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Owning or starting a business with a partner can be an exciting venture, but when disputes arise (and they will), having the right partnership, operating, or shareholder agreement in place is crucial to resolving the disputes fairly and with minimal disruption of the business.

Disputes between business partners can arise from virtually any topic at any time. Agreements governing the relationship between the partners are the first place to look to resolve these disputes. If no agreement exists, the partners are left to try and “hash it out” – usually resulting in each side taking a hard line position that results in more conflict and can eventually lead to dissolution of the business altogether.

Common questions faced by business partners are:

• What responsibility does each partner have?
• How much authority does each partner have?
• What happens if one partner wants to sell her part of the business?
• What happens if a partner dies – where does his share of the business go and does his spouse or family have all the rights and responsibilities he had?
• How are profits distributed?
• How are expenses and losses handled?
• How are other partners brought into the business?
• How exposed are the partners to liability to each other and third parties?

These are just a few of the critical questions that can be addressed in a partnership, operating or shareholder agreement at the beginning of the venture. Not only do these agreements help resolve disputes, they can help prevent them. These critical documents are meant to protect you, as well as, your time and investment in the company. They need to be carefully crafted and specific to your business and the partners’ desires. A poorly drafted agreement can often cause as many problems, if not more, than simply having no agreement at all.

That’s why it’s important to have good legal counsel to assist you in the drafting , revising, or negotiating these types of agreements. At DKG & Associates, we work with small to medium size businesses on a variety of matters, including business partnership disputes. We are often called upon to draft agreements, as well as, help resolve many cases ranging from disputes over day-to-day operations to violations of partnership agreements.

For more information, please call DKG & Associates at 214-521-1093 for a free consultation. Also be sure to check out our sliding scale fees at http://dkglaw.net/sliding-fees/.

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When you’re a small-to-medium size business (SMB), collecting on your accounts receivable isn’t always easy because there is no collections department. Juggling between payables and receivables may already be a challenge.

While the economy continues to slowly bounce back from one of the worst economic climates since the Great Depression, many businesses continue to have challenges in getting customers to pay. Having a steady flow of income is important and timely collecting on receivables is undoubtedly critical to your operations. So what do you do when an account is past due?

Have good contracts
Unfortunately, having “handshake” agreements is not the best practice. Where possible, make sure you have good written contracts in place that clearly outline the fees and payment terms. You can add interest or late payment penalties to encourage prompt payment or you may want to consider giving a small discount for early payment.

There are also terms you can include that can give you leverage if the account ultimately ends up so far past due that you seek legal assistance in getting it resolved. As just one example, you may want to include a term that indicates the customer is required to submit any disputes regarding your billing in writing within a certain time frame or the dispute is waived.

Remember, an ounce of prevention can be worth its weight in gold.

Early intervention is important
Just as the title suggests, early intervention in resolving past due payments is important. The longer a debt is outstanding, the less likely it is that you will ever collect it. In fact, after an account is 60 days past due, odds are you will never see that money unless you act quickly.

It’s typically a best practice to send written notices when an account is 30 days past due and once again at 45 days past due. If problems persist past 45 days, then you may want to quickly seek the assistance of an attorney.

While you want to keep a relationship with a customer as cordial as possible and you may feel inserting an attorney into the mix damages that relationship, a non-paying customer may not be a relationship worth retaining. A friendly letter from an attorney can help your customers realize you are serious about collecting what is due. This often motivates customers to find a solution to getting you paid.

Already having difficulty collecting?
Many SMBs know they need legal help, but don’t seek it because of fees that range from $200-450 an hour—making it cost prohibitive. At DKG & Associates, we make our services available at a rate based on your business’ ability to pay.

The attorneys at DKG work with SMBs on a daily basis. Our services are customized with your individual business in mind and our approach to pricing is ideal for small and medium businesses with gross revenues of $5 million or less per year. Sliding scale rates can start as low as $55 per hour.

If your business is having difficulty collecting on account receivables, contact DKG & Associates today at 214-521-1093 or daylen@dkglaw.net for a consultation on how our services might be a good fit for your business.

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Sometimes one of the worst threats a company faces is its own employees. They know critical information about your company’s practices and operations. Imagine if that sensitive information was shared with competitors and the public. How might that impact your sales?

There are many things you can do to prevent employees from sharing sensitive information with competitors or others in your industry. A first and critical step is to require all employees to sign a non-disclosure agreement. You may also want to consider asking employees to sign a non-compete and these agreements are addressed in other articles that we invite you to review on our website.

