March 2024

Roxanne Zhilo | March 21, 2024

How to Handle a Business Lawsuit

Even the simplest business operation has the potential to spend countless hours fighting a lawsuit from customers, employees, or other companies.

Let’s Take A Quick Look at the Legal Process

How do you know if you’re being sued?

You'll receive a summons or complaint when a company or individual initiates legal action against your business. The complaint will outline the allegations and legal basis for the lawsuit.

What do I have to do next?

You must respond to the lawsuit by filing a document with the court within a specified timeframe. The timeframe changes based on jurisdiction. Jurisdiction in this context refers to where the lawsuit is being brought. Rules change by state and sometimes even by county and court. This means that the timeframe in New Jersey is different from the timeframe in Pennsylvania. Also, in Pennsylvania, procedures may differ from county to county. If you do not file any response or fail to respond within the proper time frame, a default judgment may be entered against you.

What does a response entail?

A response could take the form of an answer or another documents such as a preliminary objection (in Pennsylvania) or a motion to dismiss (in New Jersey). Once again, your options will depend on jurisdiction.

What happens next?

Next, you begin discovery. Discovery is exactly what it sounds like- you are discovering information from the other side or third parties. You can do this using different mechanisms. This could mean producing documents or answering interrogatories, which are written questions produced by each side. It could also mean depositions, which are questions provided orally by both sides. There are several other ways of discovering information as well.

Discovery is used to figure out what evidence each side has, what credibility witnesses bring, what information experts may be presenting at trial, and much more. It’s a time to determine liability and damages as well.

Throughout the litigation process, you may also have motion practice, where the attorneys request remedies from the court. Depending on the court, your motion may require oral argument before the court or just a written submission to the court.

This process is intended to help both parties put all their cards on the table in order to both prepare for trial, and also to see if they are able to settle prior to trial.

Steps on How to Handle a Business Lawsuit

How you handle a business lawsuit is essential. First, lawsuits can be time-consuming. Second, they can deflect you from core activities, namely running your business and generating revenue.

Follow these steps if a summons or complaint crosses your desk.

Step 1: Talk with a Business Litigation Attorney

The first thing you will want to do is find a business litigation attorney near you. That attorney should be able to address your specific concern. It is just as important to have access to specific experience as it is to have specific experience. Does the attorney have other attorneys within a law firm who know about areas of law that may come into play? Find someone competent, but also someone you trust.

Litigation can be long and draining. You’ll want someone who will walk through the process with you and not only be able to guide you legally, but will be able to walk beside you as you go through this difficult process. You want someone who will communicate with you every step of the way, and someone who will be able to provide explanations and options as to the best course of action every step of the way.

A good attorney will also talk to you, the client, about the possibility of coverage. Many businesses have insurance. Certain lawsuits may be covered by your insurance policy. Your attorney should review any insurance policy you may have and discuss with you who will contact the carrier or agent. This is part of being a partner in the litigation process.

It’s critical to give timely notice to your insurance company. Not only will late notice crater coverage, a lot of carriers won’t even start calculating the retention or the deductible until notice is given.

Step 2: Go through the Complaint with a Red Pen

You’ll notice that the Complaint is usually presented in a timeline fashion. Go through each line and mark up what is correct and what isn’t correct.

Ask the following questions:

Did they miss important details?
Did they get something wrong?
Is any of the information true?
Did they miss mentioning important characters in the story?
Did anything important happen in between certain lines of the Complaint?
Is the timeline off?

Your business litigation attorney will want to know all this. The better you prepare, the better your attorney will be prepared.

Step 3: Start Gathering Your Evidence

One of the keys to success when running a business is good record-keeping. Your records will be helpful if you face a legal challenge. You’re going to need a paper trail to defend against a lawsuit.

This is one case where less isn’t more. If you think it could impact the case, include the information. Below is a good starting point on documents to have on record for your case:

Business contracts and agreements
Financial records and statements
Communications (emails, texts, letters)
Witnesses
Prior disputes

Your records should tell a story from beginning to end. That story should convince the court that your version of the dispute is correct.

Step 4: Determine Your Course of Action

With any business lawsuit, you can take several directions:

Admit to and take care of the claim.
Deny the claim and begin your defense.

Your lawyer can guide you through the pros and cons of each approach, and each approach will likely have several ways of addressing the course of action you take.

You may also be able to avoid going to court by settling the dispute. Many lawsuits take this route.

Step 5: Investigate Alternatives to Litigation

Legal proceedings can be a drain financially and even emotionally. Even if you win your case, you face distractions, courtroom hours, and legal costs. Settlement is one way to avoid those burdens.

