by Mike Oliver | May 16, 2013 | Tips
Attorneys fees can seem expensive, particularly if you only concentrate on the rate charged. The other component of the rate is the time it takes to do a task or the experience level of the lawyer. A lawyer that charges $300 / hr and takes 1/2 hour to accomplish a task or that does not need to research the issue is more efficient than a lawyer or paralegal that bills at $150 / hr but takes 1.5 hours to accomplish the same task or has to research the issue. So, what makes your fees higher and how do you mitigate them?
Below is a list of tips that we have gathered over the last 30+ years in seeing some bills end up higher than others:
- Organize your thoughts. Just as in business, a more organized plan will get you where you are going faster and more efficiently. Before you call your lawyer to “chit chat,” think through why you are calling, what information or advice you need, and be concise and to the point. We love to chit chat and we will buy you lunch and chit chat on legal issues for free, but when we are at work we generally bill.
- Organize your documents. The least efficient and most expensive resource to help you organize your documents is a lawyer or paralegal. The more sorting, sifting, re-organizing and general searching we have to do, the more expensive it is for you.
- In a deal, pin down the big issues. Transactionally, many clients think it is easy to shift a deal from one form to another (say from an asset to a stock purchase, or from a sublicense form of license to a order solicitation form) – it is not easy. In larger deals, particularly where significant tax issues arise, structuring the deal first is absolutely key. Use a non binding memorandum of understanding or letter of intent, or have a pre-call with your accountant or tax lawyer first. Once a deal is set in motion, if it changes midstream, it costs more. Consider if you got half way through college and changed your major from art history to electrical engineering. It takes more time.
- Be responsive. Probably the single most significant complaint we lawyers have is when clients do not respond to issues that are on deadlines. We have to remind, and call, and email . . . and so on, and you are billed every time we have to do that, trying to get you to provide us the responses.
- Don’t wait to the last minute. Many clients think that waiting to the last minute and giving the lawyer no real time to draft the document or resolve the issue makes the lawyer more efficient. It doesn’t! It makes us less efficient. Why? Because we are at some risk if later we miss some issue that we should have raised, so compressing the work makes us worry more and hence, be inefficient trying to make sure we have caught everything. Think about a construction project. Whenever one company falls behind and the others have to “rush” you end up with “compression damages” – enhanced costs. The same thing happens to lawyers.
- Make decisions. Being indecisive can cause increased fees. We often need decisions to be made, sometimes quickly. When they are not made, they cause us to “start and stop.” Being busy, we cannot always remember where we stopped, so we have to go back and get up to speed. This costs us time and you money.
- Work as a team. Your team includes your accountant, lawyer, banker and insurance agent, and sometimes a business consultant. These team members must work together and *communicate*. Now, sometimes this is hard for us because of the attorney client privilege. If we share attorney client privileged information with many of the team members, it may waive the privilege. But, there are still basic decisions and issues that can be shared and coordinated.
It may sound odd, but we actually want your fees to be as low as possible, and it sometimes troubles us that we have to charge for some things that have made us inefficient. So let us help you!
by Mike Oliver | May 6, 2013 | Corporate, Uncategorized
We often are asked whether to file a Maryland or a Delaware corporation or limited liability company. The chart below explains some of the factors that can affect this decision. We do not believe that there is any material difference if you are forming a single member LLC or sole stockholder entity and you are a maryland resident and the property and business is located in MD – in these cases it is just easier to register in MD. In any other case, this issue should be considered fully.
[table caption=”Delaware vs Maryland” width=”500″ colwidth=”100|200|200″ colalign=”left|left|left”]
Issue^Delaware^Maryland
Court System^Advantage Delaware: Delaware has the Court of Chancery, which is a pre-eminent court system, and a significant body of case law that allows lawyers to give fairly accurate advice regarding outcomes in disputes^Maryland has a Technology Track in its circuit court, but many fewer decisions, so it is harder to predict how a particular issue might be resolved
Informal actions^Delaware has a very flexible law for approving informal actions – they can be approved with just the number of persons necessary to take the action, unanimous approval is not generally necessary^Maryland law requires most informal actions to be unanimous, so as the number of members increases, this becomes inconvenient
Number of Members^As the number of members / stockholders increase, the harder it is to maintain a contractual stockholder agreement (this factor is about even for LLC’s), so the more you have to rely on applicable law. Delaware law is more fully developed than Maryland law^As noted above Maryland law does not allow for easy informal actions, so as the number of members / owners increase, it is harder to maintain control over the minority members.
Taxation^Delaware has no state income tax so non resident members are not taxed on passthrough income (at the state level)^There is no material difference for pass throughs as long as all members are MD residents- however, for non resident members who own a Maryland pass through entity, there is a tax withholding requirement for the Maryland LLC.
Conversions^Delaware law has a form entry for entity conversions (i.e. LLC to Corp or Corp to LLC)^Maryland law does not provide for a simple conversion process – you must fully document a merger transaction (which makes such conversion transactionally more expensive)
Garnishment^Bank accounts in Delaware are not subject to garnishment^Bank accounts in Maryland are subject to garnishment, however, a Maryland entity may own accounts in Delaware, so this is more a matter of convenience
[/table]
by Mike Oliver | May 1, 2013 | Case law, Content, Entertainment law, Intellectual Property, Licensing, Uncategorized
In The Hebrew University of Jerusalem V. General Motors, LLC, CV10-03790 AHM (JCx) (U.S. D. Ca March 16, 2012) the court refused to grant summary judgment on a claim that GM’s otherwise licensed use of an image of Albert Einstein violated the rights holder’s post mortem publicity right.
