In New York State, only approximately 3 percent of all cases filed in Supreme Court are disposed of after a trial. If you have a business dispute, your goal is to come to a resolution as quickly and as inexpensively as possible. If you have been involved in a lawsuit before, I am sure you know why this makes sense.

As an attorney, one of my responsibilities is to discuss with you the costs of a lawsuit. The basic costs of a lawsuit may include the following:

• Court Costs
• Attorney Fees
• Expert Witness Fees
• Court Reporters

News that mortgage service providers failed to accurately document the seizure and sale of tens of thousands of homes have caused a public outcry.  Robo-signers for mortgage companies verified the truth of foreclosure documents without even reading them. The New York court system now requires attorney’s to verify foreclosure papers.

The mortgage companies are not the only businesses using robo-signers. It has come to the attention of  the New York Times that debt collection companies have been using robo-signers for years.  As an attorney, I have encountered the issue of robo-singers on thousands of occasions.  If your debt was verified (checked) by someone who does not have personal knowledge of your file, you are probably in luck.  The debt collector usually can’t prove your debt.

This is how it works.  Large banks, such as JP Morgan Chase and Bank of America sell a debt that is difficult to collect to a debt collection company.  The debt collection company purchases the debt for pennies on the dollar.

The debt collection party first attempts to send a threatening letter with a follow up phone call. When that fails to work, they hire a lawyer to help collect the debt. That is when the fun and games begin. The debt collection company doesn’t have first hand knowledge of the debt.   A robo-signer from the debt collection company then verifies the debt.

The Times reports the extreme example of a  robo-signer who sued his company for wrongful termination because his demand for a better pen was denied. He was signing so many documents that apparently bics hurt his hand.

The law firms are hoping that people fail to answer the lawsuit and try to collect on a default judgment.

If you have been sued as a result of an alleged debt you should:

• Read the papers that are given to you to find out the party that is suing you.  Do you have any relationship with the business suing you?
• What are you being sued for? Is it a credit card debt?
• Ask for verification of the debt. Make the law firm provide paperwork proving that you owe the debt. Often they are unable to come up with it.
• When was the lawsuit filed? Depending how you have been served, you must provide an answer within 20 or 30 days.
• Has the debt been resold? If the debt has been resold to a company that is located outside New York, it is unlikely that they will be able to provide a witness at trial. Even if the debt is valid, they will be unable to prove it and you will win.
• Where are you being sued?  If you are a New York resident and the lawsuit is in New Jersey, they do not have proper jurisdiction over you and you can have your case dismissed.

If you have been sued in New York for a debt, contact me at the Law Office of Frederic R. Abramson at 212-233-0666.

Thousands of New Yorker’s have fallen behind on paying their bills.  The New York Times reports that debt collection law firms have taken over the docket in New York Civil courts demanding repayment. In New York County, there are two courtrooms devoted to debt collection lawsuits.

The Times highlights the role of Cohen & Slamowitz, a Woodbury, N.Y. law firm.  The firm has been filing roughly 80,000 (wow!) lawsuits a year with only 14 lawyers.  Because debt collection law firms often do not have enough staff to vet their cases, the basis of many lawsuits is improper. In my experience, many debt collection lawsuits have incorrect information about the debtor and the amount in dispute.

Credit card companies have increasingly sold off debt to debt buyers. They sell the debt in bulk, usually for 5 cents or less on the dollar.  The  new owners of the debt then hire a law firm and then attempt to collect on the debt.  The law firms are hoping that people fail to answer the lawsuit and try to collect on a default judgment.

If you have been sued as a result of an alleged debt you should:

• Read the papers that are given to you to find out the party that is suing you.  Do you have any relationship with the business suing you?
• What are you being sued for? Is it a credit card debt?
• Ask for verification of the debt. Make the law firm provide paperwork proving that you owe the debt. Often they are unable to come up with it.
• When was the lawsuit filed? Depending how you have been served, you must provide an answer within 20 or 30 days.
• Has the debt been resold? If the debt has been resold to a company that is located outside New York, it is unlikely that they will be able to provide a witness at trial. Even if the debt is valid, they will be unable to prove it and you will win.
• Where are you being sued?  If you are a New York resident and the lawsuit is in New Jersey, they do not have proper jurisdiction over you and you can have your case dismissed.

If you have beens sued in New York for a debt, contact me at the Law Office of Frederic R. Abramson at 212-233-0666.

The New York Times reports today that more struggling borrowers are facing wage garnishment than ever before. Because many credit card borrowers decide not to defend their case in court, creditors can win big judgments in court.

I recently wrote an article outlining what you should legally do if your wages have been garnished. You should go into the court where the judgment has been entered and make a motion to vacate the default.

