Q: In a lawsuit, who pays the attorney fees?

A: As a general rule, in litigation each party pays their own attorney fees (win or lose). There are three basic exceptions:

By Agreement. For example, if two businesses enter into a contract, that agreement may call for the prevailing party to pay the other’s attorney fees.

By Statute. There are some state and federal statues that allow the prevailing party to collect attorney fees in a lawsuit. An example is the Equal Access to Justice Act, under which pilots can recover legal fees if they successfully defend a certificate action.

By the Court. Some types of lawsuits (e.g., class actions) give the Court equitable power to award attorney fees to the prevailing party.

Q: What about other costs in a lawsuit?

A: Unlike attorney fees, a prevailing party is often entitled to recover their “costs” of suit. This can be expenses like expert witness fees and deposition fees. The best way to ensure this (if your case is solid), is to make a formal settlement offer under Code of Civil Procedure section 998. If your offer is rejected, and you become the prevailing party, you are usually entitled to recover all costs incurred from the time of rejection.

Q: What Could Possibly Go Wrong Without a Lawyer?

A: There are a number of things that could go wrong for the buyer and the seller if they choose to undertake the process of selling a home with no legal representation. Since the state allows the real estate attorney that you have hired for the entire process to also serve as your closing lawyer, why not use their expertise? After all, this is one of the biggest decisions you will ever make

Q: How do I incorporate a corporation? What are the steps in incorporating?

A: The first step is a reserve a name with the secretary of state; second file a Certificate of Incorporation with the Secretary of State; third organize the company, elect officers, and distribute stock.

Q: What is the difference between a partnership and a LLC?

A: In a partnership the partners are personally liable for the debts and obligations of the partnership, which means that all of their personal assets are at risk if there is a legal judgment against the partnership. Members of LLC are not personally liable and can lose or risk losing only the money they have in the LLC.

Q: What is the difference between a Limited Partnership and a General Partnership?

A: General partners are all 100% liable for the liabilities of partnerships. Limited partner is only liable for percent of participation in partnership.

Q: How does an S corporation differ from a limited liability company?

A: A limited liability company (LLC) is like an S corporation. Generally, business owners form an LLC rather than an S corporation if one or more of the following situations apply:

ANY owner of the company is another business entity or non-resident alien (a person is a nonresident alien if he or she is neither a resident nor a citizen of the United States).

The company will be owned by more than 75 persons.

The company plans to issue more than one CLASS of stock (for example, special allocations of profits and losses will be made that are not proportionate to the equity percentage of each owner.)

The owners desire to use business debt (money borrowed by the (company) to increase their tax basis.

The state where your business is located imposes an entity level income tax on the profits of an S corporation and does not impose such a tax on the profits of an LLC.

If these situations do not apply to you, than an S Corporation should do the job.

If the above situations do not apply to you, than the corporation may apply for the S corporation status by timely filing IRS Form 2553.

Q: Why can’t I just use a Web service like LegalZoom?

A: You can — but as the saying goes, “you get what you pay for.” If your particular project or transaction is significant, it makes sense to hire a good lawyer for the same reason it makes sense to see a good doctor if you’re very sick. Moreover, Web services like LegalZoom are not law firms and do not provide legal advice; they simply provide fill-in-the-blank forms, which often have no context and are not tailored to your particular situation.  The role of a good corporate lawyer is more than just providing a form — he or she is a trusted advisor (a consigliere), who will strategize with you and will help you think through key business and legal issues.

Q: What types of business structures are available?

A: There are several different types of business structures available. Sole trader, limited company, an ordinary partnership, a limited partnership, a limited liability partnership or an unincorporated organization. The different business structures will define your legal responsibilities in terms of the paperwork that must be completed (including accounts and Companies House forms), what types of taxes the business will be required to pay and determine how profits and losses will be shared. The form that we will advise your new business to take will depend on how you intend to run the business, what you are seeking to achieve and your preferences with regard to your legal responsibilities. We can advise you as to each of the options and assist you with setting up your business according to your choice. Spending some time at this stage making sure the business structure is right can often save time and money as the business develops. We will make it clear from the start what the cost will be so that you know how much to budget for legal advice.