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Category Archives: Miscellaneous

Red Flags That Your Lawyer May Be Committing Malpractice

Author By Todd McMurtryPosted on

Legal malpractice is easy to define but often hard to spot as it occurs. In general, it means a lawyer failed to exercise the accepted professional standard of care for the type of matter being handled, and that this failure caused the client harm. The problem is that malpractice may not be suspected by the client until the case ends unsatisfactorily.

If you’re involved in a legal matter, noticing the signs of possible legal malpractice by your attorney can put you in better position of averting a negative result. Here are some red flags you can be on the alert for:

  • Foot dragging — If your lawyer seems to be delaying any aspect of your case, it could be a sign of lack of industry or preparedness. Some delays are to be expected, but an unexplained or extended lapse of time could risk missing the statute of limitations, which can cripple your case.
  • Missed deadlines — Worse than foot-dragging is failing to serve or file pleadings or other documents on time. The negative results can include court-imposed sanctions or possible case dismissal. You can keep tabs on your lawyer’s compliance with deadlines by demanding to be copied on all pleadings and filings.
  • Failure to communicate — This is perhaps the most telltale sign of a lawyer mishandling a case. Failure to advise you of significant events or issues can be detrimental. If your lawyer is not keeping you updated and/or is not returning calls or answering emails, it may signal negligence.
  • Failure to obtain consent — Your lawyer must seek your input and approval when it comes to taking actions that could significantly affect your case’s outcome. This is another reason for demanding that you be copied on correspondence and court filings.
  • Failure to heed instructions — You entrust your lawyer with overall management of your case, but that does not mean he or she can disregard your wishes. The attorney can advise you that adhering to them might not be beneficial but ultimately must follow your instructions.
  • Conflicts of interest —You should be alert to any actions taken by your lawyer that may indicate a lack of loyalty to you. If your lawyer has failed to disclosed a potential conflict, it may constitute malpractice.
  • Settlement pressure — Although a negotiated settlement can be beneficial, you should be on guard if your lawyer seems unwilling or unable to fully explain why. Urging you to accept a settlement without full disclosure of risks and alternatives is unethical and may be harmful.

There are many other indicators of legal malpractice, such as your lawyer seeming unprepared in court, unclear about the current state of pertinent law or at a disadvantage while arguing or trying your case. Recognizing these signs and promptly consulting with an experienced professional malpractice attorney can protect your rights.

About Finney Law Firm, LLC

Founded in 2014, FLF has grown to 15 attorneys located in offices in Eastgate and downtown Cincinnati with five major practice areas: Corporate Law, Real Estate Law, Employment Law, Commercial Litigation and Public Interest and Constitutional Litigation.  FLF has the unique claim to three 9-0 victories at the United States Supreme Court for its public interest practice along with breakthrough class action work.

FLF also has an affiliated title insurance company, Ivy Pointe Title, LLC, that closes and insures nearly a thousand commercial and residential real estate transactions annually.

For more information about Finney Law Firm, visit finneylawfirm.com.

Media Contact: Mickey McClanahan; mickey@finneylawfirm.isoc.net; 513.797.2850.

What Is Minority Shareholder Oppression That Can Lead to Litigation?

Author By Todd McMurtryPosted on

Many businesses have only a few owners or shareholders. This is particularly common among closely held businesses. It is the owners who decide major issues such as selling or purchasing assets, merging with another company or declaring dividends. However, not all owners are equal. Individuals who own the majority of the shares have the greater say on these decisions. Minority shareholders have limited power, but they are nonetheless entitled to certain rights. When these rights are infringed, it may constitute shareholder oppression that creates a legal right of action.

Shareholder oppression, in order to be actionable, must comprise conduct that is fraudulent, unfair or illegitimate. Being outvoted on a given issue does not constitute oppression. The majority’s action must be inherently unfair and harmful to the minority’s interests. Examples of shareholder oppression include:

  • Income diversion — The majority owners might divert the company’s net profits to themselves to the prejudice of the minority owners. This can be done in a number of ways, some of which are either fraudulent or illegitimate.
  • Share dilution — The majority owners might pass bylaws that reduce the voting power of the minority. This creates an even bigger power imbalance and gives the majority even greater leverage over the minority shareholders.
  • Denial of access — Minority owners might be denied access to the company’s books and records or they might be restricted from attending official company meetings or entering upon company property.
  • Employment — In many small companies, shareholders are also employees. Sometimes the majority will vote to terminate a minority owner’s employment and remove their access to company property and records.
  • Withholding dividends — Owners typically derive a percentage of the company’s net profits based on their shareholdings. Sometimes majority owners vote to keep the dividend within the company rather than distribute profits. Doing so can cause minority shareholders financial hardship. For some owners, company dividends are a large percentage of their income.

