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Daytona Beach, Florida
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The Daytona Law Blog

What is alternative dispute resolution?

When Florida business owners like you run into issues with litigation, who do you turn to? What can you do about it? Handling conflicts and disputes in a quick and efficient manner can help you maintain good business relations and recover from potential setbacks with greater ease.

Accordingly, having an arsenal of ways to handle disputes can be a lifesaver for you and your business. Cornell Law School discusses one such method: alternative dispute resolution, or ADR. This is an umbrella term for any method of conflict resolution that does not involve litigation. Generally speaking, the only time a court is involved is if they must approve of the ADR option you decide on, but it is very rare for them to overturn it. Different types of ADR can include:

  • Conciliation
  • Mediation
  • Arbitration
  • Negotiation
  • Early neutral evaluation

Company sues former managing partner

Most in Daytona Beach might assume that business litigation is limited to legal conflicts between two different companies. Yet oftentimes such cases can arise from internal strife. In many ways, internal employees can pose the greatest threat to business owners in that they know a company' vital business information (their trade secrets and intellectual properties) and they often have the explicit trust of those owners. If and when such trust is violated, those with a stake in a business that has been compromised might justly want to seek legal action

That is exactly what is happening in a feud between a New York company and its former managing partner. In a lawsuit filed against the former partner, it is alleged that the man used the opportunity of the founder suffering a stroke to assume control of the company. Yet rather than continue with the business' standard operations, the man instead manipulated the company's resources to further his own interest. He started another company (which he operated from the same location) and began to play the two off of each other as competitors. Representatives of the original company claim that while doing this, he grossly mismanaged the business, even going so far as to fail to remit payroll taxes (which resulted in a federal tax lien). 

What is a hostile takeover?

For many business owners in Daytona Beach, their goal is to grow their businesses to the point of making them attractive to potential buyers (putting them in a position to make a significant profit from the sale). Yet you may have contrary aims to keep your company under your control as it continues to expand. That, however, may not keep your business from being targeted for acquisition. You could reasonably find your company the target of a hostile takeover bid. 

What is a hostile takeover? According to the Corporate Finance Institute, this occurs when a company attempts to acquire another by bypassing its management and going directly at its shareholders. This can be done by offering to purchase the shareholders' stock at a premium price (referred to as a "tender offer"), or by engaging in a campaign to convince shareholders to vote out a company's current management team (a "proxy vote"). 

Understanding non-compete agreement enforcement

Businesses in Daytona Beach understand the importance of their proprietary information. It is for this reason that concerns are often raised when an employee leaves a company. Many may view these fears to be justified, and thus warrant requiring staff members to sign non-compete agreements. Such an agreement typically seeks to limit what a person can do when pursuing opportunities similar to the work they provide while in a company's employ. The question is whether or not such agreements are enforceable. 

Section 542.335 of Florida's state statutes says any covenants that restrict or prohibit an employee from competing with a former employer are enforceable provided that they are reasonable in terms of their time, area and line of business. Often, courts have interpreted "reasonable" to extend only to the sharing of vital business information and not restricting an employee from working in the same industry or for a particular company within that industry (agreements deemed to be lawful that restrict employment usually only apply to a company's immediate geographic area). Indeed, Florida's law goes on to specify that restrictive covenants to employment only apply when there is a legitimate fear of a negative impact on a company's business interests. Those interests are defined as: 

  • Trade secrets 
  • Valuable confidential business and/or professional information
  • Relationships with current and potential clients and customers
  • Client goodwill
  • Trademarked practices
  • Extraordinary or specialized training

Defining intellectual property

As business markets expand and information sharing proliferates, the question of what exactly is it that your company owns becomes more important than ever. Many clients in Daytona Beach have come to us here at Smith Bigman Brock with this very question, and oftentimes coming up with an answer proves difficult. There are undoubtedly unique aspects of your company that contribute to its competitive advantage; you of course want to ensure that those aspects are protected as your business' intellectual property (thus guaranteeing that they cannot be shared with or duplicated by others). Yet what exactly counts as IP? 

