You remember email, right?  That thing you’ve been using as your main source of written communication since the last decade?  The major form of correspondence that has surpassed old-fashioned snail mail and which is relied upon by everyone from business titans to celebrities, the president, and your aging grandmother (who floods your inbox with those funny grammatically incorrect cat pictures)?  Yeah, that email – it’s no longer protected against searches from the police.

“No, that can’t be right!  Right?  Email?  They are no different than letters you received in the mail; how can they not be afforded the same protection?” Well, apparently if you think like that you’ve been preempted by a federal judge, my friend.

Specifically, this ruling comes down from and Oregon Federal Judge Michael Mosman (I almost typed Michael Madsen; if he gave the ruling I might’ve been less outraged).  Judge Mosman argues that unlike regular snail mail which is handled by postal employees, e-mail should not be afforded the same protection against unlawful searches and seizures under the Fourth Amendment because when an email is sent, it goes through various Internet service providers.  By traveling through these different providers, each email leaves a digital image of itself with each ISP.  And apparently this fact is enough to distinguish email from regular land mail because by leaving a digital copy of itself, emails are in essence open to the ISP to read and monitor and therefore people who send emails cannot expect to have the same level of privacy as when one sends a regular piece of mail through the post office.  Judge Mosman’s full opinion can be read here (please note that the link is to a PDF).

Sound mental?  Yeah, well it should.  Judge Mosman seems to hang his ruling on the notion that because emails aren’t sealed in envelopes like a written letters, people should expect it to be read.  Now to be fair, police would still need a warrant to search through your email.  However, they’ll just need to submit the warrant to an ISP that has your emails to get access to them, thereby completely bypassing you and giving you no notice before invading your private emails.

Now on one hand, Judge Mosman’s argument makes some sense.  Junk mail in the form of post cards and brochures are almost never sealed and the courts have generally viewed these as forms of advertisement and therefore not protected under the Fourth Amendment since it’s argued that junk mail is meant to be seen by as many people as possible.  However, this is also where Judge Mosman’s argument breaks down because private emails aren’t advertisements, but are actual private communications between parties.

“But Andrew, what about the whole issue of emails leaving digital copies of themselves on ISPs and not being sealed like normal letters?”  Well let me answer that question, too, and thank you for asking so kindly.  Though emails are not physical sealed, they are often digitally encrypted to prevent prying eyes from seeing its contents.  Therefore, an analogy can be drawn between sealing and encryption since they both show the sender’s intent to keep their communication private.  Furthermore, like postal workers who we trust not to open our mail, similarly we trust our ISPs not to read our emails.

Anyway, all my ranting is meaningless until someone challenges Judge Mosman’s ruling or the legislature passes a law that gives emails the same protection against unlawful searches and seizures that physical mail enjoys.

So get started people, write your senators and congressmen, just don’t email them – for now.

Email – It’s Fast, Easy, And Now Unprotected From Unlawful Searches is a post from: LegalMatch Law Blog

I suppose it’s true for every field of study or vocation.  Doctors probably have their cousins asking them to look at moles and pus-filled gashes.  Astrology professors probably have their aunts pestering them to find Orion’s Belt.  Taxi drivers probably can’t get their siblings to stop using them as a substitute for Google Maps.  The list goes on and on.  And the best part about all of this is that all the people who ask you these questions don’t care whether their question is within your field of specialty.  Resulting in situations like this:

“Hey Phil, what street do I take to get to the Eifel Tower?”

“I don’t know, my taxi only operates in New York.”

Okay, so maybe it’s not as drastic as that, but you get my point.

Anyway, regardless of the absurdity or irrelevance of the question, you always end up answering it to the best of your ability because, hey, what can you do?  They’re your friends and family and you like them (for the most part), which brings me to the point of today’s post.

I was talking to a friend the other day.  Let’s call him Norman because I don’t him to get pissed off at me using his suffering for my work.  Norman is a really nice honest guy.  He’s the type of person to go through his whole life never trying to cause a scene, which is good in some ways, but bad in a lot of others because maintaining that kind of lifestyle often leads to his inability to defend himself.