Minority shareholders do have remedies. A Kentucky statute allows a shareholder may seek a court order dissolving the company upon showing that the directors or those in control have acted, are acting or will act in a manner that is illegal or fraudulent. In addition, a minority owner can bring a lawsuit asking the court to use its equitable powers to craft a remedy. The court may enjoin or stop the majority from taking further oppressive actions and reverse those that have already been implemented. The court could also order majority members to buy out the minority at a given price. An experienced business litigation attorney can analyze your situation and advise on appropriate action.

About Finney Law Firm, LLC

Founded in 2014, FLF has grown to 15 attorneys located in offices in Eastgate and downtown Cincinnati with five major practice areas: Corporate Law, Real Estate Law, Employment Law, Commercial Litigation and Public Interest and Constitutional Litigation.  FLF has the unique claim to three 9-0 victories at the United States Supreme Court for its public interest practice along with breakthrough class action work.

FLF also has an affiliated title insurance company, Ivy Pointe Title, LLC, that closes and insures nearly a thousand commercial and residential real estate transactions annually.

For more information about Finney Law Firm, visit finneylawfirm.com.

Media Contact: Mickey McClanahan; mickey@finneylawfirm.isoc.net; 513.797.2850.

 

May I “stay” collections of a judgment pending the outcome of an appeal?

Author By Christopher P. FinneyPosted on

As clients “play out” the path of their litigation, they may plan on delaying the consequences of a possible loss at trial court for a year or two by “appealing all the way to the Supreme Court.”  Comfortable that they can postpone payment of any possible judgment 24 to 36 months into the future, they continue with the path of defending a suit, they have figured out — before we ever speak about it.

“Stay” typically requires a supersedeas bond; otherwise judgment collections may proceed

However, it’s not that simple.  As a fairly firm proposition of law, there is no “stay of execution” pending the outcome of an appeal unless and until the party against whom judgment is obtained has posed a supersedeas bond in the full amount of the “cumulative total for all claims covered by the final order.” R.C. §2505.09.

… an appeal does not operate as a stay of execution until a stay of execution has been obtained pursuant to the Rules of Appellate Procedure or in another applicable manner, and a supersedeas bond is executed by the appellant to the appellee, with sufficient sureties and in a sum that is not less than, if applicable, the cumulative total for all claims covered by the final order, judgment, or decree and interest involved, except that the bond shall not exceed fifty million dollars excluding interest and costs, as directed by the court that rendered the final order, judgment, or decree that is sought to be superseded or by the court to which the appeal is taken.

In other words, after a party to a case obtains a monetary judgment against another party (typically, but not always, a plaintiff obtains a judgment against a defendant), absent a “stay” issued by the Court, the party holding the judgment may pursue collections against the party against whom judgment has been rendered while the appeal is being briefed, argued and decided.  This means that the prevailing party may pursue foreclosure against real property, garnishment of bank accounts, attachment of wages and other collections actions, notwithstanding the slow process of a pending appeal that the opposing party believes will reverse the trial court judgment.

How a supersedeas bond is obtained

The bond can be issued by a private surety, such as an insurance company.  But the insurance company wants to take zero risk in the issuance of that bond, so they will do so only upon posting of proper security such as cash, accounts containing stocks and bonds, or real estate with sufficient equity.  And the outcome of this is that the eventual bankruptcy of the losing party, hiding of assets, dissipation of assets, death of the losing party, and other intervening events will not impair the collectability of the judgment by the prevailing party.

Posting of real estate as security

Another avenue to a “stay” order is the conveyance of property of adequate value with the Clerk of Courts, R.C. § 2505.11.  And, under 2505.12, exempt from the bond-posting provisions are (i) fiduciaries who already have posted bonds, with surety in accordance with law, (ii) the state of Ohio and its political subdivisions, and (iii) public officers of the state and its political subdivisions who were sued only in their official capacity.

