Discovery of electronically stored information poses significant risks

In a lawsuit’s discovery phase, each party must turn over to its opponent documents and electronically stored information (ESI) that could be used as evidence.

Discovery of ESI poses significant risks for unwary businesses. That’s because the obligation to preserve the ESI that is potentially relevant to a lawsuit can arise well before the lawsuit is filed.

“The first time that management thinks about ESI preservation should not be after one party to a dispute runs to court,” says Andrew P. Shelby, a litigation associate at Novack and Macey LLP.

Smart Business spoke with Shelby about what businesses should be doing when the duty to preserve is triggered in order to protect themselves from facing substantial consequences.

What is ESI?

ESI is data stored in any electronic medium.

For many businesses, email constitutes the most significant form of ESI. But it is not the only form. Increasingly, businesses’ ESI includes text messages, instant messages and social media. It also includes voice mail, photographs, databases and office documents such as Microsoft Word, PowerPoint and Excel.

Courts trend toward inclusiveness in determining whether data forms constitute ESI. So, as new office platforms and digital-communication formats emerge, they will likely be considered ESI.

What is the duty to preserve ESI and when is it triggered?

The duty to preserve is the obligation to prevent the destruction or alteration of ESI that may be used as evidence in litigation by either party, including a business’s opponent.

In general, the duty to preserve arises when litigation is reasonably anticipated — i.e., when it would be reasonable for a business to foresee that it may either sue or be sued.

What do businesses need to do to comply with the duty to preserve ESI?

Retaining a lawyer experienced in ESI discovery is the first thing that a business should do when anticipating litigation.

With the lawyer’s assistance, the business must then identify the ‘universe’ of ESI potentially relevant to the anticipated litigation. Doing so will involve identifying the custodians of that ESI — e.g., the employees involved in the dispute — and determining where they store ESI.

For example, their ESI could be on the business’s server or in its cloud storage. It could also be on employees’ computers, smartphones or tablets. The business then needs to instruct the custodians to not destroy any ESI that may relate to the litigation. This instruction is typically communicated through a ‘litigation hold’ letter.

The business also should disable any programs that automatically delete ESI on a periodic basis.

What are the consequences of failing to comply?

The worst-case scenario is losing the case automatically as a sanction.

Courts can also impose severe monetary fines. One litigant recently received a fine of almost $1 million.

Nonmonetary sanctions are also possible. For example, the court could instruct the jury to make an inference that the ESI destroyed in violation of the duty to preserve must have harmed the legal position of the party who destroyed it.

What are some steps that a business can take to proactively prevent violations of the duty preserve ESI?

Developing an ESI-preservation plan that is followed when the duty to preserve is triggered can prevent many problems.

The plan should include procedures for identifying custodians, disarming automatic deletion functions and training employees about preserving ESI if they receive a litigation hold letter, among other things. If a business has legal and IT departments, the discovery plan should be a joint effort between them with the help of counsel versed in ESI discovery.

The plan should also require periodic coordination between IT and legal departments about ESI creation, use, storage and deletion so that changes are taken into account. ●

Insights Legal Affairs is brought to you by Novack and Macey LLP

Growing infrastructure provides hope that oil and gas boom is here to stay

Oil and gas production in eastern Ohio is thriving and the industry should continue growing in the years ahead, says Margeaux Kimbrough, an attorney at Kegler, Brown, Hill + Ritter.

“We have seen a ton of jobs flow into the region related to the drilling and production wells that have already been drilled,” Kimbrough says. “Currently, we’re seeing an increase in the infrastructure that is necessary to move the oil and gas and other constituents from those wells to processing plants. Going into 2015, I expect to continue to see an increase in the amount of infrastructure being put into place, and that means an increase in jobs for Ohioans.”

As more wells are drilled and more oil and gas is unearthed and processed, some remain skeptical about the future and whether the bubble will soon burst. Kimbrough says that doesn’t appear likely.

“There is a lot of upfront demand for these projects and that is eventually going to level off, but probably not for another 10 years,” Kimbrough says. “Right now is a good time to be thinking about how you can become a part of the new development in the region.”

Smart Business spoke with Kimbrough about the process to extract oil and gas in Ohio and what is being done to ensure it happens safely.

How has new technology impacted drilling?

Production wells are drilled thousands of feet into the ground to extract oil and gas from subsurface deposits.

