Business Law

Why do I require a retainer fee?

Maceration of Money

Have you ever wondered why an attorney asks you to pay a retainer fee to get started? I lay out my reasons below. To learn more about the trust account, see *** at the end of this post.

1. It tells me I have a client.
Committing with your words and signature to me representing you is substantial. But more substantial is a commitment with your money. The retainer usually approximates one or two month’s billing. A person’s unwillingness to put up this amount of money is usually a sign of lack of committment on the case.

2. Its tells you you have an attorney.
Retainer money is not mine. It belongs to the client and it goes into my attorney trust account. That is a bank account required under Oklahoma law where attorneys have to put any money they receive that isn’t theirs. After I earn the money and in accordance with our written fee agreement, I can transfer money to my operating account and it becomes mine.
All this being said to make the point that taking a retainer is serious business. One of the quickest ways for an attorney to become an “ex-attorney” is to monkey around with trust account money. If I take your retainer money, I am compelled to be serious about your case.

3. It shows the sincerity of your belief in your case.
Actions speak as loud as words or a signature on a retainer agreement. You being willing to put up money, even money you might get back, tells me not only that I have a client, but that I have one who is serious about the case.

4. It increases the chances I am going to be paid for my work.
I can do a lot of work in a month. In some cases I may spend 40 hours or more working on a case. That is a lot of billable time. Since I only bill monthly, I will have done all the work, provided all the benefit to the client but not yet have received anything. Usually clients pay in this scenario. However, having the money to cover the bill in my trust account means that I will not be giving away a month of free work. Think of it like this at whatever your job is: Would it be okay if your employee skipped paying you for one period? Would that have any impact on your financial situation?

A couple of qualifiers. I don’t usually worry about retainer fees in estate planning work or general business matters. Litigation is the area where the retainer fee is most critical. Also, if I have successful track record of a client paying for my services, there is rarely a need for a retainer on new matters.

***What money goes into a trust account?***. Travis Pickens, the Ethics Counsel at the Oklahoma Bar Association, provided this answer:

Unearned legal fees, unincurred expenses, and third-party monies in connection with the representation. This typically means, for example, retainers (until the monies are earned), flat fees (until the monies are earned), filing fees, deposition and expert witness expenses. Settlement proceeds on a check to you and your client(s) or others may also go into the trust account for distribution.

Posted by Shawn Roberts in Blogposts, Business Law

3 reasons you need a buy-sell agreement in your small business

Would you want to be in business with your business partner’s spouse?

How about running your business with one or more of your business partner’s children?

If these situations concern you, read below to find out how to avoid them.

The phrase “buy-sell” is popular but often misunderstood.  A buy-sell agreement, or shareholder agreement as it is sometimes called, controls how ownership interests in a company are transferred.  A buy-sell agreement sets terms on how a business can sell her ownership interest if she leaves a company for any reason and protects the people who remain as owners.

It is particularly important for small companies to have written buy-sell agreements because often there is no independent way to value an ownership interest.  With a publicly traded company or actively traded privately-held company, there are some benchmarks, with a small company there is no standard.

1.  You should choose your business partners. You make plans to go into business with one or two other people.  You choose these people for many positive reasons.  What if one person leaves the company and sells her interest to a stranger who has money?  That stranger could become your business partner, for better or for worse.

2. The time when someone leaves a company is not the time to be hashing out value. Partings are rarely pleasant.  This holds true when one of a handful of business owners leaves the business.  Emotions may be running high and logic may be throttled.  Trying to determine a buy out strategy and value at this point is thorny and fraught with difficulty.  Don’t do it; set the strategy and mechanism for calculating the value while everything is peachy.

3. It protects your family. Death and disability are often reasons for needing to transfer a business interest.  The departing owner is often not capable of operating or negotiating at this point (obviously not capable in the case of a death).  The owner’s family both needs and deserves to be paid value for her interest.  If there is not a buy-sell agreement in place, my experience has been that the surviving owners are not overly eager to pay out compensation.  It’s not right, but far to often its reality.  You can prevent this by having a buy-sell agreement in place that dictates how a business compensates the family in case of death.

Take of advantage of the opportunity of good health and good relations to put a buy-sell agreement in place; this benefits all the owners.

Have you been through the dissolution of a business or left ownership of a business?  What kind of experience did you have?


Posted by Shawn Roberts in Blogposts, Business Law

The Oklahoma Non-Compete Agreement in 10 simple slides

Have you ever wanted to know the basics of Oklahoma non-compete law but didn’t want to read 20 blog posts?