How it really plays out

How does this, then, typically play out?  First, I find that losing defendants don’t just want to “write a check” to pay the judgment.  Rather, they ignore it until collections actions are taken.  Second, I have found that losing parties willfully ignore the plain language of Revised Code §2505.09 and ask for a bond amount less than the “cumulative total for all claims covered by the final order.”  This request, in our experience, is routinely denied.

Then, there are circumstances in which the losing party simply can’t pay the judgment amount and therefore also can’t post a bond in that amount.  In that circumstance, the losing defendant has the option to declare bankruptcy.  In other circumstances, the losing party has no identifiable assets, but he must honestly submit to a judgment debtor examination and tell the prevailing party’s attorney the location of his assets.  It is a bad idea — one we routinely reject — for a losing party to transfer assets to avoid collections upon loss in litigation.  What this means, for example, is moving around assets for the purpose of avoiding the prevailing party from collecting is as bad of an idea as it is appealing.

So, when Gibson Bakery sued Oberlin College for defamation and obtained a $25 million judgment, the Judged ordered a stay of execution pending appeal only upon the posting of a $36 million bond.  Last week, a $1.8 billion judgment was rendered against the National Association of Realtors and two other defendants.  Because the matter litigated is under the Sherman Antitrust Act, the damages are to be tripled, likely bringing the judgment amount to $5.4 billion.  One of the Defendants is a Berkshire-Hathaway company, which certainly has the cash sitting around for that, but will they post that for just one of their subsidiaries and to pay the freight for all of the defendants?  For most parties, including the other two defendants, they simply would not have the assets available to them to post a supersedeas bond of that magnitude.

As litigants want to be on the “offense” in collections, as the defense — against a diligent prevailing party — is no fun and there are few places to turn to avoid “paying up.”

Conclusion

In your business affairs as well as your litigation, be prepared to accept the accept the consequences of your decisions.  In litigation, those consequences can be both unexpected and expensive.  If your plan is to postpone collections until appeals are exhausted, that may mean posting a bond for the value of the judgment.

Proven Ways to Ease the Pain of a Business Divorce

Author By Todd McMurtryPosted on

A business divorce occurs when one or more of the company’s owners or partners leave or is forced out by those with a controlling interest. It can happen for myriad reasons, such as personality conflicts, disagreements on business goals or operating procedures and external changes in economic conditions that hurt the company’s profits. In many ways, a business divorce is like ending a marriage. Assets must be divided and any future obligations among the parties must be decided. The process can be contentious, frustrating and expensive.

However, there are ways to make a business divorce more efficient and less painful. Here are some positive actions that small business owners can take in preparing for a breakup:

  • Proactive planning — The reality is that most startup businesses change ownership or dissolve within a few years. However, entrepreneurs often do not often contemplate restructuring or failing. It is critical to enter the venture with an understanding of those risks and to craft a plan of action in case a business divorce becomes necessary. This can be done through the company’s bylaws or operating agreement. These documents can govern how a business divorce will proceed and specify each owner’s rights and responsibilities both during and after the divorce.
  • Focus on the process — Some owners take business divorces very personally. They will use the divorce as a platform to blame and berate other owners and as a tool to seek retribution. This is shortsighted, as this type of conflict only makes business divorces take longer and cost more. Every owner should focus on making the divorce as clean and orderly as possible. By doing so, the parties can quickly move on to other business opportunities.
  • Hire a mediator — A mediator is an unbiased third party who can help facilitate the settlement of a business divorce. The mediator should be familiar with the company’s line of business and its relevant market. A good mediator will be able to explain the strengths and weaknesses of each party’s legal position, temper unrealistic expectations and increase the chances of the parties negotiating a settlement.  
  • Be flexible — Whether a business divorce is negotiated, mediated or litigated, no party is likely to get everything they want. Divorcing owners should concentrate on coming to an agreement that is fair and reasonable overall. All owners should be prepared to make some concessions. Every hour spent on the divorce is one less hour available for engaging in productive activity.   

An experienced business divorce attorney can advise you about the best options to accomplish the ownership change in your company, whether it involves a buyout of a departing owner, the sale of the owner’s interest or, as a last recourse, the company’s liquidation.

About Finney Law Firm, LLC

Founded in 2014, FLF has grown to 15 attorneys located in offices in Eastgate and downtown Cincinnati with five major practice areas: Corporate Law, Real Estate Law, Employment Law, Commercial Litigation and Public Interest and Constitutional Litigation.  FLF has the unique claim to three 9-0 victories at the United States Supreme Court for its public interest practice along with breakthrough class action work.

