Practice Area: Business Law

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

red pen on table

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:
  1. Admit to and take care of the claim.
  2. 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:
  1. Insurance: Identify where your business could be most at risk for a lawsuit. Then, make sure you have appropriate coverage.
  2. 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.
  3. 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.
  4. 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.
  5. 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.

legal handbook to starting a running a small business

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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.

Angela Lorenz | December 7, 2023

Attorney Donald Petrille, Jr. Achieves IMI Qualification as Mediator

Don joins a well-established team of alternative dispute resolution attorneys, mediators, and arbitrators at the firm.

High Swartz, LLP attorney Donald Petrille, Jr. has earned certification as an IMI (International Mediation Institute) Qualified Mediator. Mr. Petrille is qualified to deliver alternative dispute resolution services in his practice areas of general commercial law and estates and trusts.

The mediation training, accredited by the International Mediation Institute and the Civil Mediation Council, provides education and training to meet the requirements for various court programs in Pennsylvania. Throughout the course, Petrille delved into the intricacies of conflict psychology, communication strategies, and power dynamics inherent in the mediation process.

The International Mediation Institute is renowned for setting rigorous global competency standards for mediators. The standards are maintained by independent groups comprised of experienced professionals from around the world. To achieve IMI qualification, individuals must complete the program through an approved 'Qualifying Assessment Programs' (QAPs). Don completed the program through Phoenix Dispute Solutions (PDSL), a recognized service provider organization.

As a business lawyer for twenty-five years, Don Petrille dedicates his pracitce to representing businesses and their shareholders as they navigate the complexities of today's legal landscape. His assistance spans all phases of business development, from initial organization through operational stages to eventual sale, acquisition, or dissolution.

A significant part of Mr. Petrille’s practice involves estate planning and administration, as well as handling complex matters in the Orphans’ Court division. In this capacity, he advises clients on wealth preservation, transfer methods, and business succession planning.

"My experience negotiating and litigating business break-ups, contract disputes, will contests and beneficiary claims in the civil and Orphans’ Courts will benefit parties seeking to avoid protracted litigation and find a shared path to a mutual agreement. I’m looking forward to helping lawyers and clients throughout Pennsylvania and New Jersey solve their disputes confidentially and on their own terms." - Don Petrille, Jr.

Petrille's legal experience extends to various industries, including real estate management, alternative energy, market research, pharmaceutical services, telecommunications, construction, and software development. He addresses aspects of corporate governance, contracts, procurement, compliance, human resource issues, and creditors’ rights, ensuring that his clients receive tailored and comprehensive legal support.

High Swartz | October 9, 2023

How to Avoid Lawsuits

The business world faces challenges, with legal issues just one. And for small to mid-sized businesses (SMBs), one of the gravest threats is a lawsuit. Some 12 million contract lawsuits are filed yearly against small businesses. You must have some notion of how to avoid lawsuits.

Large corporations might have the capital to weather corporate law and business litigation. But for SMBs, it could present a significant concern if it does not spell the end of your business. Fortunately, there are proactive steps you can take as a small business owner to protect your venture from commercial litigation.

One of the best first steps is arming yourself with an experienced business lawyer near you. They can work with you to put the necessary protections in place to reduce your chances of a lawsuit.

Avoiding Business Law Compliance Concerns

As a small to mid-sized business owner, you might wonder, "Why is compliance so vital?"

First, adherence to business regulations isn't just a matter of legality; it's about credibility. Compliance builds trust among clients, customers, and partners to show that your business operates with integrity and respect for the rules.

Second, staying compliant prevents financial penalties, disruptions, and legal challenges.

Two of the more common business regulations involve zoning and permits.

Zoning Ordinances

A zoning ordinance regulates how you can use a property in a specific location, typically involving areas within counties and cities. In these areas, local governments may regulate and limit the activities in the jurisdiction.

For instance, nearly 60% of Pennsylvania townships and boroughs have zoning ordinances dictating permitted use. So, your small business in Montgomery or Bucks County likely has different requirements than another across the state.

SMBs must be diligent in ensuring their operations adhere to these regulations. Otherwise, you can face legal consequences, including:

  • Criminal penalties, including fines or jail time.
  • Civil penalties that prevent the zoning violation from continuing.
  • Withholding of permits

Licenses and Permits

In addition to zoning ordinances, your business may require various licenses and permits. Failing to secure the right ones can lead to hefty penalties or closures. So, you must consult with local authorities or a business attorney to ensure you're up to date.