Oklahoma non-compete agreements are a frequent topic on this blog. I have written thousands of words about non-competes and related issues.

It occurred to me that since not everyone has time to comb through thousands of words, I could distill the main non-compete issues into a simple presentation. Check out the slide show below.


Posted by Shawn Roberts in Blogposts, Business Law, Oklahoma non-compete

The difference between an asset purchase and a stock purchase

Two common agreements that are used in the sale of businesses are:

1. a Stock Purchase Agreement; and

2. an Asset Purchase Agreement.

While there are many similarities between these 2 agreements, there are some fundamental differences.

A Stock Purchase Agreement is used when the buyer is going to purchase all of the owners interest in the company that owns the business. For example, if you are buying a restaurant and the restaurant is owned by Smith Corporation, in a stock purchase you would buy all of the outstanding stock of Smith Corporation. By purchasing all of the outstanding stock, you end up stepping into the shoes of the previous owners. That means all assets and liabilities that the previous owners have, you now have except for anything that is expressly excluded in the asset purchase agreement.

An Asset Purchase Agreement is used when a buyer wants to only purchase specific assets of a business rather than the entire business. For example, to purchase the restaurant mentioned above through an asset purchase agreement would probably mean purchasing the physical location, the inventory and equipment, goodwill associated with the restaurant and perhaps other information related to customers. In an asset purchase agreement, the buyer is only responsible for the assets he purchases and the liabilities that come with those assets.

It is important to note not only the difference between an asset purchase agreement and a stock purchase agreement, but also when to use each type of agreement. If you have any questions about using asset purchase agreements or stock purchase agreements please feel free to contact me, I have worked on many.


Posted by Shawn Roberts in Blogposts, Business Law

The different ways to do business in Oklahoma

Have you ever wondered what the different ways you could do business are outside of just doing it yourself?

You need to wonder no longer, below is an entity chart which lists each form of business and a brief description of what it is.

Entity Diagram

Posted by Shawn Roberts in Blogposts, Business Law, Oklahoma limited liability company

How to file a Trade Name with the Oklahoma Secretary of State

Trade-Name-Report

A trade name is what many people refer to as a “DBA”. That is, any name that you or your business does business under other than the one registered with the Oklahoma Secretary of State. You can find out a bit more about trade names here.

I am going to show you how to register a trade name in Oklahoma. The only cost is the $25.00 fee you pay to the Oklahoma Secretary of State.

Step 1 – Download the Trade Name Report form here.

Step 2 – Trade Name under which the business is carried on. Insert the name which you use or want to use that is different than your business’s legal name.

Step 3 – Address. Insert your business address.

Step 4 – Legal name of the “business entity” doing business under the trade name. A business or person must claim ownership of the trade name. Insert the name of your business or your own name in this blank.

Step 4 – Brief description of the kind of business carried on under the trade name.

Step 5 – Type of business entity. Find the type of entity you have and check the appropriate box.

Step 6 – Signature Block. The choices here are either “Business Entity Acknowledgment” or “Corporation Acknowledgment” If you have a corporation, sign in the “Corporation” section, if you have anything else, including a limited liability company or you are signing as an individual, sign in the “Business Entity” section.

Step 7 – Send in Report. After the Trade Name Report is completed and signed, mail it to the Oklahoma Secretary of state with a check for $25.00. The mailing address for the Oklahoma Secretary of State is:

Business Filing Department
2300 N. Lincoln Blvd., Room 101
Oklahoma City OK 73105-4897

Posted by Shawn Roberts in Blogposts, Business Law

FAQ — How much does it cost to form an Oklahoma corporation?

Broder Canning Company, Lethbridge And Taber Operations

This is one of the questions I hear often, particularly because services like Legal Zoom make so much hay with pricing. So I thought to myself: Why not share my pricing, plus what you actually get for the price?

While this isn’t the price in every case because some cases are different, this scenario covers most situations.

My price for a forming an Oklahoma corporation is typically $800.00. What do you get for this price?

Certificate of Incorporation.    The Certificate of Incorporation contains the basic information about the corporation:  Name, Resident Agent, and the initial directors of the company and are filed with the Oklahoma Secretary of State.

By-laws. The By-laws are the most important document of the corporation.  They govern the management of the corporation, the allocation and distribution of profits, duties of officers, directors and shareholders, voting, procedures for transfers of stock and various tax related matters.  The by-laws can enhance the asset protection features of the corporation, or it can weaken them depending on the provisions.

