Negotiating with the Insurance Company can be daunting. If you have had a flood or property damage you are more than likely reeling from the event and worried about getting business going again. So the last thing you want to do is wrestle with is an insurance adjuster.

What levels the playing field for a consumer are consumer protection statutes which generally require insurance companies to act reasonably in settling claims and to do so promptly? Obviously, delay would be near torturous if you are trying to get your repairs completed going but you may not want to act to hastily in settling up until all the details are properly addressed. But insurance companies cannot abuse the process and your stress and force you to settle a claim for less than it may be worth.

Insurance companies cannot:

They cannot misrepresent pertinent facts or insurance provisions relating to coverage; Compel litigation recover amounts due under an insurance policy; Fail to effect prompt and fair and equitable settlements;
Attempting to settle a claim for less than to which a reasonable man would have believed he was entitled to...See M.G.L. c 176D Section 3

 

The process is time consuming and heavily regulated don't settle for less than you are entitled to.

 

The Tale of Two Covenants

 

            Whether a small company or an new employee in the process of being hired "covenants not to compete" are common employment agreements that need to meet specific criteria to be upheld in court. Some recent cases in Massachusetts evaluated covenants and there is a simple formula to make sure that the restrictions are not overly restrictive.

 

            In one the court found that due to the nature of the sales work, the reasonableness of the scope of the restriction and the geographic area,  the covenant was enforceable and the salespersons post employment activity was restricted. The court scolded that the law cannot allow employees to shop around and jump ship for the next best deal especially when they carry with them confidential information and or customer lists.

 

            In another the court found a non compete unreasonable and therefore unenforceable due to its breadth and the lack of any geographic scope defined in the agreement for a financial analyst moving to a new place of employment. Specifically the court stated:

            "The clause provided that the employee 'shall not perform any services, either as a consultant, employee, owner, investor, or otherwise, with or for any foreseeable business, product or service of the Company.' The scope of prohibited activities is extremely broad and vague, particularly given the comprehensive nature of services and products offered by firms such as Athena. Further it is unlimited in geographic scope. The function of the non-compete covenant as drafted appears intended to restrain ordinary competition. Thus, the clause is likely to be determined to be unenforceable."  See Suffolk Superior Court, Edwards v. Athena Capital Advisors, Inc. (Civil Action No. 07-2418-E) (Aug. 7, 2007).

 

History of IRS Audits Has Not Been Good

 

Starting in October, 2007, the Internal Revenue Service will soon be conducting a Random Audit Program.  This type of Random Audit was done in the past, sometimes with unpleasant results.

According to the Wall Street Journal ("The Next Audit Scare," by Tom Herman, June 13, 2007) the Internal Revenue Service plans to revive its controversial practice of randomly selecting thousands of taxpayers for audits - even when there is no reason to suspect any wrongdoing.  The first audits will begin in October, 2007, and will target 13,000 people of various incomes for Tax Year 2006.

The reason for this program may be because the IRS is under pressure from Congress, which is struggling with budget deficits, to take action on the gap between what the government is collecting each year - and what the government feels it should be collecting.  The amount of this "difference" is estimated to be $290 billion.

Random tax audits have troubled many people in the past.  In the 1990's, when the IRS imposed a similar program, many of these targeted individuals felt the audits were invasive.  Individuals were made to produce vast amounts of paperwork to support even trivial items on their returns.

What will the "new and improved" Audit Program look like this time around?  Some people chosen for this auditing may not even realize it's happening to them - the audit will all be done completely by computer - without their knowledge.

The IRS will be able to check the information by making comparisons of what the person reports on their return against what was reported by employers and financial institutions.   But - many people will need to endure face-to-face meetings with IRS Agents in order to examine their numbers in great detail.

And what was the track record of the IRS like, when we think back to those bad old days of the IRS Audit?  Not completely flawless, it turns out.  According to CNN.com (All Politics, April 28, 1998, "Senate Panel Hears Stories of Alleged IRS Abuses") a Senate committee commenced hearings on the abuse of power by the IRS.  There was testimony from taxpayers about IRS Agents "stepping over the line" - even raids on peoples' homes, IRS Agents behaving "out of control" and acting "undisciplined."  These Agents were described as "intrusive" and "intimidating."

During these hearings, Cody Mayo, an Assistant DA in Caddo Parish, Louisiana, described how one individual actually experienced an emotional breakdown during an audit, and how another case tragically resulted in the victim's suicide.