Anyway, about a couple years ago Norman opened up a small convenience store.  His store was located within a mini-mall in his hometown.  It was a good fit for him because on top of being really nice, Norman is also really laid back and doesn’t like doing strenuous and stressful work.  Before renting out his location, Norman was able to secure the right to be the only purveyor and seller of food in the mini-mall.  The agreement was promised in Norman’s contract with the mini-malls owner.

But last month, Norman neighbor, a Laundromat, put out a soda vending machine in front of his store.  Norman saw this as a violation of the non-compete clause he had in his contract, but when he went to the mini-mall’s owner to tell his neighbor to take the soda machine down, the owner refused.  He claimed that soda is a drink and therefore didn’t count as a type of food so it was perfectly in line with Norman’s contract.  Norman then came to me to see what his chances were to get the soda machine put away.

This situation happens a lot.  Just taking a look at the number of unfair competition cases LegalMatch gets every year is good evidence of the popularity of these types of disputes.  My advice to Norman was the same that anyone knowledgeable in the law would give: it depends.

Basically in most jurisdictions, for non compete clauses to be invalid they have to be overly broad as to be considered unreasonable.  In Norman’s situation, it would seem like his non-compete clause was pretty clear since it outlined a specific limitation that could be reasonably followed (that he’d be the only food store).  And that in my opinion I’d think that he’d have a fairly easy time convincing a judge that drinks can be considered food because it’s something that’s consumed.

But like everything in the law, nothing can be certain.  Because even when all the cards seemed stacked in one direction, a good lawyer can easily make them fall in the other.

Competing With Non-Compete Clauses is a post from: LegalMatch Law Blog

Robert is 29 years old.  He lives with his parents in a small two-bedroom house located in a quiet California suburb.  After splitting with his partner of six years Robert was forced to move back in with his parents.  His partner got the better end of the deal.

Prior to his decision to move in to his parents’ home, Robert had a mounting pile of debt from his failed business.  Creditors were constantly hounding him and he was having trouble keeping up on not only his bills, but his life in general.  His credit cards were maxed out and his back pain, which was formerly just an occasional annoyance, had grown to intolerable levels.  Having no health insurance, Robert was reluctant to see a doctor and instead tried to live with it, hoping it’d eventually go away on its own.

About the only good thing Robert had in his life was his 2 year-old son Kenny.  However, Robert’s visitation rights only allowed him to see Kenny on weekends.

Not wanting to declare bankruptcy, Robert began pawning off his possessions to make good on some of his bills.  One day after having sold his beloved 1971 Camaro to a buyer who had responded to an ad he placed in the classifieds of his local newspaper, a sharp pinching pain suddenly ran through Robert’s back.  Robert fell to the floor and crawled slowly to a nearby payphone.  The pain was excruciating and after much self-deliberation, Robert picked up the phone and called for an ambulance.  The doctor diagnosed Robert with a herniated slipped disc required immediate surgery.  Now with medical bills added to his debt, Robert works seven nights a week as a pizza delivery man and regularly moonlights as a security guard.

Sounds like a nightmare of divorce, huh?  Just another reason why marriages are bad and can leave a person destitute and working at some menial job.  Well that maybe true, but Robert’s divorce ended quite amicably.  In fact his ex-wife never sought child support from him and they are still on good terms.

The split referred to in Robert’s story that started this all was that between Robert and his former business partner.  They owned a pizzeria together and after six years, their differing views on how the business should be run ended with them dissolving their business partnership.

According to Robert, he made a number of mistakes.  First, he believed his partner to be his best friend and thus relinquished a majority stake in the business to his partner.  Second, and possibly worst, Robert allowed his partner to draw up the contract which he signed without reading.  According to Robert, this resulted in him incurring much of the debt for the business.  Third, dissolving his partnership was an expensive process because the tension between both parties required him to contract an attorney.

Robert isn’t alone.  According to the LegalMatch statistics, business dissolutions make up a large majority of the cases received.

Robert, like many people, forgot that a business partnership is much like a marriage.  You have to make sure you end up with the right person or you might get taken for everything when it all falls apart.

