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Category Archives: Miscellaneous

How to Plan Effectively for a Business Divorce

Author By Todd McMurtryPosted on

A “business divorce” refers to the change in ownership or dissolution of a closely held business, which can be as complex and contentious as a marital divorce. This term encompasses a range of scenarios, from one partner buying out another to the complete unwinding of a company’s operations. 

Before undertaking such a drastic action, owners must consider several critical factors to ensure the business divorce process is handled with minimal disruption to the company and its assets. Here is an overview:

  • Take stock of the reasons and goals — The reasons could range from personal conflicts between owners to divergent visions for the company’s future. It’s also important for all parties to articulate their goals for the divorce, whether it’s a desire for independent operation, financial settlement or strategic realignment of the business.
  • Assess legal and financial implications — Owners should review any existing partnership agreements, bylaws or shareholder agreements that dictate the process for resolving disputes and exiting the business. These documents often outline buy-sell agreements, valuation processes and other critical procedures. Absent such agreements, state laws will govern the dissolution process, which might not align with the owners’ personal or business interests.
  • Undertake a valuation of the business — Determining the value of the business is a contentious aspect of many business divorces. Accurate valuation is essential for fair asset distribution. Owners should consider hiring independent appraisers to provide a valuation that all parties can agree on. This avoids further disputes and assure partners they are receiving their rightful share.
  • Measure the impact on stakeholders — A business divorce can affect a wide range of stakeholders, including employees, customers, suppliers and creditors. Owners should consider how the divorce will impact these groups and plan accordingly. Maintaining transparency with stakeholders during the divorce can mitigate negative impacts and maintain business continuity.
  • Consider negotiation and conflict resolution — Ideally, a business divorce should be resolved through negotiation rather than litigation. This can save time, reduce costs and preserve relationships to the extent possible. However, it requires compromise and understanding from all parties involved. Where negotiation fails, mediation or arbitration might be viable alternatives, offering a non-adversarial approach to settlement of key issues.

Given the complexities involved, it is advisable for each party to seek counsel from a business divorce attorney who can offer comprehensive services, making sure that valuations are done fairly, that all assets and liabilities are accounted for and that all governmental rules are complied with.

About Finney Law Firm, LLC

Founded in 2014, FLF has grown to 15 attorneys located in offices in Eastgate and downtown Cincinnati with five major practice areas: Corporate Law, Real Estate Law, Employment Law, Commercial Litigation and Public Interest and Constitutional Litigation.  FLF has the unique claim to three 9-0 victories at the United States Supreme Court for its public interest practice along with breakthrough class action work.

FLF also has an affiliated title insurance company, Ivy Pointe Title, LLC, that closes and insures nearly a thousand commercial and residential real estate transactions annually.

For more information about Finney Law Firm, visit finneylawfirm.com.

Media Contact: Mickey McClanahan; [email protected]; 513.797.2850.

 

Can You Bring a Legal Malpractice Suit Even if Your Case Settled?

Author By Todd McMurtryPosted on

Legal malpractice is generally defined as failing to adhere to the professional duty of care that an attorney owes to clients. Usually, a malpractice claim is lodged after the client received a disappointing result in an underlying court case. But does the client have the right to sue if the case below settled?

The short answer is yes. You can sue for malpractice even if your underlying case never saw the inside of a courtroom. However, proving malpractice in a settlement scenario presents unique challenges. Courts generally presume that settlements are entered into voluntarily, which can make it difficult to argue that the settlement was the result of attorney negligence or misconduct.

The attorney’s duty of care requires him or her to act with the diligence and promptness expected of an attorney of similar ability and training under the circumstances. This includes adequately preparing for and researching the case, effectively communicating with the client and acting in the client’s best interest at all times. When the attorney fails to adhere to this duty in any respect, it could lead to an unfair or inadequate settlement

Here are specific types of conduct that can justify a legal malpractice claim:

