By Andrew Sohn, Esq.
In 2019, as I sit here and reflect on the numerous business owner clients we’ve had the opportunity to serve this past year, I am reminded of two things: (1) That we were incredibly blessed this year to serve amazing clients who were not only receptive to learn, but were so trusting during the process; and (2) we learned so much about various industries of business including, but certainly not limited to: retreat centers, construction, energy solutions, health-centric foods, dental, medical, pet foods, senior care, retail, mobile apps, etc. only to name few.
Although there is certainly more to learn and various points to share, I wanted to highlight some major trends we noticed this year with our business owners and their businesses.
Corporate Records Maintenance
2019 was the year of introducing new business partners/shareholders, buying/selling businesses, and increased requirements for governing bodies within various industries. When you think of the aforementioned issues, one does not think necessarily about updating their corporate records. People know of “corporate meeting minutes,” but how many businesses comply with the Corporations code and complete them? I would venture to say that very few business owners take the time to maintain these “corporate meeting minutes,” which although seemingly very simple, involves a very strict process and protocol. If done incorrectly, you might as well have not done them at all.
Why does this matter? Like I mentioned above, if you are introducing new investors, business partners, you will most likely have to propound these corporate records for due diligence to prove that the corporation is up-to-date and maintaining its corporate formalities and in effect the “corporate veil.” Just like you have to prepare your tax returns, P&L statements, inventory check-list, etc., it’s all the same. We’ve noticed that we spent A LOT of time updating and helping clients “catch up” on all these corporate records, which cost businesses a lot more to do because they are either in transition (looking to sell) or it becomes required by their industry-specific governing body.
This year we participated in several negotiation/demand transactions. Whether it was an unfulfilled purchase order or an outstanding invoice or a dispute with a fellow shareholder, we were brought in to handle the pre-litigation phase which meant introducing tactics to resolve matters without the cost, headaches, heartaches, or struggles involved in a civil law suit (litigation).
You might wonder, how effective were we? That depends on what your goals were. In this year, we noticed that in a lot of “litigious” situations, our job was just to convey the seriousness of the issue to the opposing party. If your goal was to bring someone to the negotiating table, we were extremely successful in that. If your goal was to “get everything that was owed to you,” well, then you might’ve been disappointed.
We noticed however, after the dust had settled, litigation pursued and a settlement reached (the most likely outcome), our clients would sit there and wonder whether or not it could’ve just been resolved without all those attachments associated with litigation. Sometimes litigation is necessary, but sometimes litigation achieves the same exact results as no litigation whatsoever (when it’s all said and done). Our goal (as non-litigators) is to save our clients those extra headaches and attorney fees if we can get them those results without litigation.
The trend never stops, California is an extremely litigious State. Avodah Law Group noticed this continuous trend as well. However, ALG also noticed that litigation didn’t always mean a satisfied client or over-the-top results. It meant that you were able to blow off some steam, pay some attorneys’ fees, commit your valuable time to ultimately achieve lukewarm results.