The Law Office of Jeff Hamilton PLLC The Law Office of Jeff Hamilton PLLC2025-05-22T17:27:23Zhttps://www.jeffhamiltonlaw.com/feed/atom/WordPress/wp-content/uploads/sites/1602969/2020/10/cropped-favicon-32x32.pngOn Behalf of The Law Office of Jeff Hamilton PLLC<![CDATA[Business & Divorce: Planning Ahead]]>https://www.jeffhamiltonlaw.com/?p=461892020-10-15T06:56:31Z2020-10-15T06:56:31ZMaintain Status Quo
Depending on the way the business was structured and the relationship between you and your ex, you may be able to continue running the business the same as you did while married. While possible, this option seems unlikely for most businesses where both spouses were involved. You will need to make this decision with your ex, which should be a good opportunity to test your ability to continue to solve business problems.
Both Parties Stay Involved
Maintaining the status quo may be an easier option early on, but it is more likely that you and your ex will need to make changes to the business. If the relationship remains respectful, then maybe you can design a new way of running the company that allows both of you to stay involved. This may mean that one person manages day-to-day business affairs, while the other person retains voting power on major decisions. Alternatively, it may mean one person has general control of the company while the other becomes a limited or silent partner. These are just a few options that exist, but you and your ex will need to discuss what is best for the business. It is also a good idea to consider hiring a business consultant to help you explore alternative business models that will allow both parties to stay involved without hurting the business.
One Party Buyout
If both parties cannot work together and/or stay in the business together, perhaps the best option is to consider having one party buy the other party’s portion of the business. This may be a great option in a situation where one spouse was not very active in the business. In this case, the value of each party’s interest in the company will be determined by any operating agreements, articles of incorporation, or other formation documents you created for your business. If these agreements do not exist or you do not understand what they say, talk to an attorney!
Dissolve/Close The Business
In the event that the business requires both parties, but neither party wishes to continue working with the other, then dissolution of the company may be the only reasonable decision. The procedure for dissolution will vary for different businesses and depending on your formation agreements, but you can expect a few things. For one, if you are closing the business and not selling to a third party, you will need to settle any debts the business owes. After the debts of the business are settled, any remaining business assets will be sold or distributed in accordance with each owner’s share of the company. Once again, if you are not sure what your formation agreements say, or you do not have any, then talk to an attorney for help.
Neither Party Agrees On Outcome
What happens if you and your ex-spouse are unable to decide what to do? Well, it depends. Did you create operating agreements and discuss what may happen in the event of a divorce or separation? Did the agreement discuss how the company may be dissolved or how an owner’s rights may be transferred? Did the agreement discuss what would happen if there were any disputes between owners or disputes over valuation, dissolution, or any other major business concerns? If the agreements do not address these topics, then the Washington Code that governs your entity type will explain what is to be done. For example, if your business is a partnership then the Revised Code of Washington, Title 25, will control it.However, when deciding what is right for the future management of your business, I would not recommend leaving those important decisions to the default provisions of the Washington Code. This is not because the Code is unreasonable, but because the people running the business, not the default judgment of legislators, administrative committees, or judges, should make business decisions. Therefore, if you do not already have signed agreements with your spouse on how to handle these difficult decisions, talk to them about it now.
For some, it may already be too late. You may be going through divorce now and realizing you do not have agreements in place. Do not worry or panic, instead learn about your options by reaching out to an attorney or asking another legal professional for a referral.
If you have any questions about your business and/or how your divorce may impact your business, please reach out to an attorney and discuss your options. With the proper guidance and planning, your business can transition through your divorce and continue to thrive.
Copyright of Jeff Hamilton December 2018]]>On Behalf of The Law Office of Jeff Hamilton PLLC<![CDATA[Analyzing “Succession”: Opportunities to avoid chaos]]>https://www.jeffhamiltonlaw.com/?p=461862020-11-03T09:18:21Z2020-10-15T06:49:01Zhttps://www.hbo.com/content/dam/hbodata/series/succession/episodes/s1/succession-s1-ka-1920.jpg
For those of you who have not seen the show, the drama centers around Logan Roy, the father and legendary figure who started the company. Roy is respected, idolized, and feared by most characters in the show (especially his children) and his recent collapse in health has left the future of the company in turmoil.
While this show is obviously dramatized and meant for entertainment, it also demonstrates how family discord can lead to costly issues for family owned and controlled businesses. Problems will be unavoidable, to some extent, in running any business venture; however, those issues can become even larger in scale for families. This show is a HBO drama that is meant to entertain,it plays fast and loose with reality but the nature of the family disputes and business losses are based in reality.
*Spoiler alert episode 7* For example, episode seven “Austerlitz” features Logan Roy tricking his family into family therapy, which would be fine, but he does not care about the therapy. In reality, the company was in potential turmoil due to the public’s perception of the family relationship and Logan saw publicizing his “family therapy” as a way to fix the business problem. This example demonstrates the need to discuss and write down boundaries for family matters and business matters. Family therapy can be great for the both the family and business, but it should not be used as a form of manipulation for the business.
