoree firms here: https://lawfirm500.com/award-honorees/

 

Is this Non-Compete Enforceable?

You’ve invested a lot in your business.  It’s becoming successful. You even have trade secrets and know-how that give you a leg-up on your competition. And you have personnel that you have invested time and money acquiring, training and maintaining.  Your confidential information and your personnel are major assets of your business and big reason for your success. As such, you require all employees and contractors to sign a non-compete or restrictive covenant agreement. But, is it enforceable, or are you just wasting time and energy with these agreements?

The enforceability of non-compete agreements (or restrictive covenant agreements) is determined by state law.  Florida has a fairly strong valid restraint on trade or commerce statute (Fla. Stat. Section 542.335).  According to Florida Statute, a non-compete agreement that restricts or prohibits competition during or after the term of employment or engagement is not prohibited, provided that the agreement is reasonable in duration, geography, and line of business.  So, what’s reasonable?

What is reasonable in duration?  For a former employee, agent, or independent contractor, a term of six (6) months or less is presumed reasonable and a term greater than two (2) years is presumed unreasonable.  However, both of these presumptions are rebuttable, which means that the other party can provide factual evidence to defeat the presumption of reasonableness or unreasonableness.  These numbers increase for persons that were distributors, dealers, sellers, and licensees; and they increase even higher for restrictive covenants predicated upon the protection of trade secrets.

What is a reasonable geographic scope?  The geographic scope should not be broader than is necessary to protect the legitimate business interests of the company. For some companies, the geographic scope might be limited to a five mile radius or a small town; whereas, for other larger companies, it might be reasonable to have a nationwide geographic scope.  This will be factually dependent upon the size of the business, the nature of the business, and the type of engagement the company has with the person.

What is a reasonable limitation for line of business?  The line of business prohibited in the non-compete should also not be broader than is necessary to protect the business. The agreement does not necessarily need to be limited to exactly what the employee does; but it does need to be narrowly defined.  For example, a sales person in a pharmaceutical sales company might have a non-compete that prohibits a former sales person from taking employment with a pharmaceutical manufacturing company or distributing company. In this example, it might not be enforceable to prevent or prohibit the former employee from gaining employment with any manufacturing or distributing company, but it might be enforceable to prevent or prohibit the former employee from working for or with specific manufacturing or distributing companies, especially ones with a close relationship.

In many cases, if the limitations relating to duration, geographic scope or line of business are not reasonable, a court will not modify the agreement to make it reasonable, it will simply void the agreement or make the agreement entirely unenforceable, so it is extremely important that you narrowly define these terms when you are drafting your non-compete.

In Florida, the non-compete must be in writing and it also must be signed for it to be enforceable. If the language is simply included in an outdated employee handbook, and it is never signed, a court will not enforce the agreement.

Also, you must have a legitimate reason, a legitimate business interest, in order for your non-compete to be enforceable.  According to Florida Statutes, the company seeking enforcement of the non-compete must be able to show that the non-compete was or is being used to protect one of the following legitimate business interests: to protect (1) trade secrets; (2) valuable confidential business or professional information that otherwise does not qualify as trade secrets; (3) substantial relationships between vendors, manufacturers, distributors, etc.; (4) customer, client or patient goodwill; (5) extraordinary or specialized training.

Any non-compete or restrictive covenant not supported by a legitimate business interest is UNLAWFUL and is VOID and UNENFORCEABLE, so it is extremely important that you have a good reason for using a non-compete agreement.

The Walk Law Firm is available to review your current non-compete agreement in order to help you determine if, in fact, it would be enforceable should you ever need to use it.  Document review and drafting can be handled on a Flat Fee or Fixed Fee basis. To learn more, please contact us at the Walk Law Firm.

This article is not intended as legal advice; rather, it was written for general information purposes only.

 

Sweat Equity v. Money Investors: Who Makes the Rules? [The Golden Rule of Business]

Many years ago, while working as the General Counsel to a large public company going through a Chapter 11 Bankruptcy, I learned that the Golden Rule as we all learned it in kindergarten [do unto others as you would have other do unto you] is not the only Golden Rule when it comes to business. I certainly support and believe in the Golden Rule we learned in kindergarten and try my best to adhere to it, but when it comes to money and business, I have learned that the Golden Rule really is: the person with the gold makes the rules.