FLF also has an affiliated title insurance company, Ivy Pointe Title, LLC, that closes and insures nearly a thousand commercial and residential real estate transactions annually.

For more information about Finney Law Firm, visit finneylawfirm.com.

Media Contact: Mickey McClanahan; mickey@finneylawfirm.isoc.net; 513.797.2850.

Proving Damages in a Business Defamation Lawsuit

Author By Todd McMurtryPosted on

It can take years for a company to develop a reputation among its customers, suppliers, investors and employees. But that reputation can be quickly impaired when someone disseminates falsehoods about the company, its employees or its goods and services. This is known as business defamation and it may entitle the injured company to legal relief and compensation.

Business defamation differs from personal defamation in that damages are not presumed. The defamed company must prove monetary losses or other economic damages. Further, there must be an identifiable link between the false statements and the harm suffered by the company. The losses must also be reasonably quantifiable, not speculative. In other words, there must be a measurement of the amount of loss attributable to the defamatory statements.

Proving damages caused by business defamation often requires the use of expert witnesses. In many cases, experts demonstrate that the company had a long history of stable financial results right up until the time the defamatory statements were published. Then there was a significant or even precipitous drop in performance. Financial reports and projections also are used to show how the false statements brought actual economic harm to the business.

There are several different kinds of economic losses that may be demonstrated, including:

  • Lost revenue — If the defamatory statements caused an immediate and significant loss in sales, this will be evident in the periodic financial reports. Lost future revenue may be shown in the company’s sales projections. While future revenue is hard to predict, sales projections may be persuasive evidence if the analyses are logical and credible.
  • Lost profits — Revenue and profits are often tied together. However, not all sales generate the same profit margins. Defamatory statements might cause only a modest reduction in revenue but a large drop in net profits. Both recent profit reports and future profit analyses can be used in assessing damages.
  • Lost shareholder value — Defamatory statements can affect the value of the shares. This is particularly important when the stock is publicly traded. Poor financial performance easily affects stock price in the near term. Also, defamation losses may undermine the public’s faith in maintaining or growing shareholder value, which in turn can affect current and future stock prices.
  • Damage control — Companies might spend large sums of money in refuting false claims and pursuing defamation actions. Advertising, public relations firm costs, legal fees are often necessary expenses in countering business defamation. These costs may be compensable in a business defamation lawsuit.

Proving these damages can be complex, especially because valuation of a company’s worth and future prospects is subjective and may be challenged by the defendant’s own experts. An experienced business defamation attorney can analyze your situation and advise about the best approach to proving the case.

About Finney Law Firm, LLC

Founded in 2014, FLF has grown to 15 attorneys located in offices in Eastgate and downtown Cincinnati with five major practice areas: Corporate Law, Real Estate Law, Employment Law, Commercial Litigation and Public Interest and Constitutional Litigation.  FLF has the unique claim to three 9-0 victories at the United States Supreme Court for its public interest practice along with breakthrough class action work.

FLF also has an affiliated title insurance company, Ivy Pointe Title, LLC, that closes and insures nearly a thousand commercial and residential real estate transactions annually.

For more information about Finney Law Firm, visit finneylawfirm.com.

Media Contact: Mickey McClanahan; mickey@finneylawfirm.isoc.net; 513.797.2850.

 

Fraud Is Real: Don’t fall for it

Author By Christopher P. FinneyPosted on

Fraudsters — both high-tech and old school — daily attempt to use real estate and other transactions to scam our law firm, our title company and our clients out of money and property.  To date, we have not been hit (some of our client have been), but we are always on guard.  Fraudsters forever keep trying.

As you are growing your business — and these tips apply to businesses large and small, old and new — it is a good idea — from time to time — to gather your financial team and key executives, along with your IT professionals, and simply have a conversation about “tightening things up” and avoiding common scams.

  • Are your checks (and cash) — incoming, outgoing and blank checkbooks — tightly secured and under watchful eyes?
  • Are your systems too open and accessible (a simple question such as automatic screen savers with passwords that trigger when an employee is away from his desk)?
  • Do you have proper insurance to protect your real risks?
  • Do you have proper training and systems in place to avoid common and emerging risks?

In the end, we all have some exposure.  So, eternal vigilance, the latest technology protection and training of employees new and old, is the only answer.  Part of this caution is constantly “tightening up” and “changing up” your transactional practices and security procedures to avoid the latest scam.