A fluctuating relationship status between family members should not impact succession planning for the business. In “Succession”, Roy Logan consistently makes emotionally-based decisions that have huge consequences for the business as his feelings toward family members change. Roy Logan sees leadership decisions as a giant game and moves his family members and board of directors around like pawns. Leadership decisions should not be made so whimsically and business teams deserve more structure and guidance to depend on. Without that, decisions will be made on the whims of leaders without a common nucleus of thought. Guidelines l also provide standards by which to judge the success or failure of leadership and a measure of how leadership’s decisions reflect the goals of the company.
If you find yourself beginning to sweat as you think about your own family business, do not fear. If the Roy family and their business were real, they would have many layers of procedures detailing plans for succession, but HBO would probably not gain many viewers for a show about a business operating smoothly. HBO is home of epic dramas and iconic characters like Logan Roy, a legendary leader who could never be replaced, but most real companies are lead by talented teams, not Logan Roys. Smart companies should begin developing future leaders long before issues arise, so that one disaster does not cascade into a host of leadership problems. Had Roy Logan demonstrated trust in his son Kendall and developed him as a leader early, these problems could have been avoided or at least mitigated.
Now ask yourself 3 questions:
If you were to become incapacitated and unable to run your business today, what would happen to your company tomorrow?
Who would run your business until you returned and what structure and/or experience would guide them?
If you could not return, who would take over your business and ensure your family’s interests are protected?
If you do not have answers to those questions, do not panic, instead call an attorney and/or consultant who specializes in succession planning. These are problems that can be avoided if you are proactive rather than reactive in planning and running your business.
HBO's Succession clip
I have included a clip from the show for those who have not seen this excellent HBO drama. Happy Business planning!
Written by Jeff Hamilton. Copyright 2018
With a special thank you to Jeff Habersetzer and Davis Abott for helping in editing this post!]]>On Behalf of The Law Office of Jeff Hamilton PLLC<![CDATA[5-Hour Energy Under Fire Over False Claims]]>https://www.jeffhamiltonlaw.com/?p=461832020-11-03T09:17:31Z2020-10-15T06:45:27ZBe Careful About What You Claim
Have you ever used 5-Hour Energy ® and wondered if it really is better than coffee? If not, no worries, because the State of Washington took Living Essentials (the company that produces 5-Hour Energy®) to court in order to make them prove their product is! And as it turns out, the company did not have any scientific evidence to support their advertisement. Nor did they have evidence for a couple of other claims they made in commercials and other ads. Instead, the court found that the company was deceptive with their ads and awarded a $3 million plus verdict in favor of Washington. Way to call BS on that one Washington! The rest of this post explains the advertisements involved in this case and how Washington courts found 5-Hour Energy® to be in violation of the Washington Consumer Protection Act (RCW 19.86) on three of their advertisement campaigns.
What is the Consumer Protection Act and what does it do?
The CPA prohibits “unfair or deceptive acts or practices in the conduct of any trade or commerce” in Washington.[1] The State created this law to protect the public and foster fair and honest competition in the Washington marketplace.[2] In order to show a company violated the act, the State Attorney General must prove three things in court:
As mentioned above, the 5-Hour Energy® case involved three ads that the court found to be deceptive and therefore in violation of the CPA. They are as follows:
Superior to Coffee claim
This ad claimed that the vitamins and nutrients in 5-Hour Energy® work with the caffeine to provide longer lasting effects than caffeine alone. The court found this claim to be mere hypothesis that lacked sufficient evidence to make it a scientific finding.
Decaf Claim
The second ad claimed the decaf version of 5-Hour Energy® would provide energy, focus, and alertness for hours without the unwanted “caffeine feeling”. However, the court found Living Essentials again lacked the competent and reliable evidence to back this claim.
Ask Your Doctor Claim
The third and final ad involved a commercial where Living Essentials implied that a substantial majority of doctors would recommend 5-Hour Energy® as a safe and effective nutritional supplement. The ad stated first that Living Essentials asked 3,000 doctors to review 5-Hour Energy® and then stated that 73% who reviewed 5-Hour Energy® said they would recommend it. In reality, the trial court found that only 503 doctors reviewed 5-Hour Energy® and that the doctor’s option to say no meant that they “would instead recommend a high fat, high calorie, or high sodium energy supplement.”[4] The court found that the statics were literally true, but the impression they gave was not true.
Lessons to be learned for your business:
Do not make claims without having evidence to prove it. If you make a claim in advertisement in Washington, do the research to back up the claim FIRST! If you are not sure whether you research is valid or sufficient enough, ask a lawyer.
Do not present your statistics in a way that suggests better results than you obtained! If you have a study completed and you choose to share the results, be honest! Deceptive ads can cost you millions! Living Essential was ordered to pay over $3 million in civil penalties, costs, and attorneys fees.
If you are interested in reading the entire opinion, follow this link.[1] RCW 19.86.020
[2] RCW 19.86.920
[3] State v. Kaiser, 161 Wn. App. 705, 719, 254 P.3d 850 (2011)
[4] Top of p.24 of Opinion.
Copyright Jeff Hamilton April 2019]]>