Non-disclosure agreements make your employees aware that they have a legal obligation not to disclose what you consider your confidential business information without prior consent. The agreement is effective both during their employment and after termination. When correctly drafted, these types of agreements provide the first line of defense in keeping your confidential information out of the hands of competitors.

A non-disclosure agreement is not meant to show a mistrust of the employee, rather its purpose is to keep an employer’s carefully formulated business information out of the hands of competitors. It puts employees on notice at the beginning of the employment relationship that the employer has information it believes is confidential and takes steps to protect it.

Texas courts routinely enforce these types of agreements and expect that employers will have taken the initiative to have non disclosure agreements in place if the employer contends the business information is truly confidential.

At DKG & Associates, we work with small to medium size businesses (SMBs) to help them assess whether their information may be at risk and what can be done to protect it. Don’t assume it’s too late to assess these risks or ask employees to sign a non-disclosure agreement.

If you think your business might be at risk and would like a consultation to learn what steps you can take to protect your sensitive business information, contact us today at 214-521-1093. You can also email Daylen directly at daylen@dkglaw.net.

Remember, it’s never too late to protect your business.

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As discussed in previous articles, there are a number of things you can do at the point of hire to help protect your business information from being improperly used by departing employees, but having protective procedures in place at the time of termination is equally important.

For example, are you having an exit interview with employees? If so, are you reminding them of their contractual obligations not to compete or use your information? Are you requiring them to turn over all company property at termination? Are you requiring them to sign anything acknowledging that they haven’t retained any company information? If not – you should be.

Finally, if you do have non compete, non disclosure and non solicitation agreements in place with your employees it is acceptable for you to put their new employer on notice of the existence of these agreements. This can be accomplished by a simple letter forwarded to the new employer that advises them of the agreements and expresses your desire to insure that the employee abides by the agreement. You may also want to include copies of the agreements.

Protecting your valuable business information cannot be accomplished by a simple agreement or document. It is a process that begins at the point of hire and continues through and after the period of employment. You simply must have enforceable documents combined with intra-company protection policies and good hiring and termination practices. Does it take some effort? Of course it does – but ultimately the success of your business depends on it.

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The answer is – possibly. If your employee, while working for you, helps develop or create any product, process, formula or other similar materials they can claim their contribution gives them some right to use it in the future in competition against you. While such a claim by former employees can be an uphill battle, it is possible for them to be successful on such a claim.

Employees can claim, for example, the “idea” was theirs, that they discovered the “formula” that worked or that they brought some special knowledge to the employment relationship that was used by the employer to create the product or process. As an example, in a former case, a client terminated two employees who began using the client’s training materials in a competing business. The former employees claimed they drafted much of the training materials and that the materials were based on special knowledge they brought to the employment relationship. This made the case more difficult when the employer was claiming they couldn’t use the training materials to compete with it.

The best way from preventing these types of claims by your former employees is to insure you have enforceable non compete and non disclosure agreements. These were discussed in previous articles. However, you should also have an agreement in place whereby your employees, upon hire, agree to assign to you all rights, title and interest in any product, process, or material they help create while employed by you. Like non compete and non disclosure agreements, these agreements are also fairly technical in nature and its best to have an attorney draft them for you.

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Many businesses attempt to use non-compete and non-disclosure agreements to prevent the unwanted release and use of confidential business information. The importance and technical nature of these agreements is discussed in previous articles, but even if the agreements you have in place are carefully crafted they can be useless if there aren’t internal procedures in place to protect the confidential nature of your company’s business information.

Why is this so? The law requires that your company take reasonable steps to maintain the secrecy/confidentiality of any information it later wants to claim as important confidential business information.

For example, if you wish to maintain confidential information on your computers, the computer or information should be password protected and only those employees that have a “need to know” the information to perform their job duties should have access to the information. If you keep it in a hard copy format, it should always be kept in a locked file cabinet.

As another example, you should not allow persons from the general public to access areas where your confidential information is kept. To help illustrate this, consider the following: a former client had a metal refinishing process using powder and liquid paints that it considered to be confidential – the process required several steps to take place in the client’s shop. As one step to preserve the confidential nature of the process, members of the public visiting the shop were not allowed access to the area where the process took place and the doors to the area were clearly marked “Employees Only.”

These are only two examples of the multiplicity of circumstances that require a company to think proactively about protecting confidential information. Without these types of protections in place, a court could determine that the information is not really confidential at all and would not prohibit your competitors from using it.