  • Misrepresentation or fraud — If an attorney misleads a client about the strength of their case or pressures them into settling under false pretenses, this could constitute malpractice. For example, if an attorney assures the client that their case is weak when it is not, to coerce them into accepting a low settlement offer.
  • Failure to investigate or prepare — An attorney’s failure to properly research or prepare a case can leave the client in a weaker bargaining position and lead to a less favorable settlement. This might include failing to gather key evidence or neglecting to consult with necessary experts.
  • Conflict of interest — If an attorney has a personal or financial interest that conflicts with the client’s interest, such as a desire to settle quickly to move on to other cases or personal relationships with the opposing party, this could compromise the attorney’s ability to advocate effectively for the client.
  • Failure to communicate — Attorneys must keep their clients informed about significant developments in their case, including settlement offers. Failure to communicate such offers, or to adequately explain the implications of accepting or rejecting them, can be grounds for a malpractice claim.
  • Failure to negotiate effectively — If an attorney accepts an unreasonably low settlement without attempting to negotiate more favorable terms, this might also be seen as a breach of their duty of care.

To succeed in a legal malpractice lawsuit based on a settlement, the client must prove that but for the attorney’s negligence, a better settlement or verdict would have been likely. This often requires expert testimony from other legal professionals who can attest to the average recoveries for similar cases in the same geographic area. Since settlements are typically confidential, comparing the settlement to verdict sizes in similar cases can be a useful way to gauge whether the attorney made a substandard effort. A professional malpractice attorney can build the strongest case possible in this regard.

About Finney Law Firm, LLC

Founded in 2014, FLF has grown to 15 attorneys located in offices in Eastgate and downtown Cincinnati with five major practice areas: Corporate Law, Real Estate Law, Employment Law, Commercial Litigation and Public Interest and Constitutional Litigation.  FLF has the unique claim to three 9-0 victories at the United States Supreme Court for its public interest practice along with breakthrough class action work.

FLF also has an affiliated title insurance company, Ivy Pointe Title, LLC, that closes and insures nearly a thousand commercial and residential real estate transactions annually.

For more information about Finney Law Firm, visit finneylawfirm.com.

Media Contact: Mickey McClanahan; [email protected]; 513.797.2850.

 

The Most Frequent Causes of Business Litigation

Author By Todd McMurtryPosted on

As a business owner or operator, protecting your company’s interests requires understanding how to avoid and cope with problems that can end up in litigation. Disputes related to business operations, transactions, and partnerships can escalate quickly if not addressed proactively. 

Here is a summary of some of the most common causes of commercial litigation:

  • Breach of contract — When a party fails to meet their contractual commitments, such as by non-delivery of goods, late payments or substandard performance, it can disrupt your business immediately and in a longer term. Litigation may be needed to redress the issue. Business owner can mitigate these risks by ensuring that contracts are clear, detailed and enforceable.
  • Intellectual property infringement — Your intellectual property (IP) is one of your business’s most valuable assets. Protecting your IP through proper registration and vigilant monitoring can safeguard your competitive edge in the market. However, litigation may be needed if you believe another entity has infringed upon your patents, trademarks, copyrights or trade secrets. 
  • Negligence and business torts — Negligence and other tort claims may arise when another party’s careless actions cause harm to your business or its assets. These can include defamation, interference with contractual relationships or failure to exercise reasonable care in shipping. Such cases often require comprehensive evidence to establish fault and quantify damages.
  • Trade issues and disputes — Operating in a global marketplace exposes your business to complex trade disputes, including conflicts over international trade agreements, import/export regulations, and compliance with trade laws. Navigating these issues requires a deep understanding of both domestic and international legal frameworks.
  • Misrepresentation and fraud — If you’ve been misled by false information or intentional deception in a business transaction, you may have grounds for a fraud claim. Misrepresentation can have severe financial repercussions, and addressing it swiftly is critical. Proving fraud involves demonstrating intent, false representation, reliance, and damages.
  • Partnership and joint venture disagreements — Business partnerships and joint ventures can be lucrative but also fraught with potential conflicts over management decisions, profit-sharing, and fiduciary responsibilities. Disputes can escalate if there are ambiguities in your partnership agreements or if parties breach their fiduciary duties. Regularly reviewing these agreements can help prevent misunderstandings.
  • Non-disclosure agreement (NDA) disputes — NDAs protect your sensitive business information. If a party breaches an NDA by improperly disclosing confidential information, it can jeopardize your competitive position. Ensuring that NDAs are comprehensive and enforceable is key to protecting your business secrets.