Meeting Minutes. Meeting Minutes memorialize decisions made by the directors and shareholders of the corporation, both to get the company going and to maintain it each year.

Tax ID & Elections. In most circumstances, a corporation requires a Tax ID Number from the IRS.  Essentially, it is the equivalent of a social security number for the corporation.  Bank accounts should be opened with this Tax ID and all corporate business should be conducted under this Tax ID.

Stock Certificates/Transfer Ledger.   Stock Certificates manifest ownership in the corporation.  A corporation does not have shareholders until shares of stock are issued.  That means that there must be some manifestation of intent to issue the shares of stock, either in the Meeting Minutes or in the signing of the Certificates.

Standard Non-Disclosure Agreement. A fundamental necessity for any company seeking to protect its intellectually property, this battle-tested Non-Disclosure Agreement provides a foundation for protecting private and confidential information.

Standard Employment Agreement. It pays to have it in writing with your employees. This way, both the employer and the employee know what the deal is. You can do this with the Employment Agreement which has been tested and refined in many scenarios.

Standard Independent Contractor Agreement.  Most small businesses use the services of independent contractors.  As with the employment relationship, it is helpful to document the Independent Contractor relationship in writing.  You can achieve this with the simple Independent Contractor Agreement I provide.

Free Telephone Calls. As you get your business up and running, you need some more guidance on legal issues. I am happy to provide some help by talking to you on the telephone for no charge, for the first six months after we set up the company.

Posted by Shawn Roberts in Blogposts, Business Law

How to craft a business email that will surely get you sued

Email is ubiquitous. It is so ingrained in our personal and professional lives that we sometimes forget that email creates a paper trail that never goes away.

Even super-smart people stumble ocassionally when dealing with email. In a recent piece on The Verge, a gadget blog, the emails of some of Silicon Valley’s most famous and successful CEOs show that no one is immune.

The emails came out as part of a lawsuit alleging that several technology companies conspired to prevent employees from moving to other companies. EricSchmidt008
Check out this gem from former Google CEO Eric Schmidt:

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You can see the entire collection of email as well as some solid reporting on the issues at The Verge.

This situation brings to mind a few tips for your email writing that will hopefully help you not get sued:

1. If it could be embarrassing, don’t write it.
2. Remember as you type out that email: email, like diamonds, is forever.
3. Send emails only to the people who absolutely have to see them.

Posted by Shawn Roberts in Blogposts, Business Law, Oklahoma Employment Law

How to wind up an Oklahoma limited liability company

In my previous post, I talked about the different ways an Oklahoma limited liability company can end.  Once it has ended, there are several things you need to do to “wind up” up the company.

1. Pay Creditors. Payment, or adequate provision for payment, shall be made to creditors, including to the extent permitted by law, members who are creditors, in satisfaction of liabilities of the limited liability company;

2. Distribution to Members. After creditors are paid, the company can distribute what is left to the members. The first distribution in this category is to members or former members in satisfaction of liabilities for distributions under the Oklahoma Limited Liability Company Act; and then to members and former members first for the return of their contributions and second respecting their membership interests, in proportions in which the members share in distributions.

3. File Articles of Dissolution. Once you have completed the preliminary steps required for winding up the company, you file a document called “Articles of Dissolution” with the Oklahoma Secretary of State.

Posted by Shawn Roberts in Blogposts, Oklahoma limited liability company

When is an Oklahoma limited liability company dissolved?

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Have you ever wondered how an Oklahoma limited liability company dies?

Do you think your company might have already experienced one of those circumstances that would mean death for it?

To dissolve or have a dissolution is simply the legal term for the end of the limited liability company.

The dissolution of an Oklahoma limited liability company happens naturally under Oklahoma law when any of these things happens:

1. A natural death. The LLC reaches the age when its Articles of Organization says that it ends (e.g, the Articles provide for a 50-year life and the LLC reaches 50);

2. A prearranged death. An event happens that the LLC operating agreement says means that the company should dissolve;

3. Everyone agrees it should die. All LLC members agree in writing the company should be dissolved.

4. Death from the Court. An Oklahoma court enters an order that says the company is dissolved.

After an LLC is Dissovled, it is then “wound up”. Winding up an LLC is simply another legal term that means taking the actions necessary to close down the company.

Check back here on Friday for a post explaining how to wind up an Oklahoma limited liability company.

Posted by Shawn Roberts in Blogposts, Business Law, Oklahoma limited liability company