The New York City courts have a strong policy of having cases decided on its merits.  Generally you have to prove that your were not served properly and show that you have a valid defense.

Let’s say you moved from Forest Hills to the West Village and never received the summons and complaint. In addition, there was an incorrect charge from Le Bernadine for $650.  It looks like someone stole your identity and was having a grand old time dining through the grand palaces of New York haute cuisine.   The judge will likely vacate the judgment and remove the wage garnishment.  Your case will then proceed and will be decided on its merits.

Even if you do owe the money, you should always defend yourself in court. Here’s why:

• You force the credit card company to prove your debts.  When I first started practicing law, I litigated thousands of cases for a large bank. The bank subsequently merged with another bank and the attorney who sent me the cases lost the businesses.  The bank usually did not have the necessary paperwork, such as credit card statements, to prove their case.
• Even if the credit card company has the paperwork to prove the debt, if you defend your case the court in New York requires someone with knowledge to testify as a witness. Since many debts are resold to a third party. These third parties may not have a presence in New York.  As a result, they may not have anyone who can testify regarding the validity of debt.  You may win your case even if you owe the debt.
• Most credit card user agreements allow for huge interest charges, penalties and even attorney fees to be added.  In nearly all cases, in New York the judge will strong arm the credit card company to waive the fees.
• Credit card companies understand that there is a difference between obtaining a judgment and collecting on it.  It also costs the attorney valuable time to litigate the case in court.  As soon as you receive the summons and complaint, a call should be made to the attorney for the credit card company to discuss settlement. It is not unusual to obtain a settlement for a fraction of what you owe.

If you have been sued for a credit card debt, feel free to contact me at the Law Office of Frederic R. Abramson at 212-233-0666.

Nearly every lawsuit asks for recovery of attorney fees, costs and expenses for bringing the action.  When potential clients contact my office for the first time for a civil litigation matter, the most common question asked is whether attorney fees are recoverable.

Attorney fees are generally not recoverable.  There are exceptions to this rule, such as when authorized by statute (ie some employment discrimination cases), court rule, or as agreed to by the parties. The case law is rather exhaustive on this subject. I still recall my contract professor in law school engaging my first year contract class on this issue through the use of the socratic method.

Under the English system, the loser of a lawsuit pays for attorney fee’s. However, this was changed in the United States, and under the the American rule, each party has to pay for their own legal costs.  This law was established to protect people and businesses who have small budgets who would not be able to start a lawsuit against a company or individual who has deep pockets.

Following a judgment, your lawyer can include a bill of costs.  This legal document will list the costs and expenses that you can recover in addition to your judgment.  They include the following:

• Filing fee for the summons and complaint
• Jury Fees
• Depositions used at trial
• Service of summons by Officer or Process Server
• Service of subpeona by Officer or Process Server
• Statuatory Witness Fees
• Lay Expert Witness Fees and Expenses. But regular expert witness fees, such as for a medical doctor in a personal injury action or a forensic accountant in a trademark claim, are not recoverable.

If you have a question about what fees and expenses are recoverable in New York State, contact me at the Law Office of Frederic R. Abramson at 212-233-0666.

The above is for informational purposes and does not constitute legal advice.  This is free. Legal advice is something you pay for.

Breach of contract occurs when a binding agreement or bargained-for exchange is not honored by one or more of the parties to the contract by non-performance or interference with the other party’s performance. If the party does not fulfill his contractual promise, or has given information to the other side that he will not perform his duty as mentioned in the contract or if by his action and conduct he seems to be unable to perform the contract, that party is said to breach the contract.

An example of a breach of contract lawsuit is when a web designer that you hired failed to deliver the new web 2.0 apps on your website as agreed to in your written contract failed to deliver your app. What should you do?  First you should see whether the other side has any defenses. Should you call a lawyer and start a lawsuit?

Below, is quick guide that summarizes the basic steps, legal process and expenses of a breach of contract lawsuit.

Legal Steps:

1. Prove existence of Agreement;

2. Prove breach of Agreement (failure on one side to perform or pay);

3. Prove damages due to breach (loss of profit, damage to business).

Legal Process:

1. File Complaint with the Court;

2. Defendant answers the Complaint, and could start a counterclaim;

3. Period of Discovery which are oral and written questions from each side. Interrogatories and Bills of Particulars are written discovery. Depositions are discovery interviews.

4. Discovery conferences. For example, in New York County, you will have a preliminary conference and a series of compliance, status and settlement conferences.

5. Motions requesting certain relief. For example, a party may make a summary judgment motion if they believe that there are no issues of fact and that they are entitled to judgment as a matter of law.

