6 Benefits to Limited Liability Companies

What is an LLC, and why should you get one? LLCs are a powerful and flexible corporate form that provide incredible opportunities and protection for business owners. Even if you’re a small business, an LLC can provide a platform to grow and protect your business—and if you’re large, it’s definitely time to look at the benefits an LLC can provide.

Limited Liability Company

  1. LLCs Shield You from Liability

LLC stands for Limited Liability Company. When you form an LLC, you’re forming a company that limits your liability. LLCs are a “shield” that limit your legal liability for business decisions and mistakes that might otherwise harm you or your family.

For example, let’s say your business is installing hot water heaters. You sign a contract to install a hot water heater in a large office building, and you install the heater, but unfortunately, you are having a bad day, and you make a mistake, and the heater bursts and causes flooding in the basement of this office, or it causes someone to get burned, or maybe it just doesn’t work, and the business loses money because they don’t have hot water for a few days.

So what happens? You get sued—you do, personally—because you messed up. You breached a contract, your negligence caused an injury, your product that you re-sell subjects you to strict products liability, or all of the above. When this business and the injured employee and the office building’s owner or property management company sue you, they’re suing you, personally. If they win, they can collect that judgment by putting a lien on your house, by attaching your bank account, etc.

Now how would an LLC have helped you here? Simply put, if you run a company and make your contracts in the company’s name, then your breach of contract and other issues result in a suit against the company. That means your personal assets are not at risk. You aren’t personally being sued, you don’t personally have to report lawsuits against you personally if you’re seeking a mortgage, you can sleep a little better at night. It doesn’t mean your business won’t suffer from the lawsuit, it just means there’s a sealed wall between you and your company. Your company, in other words, limits your liability.

It’s important to note this doesn’t mean you can’t ever be sued personally for your actions, but if you set up your LLC properly, you will eliminate most of the situations in which you can be personally sued.

  1. LLCs Allow Complex Forms of Ownership

 If you’re a small business with a single owner, you can skip this one, but for family-owned businesses or startups with your college buddies that have quickly become lop-sided, an LLC allows you to setup virtually any ownership structure that you can dream of.

Does one person handle one aspect of the business? Does someone do most of the day-to-day management, while others contributions are physical assets or money? Such “lopsided” investments can be difficult to manage without an LLC as everyone’s contribution should be valued, but not everyone needs their “hands in the stew” of day-to-day management. Setting up your LLC with a board of directors or a day-to-day manager but giving financial ownership to those who’ve invested allows you to

  1. LLCs allow Outside Investment

 Do you want to take on angel investors, or sell stock? The terminology is different (stock refers to a corporation’s ownership structure), but the function is the same. By offering investors a different class of “membership” (ownership), you can sell financial stake in your company without giving up control to the investors.

  1. LLCs can be sold

 Do you foresee the possibility that you might want to sell your business down the road? Your business may be satisfying now, but in thirty years, will you want to consider a second career? Would you like to be bought out for a huge amount of money in a few years by a company that thinks they can do something huge with your startup? Setting up an LLC makes it much easier to sell your business to someone who wants to take over your client list and assets one day.

Technically, you can always sell your business, even without an LLC. But many lawyers will advise a potential buyer to look elsewhere if your business is not well organized. Having an LLC that is properly setup and running encourages a potential buyer that their purchase will be easy to roll over into a new or existing business.

  1. LLCs Let you Take Risks and Go Bankrupt

 I realize this sounds a little crazy, but have you ever wanted to try a risky business? Have you ever wanted to take a leap? As discussed in number one, above, forming an LLC allows you to protect your personal assets. If your business goes belly-up, you aren’t putting your house at risk, or your personal credit.

Note, however, that this point is somewhat limited. Yes, the LLC will be liable for debts, but if you’re taking out enormous loans for a young LLC, you may be forced to co-sign. As always, it’s not just forming the LLC that matters—it’s how you manage and run it.

  1. LLCs are the New Corporations

 What about corporations? Should you consider one of those instead of an LLC? In short, LLCs are a new corporate form that has replaced corporations. Many companies will continue to run as corporations—and there’s nothing wrong with that. But new businesses starting up today should use LLCs except in very limited circumstances (where you expect to be publicly traded, or where you want to be nonprofit). Even those exceptions may soon be reduced.

So should you form an LLC?

Forming an LLC is almost never a bad idea, but the return on investment depends on the nature of your business and what your various risks are. Call the Cornerstone Law Firm, LLC today, and let’s talk about how we can help your business grow.