Here are some common scams we and our clients have seen:

  1. In the low-tech world, fraudsters simply borrow money based upon false promises and representations.  This is a time-tested and common scam.  It is borne of two human instincts: (a) we want to trust people and (b) we are lured by the promise of a better-then market return on investment (if it’s “too good to be true,” it’s probably fraud).  Many of these fraudsters have the appearance of business stability and financial success, but are willing to offer above-market interest rates for a personal or business loan.  In the end, these loans are not properly secured and are not properly guaranteed, and the fraudster never had the ability or intent to pay back the monies.
  2. Similarly, we have seen clients purchase assets or entire businesses that are subject to liens or governmental enforcement actions, or the purchase price is based upon false financial documents or hidden property condition.  In a business transaction, be careful of slippery buyers, sellers and attorneys who can make fraudulent closing adjustments as the numbers are flying about in a closing.
  3. Another low-tech fraud is thieves who rifle U.S. Postal Service mail boxes (both the blue drop boxes and mailboxes at your home or business), steal checks, and then change the payee and amount on the check and cash it.
  4. Pay attention here: In the high-tech world, fraudsters hack into a Realtor, investor or title company email system, and steal their email signature and logo, and the details of an imminent transaction.  Then, they establish a similar email domain (with maybe one letter changed or a “dot” added).  Using the new domain, they send an email to the party who is to originate a wire with false wire instructions — instructions straight into the fraudster’s overseas wire address.  The email by all appearances looks entirely legitimate and it’s from a name you know and with whom you actively are dealing.
  5. We have written about sellers who don’t own actually property attempting to mortgage or sell the same.  Read here and here.
  6. Finally, fraudsters use sophisticated hacking and ransomware viruses to invade your critical computer systems.  They corrupt your data and hijack control of your systems, relenting only when an exorbitant ransom has been paid.  Extortionists have taken over critical infrastructure such as oil pipelines, hospitals, and municipalities.  Most recently, the vendor running the Cincinnati Multiple Listing Service and dozens of MLSes nationwide was the victim of a weeks-long ransomware attack that was costly and disruptive.

So, how can you protect yourself in this world increasingly fraught with risk of theft of your valuable data, money and time by those with malintent?

Here are a few ideas:

  • Stay in your lane.  Let lenders lend.  In most cases, they are good at it.  If a borrower is coming to you for a loan, it’s likely because he’s not eligible for conventional financing, and that ineligibility is for a good reason — he’s either lying, broke or both.
  • Carefully use due diligence and proper documentation.  If you are going to lend money or buy assets or a business, perform the kind of due diligence a prudent and sophisticated buyer or lender would undertake and obtain appropriate security and guarantees of a loan.  We discuss some of the pitfalls of private lending here.  Similar risks can exist in buying assets and buying whole operating businesses.  Part of this process is assuring that the borrower actually owns the assets he is selling or pledging (free and clear) and that your security interest is properly and timely perfected as against that asset.  In a real estate-based loan, title insurance is a key way to assure this is so.  In purchasing a business, the risk is even greater in that the corporate entity may have significant residual undisclosed liabilities or governmental enforcement problems. That seller — and your purchase monies — will completely disappear by the time you learn of the fraud.  Finally, the #1 “due diligence item” is to know your employees, know your borrowers, know your sellers.  The internet (and now artificial intelligence tools) is an incredibly powerful way to do background on parties to a business transaction,  Use it.  Cautiously heed the lessons of what you find.
  • Properly perfect security interests and document guarantees.  When banks lend money, they want proper security for their loans and appropriate guarantors for their repayment.  In most cases, banks are over-protected, and they want it that way.  You do too.  In both real estate and equipment-based transactions, we have seen borrowers pledge the same assets to different lenders as security for two or more loans.  Obviously, in that circumstance someone is going to be left holding the bag.  (Yes, fraudsters are that shameless.)  Using proper real and personal property title examinations and lien searches and using appropriate documentation for loans and guarantees is critical.  For example, in Kentucky, in order for a personal guarantee of debt to be enforceable, it must follow specific statutory requirements.  Without that, it’s worthless.
  • Don’t put checks or other key financial documents in blue U.S. Post Office boxes on the streets and don’t have checks sent to a mail box at your business or residence that is accessible by others.
  • As to wire fraud, you can’t be careful enough.
    • The sender of a wire should assume everything you see is a lie, the fax, the email, the logo, the wire instructions, the sender web site, the sender.  Everything.  Always verify everything via voice using a trusted and known telephone number for the wire recipient.
    • If you smell a rat, don’t initiate the wire.  Wait and check some more.  Urgency — especially inappropriate urgency — is a key indicator of fraud.
    • Read carefully the sender email addresses and the email.  Many times the email domain of a fraudster does not exactly match the domain name with which you have been dealing.  Note misspellings and grammatical errors in the text of an email that may come from a foreign sender or one unfamiliar with the parties and the transaction.
    • Note last-minute changes, especially of wiring instructions.
    • Note changes made on the Friday before a holiday weekend or before another holiday, and before the end-of-month, when Realtors and title company employees are more likely to be busy and careless.
  • Buy cyber insurance.  Your property and casualty insurance agent can offer your business cyber protection.  It requires you to use good practices for the insurance to invoke, but both the coverage and the required procedures are a critical part of best practices protection.
  • As to ransomware attacks, we have two pieces of advice:
    • First, according to the Harvard Business Review (citing IBM), 60% of cyber attacks originate inside your organization.  Either a malevolent employee or ex-employee intent on theft or vandalism (75% of attacks) or a negligent employee (25% of incidents) who falls for a phishing attack scam cause most losses.  So, hire and retain employees of good character, monitor their activities, and carefully, comprehensively and quickly cut off computer access of former employees.  Segregate access to data in your organization to those who need that data, and no one else.
    • Second, every computer system is vulnerable.  Every one.  But homegrown (premises-based and self-maintained) servers are more vulnerable to a hack (in my opinion).  As a result, we (a) have migrated the vast majority of our data into the Microsoft cloud (other providers are also available) (heaven help the world if they hack the Microsoft cloud!), (b) have segregated access to data to employees who need that access, and (c) have make serial backups of data that is not in the cloud.
  • Understand the risks, develop training and systems to avoid the risk, and train all of your employees on cyber security procedures.

