Litigation & Dispute Resolution

Corporations Must be Represented by Legal Counsel in Court

As our economy continues its slow recovery, many corporations continue to stay as “lean” as possible, cutting costs wherever they can. However, corporations cannot save expenses by responding to litigation pro se (individually, rather than with an attorney).

In Washington State, corporations cannot appear in court without an attorney—this includes filing documents with the court. In a 1998 court case, Lloyd Enterprises Inc. v. Longview Plumbing and Heating Co., the trial court entered a default judgment when, after the attorney for one of the parties, Berry, Inc., withdrew, Wade Berry, president of Berry, Inc., filed legal documents with the Superior Court himself on behalf of the corporation. The attorneys for the other parties moved to strike the documents signed by Berry....

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Business Startup

Social Purpose Corporations Available in Washington Starting Tomorrow

Beginning tomorrow, June 7, you can form social purpose corporations in Washington.

What is a social purpose corporation? A social purpose corporation (SPC) is a corporation organized to promote a general social purpose that is intended to positively affect certain constituencies. These constituencies must include one or more of: (1) the corporation’s employees, suppliers, or customers; (2) the local, state, national, or world community; or (3) the environment. In addition, a social purpose corporation may set forth specific social purposes for which the corporation is organized.

How are  SPCs different from a non-profit? A non profit corporation can be organized to promote social purposes, just like social purpose corporations. However, social purpose corporations can also operate for profit. Because social purpose corporations operate for profit,...

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Business Startup

Registering and Licensing 101 for Your Washington Business

There are a number of government entities that Washington businesses may need to make filings with prior to commencing business:

Registering a business with the state. The application itself is not difficult to fill out and can be found here. However, it is ideal for many strategic decisions to be made at the formation of your business, and unless you have experience making these decisions, we suggest that you seek legal advice prior to filing paperwork with the state. Applying for an Employer Identification Number (EIN) with the Internal Revenue Service. Partnerships, Corporations and multiple member LLC’s need their own EIN’s. If you are operating as a single member LLC or a sole proprietorship, you can use your Social Security Number instead of an EIN....

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Business Startup

Moore v CAI: Non-Disclosure Agreement May Have Similar Effect to Non-Compete

In Moore v. CAI, a recent Washington Court of Appeals case, the Court discussed a number of important issues related to employment law.

Case Background Robert Moore worked at Commercial Aircraft Interiors LLC (CAI) as VP of sales and marketing. Moore was laid off by CAI in a general work force reduction. During his tenure with CAI Moore signed a document acknowledging that he understood and agreed to abide by CAI’s “policy of non-disclosure of any and all company policies, trade secrets, intellectual properties, and customer contacts to outside entities or persons.”

Moore sought employment from Volant, a CAI competitor. Volant was prepared to hire Moore, so long as CAI stipulated that such employment would not violate any agreement CAI had with Moore.

CAI...

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Business Startup

Avoid Unwanted Liabilities When You Buy a Business

Today’s guest blogger is Brian Rogers, a corporate lawyer at St. Louis-based Evans & Dixon. A contracts aficionado, Brian publishes the Contracts Guy blog and he is the editor of his firm’s new project, the Blog for Business Law, which will be launched on April 16.

“Leave the gun. Take the cannoli.” Fictional mobster Peter Clemenza delivers this famous line in The Godfather after a drive into the country with the godfather’s driver Pauli. The driver betrayed his boss and Clemenza has just meted out justice.

Take the good stuff. Leave the bad stuff. That’s the main idea behind buying a business via an asset purchase.

What’s an Asset Purchase?

There are innumerable ways to structure the purchase of a business, but most deals are...

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Business Startup

Social Purpose Corporations in Washington

Legislation creating social purpose corporations has passed both the Senate and the House, and is expected to be signed by the Governor this month.

In January, we wrote about bills in the Washington legislature that would create of a new corporate form for Washington businesses–the social purpose corporation. In February, the House passed HB 2239, a bill creating social purpose corporations, by a margin of 62-31. And in early March the Senate passed its version of the bill, SB 6230, by a margin of 34-14. Governor Gregoire is expected to sign the bills into law this month. To view the bill creating social purpose corporations as passed by the legislature, click here.

For more information about what social purpose corporations are, and...

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Business Startup

Beware: Lawyers Targeted by Widespread Scams

Recently we were contacted by a potential out of state client who requested our services to assist his company collect a commercial debt. The client had a check from the debtor sent to our office to deposit into our trust account. Through due diligence we discovered the check was fraudulent and the entire transaction was a scam. We quickly terminated our representation of the client.

We wanted to put this out as a warning to other attorneys throughout Washington (and the rest of the U.S.), as these sort of scams are widespread. Based on our experience, here are some of the warning signs:

The client is from out-of-state. As is the case with many clients, these scams often are initiated by an...

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Business Startup

Seattle Basketball Back in the News— Seattle Business Owners to Benefit?

2008 was a tough year for Seattle. In addition to the financial crisis, Seattle area sports fans and Seattle business owners had the added indignity of losing the Seattle SuperSonics.  However, Seattle basketball is back in the news and this could mean more business for Seattle construction companies and a boost in profits for Seattle business owners. As avid sports fans, we were pleased to hear the proposal for the new arena. We are also excited about the potential benefits to local business owners and the Seattle economy as a whole.

The Proposal Seattle-born Chris Hansen proposed a $500 million plan to bring Seattle an NBA basketball team and an NHL hockey team. The plan includes the construction of a multi-purpose arena...

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Business Startup

LLC Operating Agreement series: Exit Strategies and Provisions

Aside from choosing what entity to form your business as, one of the most important considerations in the early stages of forming a company is the exit strategy. Ironic as it may sound, deciding how to get out of the business in the beginning can save you and your business partners time and money down the road. As we’ve discussed throughout our series on LLC Operating Agreements, there’s tons of flexibility when deciding what provisions to include in your operating agreement. It’s no different when deciding on exit strategies, restrictions, and procedures for your LLC. Some operating agreements are silent on this point, while others include extensive restrictions and procedures for getting out of the company. Today’s post will detail some of...

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Business Startup

LLC Operating Agreement series: Economic Structures

The economic structure of a limited liability company relates to how and when distributions will be made to the owners (referred to commonly as “members”). Distributions may occur on a set schedule in regular intervals, when the LLC either redeems (or buys back) the member’s interest, or when the company liquidates. In this next installment in our series on LLC Operating Agreements, we’ll explore some considerations when structuring the distributions and allocation of profits and losses for your LLC.

Washington Law

The default rule under Washington law provides that members will receive distributions and allocations of profits and losses in proportion to the amount of capital each member contributed to the company. To clarify some of these terms: a distribution is any cash or property a member...

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