How to Avoid Lawsuits from Employees

Employees are the core of every business. The relationships you build with them can make or break your enterprise, especially for SMBs.

Fostering a positive work environment is crucial to productivity and morale. Equally important, it's a critical shield to avoid lawsuits.

The dangers of neglecting employee relations are vast and sometimes devastating. Three of the most common employee lawsuits include discrimination, wrongful termination, and wage violations.

Understanding and safeguarding your human resources is more than just good business practice. It's a must to navigate the complex legal landscape of today.

Here are some other steps you can take to avoid having to hire a commercial litigation attorney.

Training and Educating Employees

Informed employees are your best assets in lawsuit prevention. Regularly train them on company policies, harassment prevention, safety protocols, and more. This not only empowers them but also safeguards your business.

Open Communication Channels

Foster a culture where employees feel free to voice their concerns. Open communication can nip potential issues before they escalate into more significant problems or lawsuits.

Workers' Compensation

One of the essential concerns relating to employees is workers' compensation. It's a requirement for employers in Pennsylvania, regardless of size. Otherwise, you risk civil and criminal penalties.

In addition, you may also be responsible for reimbursing the Uninsured Employers Guaranty Fund, including costs, interest, penalties, and other fees. Your employees can also file a lawsuit in state or federal court against you if you are uninsured.

Employment Contracts and Noncompetes

Clear employment contracts are essential. They lay out the expectations, roles, and potential severance conditions.

Restrictive covenants can be helpful if you're concerned about employees leaving and joining competitors. However, these agreements must be reasonable regarding length and scope to be enforceable.

Legal disputes can arise from employers against employees violating the contract. Conversely, employees can sue your business for unfair requirements within a noncompete agreement.

Noncompete litigation is typically fast-paced and expensive. You must act quickly if you suspect an employee or former employee is violating a noncompete agreement. Confirming sufficient factual support is critical before starting the litigation process.

How to Avoid Lawsuits During Business Formation

It's essential to separate personal and business assets.

Imagine this: Your business faces a lawsuit, and your assets, like real estate or your car, are at risk. Creating a legal distinction between your business and personal assets is crucial. And you can do that when you start a small business.

Choosing your business structure is your first critical concern as a small business owner. The form you select impacts everything from taxes and business control to operating costs and liabilities.

For example, forming an LLC or a corporation removes personal liabilities. Hiring a business lawyer is a wise investment during business formation. It helps ensure you avoid legal pitfalls down the road.

How to Avoid Lawsuits Involving Your Personal Life

Unfortunately, the line between our personal and professional lives often blurs. And that's especially true for small to mid-sized business owners.

Of all personal matters, divorce is likely the most severe threat to your business, especially with high assets.

Marital property typically includes assets acquired during the marriage. Moreover, personal premarital assets can convert to marital property over time. So, if you formed your business during the marriage, it's marital property.

That applies even if your spouse doesn't own any part of the business. Consequently, a spouse can claim a share of the company's value in a divorce.

Consider drafting a marital agreement that clearly defines business ownership. It can go a long way to preventing your business from becoming a point of contention in a divorce. It's also wise to avoid mixing marital funds with business funds.

Good Documentation Can Help Avoid Lawsuits

In a lawsuit, well-maintained records can be your most vigorous defense.

Keep accurate records of all business transactions, employee training, safety measures, and customer interactions. If someone claims you, you have evidence to validate your story.

Regular Legal Audits Help Avoid Lawsuits

Think of legal audits as health check-ups for your business. It's best to get into the habit when you start a business. Consulting with a business lawyer can help you identify and address potential concerns.

Spending money on legal help initially is much cheaper than paying a business litigation lawyer later.

Consider Insurance as a Safeguard Against Lawsuits

Insurance cannot help you avoid a lawsuit, but it can assist you if someone hits you with one. It offers a safety net and a shield against these unforeseen challenges. We already mentioned workers' comp insurance as mandatory. But here are some other insurance types worth considering to protect your business:

  1. General Liability Insurance: It covers legal fees and damages for lawsuits like injury or property damage.
  2. Professional Liability Insurance: This insurance protects against legal claims arising from professional errors, negligence, or contract breaches. For instance, if a consultant offers advice that leads to a client's financial loss, this insurance can cover the legal fallout.
  3. Product Liability Insurance: If you sell a product, you run the risk of that product causing harm. In addition, the product may not meet its promised standards. This insurance protects against lawsuits from product-related issues, ensuring that one defective batch doesn't spell doom for your venture.
  4. Cyber Liability Insurance: In an age where businesses increasingly operate online, cyber threats are real and potent. This insurance protects companies against lawsuits from data breaches or other cyber incidents. For businesses that handle sensitive customer data, this is becoming increasingly non-negotiable.

