Question 1

Should I sue my customer?

Accepted Answer

I often get this question from potential clients. There are a number of concerns to consider. First, I usually advise my clients to try to professionally and politely remind the customer of their obligations. Second, It is also advisable to send the bill a few different ways, such as email, mail, fax. If it is sent a few different ways, then that avoids the issue of the client just missing it or not getting it by accident. Third, I would also suggest after the customer is either behind a significant amount (or beyond the regular payment period) to politely call the customer to ask about the bill. Sometimes, small questions arise that can be dealt with over the phone that people may not raise in response to receiving the bill until they are contacted. Fourth, I would suggest offering a payment plan (if that works for your business) or trying to be flexible with the client. Fifth, if all of the above doesn’t work, then contact Nick Heimlich and we can see about sending a demand letter for payment to see if that works. If the demand letter does not work, then a lawsuit can be considered.

Question 2

What are the advantages of suing?

Accepted Answer

The advantages of suing is mainly that it can force someone potentially to pay that would not have paid without the lawsuit.

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If I sue, am I guaranteed to get paid?

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No. There are situations where you can win a lawsuit, but not get paid. Sometimes the person you are suing has no money, files bankruptcy or evades collection of a judgment.

Question 3

Can I lose even if I have a written contract?

Accepted Answer

Yes, sometimes. The lawsuit can sometimes change and include claims against you even if you sued first. Further, sometimes there are legal or factual defenses to your claim that might prevent you from winning.

Question 4

When should I sue?

Accepted Answer

Consult an attorney as soon as possible, because the statute of limitations (the time deadline to sue) depends on the type of claim that you have. Some claims have very short deadlines to file claims. Only after an attorney has determined what types of claims you have can the attorney tell you how long you have to file suit. For example, in California, a party has 4 years from the date of breach of a written contract to file suit (this can be changed in the contract or based on other facts). However, if there is no writing, then it is only 2 years. Other claims have different deadlines and sometimes even require filing administrative claims before filing suit.

Question 5

What is Partnership or Shareholder Disputes?

Accepted Answer

Sometimes, the owners of a business get into disputes with each other. Some disputes can be caused by differences in business strategy such as what type of business to conduct, marketing goals, or operational issues, such as expenses. I often get contacted because the ownership relationship has broken down between owners.

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That dispute then gets to the point where the question is what to do next. There are often concerns about liability and lost profits or return of monies invested in the business by the departing party. Or, sometimes both parties are still running the business, but they cannot get along and are constantly fighting against each other.

Question 6

What are Typical Types of Claims?

Accepted Answer

The claims could be breaches of fiduciary duties, failure to provide corporate inspection records, failure to pay employees, self-dealing, or using corporate monies for personal purposes or expenses. Other times, there is fraud in that one party may claim reimbursement for expenses that did not occur, or failing to report sales as income for the business on cash sales or other items.

Question 7

What is Amicable Resolution by Voluntary Agreement?

Accepted Answer

Once a dispute has occurred, there are multiple ways to try to resolve the dispute. The easiest solution, but not always practical, is for the parties to share a complete picture of the businesses financials and to negotiate one person buying out the other person’s interest including any equity and paying back any loans due or other monies owed. If that can’t be worked out, sometimes a voluntary winding down or closing of the business could work by paying all creditors and returning profits to the owners based on their percentage ownership.

Question 8

What is Alternative Dispute Resolution?

Accepted Answer

If the parties cannot come to a resolution amongst themselves, then sometimes bringing in other parties can move the dispute toward resolution. There a multiple forms of alternative dispute resolution, including mediation, and arbitration.

Question 9

What is Mediation?

Accepted Answer

A mediation is basically where both parties agree to meet with a mediator (who is a third party) to help negotiate a voluntary resolution of their dispute. The mediator, which is usually agreed upon by the parties is often an experienced attorney or a former judge who is familiar with situations such as the one that the parties are involved in. The mediator has no power to force the parties to accept any resolution, but rather tries to help explain information and persuade the parties to reach some resolution. If one or both parties cannot agree on a solution at mediation, then there is no settlement and the parties will have to consider alternatives to resolution, or consider mediation at a later date. If the mediation is successful, then a formal settlement agreement should be drawn up on the day of the mediation and signed on that day. This is critical that a fully signed agreement is done that day. If it is not done, then the parties could be spending days or weeks negotiating those terms after the mediation. Below are some typical questions about mediation.

Question 10

Can I be represented by an Attorney?

Accepted Answer

Yes, parties can have an attorney present for mediation. However, it is not required.

Question 11

What happens before a Mediation?

Accepted Answer

Often, the parties should have summaries of their dispute written up, along with key documents and legal points and provide this in a Mediation Statement or Brief to the Mediator for review. This should also be provided to the opposing side. While certain parts of the Brief (such as settlement proposals) might be only shared with the mediator, most of the brief should be shared with the other side. Failure to share a brief often results in an unproductive mediation because the parties do not understand each other’s position.

Question 12

Do I have to file suit to have a mediation?

Accepted Answer

No, a mediation can be done either before or after a lawsuit is filed. Mediation does not require that a lawsuit or arbitration is pending.

Question 13

What is the cost of a mediation?

Accepted Answer

The cost is based upon two main factors, the preparation for the mediation and the mediation itself. The preparation will include the time needed by you and your attorney to prepare a summary of your case and relevant documents and provide that brief to the mediator. Additionally, the mediator will often charge on a hourly (or per day) basis for their time both for preparation and on the day of the mediation. Then, you attend with your attorney the day of the mediation and there is time on the day of the mediation.

Question 14

Why should I consider mediation?

Accepted Answer

If the parties would like a flexible approach that might resolve their dispute outside a court or arbitration and in a faster manner, then mediation should be considered.

Question 15

When should I not consider mediation?

Accepted Answer

If the parties are extremely far apart in their positions and show little or no flexibility, then mediation may not work, or may need to take place later. Additionally, if one or both parties do not have the information that they need to resolve the dispute, then mediation may be premature.

Question 16

What is Arbitration?

Accepted Answer

Arbitration is a private forum for disputes. It is an alternative to a Court and allows the parties to present their dispute to an Arbitrator. The Arbitrators have a set of rules set by their organization that they belong to and will basically act as Judge and Jury for any case. Arbitration can be flexible in how it is administered. Sometimes, Arbitration can allow for a more economical forum, although that is not guaranteed depending on the parties needs and the dispute. Arbitration also typically involves fees to initiate the arbitration and fees of the Arbitrators at their hourly rates and possibly additional administrative fees or charges. Sometimes, the Arbitration fees are greater than Court fees would be for similar proceedings.

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