In business large and small, there is often reward and equity for those who have a great idea or are the work horses driving success (the “Sweat Equity Owner”). Typically, however, the greatest percentage of equity and, hence, the greatest return in pure dollars, goes to the person who put up the money in the first place (the “Cash Equity Owner”). Once the business gets going, this often leads to resentment of the Sweat Equity Owner and frustration of the Cash Equity Owner.

Not surprisingly, the Sweat Equity Owner often feels like he has worked harder and should be compensated for the hard work and ideas. In addition, the family of the Sweat Equity Owner has started to feel the pain of long hours and missed meals and events, resenting the Cash Equity Owner whose life and lifestyle has not changed at all.

The Cash Equity Owner is frustrated because the project is taking longer than expected to show a return and the Sweat Equity Owner continues to ask for cash, primarily to meet living expenses in the form of  salaries for business personnel. The Cash Equity Owner usually has other investments or businesses and more business experience and wants the Sweat Equity Owner to work differently and take his advice on how to get the work done more quickly so that product can get to market faster. His family (or fund investors) wants to know when they will see a return on investment.

Not to sound like a broken record on the reasons for Business Divorce, but there are some things that can be done at the onset of a relationship to avoid these dilemmas. Too often, when the relationship is formed, there is no substantive discussion of duties, timing for deliverables and exit strategy for the Cash Equity Owner. The conversations are very high level and never transcribed into a detailed agreement. One party calls cash loans while the other considers it equity.

In the last 12 months, I have encountered among other missteps: companies in which the equity was never issued despite cash being infused; standard Bylaws from companies like Legal Zoom were used, but no one ever read or understood what they meant; Articles were filed on www.Sunbiz.org indicating the names of managers, managing members, officers, owners … who were not in fact in the positions indicated and who had no authority to act on behalf of the business; domain names and other intellectual property placed in the name of one owner instead of the business …. This list is hardly exhaustive, but all have led to expensive legal battles between business partners on break-up.

When I get the call, whether as an attorney or mediator, that business partners are seeking to terminate their business relationship, the first step in my analysis is to look at the agreements between the partners.  These documents become the guide on how to proceed. If they have been carefully crafted and reflect the partners intent, often the cost to the business as well as the individuals for navigating the business divorce is emotionally and financially insignificant —- Owners typically know what to expect and time is spent implementing already agreed plans. Without these written agreements or mutual acknowledgment of intent of unwritten agreements by the Owners, the cost in the first days of efforts to separate can be thousands, and at times, tens of thousands, of dollars.

At this point you are probably thinking that I am exaggerating, but in fact, if a lawsuit needs to be filed  in order to keep the business running and make it clear who has authority to act, the effort is significant and lawyer time and cost is high. We start by preparing a complaint seeking injunctive relief and serve it with requests for admissions, production of documents and interrogatories. At times, we demand a receiver be appointed if we are representing the Cash Equity Owner and our client is not ready or able to step in and run the business. We seek emergency hearings to ensure if our client in good faith believes irreparable harm to, or waste of, business assets will occur if action is not immediate.  We often need to include third parties such as the domain hosts or banks to require them to turn over account codes and keys or to freeze assets.

Courts do not like to get involved in daily business activities and if the situation  lacks clarity, the court may appoint a receiver on its own. Domains and intellectual property will need to be be place in escrow; bank accounts will need to be frozen or unfrozen; payroll companies, customers, vendors, employees will all need to be notified as to who has authority to direct activities just to keep the business operating  and attorneys will be stepping into conversations with domain hosts, bankers, customers, vendors and employees…. all while on the clock. By the way, the Receiver will hire an attorney as well and both the receiver and attorney will also be on the clock.

Back to the Golden Rule — needless to say, the Cash Equity Owner often has the gold necessary to stay afloat while the Sweat Equity Owner does not.

Although good friends and family members make great investors because they are trustworthy, life changes and needs change over time. By having a frank conversation up-front and documenting the deal, before money is invested, much of the financial and emotional cost can be minimized on business divorce and friendships and family relations can remain favorably intact. Like a good pre-nuptial, shareholder agreements, operating agreements, and buy-sell agreements, can minimize cost in the future and avoid undue emotional harm. To me, it is well worth spending a couple hours in frank discussion and a couple thousand dollars up-front when investing in a business to avoid a later fight at ten times that expense.

At the Walk Law Firm, we regularly advise clients on these matters and encourage open discussion between owners. We can work as company counsel or as counsel to a business owner in helping businesses sort through these issues.