Our Business Litigation Attorneys Can Help

Regardless of how carefully you try to avoid a lawsuit, it's almost inevitable. Reports from various sources indicate that up to 53% of small businesses face a suit annually. And 90% of all companies experience a lawsuit at some point in their lifespan.

If that happens to your business, call our Doylestown or Norristown law offices and talk with our experienced business litigation attorneys. They'll help you address any legal action and get the desired results.

High Swartz | October 9, 2023

7 Essential Business Contracts

Business contracts are the core of any successful business, regardless of size. They serve as legally binding agreements that protect the rights and interests of all parties. Moreover, they're critical for even the smallest business owner. So, it's worth spending the time and expense to consult a contract lawyer on your most essential business contracts.

Every contract needs to outline the terms and conditions of a business relationship. For example, it provides a framework for doing business and helps prevent disputes. In addition, contracts establish expectations, responsibilities, and obligations to provide a solid base where trust and professionalism can thrive.

Contracts are ensure that all parties are on the same page. Moreover, they also offer legal protection when conflicts arise. They also provide a means of recourse and a clear path for resolution in the event of a breach of contract.

Ultimately, contracts bring a sense of security and stability to business transactions. And that enables small business owners to focus on growth and success while avoiding legal concerns.

Types of Essential Business Contracts

As a small business owner, having solid relationships with clients, vendors, employees, and partners is critical to success. However, relying only on verbal agreements or informal understandings can leave your business vulnerable to misconceptions, disputes, and legal issues. That's where business contacts are valuable.

These agreements provide clarity, protection, and peace of mind by outlining all parties' rights, responsibilities, and expectations. It's best to consult a contract lawyer near you to address and clarify the following business contracts.

Client Business Contracts

These contracts are vital for service-based businesses, as they outline the terms of your engagements with clients. So, key elements should include:

    • Scope of work
    • Deliverables
    • Payment terms
    • Project timelines
    • Termination clauses
    • Dispute resolution options

These service contracts should also include clauses for intellectual property rights, confidentiality, indemnification, and limitation of liability.

Vendor Business Contracts

Vendor contracts spell out the terms of your relationships with suppliers and service providers. As a result, this essential business contract should include:

    • Pricing
    • Delivery schedules
    • Quality standards
    • Warranties
    • Termination

When negotiating vendor contracts, get several bids. You should also consider long-term agreements for better pricing.

Employee Offer Letters

An employment offer letter defines work terms. Including one with any new hire is vital, regardless of position.

Key elements include:

    • Position title
    • Start date
    • Compensation package
    • Benefits
    • Working hours
    • Probation period, if applicable

You'll also want to mention any considerations in this essential business contract, such as background checks or references. Additionally, clarify the at-will employment relationship unless specific employment terms or agreements exist. If you have an employee handbook, you must also ensure they receive and sign a copy.

Partnership Agreements

An operating agreement is crucial if you're entering into a partnership. Consequently, this essential business contract must include these elements:

    • Capital contributions
    • Profit distribution
    • Decision-making processes
    • Roles and responsibilities
    • Dispute resolution methods
    • Withdrawal from Ownership
    • Buyout terms

Including dispute resolution and termination clauses provides a framework for resolving conflicts with business partners.

Non-Disclosure Agreements (NDAs):

NDAs protect your sensitive information when sharing it with external parties, such as contractors, investors, or potential partners. Key items include:

    • Definition of confidential information
    • Purpose of disclosure
    • Obligations of the recipient
    • Duration of the agreement

To enforce NDAs, clearly identify what represents a breach. You can consult with a contract attorney to present remedies if violations occur.

You might also consider other employment agreements like restrictive covenants relating to non-solicitation of customers, employees, or vendors.

Independent Contractor Agreements:

If your business engages independent contractors, it's crucial to have an explicit agreement in place. Generally, key provisions with this type of contract include:

    • Description of services
    • Compensation terms
    • Project timelines
    • Intellectual property rights
    • Termination clauses

You should specify that the contractor is not an employee and clarify the contractor's responsibility for taxes and benefits. In addition, include confidentiality and non-compete clauses to protect your business's sensitive information. A release of liability may also be prudent.