Traditionally, production wells were drilled vertically into the ground, and in order to fully develop a deposit, several vertical wells were drilled over a large surface area. New technology allows drillers to drill vertically and then horizontally into the ground.

This process is called horizontal drilling. As a result, drillers can use one drilling unit with multiple laterals. This new process takes up a lot less surface area than using vertical wells.

What are some misconceptions about hydraulic fracturing?

Hydraulic fracturing is a process where millions of gallons of fresh water mixed with different kinds of chemicals is injected into production wells at a very high pressure. This water, called brine, goes through the pipes, breaks up the rock in the subsurface, and allows the oil and gas to be released and flow back up through the pipe.

Some have expressed concern that injecting so much water into the ground and releasing the chemicals, gas and oil, risks contaminating individual water wells. But the oil and gas wells are drilled thousands of feet deep, much deeper than any water wells. So the concern is really not well-founded.

Can the brine water be treated?

Currently, Ohio does not have any specific regulatory provisions that would allow a company to treat brine water and dispose of it through state waterways.

The safest way to dispose of brine water is to inject it back into the ground through injection wells.
Injections wells are used to inject the brine water into porous rock.

The Ohio Department of Natural Resources, the state agency with regulatory authority over injection wells, has instituted new regulations to ensure that injection wells are not located near fault lines in an effort to address concerns about the potential for seismic activity.

What is the economic impact of all of this drilling?

The eastern region of Ohio has seen a substantial increase in the number of hotels, restaurants and supportive services needed to react to the demand created by the oil and gas boom.

Although you may not be directly connected to the oil and gas business, there is significant demand for ancillary services that are going to support development in this region for several years to come.

Insights Legal Affairs is brought to you by Kegler Brown Hill + Ritter

How to take advantage of the accelerating M&A market

As the M&A market for small businesses continues to recover after the recession, now is the time for potential sellers to begin planning. After all, business owners who sell their business without a well-defined exit plan typically sell for too little.

“To maximize value, minimize cost and make for an efficient sale, the business owner must seriously review legal, financial and business operations before going to market,” says Peter J. Smith, a member at Semanoff Ormsby Greenberg & Torchia, LLC. “Your lawyer, accountant and/or a good business consultant can help with this evaluation.”

Smart Business spoke with Smith about the M&A market and how to create an effective exit plan strategy.

What are some indicators that the M&A market is heating up?

BizBuySell.com reports that sales of small businesses have for the first time reached pre-recession levels. We’ve seen this in our own practice as well with increased deal flow and increased multiples.

What is driving the increase?

A variety of factors: improving small business performance, increased capital availability, more add-on acquisitions for venture capital portfolio companies, more sellers who waited out the post-recession recovery in order to regain lost value, and more buyers willing to take on debt and risk to grow.

Currently, there are many potential sellers in the market with viable businesses. Many restructured during the recession, so expenses were reduced and their EBITDA and profits have now increased. At the same time, banks have relaxed underwriting criteria and are more willing to finance buyers who are interested in making strategic acquisitions. Finally, there is a lot of pent-up demand, both among small businesses that see acquisition as a way to grow, and venture capital firms that are looking to expand their holdings through add-on acquisitions that provide synergy with their existing portfolio.

According to a BizBuySell.com survey of brokers, the strong M&A market is expected to continue throughout 2014 and we see nothing on the horizon that should cause a decline in deal activity.

What should potential sellers be thinking about in this market?

They should be thinking about exit planning — How can I position my business for maximum value and a clean, quick sale? They should be reviewing their entire company from the perspective of a buyer. This is not how most business people usually view their companies.

What are some examples of things to consider when exit planning?

Among other things, the business owner should ask:

  • Are financial systems and controls in place and adequate? Are financial statements presentable and in accordance with standard accounting principles? The business owner should consider having the financial statements reviewed or audited, if they are not already.
  • Can the business owner identify the best ways to increase EBIDTA? This is the biggest driver of value in your business.
  • Are employment agreements in place for key employees? Do all sales employees have non-competes?
  • Do key customers and vendors have contracts? Is there any guarantee of recurring revenue?
  • Does the business have title to all of its assets? Can it prove this in writing?
  • Does the company have title to all of its intellectual property? Without contracts, this is unclear.
  • Are all key contracts assignable? The business owner should know who can hold up their deal.
  • Is the business qualified in all states in which it does business? Has it filed tax returns in all of the appropriate states?

