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Cyber insurance: Because the costs of investigating and responding to cyber attacks can be staggering for small firms, some companies are turning to cyber liability insurance. If your business stores data in the cloud, I would certainly look into purchasing. FYI, my friend Chad Ezkanazy over at Morstan General Agency Insurance can help you out.

Texas Bill to Allow Service of Process Via Facebook. Bradley Shir, an attorney based in Washington, DC. reports that Texas recently introduced a bill that would allow for service of process via FacebookTexas House Bill 1989 if enacted would make the Lone Star State the first in the United States to allow for service of process via social media as an alternative means of service. No word if New York plans to allow service of process by Facebook anytime soon.

To Place Graduates, the New York Times reports that Law Schools Are Opening Firms. It is hard to believe that it has come to this. We all know that law schools have been running a scam for decades. With relatively low overhead law schools are a cash cow. They charge more and more each year yet their expenses remain stable. Unlike medical schools, law schools don’t have to pay for expensive lab equipment.

Law schools are now getting into the law firm business and it really is not very helpful. They just add another layer of competition. Since they are able to fund their “firm” through high tuition, they have no profit incentive. They could sell services at a loss. This could have the net effect of killing law firms that could have hired these graduates later. It could drive the cost of law firm salaries down.

I am already seeing the effect of this. The Brooklyn Tech meetup is currently hosted at Brooklyn Law School. A couple of months ago I attended the event. Their legal clinic was giving legal services to start-ups for free. Yes, it is a decent deal for entrepreneurs. Free advice from a law student with help from a professor. Yet, if I were able to nab one of these start-ups, I would be hire these law students and actually pay them for their work. This model simply doesn’t make economic sense for attorneys.

What do you think of Law Schools opening law firms? Is it a good idea to bring legal costs down, or will it further damage the legal industry?

The Law Office of Frederic R. Abramson represents businesses and individuals in New York. If you have a legal question, feel free to contact me at 212-233-0666




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Is an Email Contract Binding?

by Fred Abramson on October 15, 2012 · 8 comments

We all use email. Perhaps due to its ubiquity, we often feel safe sending business messages via e-mail. The Atlantic recently noted that most sharing is accomplished through Dark Social means that are difficult to measure because they are “private.” But don’t be fooled, communicating through email can have dire consequences.

As a business lawyer, the two most frequent questions regarding emails are the following:

  1. Am I  contractually bound  by what is written in an e-mail?
  2. Can I rely on an exchange of e-mails as evidence of a contract?

It has become increasingly clear as courts are relying on electronic transaction legislation, applying rules of contract formation, and finding that e-mails create binding contracts. As a result, you need to be aware of what you state in e-mails to avoid an accidental contract.

The Legal Framework 
  • Laws passed more than a decade ago by both New York State and Congress provide that contracts will not be denied legal effect solely because they are created or stored electronically. Paper contracts are not a requirement.
  • Courts then look to basic contract formation law to find out whether a number of e-mails creates a binding contract. In doing so, courts look to see if one party made an offer, whether that offer was accepted by the other party, and whether there was intent to be bound by the e-mailing parties, which the courts call a “meeting of the minds.” If a court finds that those elements are present within a series of e-mails and concludes that the terms of the agreement are reasonably certain, the court is likely to hold that the e-mail exchange is a binding contract.

I recently litigated a case where a series of e-mails constituted a change to a sales agreement even though the agreement included a section requiring all changes to be in writing and signed by the parties. The court decided that the series of e-mails exchanged between the parties constituted the requirement that the changes be in writing, and by both parties typing their names at the bottom of their respective e-mails, the changes was signed by both parties as required under the contract.

Be aware that simply because e-mails can satisfy the requirement under the statute of frauds that all contracts over $500 must be in writing, other contract formation rules must be applied. For example, if there is no evidence of a “meeting of the minds,” then there may not be a contract.

What to keep in mind before you hit send
  • Think about whether the series of e-mails contains the necessary contract formation rules. Was there an offer? Did someone accept the offer? Was there any money exchanged?
  • If you do not intend to be bound, use qualifying language in your e-mails, such as this is not a binding contract.

It is vital to be aware that e-mail can create or change an agreement.

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You know that litigation could be expensive.  If your attorney is a Linchpin he will always present an analysis of the costs of defending a lawsuit to you.  Great attorneys are often able to limit the costs of litigation while continuing to defend you aggressively. Bad attorneys make lots of money by drafting unnecessary motions.

Some judges don’t allow for discovery motions, preferring issues such as the re-scheduling of depositions to be resolved at a conference. “Snake” attorneys will make the motion anyway, viewing it as a billing opportunity.

If you are subject to a lawsuit, one of the tools in your lawyers’ toolbox is a motion to dismiss. If you win a motion to dismiss, your case is over in one sweeping step.  However, if you lose and your motion is denied, your litigation costs become more expensive.  The rule outlining a motion to dismiss is CPLR section 3211. Because of its costs, the decision of whether you should make a motion to dismiss should not be taken lightly.

What should you look for when making a motion to dismiss?