Drafting and Enforcing Essential Business Contracts

With templates on the internet, you can draft these essential business contracts yourself. Unfortunately, that's not always the best course of action. So, seeking legal advice ensures that your agreements meet state and local laws and protect your interests. An experienced contract lawyer can provide valuable insights and tailor contracts for your business.

Once complete, ensure that all parties sign the contracts. Keep copies of completed contracts in physical and digital formats. Maintaining proper records helps you reference agreements when needed. It also helps enforce the process if disputes arise.

Contracts need enforcement to be effective. So, regularly monitor compliance with contractual obligations, such as payment schedules and performance milestones. If a breach occurs, consult your contract attorney to understand the available remedies. They'll advise you on the steps to take to protect your rights.

Contract Lawyers Serving Bucks and Montgomery Counties

Our law firm has offices in Norristown and Doylestown, PA. Our business and contract attorneys help companies of all sizes and types, from small main street businesses to multi-national companies. Plus, our broad offering of legal services ensures you'll have experienced counsel regardless of your legal concern.

Call our law offices for any business concern - we are here to help.

 

Tom Gabor | June 29, 2023

Joel D. Rosen, Esq. Joins Board of Foundation for Sarcoidosis Research

The High Swartz LLP managing partner joins an impressive board of executives and innovators.

The Foundation for Sarcoidosis Research (FSR) is a prominent international organization focused on finding a cure and enhancing the care provided to sarcoidosis patients through research, education, and support. Since its inception in 2000, FSR has played a pivotal role in fostering sarcoidosis-specific research endeavors, accumulating over $6 million in funding.

Sarcoidosis is an inflammatory disease characterized by the development of granulomas, small clusters of inflammatory cells, in one or more organs of the body. Excessive formation of these clumps can impair the structure and function of affected organs. If left untreated, chronic inflammation can lead to permanent scarring of organ tissues, known as fibrosis.

While the lungs are the primary target in around 90% of cases, sarcoidosis can affect virtually any organ. Despite ongoing research advancements, sarcoidosis remains challenging to diagnose, with limited treatment options and no known cure.

When individuals are diagnosed with a rare disease like sarcoidosis, many face a lack of clear paths to recovery and, in some cases, no chance of healing at all. Unfortunately, there are few treatment options and limited understanding among doctors, researchers, and even patients themselves.

FSR actively facilitates groundbreaking advancements in sarcoidosis research, expediting the translation of promising therapies from the laboratory to patients. Through education, advocacy, resource provision, direct funding, and collaborations, FSR alleviates the suffering of patients while striving towards the ultimate goal of a cure.

Joel D. Rosen provides extensive guidance to a wide range of businesses in matters pertaining to corporate and commercial transactions. His practice encompasses various areas, such as company formation, mergers and acquisitions, licensing, sales, and financing initiatives. He is well-versed in non-profit law, franchise law, business and commercial law, employment law, trademark and copyright law, as well as commercial leasing. Mr. Rosen currently serves on the Boards of three other nonprofit institutions and has served on numerous non-profit Boards over the last twenty years.

 

Tom Gabor | May 16, 2023

Jacob Limaldi Joins High Swartz LLP as Summer Law Clerk

High Swartz LLP is pleased to announce that Jacob Limaldi, (Charles Widger School of Law, Villanova '24) has joined the firm's business and corporate law group as a summer law clerk. His impressive background and achievements make him a valuable addition to the firm. Welcome Jacob!

Originally from Toms River, New Jersey, Jacob attended Toms River High School South, where he was a member of the school's swim team. His dedication led him to become a one-time state record holder, earning recognition from USA Swimming as a Scholastic All American and Scholar Athlete of the Year. These accomplishments demonstrate Jacob's discipline, and dedication—qualities that will undoubtedly translate well into his legal career.

Jacob pursued his undergraduate studies at Yale University, where he obtained a Bachelor of Arts degree in Political Science. During his time at Yale, Jacob not only excelled academically but also participated in the university's men's Varsity swim team. Moreover, Jacob's passion for learning and intellectual growth led him to be selected as a William F. Buckley Jr. Fellow. This prestigious fellowship recognizes students who exhibit exceptional intellectual curiosity and a commitment to exploring diverse ideas. Additionally, Jacob was honored as a Yale Club of New York City Scholar, highlighting his academic achievements.

