Understanding Business Interruption Insurance

Business interruption (BI) insurance can be one of the most vital kinds of insurance that you ever purchase. It can ensure that you can pay your bills and feed your family in the event that your business can’t bring in the revenue that it normally brings in. 

But despite its importance, many people know very little about business interruption insurance, what it does, and what it insures and doesn’t insure. Our Chicago business attorney at Ellis Legal will explain more on this below.

Physical Damage to the Business

Like any insurance policy, what your BI policy covers will vary from policy to policy and, of course, based on what you are willing to pay.

As a general rule, business interruption insurance will pay for your business’s financial losses in the event of any physical loss or damage to the property that keeps it from being able to operate as it normally does. 

BI does not help you pay to actually repair the physical premises—BI is only to help you get compensated for the financial losses stemming from a physical loss or damage to the property.

Note the term “physical loss”; that means that non-physical problems, like, say, a law change that makes it impossible to operate your business, would not be covered.

Expenses are Insured Also

One good thing about business interruption insurance is that many policies don’t just cover your lost revenues and income, but they also will insure you for expenses related to getting your business back on track—for example, the cost of relocating an office, or an increase in rent that you incur, because of a temporary relocation.

BI also will, in some cases, pay for your business’ continuing debts and liabilities, such as loan or lease payments that you cannot pay because of an insured loss.

Who Caused the Loss? 

Sometimes, the policy’s coverage will depend on whether or not you caused the business loss or whether you could have avoided it.

So, for example, if your restaurant cannot operate because it was shut down for health code violations or if it is unable to open because you have to make repairs to make the premises compliant with the ADA, those may not be covered, as they are things that (according to your insurer) you could have known about and avoided in advance.

Other things may be out of your control—for example, if the government were to condemn your business’ building because of a roof leak, and you don’t own the building itself, you may be covered.

Speaking of the government, again, so long as you aren’t the cause of the problem, your BI will generally cover you for losses incurred for government actions that shut down your business or make it impossible to operate. For example, if a road were to need complete repair and it was closed, and the road was the only access to and from your business, you may have an argument that the government action had the effect of completely shutting down your business.

Question about your business’ insurances? Speak with a Chicago business litigation attorney at Ellis Legal at (312) 967-7629 today.

Basic Advertising Reminders for Law Firms to Stay Out of Trouble With the ARDC

In the fight for clients, advertising, in any form, is key to the survival of a law firm. However, unlike traditional, non-legal businesses, the Illinois Bar Rules and the ARDC have strict rules on what an attorney can and cannot say in the course of advertising.

Read on as our Chicago ARDC defense attorney at Ellis Legal explains more.

Not Just Traditional Ads

Remember that advertising includes “passive” advertising—that is, things like websites or social media pages that you may not be paying for specific advertising space for, like you would a billboard or TV ad. Anything you hold out to the public to promote yourself is considered an ad. 

Ad and PR Agencies

Another important reminder is that you, as the law firm or attorney, are ultimately responsible for what is put in the public eye, even if you use a third party, like a public relations company or a social media company, to handle your advertising. That makes it important to use companies that understand what attorneys can, and cannot say, in the course of their advertisements.

Never Mislead the Public

Unlike most ads in other industries, which can contain puffery or some level of exaggeration, when it comes to lawyers, you are prohibited from using any form of advertising that contains misleading or untruthful statements. The question isn’t whether the statements made are objectively true or not—it’s whether the general public would be likely to be misled by something that is said in advertising.

Certifications and Touting Yourself as an Expert

Often, attorneys will get “certifications” by an organization or entity—for example, you may take a weekend class on elder law, and then have a badge that you put in your emails saying you are a “certified” elder law attorney.

If you do use those words in conjunction with something issued by a company or third party, you must state that the Supreme Court of Illinois doesn’t recognize legal specialties, and they are not necessary to practice law in Illinois.

Outside of certificates, awards, or other recognitions given by third parties, lawyers are generally prohibited from using words like “expert” or “certified” on ads or promotional materials. You should also avoid using qualitative terms that cannot be objectively proven, like saying you are “the best immigration attorneys.”

Former Results

You can use and tout your former results in a case in your advertising. But be careful—if someone could be misled to believe that the same results can be obtained for that client or that past results create an unjustified belief that the same results are guaranteed in the future, you could be running afoul of ARDC advertising rules.