As our attorneys can assist with due diligence and proper documentation (including title insurance) of your transactions, call us!

More on upcoming property tax valuation increases

Author By Christopher P. FinneyPosted on

For both commercial properties as well as single family homes, owners have flooded us with inquiries about their notices from County Auditors in Hamilton, Butler, Clermont and Montgomery Counties as to new property valuations.  We can’t imagine the number of calls the County Auditors must be getting.

A few guideposts for you:

  • First, read this important blog entry that essentially tells you that the first 30% of the valuation increases in southwest Ohio will not result in an increase (or at least not a significant increase) in your actual tax bill.
  • Second, Auditor’s property valuation is not some magical number — for the January 2024 tax bill, it is to be the fair market value as of January 1, 2023.  Thus, if your property was worth more then than in the prior valuation period, you should expect a valuation increase — perhaps one even above average for all properties in the marketplace.  Some clients seem to think that since valuations were less than what they thought the property was actually worth in the past, the Auditor’s valuation process is supposed to yield a lower number.  Well, it’s not.
  • Third, if your property was purchased since the last triennial valuation date (January 1, 2020), the sale price likely will be reflected in the valuation.  As this blog entry addresses, a recent arm’s length sale essentially — and largely irrebuttably — IS the value by law.
  • Fourth, if your property falls in one of the gazelle categories of properties whose values have leaped ahead of the market — single family homes, warehouse and industrial properties, and apartment buildings — you should both celebrate your good fortune and expect a bigger tax bill as a result.
  • Fifth, on the flip side, if you are a victim of the weak office market or the mall or downtown retail market weaknesses, you should should see some tax relief in the January tax bills.
  • Sixth, gas prices are up, grocery prices are up, car prices are up.  You have not had a valuation increase in three years.  Wouldn’t you expect your tax bill would rise some, at least modestly?
  • Seventh, for both buyers and sellers in today’s market, the looming valuation increases create both a possible problem and an opportunity as to contractual tax prorations for sales between now and January when the new — very different — valuations come out.  Read here for more detail on this.
  • Eighth, remember, the Board of Revision process to challenge property valuations is a two-way street.  If your property truly is undervalued, you risk an increase.  Cautiously keep in mind the upward dynamics of the real estate market over the past three years.  You could wind up with an increased valuation as opposed to the sought reduction if you overplay your hand.
  • Finally, I had a client recently ask me “why would single family home valuations be increasing in Cincinnati?” and I swear he must live under a rock.  I responded, “haven’t you seen newspaper articles explaining that Cincinnati has had one of the hottest housing markets in the nation since the start of COVID?”  The response, “ummm, no.”  It is surprising since we deal with this every day, and to some extent it is just denial of the obvious fact that we are blessed in Cincinnati with a fantastic housing and commercial real estate market.  Enjoy it while it lasts!