Following his undergraduate studies, Jacob gained valuable experience at Paul Hastings LLP's New York City law office. As a corporate paralegal in the Alternative Lending & Private Credit Group, Jacob provided counsel to private lenders and financial sponsors specializing in secured credit facilities. His time at the firm not only allowed him to develop a comprehensive understanding of corporate law but also honed his skills in delivering sound legal advice to potential clients.

Outside of his professional endeavors, Jacob generously devoted his free time to volunteering with Minds Matter NYC as a writing tutor. This organization supports high school students from lower-income families in the New York City area by providing them with educational resources.

Currently pursuing his JD at the Charles Widger School of Law, Villanova University, Jacob actively contributes to the legal community. As a member of the Corporate Law Society Executive Board, he collaborates with fellow students and professionals to enhance their understanding of business law. Additionally, Jacob has been recognized as a BARBRI Law Preview Scholar, which prepared him for the rigors of law school. Furthermore, he participates in the Graduate Student Peer Mentorship Program, where he provides guidance and support to his peers, fostering a collaborative and inclusive environment.

With his well-rounded background, passion for business law, and dedication to his studies, Jacob is poised to make significant contributions to High Swartz LLP's business and corporate law group. The firm looks forward to the fresh insights that Jacob will bring as he continues to pursue his legal education at Villanova and beyond.

High Swartz | April 19, 2023

What Do I Need to Start a Business?

Starting a business can sound like a pretty daunting task. It's true, there are many things to consider such as how your business is structured, contracts, and insurance. Below is a quick breakdown of specifics you will need to start a business. For this example, we have consulted with a Pennsylvania business attorney with regards to starting a business in the commonwealth state.

First and foremost you need to:

Choose the right business structure

Selecting the appropriate legal structure for your business is crucial for minimizing risk and liability. In Pennsylvania, common business structures include sole proprietorships, partnerships, limited liability companies (LLCs), and corporations. We've gone more in depth on those structure in our Legal Handbook for Starting and Running a Small Business.

Essentially, each structure has its own advantages and disadvantages, so choosing the correct structure is paramount. If you're still not sure, consult with a business attorney.

Develop sound contracts

Written contracts are essential to protecting your business interests and minimizing legal disputes. Whether you're entering into an agreement with a supplier, vendor, customer, or employee, it's important to have a clear, comprehensive contract that outlines the terms of the agreement, including payment terms, delivery dates, and dispute resolution mechanisms.

Here are 3 of the more important contracts to consider:

Partnership Agreement: If you are starting a business with one or more partners, you may need a partnership agreement that outlines each partner's roles and responsibilities, profit-sharing arrangements, and how decisions will be made.

Operating Agreement: If you are forming a limited liability company (LLC), you may need an operating agreement that outlines how the company will be run, including how profits and losses will be shared, how decisions will be made, and what happens if a member leaves the company.

Exit Strategy: A business exit strategy outlines how a business owner or investor intends to exit or sell their ownership stake in a business. It’s essentially a roadmap that lays out the steps and actions necessary to leave a company and realize the maximum possible value of the business. We have a whole chapter dedicated to it in our handbook.

Protect your intellectual property

If your business relies on products or services that are distinct to your operation, such as trademarks, patents, or copyrights, it's important to take steps to protect that property.

And with the advent of AI technology, it's appropriate to wonder whether certain intellectual property laws pertain to ideas that may have been discovered using it. Below is a quick breakdown:

Can I trademark or copyright ideas that came from ChatGPT or Open AI?

You may think that ChatGPT just gave you a one in a million business idea, but think again. ChatGPT or a similar open AI platform is not capable of inventing new ideas or concepts on its own.

Why is that?

Open AI was created to process and generate responses based on the input provided by the user. Therefore, any "original ideas or concepts" that may be expressed through AI responses are ultimately the property of the person that provided the input.

If you, as the AI user, have created an original idea or concept that you would like to protect, you may be able to obtain intellectual property protection through a trademark, or copyright, depending on the nature of the idea or concept. However, it's important to note that obtaining intellectual property protection can be a complex process and requires meeting certain legal requirements. We would recommend consulting with an IP attorney who is experienced in intellectual property law to determine the best course of action for protecting your idea or concept.

Comply with regulations

As a business owner, you must comply with a wide range of federal, state, and local regulations, including tax laws, employment laws, environmental laws, and more. Noncompliance can result in costly fines and legal penalties, so it's important to understand your obligations and take steps to ensure compliance.

What are the most important regulations to consider when starting or running a business in Pennsylvania?