Remember that aside from the content on the ads themselves, Illinois rules have a good number of technical requirements for advertisements. For example, the address of one of the firm’s offices must appear in the ad, as well as the name of at least one lawyer in the firm.

Speak with a Chicago business litigation attorney at Ellis Legal at (312) 967-7629 today to make sure that your firm is complying with ARDC rules and regulations. 

Avoid These Common Intellectual property Mistakes

You aren't in the business of intellectual property. You're not creating or inventing anything. So, you may not give much thought to legal issues or potential problems related to intellectual property. 

That can be a big mistake. No matter what kind of business you have or run, our Chicago business litigation lawyer at Ellis Legal provides some common mistakes that businesses unknowingly run into—and which can end up costing your business a lot of money.

Using Music - If you're using or playing music on or on your property, you may need a license to use it—even if you're just playing your own music playlist or from your own Apple Music, Spotify, or other subscription service.  And even if the music isn't the primary focus of the business (for example, if it's just "in the background").

Licenses can be obtained in bulk through licensing services like ASCAP or BMI. But don't get caught playing music in your business without a license.

Pictures Online – just because you can pull a picture off the internet doesn't mean it's yours to use. Almost every picture is owned by someone unless it's from a free library or a subscription service. If you're in a news business or giving critique or opinion on a picture, you have a bit more freedom. But generally, don't just pull a graphic or photo that you found online for your business use or materials.

Your Own Pictures – Yes, you can get in legal trouble for using pictures that you took for your business' promotional material. You will need a photo release from anybody—including your own employees—whose picture likeness or property you use on your marketing or business materials. Just because people work for you or were at a company function doesn't mean they give consent to use their picture on your next social media ad campaign.

Protecting Your IP – When you develop a logo, a saying, a design, or something else that's uniquely yours, it can have copyright or trademark protection. You should always register your IP, to give you greater rights to sue for infringement, and to make it easier to win damages against infringers.

And if you do register IP, you need to enforce your rights against infringers. Nobody likes to sue. But if you don't, you risk that your trademarks become "generic," and you could lose your valuable IP rights. When half the world is using your brand, color scheme, saying, or logo, it's hard to argue to a court that your trademark is uniquely yours.

Using Employees – it's easy and cheap to just give an employee an assignment to design a brochure or develop a saying or musical jingle. But who owns what the employee is creating for you and your business? You or the employee?

Generally, you, as the employer, do this under the work-for-hire doctrine. But it's best to get that in writing, especially when working with outside independent contractors, where ownership of IP created for your business can get a bit murkier.

Get legal help and avoid legal problems down the road. Speak with a Chicago business litigation attorney at Ellis Legal at (312) 967-7629 today.

The Good Guy Guarantee Can Work for Both Sides in a Lease

Let's say that you are entering into a lease for a property in Chicago with another business, and you want to ensure that you get paid. Specifically, you want to make sure that if there is a default, you will have someone or something to recover your damages against if there is a breach of the lease.

Our Chicago business litigation lawyer at Ellis Legal explains more below.

A Personal Guarantee

One common tool is the personal guarantee, which puts the signer of the contract on the hook personally and allows you to go after his or her assets, in addition to the company's assets, in the event of a default.

But a lot of people aren't willing to put their personal assets at stake and simply won't do business with you.

What About the Good Guy Guarantee? 

One way to avoid this problem is through the use of what is commonly known as a good guy guarantee (GGG), which is particularly useful in commercial leases. The tenant still signs a personal guarantee, but the lease has some extra considerations.

The GGG says that the tenant has to give written notice of the intent to terminate the lease early (something that would ordinarily be a breach of the lease). You can specify how much advance notice needs to be given.

So long as the rent is current at the time of vacating the property and the property is in good condition, there will be no breach of the lease.

Why it Works

This works for both parties for a number of reasons.

From the landlord's standpoint, because of the notice period, the landlord gets a stronger assurance that he or she will have time to find another tenant should the tenant want out. The landlord also includes extra motivation for the tenant to make sure that the rent is current and the property is being taken care of so that if the property does need to be quickly re-let in the event of the tenant vacating, there is little downtime between tenants.

The landlord also gets the benefit of knowing that there is still a personal guarantee in the event of a breach or default.