Tales of Dissolution – Breaking Up A Business Partnership is a post from: LegalMatch Law Blog

The economy is in the tank, but it has been particularly stressful for recent college and professional school graduates looking for their first “real” job. Combine this with the stress of being unceremoniously thrust into the real world (a stressful period in one’s life in the best of times), and you can understand the anxiety and frustration that many people are feeling, especially when they have massive student loan debt hanging over their heads.

But it should go without saying that this is not the way to go about improving your lot in life. First of all, most people assume (correctly) that school career services are supposed to be tools for students to use in their own job hunt – they don’t exist to hand recent graduates a job on a silver platter.

According to the story, this student graduated with a GPA of 2.7, and her crowning academic achievement is a “solid attendance record”. Oh, but it gets better. According to the recent grad, “They’re supposed to say, ‘I got this student, her attendance is good, her GPA is all right — can you interview this person?’” On what planet? Once again, career services offices exist to help you in your job hunt, not to find jobs for you.

In a recent post I talked about the importance of managing one’s online presence, and about the fact that filing a lawsuit, even if it has merit (which this one definitely does not), is not always the best way to accomplish one’s ultimate objectives. In my earlier post, I noted how the mere fact that the apartment manager filed a lawsuit over a single Tweet did far more damage to its reputation that the Tweet ever could have.

Here, it is clear that the unfortunate alumna, by filing this lawsuit (and agreeing to be interviewed by CNN), has done irreparable damage to her future employment prospects, regardless of the state of the job market. A quick Google search for her name returns nothing but news articles and discussions related to this story on the first page.

It is now common practice for employers to run internet searches on prospective employees. In this case, do you think an employer would like what he or she is bound to find?

It’s probably been said before, by people more eloquent than me, but it bears repeating: Think before you sue.

Bad Job Market? Sue Your College! is a post from: LegalMatch Law Blog

Law school is expensive and just keeps getting pricier.  But if you release a campy 80s rap single and sign a really unfair contract with a record company, who cares about the price for admission?  Why didn’t I think of that?  (Although my musical abilities are only a slight cut above this guy).  Also, I’m pretty sure every contract in the music industry is unfair, so I didn’t need that extra adjective.  Sleaziness seems to come free with a life in commercial music.

Anyway, at least Roxanne Shante… urgh, I mean Dr. Roxanne Shante only had to fight for years and years to get the Warner Music executive who originally signed her to get them to follow through with their promise to pay for her education for life.  I say “only years and years” because a lot of rappers can get really screwed over.

Apparently clauses promising to pay for a music artist’s education, should they choose to continue it, aren’t that weird in the grand scheme of musician contract clauses.  In fact, it’s actually pretty mundane when compared to what other performers ask for — at least in terms of craziness.  I’d rather waste an hour segregating M&Ms than cough up $217k.

Props to Dr. Shante for taking a big corporation to task and getting what was promised to her.  She gets even more respect for sending the right message to teens growing up in this increasingly materialistic era of ours by pursuing higher education instead of trying to parlay her life into a bad reality show.  And finally she gets my ultimate praise by really sticking it to Warner Music and going Ivy League for her PhD.  Her life is a good lesson to everyone thinking of taking advantage of the naïve: stay moral or get stuck with the consequences.

Multi-Million Dollar Record Company Honors Contract To Musician! Experts Predict Pigs Soon To Fly And Hell To Freeze Over is a post from: LegalMatch Law Blog

Now to be fair, possessing a winning lottery ticket isn’t an automatic Monkey’s Paw.  The vast majority of lottery winners have held on to their money and walked quietly off into the sunset, living their lives in ways that all of us only wish we could.  However, there have been a lot of lotto winners who couldn’t quite seem to keep it together.  And let’s face it: those are the interesting stories because like everyone else who reads these articles, people can’t help but wonder how it’s possible to lose millions in so short a period of time.   Aside from the government taking a huge chunk of it right off the bat and the numerous family and friends that inevitably spring out of nowhere to borrow a little somethin’ somethin,’ the answer is that a lot of these winners seem to squander their winnings away in failed businesses.

