Author Archives: Bovarnick

0o1a7779-2248Most people think the term “attorney’s fee clause” or provision just applies to attorneys. Nothing could be further from the truth. The correct way to think about the attorney’s fee clause or provision is in the context of any contract you might have written for yourself or your business.

Any legal dispute you have with someone or a business means there’s going to be attorneys involved. In situations where there are attorneys, you’re going to see attorneys’ fees. Whenever you’re having a contract prepared, you need to address the possibility that a legal dispute is going to arise at some point between the contracting parties. As a result, you need to make sure there’s a clause or provision in the contract that addresses who is going to pay for the attorneys’ fees.

It’s common to have a provision that requires the losing party in a dispute pay the attorneys’ fees and costs. These provisions are commonly written as follows: “The prevailing party shall have the right to collect from the other party its reasonable costs and necessary disbursements and attorneys’ fees incurred in enforcing this Agreement.” The most common costs include filing fees. Filing fees may consist of fees for serving summons, complaints or other court papers. The costs might include transcription services by a court reporter or photocopying of court papers and exhibits. It’s important to note that court costs are typically paid by all parties to a dispute but if you include an attorney’s fees provision in your contract, this can make the losing party to the dispute also responsible for the court and other costs.

One thing you have to be careful about with these provisions is that in a relationship where one party to the contract is in a stronger position, they will often put in a provision that means one party to the contract pays all fees and costs and that party is usually the party that is the weaker in the agreement. Even as this is unfair, it’s not unheard of so it’s important to watch out for this.

Preparing contracts is no simple matter and it’s important to have them prepared by experts who can look out for your best legal interests. At Bovarnick & Associates, LLC., we specialize in preparing contracts for our clients. If you’re in need of a contract, whether it’s for your business, property or personal matter, we can take care of it for you. Just give us a call at 215.568.4480 or email us at info@rbovarnick.com.

Robert M. Bovarnick, Esquire

Bovarnick and Associates, LLC
Two Logan Square, Suite 2030
100 N. 18th Street
Philadelphia, PA 19103
(215) 568-4480
(215) 568-4462 (fax)

IMG_4200a (683x1024)Luke Sampson, an attorney at Bovarnick & Associates, is a dedicated VIP volunteer and friend. In his private practice Luke handles small to mid-sized business and general corporate litigation and business bankruptcy. Since taking his first volunteer case in 2013, Luke has assisted five VIP clients in both homeownership and divorce matters. Luke has also served as the Philadelphia Bar Association’s Young Lawyer’s Division representative on Philadelphia VIP’s Board of Directors since January.
Luke is one of a small group of volunteer attorneys who take cases outside of their usual area of expertise. To Luke, his VIP cases are opportunities to continue to serve the clients he helps in his private practice. “At Bovarnick & Associates, I see the direct impact that small businesses have on their owners. These owners have spouses and children to support, and are severely impacted if their business closes. If their business closes, they are coming to VIP for help.”
“Luke exceeds expectations as a volunteer and has truly demonstrated a commitment to helping low income Philadelphians over the past two years,” says Roxane Crowley, VIP Staff Attorney. “He takes the time to get to know his clients and ensures they fully understand the details of their cases. Luke even attempted a last minute hospital visit because he knew it could help his client obtain a better outcome in her case.”
“There are a lot of pro bono organizations in Philadelphia,” says Luke, “but VIP really stands behind its name as the place to effectuate its mission in legal services.”
Luke is a dedicated volunteer who provides outstanding pro bono legal services to low-income families in Philadelphia. We applaud his commitment to helping VIP improve the lives of our clients and our community.

 

Brown auction gavelYou can’t afford to wait until a crisis emerges to start planning. Did you know a third of all businesses will be sued, at an average cost of over $100,000? Don’t risk everything you’ve worked so hard for: budget your legal costs now, with Legal Access.

The Legal Access program offered by Bovarnick and Associates gives business owners the opportunity to buy prepaid legal hours at a discounted price. Get the power of in-house legal counsel for a price start-ups and small business owners can afford.

Legal Access allows you to work your legal costs into your company’s budget, so you know the cost ahead of time. Select as many hours as you need. The more hours you buy, the greater the discount.  Rob Bovarnick and Associates are ready to take on whatever challenges you may face. In case something falls out of their realm of specialty, they refer you to carefully selected specialized lawyers. Even then, they oversee your interests and remain by your side, at no additional charge.