The best advice would be to consider every business regulation as important, but of course, some could be considered more important than others. For example:

Businesses need to obtain various tax IDs, such as an Employer Identification Number (EIN) or a sales tax license. Business owners should consult with a tax professional to ensure compliance with tax laws and to minimize tax liability.

If your business has employees, you must comply with Pennsylvania-specific employment laws such as the Pennsylvania Minimum Wage Act and the Pennsylvania Human Relations Act. Federal laws that PA business owners need to adhere to include the Americans with Disabilities Act (ADA), Fair Labor Standards Act (FLSA) and the Family and Medical Leave Act (FMLA). We've included links to each act above.

Business licensing and registration

Depending on the nature of the business, Pennsylvania may require business owners to obtain certain licenses or permits, such as a local business license or a professional license.

What are the specific business licenses and/or permits I need to get to start or run a business in PA?

It all depends on the nature of your business, your location, and other factors. However, here are some common licenses and permits that many businesses in Pennsylvania may need to obtain:

Pennsylvania Business License: This is all dependent on your business structure. You can read more on the specific structure best suited for your business here.

Local Business License: Some cities or counties in Pennsylvania may require businesses to obtain a local business license. Check with your local government to determine whether this is required for your business.

Below are a few cities in Pennsylvania that require a local business license:

Philadelphia: All businesses operating in Philadelphia must obtain a Commercial Activity License (CAL).

Pittsburgh, Allentown, Erie, Reading: Businesses operating within these cities must obtain a Business Privilege License (BPL).

Professional or Occupational License: Some professions or occupations in Pennsylvania may require this license. These may include doctors, lawyers, accountants, and others.

Data privacy laws

With the increasing prevalence of data breaches and cyber attacks, Pennsylvania businesses must comply with data privacy laws to protect sensitive customer information. The Pennsylvania Data Breach Notification Act requires businesses to notify customers in the event of a data breach.

There have been several businesses in Pennsylvania that have experienced data breaches and had to notify their customers. One of the most egregious examples came from a 2014 breach at the University of Pittsburgh Medical Center.

Essentially, UPMC experienced a data breach in which the personal information of approximately 62,000 employees, including names, birth dates, Social Security numbers, and tax information, was stolen. UPMC notified affected employees of the breach and offered free credit monitoring and identity theft protection.

In late 2018, the Pennsylvania Supreme Court decided that employees may sue employers for the release of stolen confidential employee data. The Court’s decision in the Dittman vs. University of Pittsburgh Medical Center, allowed UPMC employees to bring a class action lawsuit for negligence. Read more about the fallout and impact written by attorney Thomas D. Rees here.

Talk with a business attorney who can give you the right answers

It's important to note that this is not an exhaustive list of regulations that may apply to your business. Depending on the nature of your business, there may be additional regulations that you must comply with. Working with an experienced business attorney and other professionals can help ensure that you are aware of and compliant with all relevant regulations.

The above information is not to be taken as legal advice.

High Swartz | April 4, 2023

Legal Issues with Social Media

Datareportal reports that 4.7 billion people worldwide use social media, spending an average of two hours and 29 minutes on it a day. That's more than half the world. 

So, it's not surprising that social media law has emerged and includes criminal and civil aspects. Owing to the numerous legal issues with social media activities, many law firms now have internet and social media lawyers dedicated to counseling businesses and individuals on applying its laws on state and federal levels.

What is Social Media Law?

Social media law focuses on the legal issues associated with user-generated content. Some of its top concerns are the right to privacy, defamation, and intellectual property law covering trademarks, logos, and other copyrighted material.

Social media covers a lot of ground, and social networking is one key component. But it extends beyond that. It covers any technology allowing online communications. Facebook and Twitter immediately come to mind.

But there are also blogs, wikis, chat rooms, reviews, comments, and more. For example, a web page with a comments section is part of social media. In short, any website that involves interaction is social media.

The U.S. Department of Health & Human Services (HHS) has strict policies that govern social media use. You can read more about the policies and standards here.

Moreover, numerous state, federal, and foreign statutes apply to social media law. You can view some of the more critical laws here.

Top Legal Issues with Social Media

Some of the top issues are:

  1. Copyright Infringement
  2. Defamation
  3. Privacy and Confidentiality
  4. Misleading Information
  5. Business Contracts

Let's look closer at each of those potential legal concerns.

Copyright Infringement

It's easy to cut and paste content from sites on the internet. But using content from another site can result in criminal and civil liability.

Intellectual property laws govern the use of trademarks and copyrights. Copyright relates to the authorship of original works like art, books, music, and more.