6. Trial

Expenses:

1. Timeframe: Between 1 and 5 years.

2. Retainer: A common breach of contract retainer is between $5 and $20 thousand dollars.

3. Court costs: Between $500 and $10,0000.00.

4. If a case proceeds to trial, $20-$100,000 is not uncommon.

If you have any questions regarding a breach of contract, contact me at the Law Office of Frederic R. Abramson at 212-233-0666

You are sitting in your office on the busiest day of the year, and just when you think nothing else could go wrong, a person walks in and utters the fateful words “You’ve been served”, while handing you a stack of papers.   You have just been sued.  What is the best course of action you can take, and how can you protect yourself as well as your business?

Who?

Read the papers that are given to you to find out the party that is suing you.  Is it a corporation, a partnership, or an individual?  Are they a customer or a supplier of your business? Who is the lawyer representing the party that is suing you?  This information will help your attorney obtain a more favorable result for you by researching the other party and its counsel. (Do they settle often?  Are they a big company?  What are their financial resources?  Do they have a reputation to maintain and therefore may want to settle quickly?).

What?

What exactly are you being sued about?  Is it a non-payment claim, or a non-performance claim?  Those are many reasons why a business may be sued.

When?

Timing is critical in a lawsuit.  Responses must be filed within a set period, which in New York is  usually within 30 days.  While an extension can be granted, don’t wait until the last minute to contact your attorney.  It takes time to prepare an appropriate answer to the papers.  If you do not respond in a timely fashion, you will be considered in default, and a judgment may be taken against you.  This means you may lose the case without the opportunity to provide a defense.

Also, don’t assume you are judgment proof, because judgments can be collected from future earnings as well as assets.  In addition, do not assume that your insurance covers everything, although it may be wise to notify your insurance carrier as well as your attorney.

Where?

What court are you being sued in?   What county?  State or Federal Court? You may be sued in a state far away if, for instance, you have done business in that state.  In that case, your New York attorney will have to obtain local counsel for you in the other state, and this takes time.

Why?

Why did the party resort to a lawsuit?  Is it something you can fix by having your attorney talk to the other side and negotiate a settlement?  Is there a running animosity between your company and the other party, in which case settlement will be difficult?  Do you need to file a counterclaim against the other party?

How?

Immediately notify and supply the lawsuit papers to your attorney.  Make sure you retain a photocopy for yourself.  Inform your attorney of all the facts relevant to the case.  Your attorney will decide what is important and what is not.
Organize your documents pertaining to the case so that you can minimize the time the attorney must spend going through them.  This will save your attorney ‘s time, and therefore save you legal fees.  Do not talk to the other party’s attorney.  He works for the other party, just as your attorney works for you.  Let your attorney do this for you.  In addition, remember that in law, just as in any profession or business, there are rules and procedures  your attorney knows and you may not.  To stay out of trouble, leave the legal work to your attorney.

A trial can take several years in New York, including preparation time.  Therefore, it may be in your best interest in certain cases to settle.  However, be realistic in your settlement expectations.

Conclusion

Having an ongoing attorney-client relationship will help protect you in the event of a lawsuit.  The more your attorney knows about your business, the better the attorney will be able to help you.  In addition, discussing business options and problems with your attorney ahead of time could help prevent a lawsuit from ever starting.  Either way, it will save you money in the long run.

Please be advised that the above is for informational purposes only. If you have a legal problem, please consult our law office at 212-233-0666.

Just because you entered into a valid contract with a company does not mean that your contract is secure. According to Crain’s New York Business, more companies are going out of business than ever before. Many are doing so without any notice. Bankruptcy filings alone have tripled in the last year. You contact the company up one day, and they are gone. Before you decide to pack it in and think there is no recourse, here are a few tips:

1. Determine the form of business ownership for the company. If the business had been established as a sole proprietorship or partnership, the partners remain personally liable. As a result, you may commence a lawsuit against them personally. If the business had been a corporation, to reach the personal assets of the owners, you have to “pierce the corporate veil.” This legal cause of action allows you potentially obtain a judgment from the personal assets of the corporate owners.

2. For any credit card transactions, contact the credit card company and ask for a refund for any goods or services not rendered. Usually, the credit card company limits the time in which a dispute must be made to 60-90 days from the date of the charge. If you paid in cash, or check, you can file a claim in bankruptcy court, if the company has filed for bankruptcy. However, this will be a lengthy process, and you may receive pennies on the dollar, if that much.

3. Look to the dissolved companies industry professional groups. A variety of organizations have plans requiring its members to reserve funds.

4. Read over your any business insurance policies regarding coverage for business losses.

5. Search the status of any class action lawsuits.

6. Contact the city, state, and federal government. There are numerous regulatory agencies that may provide assistance in obtaining recovery for losses.

7. Be aware that a company may dissolve and reorganize under another name to avoid debts. Under the “Alter Ego” doctrine, the courts may impose liability on the shareholders of the new company for the debts of the dissolved company.