Tenants, of course, get the benefit of having an "out" in an otherwise long term commercial lease, and the security of knowing that so long as the conditions are followed, there won't be any legal action. They do sign the personal guarantee, but it's one that has a far less likelihood of being used, so long as the tenant can abide by the terms of the (now much more lenient terms than they would be) lease.

Still a Guarantee

In truth, the GGG is still a personal guarantee, But it's one that is much less likely to be used because the landlord is making some concessions in return for the personal guarantee.  

A landlord can add more conditions or concessions than the ones listed above as well—the core element, no matter what the terms are, is that the personal guarantee is signed in return for more negotiated and often tenant-friendly terms.

Problems with your commercial lease or any other business contract? Speak with a Chicago business litigation attorney at Ellis Legal at (312) 967-7629.

You Received a Cease and Desist Letter: Here’s What to Do

Stop what you’re doing! You have a cease and desist letter! What do you do now? Or maybe you want someone else to stop doing something. Will a cease and desist letter help you?

Cease and desist letters have a reputation of being scary, demanding, or troublesome. And while they should never just be ignored, what they mean, and what you should do if you get one, are important to know. Our Chicago business litigation lawyer at Ellis Legal explains more below.

What is a Cease and Desist Letter? 

A cease and desist letter is sent when someone believes that someone else is continually engaging in behavior that either hurts them, or which is violating their rights. The letter is not sent by a judge or a court official, but rather, by a private person—usually an attorney, but it can be sent by anyone.

Common uses for sending a cease and desist letter include where somebody is working somewhere, in violation of a noncompete clause or where someone is continually profiting off of someone else’s intellectual property or trade secrets.

Different Kinds of Letters

Cease and desist letters always ask for the behavior to stop beyond that; they differ in what else they ask for.

Some may ask for nothing more than cessation of the behavior, with a threat of future action if the request to stop is not followed.

Others, however, may ask for some measure of payment or damages, with a threat that the demand will be greater or will be enforced in court; these are more akin to demand letters combined with cease and desist requests.

Remember that the cease and desist letter is only one party’s side or version of events—you can and may disagree with it. There is no penalty for disagreeing with it other than the other side carrying out whatever threats may be contained in the letter, such as the initiation of a lawsuit.

What to Do Next

What to do if you receive a cease and desist letter depends on your particular situation.

In some cases, if the letter only asks that behavior stop, you can opt to stop the behavior if doing so is something you’re willing to do. Often, if the behavior is just a minor part of your business, this is the best option—and you do not have to “agree” in writing with the other side in order to opt to voluntarily comply with the cessation request.

But sometimes, what you are doing is a major part of your business operations, and you believe that you are doing it legally. In that case, you may not want to simply comply with the cease and desist letter.

You can send a response to the cease and desist letter (preferably sent by your attorney), giving your position on the matter and explaining why you cannot or will not comply with the cease and desist. You can even propose a solution or resolution if there is one that would be workable and acceptable to both sides.

If you do not respond to the letter at all, you are gambling—if you do nothing, the letter may just be a bluff and the other side may not ever take steps to enforce the cease and desist letter. 

Of course, the opposite may be true—do nothing, and you could find yourself embroiled in litigation that could have been avoided had you responded to the letter.

Did you get or do you need, a cease and desist letter? Speak with a Chicago business litigation attorney at Ellis Legal at (312) 967-7629.

Facebook/Meta Lawsuit Could be a Warning to Those Who Host Online Discussions

A recent lawsuit is a reminder to anybody who has an online presence or who hosts discussions, message boards or online groups that speech online is still speech, and because of that, can still subject people who host groups or discussions to liability.

Are We Dating the Same Guy? 

The lawsuit stems from a Facebook group, called “Are We Dating the Same Guy?” The group’s original intention was for women to join the group, and then ask other group members about men they are dating, to make sure that the men they are dating, aren’t dating someone else, or are not married.

The idea took hold—so much so that Facebook groups became localized, forming in numerous cities across the nation, including Chicago.

But as time went on, the discussions in the group changed, according to the lawsuit, to people “reviewing” men that they had dated—that is, the group now was an open discussion where people could say whatever they want about men they had dated.

Man Alleges He Was Defamed

But one man, who was apparently a subject of the discussions in one of the groups, has filed a lawsuit against more than 20 women who used the site, alleging that they defamed him on or in the Facebook group. 

The lawsuit also named Meta, the parent company of Facebook, given that the lawsuit says that Meta makes money off the group, through facebook ads that run and are displayed to group users.