Since any of these outbreaks disrupting your business, it is vital to consult with a skilled business litigation attorney immediately when a dispute arises. Early intervention allows for a thorough assessment of your case, the preparation of a strong defense and the exploration of alternative dispute resolution strategies, such as mediation or arbitration, which can save your business time and resources.

About Finney Law Firm, LLC

Founded in 2014, FLF has grown to 15 attorneys located in offices in Eastgate and downtown Cincinnati with five major practice areas: Corporate Law, Real Estate Law, Employment Law, Commercial Litigation and Public Interest and Constitutional Litigation.  FLF has the unique claim to three 9-0 victories at the United States Supreme Court for its public interest practice along with breakthrough class action work.

FLF also has an affiliated title insurance company, Ivy Pointe Title, LLC, that closes and insures nearly a thousand commercial and residential real estate transactions annually.

For more information about Finney Law Firm, visit finneylawfirm.com.

Media Contact: Mickey McClanahan; [email protected]; 513.797.2850.

 

Do’s and Don’ts of Business Divorce Negotiations

Author By Todd McMurtryPosted on

In a business divorce, where owners of an enterprise part ways, structuring negotiations effectively can help prevent prolonged disputes, preserve relationships and ensure a fair division of assets and responsibilities. 

Here are some do’s and don’ts of conducting business divorce negotiations, along with insights on when mediation may be beneficial.

Do’s:

  • Prioritize respectful communication — Discuss reasons for the split between owners in a dispassionate, professional manner. Respectful communication fosters trust and can prevent misunderstandings that might escalate the conflict.
  • Establish Shared Goals — Identifying the parties’ intentions can serve as a foundation for the negotiation. Whether it’s the continued success of the business or fair compensation to a departing owner, keep the focus on constructive outcomes rather than on personal grievances.
  • Prepare a comprehensive agenda — Your agenda should cover and prioritize all relevant issues, including treatment of financial assets, intellectual property, customer lists, ongoing projects, liabilities and personnel. This helps guide the discussions and allows parties to gauge progress.
  • Involve legal and financial experts — Professionals can clarify complex issues, help prevent costly mistakes and provide unbiased perspectives that aid in reaching fair settlements.
  • Be open to compromise — Flexibility in negotiations can bring about a less acrimonious outcome, which is important if the parties must maintain any future business relationships.

Don’ts: 

  • Don’t let emotions speak for you — Remain calm and focused on the business aspects. Outbursts or even passive aggressiveness can throw the negotiations off course.
  • Don’t rush the process — While efficiency is important, rushing through negotiations often leads to missed details or unresolved issues. Take the necessary time to address every point thoroughly to avoid future conflicts or financial repercussions.
  • Steer clear of public disputes — Dragging the split into the public sphere can only hurt the business’s image and reputation. Try to project a message that all is well with the company.
  • Avoid taking intractable positions — Approaching negotiations with a combative mindset can derail progress. Refrain from issuing ultimatums or threats, which tend to create hostility and resistance.

If business divorce negotiations become contentious or reach an impasse, mediation provides a cooperative environment to work out solutions. The mediator, a neutral third party, can guide discussions, defuse emotions and divide the dispute into smaller elements, which can help move past gridlocks. Mediation is especially beneficial when there’s a power imbalance or if one party is less experienced in business negotiations. A mediator can level the playing field and ensure that both parties feel heard and respected. 

About Finney Law Firm, LLC

Founded in 2014, FLF has grown to 15 attorneys located in offices in Eastgate and downtown Cincinnati with five major practice areas: Corporate Law, Real Estate Law, Employment Law, Commercial Litigation and Public Interest and Constitutional Litigation.  FLF has the unique claim to three 9-0 victories at the United States Supreme Court for its public interest practice along with breakthrough class action work.

FLF also has an affiliated title insurance company, Ivy Pointe Title, LLC, that closes and insures nearly a thousand commercial and residential real estate transactions annually.

For more information about Finney Law Firm, visit finneylawfirm.com.

Media Contact: Mickey McClanahan; [email protected]; 513.797.2850.