Rob Bovarnick knows what it’s like to run a business, and prefers lifelong customers to a quick payday. Legal Access does what’s best for you, even if means less money for them. And routine legal calls, which normally add up quickly, are free as part of Legal Access, and don’t count toward your hours.

With Legal Access, you get flexibility, fewer emergencies, legal costs worked into your company’s budget, and the security of constant legal preparedness, all for a lower price. Legal Access: Pay less now, or pay more later.

Interested in Legal Access? Contact us today to schedule a chat!

No matter the income, today’s practice of law carries a notoriety that is far from the noontime martinis and Bentley-driven glamour portrayed on television. For many attorneys, the typical day begins and ends with a text, tweet or email, staring at one screen or another, carrying the weight of their clients’ problems or fending off an opposing counsel whose style of advocacy oozes with toxicity. But for Miami attorney Brian L. Tannebaum, who built his practice 20 years ago from what he calls “an organic approach,” the practice of law has been not only successful, but fulfilling.

In contrast to his own experience, Tannebaum has become greatly disturbed by what is commonly stated as “necessary” for a happy, successful practice of law. So he wrote “Te Practice: Brutal Truths About Lawyers and Lawyering.” Tannebaum flew to Philadelphia recently to discuss the message of his book at a Young Lawyers Division program.

Tannebaum senses a misplaced reliance on technology and volume-based clientele as essential to the practice of law, “Technology and the desire to get more and more is causing us to just go crazy; we’re constantly trying to push this ball up the mountain,” explaining how many lawyers end up saying “This isn’t what I wanted to do. I didn’t go to law school to pay bills and die.”

“When I started 20 years ago, professionalism was different, we didn’t expect responses in 10 minutes; we didn’t send emails at 4:30 p.m. demanding discovery and at 9:30 a.m. email the lawyer saying ‘why haven’t I heard from you?’ Actually, we didn’t use email. Everything was faxed. Tere was no texting – it just didn’t exist.” While he is far from “anti-tech,” Tannebaum explained, “I haven’t updated my website in 10 years; perhaps it is really affecting my practice, but I can’t tell. I built my practice by meeting people.” Rather than focusing on the Internet, Tannebaum urges an “organic” approach to building one’s practice – relationships. “Few people talk about referral sources… getting out there and meeting people, thanking people who do things for you,” he said.

Acknowledging the variety of ways to build a profitable law practice, Tannebaum sees the “race for more clients” as a slippery slope. In his experience, Tannebaum saw that the “quality” of clients was paramount in his practice – not quantity. “Being successful in the practice of law [hasn’t been] getting cases, it’s declining them. Do you really want more and more clients? Maybe you want quality. Tis notion is not frequently discussed today.” Admittedly a luxury, Tannebaum maintains that the key is “knowing that you’re really in control of what the practice is all about; making money, being happy, remembering why you went into this to begin with. So many of us are on a treadmill, it’s time to stop and think about what the end game is here and whether we’re really happy doing what we’re doing.”

In conclusion, Tannebaum maintained that relationships are, and continue to be, the cornerstone of his success – not just with current or potential clients, but colleagues. “Don’t forget the opposing counsel you mess with today, may some day later be responsible for something having to do with you. And yes, he will absolutely remember.”

-Luke W. Sampson
(This article was originally published in Philadelphia Bar ReporterFebruary 2015)

Dr. Richard Alley asked the audience to think back to last January. “You may remember the polar vortex. It was cold here.” But at that time, the rest of the world was dealing with milder-than normal temperatures. “But we happened to be in a cold spot.” Skeptics pointed to those milder temperatures and repeated their claims that global warming was a hoax. “It’s physics,” Dr. Alley said of climate change. “There isn’t another side of that.”

Dr. Alley is the Evan Pugh Professor of Geo Sciences in Penn State’s College of Earth Mineral Sciences, focusing on glaciology, sea level change and abrupt climate change. He and Robert B. McKinstry Jr., practice leader of the Climate Change and Sustainability Initiative at Ballard Spahr LLP, were the speakers at a Nov. 6 Chancellor’s Forum on climate change.

