Tag Archives: Management

We are in better shape than we thought

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We are in better shape than we thought

The Philadelphia Business Journal is reporting that the U.S. economy shrank at just 1 percent the second quarter, beating analysts’ expectations and providing fresh evidence that the effects of the economic downturn are weakening.

The GNP is a measure of the value of all goods and services produced in the United States. This is important news, because analysts expected our GNP to fall 6% or more in comparison to our GNP last quarter.

What does this mean for small business owners? Now is the time to re-examine your GNP. Look at your key metrics that measure profitability. While you may not have increased your revenues, have you reduced costs or increased efficiency? Do you have enough prospective clients in the pipeline? Have you reduced your risk by purchasing an insurance policy or adopting standard operating procedures promoted by your professional organization.

Update: Here is a business doing well during the recession. Miller Coors, like our GNP, has lost 1% of its market share. However the Philadelphia Business Journal is reporting that the company is saving over $500 million dollars by improving efficiency.

Good Luck.

Sharmil McKee
Business Attorney
blog@mckeeoffice.com

McKee Law Office
Philadelphia, Pennsylvania
215-242-5260

www.mckeeoffice.com

Hot Issues in Business Law: Patent Trolls

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Hot Issues in Business Law

Technology giants have formed a new group to protect themselves from patent trolls.  Patent trolls are businesses who business model is to purchase key intellectual property then collect royalties from companies whose products depend on that intellectual property.  Patent trolls seem to walk a fine line between savvy capitalist and  kidnapper.   

So, technology companies have created a group, Allied Security Trust, that purchases patents for the future.   The Trust then sells the patents to a member of the gropu after granting itself a nonexclusive usage license.  To join, members pay a $250,000 fee and place $5 million in the Trust’s escrow fund.  If I represented a patent troll, the first thing I would do is file an antitrust complaint with the Antitrust Division of the U.S. Department of Justice.  You can file a complaint online at http://www.usdoj.gov/atr/contact/newcase.htm  Keep your eyes open for this storm brewing on the horizon. 

Do you have a legal question? We offer free consultations regarding this and others legal issues.  Call today or chat online, privately, with an attorney every Monday through Friday from 8 a.m. to 8 p.m. at www.mckeeoffice.com
 
 
Sharmil McKee
Business Lawyer
 
McKee Law Office
245 W. Allens Lane
Philadelphia, Pa 19119
 
Telephone:     215-242-5260

Toll-Free:         1-877-273-0749

Skype Us!              mckee.law.offices

How a member can force a nonprofit to involuntarily dissolve?

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How a member can force a nonprofit to involuntarily dissolve?

Yes. The Court of Commonwealth issued a ruling in April that should serve as a warning to nonprofit boards in Pennsylvania.   

Did you know that Pennsylvania law allows a member of a nonprofit to petition the court to involuntarily dissolve the nonprofit corporation?  A court will dissolve a nonprofit when the the corporation abandoned its mission, misapplied its assets, when the director act fraudulently, or when the members are deadlocked about the management of the non-profit’s affairs.

In Loveless v. Poconos Forest, Mr. Loveless tried to dissolve his nonprofit, Poconos Forest.  The court, eventually ruled in the nonprofits favor, however, it seems the nonprofits only saving grace was the broad language written in the non-profit’s bylaws about its purpose and that its directors did not commit fraud.  The main purpose of the nonprofit was to host sporting events, however, the nonprofit had not hosted a sporting event in 19 years. 

Fortunately for the nonprofit, the bylaws broadly states its purpose is to provide vacation facilities for its members.  And while the court found that the directors engaged in self-dealing, the court concluded that the activity did not rise to fraud; the directors conduct fell more along the lines of ignorance, rather than fraud.

The court under these facts refused to dissolve the nonprofit, but the court ruled that the nonprofit must, in the future, conduct all business in strict accordance with its governing documents and all applicable laws.  (Loveless v. Poconos Forest Sportsman Club, No. 2196 C.D. 2008, April 2009).

What can you, as a director of a nonprofit, learn from this case?

1.  Take minutes of all your meetings.

2.  Be sure that each meeting has the required quorum.  If your by-laws do not specify the number, then the Pennsylvania Nonprofit law requires that at least majority of all voting members must be present.  

3.  Follow your bylaws closely when making changes to the by-laws.  If your by-laws do not specify the procedures for amending the by-laws, then the Pennsylvania Nonprofit law first require that the amendment be proposed to the board by a resolution.  The proposal must be presented by petition of at least 10% of all voting members.  The amendment must list the existing text of the article with brackets around the language that is to be added.  Once the resolution to petition to amend the by-laws is adopted, then all voting members must be given at least a 10-day written notice about the meeting to consider the proposed amendment.  The meeting notice must include the proposed amendment.  The proposed amendment may then be adopted by a majority vote of the present quorum. 