How far in advance of an anticipated sale should exit planning occur?

The longer the lead time the better. Planning should occur at least a year in advance of going to market. Ideally, it would be two to three years before a sale as it’s important to have the financial statements and tax returns in place as part of due diligence.

Insights Legal Affairs is brought to you by Semanoff Ormsby Greenberg & Torchia, LLC

How to avoid violating intellectual property rights in corporate videos

Corporate videos are a popular means of promotion for companies, and for reaching internal employees with important messages. What companies often miss is that many of the images, sounds or references included in these presentations may be legally protected under copyright, trademark, or other intellectual property (IP) rights. Even something as innocuous as a painting on the wall in the background of a shot may be protected under copyright, and displaying it in the video without proper permission can result in heavy penalties.

“As companies work through the planning stages of their corporate video, it’s critical that they consider what releases and licenses must legally be obtained before shooting,” says Sandra M. Koenig, a partner at Fay Sharpe LLP.

Smart Business spoke with Koenig about corporate videos and how companies can ensure they are free from copyright violations before broadcasting.

How is ownership determined?

The creator of a video is typically considered the holder of the copyright. In the U.S., when a work is created within the scope of one’s employment, the employer is the author and owner. This is the case when it is the employee’s responsibility to create a video as a central part of his or her employment. If making the video falls outside of the employee’s core duties, or the employee works for the company at a foreign office, then the employee is considered the author and owner and he or she must transfer the copyright or provide permission to the employer before the employer can freely broadcast it.

When a third party creates a video, even if it’s done so on a company’s behalf, the third party owns the copyright and the company needs to get permission from the owner to broadcast it. Ideally, the creator will agree to assign the copyright in the video to the company.

Must a company get permission from employees to show them in a video?

Written releases from all individuals who appear or can be heard in a video should be obtained well before the video is shown, either publicly or internally. Rights of publicity are different in each state, so check to make sure the appropriate permissions have been obtained from each person before proceeding with a video shoot.

Similarly, if a company uses a person’s name, likeness or other recognizable aspects of their persona, even a nickname, without permission in a video, the company may have violated an individual’s publicity or privacy right. Make sure to obtain written  authorizations from the persons or the estates of the persons who may be included in a video before proceeding.

How can music be incorporated into a video without violating copyright?

Companies that include music in their corporate video need to get the appropriate licenses from the copyright holders before music can be used.  For example, a music publisher may own the copyright in the sheet music, while a record label owns the recorded song. Permissions from all relevant copyright holders should be obtained.

What IP might be missed in videos?

Sometimes companies inadvertently include a protected property in their videos. This can happen when a product, piece of art or brand is not cleared from the shot and appears in a video. Even if it’s an accident, the company could be liable for using the image without obtaining permission. Showing any branded or protected product or image in a corporate video can be misconstrued as that brand in some way supporting the products showcased in the video.

Unless they are in the public domain, works of art, such as painting or sculpture, also should not be shown without permission from the copyright owner for similar reasons.

The risks associated with video presentations can easily be cleared if companies are familiar with the potential copyright pitfalls that can happen during a shoot. Lawyers familiar with IP law can help companies navigate potentially costly mistakes, but it’s important to engage an expert from the outset because once a video is broadcast, it’s too late.

Insights Legal Affairs is brought to you by Fay Sharpe LLP

Alternative fee arrangements provide insight to manage your legal costs

Managing expectations is a critical part of the relationship between law firms and their clients.

“If expectations are different between the two parties, it can either lead to the client feeling that they were overcharged or feeling that they did not get value for the service provided,” says Marc B. Merklin, managing partner at Brouse McDowell.

“The last thing a law firm wants is a client whose expectations weren’t met and who is unhappy with the final bill,” he says. “They may complain about it, and they probably aren’t going to be a client in the future or recommend the law firm to others.”

Alternative fee arrangements can reduce the risk of hard feelings by ensuring that clients understand both the services they need and what those services will cost.

“Almost any firm is willing to talk about fee alternatives as a way to manage legal cost expectations,” Merklin says.

Smart Business spoke with Merklin about the different approaches companies can take in managing their legal needs.

What payment options are available for legal services?