In June, the Philadelphia Bar Association’s Board of Governors unanimously passed a resolution to increase awareness of global climate change as a critical issue, which called on local, state and federal government to take action.

Dr. Alley’s presentation focused on the causes, current trends and solutions of global climate change. He began by highlighting the staggering ironies underlying general awareness of global warming. For instance, the effect of greenhouse gases on the atmosphere was actually discovered more than a century ago. Although rooted in well-established laws of science, it remains a hotly debated issue among the people responsible for effectuating change. Examining this paradox, Dr. Alley pointed to general reactions to regressions in temperature. No matter the regressions, Dr. Alley said the temperature has steadily increased, glaciers continue to shrink at a rapid pace, the grain belt is drying and yielding fewer crops and sea levels are rising. Yet, the average driver in the U.S. still generates 40,000 pounds of carbon dioxide (CO2) emissions every year.

The solution? Dr. Alley believes that feasible technology designed to capture and produce external energy sources, i.e. wind farms that have the capacity to generate one third of the world’s energy; solar technology that requires small areas of land; or, if properly extracted, the use of natural gas to power energy turbines. Additionally, Dr. Alley explained that systems such as California’s cap-and-trade program can greatly incentivize emission reduction.

From a legal perspective, McKinstry discussed the relevance and implications of effectuating change. Following the U.S. Supreme Court case, Massachusetts v. EPA (where he was also co-counsel), McKinstry explained that the Environmental Protection Agency was required to regulate greenhouse gas emissions under the Clean Air Act of 2007, and establish guidelines for emissions reduction. In turn, each state is mandated to submit a plan adopting and implement these guidelines. To date, California and nine other states have submitted plans. California’s “cap and trade” model, McKinstry explained, establishes an annual greenhouse emissions cap on companies and in turn, generates revenue for clean energy technology through the purchase or trade of emissions allocations.

Concluding the forum, Dr. Alley and McKinstry agreed that these systems are not only feasible for reducing necessary emissions, but also generating economic benefit.

-Luke W. Sampson
(This article originally published in Philadelphia Bar ReporterDecember 2014)

There a number of truths in life from “the only certain things are death and taxes,” to “the sun rises in the East and sets in the West,” and, my personal favorite, “everyone hates being nickeled and dimed.” While I can’t address the metaphysics of death or why the Earth rotates clockwise, I can speak about the last one. Everyone hates the idea of being taken advantage of, particularly when the costs associated with dealing with a person cost more than a few nickels and dimes. This occurs in the law, just as it does everywhere else.

Here is the basic problem: Someone owes you money, say $5,000, which is not an insubstantial amount. If you hire a lawyer to collect it, the attorney’s fees will quickly eat up most, if not all, of the $5,000. I recently had a real-life example of this. A friend of mine is owed about $20,000 in past-due child support. Real money that she can certainly use. Her ex, ironically now married to a divorce lawyer, could pay it but simply refuses. My friend’s only option is to sue her ex to pay the past-due amount. However, since the ex has a “free” lawyer at his disposal, unless my friend hires an attorney, she will be at a disadvantage.

As you know, good lawyers can charge up to $400-$500 per hour. Let’s assume it take 8 hours from the time my friend has her first meeting with a lawyer until a motion is filed. At $500 an hour, that’s already $4,000. Let’s also assume from that moment, until the court hearing, the attorney logs 2 more hours. Another $1,000. Since court always takes time, let’s wager the time spent between gavels is another 6 hours, adding $3,000. We are now up to 16 hours and $8,000. What will my friend have for her money? Most likely, an Order stating she can get the $20,000 of child support. She will now need to spend even more money to actually get what’s owed to her.

See the point? Despite spending money out-of-pocket for a lawyer, my friend still has no assurance of actually getting back the money she deserves. Is there any hope? This is where an attorney’s fee provision comes in. If the underlying agreement with her ex states that, if she has to chase him, he will have to pay not only what he owes in child support, but all of the money she spent on litigation. Of course, she is still out money on the front-end, but now she can hope to recover her costs, assuming her ex pays both the $20,000 and the additional $8,000 in fees.

