Koenig Law Group, P.C.FindLaw IM Template2026-05-20T13:27:16Zhttps://www.atlanta-businesslitigation.com/feed/atom/WordPress/wp-content/uploads/sites/1604869/2021/03/cropped-Koenig-ID-image-32x32.jpgOn Behalf of Koenig Law Group, P.C.<![CDATA[Yes, restrictive covenants are still generally enforceable]]>https://www.atlanta-businesslitigation.com/?p=471762024-11-05T23:02:26Z2024-11-05T23:02:26Zrestrictive covenants to their employment contracts.
Non-solicitation, non-disclosure and non-compete agreements are among the most common restrictive covenants used in employment contracts. These prevent workers from starting competing businesses, disclosing trade secrets or trying to do business with those currently working with their employers. However, workers and the organizations that represent them have begun pushing back on restrictive covenants in employment contracts.
There have been attempts to end their use. Most recently, the Federal Trade Commission (FTC) announced a ban on non-compete agreements in employment contracts. All of that furor may leave leadership within organizations wondering if their employment contracts are still enforceable. The good news for those companies is that restrictive covenants are still typically enforceable.
Non-compete agreements remain legal
After the announced FTC ban made waves early in 2024, several lawsuits made their way into federal court. A judge in Texas issued a ruling effectively declaring the ban unconstitutional as it represented an overreach of the FTC's authority. Therefore, the ban never actually took effect.
Non-compete agreements and other restrictive covenants remain completely enforceable provided that the contract itself is valid. Employers can still take legal action against former employers who engage in economic behavior that could harm the company after leaving their jobs.
Restrictive covenants should have clear limitations regarding how long the company can enforce them and the geographic area to which they apply. Additionally, workers usually need to have received something of valuable consideration for employers to limit their activity outside of work and after leaving their position.
Organizations can still initiate litigation to enforce their contracts when workers go on to take jobs with competitors or start a business in the same industry. They may even want to expand their contracts to include more limitations given the ease of sharing information online and how leaked trade secrets could hurt the business.
Pursuing litigation against a former employee for violating a contract can help protect trade secrets and deter other workers from attempting to unfairly compete with a former employer. The courts are empowered to issue an injunction forbidding unfair competition, enforce penalty clauses and even award employers damages, depending on the circumstances.]]>On Behalf of Koenig Law Group, P.C.<![CDATA[Sharing business plans could lead to insider trader allegations]]>https://www.atlanta-businesslitigation.com/?p=471752024-07-29T00:40:36Z2024-07-29T00:40:36ZVenting could lead to securities law violations
There are many laws regulating the financial conduct of individual investors and businesses. Securities law focuses on preventing the manipulation of the economy for personal benefit. Insider trading is one of many financial acts prohibited by current federal securities laws.
Most people in leadership positions at organizations recognize that they cannot buy or sell stock based on what they know about a company's upcoming business plans. What they may not realize is that they could be culpable for the actions of other people as well.
Many insider trading charges relate to the financial conduct of individuals not directly employed by a business. When the friends, family members or social acquaintances of someone at an organization make highly-profitable trades prior to a major business announcement, that can lead to regulatory scrutiny.
If there is an indication that someone privy to non-public information shared that information with others, they might eventually face insider trading charges. The person with access to non-public information does not necessarily need to directly profit from that information to face criminal allegations.
Those who learn they are the subject of an investigation or who face arrest or indictment may need help responding to claims that they violated securities laws. Understanding that insider trading can relate to the financial conduct of other people can be beneficial for those privy to non-public information about a business.]]>On Behalf of Koenig Law Group, P.C.<![CDATA[3 signs it may be time to buy out a business partner]]>https://www.atlanta-businesslitigation.com/?p=471742025-02-14T19:55:46Z2024-04-29T21:21:30Zthrough a partnership buyout. The following are some of the most common reasons why one business partner may seek to acquire the other's interest in the organization that they started together.