The lawsuit alleges that the women in the group said that the man was “clingy” and “psycho.” The man says that the women were allowed to say this by the site, despite the fact that the site or the page has absolutely no way of verifying what any woman says in the group, and there is no requirement that any woman who says anything about other people, back up, or corroborate, what they are posting—in fact, the lawsuit alleges, there is not even any way of knowing whether people who post things about men, even know the men they are posting about.

Many men may not even be aware they are the subject of posts, and there is no opportunity for people to refute things that are said about them, according to the suit.

Some Protection From Liability 

To some extent, online and social media hosts are immune from defamation claims based on things that other people post on their sites or message boards, that the host has no control over. But this case may be different, because in addition to defamation, the lawsuit also alleges invasions of privacy, and because the lawsuit alleges that Meta/Facebook profits off of the use of the group.

It’s likely the case will settle out of court, but the fact there was a lawsuit at all is a warning to those who host open discussions online that they may not be able to take such a hands-off approach to the discussions that happen on their pages or sites.  

Legal issues related to your digital online presence? Ask us how to stay legally safe. Speak with a Chicago business litigation attorney at Ellis Legal at (312) 967-7629.

Your NDA Is Important; Make Sure It’s Done Correctly

Nondisclosure agreements (NDAs) are important tools in the business world. They can allow you to explore new business ventures, bring new employees or contractors on board, or seek investments, all without fear that the “secret sauce” that makes your business what it is will be jeopardized.

But just saying something is secret, or perhaps worse, getting some stock NDA off the internet, is a recipe for trouble. The things and secrets you’re trying to protect are too valuable for that. Drafting a rock solid, enforceable NDA is more than just a form contract, and there are things in NDAs that should be there to ensure that they are as solid and protective as you intend them to be.

Read on as our Chicago business litigation lawyer at Ellis Legal explains more.

What is Protected? Be as Specific as Possible

Often, an NDA will state that it protects “all information” or some general, all-encompassing term like that. But that’s a mistake; while NDAs are enforceable, many courts do want to know exactly what is being protected—and “all information” is so broad that many courts will say it really protects nothing at all.

There is, of course, a balance—you don’t want to exactly list that which is supposed to be private and confidential; in the event, you have to enforce the agreement, the NDA would be filed in court and part of the public records. But you also need to have some way of identifying what it is that is supposed to be confidential.

You Still Need Consideration

NDAs can be one sided, but they do need consideration. Someone has to get something, or give something up, in return for agreeing to the NDA. If someone is getting a job or an opportunity, or something of benefit for agreeing to the NDA, the agreement should state that. This is often a problem with current employees; many companies make them sign NDAs, but don’t give them any extra benefits for doing so.

How and When the Information Can be Used

Setting the rules for accessing and using confidential information is important. Even though you’re granting access to your confidential information, that doesn’t mean someone can use that information all the time or for any purpose.

Yes, your NDA will allow someone else to use, access or review the information that is private or confidential. But how can they use it? For what purpose? For how long? Is there a way that they can and cannot access that information?

Returning the Information

How will the confidential information be returned to you when access is no longer needed? If access is for a one-time purpose, like doing due diligence on a business purpose, if the transaction never happens, your NDA should say how confidential information is returned to you—and that any information the other side does access should be destroyed if it cannot be returned.

One way you can help with this problem is by setting up a separate email account for the project you are working on. That way, if need be at the conclusion of whatever you are doing, you can just access the accounts to make sure electronic data like emails are destroyed.

Speak with a Chicago business litigation attorney at Ellis Legal at (312) 967-7629 to help protect your business and it’s confidential information. 

Ethical Issues in Conflicts of Interests With Former Clients

Attorneys have an ethical duty to avoid representation of clients whose interests are adverse, or where representation of a client may create a conflict of interest.

Two Types of Conflicts

There are actually two Rules of Conduct that address this rule: one deals with two clients who may concurrently have matters that conflict with one another (for example, representing two people in a divorce or two partners in a partnership dispute).

But there is a separate rule that is a bit harder for many attorneys: the rule that prohibits the representation of a client whose interests are adverse to that of another, former, client—that is, conflict with a client whose legal matter has long wrapped up, and where the attorney-client relationship has long ceased to exist.

This is a significant difference. When there is one concurrent matter (like a divorce) where there are two clients, the issue isn’t often whether the matter is similar enough to constitute a conflict of interest—it’s usually obvious that the matter is similar.