Having an attorney’s fee provision is one of two ways to recover lawyer fees. The other is if there is a statute permitting it. While one would think that, in the world of divorce court, there would be such a statute. However, it is not that simple. In Pennsylvania, there is such a statute, but it does not make payment of fees mandatory. Rather it provides that, “the court MAY assess… reasonable attorney fees… .” I have two issues with this. First, the word “may” which means that it is at the discretion of the court. Second is the word “reasonable.” While there is always a presumption that the award of fees must be reasonable, the word is open to interpretation. In my example, there may be no doubt my friend’s attorney put in 16 hours. However, the court may conclude that fees which are equal to 40% of the amount of the past-due child support is too much and reduce it to $4,000. My friend will still have to pay the $8,000, but is now out $4,000.

This is why a provision in your agreements providing for the award of attorney’s fees is just as much for your benefit as for your lawyer. By doing this, we may be able to add another phrase to life’s truths— “My lawyer is my friend.” Okay, that might be asking too much.

One of the things it seems we all get in the mail from time to time is a notice of the settlement of a class action case that somehow we are a part of.  If we send in some information we can participate in the settlement.  Otherwise, we can’t.

At the beginning of the year I received a letter advising that the Emergen-C class action lawsuit was settled and I am a potential class member.  I have been a user of Emegen-C for many years.  I have no idea if it works, but I like watching the pellets dissolve in water (reminds me of when my father would take Alka Seltzer).  While not quite as exciting as winning the lottery, I had thoughts or getting free Emergen-C for life.

The first thing I needed to do was to determine whether I was actually a member of the class.  The Settlement Class includes all people who purchased Emergen-C between June 1, 2006 and February 27, 2012.  There was no doubt that I fit in that category.

The amount of the settlement?  $6,450,000.  Nice.  That will sure provide me with a huge supply of Emergen-C.  I am all set.

Now, let’s look at the fine print.  According to the settlement, the fund is to be used to pay, in order: (1) all costs and payments associated with the notice and administration of the settlement, including all payments to the Settlement Administrator; (2) any necessary taxes and tax expenses; (3) any Fee and Expense Award made by the Court to Class Counsel; (4) any class representative service award made by the Court to Plaintiffs; and (5) payments to eligible Claimants and any others as approved by the Court.

Let’s go through this one item at a time.  First to get paid are the hard costs in sending out in the notice of the settlement and the costs associated with administering the settlement.  I guess that is okay.  Second to get paid are taxes.  Can’t argue with that.  Third to get paid are attorney’s fees.  Fourth to get paid is something for the class representative.  I am okay with that.  But, let’s wait a minute.  We have now gone through four categories of payments.  Notice anyone who has not yet been included?  Right, the people who are actually supposed to benefit from this great lawsuit.  Anyone?  Anyone?  Bueller?  Oh, here we go, fifth and last are the actual claimants.

Well, I guess that is okay.  After all, while I am one of the aggrieved parties, one of the people the attorneys were supposed to protect, I am sure the settlement will take care of me.  So, what will I be “taking to the bank”?  Let’s take a look at what I will actually get:

If you have Proof of Purchase (valid receipt or box packaging), you can claim the full purchase price you paid for the Products during the Settlement Class Period. If you have a receipt you may seek reimbursement of the purchase price stated on the receipt. If you have box packaging you may seek reimbursement ranging from $4.36 to $12.97, depending on the Product(s) purchased. Claimants with Proof of Purchase may seek reimbursement up to a maximum recovery of $36.

If you do not have Proof of Purchase, you may file a claim for 75% of the average price, per box package of the particular Product(s) you purchased during the Settlement Class Period, up to a maximum recovery of $18. Those average prices range from $4.36 to $12.97, depending on Product purchased.

The actual amount paid to individual Claimants will depend upon the number of valid Claims made and may be reduced pro rata if the total value of all valid Claims is greater than the money available in the Settlement Fund.

In case you did not read all 3 of the paragraphs, let me give you the sound bite: you can get up to $36, but only if you have the Proof of Purchase for the product.  If you don’t have the Proof of Purchase, you will get between $4.36 and $12.97

I don’t know about you, but I have not kept my “Proof of Purchase” of all of my Emergen-C purchases since 2006.  Perhaps I am the only one, but I don’t keep empty boxes for 8 years (full disclosure—I throw them out as soon as I open them).