Issues with misconduct
One of the most common reasons that someone wants to buy out their partner is a lack of trust in their relationship. If a partner has embezzled, funneled money toward a spouse's business or otherwise made choices that benefited them rather than the organization, that misconduct could affect the partnership relationship and the business itself. Documented issues with partner misconduct may lead one partner to attempt to purchase the interest of the other to preserve the company and secure control over the organization.
Concerns about job performance
Sometimes, both partners enter the relationship in good faith and do not engage in any overt misconduct. However, one partner might still fail to meet certain necessary standards for their work performance. Committing fewer than 40 hours a week to their job, closing fewer sales than they used to or making mistakes due to negligence or distraction could all be issues that might lead to one partner wanting to buy out the other.
Differing goals for the company
Perhaps the partners initially started the company with the intention of working there until they were both retirement age. However, one may have since developed a passion for a completely different project. Buying out the disinterested partner could be a smart move on the part of the partner still intent on operating a thriving organization. When partners no longer agree on how they should run the company or what the long-term plan for the organization is, one partner may decide they want to buy out the others.
Negotiating a partnership buyout can be a complex process that requires a business valuation and a thorough contract review. Business partners who recognize when a buyout may be beneficial can potentially preserve the company they started and the investment they made in it.]]>On Behalf of Koenig Law Group, P.C.<![CDATA[How can legal disputes impact a business?]]>https://www.atlanta-businesslitigation.com/?p=471732025-02-14T19:55:51Z2024-02-01T02:21:41ZFinancial impacts
Financial cost is one of the most immediate impacts of a legal dispute on a business. Legal proceedings can be expensive, involving attorney fees, court costs, settlements or judgments if the company is found liable. These expenses can strain a company's finances, diverting funds from critical business operations, development projects or investments. For smaller businesses, the financial burden of a legal dispute can be particularly severe, potentially threatening the company's solvency.
Operational disruptions and focus diversion
Legal disputes can lead to operational disruptions. Management and key personnel often need to devote significant time and resources to address legal issues, which can distract from day-to-day business activities. This diversion of focus can affect productivity, project timelines and overall business performance. In some cases, the dispute might also involve aspects of the company's operations, leading to changes or halts in certain activities, further impacting the business.
Reputational damage and customer relationships
A legal dispute can also harm a company's reputation, especially if the case garners public attention. Negative publicity surrounding a legal battle can erode trust and confidence among customers, investors and business partners. This reputational damage can lead to losing current and potential clients and difficulties attracting new business or investments. It can also cause challenges in maintaining relationships with suppliers and partners.
Long-term implications and strategic changes
A legal dispute can have long-term strategic implications for a company. Depending on the nature of the case and its outcome, the business may need to make significant changes to its policies, practices or corporate structure. This could involve implementing new compliance measures, altering products or services, or restructuring the organization. While potentially beneficial in the long run, these changes can require additional resources and time to implement.
Legal assistance throughout the process is critical to help protect a business’s interests. This can help to mitigate damages and potentially improve future protections for the company at issue.]]>On Behalf of Koenig Law Group, P.C.<![CDATA[How contract disputes are typically resolved]]>https://www.atlanta-businesslitigation.com/?p=471692025-02-14T19:55:58Z2023-11-07T04:08:42ZFinancial compensation
A common way to resolve a breach of contract is for the victim of the breach to receive money from the breaching party. The amount that changes hands may be a specific amount written into the contract or an amount equivalent to the economic damage caused by the breach. For instance, if the breach caused $5 million in damages, the party that breached the deal could be ordered to pay $5 million. Legal fees and other costs might also be added to a financial award.
An injunction might be issued
It's possible that the only way to remedy a breach is to cancel the contract entirely. This could happen if there is no way that a factory could deliver goods that a company ordered or if the quality of the items delivered was substandard. Conversely, a judge might order that the breaching party must deliver goods or perform services as outlined in a contract.
A middle ground might be reached
Many contract disputes might be resolved by providing partial payment for partial goods or services rendered. This is referred to as a quantam meruit and can come into play if a breach occurred after a portion of a deal has been completed.