There was testimony that the IRS retaliated against whistleblowers.  Yvonne DesJardins, of IRS Employee and Labor Relations, appeared as a surprise witness.

She described how people who just wanted to do the right thing were "ostracized," and their "careers destroyed."  Meanwhile, IRS officials who engaged in any misconduct were protected -- or even rewarded.

What will you do if you sadly discover that you need to persevere through one of these face-to-face audits?  You might feel that you need help.

 

Do Taxpayers Have Any Rights?  Thankfully, Taxpayers do in fact have rights.  In fact, many of us might not know that there is a "Taxpayer Bills of Rights."  (IRC Section 7521)  Some highlights of the "original" Taxpayer Bill of Rights include the following:

 

• Taxpayers have a right to an explanation of the audit process, their appeal rights, and the collection process;
• Taxpayers have a right to be represented by a representative authorized to practice before the IRS;
• Taxpayers have a right to suspend an interview to consult with a representative, provided the interview was not arranged through the use of an administrative summons; and,
• Taxpayers have a right, with advanced notice to the IRS, to make an audio recording of any IRS interview.

 

Of course, the revised Taxpayer Bill of Rights (TBOR) is much longer and much more complex.  You can view this entire thirty-page long document by going to the IRS website www.IRS.gov.

 

  Ethical Dilemma: Did Honest Abe Lie?

            I recently finished Doris Kearns Goodwin's Team of Rivals a ten year research project/epic of Lincoln's political career and his management of his most ambitious rivals.  Kearns-Goodwin's wonderful epic depicting the excruciating political life and death of Lincoln is a good opening to the Ethics segment of our weekly EBM&D Blog. Lincoln was a prominent lawyer and used his anaytical skill to manage some of the most controversial issues that ever faced the nation.

            When the 13^th Amendment, which would abolish slavery, was introduced into the House of Representatives in January of 1865, there were rumors that Peace Commissioners had been sent from the South to Washington DC to offer a settlement of the civil war.  Lincoln was concerned that if certain factions advocating for peace or "peace Democrats" and the maintenance of slavery caught wind of this development, it may in fact take the wind out of any sails of the opportunity to end slavery.  Lincoln was asked:  "Are there peace commissioners in the city?"  Lincoln specifically answered, "There are no peace commissioners in the city..." nor did he expect there to be.

            Did Honest Abe lie?

            Lincoln was aware that in fact there were peace commissioners traveling to a fort in Maryland for a meeting with General Grant.  But he answered the question directly, specifically and truthfully.  There were no commissioners in the city meeting with him, which of course would have signaled a more prominent chance of the settlement of the war, rather than what could be construed from a preliminary meeting with his general. But after five years of fighting and a recent re-election, Lincoln was taking no chances.

            As the 13^th Amendment only passed the House of representatives by 5 votes, after these same "peace Democrats" switched their votes, his specific response may have been as critical to the end of slavery as the war itself.

 

            When you have been harmed you may have an action.  If not, you generally do not.

            But is that employee at will or under contract?  This is becoming less clear in Massachusetts, and businesses and employees should hearken to this information and monitor their activity very carefully.

            Generally, an employee is at-will, when employed without a contract.  The advantage is the freedom to move on if an employee, and the freedom to replace for the employer. Hence either party may terminate the employment relationship at any time, for any reason - or not, so long as it does not violate public policy. However, manuals and policies as well as certain conduct may create an implied contract material that moved the employee into a contract status thereby giving him or her rights that an employer may not realize.

            So some tips...

                         1. Review those manuals to strike any language that may imply a contract or that contains language that is inconsistent with "at will" employment status;

                          2. Review those offer letters, to make sure they are not a contract

 

Joan Vennocchi of the Boston Globe writes an interesting piece in the Suffolk Law School Alumni Magazine (Winter/Spring 2007) about her years in night school at Suffolk Law. She explains with journalistic clarity her insight into how lawyers learn. She talks about arguments in class, study groups, and discussions. Her observations of the lawyer in training balancing perspectives and the depth of analysis reminds me that clients may not be aware of how lawyers are trained and how they assess a case.

It is helpful when retaining a lawyer to understand that legal solutions are milled by the mind over time with discussion, research and interaction with the facts you may have shared.

When you talk to a lawyer, they may ask questions that seem unusual to you. It may very well be that part of the analysis they are undertaking in getting to the core of your issue takes them down a circuitous route. In fact, you will wonder if they heard anything that you said. At least initially they are searching for the key elements of your situation and applying the law to them as best they can before they consult the legal research that will get them up to speed on your topic.