Consequently, it's essential to have policies governing your business' online content publication. You should have someone review posts and messages for legal compliance before publication. When using third-party content, you should attribute the content to that party to avoid any copy infringement. A social media lawyer can help draft appropriate guidelines.

Defamation

First Amendment rights do not protect defamatory statements. Such statements typically fall under two categories:

    1. Libel: Tangible, written statements
    2. Slander: Spoken words or gestures

The criteria for either is that the statement was objectively false, seen or heard by a third party, and caused financial injury. The comment is also unprivileged by law.

It's always best to show caution when commenting about a third party. Social media platforms make those comments immediately viewable by millions of people and can quickly create a legal issue for you. Note that sharing or liking another person or business' defamatory comment can present a legal issue for you. And if you make an ill-advised comment while at work, you potentially put yourself and your employer at risk.

Two recent Pennsylvania employment termination cases give this same advice to adult social media users. In both cases, courts upheld terminations for employees’ mean-spirited off-duty social media comments.

Privacy & Confidentiality

Privacy laws govern the collection, use, disclosure, and storage of personal information. Moreover, you must inform individuals that you are collecting such information. And you cannot disclose that information unless it's for specific purposes. It's common to see businesses to require a signed agreement to use your NIL (Name, Image, and Likeness) in any social media content produced by the employer.

Europe implemented the General Data Protection Regulation (GDPR) in 2018. It spelled out rules to guarantee the protection of personal data. The United States has no such law, however, the California Online Privacy Protection Act (OPPA) approved legislation covering online privacy. So, if you're conducting business in the state, it's necessary to comply with its requirements.

Any personal data collected must be stored securely. As a result, data breach lawsuits have become commonplace, impacting businesses both large and small. For example, Equifax suffered a data breach exposing the personal information of 147 million people. The settlement included up to $425 million distributed to those affected.

Misleading Claims

It's best to substantiate any claims made on social media to avoid legal issues. Consumer protection laws prohibit businesses from making false, deceptive, and misleading claims about products or services.

The same goes for reviews of a company or service. It's common practice for companies to capture reviews through social media channels. But, of course, those reviews need to be legitimate and not falsified or misleading. The same holds for endorsements. Google and other search engines are getting better daily at identifying fake reviews, and will not hesitate to penalize company websites.

Business Contracts

Businesses of all sizes execute contracts, including non-disclosure agreements, confidentiality agreements, and non-compete agreements. Interestingly, On January 5, 2023, the Federal Trade Commission (FTC) proposed a rule to ban non-compete clauses. This has since been approved and has retroactively negated many of these clauses. That being said, social media communications can set the stage for breaches of the formerly stated contracts.

For example, employees must be aware of business contracts with non-disclosure agreements. Imparting essential knowledge detailed in such agreements can lead to a lawsuit. Here's another example. Let's say you recently hired an employee. A recently hired employee has a non-compete agreement from their former employer preventing him from contacting former clients. The employee then changes his status on LinkedIn, which sends out an update to clients, including some former clients. In the past, this scenario could open the door for a suit claiming a breach of contract against the former employee.

Tips to Avoid Legal Issues with Social Media

Even though social media focuses on sharing information and free expression, it's not without legal risks for businesses and individuals.

Here are some things you can do to mitigate your risks of legal action as a business owner:

  1. Social Media Policy: Work with an employment or business lawyer to create a policy document covering all aspects of social media communications. It's essential to document how employees use social media in the workplace and what they can say.
  2. Permissions for Licensed Content: Ensure you get explicit consent to use copyrighted materials such as images.
  3. Monitor Content: Establish standards for publishing content. Then monitor and moderate content and posts. If something seems inappropriate, remove it.
  4. Train Employees: Keep your employees and subsequently your handbooks and policies updated with the latest social media laws and regulations.

As an employee, you must understand that any comments you make on social media during the workday can impact your business. The same holds for you outside business hours. Your comments on social media can land you in hot water.

Talk to a employment or business lawyer If You're Facing a Legal Issues with social media

Social media and the laws governing it can substantially impact a business and its employees. Don't hesitate to contact us if you are in need of guidance.

Our law firm has offices covering Bucks and Montgomery Counties in Pennsylvania We have attorneys experienced in intellectual property law, business law, and employment law. We also have top litigation attorneys to support you with any lawsuit concerns, either presenting or defending a suit.