Then, finally the Articles of Amendment must be executed by the nonprofit corporation and filed with the Department of State.  The amendment does not become effective until it is filed with the Department of State.

Consult an attorney for more specific information about your nonprofit.  Good luck.

Sharmil McKee
Business Attorney
McKee Law Office
Philadelphia, Pa
215-242-5260

New Mechanic’s Lien Law

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In June, the Governor Rendell signed a new law that becomes in effect on January 1st.  The new law empowers sub-contractors and suppliers with the right to place a lien against a property if the owner or general contractor does not pay the sub-subcontractor for his/her work.  The old law limited this right to the prime contractor and the sub-contractor.


Why did we need a new mechanic’s lien law?
 

 

The purpose of the law is to protect sub-subcontractors, title insurance companies, and mortgage lenders who finance development projects.  Owners are now motivated to pay a lien regardless of whether they dispute the claim because liens cloud the property title and interfere with the owner’s ability to sell the property after the lien is attached.

 

Who can this law harm?

While sub-subcontractors celebrate the new law, owner-developers are not so happy.  The law now broadens the class of people who can file a mechanics lien.  In addition the law limits a developer’s ability to protect her property from a mechanic’s lien.  In the past, a developer and a sub-contractor could sign a waiver relieving the parties of their right to file a mechanic’s lien.  The new law enforces a waiver only if the developer purchases a bond equal to 1% of the project.     

 

How will this law work?

 

An owner-developer purchases a residential lot.  The developer sub-contracts with Company Builder to builder the homes.  Company Builder in turn contracts with Dry Wall Company to put up the walls for the new homes.  Dry Wall Company orders 300,000 nails from Nail Supplier in China.  After the nails arrive, Dry Wall Company refuses to pay Nail Supplier because the Company Builder did not pay Dry Wall Company for its work.  Who can file a mechanic’s lien against the property?  The Nail Supplier and Dry Wall Company can file.  The owner-developer will be forced to pay Nail Supplier and Dry Wall Company directly to protect the property’s title, even though the developer only has a contract with Company Builder. 

 

How can I protect my property from a mechanic’s lien?

 

To prevent this from occurring, a developer will have to purchase a bond worth at least 1% of the project and get signed waivers from all the sub-subcontractors and suppliers working on the project. 

 

If you need help determining whether this law applies to your company, please call  or email me.  We offer free consultations regarding this and others legal issues.  Call today or chat online, privately, with an attorney every Monday through Friday from 8 a.m. to 8 p.m. at www.mckeeoffice.com

Independent Contractors and Worker’s Compensation

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A Pennsylvania court recently ruled that a claimant was not entitled to worker’s compensation because he was not an employee, but rather he was an independent contractor.

The Court, while ignoring the independent contractor agreement and the non-compete agreement signed by the company and the claimant, examined the nature of the employment to determine if the driver was an employee and eligible for worker’s compensation. Based on the following factors, it determined that the escort driver was NOT an employee and therefore NOT eligible for worker’s compensation:

  1. the company did not control the details of the trip.
  2. the claimant may refuse any assignment.
  3. the company provides no training or equipment.
  4. the drivers did not need to attend any functions at work (i.e. no mandatory employee meetings)

Beacon Flag Car v. W.C.A.B., No. 928 C.D.2006 (Oct. 31, 2006).

What does this case mean for you, as a business owner?  The Unemployment Compensation Board and the Workers Compensation Board are not required to respect your independent contractor agreement.   The boards, including the Internal Revenue Service, will examine your actual relationship with the work to determine if he or she is independent.  So, for examine if you control the hours and activities of the worker, the I.R.S. may declare that your independent contractor is an employee for tax purposes.

What should you do? In addition to carefully drafting your independent contractor agreement, you must critically examine your relationship with the person.  It is best to develop a standard operating procedure for governing and working with your independent contractors. 

Do you have a legal question? We offer free consultations regarding this and others legal issues.  Call today or chat online, privately, with an attorney every Monday through Friday from 8 a.m. to 8 p.m. at www.mckeeoffice.com
 
 
Sharmil McKee
Business Lawyer
 
McKee Law Office
245 W. Allens Lane
Philadelphia, Pa 19119
 
Telephone:     215-242-5260

Toll-Free:         1-877-273-0749

Skype Us!              mckee.law.offices

Web: http://www.mckeeoffice.com