Considering using alternative dispute resolution (ADR) to resolve your business conflict could be an option. ADR programs excel at getting results that are flexible and cost-effective. Equally important, they help retain business relationships.

The most common forms of business ADR are negotiation, mediation, and arbitration.

Is there anything I can do to protect my business from a lawsuit in the future?

While you can't wholly avoid lawsuits, there are steps you can take to reduce the risk of having to handle a business lawsuit.

Focus on these actions:

Insurance: Identify where your business could be most at risk for a lawsuit. Then, make sure you have appropriate coverage.
Contracts: They're a substantial driving force behind business lawsuits. So, take the time to draft clear and precise contracts that state responsibilities and deliverables. Even when dealing with friends, and maybe especially when dealing with friends, take the time to draft a contract when doing business. Contracts are just a way to set boundaries and set expectations up front. If everyone is on the same page up front, there’s less chance of hurt feelings or “I didn’t know” that’s what you meant/wanted in the future. A well drafted contract can and should help you protect your relationship with the person or entity you are contracting.
Employment Policies: Establish and communicate employee policies governing customer interactions, competitive conflicts, internal communications, etc. An employee handbook is essential for any startup business. Restrictive covenants can also avoid legal disputes with employees and competitors. Again, this is another way to set expectations. If you teach your employees what is expected of them, they can’t say they didn’t know later. The best course of action is always policies coupled with actual training.
Safety: Some businesses require more attention than others with safety regulations. Construction and manufacturing companies, for example, demand strict attention to safety concerns. There are ways to mitigate risks. There are also ways to mitigate liability. One of the ways to mitigate liability is make sure people are aware of dangers and safety concerns. Once again, both policies and training are always the best protection.
Business Formation: Consider your chosen legal structure when starting your business. Your structure impacts asset risk, taxes, operations, legal protections, and benefits. You should speak with both your attorney and your accountant before making this decisison. Each business entity has its specific pros and cons.

Free Download: Legal Handbook for Starting and Running a Small Business

Download our quick and concise handbook featuring the legal steps and strategies to accelerate your growth and company success.

Business Litigation in Bucks, Delaware, and Montgomery County, PA

Handling a business lawsuit starts with having an experienced business litigation attorney on your side. They can distinguish between winning and losing a business lawsuit, and guide you through the complex legal system.

High Swartz has law offices in Doylestown, Norristown, and Wayne, PA. We represent local and national businesses. If you face a legal dispute, call our firm.

Roxanne Zhilo is a commercial litigation attorney, whose legal practice focuses on business litigation and complex civil litigation matters. She also works as a small to medium-sized business (SMB) counsel, and has experience with employment law and contract matters. She regularly advises non-profits and businesses in risk mitigation, liability assessment, procedural and protocol framework, and employee policies.

Michael A. Luongo | March 18, 2024

The Most Common Small Business Lawsuits

Small Business Lawsuits are a Common Occurrence

Business lawsuits, in general, are nearly an everyday occurrence. They run the gamut from contract disputes to discrimination. But here I want to address five of the most common small business lawsuits.

Before doing so, you should be aware, as a small business, how frequently lawsuits happen. A compilation of statistics by The Zebra shows:

Business litigation impacts 36% to 53% of small businesses annually.
Roughly 45% of small companies are in litigation.
90% of all companies experience a lawsuit at some point.
Small companies face 12 million contract lawsuits annually.

Consequently, the more you're aware of the challenge, the better able you'll be to safeguard your business. Whether you have internal counsel or a commercial litigation attorney on speed-dial, a trusted legal resource is critical.

An attorney can provide counsel to minimize the potential for business disputes. And when the inevitable strikes, they can help guide you through the litigation process.

Commercial Lawsuits vs. Civil Lawsuits

Both types of lawsuits share similarities relating to legal procedures and remedies. However, their underlying causes and contexts differ significantly, highlighting the diverse legal landscape businesses must navigate.

Commercial Lawsuits

The most common small business lawsuits involve commercial lawsuits. Commercial litigation is civil litigation involving companies’ business interests as opposed to individuals pursuing consumer, household or personal claims.

Commercial lawsuits typically involve disputes arising from business transactions, contracts, or commercial relationships. These may include breach of contract claims, business torts, or conflicts over intellectual property rights.

Commercial lawsuits focus on resolving commerce, trade, or business operations conflicts. Generally, they involve parties seeking financial damages or specific performance remedies.