Are you wondering about how much the attorneys will make?  I looked at the actual settlement agreement.  According to the agreement, the attorney’s have agreed to limit their fees to no more than 30% of the Settlement Fund.  It certainly made me feel better, knowing that while I would get enough money to buy a couple of Mocha Frappacinos at Starbucks, the attorneys had agreed to limit their fees to $1,935,000.  As long as it was less than $2,000,000, it seems fair.

While there may be value to certain class action lawsuits, it certainly seems that the real winners are the lawyers.

Many lawyers tend to think of ‘corporate separateness’ as a line dividing the business owner and the business itself. In this context, creditors of the business may reach assets of the business, but not the owner. However, owners may have creditors too. In this context, personal creditors of the owners may attempt to reach the monetary equivalent of their interest in their business. In the case of an LLC, the creditor will seek an order from the court, charging the business owner’s membership interest in the LLC with payment of the creditor’s judgment; this is known as a “Charging Order”. While most statutes generally define a membership interest to include both economic and governance rights, this does not mean that a transferred interest will include such rights. In Pennsylvania, the statute which limits the transferred interest to include only economic rights without the unanimous consent of the other members, was intended to restrict creditors from collecting more than they were entitled to, and also prevent business owners from being forced to accept unwanted partners. However, the statute says nothing in the context of single member LLC’s. If unanimous consent is required from the other members, and there are none, does this give the transferee both economic and governance rights? There is no case law on the matter in Pennsylvania. However, in 2010 the Florida Supreme Court rendered a landmark decision, Olmstead v. FTC. The Olmstead case drew nationwide attention and has become a call to legislators across the country to re-examine their related statutes.

In Olmstead, the Florida Supreme Court held that a judgment creditor who obtained a charging order on the membership interest of the debtor in a single-member LLC obtained both economic rights (rights to distribution) and management rights (self explanatory) on the debtor’s membership interest. As a result, since the decision came out in 2010, business lawyers have scoured the statutes of their respective states. Not surprisingly, the relevant statutes in many states reveal gross inconsistencies and lack of clarity. Despite the nationwide frenzy, nearly two years have passed since Olmstead and there appears to be little discussion on this issue in Pennsylvania. For a state that borders the Delaware ‘corporate mecca’, it is crucial that the Pennsylvania legal community (and perhaps legislature) re-examine potential issues in light of Olmstead. In a Pennsylvania case involving a multi-member LLC, the court interpreted 15 Pa.C.S.A. §8924 to prohibit the right of a transferee to participate in the management of the business absent the consent of all members. Frank R. Zokaites v. Pittsburgh Irish Pubs , LLC. Like the statute, the case was silent on what rights are transferred in the context of a single-member LLC. However, the court provided some value in its discussion of the purpose behind the restriction, which in turn, implies that the same may not apply to single member LLC’s:

Pennsylvania Limited Liability Company Law prohibits transferring or assigning a member’s interest without the unanimous approval of other members of the company. When such approval is not forthcoming, a judgment creditor is still entitled to the debtormember’s economic rights (which are transferable) to satisfy the member’s indebtedness…….When Appellant attempts to expand his recoupment efforts from one of just securing economic rights to also obtaining governance rights, we find this approach proscribed when viewed against the backdrop of Pennsylvania’s Limited Liability Company Law…

It is important to note that Zokaites was decided in 2008, two years before Olmstead. Since the Olmstead decision, there appears to be no case law or statutory guidance in Pennsylvania on the application of §8924 to singlemember LLC’s. In addition to the inconsistencies surrounding Section 8924, many business lawyers in Pennsylvania are admittedly unclear on the function, use and scope of a Charging Order, let alone its equivalent function within the context of a Partnership or Corporation. As implied in Zokaites, the answer to these questions depends on the entity classification. However, the accuracy of these answers depends on clear and consistent statutes and more case law. Because these issues can have a serious impact on both clients and attorneys, there should be an increased awareness of these issues in the Pennsylvania legal community. Even more, perhaps there should be a call to the legislature for a statutory amendment.

Given the court’s reasoning in Zokaites, the Pennsylvania legislature may wish to amend §8924, such that it reflects the fact that a creditor should therefore be able to obtain economic and governance rights in a transferred interest, given that there are no other members to unanimously approve the transfer.

-Luke W. Sampson
(This article originally published in The Philadelphia Law Insider; April 2012)