If your company has been hit with a lawsuit, you may want your attorney to tell you up front if he or she is going to settle the case or fight to the death through a trial.
But that’s not always something that can be determined in advance, says Alex Craigie, a trial lawyer with Dykema Gossett, PLLC. Instead, there are several key points during the process at which the attorney and the client should assess the value of going forward with the case versus settling.
“Settling is not always the best option,” says Craigie. “But if it is a case in which the defendant wants or needs to settle, there are certain key times during a case that it can leverage that option.”
Smart Business spoke with Craigie about critical times during a lawsuit to evaluate whether settling, or moving forward with the case, is the best option.
What is the first key point at which to consider settlement options?
The parties can discuss settlement at any time, but I’ve found there are a few pressure points during the life of a case where it can be strategically intelligent to consider engaging in settlement negotiations.
The first is at the very onset, before the company has been served with the suit or filed its response. At this point, the parties’ costs are still at a minimum, and this fact alone sometimes creates an incentive for a reasonable settlement.
But not always. At this point, the attorneys have only heard one side of the story— their client’s version. The plaintiff’s lawyers may be overly optimistic about the quality or value of the case. A company defendant and its lawyers might be too bullish or unrealistically undervalue the case. Either of these circumstances can complicate negotiations. While the concept of an early settlement sounds appealing, finding a common ground this early in the litigation can be challenging.
When is the next juncture that provides a settlement opportunity?
I find a second key time to negotiate may be as soon as the deposition of the plaintiff or the plaintiff’s key witness has been completed. Sometimes the sheer intrusiveness of the deposition makes the plaintiff uncomfortable enough that they no longer want to pursue the case the way they did at the outset. I find this particularly true in sexual harassment, discrimination and certain personal injury cases.
The deposition might also have revealed facts that weaken the case for one party. If the plaintiff’s case was weakened by the testimony, they may begin to value the case more realistically, closer to the defendant’s estimate.
By the same token, a company defendant’s desire to resolve a case might increase if harmful information was learned for the first time during the deposition.
How can filing a motion to dismiss lead to settlement?
A dispositive motion, whether for summary judgment or dismissal, should always lead an opponent’s lawyer to re-think their settlement stance. Regardless whether it is a ‘slam dunk’ winner, a dispositive motion creates a risk that the plaintiff will walk away with nothing. This is a key pressure point and an opportunity to discuss settlement.
I can’t blame a company defendant, who has filed a strong motion, from becoming further entrenched in its bullish position. After all, it could be just a hearing away from complete victory. On the other hand, this is perhaps the best opportunity to find out if settlement is possible. The risk created by the motion can reduce a plaintiff’s expectations to the point where ‘peace’ can be purchased relatively cheaply. This is all the more true if, by settling, the company avoids the extraordinary defense costs and risks associated with a full-blown trial.
Is there still room to settle before a trial begins?
Absolutely. Trial is war. Preparing for any trial is a risky and expensive endeavor. It is also disruptive to the company, especially if it is a smaller company. It can take every hour of every day for several key employees to prepare. The company must devote an enormous amount of resources, both money and time, to preparing. If the case is going to be settled and should be settled — and let me emphasize that not every case should settle — an optimal time to do it is before you get to the final trial preparation phase.
In the final four to six months before the trial, the parties and their lawyers should be asking, ‘When are we going to start incurring trial preparation costs? When are we going to start pulling people away from their normal jobs to prepare for trial testimony? When are we going to start hiring experts, which becomes very expensive? When are we going to start filing pretrial motions and jury instructions?’
So, for example, if the trial is set for October, your attorney should be able to tell you that you’ll need to kick it up starting in late June. If you want to attempt to settle before trial preparation costs really start to mount, you need to be thinking June or earlier.
Do you suggest the parties use a mediator to help them negotiate?
Yes. But I don’t advocate working with a neutral prematurely. I’ve found that, in most cases, a neutral does not bring a lot of value to the parties’ settlement discussions until there has been at least some basic fact discovery completed. Otherwise, the neutral just regurgitates both parties’ unsubstantiated claims. In my view, the parties should complete one or more key witness depositions and exchange documents before engaging in a mediation. At that point, the neutral has something to work with.
