Bluegrass Business Law

May 26, 2007

Do it yourself incorporation

Filed under: Business,Uncategorized — G.A. Napier @ 11:00 pm

The rising popularity of Limited Liability Companies is partly due to the ease of organization this company form with the state. The Kentucky Secretary of State’s online business service provides all the forms and information necessary to create your own LLC. For many fairly sophisticated entrepreneurs, the do-it-yourself approach works out just fine. Also, the IRS now accepts LLCs as non-profits. However, some more complicated business structures need the professional assistance of an attorney.

One example is a non-profit organization. Ironically, many of these non-profit companies, usually founded for charitable purposes, are very small, lean operations with little or nothing set aside for legal assistance. However, the consequences for mistakes with non-profits can be graver due to the IRS regulations.

When starting a non-profit, one must have specific language in the Articles of Incorporation that does not fit into the Secretary of States form. Also, while not filed with the state, there need to be bylaws that will be submitted to the IRS with the Form 1023 required to be recognized as a non-profit under 501(c)(3). Also, when applying as a 501(c)(3) entity, the default designation given is a private foundation. This entails additional scrutiny of your operations as compared to a public charity. Churches, hospitals and certain educational institutions are specifically designated public charities, but many others need a letter of determination from the IRS.

May 7, 2007

Comprehensive legal consultation

Filed under: Business,Construction Law — G.A. Napier @ 3:52 pm

Every time I meet a new person and wind up saying that I am an attorney, or counselor at law, the very next question is, “What kind of law do you practice?” or “What kind of lawyer are you?” I am always tempted to say, “The good kind.” But, I think I have a better answer, “A comprehensive one.” In every professional field, there is increasing pressure to specialize. The general practitioner, whether in law or medicine, is being squeezed out of existence. I often wonder if there will be a backlash to this demand for specialization.

One downside to specialization is a narrowing of focus. Consider this situation in the construction/development industry where a prominent developer is being criticzed for violating Federal laws protecting wetlands. I do not wish to focus on the motives involved in bringing this situation about, rather it left me wondering what kind of legal counsel did the developer get before starting and along the way with this project. Did that developer have one attorney specializing in construction, but unaware of the issues of environmental law? Was an attorney consulted at the inception at all? And most importantly, if an attorney who valued a comprehensive approach had been consulted, would the developer now be facing expensive fines and delays? I do not know the anwers; for all I know, the developer sought and received top notch legal counsel.

What I do know, is that even if an attorney specializes, maintaining a comprehensive mindset can be invaluable. Such an attorney may not have the answers at the tips of his fingers. The value of such an attorney is more in how he or she thinks and not in the knowledge possessed. It is a truth about the practice of nearly any profession, but especially true about law, that the answers can be found if you just figure out the right questions to ask. So, a comprehensive minded lawyer would have been asking about environmental impact issues from the beginning.

May 3, 2007

Creative lawyers can boost business profit:

Filed under: Business — G.A. Napier @ 7:35 pm

Here is a post by The Greatest American Lawyer that nicely affirms what I previously wrote in this prior post . If you own a business where having in-house counsel is not cost efficient, consider finding a solo practitioner or small firm with that “why not!?”/”can do” attitude to keep on small monthly retainer for those quick consults that will protect and boost your bottom line.

May 1, 2007

Counselor/Lawyer as Asset to Business:

Filed under: Business — G.A. Napier @ 12:30 am

Here is an excellent follow-up post from G.A.L. to this prior post about lawyers, risk aversion and profit. Attorneys can be major assets to businesses big and small in creative problem solving and consulting. Small firm and solo attorneys, being entrepreneurial by nature, are excellent and cost-effective sources of such services.

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