Not every LLC needs an operating agreement or requires one from its inception, but the decision as to whether the LLC needs one and when it should have one should be made by the owner or owners after understanding the issues that impact the decision. Without an operating agreement, the LLC is bound by the Revised LLC Act, Chapter 605, Florida Statutes and, therefore, gets what the Legislature has decided the business should have. Sometimes, this one-size fits all approach is not appropriate for or tailored to the needs of the business.
To increase the efficiency of the process of developing an operating agreement to fit a business and to reduce the costs involved, David Steinfeld created a proprietary and easy to navigate questionnaire that incorporates the provisions of the Revised LLC Act that can be changed or modified. This allows the Law Firm to obtain salient information from the business owner without a lengthy and direct interaction, which effectively eliminates one meeting and saves hundreds of dollars for the business. Because many LLCs undertake an operating agreement early in their existence, the cost of so doing is normally very important because the fledgling business often has only so much money with which to work at that point. By making the process of creating he operating agreement faster and cheaper for the business, the Law Office of David Steinfeld can provide a value and benefit to the business that promotes its future success and avoids costly disputes in its future.
To create a business in Florida, all one has to do is log on to the Sunbiz website and follow the prompts. It is no different and no harder than purchasing merchandise online. While a corporation is said to be “incorporated” and an LLC “organized”, the result is that once approved, Articles are filed with the State and the entity is born. The Law Office of David Steinfeld based in Palm Beach Gardens can easily and effectively provide guidance in the formation of a business anywhere in Florida, but the greater value that an experienced, Board Certified expert business lawyer like David Steinfeld provides is in the crafting and preparation of documents used in managing and operating most business ventures called corporate governance documents. These include operating agreements, shareholder agreements, and partnership agreements. David Steinfeld also assists businesses in determining whether they need documents for dealing with parties collateral to and outside of the business, such as employees, vendors, and customers, like non-compete agreements, non-disclosures, and contracts.
However, not every business needs a full complement of every document available to it at the time it opens. Which documents are appropriate and when in the lifecycle of the business they can or should be used is the benefit of consulting with David Steinfeld. There are considerations that apply to these documents that Mr. Steinfeld can explain with his expertise in the field, making it easier for the business owner to make informed decisions on the topic.
In 1999, Florida put its first LLC laws in place and then upgraded them in the early 2000s. Because the LLC was created by the Legislature it is commonly referred to as a “creature of statute” as opposed to the corporation and partnership that developed in common practice first and then were formalized or “codified” into actual written law by the government. More recently in 2013, the Florida Legislature updated and upgraded our LLC laws to fill in some gaps that had been identified over the previous years and make the LLC more user-friendly for people wanting to do business in the State.
One of the reasons why the vast majority of all businesses now formed in Florida are LLCs is because it acts like something of a hybrid; it provides and combines the protections of the corporation with which many are familiar with the practical day-to-day use and feel of the partnership. It is arguably less burdensome to manage than a corporation and provides more protections than the partnership, thus making it an ideal choice for the closely-held concerns that comprise the bulk of the business engine in Florida.
The most common business entity used at present in Florida is the LLC. Historically, several hundred years ago, the partnership was the only method by which to conduct business with others. Then, in the mid-1500s, the corporation as we understand it as a means to do business came into being to support voyages to the new world. It would seem that it was deemed more practical at the time to have a small governing board to guide the venture with one-hundred fifty shareholder/investors as opposed to one-hundred and fifty actual partners who each might have wanted to have the adventure go in a different direction.
From that time until the end of the twentieth century, the options for business people were the corporation or the partnership. However, most businesses in Florida are closely held concerns owned by one or a handful of people and are not large businesses with hundreds of stockholders, publicly traded stock, a large board of directors, or thousands of employees. Therefore, the corporation as a legal entity by which to conduct business was too cumbersome for most people and was akin to nailing a thumbtack in with a sledge hammer. In reaction, in the early to mid-1990s, the Florida Legislature revised the partnership laws to allows for different types of partnerships that would better accommodate how business people were actually operating in the State. But, those options did not afford the legal protections offered through the corporation and by the end of the 1990s they were largely abandoned in favor of the limited liability company.
In Florida at present there really are no burdensome requirements to set up a business other than having a credit card and a physical address for a registered agent. For example, there are no citizenship requirements or bonds or a test to pass, which would seem to promote the open development of business in the State.