Alex Craigie is a Member in Dykema’s Los Angeles office. His practice currently focuses on employment litigation. Reach him at (213) 457-1750 or firstname.lastname@example.org.
The property tax bill comes in the mail, and you pay it. But do you ever really look at it to determine whether you are paying the right amount?
“Property tax on the real estate and personal property that you own or that you lease is part of the overhead of the operation of your business,” says Carl Rashid, Jr., leader of the Property Tax Appeals practice group at Dykema Gossett PLLC. “You want to make sure you are paying your fair share of taxes, but you certainly don’t want to pay more than your fair share.”
Smart Business spoke with Rashid about how to make sure you’re not paying too much, and, if you are, how to return that money to your bottom line.
Why should business owners be concerned about their property tax bill?
Real estate values have declined in the last few years, making it a good time to review the amount of taxes that you are paying. If your property was formerly worth $1 million, and you know for a fact that you could not get $1 million for it now, you should not still be paying property taxes based on a $1 million value. If you are looking at the bottom line, as you should be, you have to look at every item of expense in your overhead, and this can certainly be a major one.
When your next tax assessment comes, consult with an adviser to determine if the amount you are paying could be lower.
How can an adviser help lower the amount of property tax a business pays?
Once you’ve received the assessment — usually in February in Michigan — and want to determine if you may be paying too much, contact an attorney to begin the assessment process. The attorney will look at the assessment, look at what comparable properties are going for in the area where your business is located, and oftentimes consult with an appraiser to determine the value.
To assist the adviser in making an accurate assessment, the business owner should provide the notice of assessment; the previous year’s tax bills; any appraisal reports that they may have; the insurance value of the property, although that is not always indicative of the true value of the property; and, if it’s an income-producing property such as an office building, a shopping center or an apartment building, the financial statements from the previous three years.
From there, the adviser will undertake the appeal seeking to lower the appraised value of the property and file it with the appropriate state authority.
How can business owners identify the right lawyer for their needs?
Look at the years of experience and the adviser’s success rate. That person’s relationships with the taxing units in the state are also critical. If those working at the taxing units respect the adviser, they are going to sit down at the table and try to resolve the issues. If they don’t respect the adviser, or don’t have a previous relationship with him or her, it can significantly lower the chances of success.
How long does the process take?
It could be a very long process, as long as three years, because of the backlog the state is facing. During that time, the taxpayer will continue to pay at the assessed value. And if the value is found to be less than the assessment amount, the portion that was overpaid will be refunded when the case is over.
While the appeal is pending, the lawyer will amend the petition to make sure that subsequent tax years are involved. The attorney will also keep you informed of the progress of the appeal as it goes through the tax tribunal or court system, and of subsequent filings.
Then, once there is a hearing and judgment, or a settlement — and most cases are settled — the revised assessment becomes the taxable value. The taxable value is frozen at that number and can only be increased by what the Consumer Price Index is in Michigan, but not to exceed 5 percent.
Once an appeal is settled, can a taxpayer appeal again the following year?
Yes. If you settled at a lower number, and after that the market drops again, as it has in the past few years, your property may be worth less than the value determined when you filed the appeal. If you feel that is the case, it may be worth it to repeat the process.
How does the taxpayer pay the adviser?
The case can be paid on an hourly basis or on a contingent fee basis. A lot of clients prefer not to receive regular bills and would rather pay a percentage of the amount recovered. Some clients also believe that hiring someone on a contingency basis provides an added incentive for the adviser to get results.
Would you advise that every business hire someone to appeal its property taxes?
No. A business should only appeal if there is enough tax dollars at stake to make it worth the time and effort of both the business and the lawyer involved.
It’s really determined on a case-by-case basis. If the amount in dispute is minimal then it becomes a business decision that each owner has to make based on what he or she is comfortable with and whether it is worth it to engage the services of a lawyer.
Carl Rashid, Jr. is leader of the Property Tax Appeals practice group at Dykema Gossett PLLC. Reach him at (313) 568-5422 or email@example.com.
With an estimated 80 percent of the value of S&P companies in their intellectual property holdings, businesses cannot ignore the impact of IP on their bottom lines, their equity value and their day-to-day operations.