 

How Business Defamation Differs From Personal Defamation

Author By Todd McMurtryPosted on

Defamation is a false statement presented as fact that injures the reputation of the person or entity about whom it is made. In a lawsuit alleging defamation of a business, the damages that need to be proved must be related to the business’s economic losses. These can consist of harmed relationships with customers, suppliers, and investors, ultimately affecting sales, profits, and overall market position. Unlike in personal defamation actions, business defamation damages are usually not presumed.

The following are types of damages that a business can prove in a defamation lawsuit:

  • Actual damages — A business can demonstrate that the defamatory statements have caused direct financial harm, such as loss of sales, customers or contracts; reduced profits; or expenses incurred in counteracting the defamatory statements. Actual damages are often the primary form of relief sought, as they represent the concrete impact on the business’s bottom line.
  • Reputational harm — In proving reputational harm, the business must show that the defamatory statement resulted in a loss of goodwill, that is, the trust and loyalty among customers that the company has built over time. This may be difficult to quantify precisely but can be inferred from other evidence, such as customer testimonials, expert testimony, or financial performance indicators.
  • Loss of business relationships — Defamation can cause a company to lose valuable relationships with suppliers, distributors or other business partners. If the defamatory statement falsely suggests that the business is unreliable or unethical, it could result in a diminution of trust and credit, which could harm the company’s operations and bottom line.
  • Punitive damages — These damages might be awarded if the business can prove that the defamation was committed with actual malice, that is, with knowledge of the falsity of the statement or with reckless disregard for the truth. Punitive damages are awarded not to compensate for harm but to punish the wrongdoer and deter similar conduct in the future.

The primary difference between defamation of a business and defamation of an individual lies in the relative availability of presumed damages. For certain types of defamation of an individual, damages for reputational harm need not be proved, such as when the defamatory statements are classified as libel per se or slander per se. Examples are false statements alleging someone committed a crime, has an infectious or contagious disease, has been engaged in sexual promiscuity or is unfitness to perform their profession. The reason for presumed damages is that an individual’s personal reputation is usually of unique importance and that defamation has a direct, immediate social impact. 

For a business, however, presumed damages are generally not awarded unless the plaintiff can show actual malice or demonstrate that the defamation was of a nature that inherently caused harm to the business’s commercial reputation. An example is where the false statements impugned the plaintiff’s trademark or brand to the point that it is irreparably weakened. Although the harm is speculative, it may warrant damages if it is reasonably quantifiable and traceable to the alleged defamation. 

About Finney Law Firm, LLC

Founded in 2014, FLF has grown to 15 attorneys located in offices in Eastgate and downtown Cincinnati with five major practice areas: Corporate Law, Real Estate Law, Employment Law, Commercial Litigation and Public Interest and Constitutional Litigation.  FLF has the unique claim to three 9-0 victories at the United States Supreme Court for its public interest practice along with breakthrough class action work.

FLF also has an affiliated title insurance company, Ivy Pointe Title, LLC, that closes and insures nearly a thousand commercial and residential real estate transactions annually.

For more information about Finney Law Firm, visit finneylawfirm.com.

Media Contact: Mickey McClanahan; [email protected]; 513.797.2850.

 

Proving “the Case Within the Case” in a Legal Malpractice Action

Author By Todd McMurtryPosted on

A person or company alleging legal malpractice bears a unique burden often referred to as proving “the case within the case.” Essentially, the plaintiff must show two layers of causation: first, that the defendant attorney’s conduct fell below the standard of care, and second, that if the attorney had handled the underlying case competently, the outcome would have been more favorable. The malpractice trial must simulate or recreate the original case so that the factfinder — usually a jury — can determine the probable result if the attorney had acted appropriately.

To meet the burden of proof in a legal malpractice case, the plaintiff must present evidence that not only establishes what the attorney did wrong but also enables a jury to assess what the result would likely have been if the lawyer had handled it correctly. In a negligence case, this would involve presenting testimony and other evidence that would have been on record in the underlying trial. If it was a criminal case in which the plaintiff was convicted and/or received a heavy sentence, it would have to be shown that the outcome would have likely been an acquittal or a lesser sentence if the attorney had been more diligent.