The World Intellectual Property Organization defines IP as "creations of the mind." Such a definition seems to leave much room for interpretation, yet fortunately the WIPO goes on to define it further. It identifies two distinct types of IP. The first is copyrighted material. This covers music, films, books and artistic works. Your business may or may not produce its own copyrighted material, but it may manage that of others, thus making the need to identify instances where it is being infringed important. 

What if a client doesn't pay me?

Small business owners need payment to continue providing quality service to customers. Ignoring an invoice is all too common in the business world, and if the invoice remains unpaid a business owner can choose to pursue legal action to recoup his or her losses. Before that happens it helps to recognize the signs that an invoice will likely be unpaid, as explained by Inc. 

Most business transactions are done digitally these days. Having your clients remit payment digitally is more convenient and cost-effective since no postage is necessary. That's why it's odd when a client insists on paying with check only. While it may be true that some people prefer this method, a check can easily bounce, which leaves you scrambling for another form of payment. If your business accepts checks, institute penalties for bounced checks so you remain financially protected. 

Trademark basis for filing options

Finding ways to achieve competitive advantages or differences in the marketplace is a common goal for businesses in Florida and across the country. At the same time, companies often seek ways to prevent others from leveraging their strengths or assets. Intellectual property protections like trademarks or service marks can assist with this.

As explained by the United States Patent and Trademark Office, a trademark or service mark is designed to identify the origin of a particular service or product. It also identifies a product or service as unique, aligns it to a brand and differentiates it from competitive offerings. When applying for a trademark, a company may or may not have already used the name or mark publicly yet.

Client sues marketing agency over failed website project

Business owners and executives in Florida know that entering into contracts is an important and delicate part of operating a company. The manner in which a contract is developed and the specific verbiage it uses can help or hurt one or both parties if a dispute ever arises. The terms and verbiage of one contract between a major car rental company and a marketing agency will likely be under close examination in a new lawsuit.

As reported by Consulting magazine, the rental car company hired the agency to develop an all-new website and associated mobile application. Unfortunately, the work was not delivered in the manner that the client believed was appropriate. Now the company is suing the agency for breach of contract.

Should you arbitrate a business dispute?

Disputes between business partners can tear a Florida company apart, which is why many businesses build ways to resolve conflicts into their contracts. Some companies employ mediation or civil litigation, but arbitration is commonly used to handle many disputes. Arbitration mimics a civil trial in that the disputing parties make their case before a person who looks at the evidence and renders a judgment. Arbitration, like any form of resolution, has its benefits and drawbacks which should be carefully considered before going forward with it.

Per Chron.com, companies typically like to use arbitration because it costs less than civil litigation, takes less time, and is more private. Going to arbitration means that details about the case that could be embarrassing if made public will be kept confidential in the arbitration process. Also, sometimes corporate or technical matters may be so detailed and sophisticated that the company prefers a specialist to arbitrate as opposed to a judge who might not be familiar with the concepts involved.

Buyout agreements: What are they and why do you need one?

If you plan to start a business in Florida, or if you already own and operate one, you may benefit from a sound buyout agreement. A buyout agreement, also known as a buy-sell agreement, is an agreement between the owners of a business that details what will become of an owner's share of the business should he or she choose to back out for any reason. The agreement also goes into effect when certain triggering events such as death, disability or conflict occur. FitSmallBusiness.com explains why you need a buy-sell agreement and what elements to include in yours. 

The sole purpose of a buyout agreement is to offer you guidance in the event that an unforeseeable happening occurs. Though you should maintain a positive attitude about your business partnership, plan for the worst. Unfortunately, life is full of curve balls, many of which have the potential to derail even your best of intentions. Some events that may occur during your time as a business owner include the following:

  •       A partner may divorce and part of his or her share may end up in the hands of an angry ex-spouse.
  •       You or a partner may pass away and, as survivors contest their rights to a share of the business, the business could die in probate.
  •       If you decide to exit without a buy-sell agreement, you or your heirs may not receive fair compensation for your portion of the company.
  •       If you or a partner have to find a buyer for a share of the business on short notice, you may not receive market value.

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