So a reminder information on a blog such as this can never pass as legal advice - even tips – unless you have retained the lawyer to represent your interests and shared all the details fo your matter. Anything short of that will not serve you well.

You’re at work revising a proposal for a public bid or an internal memorandum to your supervisor where you make references to people you work with, it gets revised and edited by a manager before it is sent out and publicized. Simple, you do this regularly.

You create a document and send it out.

This may not be as simple as you thought. You need to recognize what technology is doing to communication. The expression on Joseph P. Donahue Jr.’s face, a business law attorney of of 50 years, was more powerful than words when the discussion of Meta Data came up in a recent firm gathering. A lawyer trained prior to the advent of the generally accepted Rules of Discovery were adopted in the 1960’s, Attorney Donahue never quite understood the overflow of documents produced and was always a bit suspicious of aggressive and unnecessary litigation issues. The concept of meta data sealed it for him.

That document you have created is more than what appears on the screen and it could haunt you if your company is ever subject to litigation or an audit.

Even tech savvy lawyers/businesses of this generation will now cringe at the prospect that electronic documents may very well contain “invisible confidential information.” See David Hricik and Robert Jueneman, the Transmission and Receipt of Invisible Confidential Information (2003) at http://www.hricik.com/eethics/Metadata1103.doc

Simply stated -- software maps changes to a document and this information, though not visible as you see any document on a screen, can be accessed and seen. This means that show revisions that you may not want to share. For example, consider an offer letter drafted by you containing a price to purchase a good service or real estate. You circulate and discuss the offer with colleagues or a family member as you consider your next move in a negotiation. In that process, the number in the offer changes and comments are made.

This data, the comments the changes are saved and could be seen with little effort. The data not visible – meta data-- can in fact still be mapped in the document and anyone getting a copy of such an offer could very well look behind the text and expose the changes which could be detrimental to a negotiation. This meta data includes information about who generated the document, when it was revised, and the additional or changed information in the document. More dramatically it could contain comments made in an edited document and the revisions themselves leaving the changes and the time spent editing the document.

What steps can you take to protect yourself? We’ll keep you updated on this potential minefield on your computer.

 

At will Employees are people too, and they may have an employment contract

    Speaking of Business practices, how are your employees today? Are they old, overweight, black, white, Asian, disabled, impaired, injured, harassed, ill, depressed… not common words that you would use to describe your employees. You may know them by name or position or their ability to hit a golf ball, catch a fish, or a family connection from the wedding you attended.

    How you think of your employees may determine your future exposure to issues that may arise in employment litigation…so with that in mind, how connected to your organization are they? Do they have a contract? Or are they at will, that is, can be released virtually at any time and for no reason?

    We will address some of these topics every so often to keep you up to speed…

"Progressive Discipline" at work may be a Problem:

    Consider the recent case of Ortega v. Wakefield Thermal Solutions where progressive discipline backfired on the employer. The company did not follow their own company’s policy. Doesn’t this create a right in a job to be terminated in a certain way and thereby your employee may not be at will at all?

    The employee relied upon the progressive discipline and therein was able to be treated as if she had a contract.

Tips

1. Disclaim: Disclaim Contract by repeatedly re-stating the at-will employment relationship exists

2. Notify: When you make changes in a policy or employee manual or handbook, make sure all employees get a copy and know its content 

How not to use blogs: email and other communications

 

Imagine being sued and having a blog, and during the course of the trial you post certain events about the trial, such things as the personal habits of the lawyers, judges, and commentary on a dozing juror… What would happen if that were known and you were confronted at the trial? Well nothing would happen which may be bad or good. But on May 31^st the Boston Globe reported about such a scenario in a medical malpractice case involving a failure of a physician to diagnose diabetes in a patient. The Defendant/Doctor was “outed” as a blogger and settled his case when the lawyer dangled the specter of revealing the details of his commentary -- so, based upon the threat of the exposure, the case settled. What did that have to do about diabetes or negligence or the nature of health care? Nothing. The Doctor eliminated those opportunities to be heard on the issues relative to his defenses due to the specter of a threat…so be advised, potential litigant, when going into a courtroom, being exposed may settle a case or kill the very desire to proceed or lose your case… It would depend on the circumstances.

 

This is not uncommon. Litigation is tough business and the best defense is always the best business practice, care and maintaining integrity.

 

So will I win my case? You will increase your chances by not getting into court in the first place, but if you have to go, prepare before you even call your lawyer…Stay tuned for such tips to prevent common business practices that land you in court.