Thomas D. Rees | February 10, 2023

How Would a Non-Compete Ban Impact My Business? – 5 Things to Know

On January 5, 2023, the Federal Trade Commission (FTC) proposed a rule to ban non-compete clauses in employment agreements nationwide, except in very limited circumstances. If enacted as written, the proposed rule would supersede all contrary state laws that currently govern non-competes.

1. What is a Non-Compete Agreement?

A non-compete agreement is a restrictive covenant limiting your ability to work in a particular field or industry. Generally, the non-compete specifies the length and the geographic area of the restrictions.

Currently, state laws govern the enforceability of non-competes. Limitations on non-competes vary from state to state. For example, California, North Dakota, and Oklahoma, Montana and District of Columbia don't allow non-compete agreements. Pennsylvania and neighboring states limit (but don't prohibit) non-competes.

2. What Would the FTC's Proposed Rule Do?

If made final, the proposed rule would prohibit employers in every state from entering into or enforcing non-competes with workers (including employees, independent contractors, volunteers, interns, and any other individuals who work for an employer). The FTC rule states that non-competes are unfair methods of competition, which the FTC Act prohibits.

The proposed non-compete ban would require employers to rescind existing non-competes within six months. In addition, employers would have to provide individual notice to current and former employees that their non-compete clause is no longer in effect or enforceable.

The proposed rule does not prohibit non-competes that are part of the sale of a business.

3. When Could The Non-Compete Ban Take Effect?

The proposed rule is open for public comment until March 10, 2023. After that, public members may request more time to submit comments.

Once the comment period closes, the FTC may modify the proposed rule before deciding whether to reopen the comment period or whether to issue a final non-compete ban.

A final rule may face lawsuits challenging the rule's content or the FTC's authority to take away state authority to regulate non-compete agreements. Because of the likelihood of challenges, the timeline for any proposed rule is unclear.

However, the long-term trend among the states is to limit or ban non-compete agreements. State and federal courts have ruled against enforcement of non-competes where employers appeared to overreach. State legislatures have considered laws that prohibit or limit non-competes.

4. How Can I Protect My Business Without Using Non-Competes?

The proposed rule does not specifically ban other types of restrictive covenants, such as non-solicitation or non-disclosure agreements, which employers can use to protect their business interests. These are described below.

Non-Solicitation Agreements restrict ex-employees from asking customers, vendors, or other employees to move to the employee's new employer. The employee may work for a competitor but may not initiate contact with the former employer's customers, vendors, or employees to gain a competitive advantage. Like non-competes, non-solicitation agreements have a limited duration (typically one or two years).

Non-Disclosure/Confidentiality Agreements prohibit the employee from using confidential information acquired during an employee's tenure with the employer. Examples include customer lists, trade secrets, unique manufacturing processes, and product development initiatives. Unlike other restrictive covenants, confidentiality provisions need not include time limits.

Although the proposed non-compete ban does not prohibit non-solicitation or non-disclosure agreements, the ban would extend to de facto non-compete clauses. These are contractual provisions written so broadly as to have the functional effect of prohibiting workers from seeking or accepting new employment.

As such, business owners need to understand the terms of their employment agreements and avoid using overly broad language in them. Restrictive covenants should be written narrowly to protect legitimate business interests, such as confidential information or trade secrets, and shouldn't be any broader than necessary to protect those interests. Contact a business lawyer or employment attorney to review your current agreements.

5. What Else Can Businesses Do To Prepare for a Non-Compete Ban?

The FTC's proposed rule may or may not become law, and its final version may differ significantly from its current version. Nonetheless, employers should continue monitoring the status of the proposed rule and state law for any related legislative developments that may occur in the meantime.

While employers don't need to take any immediate action, business owners using non-competes should consider the enforceability of their existing restrictive covenants and determine if those restrictions are necessary to protect a business's interest.

Business owners may find it valuable to revisit and consider updating their existing employment agreements to best comply with the purpose of the proposed rule.

Talk to Our Employment Lawyers

It makes sense to have some restrictive covenants to protect your business if you're an employer.

Our business and employment lawyers can provide employers throughout Pennsylvania and New Jersey with sound advice and representation. Our employment law attorneys deal with workplace issues in an ever-changing environment and seek to minimize the risk of employee lawsuits for our clients.

If you'd like to learn more about enforcing a restrictive covenant or about creating an employment agreement for your business, call our Montgomery County and Bucks County law offices today at 610-275-0700.

The information above is general: we recommend you consult an attorney regarding your circumstances. The content of this information is not meant to be considered legal advice or a substitute for legal representation.