In structuring the case within the case, a judge must apply the same procedural and evidentiary rules and jury instructions as in the original trial. The judge must make sure that the jury’s focus is on the evidence rather than on conjecture. This sometimes involves the judge giving specific instructions to clarify that the jury is not reconsidering the underlying case itself but instead determining what the outcome should have been.

The case within the case becomes more complex when the underlying case ended in a settlement rather than a trial. The plaintiff still must prove that a more favorable outcome could have been achieved. However, settlements involve numerous factors, including the strengths and weaknesses of the case, the risks of litigation and the plaintiff’s own preference for certainty over potential future gains. In these instances, the jury does not evaluate what a judge or jury would have decided in the original case but instead assesses whether the plaintiff could have obtained a better settlement if the attorney had handled the matter more competently.

If the matter was settled, the court may rely more on expert testimony to help the jury understand how settlements are evaluated, particularly if they involve specialized fields like corporate law, intellectual property or personal injury. Experts can provide insight into typical settlement values and how specific errors by the attorney — such as failing to pursue certain claims or neglecting evidence that would have strengthened the plaintiff’s position — may have impacted the settlement. Additionally, the judge may instruct the jury to consider how the attorney’s actions influenced the plaintiff’s decision to settle, such as if the attorney failed to fully advise the client of the risks or potential outcomes of going to trial.

A person bringing such a lawsuit should entrust the matter to a professional malpractice attorney who understands the underlying case and can vividly show how the defendant’s conduct fell short of the applicable standards of care.

About Finney Law Firm, LLC

Founded in 2014, FLF has grown to 15 attorneys located in offices in Eastgate and downtown Cincinnati with five major practice areas: Corporate Law, Real Estate Law, Employment Law, Commercial Litigation and Public Interest and Constitutional Litigation.  FLF has the unique claim to three 9-0 victories at the United States Supreme Court for its public interest practice along with breakthrough class action work.

FLF also has an affiliated title insurance company, Ivy Pointe Title, LLC, that closes and insures nearly a thousand commercial and residential real estate transactions annually.

For more information about Finney Law Firm, visit finneylawfirm.com.

Media Contact: Mickey McClanahan; [email protected]; 513.797.2850.

A Guide to Effective Preparation for Commercial Litigation

Author By Todd McMurtryPosted on

Even the most well-run companies can become involved in disputes that end up in court. These disputes can arise in a variety of situations and can impact a business’s operations, finances, and reputation. Examples of common commercial disputes include breaches of contract, intellectual property disputes, employment issues and regulatory compliance matters. 

Whether your company finds itself as a plaintiff or defendant, careful and thorough preparation is crucial to the outcome. To prepare for impending commercial litigation, the following are among the essential steps to follow:

  • Assess the situation — Understanding the nature of the dispute is vital. Determine the facts and legal issues involved, identify the parties and assess the potential risks and impacts on the business. This initial assessment will help in formulating a response and determining whether to pursue litigation, seek a settlement or explore alternative dispute resolution methods.
  • Gather and preserve evidence — Companies should assemble and organize all relevant documents, emails, contracts and other records related to the dispute. It is equally important to preserve this evidence to prevent loss or destruction, which could lead to adverse inferences in court. Implementing a legal hold on relevant data can be an effective way to ensure preservation.
  • Review insurance policies and notify carriers — Review any relevant insurance policies to determine if they provide coverage for the dispute. This could include comprehensive general liability (CGL) insurance, directors and officers (D&O) insurance, or errors and omissions (E&O) insurance. Understanding coverage options can help in planning for legal costs and potential liabilities. It is also important to notify your insurance carriers that coverage claims may ensue. 
  • Consult with legal counsel — Engaging a skilled business litigation attorney early in the process is essential. An attorney can provide guidance on the legal issues, help develop a strategy and represent the company’s interests. Legal counsel can also assist in navigating complex legal procedures and negotiating with the opposing party.
  • Develop a litigation strategy — Based on the initial assessment and consultation with legal counsel, develop a comprehensive litigation strategy outlining the desired outcomes, key arguments and mitigation of potential risks. 
  • Identify and interview witnesses — Identify witnesses who can provide testimony or evidence in support of the company’s position. Interview these witnesses to understand their perspectives and gather detailed information. Witness testimony can significantly impact the outcome of the case.
  • Manage public relations — Litigation can attract public attention and affect a company’s reputation. Develop a public relations strategy to manage communication with the media, stakeholders and the public. Clear and consistent messaging can help protect the company’s image and prevent misunderstandings.
  • Evaluate settlement options — Not all disputes need to be resolved in court. Evaluate settlement options throughout the litigation process. Settlement can be a cost-effective and time-saving alternative to a lengthy trial. 