However, former cases and clients create some difficulty because the old and new matters may, on the surface, seem different enough (and, in fact, may be completely different lawsuits if litigation is involved). 

So how similar is too similar, such that the attorney cannot represent a new client against an old client?

How Similar is Too Similar? 

One thing to ask to see if there is a conflict between a current and prior client is whether the matters for both clients are similar enough that a conflict actually exists. 

Courts normally will ask whether both cases or matters involved similar facts or legal issues or whether information gathered in the representation of one client in the former matter could help the “new” client in the current matter.

Note that to have a conflict of interest, thus prohibiting a lawyer from representing a client, the lawyer doesn’t actually need to have obtained confidential information or used the confidential information. The ARDC and the professional rules of conduct in Illinois consider it to be a conflict so long as it is reasonable to believe that confidential information could have or would have been shared and used.

If information gathered in the prior representation has relevance in the new, current litigation, there could also be a conflict of interest between past and current clients.

Types of Representation

A conflict can exist, even where the type of representation differs. 

For example, if a lawyer draws up a contract for a client and then represents another new client who sues the old client under that same contract, even though one representation was transactional (contract drafting) and the other involved litigation, this would still constitute a conflict of interest.

If you have a problem or issue with the ARDC, or an legal ethical problem, let us help you. Speak with a Chicago attorney discipline attorney at Ellis Legal at (312) 967-7629 today.

Don’t Let Creditors Pierce the Corporate Veil and Come After You, Personally

Many people are aware that one of the big benefits of forming a company is protecting personal assets. A legally formed company is its own separate legal entity, and while the company can be sued or liable to someone, all that the debtor can get are the assets and money of the company—not the assets of the owners, managers, or officers individually.

That's called a corporate veil. But there are times when that corporate veil can be pierced, allowing a debtor or someone with a judgment to come after your personal assets to collect a business judgment. Often, this happens when a business owner makes mistakes or gets careless, giving the creditor an avenue to go after personal assets.

Read on as our Chicago business litigation lawyer at Ellis Legal explains more.

Using Your Own Personal Name

One big mistake that people make is signing contracts in their own name, personally, and not as an officer, or on behalf of the company. 

And it's' not just your signature that matters—the body of the contract matters also. Signing a contract in your name "as President of the company" won't shield you if you are named individually in the body or text of the contract itself.

Mixing and Commingling Debts and Assets

Another common mistake is commingling personal assets, money, and liabilities with corporate ones. This often happens when someone keeps corporate money in their personal bank account or has the company pay a personal debt (like a car payment). When the line blurs between personal and corporate debts, assets, income, payments, and budgeting, a court can find that you, personally, are just an "alter ego" of the company, making you one and the same.

Avoiding Alter Ego Liability

There are steps you can take to avoid becoming an alter ego of the company itself.

If there will be money or assets or debts paid or deposited into your personal account, document it. Document both what is being deposited or paid, but also, document it with a corporate resolution.

So, for example, if the company has agreed to make your personal car payment, there should be a resolution in the corporate records that says that (and preferably, which explains why the payment is being made by the company).

Payments that a company makes to or for your personal debts or liabilities, should be consistent. Don't pay your car payment this month with company money, then nothing next month, then the month after, the company makes your mortgage payment. This haphazard, inconsistent, and undocumented intermingling of corporate and personal expenses is a recipe for disaster.

Stay Within Corporate Authorization

If you are making a deal, signing a contract, expanding the company, or taking any other kind of corporate action, don't do it on your own. Make sure there is some corporate approval behind you, like a meeting where the board of directors has approved what you are doing. This way, you don't look like you're acting "on your own," but rather, in your corporate capacity.

Speak with a Chicago business litigation attorney at Ellis Legal at (312) 967-7629 to make sure that you and your company are protected as much as legally possible. 

Should You Keep an Attorney on Retainer?

If you are like most businesses, when you have a legal problem or you sense one coming up in the future, you have to find an attorney. Maybe you call a bunch that you know or that were recommended to you. You spend time interviewing them or asking basic questions. Some may be perfect, but they may not be on the time schedule that you need. 

Sometimes it may seem like finding an attorney for every single legal issue is as difficult as dealing with the legal issue itself.

It would be really nice if you could just pick up the phone and have one ready to talk to you. Maybe it's time you considered having counsel on retainer for your business.