Clients can ask for a blended rate, which is a single rate to be charged irrespective of who is working on the case. So instead of worrying about whether you’re going to get a senior partner or a junior associate, you work out a blended single rate and whoever is needed on that file to manage that matter works on it. You don’t worry about differences in rates between different attorneys.

Firms will sometimes give a volume discount. So if you consolidate your legal affairs with a single firm, the more business you’re able to give that firm, the lower the total cost. The firm will give a percentage off the total based upon levels of business.

There are also flat fee arrangements. If it’s a routine matter such as intellectual property or estate planning where there is some certainty as to what the costs are going to be, firms will often give a flat fee quote for that project.

Flat fees can be tougher in the merger/acquisition or litigation areas, but there are still ways to do it. You may have a fixed fee for the discovery phase and then some incentives for the firm to manage within the budget.

There is also the traditional contingent fee. You have a lower hourly rate or a lower flat fee arrangement with a greater bonus for the law firm if there’s a successful conclusion to the transaction or litigation.

What’s the key to getting value for your legal services?

You need to look at the size and complexity of the particular matter at hand. It may not make sense to have the largest firm in the city handle a $50,000 piece of litigation because it may not be done in an efficient, cost-effective, value-driven manner.

If you know you’re looking for service in a particular area, who are the firms that can provide service in those areas? Compare rates and shop around to see if you’re getting value. What are the reputations of the firms you are considering? Are there other clients you can talk to who can talk about their experience with that firm and the value they received?

There is a wide range of people who can handle your matter, and within that group there may be wide variations in cost and approach.

It depends on how concerned you are with cost versus your concern about the specific matter being handled and who is handling it. That’s often the balance.

But, anybody who says, ‘I’m going to put my project out for bid and take the lowest bid,’ is risking a mistake.

How has the economy affected legal services?

More clients are putting work out for bid and asking what you would do to keep the costs down in a particular transaction.
Clients are much more willing to look at alternatives now, if the cost justifies it. In the past, that was far less prevalent.

Insights Legal Affairs is brought to you by Brouse McDowell

Align U.S. and European patent filing strategies for maximum efficiency

Filing patent applications with the European Patent Office (EPO) requires a different approach than when filing solely in the U.S. The differences range from administrative to technical. There are, however, filing strategies that will save applicants time and improve their chances of success.

“There are many ways to adjust your drafting technique for your U.S. patent application that won’t hurt you when submitting it in America, but will align it with European standards. A little more work up front will save you a lot of money down the road,” says John Ling, partner at Fay Sharpe LLP.

Smart Business spoke with Ling about how to save money and ensure success when filing patents with the EPO.

How should companies approach filing patents in multiple countries?

Some companies file informal provisional patent applications that establish an early effective filing date in the U.S. and then file a Patent Cooperation Treaty (PCT) application, which makes it possible to seek patent protection simultaneously in many countries, on or before the 12-month deadline from filing the provisional application. This identifies individual countries and/or regions in which the company desires patent protection.

Let’s say a company files a provisional patent application in the U.S., files the PCT application a year later, and then elects to file national stage patent applications in Europe, the U.S., and China. In this scenario, the company has postponed the expense of the national stage filings by several years, which permits the company to evaluate whether the invention is still commercially valuable before it elects to pursue a potentially expensive patent application elsewhere.

In this instance, it can be advantageous to draft the U.S. provisional application in a somewhat universal manner so that minimal alterations to the invention are required when filing in multiple countries.

What are some key ways to save money and time when filing with the EPO?

Some patent attorneys draft lengthy and redundant patent applications. They write patent specifications that are 50 or more pages, taking multiple pages to describe an embodiment and then copy and paste that multi-page description in when describing only minor alterations to the embodiment. This approach lacks foresight when the intention is to file in multiple countries because the application potentially will need to be translated into several languages. Translation services typically charge by the word or page, so brevity can be beneficial.

Additionally, European patent practice permits the use of multiple-dependent claims — dependent claims further narrow the scope of the independent claim —without additional fees. If you make multiple dependent claims in the U.S., they’re filed separately and incur costs separately. In Europe, however, you can essentially bundle dependent claims together by claiming multiple dependency from ‘any one of the preceding claims,’ rather than from a specific single claim, giving you more claim scope coverage. Just make sure that each multiple dependent claim has a basis in the claims from which it depends.

What should patent applicants consider before filing for patent rights with the EPO?