There are three types of business entities in Florida. They are the corporation, which is designated by the letters “Inc.”, the limited liability company, designated by the letters “LLC”, and the partnership with its various permutations that can be represented by letters such as “L.P.” for limited partnership, “L.L.L.P.” for limited liability limited partnership, etc. The “S Corp” is not a legal business entity, but is merely a tax election that a business owner makes with its accountant.
This entry will conclude our study of the third of the three basic component parts of a business lawsuit in Florida, which is the final phase that sees the resolution of the dispute. We have reviewed the pleadings and discovery phases and conducted a deeper dive into those phases. We have also analyzed direct settlements, mediation, and arbitration as mechanisms of resolving business disputes in whole or in part. Now we turn our attention to the most formal method of the trial.
Trials are governed by certain rules. As James Bond infamously said to Auric Goldfinger in the 1964 classic that bore his name, “strict rules of (golf) evidence and procedure, Goldfinger.” It is the function and obligation of your lawyer to know those Rules inside and out and to understand how to properly employ them in the trial. Florida Bar Board Certified business lawyers like David Steinfeld, who even served as past Chair of that Committee at the request of the Florida Bar President, have demonstrated to the Bar that they have sufficient experience in both jury and non-jury trials of business disputes, have passed a very comprehensive exam, and received approval from judges and fellow lawyers to be called experts in business trials.
Board Certified business lawyers are the cream of the crop in Florida and are experts in conducting trials, which is where the proverbial rubber meets the road in a business lawsuit. Such experience also permeates the entirety of the lawsuit and guides and structures all pre-trial phases. To draw a parallel, an educated doctor who has experience with certain operations is better than a doctor who has never performed an operation or has little experience in them, but knows a lot about the body. Unlike doctors, however, not all lawyers are board certified nor are they required to be in order to practice law; only those who have the experience and are deemed worthy by judges and other lawyers can even sit for the exam and not all who do so pass the exam.
Parties in the lawsuit can choose a judge or jury and do so early on in phase one. Thus, determining whether the case is appropriate for a judge or a jury is where actual trial experience is of great value to you or your business. Selecting the jurors, a process called voir dire, is also a critically important skill and can make or break the trial. A trial is like a play that runs one time for a very select audience. Knowing how to organize, manage, and produce that production is the hallmark of an experienced and accomplished attorney and one that you want to represent and stand by you or your business in trial.
In our continuing study of the third or conclusion phase of a Florida business lawsuit we have reviewed the informal methods of resolution consisting of settlement and mediation, and will now examine the more formal methods of arbitration and trial.
Arbitration can exist as an independent option where parties agree in a contract to resolve certain disputes in arbitration instead of in court. But, it can also be used within a lawsuit and can be binding or non-binding and can be by agreement or ordered by the Judge, but a Judge may only order the non-binding variety. A decision entered in a binding arbitration is final, subject to review, while one rendered in non-binding arbitration is not and rests somewhere between the informality of mediation and the formality of a trial because a party can reject the decision and take their case to trial. Logic leads one to the inquiry of what benefit arbitration provides if the case can still go to a trial, but the arbitration can act as a dress rehearsal for trial evidence and can show one party that they may not have a chance at trial.
Depending on the circumstances of any dispute, whether arbitration is useful or beneficial is a decision for you to make with you lawyer. Naturally, having an attorney who has a depth of experience and knowledge with arbitrations in and outside of lawsuits like David Steinfeld is highly beneficial to the analysis that your team should undertake in deciding this option.
In our examination of the three basic component parts of a business lawsuit in Florida we have analyzed the first two phases and now proceed to the third phase, which is the conclusion of the dispute in some form or another.
To review, some of the ways that a lawsuit can conclude are direct settlement, settlement through mediation, or procedural methods like summary judgment that can actually occur in the first two phases of the lawsuit. But, a trial either in front of a judge or a jury occurs primarily in this third phase. There are the one-off situations where a case can be split in half or bifurcated and part of it tried earlier before additional discovery might be conducted or variants of trials like summary trials employed, but generally the trial occurs in the third and final phase.
As to direct settlement, nothing prevents a party in a lawsuit from settling their dispute or from suggesting a settlement to the other side at any time. Business lawsuits are fundamentally business disputes and are thus capable of being resolved by business people in a business-like fashion. Sometimes, however, it takes one side or the other some time to come to that realization or they do not get to that point and the dispute is decided by a judge or jury. But, whether or when to suggest a settlement is a tactical decision that should be made in concert with your attorney as there are implications to the overall dispute. Likewise, certain provisions should be addressed and accommodated in any settlement agreement, which is where having an experienced attorney representing you becomes of tremendous benefit.