Civil Lawsuits

Civil lawsuits cover cases involving a broader range of legal disputes unrelated to commercial activities. These may include personal injury claims, property disputes, or family law matters.

Civil cases can involve individuals, businesses, or other entities. They seek various forms of relief, such as compensation for injuries, injunctions, or declaratory judgments.

The 5 Most Common Small Business Lawsuits

Businesses face many lawsuits, from contract disagreements to employee disputes and claims of intellectual property theft. Business litigation lawyers can help devise the best strategy for handling disputes.
The five most common small business lawsuits include:

1. Breach of Contract

Contract disputes, notably breach of contract, are generally the most common business-directed lawsuits. These suits can involve failure to deliver goods or services as per the contract or damaged goods. Contract issues can also involve failed payments or revealing trade secrets.

2. Discrimination

Small businesses can face discrimination lawsuits from employees and customers. More employees are suing their employers, mainly from increased enforcement by the Equal Employment Opportunity Commission (EEOC).
The most common employee discrimination claim is retaliation, representing more than half the cases. These cases can extend to disability, race, sex, age, equal pay, etc.

3. Wage Payment and Collection Law

Wage and hour laws can be local, state, or federal. Employees can file lawsuits against employers who violate any of these laws. Many lawsuits are about employers not paying enough money or extra money for hourly workers. Sometimes these cases involve bonus or commission disputes.'

Pennsylvania has one of the country's strongest Wage Payment and Collection Laws (WPCL).

4. Torts

Businesses often find themselves embroiled in tort lawsuits. They involve claims of wrongful acts that harm individuals or property. These lawsuits can arise from various scenarios:

Slip and fall accidents

Product liability claims

Negligence in providing services

5. Ownership Disputes

Partners, stockholders and other owners can disagree about purchase or sale agreements, bylaw violations, or compensation issues. While most partners would not expect to have a dispute when starting, these lawsuits are common in the business world.

Types of Businesses Facing These Lawsuits

Litigation affects businesses of all sizes. It might seem logical to assume larger corporations with expansive operations and deeper pockets are the prime target.

But as you've seen from the statistics, small and medium-sized Business (SMBs) are not exempt from lawsuits. And unlike larger corporations with in-house legal representation, small businesses have fewer resources. That makes handling legal issues even more challenging.

Your likelihood of a lawsuit varies based on numerous factors. But some industries are more susceptible than others. Common targets include:

Construction
Healthcare
Service
Technology
Retail
Manufacturing

So, if you own a business in one of these sectors, you'll want to prepare yourself to address common small business lawsuits.

Work with an Experienced Team of Business Litigation Attorneys

Our law firm works with companies in Bucks, Chester, Delaware, and Montgomery counties and represents nationally based businesses. Give us a call for assistance.

Michael A. Luongo, Esq. is a Bucks County attorney in the firm's business litigation, municipal, and criminal defense practices. Michael defends depositions, drafts and argues various motions, and serves as first and second chair in complex trials.

Caitlin Foley | March 14, 2024

PA Spousal Support Guide

Divorce is an all too common occurrence. Apart from the emotional turmoil, there are other real-life consequences. Spousal support is one of them. Let's examine spousal support in PA.

What is Spousal Support?

If you're facing a divorce, you might have heard three legal terms relating to spousal payments. There's spousal support, alimony, and alimony pendente lite. Moreover, you might even think they all refer to the same thing: a payment to or from your spouse during divorce. And in one sense, you'd be right.

However, they are distinctly different terms, and it pays to know the difference. It's essential to note that Pennsylvania doesn't discriminate based on gender. Pennsylvania divorce court is a court of equity, which means that the judges have a lot of discretion when making decisions regarding spousal support and alimony.

You should talk with a spousal support attorney if you're considering divorce. Call our law offices in Norristown, Wayne, and Doylestown, PA.

Spousal Support

This payment happens during separation and before starting a divorce proceeding. Pennsylvania defines payment as providing "care, maintenance, and financial assistance" for a party during separation.

As a result, the spouse with a lower income may request support for living expenses during separation. The key determinant is that this happens during separation and before the actual divorce process.

It is important to note that someone who would otherwise be entitled to spousal support may be denied those payments if the paying spouse successfully presents an “Entitlement Defense.” This means that a court can deny spousal support payments if the party asking for support commits marital misconduct, engages in indignities, or does not demonstrate a need for support.

Spousal support in PA ends when one spouse files for divorce, but will convert to Alimony Pendente Lite.

Alimony Pendente Lite (“APL”)

This payment happens after filing a divorce complaint. Unlike spousal support, alimony pendente lite, or “APL”, is meant to assist the financially dependent spouse with the legal costs of the divorce proceedings.