If, after reading this and the prior blog entry on the new valuations coming out in January, you still have tax valuation questions, please contact me (513.943.6655) or another member of our tax team.  We are glad to help.

7 Key Clauses to Include in a Terms and Conditions Agreement

Author By Todd McMurtryPosted on

As recently as 2018, just half of the country’s small businesses had a website. But today, in the aftermath of pandemic-era lockdowns and closures of physical plants, around 95 percent of small businesses have some form of online identity. The internet offers powerful tools to present your products, generate revenue and provide customer service. However, taking full advantage of an internet presence requires devising new ways to deal with the public, including adoption of a terms and conditions agreement.

Also known as terms of service (TOS), a terms and conditions agreement outlines the rules governing your website or app and defines the relationship between you and your users, who implicitly agree to the terms and conditions.

The TOS should be crafted to fit the types of merchandise and services that your business offers, but certain provisions are generally advisable. Here are seven clauses that you should consider having:

  • Limitation of liability — You can include disclaimers designed to protect your business from being held liable for certain losses suffered by users, such as data loss, malware infections and other mishaps outside your control. You can also state a maximum amount of damages for which your company can be held liable.
  • User code of conduct — Any site or app that allows users to post content, such as reviews or comments, should have a code of conduct. It should also state the consequences of posting unacceptable content, such as account suspension or termination. The code can explain that you have the right, but not the obligation, to remove offensive user posts.
  • Governing law clause — This tells users that if they file a legal claim against you, it will be governed by the laws of the state you specify.
  • Intellectual property clause — This prohibits the use or distribution of your company’s name, logo, domain name, trademarks or copyrights without your permission.
  • Payment and refund procedures — The TOS should clearly explain the payment methods you accept, the consequences of non-payment and your policy for issuing or refusing to issue refunds.
  • Termination clause —This reserves your right to delete a user’s account if they violate the terms of service.
  • Cookie usage — The TOS should explain how your site or app uses cookies to track users and to provide them with relevant information. It should also explain users’ rights to limit or prevent use of cookies.

There may be other clauses you’ll want to include, such as one setting out a procedure for conflict resolution. A qualified business attorney can analyze your situation and draft a TOS that is best suited to your needs and objectives.

About Finney Law Firm, LLC

Founded in 2014, FLF has grown to 15 attorneys located in offices in Eastgate and downtown Cincinnati with five major practice areas: Corporate Law, Real Estate Law, Employment Law, Commercial Litigation and Public Interest and Constitutional Litigation.  FLF has the unique claim to three 9-0 victories at the United States Supreme Court for its public interest practice along with breakthrough class action work.

FLF also has an affiliated title insurance company, Ivy Pointe Title, LLC, that closes and insures nearly a thousand commercial and residential real estate transactions annually.

For more information about Finney Law Firm, visit finneylawfirm.com.

Media Contact: Mickey McClanahan; mickey@finneylawfirm.isoc.net; 513.797.2850.

What Are the Most Common Forms of Legal Malpractice?

Author By Todd McMurtryPosted on

You expect your lawyer to represent you effectively and to work hard to achieve the results you want. However, the fact that the lawyer fell short of your expectations doesn’t automatically mean you can sue for legal malpractice. Also known as professional negligence, malpractice is limited to situations where an attorney does not act according to the accepted standard of professional care. The lawyer might do something that a reasonably competent lawyer would not have done in a similar case or, conversely, might fail to do something that should have been done. In addition, the act or failure to act must have harmed the client in some way.