  • You should first review and pick apart the complaint.
  • Does the plaintiff (the person who is suing you) state a cause of action?
  • Are there any legal defects to the complaint?
  • Does the complaint make factual sense?
  • Do you have all the facts? In many cases, you need paperwork from the plaintiff, such as a contract.
  • Does the court have the right to hear the case?
  • Are you or your company subject to the court’s jurisdiction?  For example, if your company is being sued in New York but has never conducted business there, a motion to dismiss could be appropriate.
  • Statute of Limitations. The action may not have been timely filed.

What you need to tell your Attorney

  • If you company has been sued, find out the person who has the most knowledge regarding the lawsuit.
  • Write a detailed summary of the facts
  • Notify him of any witnesses with their address, email address, Twitter account and phone number.
  • Provide all documents related to the lawsuit.

When is winning a motion to dismiss a waste of time and money?

Just because a motion to dismiss can be made, doesn’t mean that it should. There are times when winning a motion to dismiss will not dispose of the case

  • If you were improperly served, but the case is still well within the statute of limitations, the plaintiff can simply re-serve you.  
  • If there is a technical defect which can be easily changed by an amended pleading, such as the misspelling of your name?
  • In some instances, by making a motion to dismiss you may alert the plaintiff of your defenses or missing information.

When should you make a motion to dismiss even if you will probably lose?

  • For tactical reasons, you may decide to show the opposition that you are ready to go to war.
  • You can obtain facts about the case earlier than waiting for formal discovery, which could take years.

As a defendant, you should always look to settle the case before a motion dismiss is made or an answer is filed. The vast majority of cases are settled before trial.  Everyone is aware that the settlement is not a sign of weakness because of the high cost of litigation.

If you or your company has been subject to a lawsuit, contact me at the Law Office of Frederic R. Abramson at 212-233-0666.

I have a technology company as a client who recently retained my office to advise them on a relatively common employment law. The company signed a contract with financial institution to perform help desk related work.  They hired ten people to perform the work and had each of them sign an independent contractor agreement.  All of the workers performed the work on the job site only. The all worked solely for the technology company for 40 hours a week. The company just received an evil notice from the IRS. The IRS believes that the workers are misclassified as independent contractors and should be employees.

The technology company now wonders if there are penalties for misclassifying the workers as an independent contractor.  The IRS looks in part at the intent of the employer.  If the IRS reclassifies a worker from independent contractor to employee, the employer may be liable for a penalty based on the amount of the tax that was not withheld because of the original misclassification. If the IRS finds that the misclassification was an honest mistake on the part of the employer, and the employer filed proper returns, the penalty against the employer is:

• 1.5% of the wages paid to the employee; and

• 20% of the amount that should have been withheld from the employee’s wages for FICA, but was not due to the misclassification.

If the IRS finds that the employer failed to file the proper returns, then, except where the failure is due to reasonable cause and not willful neglect, the penalties double. Then, the penalties are:

• 3% of the wages paid to the employees; and

• 40% of the amount that should have been withheld from the employee’s wages for FICA, but was not.

If the misclassification on the part of the employer is intentional and therefore the employer intentionally neglected to withhold the necessary employment taxes, the limits discussed above do not apply in assessing the employer’s liability. The penalties for intentional misclassification are more severe. Moreover, the limits are not applicable to the employee’s share of the FICA taxes if the worker is a “statutory employee,” nor where the employer withholds federal income tax from the worker’s wages, but does not withhold FICA.

Lastly, if the required to pay an “employee reclassification” tax liability, the employer may not recover the tax assessed from the employee. In addtion, the employer may not deduct the amount of tax assessed from the employee’s wages. The Internal Revenue Code provides further that the employee’s liability for his or her share of the tax is not affected by the assessment or payment of the penalty tax by the employer.

If you have a legal question regarding independent contractors in New York, contact the Law Office of Frederic R. Abramson at 212-233-0666

“Art,” Linchpin, Seth Godin and the Law

April 14, 2010

This post has nothing to do with the law. It’s about art. I am not talking about art in the traditional sense, like Jackson Pollack or Pablo Picasso. I am talking about the art that you bring to your work and to your life. In our economy, you are no longer guaranteed lifetime employment. The […]

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Killer Lessons for Lawyers and Entrepreneurs from Rework

April 6, 2010

My commute from the lovely North Shore of Long Island to the New York Supreme Courthouse near Chinatown in Manhattan is an hour journey.  I devoured the new business book entitled Rework by @jasonfried and David Hansson in one round trip. Unlike most business books, Rework is the product of real life successful entrepreneurs.   […]

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4 Ways to Protect Your Small Business from Fraud

March 31, 2010

Fraud is not limited to the Bernie Madoff’s of the world.  Because of the recession, it should come to no surprise to learn that financial problems are more likely to lead to more fraud. Fraud is a huge problem.  According to the Association of Fraud Examiners 2008 report on occupational fraud and abuse, companies lose […]

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Wage Garnishment: What should you do?

March 24, 2010

  Wage Garnishment is a very powerful tool for either the government (most commonly the IRS), a company or an individual to collect money damages.  If you are a plaintiff in a civil action, if you obtain a judgment you may be able to have the sheriff garnish the wages of the person you are […]

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What Litigation Costs and Expenses are Recoverable in NY? How about Attorney Fees?

March 19, 2010

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 […]

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