In Europe, the examiners apply a problem-solution approach when examining patent applications. Applicants, therefore, must be able to point to a technical solution, described in the patent application, to a problem when defending claims.

Different art groups handle unique areas of patent processing. Some are more liberal than others in their problem-solution approach. Savvy companies craft claims to appeal to specific art units, which is important since once an application is assigned to an art group it stays there.

If one applicant repeatedly files applications directed toward subject matter known to be difficult to patent in the EPO, that applicant will get a reputation with an art group for filing unpatentable inventions. Over time, those examiners may recognize that and the applicant will lose credibility.

Smart businesses do their analysis early to determine whether and how to purse a European patent. Find an attorney to help determine your chances of success. No one likes bad news, but it’s better than the cost of rejection.

Insights Legal Affairs is brought to you by Fay Sharpe LLP

Why you should involve an attorney when leasing real estate

Costs and expenses associated with real estate leases often account for a significant portion of a business’ overhead. Many business owners do not pay attention to the terms of a lease, other than the amount of rent and the length of the term, and may be surprised when required to pay unexpected expenses associated with the lease. Having an attorney experienced in leasing assist an owner from the outset will help avoid these surprises and other pitfalls. An experienced attorney will help level the playing field with a sophisticated landlord.

“It’s best to engage an attorney from the very beginning of the leasing process,” says Craig Chernoff, a member at Semanoff Ormsby Greenberg & Torchia, LLC. “Business owners typically do not deal with leases on a regular basis. Attorneys experienced with leasing do this work frequently, and are aware of the pitfalls.”

Smart Business spoke with Chernoff about the importance of having an attorney assist in the leasing process.

Why have an attorney review your real estate lease?

Many business owners will sign a lease presented to them without having an attorney review it. Many do not even read the lease, thinking ‘Oh, it is only $5,000 per month, and it is just a form.’ This is a serious mistake.

The proper way to view a lease is to approach it as an investment. For example, a $5,000 per month lease for a term of 10 years is a $600,000 investment. This is significant. Perhaps even more so than constructing a $1 million building, which will have significant residual value. Also, the lease is not just a $5,000 per month expense. There will likely be rent increases each year. The lease may also be a triple net lease, meaning a tenant will pay its share of operating expenses, taxes and insurance. These expenses will be significant, and there are many pitfalls.

What are some of the pitfalls associated with a triple net lease?

Hidden expenses are a major pitfall of a triple net lease. The most common are included as operating expenses. Leases may broadly define operating expenses, which may cause a tenant to incur significant, unexpected expenses. Having an attorney negotiate the lease could help limit these expenses.

At a minimum, the business owner will know what expenses may be imposed upon the business. For example, assume a tenant is responsible for 20 percent of operating expenses, and operating expenses include replacements. Now assume the roof is destroyed in the final year of the lease and the replacement cost is $1 million. While tenant will only benefit from the new roof for a few months, tenant will be responsible to pay $200,000 or 20 percent of a new 20-year roof. This is unreasonable, but it is what many form leases provide. An experienced attorney will recognize this issue and will limit these, and other, expenses.

Can the business owner be personally liable under the lease?

If the business is an entity, its owner is not personally liable if the entity is the tenant. However, many landlords will require the owner to sign a lease guarantee, whereby the owner guarantees all of the business’ obligations under the lease. If the business defaults under the lease, the landlord may pursue the business and the owner individually.

While the provision of a guarantee is not uncommon, there are instances when providing a guarantee is not appropriate, such as when a business is financially strong, and there are instances when the owner’s obligations under a guarantee may be limited. This should be negotiated at the letter of intent stage. An experienced attorney will suggest various methods to eliminate or limit a guarantee.

At what point in the leasing process should a business owner engage an attorney?

A business owner is best served by engaging an attorney prior to negotiating the term sheet. An experienced attorney will know what is common and what is not. The earlier an attorney is involved, the more level the playing field will be for the business and the business may save money and heartache in the future.

Insights Legal Affairs is brought to you by Semanoff Ormsby Greenberg & Torchia, LLC

Being proactive is the way to go when it comes to environmental policy

Environmental compliance may not always be a top priority for business owners, but fail to secure the required permits and adhere to the regulations that apply to your company and it could quickly catch up to you.

“I have seen instances where the agency proposed penalties that were so high, payment would put companies out of business,” says Meagan L. Moore, partner, Environmental Practice Group, Brouse McDowell.