Our Chicago business litigation law firm at Ellis Legal explains more below.

What Does Being on Retainer Mean? 

Having an attorney on retainer generally means that you pay one lump sum (a retainer) in advance to the lawyer, even before there are any pending legal problems. So, the lawyer has been "prepaid" for what you will need him or her for in the future. 

Fee arrangements can vary—some may have a set monthly fee, an extra fee for actually going to court, or a reduced hourly fee for any work the lawyer does; others may not. 

But if you do have a larger or mid-sized business, having a lawyer on retainer can have a number of benefits.

Familiarity – The attorney that you have on retainer knows your business. He or she knows your business' past, how you do business, and the history of any legal problems. You do not have to re-explain every situation because you're always talking to a new lawyer.

Being proactive – When you are paying an attorney for every hour, it can be a disincentive to act proactively. But wouldn't it be nice to have comprehensive policies and procedures? Or to have someone you know to ask how to handle a problem before it becomes a problem?

Much like preventative medicine, an attorney on retainer can do those things for you, on your schedule. 

Responsiveness – Although an attorney on retainer may also have his or her own client base, separate from you, there is often a much better response time from attorneys to whom you have already paid a retainer. 

You always have someone to call and get almost immediate legal advice or attention if needed. You aren't just "another client calling," but rather, you are the client that retains that attorney. That can mean that your calls get answered quicker, and if you need a letter or documents drafted or sent, they get done that much quicker.

Saving money – If your company does have a lot of legal issues, you are often saving expensive hourly fees, by just having an attorney on retainer. 

Yes some retainers will still have an hourly fee involved, but some may not, for certain tasks. This is especially true if you have one kind of work that the attorney will do routinely (such as sending X number of demand letters every month, or reviewing X number of the same kind of contract every month).

Speak with a Chicago business litigation attorney at Ellis Legal at (312) 967-7629 today to see if having an attorney on retainer is right for your business.

ADA Testers: What Are They and Can They Sue Your Business?

The Americans With Disabilities Act (ADA) is a powerful law that provides protections to those with disabilities. One of those protections is the right for public buildings and employment to remain accessible to those who are disabled. If a building does not meet the specific structural requirements of the ADA, the disabled person can bring a lawsuit against the building owner or the business. 

Read on as our Chicago business litigation lawyer at Ellis Legal explains more about ADA lawsuits.

ADA Testers

However, the ADA has had another unintended consequence: The use of ADA testers.

ADA testers are people who are disabled as defined by the ADA and who go to local businesses and establishments to check to see if the businesses’ structures and premises are compliant with the ADA. They will measure every step, ramp, door opening, and other areas of compliance. 

ADA testing has even extended to websites, with ADA testers visiting websites to evaluate them for ADA compliance.

And if testers find that there is noncompliance with the ADA, they will sue.

The Debate For and Against

The use of these testers has become very controversial, largely because businesses see these testers as nothing more than lawsuit generators.

While businesses want to be compliant with the ADA, their position is that these testers were never on their property to do business—just to test the facility for ADA compliance. As such, the businesses argue, these testers have no legal standing, no right to sue, and have personally not been denied any right or been discriminated against.

They also say that many lawsuits derive from what businesses see as minor, trivial, or nominal ADA violations. Many of these violations are brought by what businesses call “serial litigants,” who bring multiple lawsuits against multiple businesses, thus driving up the cost of doing business.

Testers and many disability rights groups take a different approach. They contend that testers work for the disabled population in general and that testers are able to file lawsuits that force businesses to be ADA-compliant when individual disabled customers may not be able to. In essence, they see these testers as “citizen enforcers” of the ADA on behalf of the larger disabled population.

Are Lawsuits by ADA Testers Valid? 

But can a tester actually bring a lawsuit for an ADA violation? 

That issue is up in the air, with different laws coming from different federal courts. The Supreme Court had the chance to settle the issue in a case that was brought to it, but the Court declined to rule.

In the seventh circuit, covering Illinois, businesses may have a bit of an advantage, as the seventh circuit has held that a Plaintiff suing under the ADA must have had an interest in the business, that goes beyond just testing for ADA violations to have standing.

But the issue is still unsettled, and while lack of standing remains a valid defense to these kinds of ADA claims, that may not always be the case, and it certainly may not be the case for Illinois businesses who have offices or locations in different states, where those federal circuits may have found that testers do have the requisite standing to bring ADA lawsuits.