A spouse cannot receive spousal support and APL at the same time. There are no "Entitlement Defenses" with APL.

Alimony

After a divorce is finalized, you may either receive or pay alimony. So, alimony represents the financial obligations from one spouse to another after a court issues a divorce decree.

Courts determine alimony in Pennsylvania by analyzing 17 factors, including those presented in 23 Pa.C.S. Section 3701(b).

Alimony is not guaranteed.

Calculating Spousal Support in Pennsylvania

Pennsylvania spousal support guidelines typically require the higher-earning spouse to pay approximately 40% of the net income difference. You should be aware that courts have a certain level of discretion to deviate from the guidelines, and that any online spousal support calculators should not be relied on for financial planning.

For example, if the parties have children, the spouse with the higher earning capacity might pay less in spousal support if they have an additional child support obligation. Courts also may adjust these basic calculations to account for insurance coverage, medical expenses, duration of the marriage, etc. In addition, there are protections for low-income parties and alternate analyses for very high incomes.

How Long is Alimony in PA?

As mentioned, the duration of APL and spousal support in PA may vary depending on the separation time and divorce filing. If granted, alimony can last for a definite or indefinite time. Courts also grant permanent alimony in some rare instances. PA alimony laws use a barometer reflecting "reasonable under the circumstances" when determining alimony payments.

Often, the type of alimony helps set the tone for the duration it will be paid. Pennsylvania recognizes three types of alimony:

Rehabilitative Alimony: This presents temporary financial support for a fixed time to become self-supporting. Generally, it gives the spouse seeking alimony the time to complete school or training, or to get back on their feet after a divorce.

Permanent Alimony: In very rare cases, the receiving spouse may receive payment throughout their lifetime. The alimony usually ends if the receiving spouse remarries or cohabitates with another partner.

Equitable Reimbursement: Equitable Reimbursement is sometimes considered Alimony. Picture this: You supported your spouse through law school. Now, they're practicing law and filing for divorce. A court may allow Equitable Reimbursement payments based on the expenses incurred while your spouse was in school.

Can You Modify Alimony Payments?

A judge might modify an alimony order if you don't have a written agreement or court order forbidding modifications to alimony. Circumstances justifying a payment change can relate to substantial income changes, illness, or job loss. Always ask your divorce lawyer about the pros and cons of modifiable alimony.

If your alimony is modifiable, you must file a Petition to Modify Alimony Order and attend a hearing to decide the matter. It's best to consult a spousal support lawyer to assist with the process.

One other option for modifying your payment is through mediation. If a couple can agree to change the alimony payment, they can submit it to the court.

Need Legal Help with Spousal Support in PA?

If you still have questions after reviewing our PA spousal support guide, call our law firm to talk with a family lawyer. We have offices in Montgomery County, Bucks County, and Delaware County, PA. Our experienced attorneys can help you with spousal support, divorce, and child custody concerns.

John S. Han | March 8, 2024

Wire Fraud: Protecting Yourself in a Digital World

Wire fraud is a white-collar crime that has consistently grown in today's digitally-based world. In 2022, for instance, bank transfer or payment fraud resulted in losses amounting to $1.59 billion.

Equally important, it targets consumer and business accounts. Consumer account attacks happened more frequently than business attacks last year.

What is Wire Fraud?

Committing wire fraud involves using electronic communications to deceive individuals or entities for financial gain. The schemes use wire or electronic transfers to carry out the activity.

Communication can involve phone calls, faxes, texts, social media, or emails.

Because interstate commerce generally applies to these forms of communication, the crime is a federal offense. However, some states, including Pennsylvania, charge for the offense.

As a result, investigations can happen at multiple levels. The Federal Bureau of Investigation (FBI) generally heads the investigation. However, investigations can include the Federal Trade Commission (FTC), U.S. Department of Homeland Security, and state governments where applicable.

How Does Wire Fraud Work?

Wire fraud takes many forms, but the schemes generally take the same approach.

The fraudster often uses a story that creates an urgency to rush the target's decision. They use various communication channels like email, phone calls, text messages, social media, or fake websites.

Typically, the wire fraudster presents themselves as legitimate, working banks, reputable companies, or government agencies. They promise high investment returns, offer too-good-to-be-true deals, or create false emergencies to exploit the victim's trust.

The fraudster convinces the victim to wire money into a bank account they control. Wire transfers are difficult to reverse, making it challenging for victims to recover their funds.