From construction companies to personal record labels, these lottery winners seem to love risking it big in the hopes of earning a little more.  Personally if it were me, I’d be happy just walking off into said sunset because I’m so sick of working…ahem…

Anyway, enough about me.  One of the biggest failings for these temporarily lucky few isn’t necessarily a lack of knowledge in the business they’re attempting to pursue (though you should really, really know your industry), it’s that they didn’t properly incorporate their business to protect their assets.

Starting a business is no doubt a difficult, risky, and expensive venture.  Folding and closing up shop on a failed business often means more than just a loss dream; what usually accompanies it is a string of creditors looking to seize your assets in order to make themselves financially whole again.  Now on the one hand, this is great news for the creditor who gets to cut up your business and personal property to make good on a defaulted loan.  But on the other hand, well, I don’t really need to spell it out, huh?

Establishing your business as a corporation rather than a sole proprietorship or partnership has a number of advantages.  Most important of these is the protection against liability you are given when you incorporate your business.  Corporations are treated almost like an individual.  If it falls, you as a shareholder are only liable for the money that you’ve put into it, which means your personal assets are safe, theoretically.  Furthermore, unlike a sole proprietorship, corporations live on forever as long as the business remains viable.  Corporations allow you to control the amount of income you receive and may also allow you to defer your taxes to a later time, and may even give you certain tax deductions not possible as a sole proprietor.

Last year, LegalMatch received thousands of new clients looking for business attorneys to help them incorporate their small business.  But don’t be too gung ho about incorporating your business.  Aside from the paperwork, there are some real disadvantages, too, such as the ineligibility for personal tax credits and the costs to incorporate.  Sitting down with a good business lawyer is the best way to see if incorporating your business is the right move for you.  It definitely would’ve probably helped a lot of those lottery winners.

And remember, sometimes even the best financial lawyers and advisors can’t save you no matter how much money you may have.

Why Incorporate? Because You Don’t Want To End Up BROKE!! is a post from: LegalMatch Law Blog

• LLC (limited liability company): 45%
• Corporation: 17%
• S Corporation: 15%
• Nonprofit: 9%
• Partnership: 8%
• LLP (limited liability partnership): 3%

Don’t they realize there is an impending war on the rich and on business owners?! That this country is going to be socialist before the year is over?!?! (OK, now I am really ending the sarcasm, I promise…)

All jokes aside, LegalMatch.com statistics support the conventional wisdom that LLCs are the most popular type of new business in the country. Limited Liability Companies are a relatively new invention, but a powerful tool if one wants to limit their exposure while running a business.

Are lawyers helping this increase? Lawyers typically operate LLCs when they form their own small firm. The tanking economy is affecting everyone, attorneys included, and more and more attorneys are looking to go it alone. Newly minted attorneys, thousands of whom are regularly churned out every year, are facing stiff competition in a vastly shrinking field. Business is so bad (or is it good?) that an online university offering courses on how to build and run a solo practice has recently opened. Because clearly, the best thing a recent law graduate can do is spend more money on school. (I thought I stopped being sarcastic?)

Obviously new grads aren’t the only ones going it alone; the vast majority may be experienced lawyers or attorneys with a year or two already under their belt. As more and more biglaw firms collapse, we may be seeing more and more fragmenting in the legal community. This could be good thing for clients and attorneys. More lawyers competing may mean lower fees for our services, and more new lawyers getting out of their biglaw basements and acting like real attorneys means more experience and possibly more options down the line. In every crisis there is an opportunity; is now the time for a change?

Top Types of Business Formations in Past Year is a post from: LegalMatch Law Blog

Absent a bailout, the Big 3 are looking at Chapter 11 bankruptcy. Chapter 11 is a corporation-specific type of bankruptcy that calls off the dogs and gives a company breathing room to restructure. In the case of the big 3 automakers, most experts agree that Chapter 11 bankruptcy would cut jobs, gut costly labor contracts with unions such as UAW, eliminate pension obligations to current and future retirees, and close unproductive factories.

Although shedding billions in health care costs, pension benefits, and operating costs might look good for a company’s balance sheet, the picture is not so rosy for everyone else. The UAW was a major supporter of President-elect Obama and will not be pleased if the democratic government they helped elect turns their back on them. Furthermore, where will they go for health care? Many-especially those who will inevitably lose their jobs-will go to Medicaid.