Is your business being sued for any reason? Speak with a Chicago business litigation attorney at Ellis Legal at (312) 967-7629 today.

Receivers and Receivership: How and When are they Used?

In many business law cases, there are allegations of fraud or mismanagement of companies that are thrown about during the course of the lawsuit. That may even be the subject of the lawsuit, such as with shareholder derivative cases, or cases where partners feel they have been cheated out of profits or distributions or dividends.

When those allegations happen, there is usually a motion to appoint a receiver that is filed. But what is a receiver, and when are they used in commercial litigation cases? Read on as the Chicago business litigation lawyer at Ellis Legal explains more.

What or Who is a Receiver?

A receiver is a neutral third party, unassociated with the business, the lawsuit, or the parties to the lawsuit. The receiver’s job is to run the company—the receiver basically “takes over” the company from the owners, under the direction of the court, during the course of the lawsuit.

The receiver will consult with the owners of the business, and the business owners will work with the receiver, but the receiver has ultimate control over the final decisions that are made by the company (often with permission from the court for major decisions) while he or she is in that role.

Good or Bad? 

If you are the business owner, this can be bad; you are losing control over your own company, and employees can lose faith in the company. Compensation of owners can be affected, as can business creditors, as the receiver must determine who gets paid what and when. The receiver may not know the ins and outs of the business, again, weakening the business financially and morally.

If you are the other side, someone who feels he or she has been cheated by the business, the receiver is a good thing; the receiver is someone who accounts to nobody but the court, and you will get to see what the company has been doing financially, and you have the security of knowing that while litigation is going on, no corporate assets are being wasted, or funneled out of the business.

When are they Appointed? 

Appointing a receiver is a drastic remedy, and an expensive one—the parties have to pay the receiver, but sometimes the receiver will be paid out of profits of the business itself, if there is any. So, courts don’t agree to appoint one unless absolutely necessary.

This can be where there is tangible evidence of fraud, mismanagement, waste, or questionable accounting practices.

Receivers are often used to wind down or dissolve a company when there is concern that creditors or shareholders may not be paid.

Business contracts may also say that the parties agree to the appointment of a receiver if needed.

When a creditor has a security in property, a receiver can be appointed to protect the security and make sure it retains its value. This often happens in disputes over real estate. The receiver will act as the landlord, or ensure that the physical property is not damaged.

Is a receivership right for you, in your case? Ask us. Speak with a Chicago business litigation attorney at Ellis Legal at (312) 967-7629 today.

Want to Arbitrate? Make Sure Your Arbitration Clause is Enforceable

The Chicago business litigation lawyer at Ellis Legal explains that there are pros and cons to including an arbitration agreement in your contracts. Whether an arbitration agreement is best for you depends on who you are and your situation. But if you do decide to include an arbitration provision, you want to make sure that it’s enforceable and that the language in your contract does what you need it to do.

Why So Difficult? 

Arbitration, and arbitration agreements are controversial because you are taking away basic rights from the other side (and from yourself, but you’re the one opting for arbitration by including it in your agreement).

These rights include things like the right to a jury, the right to have your case decided or heard by an elected judge, or the right to engage in the full breath of discovery that you would normally have under the rules of procedure.

Make it Clear

If your arbitration agreement is on its own, as a separate agreement, on a separate document, great. But if it is included as part of a larger contract, don’t bury it. The arbitration agreement should be bolded, highlighted, or set forth in a way that the other side sees and acknowledges it.

You can give a short description of arbitration, but you need not give a whole primer on the ins and outs of arbitration; a general statement that the rights to a jury are being waived, should suffice.

If you plan on doing a lot of arbitrations, you do have the right to talk to, and interview, arbitrators and arbitration companies. If you do that, you want to also include the name of the arbitrator or company that you want to use.

Fees, Costs, and Location

While you can have a “prevailing party pays attorneys fees provision” in your arbitration agreement, you should not make the other side pay all of the other expenses of arbitration, such as the arbitration fees. 

For those who may be geographically distant from you, you don’t have to arbitrate where they are, but you should have a reasonable distance where the arbitration will take place—for example, within 100 miles of your office or anywhere you have an office.

In other words, when it comes to cost, and distance—be reasonable. Don’t “punish” the other side by making them do all the traveling and paying all costs (although you can make them pay costs, if they lose the case).