How do you protect your valuable business information?

The team at DKG & Associates works with small to medium size businesses (SMBs) every day to assess how valuable information is being protected.

Feel free to contact us today at 214-521-1093 to schedule a consultation. We can advise you on procedures that protect your company.

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Many times we’re asked by employers if former employees can legally try to hire aware your current team members. The short answer to this question is yes!

Unless you have an appropriate non-solicitation agreement in place, your company is at risk of losing valuable employees to a competitor. Many times your competitors lure away a valued employee and encourage that employee to find other valuable employees to lure away from your company.

While this is considered a sharp business practice by some, it is not prohibited by law unless your employees contractually agree they will not engage in this behavior.

Fortunately, agreements regarding the solicitation of other employees do not require the same high degree of technicality as non-compete agreements, but they should be drafted by an attorney to ensure they can be readily enforced.

An attorney can help ensure that the agreement allows for some type of immediate injunctive relief (like restraining orders) if a breach happens or is threatened. This is important because immediately stopping a former employee from luring away other valuable employees lessens the risk of damage to your business.

For more information or to schedule a consultation for us to look at your company agreements, please give us a call today at 214-521-1093.

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Noticing a trend that employees are leaving your business to work for a competitor? Reasons for the move can vary from one person to another, but your competitor could be gaining more than just another helping hand.

Your employees possess an abundance of valuable information regarding your company, its operations, trade secrets, customers, and future plans. If your employees move to a competitor and you don’t have enforceable agreements with your employees protecting the disclosure of this valuable information, you might as well simply hand it over to your competitors.

Unchecked, former employees also have leveraging power to recruit other employees to work for a competitor and this can exponentially increase the risks of unwanted disclosure of critical company information.

The easiest and most effective way to reduce the risk of disclosure is by implementing the proper procedures at the point of hire. There are even ways to obtain enforceable agreements with current employees, but handing them a non-compete or non-disclosure agreement to sign after they have been employed for a period of time simply won’t work. You also can damage the enforceability of these agreements with new and old employees by having poorly drafted or seldom enforced company policies.

Protecting your valuable confidential business information is critical. Don’t rely on your HR team or the internet to produce enforceable agreements.

Do you know the origins of the agreements protecting your valuable information? Do you have these kinds of agreements at all? Have you ever sought advice regarding the enforceability of your agreements?

If you answered “no” to any of these questions or have doubts about how well your company information is protected, then your information is at risk of being disclosed to your competitors.

DKG & Associates works with small to medium size businesses to draft customized documents and procedures designed to protect valuable business interests – all at customized flat fees. For more information and a free consultation on how DKG & Associates can help your company protect its most valuable assets, feel free to contact us.

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Small to medium size businesses’ (SMBs) most valuable assets are typically trade secrets or other confidential business material like customer lists, pricing, business strategies, or technical “know-how.” The quickest way for your competitors to take advantage of your business information is through your former employees.

Non-compete, non-disclosure, and conflict of interest agreements are the best way to keep former employees from divulging and using your information to your detriment and many SMBs attempt to protect this valuable information by requiring employees to sign a non-compete agreement.

Non-compete agreements are enforceable in Texas, but can be tricky and must be specifically drafted for the type of work your employees perform for you. The two biggest mistakes many SMBs make is that they assume (1) that the same non-compete agreement works for all their employees; and (2) that simply having a document that says an employee agrees she won’t compete in the future is good enough.

In Texas, the Covenants Not to Compete Act states that such an agreement “is enforceable if it is ancillary to or part of an otherwise enforceable agreement at the time the agreement is made to the extent that it contains limitations as to time, geographical area, and scope of activity to be restrained that are reasonable and do not impose a greater restraint than is necessary to protect the goodwill or other business interest of the promisee.”

Because the language in the Act is broad, courts have had to interpret exactly what it means. Having an attorney draft or review your agreements is the best way to make certain your agreements contain the language courts require to make them enforceable.

Do you know if your agreements are effective – or are they only as good as the paper they are written on? Don’t find out the answer to this question when it’s too late.

At DKG & Associates, our team has worked with many SMBs to draft customized non-compete agreements. It’s important to note the word “customized” because each agreement will vary from business to business and even from job role to job role.

Feel free to contact us today to schedule a consultation to review your current agreements. We can advise you on procedures that will increase the enforceability of your agreements; and if necessary, we can revise your current agreements or draft new agreements for your company – all for a customized flat fee.

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