For more information contact Mike Oliver.
by Mike Oliver | May 1, 2013 | Case law, Intellectual Property, Litigation, Patents, Uncategorized
On January 10, 2013, the United States District Court, N.D. California, San Jose Division entered a permanent injunction against a patent-infringing defendant in BROCADE COMMUNICATIONS SYSTEMS, INC. v. A10 NETWORKS, INC., Dist. Court, ND California 2013 – Google Scholar. The ruling restrained the defendant and parties in active concert with it from “making, using, selling, or offering to sell in the United States, or importing into the United States any AX series application delivery controller that includes features that infringe claim 25 from U.S. Patent No. 7,454,500, claims 13 and 24 of U.S. Patent No. 7,581,009, or claim 1 of U.S. Patent No. 7,558,195.”
While this result would not have seemed odd before May of 2006, Brocade is now one of the few cases where permanent injunctions have been issued since the decision in eBay, Inc. v. Mercexchange, LLC, 547 U.S. 388 (2006). While the Supreme Court was careful to make it clear that permanent injunctions remained a viable remedy in patent cases, the eBay case changed somewhat well established case law that a prevailing patent infringement plaintiff was virtually always entitled to a permanent injunction.
A successful patent plaintiff must meet its “burden of showing that the four traditional equitable factors support entry of a permanent injunction: (1) that the plaintiff has suffered irreparable harm; (2) that “remedies available at law are inadequate to compensate for that injury”; (3) that “considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted”; and (4) that “the public interest would not be `disserved’ by a permanent injunction.”
While those factors might seem easy to meet, in practice, it is often very hard to show that legal remedies (damages) are inadequate. In Brocade, the court found that Brocade “practices its patent, that [the defendant] is its direct competitor, and that Brocade does not license its patents,” and therefore that “Brocade has shown that it suffers the type of irreparable harm that a permanent injunction is intended to remedy” (emphasis added).
For more information on patent licensing contact Mike Oliver.
Brocade is a district court case and may be subject to an appeal, but it now stands as one of the relatively few cases post eBay in which a permanent injunction was issued.
One take-away from this ruling for licensing transactions, is that a patent holder must consider whether this type of remedy will be sought before engaging in licensing, particularly come one come all or non exclusive types of licenses. That was one of the three key factors the court pointed to in finding irreparable harm and lack of an adequate remedy at law.
by Mike Oliver | May 1, 2013 | Contracts, Infotech, Intellectual Property, Licensing, Software, Uncategorized
In GMG Health Systems v. Amicas, Inc., 1st Cir April 10, 2012, the court had occasion to address a dispute between a software licensor / developer, and a licensee, in which more typical contractual language was in issue (for example, use of the term “go-live” and the phrase “substantially conform to Documentation” and typical warranty limitations).
GMG is a medical services provider – they typically have several systems to manage their billing, processing and other business functions. Here, GMG contracted with a third party (Amicas) for its software – which had to interoperate with software from an already existing vendor used by GMG. Like so many disputes, this one arose because of finger pointing between two vendors as to whose software was causing the error. As an added twist here, and something we have litigated on at least one occasion here – GMG had decided to leave Amicas and go with another vendor, and was desperately trying to find a way out of the long term agreement.
Normally in such disputes, the licensee (client) makes some effort to produce a viable claim of breach of the agreement by the licensor / software developer. In this case, however, GMG, which had not negotiated the agreement and signed a pre-printed form provided by the software company, produced a sole witness to fight the motion for summary judgment filed by the software developer. This witness had no IT or software training, was not a project manager, was not familiar with the function of either of the software systems at issue, and could not provide any details beyond that the “interface did not work.” GMG feebly tried to argue that the merger clause – a clause that states that all prior agreements including verbal understandings between the parties are “merged” into the agreement, did not apply because it had not negotiated the agreement. The court dismissed that argument without any discussion.
Without the ability to provide evidence of what the parties intended – the so called “seamless integration” with the other system – GMG was unable to overcome the warranty limitation in the agreement, which stated that Amicas did not promise that the software would work for GMG in its environment. Not surprisingly, GMG lost on all counts . . . and that loss was affirmed on appeal.
What is the moral of the story?
First, negotiate large scale enterprise resource planning agreements! Yes, the negotiation can be expensive, but far, far less than the litigation costs and potential damages. For example, in the GMG case, it was forced to pay an additional $700,000 for software it had abandoned, it was subject to an attorney fee award, it lost all kinds of time dedicating resources to fight the case, it had to pay its own lawyers, and it ended up taking 5 times as long to reach it s goal (of an integrated system).
Second, even if you do not want to hire a lawyer to negotiate, at least make sure that the party providing the service has stated clearly in the agreement, the deliverable, what it will do, and what you expect from the service. We have reviewed too many scenarios to count where a client has signed a pre-printed form that had NO promises or very light ones, like this agreement. If it is a critical result that software X must interoperate with software Y, state that in the agreement.
Third, consider the remedy. Many contractual negotiations can get hung up on the representations, warranties, disclaimers and so on – when they can be resolved by thinking in the opposite direction – assuming a performance representation is not met, what is the remedy? Remedies range from the “nuclear” option (total contract termination), to some form of “notice and cure” to a repair, re-perform remedy.
Fourth, consider the term of the agreement. In the GMG case, the parties amended their agreement and made it a longer term agreement. Many vendors will offer more significant fee discounts, or less escalation, if the term is longer. These can be attractive deals – but consider that as with GMG, you may desire to move away from that solution. So, my rule of thumb on this point is . . . the longer the fixed term of the contract, the more closely you must negotiate it – and the more you must pay attention to escape hatches and “relief valves” if something changes. Technology changes very fast – locking into a vendor for 5 years (as was done in GMG) is almost unheard of. A three year deal presents enough technology-change-risk to be the outer limit of most of these deals.
I could go on, but if you made it this far . . . well, thanks!
For more information, contact Mike Oliver.