National Park “First Amendment” Signs Should Come Down

Last week, after observing signs in National Parks purporting to limit the exercise of the First Amendment, Joel Ready sent the following letter to Ryan Zinke, Secretary of the Department of Interior, and to Michael Reynolds, the director of the National Park Service.

Dear Sec. Zinke:

At the end of August, I honeymooned with my wife in the Smoky Mountains National Park. The Smokies are a sort of home away from home for my family. I spent many summer weeks there growing up, and of course, my wife and I now have wonderful memories of the park as well. The park has earned its place as the most visited park in America, with its lush beauty and unique wildlife. We had the opportunity to quietly observe two black bears while we were there, as well as to visit Clingman’s Dome and Cades Cove, among other sites.

However, I write to let you know of a concern I had while visiting the Smokies. During our trip, we stopped at one of the visitors’ centers,[1] where we were confronted by [the sign pictured above].

As you are probably aware, Mr. Secretary, the First Amendment cannot be confined to a small portion of government-owned ground. The First Amendment is designed to prevent the “abridgment” of speech, no matter where it occurs. Nowhere is this protection stronger than on government property. While the government is free to engage in reasonable “time, place and manner restrictions,” such restrictions must be content-neutral, narrowly-tailored to advance a significant government interest, and leave open ample alternative channels of communication.[2] Parks are “quintessential public forums [where] the government may not prohibit all communicative activity.”[3] I believe that no compelling government interest is at play here, and that these zones in front of visitors’ centers[4] (making up only a fraction of a percent of the total park) do not constitute a “narrowly-tailored” solution in any event.

The Smoky Mountains National Park, like our nation, was born in the cauldron of political dissent and protest. When the federal government used the powers of eminent domain to seize the land in the 1920s and ‘30s, a number of evicted local families protested in different ways, including protesting FDR’s speech in the park (which was, of course, full of political statements, as any Presidential speech would be).[5] Political speech in our national parks is a proud tradition, and the federal government has no place in attempting to curb speech by creating “zones” where it is acceptable or unacceptable to speak.

In our travels through the park, we encountered a number of violations of this sign, including Jehovah’s Witnesses with displays who were handing out tracts about their faith, the National Park Service’s signs throughout the park arguing for better environmental protection legislation and lauding past EPA efforts, and a small child protesting to her mother that she was done with her sack lunch (most of her sandwich was still uneaten). From the loftiest sentiments (those about religion) to the most trivial (private disputes between mother and child), all of these are speech protected by the First Amendment from government abridgment, and all of them are presumably prohibited by the sign at the visitors’ centers.[6]

I have no reason to believe any enforcement action has been taken against groups or individuals based on these signs. Nor do I harbor any suspicion that you personally authorized these signs. Rather, like so many things, our liberties are slowly eroded by the well-meant actions of individuals attempting to prevent pesky protestors from marring natural beauty or causing disruption. But protests and political speech do not mar natural beauty as quickly as oppression. I hope you will not think I overstate my case with the word “oppression”—rather, the attempts of government to snip at the fringes of free speech are always the first signs of the erosion of natural liberty. The American people are free to speak and advocate for their beliefs on government property, and these signs should come down.

With great respect and appreciation, I write to request that you remove these signs from all National Parks and any other similar government-owned properties where they may be found.

[1]              The visitor’s center we visited was Sugarlands Visitors’ Centers, where we encountered very kind and helpful rangers and other workers.

[2]              The caselaw on this point is voluminous, but one example should suffice: Perry Educ. Ass’n v. Perry Local Educ. Ass’n, 460 U.S. 37, 45 (1983).

[3]              Id.

[4]              I was unable to ascertain whether these signs are present at all visitors’ centers in the Smokies, or at all parks nationally, or whether this one visitors’ center was an anomaly. I presume that they are present nationally, but my argument is not affected if this visitors’ center is the only example.

[5]              Both silent footage and text of the speech survive. The footage can be viewed on youtube: https://www.youtube.com/watch?v=RnJbJbcr3jw. The text of the speech is also available: “Address at Dedication of Great Smoky Mountains National Park.,” by Franklin D. Roosevelt, September 2, 1940. Online by Gerhard Peters and John T. Woolley, The American Presidency Project. http://www.presidency.ucsb.edu/ws/?pid=16002.

[6]              Political t-shirts, personal conversations, bumper stickers on cars and license plate messages, and “pillow talk” while camping under the stars are all presumably prohibited by the sign, as well.

Attorney Crossett, Partner

Berks County Lawyer David W. Crossett Joins Cornerstone Law Firm as Newest Partner

The Cornerstone Law Firm is thrilled to announce the addition of Berks County lawyer David W. Crossett, Esq. as a Partner in the firm. Mr. Crossett brings years of litigation experience and success in the courtroom to Cornerstone’s litigation practice. “We’re thrilled to have Mr. Crossett join us as a partner in the firm,” Attorney Joel Ready says. “His work ethic and legal acumen are matched only by his integrity.”