There are many ways to resolve a breach of contract, such as by holding private talks or working with a mediator. If your claim is successful, you may be entitled to a refund or other damages. The contract itself, messages from a vendor or other evidence may be used to prove that the deal was legally binding and that its terms were not followed.]]>On Behalf of Koenig Law Group, P.C.<![CDATA[The matter of an anticipatory breach]]>https://www.atlanta-businesslitigation.com/?p=471672023-08-07T22:31:20Z2023-08-07T22:31:20ZThe anticipatory breach
With an anticipatory breach, the contract has not expired, but one party states it will not honor the terms of the agreement. For example, a business owner may pay a contractor for renovation work, and the contractor says they will not complete the job by the agreed-upon completion date. Or, a producer may pay talent to perform at an event, and the talent says they intend to no-show after receiving their money. In both these instances, it might be possible to amicably solve the problem since the associated contracts have yet to expire.
Both parties may agree to cancel a contract when an anticipatory breach is notified. While this might not be the preferred outcome, it could be the most amicable. Other scenarios may require legal action to address the promised party's problems.
Legal actions with an anticipatory breach
When someone indicates they intend to inflict an anticipatory breach, the party committing the breach should do what they can to reduce the promiser's damages. Failing to renovate a business by the expected due date might result in the promisor experiencing a substantial loss of income. business litigation may occur when the promisor seeks compensatory damages for the loss.
The promisor will likely have to prove specific losses to establish claims of compensatory losses. Keeping accurate records may help with the case.]]>On Behalf of Koenig Law Group, P.C.<![CDATA[Tips for resolving business disputes]]>https://www.atlanta-businesslitigation.com/?p=471642025-02-14T19:56:02Z2023-05-04T04:13:27ZConsult the partnership agreement
Ideally, you and your partners would have come to a written agreement as to how the company would be run. If this is true, the document should outline protocols for how disagreements are resolved. For instance, a disagreement might be settled by allowing all of the partners to vote with the majority getting its way. A partnership agreement may also stipulate that you have the final say regarding certain issues while other partners have final say over others.
Mediation may be an option
It's possible that the protocols outlined in a partnership agreement won't be sufficient to come to any sort of consensus. Therefore, it may be necessary to seek the help of a mediator who may be able to facilitate a conversation between yourself and the other parties to the dispute. A mediator may suggest that a partnership agreement be rewritten or that other steps be taken to address everyone's concerns.
Leave the company
Even if you obtain a favorable outcome in a particular dispute, your partners retain bitter feelings about what happened. If you don't think that you can salvage a working relationship with the other owners, it may be best to sell your stake. Alternatively, it may be best to allow your partners to leave in lieu of litigation that might result in the business being involuntarily liquidated.
Resolving a business dispute may be easier when you have strong evidence to back your position in the matter. Having copies of a partnership agreement, client emails or other relevant documents may make it easier to come to an amicable understanding in a timely manner.]]>On Behalf of Koenig Law Group, P.C.<![CDATA[Should I consider adding an arbitration clause to my contract?]]>https://www.atlanta-businesslitigation.com/?p=471632023-01-24T21:30:19Z2023-01-24T21:28:02ZWhat is an arbitration clause?
An arbitration clause is a part of the contract where the parties promise that they will go through arbitration to solve a breach or dispute.
What is arbitration, and how does it work?
Arbitration is a form of alternative dispute resolution (ADR) independent of the court system. It has become quite popular over time because of its inherent benefits. When the parties decide they have a problem or breach they must formally address, they come before an arbitrator or panel of arbitrators. Each side presents its case just like it would in court, except arbitration has its rules and procedures, which are generally much more straightforward than those in the court system.
What is the role of an arbitrator?
An arbitrator is a trained professional tasked with evaluating the facts of the case presented before them, listening to both sides, assessing the evidence, if any, provided by the parties and rendering an award at the end once they have come to a decision. In most cases, arbitration is binding, which means that it is not subject to appeals and that, absent extraordinary circumstances, the parties cannot go to court to dispute the arbitrator’s award.
Arbitration can be highly beneficial for business owners constantly dealing with conflicts. In the business world, it is common to have many disagreements at any given time, breaches of contracts (not all of which are worth going to court for) and problems that the parties must address.