About Finney Law Firm, LLC

Founded in 2014, FLF has grown to 15 attorneys located in offices in Eastgate and downtown Cincinnati with five major practice areas: Corporate Law, Real Estate Law, Employment Law, Commercial Litigation and Public Interest and Constitutional Litigation.  FLF has the unique claim to three 9-0 victories at the United States Supreme Court for its public interest practice along with breakthrough class action work.

FLF also has an affiliated title insurance company, Ivy Pointe Title, LLC, that closes and insures nearly a thousand commercial and residential real estate transactions annually.

For more information about Finney Law Firm, visit finneylawfirm.com.

Media Contact: Mickey McClanahan; [email protected]; 513.797.2850.

Compliance With HIPAA Rules for Employee Data Security

Author By Todd McMurtryPosted on

The Health Insurance Portability and Accountability Act (HIPAA) imposes strict requirements on
employers, particularly those classified as covered entities or business associates, to protect the privacy
and security of employees’ protected health information (PHI). HIPAA mandates that these entities
implement safeguards to ensure the confidentiality, integrity, and availability of PHI, including physical,
administrative and technical measures.


Common HIPAA violations in the workplace include the following:


  1.  Unauthorized access and disclosure — Allowing unauthorized individuals to view or receive PHI,
    such as sharing health information without patient consent or displaying it publicly.
    2. Lack of safeguards — Failing to secure electronic PHI (ePHI) through encryption, proper access
    controls, or secure transmission methods.
    3. Insufficient training — Not providing adequate training for employees on HIPAA compliance,
    leading to mishandling of PHI.
    4. Inadequate data disposal — Improper disposal of records containing PHI, such as not shredding
    documents or securely erasing electronic files.
    5. Social media misuse — Sharing PHI on social media platforms without consent.


Penalties for HIPAA violations depend on the level of negligence and can range from financial fines to
criminal charges. The Department of Health and Human Services’ Office for Civil Rights (OCR) categorizes
violations into four tiers, with penalties escalating based on the level of culpability:


  1.  Tier 1 — Violations where the entity was unaware and could not have reasonably avoided the
    violation, with fines ranging from $137 to $68,928 per violation.
    2. Tier 2 — Violations due to reasonable cause, but not willful neglect, with fines from $1,379 to
    $68,928 per violation.
    3. Tier 3 — Willful neglect violations corrected within 30 days, with fines starting at $13,785.
    4. Tier 4 — Willful neglect violations not corrected within 30 days, with penalties up to $2,067,813
    annually.


An employment law attorney experienced with HIPAA compliance can advise companies on how to
avoid significant penalties by taking positive actions, such as the following:


  1.  Implement comprehensive training programs — Regular training for all employees on HIPAA
    regulations and the proper handling of PHI.
    2. Establish robust security measures — Use encryption, access controls and secure
    communication channels to protect ePHI.
    3. Develop clear policies and procedures — Establish clear protocols for accessing, using and
    disclosing PHI, and ensure all employees understand these policies.
    4. Regular audits and risk assessments — Conduct regular audits and assessments to identify and
    address potential vulnerabilities in PHI protection.


In the event of a breach, companies must act swiftly by notifying affected individuals and the OCR,
conducting a thorough investigation and implementing corrective actions to prevent future incidents.


About Finney Law Firm, LLC

Founded in 2014, FLF has grown to 15 attorneys located in offices in Eastgate and downtown Cincinnati with five major practice areas: Corporate Law, Real Estate Law, Employment Law, Commercial Litigation and Public Interest and Constitutional Litigation.  FLF has the unique claim to three 9-0 victories at the United States Supreme Court for its public interest practice along with breakthrough class action work.

FLF also has an affiliated title insurance company, Ivy Pointe Title, LLC, that closes and insures nearly a thousand commercial and residential real estate transactions annually.

