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2021 Midwest Road, Suite 200, Oak Brook, IL 60523

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A common scenario I see: Two or more friends have a grand business idea and file their Articles of Organization for their LLC. They start taking clients and all goes well... for awhile. They start making money and are excited for growth. Then the honeymoon phase is over. The business partners realize one of their comrades is not putting in as much effort but still reaping all the benefits. Or one partner has 'creative differences' with the other partners and the partners are deadlocked in how to grow the company. Conflict ensues and they start to fight over who gets what or how things get done. Ouch.

Problems of Not Having an LLC Contract aka 'Membership Agreement'

So what happens? Or could this have been avoided? Great questions. It is best practice to create a 'membership agreement' between LLC partners. Without the Membership Agreement, the Illinois Limited Liability Act will govern the rules. For example, if a member wants to leave the LLC, the LLC Act will dictate the terms. If, however, the members want to have different terms, they can put it in the Membership Agreement. For example, under the newer LLC Act, that became effective on July 1, 2017, the LLC no longer is required to be buy out a member who wants to leave the LLC. However, the LLC members can write up their own terms in their Membership Agreement such as requiring an LLC to purchase a member's interest or other terms that would dictate a conflict. Because members wanting to leave an LLC is very common, this is very important to negotiate with fellow LLC partners.

Another problem with not having a Membership Agreement are the terms of how profits and losses are divided. As a default according the the LLC Act, profits and losses are allocated based on ownership ratio. So if John and Jane go into business together and John owns 35% of the LLC and Jane owns 65% of the LLC, the profits and losses are split the same way. But if John and Jane want to agree to a 50/50 split instead, they can do that if they write it out in the Membership Agreement. Some LLCs even failed to decide how much the members own and just assume it's an equal split. Another huge failure that LLCs fall into is not clearly deciding what is an 'contribution' and what is a 'loan.' For example, Jane decides that she can give the LLC $10,000 but wants only $3,000 to be her contribution and the remainder she wants back. This is extremely important because if the LLC needs to close up or Jane wants to leave the LLC, whether she gets her money back really hinges on clearly communicating what part of that money is an investment and what is a loan.

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A few weeks ago, a nice woman scheduled a consultation with me and said, surprised, 'I had no idea I could get all of this out of just a consultation!' (She came to me, of course, after knowing how to properly look for a lawyer). ? In my many years of practicing law, it's becoming more clear to me that many people do not understand what a consultation is and all that they can get out of one.

We tend to associate consultations with personal injury lawyers as they tend to typically advertise (a lot) FREE consultations. But did you know that each type of lawyer has a different purpose for their consultations? Personal injury attorneys tend to assess whethe a person has a valid case. After the consultation, there isn't much information or value the attorney can provide after the consultation is over and the attorneys determine that the person does not have a good case. This is simply due to the nature of the claim, not because of any problem with the lawyers themselves.

Other attorneys, like myself, actually provide actionable advice to clients whether they end up hiring me or not. Like in this lovely lady's situation, she needed to know whether her non-compete was enforceable so she could work for a nearby employer. She did not realize she could simply schedule a consultation to ask me some questions with zero intent on hiring me for more services. What did she get out of the consultation? She learned that she could leave a job she was unhappy with and how to handle any threats from the current employer. She said she wished she came sooner prior to signing this contract to get advice if she knew she could do that.

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Posted on in Uncategorized

I don't practice criminal law but I can't help but to dabble in some current news. Since I also live near Chicago, this has become sort of local news to me as well.

The Curious Case of Jussie Smollett

On March 14, 2019, 'Empire' act Jussie Smollett pleaded 'not guilty' on charges that he staged a hate-crime attack against himself in Cook County, Chicago, Illinois. In case you are not aware, Smollett, who is black and gay, told police that he was attacked by two men as he walked to his Streeterville apartment around 2 a.m. that morning. He claimed that his assailants hurled racist and homophobic attacks at home, punched him, and wrapped a noose around his neck. After the attackers, who are brothers, were caught and were in custody for 48 hours, they told police that Smollett had paid them $3,500 to carry out the attack as a hoax in order to raise Smollett's street cred.

A grand jury has indicted Smoll ett for various counts of disorderly conduct regarding his false statements to detectives. So what is disorderly conduct? The Illinois statute 720 Ill. Comp. Stat. Ann. ยง 26-1 et. seq. lays out several categories of disorderly conduct but the most relevant one is probably:

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I get a lot of calls for consultations asking me if the employee can sue their employer for firing them. The employee will cite that it was 'unfair', that the employer 'is mean' or just likes other employees more. However, employers can usually fire employees as they see fit. It does not have to be fair. The employer can be completely unreasonable and that's perfectly legal.

Types of Wrongful Termination

The good news is that there are laws that protect employees from claims of 'wrong termination' and when it is absolutely NOT legal for an employer to fire an employee. Wrongful termination claims are:

  • Illegal discrimination. This is when an employee is fired for her race, age, color, genetic information, religion, sex, sexual orientation, national origin, family status, disability, and sometimes veteran status (if an employer has 15 or more employees). Those are the federal protected classes that are universal for all states. Some states and even cities have additional protected classes.
  • When employee asked to commit an illegal act. If an employee refuses to comply with orders to commit an illegal act and is fired for doing so, this is wrongful termination. Illegal acts include fraud, violating industry-specific laws and codes, and violating other employees' rights such as refusing to pay for overtime.
  • Whistleblowing. Whistleblowing is when an employee witnesses an employer engaging in illegal acts and reports the employer to the government agency. The employer then fires or otherwise retaliates (such as demoting) against the employee.
  • Retaliation. If an employer demotes, fires, or decreases pay of an employee who exercises his legal rights, this is considered retaliation. For example, if an employee requests accommodations under the Americans with Disabilities Act and is fired, this is retaliation. If an employee demands her rightfully owed overtime pay, this is a form of retaliation.

In addition to the above forms wrongful termination, there are contract-based ways to illegally fire an employee. They are:

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Posted on in Uncategorized

You may be in a situation where you are asking yourself 'man, I think I may need a lawyer for this,' whether you are starting up a new business and need some contracts, need advice on how to organize your business, or you think you are about to get into a legal battle with a former business partner. But before you start looking for attorneys, it's good to know what you are looking for and how to evaluate an attorney prior to hiring. I'm going to first lay out how to find look for an attorney then the questions you can ask when speaking to an attorney:

How to Search for an Attorney

  1. Start with your networks. If you've had friends or family who had a similar legal issue, ask them first. It's a good way to get some names of lawyers who have been tried and you can gauge whether an attorney will handle your case well.
  2. Call Your Local Bar Association. Another way to get a list of attorneys is if you simply go to a search engine and type '[your county] bar association.' Many bar associations have a list of vetted attorneys that they refer cases to. The bar association can also guide you to the type of attorney you may need.
  3. Search online. Of course it's 2019 and you can easily get on the internet and search away. There are some drawbacks to this method because 1) you are not sure what type of lawyer you need and 2) it may be difficult to vet them, especially in this day and age where good marketing can cover up bad lawyering. Regarding knowing what type of a lawyer, be clear about your issue rather than the type of lawyer you are looking for. For example, since I practice contract law, I had an potential client who asked for a prenuptial agreement. Although prenuptial agreements are technically contracts, a family attorney is better suited for this role. So again, when calling law firms, explain your situation more and the law firm can get a better sense if they can serve you. With respect to the vetting issue, I will address that in my section.

How to Vet Attorneys

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