Arbitration provides a private route to solve these issues in a cost-effective, faster way. It aims to be less adversarial than litigation. Suppose the opposing parties wish to continue working together after the arbitrator renders a decision. Ideally, the non-adversarial nature of arbitration will support that effort.
There are many options for solving conflicts and breaches of contracts. In many cases, arbitration is a very effective way to address and resolve those issues without going through the public, expensive and lengthy litigation process.]]>On Behalf of Koenig Law Group, P.C.<![CDATA[Why is due diligence important in an acquisition?]]>https://www.atlanta-businesslitigation.com/?p=471322022-11-04T22:08:43Z2022-11-04T22:08:43ZLearning the target’s story
With a signed confidentiality agreement, as a potential buyer, you and your consultants will have unlimited access to the target company's financial and other vital data. This includes detail on all assets and liabilities, tax matters, contracts, employment matters, litigation, financial projections and historical financial statements.
Solid due diligence uncovers issues that could affect the target company's performance post-acquisition. A thorough investigation that turns up clean, well-organized data and a healthy business can boost confidence in moving forward with the deal.
Identifying potential contractual or legal issues
Due diligence includes completing a review of all significant risks. Depending on the target's size and complexity, this process could take several weeks or months. An in-depth review might turn up issues such as poorly compiled or documented financial statements, non-transferrable customer or supplier contracts that are material to the business and key employees that might leave if the sale goes through.
Identifying necessary protective covenants
A lot can happen between when the deal is signed and its closing date. Buyer and seller covenants protect each party to the transaction. At a minimum, seller covenants often include a requirement to operate the business in its ordinary course between the deal's signing and closing. Additionally, sellers typically must agree not to take on any new debt and use reasonable efforts to satisfy all conditions specified in the closing document. Covenants often also require the seller to use reasonable efforts to obtain consent to the deal from all material third parties, such as key suppliers.
Business acquisitions are stressful and risky deals. Due diligence as a potential buyer provides valuable insight into the target company to ensure they have financial viability and do not expose you to legal and other risks once the deal closes. Identifying legal and other issues during this phase and formulating protective deal covenants are some of the essential tools that can minimize risk in the acquisition.]]>On Behalf of Koenig Law Group, P.C.<![CDATA[Georgia LLC operating agreement]]>https://www.atlanta-businesslitigation.com/?p=470922022-08-05T20:10:45Z2022-08-05T20:10:45ZUnderstanding an LLC operating agreement
An LLC operating agreement is a legally binding contract between the members of an LLC that outlines the company's ownership structure, member roles and responsibilities, voting rights, and profit and loss distribution. It works by organizing the company's business affairs and member relationships in a way that will avoid future disputes.
Reasons why an operating agreement is important to a business
There are several reasons you should have an operating agreement for your LLC, even if it is not required by state law. The main ones are:
1. An operating agreement can help prevent personal liability for business debts and obligations.
2. It can help resolve disagreements between members about important decisions, such as how profits will be distributed or what happens if a member wants to leave the LLC.
3. It can provide clarity about the company's ownership structure and member roles and responsibilities.
4. It can help prevent the state from governing your business because, without an LLC agreement, Georgia default rules will be imposed upon your company.
Operating Agreement Requirements in Georgia
There are no specific requirements for LLC operating agreements in Georgia, but you should follow some general guidelines. They include:
• The agreement should be in writing and signed by all members of the LLC.
• It should outline the company's ownership structure, voting rights, profit and loss distribution and member roles and responsibilities.
• Rules regarding holding of meetings.
• It should be kept in the company's records.
Changing the terms of an LLC operating agreement
According to business law, you can change the terms of an LLC agreement by unanimous vote of all members. Nonetheless, a vote by the majority of members can also work if all members are given notice of the proposed changes and a reasonable opportunity to object to them. The court can also change the terms if it finds that the change is necessary to prevent fraud or injustice.
An LLC operating agreement is basically a tool that gives you complete control over all aspects of your business. You won't be breaking the law for not having one, but if you do, violating the terms of your agreement can land you in trouble.]]>