 

“Sue me if I play too long…this brother is free.”
                          --Donald Fagan, Steeley Dan

 

    Entering the new blog world, lawyers tread cautiously due to the general historical regulation of our trade. So lawyers are forewarned that we are to abide by the rules of ethics and it occurs to me that clients may not be aware of what the ethical standards that apply to attorneys are. As such we will introduce some of the more relevant Model Rules of Professional Conduct that govern our profession, our business and this web site.

EBM&D: Accordingly Ethical Attorneys

Model Rules of Professional Conduct[1] 

Information About Legal Services
Rule 7.1 Communications Concerning A Lawyer's Services

    A lawyer shall not make a false or misleading communication about the lawyer or the lawyer's services. A communication is false or misleading if it contains a material misrepresentation of fact or law, or omits a fact necessary to make the statement considered as a whole not materially misleading.[2]

Transactions With Persons Other Than Clients
Rule 4.1 Truthfulness In Statements To Others

    In the course of representing a client a lawyer shall not knowingly:

(a) make a false statement of material fact or law to a third person; or

(b) fail to disclose a material fact to a third person when disclosure is necessary to avoid assisting a criminal or fraudulent act by a client, unless disclosure is prohibited by Rule 1.6.

    In an age of hopeful transparency, the Massachusetts and New Hampshire attorney has an obligation to tell the truth to people outside the scope of representation. Attorneys then are required to choose their words carefully and reflect on questions making sure that all circumstances are evaluated before rendering an opinion.

    So, the EBM&D Blog can in no way be construed as legal advice to any reader, it cannot possibly be used as such, since no lawyer can know the circumstances of a particular matter presented until they have fully explored an evaluated the case completely and thoroughly.

 

Two Tips on How to Hire an Attorney in Massachusetts and New Hampshire

    A Law firm should always attempt to evaluate a client’s case by exploring the legal issues in the context and circumstances of their life; and improve a client’s quality of life and business. A law firm or attorney rarely can do an evaluation quickly -- in a phone call, an email or even a brief free consultation. A firm seeks to open a dialogue as to the needs of a personal or business client.

    Getting legal advice is not hard to do; but it is more complicated than you think.

    The following is probably not a good way to get advice from a lawyer.

1. Call him or her on the phone, provide no information but ask a particular question and expect to get an answer.

    Many of the legal issues that face a client are related to non legal situations and it takes time to explore how those circumstances impact your legal situation and will define an ultimate solution. As lawyers, we see situations and people moving through their daily lives unaware of some of the legal implications of their actions. We have been trained not to conclude too quickly because the facts and circumstances of the situation you are in – any situation -- is critical to a fair assessment and ultimate judgment of your case.

2. The Loaded Question rarely has a simple answer.

    The client asks. “So, can I win my case?” The loaded question usually has a complicated answer. It will start with “It depends…” Give the Attorney a chance to boil things down to more critically evaluate your situation, that is what they are trained to do. If you’re getting a quick answer it is probably not legal advice that should be relied upon.

 

________________________________ 

[1]See the American Bar Association Website devoted to the Model Rules of Professional Conduct that have been adopted in Massachusetts and New Hampshire at www.abanet.org/cpr/mrpc/rule_4_1.html

[2] [1] This Rule governs all communications about a lawyer's services, including advertising permitted by Rule 7.2. Whatever means are used to make known a lawyer's services, statements about them must be truthful.

[2] Truthful statements that are misleading are also prohibited by this Rule. A truthful statement is misleading if it omits a fact necessary to make the lawyer's communication considered as a whole not materially misleading. A truthful statement is also misleading if there is a substantial likelihood that it will lead a reasonable person to formulate a specific conclusion about the lawyer or the lawyer's services for which there is no reasonable factual foundation.

[3] An advertisement that truthfully reports a lawyer's achievements on behalf of clients or former clients may be misleading if presented so as to lead a reasonable person to form an unjustified expectation that the same results could be obtained for other clients in similar matters without reference to the specific factual and legal circumstances of each client's case. Similarly, an unsubstantiated comparison of the lawyer's services or fees with the services or fees of other lawyers may be misleading if presented with such specificity as would lead a reasonable person to conclude that the comparison can be substantiated. The inclusion of an appropriate disclaimer or qualifying language may preclude a finding that a statement is likely to create unjustified expectations or otherwise mislead a prospective client.

[4] See also Rule 8.4(e) for the prohibition against stating or implying an ability to influence improperly a government agency or official or to achieve results by means that violate the Rules of Professional Conduct or other law.