“There is also the risk that a certain stigma would attach to your company if an environmental agency comes in and realizes you are not in compliance and haven’t been for some time. The agency might consider your operation more stringently than others because you now have this reputation of not giving proper consideration to environmental regulations.”

Fortunately, there are solutions to avoid these dire consequences.

Smart Business spoke with Moore about what business owners can do to stay on the right side of environmental law.

Where do companies miss on environmental compliance?

Often, things that you don’t typically consider can become problems. If you’re doing an expansion or you are building on your property, you might not consider the need to get a storm water permit for your construction activities.

You also may not be aware of universal waste regulations and the specific ways to store and dispose of fluorescent light bulbs.

These might seem like little things, but if an agency came out for an inspection and detected them, they would cite you and seek a penalty.

One of the biggest trouble spots is not looking into whether you have obtained the necessary permits, licenses and registrations for your operations. The permitting process can take time as some environmental permits are written for specific sources.

Getting the proper permit might take a few months and you often need more than one permit.

The first thing you should do to get in compliance is see if what you are doing has any impact on the environment.

If you’re a new business or you’re buying property to add on to your operations, look into past uses for the property. Determine if an environmental site assessment has been performed or if there are any zoning issues.

If you’re in an industry that makes some sort of product, are there uncontrolled air emissions?

Are boilers, generators or fuel consumption equipment being used? If so, these items may need to be registered. Water and waste are two areas that present a number of complex issues in terms of sourcing and disposal that require attention.

Even non-hazardous waste has certain regulations that need to be followed in regard to how that waste is going to be disposed.

What type of assistance is available to conduct an environmental evaluation?

One option to help with this process is to reach out to an environmental consultant or environmental attorney, but this is not always financially feasible. The Ohio Environmental Protection Agency offers the Small Business Assistance Program for companies with fewer than 100 employees to help identify environmental compliance issues you could encounter.

It’s a free, non-regulatory program where the agency will send someone to your business to do an on-site environmental inspection. The program is entirely confidential. During the inspection, the agency will compile a list of compliance issues that exist, offer guidance and, if necessary, work with you through the process of getting a permit.

What cost benefits can be realized through environmental compliance?

Smart management of environmental issues not only reduces regulatory risk, but also helps the business become more efficient. It can reduce operating costs and improve profitability. Consider saving money and protecting your business from potential enforcement by going beyond mere compliance. Take into consideration what you can do today and it will save you money in the long run.

Insights Legal Affairs is brought to you by Brouse McDowell

When employers help shape HR policy, it can make a big difference

The Ohio General Assembly recently sent 33 bills to Gov. John Kasich, some of which are expected to positively impact issues affecting the HR profession in areas of workforce development and unemployment insurance.

House Bill 486, for instance, requires coordination and collaboration among Ohio’s three major workforce development programs: Adult Basic Literacy Education, the Carl Perkins career technical program and the Workforce Investment Act.

The state agencies that oversee these programs are directed to work with the Governor’s Office of Workforce Transformation (OWT) to create a single state workforce plan for a waiver from certain federal requirements. The bill also requires the OWT to review the remaining 88 workforce-related programs and organize them into a comprehensive structure.

It’s now up to employers and their respective HR teams to be engaged with this effort to ensure it ultimately leads to a better pool of talent for Ohio businesses, says Tony Fiore, Of Counsel for Kegler, Brown, Hill + Ritter.

“If you’re not providing feedback as experts in the HR profession to individuals writing the laws or creating public policy, at the end of the day, compliance is something you really can’t complain about,” Fiore says.

Smart Business spoke with Fiore about the importance of having a strong voice in the policies that shape the state’s companies.

What factors led to the passage of HB 486?

Ohio has training programs geared to building a stronger workforce. But for too long, they have operated in silos, making them blind to what is happening outside of their specific areas of focus. The result is programs that continue despite not meeting the objectives that led to their implementation.

Talk to your political representatives about your company’s needs and explain which programs are helpful and which ones offer less support. Are there skills or talents absent in the existing pool of candidates that you hire from? Is this group lacking certain technical skills that community colleges, higher education institutes or workforce development institutes could easily incorporate into their curriculum? These are the people who can effect changes that benefit your employees and your business.

What is another area of HR policy that affects employers?