For more information about Finney Law Firm, visit finneylawfirm.com.

Media Contact: Mickey McClanahan; [email protected]; 513.797.2850.

 

How Businesses Can Deal With the FTC Ban on Noncompetes

Author By Todd McMurtryPosted on

A recent action by the Federal Trade Commission (FTC) purports to make illegal any contract whereby an
employee agrees not to enter into competition with the employer during or after the employment
period. Noncompete agreements typically restrict the employee from joining a competing firm, starting
a competing business or sharing proprietary information within a certain geographic area and for a
specified time period.


The FTC rule announced in April 2024 bans most noncompete agreements in employment contracts
across the United States. This rule aims to eliminate barriers to worker mobility, enhance competition,
and promote innovation by preventing employers from limiting employees’ future employment
opportunities. The regulation not only applies to future noncompete agreements but also requires the
rescission of most existing ones, compelling employers to notify workers that their noncompetes are no
longer in effect.


Before this rule, noncompete agreements were subject to state laws, which varied significantly. In
Kentucky, for instance, noncompetes were enforceable if they were reasonable in scope, duration and
geographic area. Courts would typically uphold these agreements if they were necessary to protect
legitimate business interests, such as trade secrets or goodwill. Ohio had similar requirements,
emphasizing that noncompetes must be no broader than necessary to protect the employer’s legitimate
interests, must not impose undue hardship on the employee and must not be injurious to the public.


With the FTC’s new rule, the enforceability of noncompete agreements will undergo a fundamental
shift. While the rule broadly prohibits noncompetes, it does allow for some exceptions, particularly in
the sale of a business where the restriction may be necessary to protect the value of the sold business.
However, these exceptions are narrowly defined, and the general presumption under the new rule is
against the enforceability of noncompetes. Employers in Kentucky, Ohio and other states will need to
reassess their employment agreements to ensure compliance with federal law.


In the new regulatory landscape, businesses are encouraged to explore alternative means of protecting
their interests, such as nondisclosure agreements (NDAs) and non-solicitation agreements, which are
not covered by the FTC’s ban and can still be used to prevent the misuse of confidential information and
the poaching of clients or employees. A business contracts attorney experienced with restrictive
covenants can advise you about provisions suitable for your company’s needs.


About Finney Law Firm, LLC

Founded in 2014, FLF has grown to 15 attorneys located in offices in Eastgate and downtown Cincinnati with five major practice areas: Corporate Law, Real Estate Law, Employment Law, Commercial Litigation and Public Interest and Constitutional Litigation.  FLF has the unique claim to three 9-0 victories at the United States Supreme Court for its public interest practice along with breakthrough class action work.

FLF also has an affiliated title insurance company, Ivy Pointe Title, LLC, that closes and insures nearly a thousand commercial and residential real estate transactions annually.

For more information about Finney Law Firm, visit finneylawfirm.com.

Media Contact: Mickey McClanahan; [email protected]; 513.797.2850.

 

What do all of these contingencies mean? Strategies for buying a home in a competitive market without abandoning all reason

Author By Casey A. JonesPosted on

With interest rates dropping, the housing market is becoming even more saturated with buyers. Practically speaking, that means that buying a home has, once again, become super competitive and provisions that were once a “given” in Contracts to Purchase are now being eliminated in favor of making the offer more appealing to sellers, including the removal of financing, appraisal, and inspection contingencies.

But what is not always understood is what happens if these contingencies are removed and things go south.

I have had at least three clients or potential clients call me in the past month with varying levels of “buyers’ remorse.” Either they had simply changed their minds, or they had agreed to waive the inspection contingency altogether, or they had agreed to pay significantly more than the property’s appraised value – and, now, they wanted to walk away. Each of these clients were under the understandable, but mistaken belief that they could simply forfeit their earnest money and everyone would go their separate ways. Unfortunately, it is not so simple.

Financing Contingency

This contingency allows you to justifiably terminate a Contract if you are unable to obtain financing. If you are getting a loan/outside financing (versus paying cash for the property), you NEED to keep this contingency. This protects you in the event you lose your job, or experience a significant change in your income or financial situation. Buyers are generally required, however, to apply for financing within a set number of days and to act in good faith in attempting to obtain financing. In other words, if you experience a change of heart, ghosting your lender so that they deny your financing is likely not a feasible strategy.