Mediation is a private meeting between the parties either by their agreement or by court order with a mediator they choose. Florida was the pioneer in this area of alternative dispute resolution in the early 1990's and now has some very accomplished and skilled mediators. Mediation can actually occur as many times as the parties desire by their agreement, but it usually must occur at least one time before a judge will allow a case to proceed to trial. You and your lawyer should perform due diligence on any mediator that will assist you in solving the dispute to be sure you choose the right person for the job. Through the scores of mediations in which David Steinfeld has represented client, he has worked with many seasoned mediators and can guide you or your business in selecting appropriate mediators for your situation.
In the last post we started looking at the second or discovery phase of a business lawsuit in Florida as part of our examination of the three basic phases of a business lawsuit. As part of that we looked at depositions as one method for parties to use to question another party or a third-party outside of the lawsuit to obtain or clarify information and documents. Some of the other mechanisms available to parties in a lawsuit are interrogatories, requests to produce documents, and requests for information. When and which of these discovery methods to use is largely the judgment call of your attorney, but he or she should at least explain the options to you and the plan for using them in the overall discovery program.
Interrogatories are limited in number and ask the other side in a lawsuit to answer questions under oath, similar to what happens in a deposition, but they are not the same kind of questions. Requests to produce ask for documents or categories of documents relevant to the lawsuit and likewise have certain limitations and restrictions placed upon them. Requests for admissions ask the other side to admit or deny specific facts or validate documents to save time by not having to do so later. When these requests go beyond what is allowed or they are perceived to do so, they are often met with motions filed by the recipient to which the requesting party can reply. This is commonly called motion practice and the disputes in this phase are either resolved by and between the lawyers or by the Judge in a hearing. Sometimes these issues can grow quite complex and involve unique issues touching on trade secrets, confidential business information, and electronic materials.
In the past several years, the discovery of electronic materials has occupied an increasingly important role in the discovery phase largely as a consequence of how businesses and people store and use information. Few businesses have a file cabinet with paper files nowadays; most have sophisticated cloud-based IT solutions that have become inexpensive and multiply the ability of the business to generate profit. This area of discovery of electronically stored information has aptly become known as e-discovery and is one of the newest and hottest topics in the legal industry.
In order to maintain pace with both its business clients and this evolving area of the law, the Law Office of David Steinfeld has embraced technology in the service it provides and David Steinfeld has taught numerous continuing education classes to Judges and to hundreds of lawyers on e-discovery. He also created a website that evaluated the software from vendors used in e-discovery to better aid law firms across the country in selecting the right software and to provide a more cost effective and better service to clients. Mr. Steinfeld is regularly called upon by the Florida Bar and the Palm Beach County Bar as well as other groups to speak on e-discovery and maintains special relationships with e-discovery software companies that allow the Law Office of David Steinfeld to obtain preferred pricing to benefit its clients.
In a previous post we looked at the three basic phases of a business lawsuit in Florida. We are now starting to examine them in further detail. The second phase is the discovery phase in which the parties try to verify what they think they know and learn information of which they were unaware. They do this with the other party or parties in the lawsuit and with parties outside the lawsuit known as third-parties.
The Rules of Procedure that govern civil lawsuits in Florida provide the parties with ways to obtain documents and information in their discovery efforts and, along with past cases or precedent that have interpreted those Rules, place certain limits on those. Those options include depositions, which are essentially question and answer sessions under oath conducted by a lawyer and recorded by a stenographer also called a court reporter that the party taking the deposition hires and pays. Unlike some of the other discovery options available, a party can use a deposition to obtain or clarify information and to even obtain documents from another party in the lawsuit or from a third-party.
Depositions can also be videotaped in addition to the court reporter and like the court reporter, the party taking the deposition hires and pays for that in most cases. Depositions are coordinated between the parties unless a Judge orders them and prescribes the time and location for them. Ordinarily however, because lawyers are required to conduct themselves in a professional manner, this is all coordinated very easily between the parties without the need or expense of involving the Judge. The website of the Law Office of David Steinfeld contains several articles on depositions and what to do and what not to do in them, but the best preparation is a frank and direct discussion with your counsel before the deposition. There are also some examples on YouTube now of depositions that have gone horribly wrong that make for interesting viewing.