The federal unemployment tax has risen over the last four years whether or not your company terminated an employee. While unemployment is down and an emphasis by Gov. Kasich and lawmakers has been placed on job creation, Ohio’s unemployment insurance loan balance is still the third-highest in the nation at $1.38 billion.

Since the economic downturn of 2007, the state has been forced to borrow these funds from the federal unemployment account to pay unemployment insurance benefits.

Federal law states that until this loan balance is paid in full, Ohio employers will pay an additional $21 per employee each year to repay the loan. Since the state has carried a loan balance for the last six years, employers are paying $105 per employee for 2014 and face another $21 add-on in 2015.

HB 329 would require the director of budget and management to make payments on the balance of amounts borrowed by the state from the federal government. But many believe a more comprehensive unemployment compensation reform package is needed to address the current loan balance and rebuild the unemployment insurance trust fund to a position of strength to weather the next downturn.

Why should HR professionals care who wins the elections in November?

Thomas Jefferson had a great quote: ‘America is not governed by the majority, but a majority of those who participate.’ If you’re not providing some voice to those individuals making decisions that affect your business, you waive your right to complain.

In November, Ohio electors will have the opportunity to vote for all statewide officeholders, all 99 seats in the Ohio House, 17 of the 33 seats in the Ohio Senate, all 16 U.S. Congressional seats and two Ohio Supreme Court justices. The importance of educated voters cannot be overstated and leaders need to be informed about HR issues that affect Ohio’s businesses.

Insights Legal Affairs is brought to you by Kegler Brown Hill + Ritter

Commit agreements to writing or risk having no agreement at all

It is always a good idea to commit an agreement to writing, both to avoid disputes and enhance prospects for effective enforcement. But in certain instances, getting a deal memorialized in writing with signatures is more than just smart, it is essential.

“Illinois law provides for a number of situations when the enforceability of an agreement may turn on whether it is reduced to a signed writing,” says Michael A. Weinberg, a partner with the business litigation firm Novack and Macey LLP.

“Contracting parties who have a high level of mutual trust often believe that oral promises will be sufficient, but such confidence can prove fatal if the relationship breaks down, or a good faith dispute arises.”

“Sales of interests in real estate, certain sale of goods contracts, long-term employment contracts and agreements relating to extensions of credit are just some of the spheres of commerce where ‘written contract’ requirements are imposed.”

Smart Business spoke with Weinberg about various types of agreements that need to be in writing.

What contracts must be in written form?

The most familiar collection of laws mandating that certain types of agreements be in writing are those collectively referred to as the statute of frauds.

For example, contracts for the sale of real estate or interests therein are unenforceable if not written and signed by the parties to be bound, as are contracts that cannot be performed within the span of one year. Contracts for the sale of goods in excess of $500 will not be enforceable unless they are in writing and signed by the parties against whom enforcement is sought or their agents.

It should be noted that the various statute of frauds enactments do not say that oral contracts falling within their scope are per se void, but rather that they are voidable and may be unenforceable if contested.

There is no strictly mandated form that writings must take in order to satisfy the statute of frauds. As long as a court can glean the essential terms of the deal, the writing will likely pass muster.

Are the statute of frauds requirements iron clad?

Notwithstanding the seemingly uncompromising language of the statute of frauds acts, there are exceptions to those requirements that will allow an oral contract to be enforced even if the agreement in question falls within a category that normally must be reduced to writing.

Thus, for example, partial performance of certain types of oral contracts can make them enforceable even if the statute of frauds suggests otherwise, as can a long course of commercial dealing.

Must agreements with commercial lenders be in writing?

The Illinois Credit Agreements Act requires that a ‘credit agreement’ — a commitment by a creditor in a commercial context to lend money, extend credit, or delay or forbear repayment — be in writing and signed by the creditor and the borrower.

This has proven to be a trap for many unwary businesses. A borrower may be orally told that a loan has been approved, an extension to repay authorized or a technical default waived, but none of those oral promises are enforceable.

When else might a signed writing be required?

Without attempting to address all such instances, one situation that bears noting relates to amendments to written agreements.

Even where there is no statute prohibiting oral changes to the contract in question, the contract itself may have a provision that expressly requires that amendments be in writing and signed by all parties. The best way to protect yourself is to get everything in writing.  ●

Insights Legal Affairs is brought to you by Novack and Macey LLP