IP Basics for Start-Ups and Business

When you start a businessintellectual property protection should be a primary part of your start-up business plan.  What intellectually property (IP) has your business developed?  Why should you protect it? And, more importantly, how do you go about protecting the various types of intellectual property that your business owns?  Every business is different and will have different intellectual property considerations, so it’s important to develop a strategy on how your business intends to protect its unique inventions, innovations, and information. It is important to remember that your trade name, ideas,  concepts and customer lists are important assets of your business — assets that need protection.

 

What is your intellectual property?

Intellectual property refers to creative and innovative inventions, marks, designs, or works of authorship that you or your business independently created.  Ask yourself this question, “If you gave this product, information, or design away, could it hinder or prevent you from competing in your industry’s market; would it prevent or impact your profitability?” If the answer is yes, then it is more than likely some form of intellectual property.

 

There are several different types of intellectual property that your business should consider when taking an inventory of its IP for business planning purposes, including: (i)patents, or new or improved inventions, including products and processes; (ii)trademarks, or logos, brands, and designs; (iii) copyrights, or unique works of authorship, including software, articles, books, brochures, artwork, music, etc.; and (iv)trade secrets, or formulas, patterns, compilations used in a business to gain an economic or commercial edge over competitors.

 

In the early stages of your business plan, you should take an inventory of what types of intellectual property that your company owns and which intellectual property is worth protecting.  In other words, examine your business to see what might be eligible for intellectual property protection, including patent, trademark, copyright or trade secret protection, and determine the value that these inventions, innovations, or information provide to your business.  The state and federal protections afforded to intellectual property owners are designed to reward your creativity and provide you with an economic or commercial benefit, so take advantage of these protections.

 

Why should you protect your intellectual property?

Your intellectual property is an asset of your company just like your office, or your bank account.  In fact, depending on the size of your company, and the importance or value of the intellectual property, you can easily include your IP as an asset value on your corporate balance sheet.  Your intellectual property distinguishes you and your product or services from those of your competitors and their products and services.  Just like any other corporate asset, you need to safeguard your intellectual property.  If you fail to adequately protect and police your intellectual property, your competitors, and even worse, your own employees or contractors, can study, steal, and improve upon your product or service and run you right out of the market.

 

Also, social media has exponentially increased the speed of informational posting and exchanges.   This is important for a number of reasons – one, the simplicity of these social media outlets allows you to quickly and easily put information out there that you may have failed to adequately protect that is accessible to consumers, clients, and competitors; and two, a competitor can just as easily steal, improve, and disseminate the information, which could seriously impact the economic benefit of the intellectual property to your business.

 

Additionally, registration is sometimes a requirement for pursuing a legal remedy (e.g., copyrights), so it is extremely important to register early.  And finally, another reason why you should invest now in your IP’s adequate protections is because a lawsuit later will be far more costly than the application and registration fees and the attorneys’ fees for consultation and filing.

 

How do you protect your intellectual property?

It is extremely important to consider and build intellectual property concerns into your business plan. You should educate yourself and your team on the basics of trademarks, copyrights, patents, and trade secrets, so at the very least, you know when something has been created that has the potential to be afforded protection.  Next, you will want to register your IP, either at the state or federal level, depending on the level of protection you desire.  Because of the unique nature of your business, and because the various types of intellectual property are protected in different ways through various registration processes, it is good idea to at least consult with an intellectual property attorney who is familiar with start-up businesses and familiar with your industry.  An attorney can help you file the appropriate state or federal registration, and often such tasks can be completed on flat or capped fees.  They can also help you protect your IP while registration is pending.

You should also establish corporate policies regulating ownership of your business’s new and existing intellectual property.  Often times, it’s not a competitor stealing a business’s IP; it’s a former employee, independent contractor, or partner who undermines the business. Have your employees and contractors execute adequate protection documentation, including well-drafted non-disclosure and confidentiality agreements, employment agreements, independent contractor agreements, etc.

Finally, once you have registered your IP, you should actively police it.  Collaborate with your clients, vendors, merchants, and anybody else who helps you get your product or service into the stream of commerce and keep your eyes open for illegal duplication of your product and/or services.  It is the owner’s responsibility to police its own intellectual property and to insist on legal compliance of the respective laws, rules, and regulations when you find someone infringing upon your IP rights.