Then there are pension benefits. What happens when a company like GM can’t make its pension obligations? Under the Pension Benefit Guaranty Corporation, the federal government insures pension plans in the American auto industry; this agency is already $14 billion in debt.

Lastly, one of the most important parts of corporate restructuring under Chapter 11 is debtor-in-possession financing. This allows a bankrupt corporation to take loans to stay afloat, with the creditors of the needed capital jumping to the front of the claims line. With the economy in a tailspin and credit lines essentially non-existent however, economists like Nobel Prize winning Paul Krugman worry that no one will make any loans. No loans means no production; no production means this turns into a Chapter 7 liquidation.

No one wants to see what will happen if the big 3 simply cease to exist. Experts predict that the potential ripple effect would cost 2.5 million jobs in the various industries that depend on companies like GM. Many unemployed would inevitably end up in government unemployment lines.

There is no question that fundamental restructuring needs to be done. Some job loss and benefit cutting is inevitable. A bailout with strict conditions similar to a bankruptcy hearing, however, could prevent a far larger potential catastrophe. The government’s loan would operate similar to debtor in possession financing necessary to keep the production lines rolling and save millions of American jobs. Significant strings could be attached: the Big 3 would need to do major restructuring of their labor contracts, close unproductive plants, get rid of incompetent management, and make fundamental changes to their business model. Some creditors may need to take a significant pay cut or agree to restructure their claims. At the same time, some of the more horrific consequences of liquidation and massive unemployment would be avoided, and at a fraction of the cost to our economy should the big 3 all go bust.

Just like the original bailout, none of the options look good. Sometimes, however, you have to pick the lesser of two evils.

Bailout or Bankruptcy: Potential Consequences of Letting the Big 3 Go Bust is a post from: LegalMatch Law Blog

In response, major companies, including Cisco Systems and Morgan Stanley, have begun outsourcing to India and other offshore countries, where foreign lawyers review documents at a lower cost.  Sure, we all understand the desire to cut costs, but if companies aren’t careful, they may incur costs far greater . . .   

Obvious concerns about outsourcing to foreign jurisdictions include quality control, issues of professional liability, breaches of attorney-client privileges, and facilitating the unauthorized practice of law.  Remember, China, India, and other popular offshore locations lack stringent U.S. data protection and information security laws; moreover, many also lack adequate judicial systems to remedy a problem once it occurs . . .  

Francoise Gilbert, of the Silicon Valley-based IT Law Group, recently commented on this issue in her lecture, The Law of Privacy and Data Security, hosted by the Bar Association of San Francisco.  Ms. Gilbert stressed that U.S. companies need to make sure their outsourcers abide by U.S. law, and U.S. companies need to closely supervise their outsourers.

For example, if an information security breach occurs at a U.S. company’s foreign call center, the U.S. company remains ultimately responsible; this would be true even if the call center signed a contract to adequately screen and supervise its employees.  It’s also important to realize that a breach could occur even if the call center acted in good faith to abide by the contract. 

A further example: a call center that conducts background checks on prospective employees might not discover criminal records due to limited search capabilities.  So, if an employee committed a crime in a neighboring county, this record would not turn up during the search, she would be hired, and if she uses customer credit card information for fraudulent purposes, guess who pays?

Outsourcing Offshore: Cutting Costs at the Expense of Security? is a post from: LegalMatch Law Blog

The Stanford report also shows that about half of the 110 filings between Jan 1 and June 30, 2008 were related to the U.S. subprime mortgage crisis and global credit crunch; moreover, the increased filings have caused defendant firms’ market capitalization losses to skyrocket. 

Do these securities class action filings threaten average shareholders’ assets?  According to a recent report issued by the Institute for Legal Reform (IRL), compelling evidence shows that such filings are putting U.S. businesses in peril, and threaten the economic health of individual investors.  Lawsuit-related monetary losses in 2007 doubled since 2006, and settlement costs may even exceed litigation costs as more companies hope to salvage some of their stock price and reputation.  The ILR report urges Congress to investigate fraud and abuses in the securities plaintiffs’ bar, and suggests legislative changes.

Securities Class Actions Climb Amidst Market Turmoil is a post from: LegalMatch Law Blog