Appraisal Contingency

We most often see this contingency removed in cash purchase situations. When using outside financing, your lender will almost certainly require that the home appraise for the purchase price or for the purchase price less the amount you are planning to put “down” (i.e., pay out of pocket at closing). Buyers (in both cash and financed transactions) sometimes add provisions that they will pay $“x” or “x”% over the appraised value to make their offer more competitive. What this means is that the Buyer agrees to bring the difference between the appraised value and amount for which the property was required to appraise to closing. If this contingency is removed entirely or amended to allow for a certain amount above the appraised value, the buyer may be contractually obligated to pay significantly more than the fair market value of the home, resulting in a negative equity situation.

Inspection Contingency/”As-Is” Purchase

Removal of the inspection contingency is, by far, the most popular among buyers seeking to make their offers more competitive. This can be done in a few ways: 1) designating the purchase “as-is” or stating that inspections are for “informational purposes only,” 2) forfeiting the right to terminate based on inspections, and 3) waiving inspections altogether.

  • An as-is purchase does not necessarily mean that you waive inspections. It can also mean that you are performing inspections but that you will not seek repairs or a price reduction from the seller based on what you may find during inspections (or that you will only seek repairs/a reduction based on defects or conditions estimated above a certain dollar value). Under an “as-is” purchase or when inspections are for “informational purposes only,” you can still maintain the right to terminate based on the inspections. However, the contract language should be clear as to what is intended as the above terminology can be somewhat ambiguous.

 

  • The inverse of No. 1 above, buyers sometimes agree that they will perform inspections but they will not terminate based on the inspections. Instead, they will allow the seller the opportunity to “fix” any defective conditions. Candidly, this can create a whole host of issues. For example, what happens if there is a dispute between seller and buyer as to whether the issue was fixed or fixed properly? What if the seller refuses to drop the price or fix a condition, or disagrees that it is defective? Under a prototypical inspection contingency, the buyer could terminate in this situation (i.e., where no agreement can be reached between the parties) but, here, the buyer has ostensibly forfeited its right to terminate. While there could be defenses to the enforceability of such forfeiture, it could also be quite expensive to litigate that issue to conclusion.

 

  • Finally, buyers in a competitive market often waive inspections altogether. This means they will not perform any due diligence as to the physical condition of the property. While this can allow for a faster closing and obviously sounds great to the seller, it is very risky if things go awry. Under such circumstance, the buyer will have essentially no recourse if they discover a defect after closing, the exception to this harsh result being if they can prove that (a) the seller knew about the defect, (b) the buyer did not know about the defect, (c) the defect would not have been discovered had the buyer performed reasonable inspections (e., it was a “latent” defect and not an open and obvious one), (d) the seller did not disclose the defect on the Residential Property Disclosure Form or otherwise misrepresented the same, and (e) the buyer suffered damages as a result. These are the elements of a cause of action for fraud and are not easily proven. Further, unless the cost of remedying the defect is at least $30-40,000+, it is often not financially worthwhile to pursue given the legal/expert fees and expenses. A buyer can seek reimbursement for its attorney’s fees upon satisfying the elements of fraud, but such reimbursement can never be fully guaranteed.

As noted above, there are a number of ways that each of these contingencies can be crafted, limited, or even removed and the resulting implications can vary widely. This is why it is so critical to consult with an attorney before agreeing to deviate from standard language. If you are found to be in breach of the contract or decide to “walk away” without legally adequate justification, your liability is often not limited to your earnest money – in fact, it can add up to tens, if not hundreds, of thousands of dollars.

There are other options and terms that can be included in an offer to “sweeten the deal” for sellers and help get your offer noticed, even in a competitive market, without jeopardizing the rights and protections that are so vital to buyers.

We can help make sure you understand the potential consequences of the contract language and even draft or revise an offer to make sure you are protected, whether you are working with an agent or purchasing a home on your own. Making a competitive offer does not have to mean taking on substantial additional risk.

Please reach out to Casey A. Jones, Esq. at [email protected] or (513) 943-5673 for assistance.

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