The following are some of the most common examples of legal malpractice:

  • Commingling funds — This means the attorney or law firm failed to keep client funds in accounts separate from business accounts.
  • Lack of experience or training — Lawyers cannot know everything about every area of law, so they are obligated to take only those cases they are competent to handle. A corporate lawyer who has no experience in family law could make critical mistakes in a divorce case.
  • Missing deadlines — Attorneys are expected to adhere to all deadlines imposed by law and by courts or other tribunals. Among the most critical deadlines are statutes of limitations that set time limits on certain claims.
  • Not knowing the facts or applicable law — Lawyers must take the time to learn the facts and laws applicable to each case in order to represent the client’s interests thoroughly and effectively.
  • Fraud or misrepresentation —Lawyers must disclose to clients all material information about their cases and do so truthfully. Lawyers also have a duty of candor and honesty to courts and tribunals, as well as to other parties and lawyers.
  • Failure to communicate — Lawyers have a duty to keep clients informed of what is happening in their cases so the clients can participate in making informed decisions. 
  • Improvident acceptance or rejection of settlements — Lawyer should not accept settlement offers that are not in their clients’ best interests, nor should they reject settlements that might be beneficial. Failure to discuss settlements with clients can also constitute malpractice.

Legal malpractice claims can be challenging to win. You have to prove that you would have achieved a benefit if your attorney had adhered to the proper standard of professional care. This is known as a “case within a case,” since it means presenting evidence sufficient to support a favorable outcome in the underlying matter. The lawyer you retain for your legal malpractice claim should also have familiarity with the area of law involved in the original case.

About Finney Law Firm, LLC

Founded in 2014, FLF has grown to 15 attorneys located in offices in Eastgate and downtown Cincinnati with five major practice areas: Corporate Law, Real Estate Law, Employment Law, Commercial Litigation and Public Interest and Constitutional Litigation.  FLF has the unique claim to three 9-0 victories at the United States Supreme Court for its public interest practice along with breakthrough class action work.

FLF also has an affiliated title insurance company, Ivy Pointe Title, LLC, that closes and insures nearly a thousand commercial and residential real estate transactions annually.

For more information about Finney Law Firm, visit finneylawfirm.com.

Media Contact: Mickey McClanahan; mickey@finneylawfirm.isoc.net; 513.797.2850.

Determining Company Value During a Business Divorce

Author By Todd McMurtryPosted on

Dividing property is one of the most important and potentially contentious aspects of business partners falling out and going their separate ways. A business divorce requires that the company be fairly valued so that all or part of it can be sold, whether to insiders or to outside buyers.

A business valuation analyzes all areas of the company to determine the worth of its various departments and of the entity as a whole. Professional evaluators look at such as elements as the company’s capital structure, its management, the market value of its assets and its future earnings potential.

There are numerous ways to value a company during business divorces. Some of the most common methods are:

  • Market capitalization — The value of a public company typically is calculated by multiplying the company’s share price by the number of shares outstanding. If the price is $50 and there are one million shares outstanding, the company’s value is $50 million.
  • Times revenue — A multiplier is applied to the revenue the company has generated over a certain time period. The multiplier varies by industry. A tech company might be valued at 5x revenue while a service company might be valued at 1x revenue.
  • Earnings multiplier —The company’s price-to-earnings ratio is adjusted to account for current interest rates. This is often more accurate than the times revenue method because the earnings multiplier is based on profits.
  • Discounted cash flow — This is similar to the earnings multiplier method, except that the company’s cash flow is calculated taking inflation and other market risks into account.
  • Book value — This is the company’s total assets minus its total liabilities as shown on its balance sheet.
  • Discretionary earnings — This method, often used for valuing small businesses, takes gross earnings and adjusts them for depreciation, interest expense and non-operating and non-recurring income.

When business owners are engaged in a split up, it is to be expected that the choice of valuation method will be a point of contention. Different owners will likely choose their own evaluators, with each employing a different method. If the owners can’t agree on a selling price, some form of alternative dispute resolution, such as mediation, may be used to arrive at a settlement.

About Finney Law Firm, LLC

Founded in 2014, FLF has grown to 15 attorneys located in offices in Eastgate and downtown Cincinnati with five major practice areas: Corporate Law, Real Estate Law, Employment Law, Commercial Litigation and Public Interest and Constitutional Litigation.  FLF has the unique claim to three 9-0 victories at the United States Supreme Court for its public interest practice along with breakthrough class action work.

FLF also has an affiliated title insurance company, Ivy Pointe Title, LLC, that closes and insures nearly a thousand commercial and residential real estate transactions annually.

For more information about Finney Law Firm, visit finneylawfirm.com.

Media Contact: Mickey McClanahan; mickey@finneylawfirm.isoc.net; 513.797.2850.

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