Mr. Crossett’s track record includes defending clients in multi-million-dollar business disputes, successful personal injury claims of over a million dollars, and complex litigation over property interests, including one case involving Reading Railroad (of Monopoly fame). Mr. Crossett’s work in the courtroom extends beyond financial success for clients, however, and includes significant victories for clients’ civil rights and religious freedom. “Our Constitutional system of government will not defend itself,” Attorney Crossett explains. “I believe in improving our legal system and in defending individual rights, and I’m proud to join a firm committed to those principles.”

Mr. Crossett attended Regent University School of Law in Virginia, where he graduated third in his class and served as an Editor of the Law Review. Mr. Crossett received the prestigious Blackstone Fellowship from the Alliance Defending Freedom before moving here to Berks County to begin working as a lawyer. You can read more about his background and accomplishments by viewing our attorney bio page.

Cornerstone Law Firm, LLC is a litigation boutique firm in Blandon, Pennsylvania, but offers licensed representation throughout Pennsylvania, as well as in Maryland, New Jersey and Alaska.

Film the Police

Filming the police has become an act of political speech. Police actions caught on camera have played an enormous role in debates over police brutality and practices over the last twenty years, most infamously in the case of Rodney King. In the wake of such landmark events, many cities and police departments have tried to crack down on and prevent the filming of police actions. In Fields v. City of Philadelphia, released yesterday by the Third Circuit Court of Appeals (the Federal Court that governs Pennsylvania, New Jersey and Delaware), the court ruled that the First Amendment protects your right to film the police as they do their job, and that a city may not prohibit such filming or photographing of police actions, because the First Amendment to the United States Constitution protects your right to film and photograph the police.

The Camera as Eyewitness

In a beautifully-written opinion, the court ruled that you have the right to record even run-of-the-mill police encounters, because one never knows when a shot might be important. The First Amendment gives you the right to preserve an eyewitness account of what you’re seeing, even if you’re not sure that you’ll ever use that footage.

To record what there is the right for the eye to see or the ear to hear corroborates or lays aside subjective impressions for objective facts. Hence to record is to see and hear more accurately. Recordings also facilitate discussion because of the ease in which they can be widely distributed via different forms of media. Accordingly, recording police activity in public falls squarely within the First Amendment right of access to information. As no doubt the press has this right, so does the public.

Footage Need not be “Expressive”

 The court rejected the contention that the individuals caught filming the police had to prove that they were creating some sort of expressive art protected by the First Amendment. The very act of filming was the protected conduct.

This aspect of the ruling—that you don’t have to prove the artistic value or expressive nature of your footage or picture for it to be protected by the First Amendment—will have broad application in other contexts. Students who film a teacher’s interaction with them at school, footage of a DMV official rejecting an applicant on dubious grounds and even pictures taken on the street of public events are all constitutionally protected, even if it is unclear at the time how such media may be used. This right extends to the private citizen in equal force as it does to the press.

A few exceptions

The court left open the possibility that there are limits to the time, place and manner in which you can film the police. Recording a police officer’s conversation with a private informant, getting in an officer’s way or otherwise interfering with police activity might be unprotected conduct which could properly lead to an arrest.

But the court left these possible exceptions general, and the most important ruling in this case will be that you have a right to record your public servants as they go about their jobs or interact with you and others. You have a right to film the police.

Pick up Your Phone

So keep your phone out when you run into the police, or when you see others interacting with them. Allowing the public the opportunity to see how police work is done is an important part of making our justice system better, and of advocating for a better society. The First Amendment protects your right to do just that.

 

Police Dashboard Camera Videos Must Be Released

Police Dashboard Camera Videos Must be Released

Police dashboard camera videos are available to the public pursuant to Right to Know requests in Pennsylvania, says the Supreme Court of Pennsylvania. The ruling in Pennsylvania State Police v. Grove, which came down Tuesday, affirms that Motor Vehicle Recordings (MVRs) are subject to disclosure unless specific content is proven to be confidential.

Unfortunately, this is not the law in all states, and even here in Pennsylvania, the state legislature is taking steps to expand police power to protect videos from disclosure. Yet, as we’ve seen in the Philando Castile case and others, footage capturing officers in crucial moments of fatal encounters can sometimes be the only witness against an officer’s word. Such footage can go viral and have a tremendous impact on the public’s perceptions of law enforcement.