The victim provides personal or financial information the fraudster can use to steal money or commit identity theft. Generally, that information includes bank account numbers, credit card details, or login credentials.

Elements of Wire Fraud

According to the U.S. Department of Justice (DOJ), these four elements are essential in wire fraud cases:

That the defendant voluntarily and intentionally devised or participated in a scheme to defraud another out of money;
That the defendant did so with the intent to defraud
That it was reasonably foreseeable that interstate wire communications would be used;
And that interstate wire communications were used.

What is Wire Fraud Conspiracy?

Wire fraud conspiracy occurs when two or more individuals conspire or agree to commit wire fraud. It requires a collaborative effort when planning the crime.

Charges can apply even if the fraudulent scheme is unsuccessful. Equally important, you needn't be the mastermind to face charges.

Requirements for Wire Fraud Conspiracy

The DOJ includes these requirements for a conspiracy to defraud:

An agreement between two or more persons;
To commit mail fraud or wire fraud;
It was an overt act committed by one of the conspirators to further the conspiracy.

The conspirators don't need an agreement on using mail or wire communications. For prosecution, only one of the conspirators must have the intent to do so, but all parties can face charges.

What is the Penalty for Wire Fraud?

Because wire fraud is a Class C Felony and federal crime, wire fraudsters face severe penalties:

Fines up to $250,000 for individuals
Fines up to $500,000 for organizations
Imprisonment of not more than 20 years

Some cases involving national disasters or financial institutions carry penalties of 30 years imprisonment and a million-dollar fine.

Moreover, these penalties apply per count. For example, sending five emails with fraudulent intent constitutes five counts. And each is subject to maximum fines and prison terms.

Examples of Wire Transfer Fraud

Wire transfer scams target entities of all types, including individuals, businesses, financial institutions, real estate, healthcare providers, etc.

One notable example is the noted Nigerian Prince scam. The scammer sends an email claiming to be a Nigerian prince who can't access their fortune sitting in a bank account. They ask the target to hold the money in exchange for a sum. Their goal is to access financial information to steal the target's money.

Other tactics include:

Phishing: Fraudsters attempt to acquire bank accounts, credit cards, phone numbers, or other sensitive information through emails or websites. They present themselves as a legitimate business or person.

Investments: The perpetrator offers high returns or profits using emails or phone calls.

Identity Theft: Wire fraudsters steal a person's social security or bank information and send money to themselves.

Hiring Scams: Scammers present high-paying jobs on employment platforms like LinkedIn and Indeed. Their goal is to steal birthdays or social security numbers.

How to Report Wire Fraud

If you suspect you're a victim of wire fraud, take these steps immediately:

Alert Your Bank. They might be able to stop the transfer or help contest charges.
Report the Crime. Contact your local FBI office. Call the Fort Washington satellite office at (215) 641-6059 for Bucks and Montgomery counties. Call the Newtown Square in Delaware County at (610) 353-4500.
Review Insurance: Contact your carrier to see if you have coverage.
Engage an Attorney: An attorney can help determine who to contact and what actions to take. They can also help determine potential third-party liabilities.

Ensure you capture details like dates, times, names, companies, money lost, and supporting evidence.

What to Do If Accused of Wire Fraud

Contact a criminal defense attorney specializing in white-collar crimes and wire fraud. Remain silent and wait for that attorney to be present before any discussions.

Remember: This is a serious situation. You face severe consequences if convicted. Consulting with an experienced attorney is crucial to protect your rights.

7 Red Flags for Wire Fraud

Scammers often pose as a colleague, client, or someone you or your company has done business with recently. They may pretend to be a vendor asking you to wire funds to an account.

Understanding how fraudsters attack is the best way to help prevent wire fraud. Here are some red flags to look for:

Unsolicited requests for money or personal information.
The sender insists on communicating only via email.
The return email looks odd or doesn't include the company name.
Urgent or time-sensitive offers that seem too good to be true.
Pressure to act quickly without proper verification.
Misspellings, odd phrases, or grammatical errors in communication.
Requests to wire money or send payments through unconventional methods.

Criminal Defense Lawyers for Bucks, Delaware, and Montgomery Counties

Wire fraud is all too common today. Talk with a local attorney who can help recover your money. Or, if accused, reach out to a criminal defense attorney quickly.

Our attorneys support clients in Bucks, Delaware, and Montgomery County. More importantly, you can count on their experience to get results.

John S. Han serves as a trial and criminal defense attorney, representing clients facing investigation and prosecution by State and Federal Law Enforcement authorities throughout the Philadelphia metropolitan region, with a particular focus on Montgomery and Bucks Counties.