Intellectual property law is among the most complex and misunderstood fields of law and represents a veritable mine field for businesses, says David G. Henry, Sr., a member of the Intellectual Property Group at Dykema Gossett PLLC.
“Failing to recognize intellectual property issues as they arise, asking the wrong questions, or acting upon the many myths surrounding the proper handling of IP issues can lead to substantial losses and/or liability for a business, its shareholders and its officers,” he says.
Smart Business spoke with Henry about recognizing intellectual property issues when they present themselves and what to ask IP experts before acting in any material way.
What are patents and some of the myths regarding them?
Patents are legal monopolies that allow owners to prevent all others from making, selling, using or importing patented subject matter, which can include machines, chemical compositions, manufacturing processes and business methods.
There is a common perception that you can protect an invention by mailing yourself a letter describing your invention. However, that does little, if anything, to protect an invention, and relying only on that will destroy any patent rights for failing to file a real patent application. Applications must be filed within one year of the first public use of the invention, its sale or offer of sale, or a description of the invention in a printed publication, among other things.
Another fallacy is that you cannot patent something that is just a new combination of old parts. In fact, most new inventions are merely new combinations of old parts. Assuming that it is impossible to patent your invention, or that patents are easily circumvented and not worth the time and expense (another common misconception), you may miss the opportunity to secure your most valuable asset, perhaps costing you millions of dollars in value.
Finally, many people believe they can get around an existing patent simply by changing or adding something to the patented item. However, patent claims often cover much more than the item shown in a patent, and, if you infringe, it could cost you your business.
What are some misperceptions regarding copyrights?
There is often confusion about what a copyright covers. Copyrights protect the expression of ideas and information, not the underlying ideas or information. Items such as books, software, photos, paintings and recorded music may be protected, while mere information like recipes, mathematical theorems and phone listings may not.
There is a common misperception that if you change someone’s work enough, you can get around the copyright. However, copyright covers much more than just literal, verbatim copying, including the making of derivative works. And admitting that you changed someone’s work to get around the copyright may be an admission of infringement.
There is also the perception that if you pay for a copyrighted article that you own it, especially if you paid to have it made. However, ownership most often results from creating the work yourself or having your employee create it as part of his or her job (a true ‘work for hire’ under copyright law). Companies often make the mistake of thinking that because they paid an independent contractor that they own the end product, but they often do not, absent a contractual assignment of the copyright.
There is also the myth that you only have copyright protection if paperwork is filed with the government, but copyright exists the moment a protectable work is reduced to tangible form. You can be liable for infringing on a copyrighted work for which no filing has occurred.
However, before you can sue for infringement, you must register the work in a timely manner. Registering too long after publication and after an act of infringement can cost you the right to statutory damages and attorney fees.
How do trademarks work?
Trademark protection is for words and symbols that distinguish the goods or services of one vendor from those of all others. Trademark rules protect the public from confusion and makes commerce work. Properly selecting and protecting trademarks will help you protect your reputation and market power, and avoid considerable trouble and expense.
Businesses must know what they do and do not own as a trademark. If the Secretary of State’s office merely says a name is available as a corporate name, for example, that doesn’t necessarily means it’s OK to do business under that name. Too often, companies make the mistake of incorporating under a name that, if used as a brand, may infringe trademark rights of a third party. Some also believe that merely filing an assume name certificate (DBA) creates exclusive rights, but such is not the case.
Concerning infringement: Just changing a spelling or adding a word to an existing trademark often does not protect you. Trademark infringement typically exists if your trademark (however spelled or configured) creates merely the likelihood of confusion as to source, sponsorship, approval or affiliation. Trademark infringement is easier to commit than most think, can be very difficult to spot, is expensive to litigate and is potentially ruinous in terms of wasted reputation investment.
Intellectual property is often a company’s most valuable asset and is easily overlooked, lost or destroyed, or infringed upon. By understanding the value of IP and consulting with experts in the field, you can avoid the potential land mines that abound.
David G. Henry, Sr. is a member of the Intellectual Property Group at Dykema Gossett PLLC. Reach him at (214) 462-6439 or DGHenry@dykema.com.