Yesterday, Cornerstone Law’s Attorney Ready, who covers the Supreme Court of Pennsylvania for SCOPA Review, was asked to comment on this case for 69 News out of Allentown. You can watch the interview here.

Does the First Amendment Give You the Right to Record Police?

Another case coming from the Federal Court of Appeals for the Third Circuit will have significant implications on how we monitor police. In Fields v. City of Philadelphia, the Federal Court is called upon to decide whether the First Amendment allows the City of Philadelphia to prohibit the recording of police while they perform their jobs.

The simple fact is that while we need police as a society, police are an extension of government power–and where there is power, there will always be corruption. “Power corrupts, and absolute power corrupts absolutely.” Giving our government absolute power to determine what information can be released, or who can record the government’s actions is corruption. Monitoring our government is a right inherent to our republic, and must be preserved.

Contracts Promote Business

Contracts are the fabric of society. Contracts promote business by clarifying parties’ expectations, and facilitating better working relationships. They hold us together, allowing commerce to go forward quickly and securely, and allow the conscientious businessman a remedy when a business partner goes back on his word. But contracts are often frustrating to the business owner precisely because of their importance. When presented with a contract and all its glorious fine print, most people glaze over (seriously, when was the last time you read your iTunes’ user agreement?).

We have a gentlemen’s agreement

One mistake many people make is assuming that a “gentlemen’s agreement” will suffice for their business. “I was raised to honor my word,” I’ve heard many clients say after they were burned by someone who never put their commitment in writing.

The problem with such oral agreements is two-fold. First, as the old joke goes, oral agreements aren’t worth the paper they’re written on. Just because you were raised to honor your commitments doesn’t mean the other guy was. And second, even where both parties are honest, written contracts force both parties to think about scenarios they might not otherwise consider.

For example, let’s say that you are a famous orange-grower, and I am desirous of buying and re-selling your delicious, name-brand oranges. We agree that you will sell me 1,000 oranges at $1 a piece. We shake hands, and we have a deal, right? Well, yes, we do, but do we really know what our deal is? Am I picking up the oranges, or are you paying to have them delivered? Does it matter if this year’s orange crop came in smaller than last year’s? Do I have to pay on delivery or after I re-sell,  and do you care if I pay with a credit card? Most of all, what if you had a bad year and sell me your neighbor’s oranges? I bargained for your name-brand oranges, not some neighbor’s knock-off citrus!

I think you get the point. Sitting down and writing out an agreement does not eliminate the possibility for misunderstanding, but it helps to bring into focus the various things that can go wrong in a business deal, and allows the parties to allocate the risk of various possibilities.

What should a good contract have in it?

Obviously, a contract should be as unique as the deal it governs. It’s always frustrating to see form contracts copied and pasted from one thing to another, as though a business deal is just a cut and paste job. Nonetheless, certain provisions should probably be in your contract.

  1. Allocation of Risk

What happens if the crop you’re buying—or the product you’re depending on the production of—is unavailable because of famine, war or strike? You can laugh, but this happens all the time. What if the other party dies tragically during the term of the contract? Is his estate responsible for completing the contract?

  1. If there is a conflict between the parties, where can suit be filed, and what state’s laws will apply?

This might seem unnecessary in a deal between two local businesses, especially in a place like Berks County. But what if the other party to your contract moves to Montana, and the deal breaks down at some point. Can you sue him in Reading, Pennsylvania? That depends on a number of factors, believe it or not, but if you’ve written that into the contract, the answer will almost certainly be yes.

  1. What are the parties’ remedies if someone breaches?

If you mess up, what happens? Does the contract dissolve? Is there a stated financial penalty? Does it depend on the damage done to the deal? This part of a contract is governed by a fairly complex thicket of Constitutional law and public policy legislated both through our General Assembly and our courts. Understanding how these remedies will be enforced (or whether a court will refuse to enforce the remedy the parties wrote into the contract) is vital to creating a strong document to govern your transaction.

  1. Terms of Payment and Other Logistics

Sounds obvious, right? But how are you getting paid (or making payment)? Does it matter if it’s in cash, or will you take a line of credit? Will you allow a grace period if a payment doesn’t get in on time? If so, what interest rate are you agreeing to? Who’s delivering? To where? If weather interferes, is delayed delivery excused?

Conclusion

A contract is the lifeblood of a good business deal. It is crucial to have a well-draft document that covers the contingencies that can arise. As the old saying goes, “Measure twice; cut once.” A well-written contract can lead to a much more amiable relationship between the parties when unexpected difficulties arise, and can lead to more and better business in the future. Do you need contracts to cover your business? Contact the Cornerstone Law Firm today, and let us see how we can help you.