No Alteration of Damages

Your arbitration agreement should never waive any substantive rights the other side would have or alter the damages that are otherwise receivable under any law or contract.

So, for example, if a law says that the prevailing party pays the others’ attorney fees, your arbitration agreement should not say that only you get attorney fees. If a statute says that the winning party gets double the amount of damages, your arbitration agreement shouldn’t take that right away.

Speak with a Chicago business litigation attorney at Ellis Legal at (312) 967-7629 today to make sure your contracts are enforceable and do what you need them to do.

Protecting Yourself From the Other Sides Bankruptcy: It’s Not Easy

When you enter into contracts with other businesses, you may give some thought to what would happen if they default on or don’t fulfill their obligations under the agreement. But you are somewhat content because you know that you can sue, and with the right lawyers and the right contractual language, you will at least recover damages for any breach of a contract.

Unless that is, the other side files for bankruptcy. Although some contracts can, in limited cases, survive the other side’s bankruptcy most will not, leaving you holding the bag, with no avenue to recover any kind of damages.

The Chicago business litigation lawyer at Ellis Legal explains more below.

No Bankruptcy Clauses

So what about just having something in the contract that says that the contract, or the obligations under it, cannot be terminated or discharged in bankruptcy? After all, people can contract for what they want—including contracting away rights if they want to.

You’re not the first to think of this—it’s called an ipso facto clause—and it is unenforceable, no matter how you word it and no matter who agrees to it.

Types of Ipso Facto Clauses

Ipso facto clauses come in many forms.

One common form is just saying that the debt cannot be discharged in bankruptcy. 

But another less common type of ipso facto clause, which is still legally unenforceable, is one that says that if the other side files for bankruptcy, it will be considered a default under the contract—even if the other side is technically fulfilling its obligations, and thus, is not otherwise in default under the agreement.

Often, people try to take away specific bankruptcy rights—such as saying that you can still collect a debt under the contract, even after the other side files for bankruptcy in violation of the automatic stay.

Unenforceable Provisions

None of these are enforceable. Federal bankruptcy law will take precedence over anything you agree to, which lessens, weakens, or undermines bankruptcy laws. By law, all of a debtor’s creditors are treated equally in bankruptcy court, and you cannot give preference to any one creditor (including yourself) by virtue of an ipso facto clause—whether you’re the one filing for bankruptcy or trying to collect on a debt.

How to Avoid the Other Side’s Bankruptcy

There isn’t much to do to avoid the consequences of a debtor filing bankruptcy. However, if you can make yourself a secured creditor, you have some protection. Collecting on a security (for example, repossessing property or foreclosing on real estate) is still allowed after a bankruptcy (just make sure that you do have legally secured property).

You also can have the other side sign a personal guarantee. That way, if only one of the other side’s entities that signed the agreement (the business or the individual person who signed the guarantee) files for bankruptcy, you can still legally pursue the one that did not file for bankruptcy.

We can help you draft contracts and business agreements that work. Speak with an experienced Chicago business litigation attorney at Ellis Legal at (312) 967-7629 today. 

Payment Plans For Debts Are Good-If They’re Done Correctly

If you have a business in Chicago with clients or customers that could end up owing you a decent sum of money for your services, you may run into a situation where someone just can't pay you all of what you are owed when you are supposed to be paid.

Some just won't pay you at all, but others will ask to "pay what they can" when they can. Some may not pay you for an extended period of time, and then, out of the blue, they may pay you a little bit on the balance that is owed.

Read on as the Chicago business litigation lawyer at Ellis Legal explains more.

Being Flexible Can be Good

Certainly, it is always better to try to work out a solution with businesses or people who owe you money instead of rushing right into a collection lawsuit. You may think "something is better than nothing," and just take whatever is paid when it's paid—after all, the debtor is trying, in good faith, to pay.

That's logical thinking, and it can work—if it's done correctly. But there are pitfalls to this strategy.

Accord and Satisfaction

Whether purposeful or not, many debtors will send a partial payment with a notation (often on a check) that says" in full payment" or similar language. Be very careful, as legally, if you are sent money with some kind of notation (or even a separate email or text to that effect), that can be seen as an accord and satisfaction.

That means that the partial payment you accepted also became your acceptance of the debtor's "terms," specifically, that what was paid satisfies 100% of the debt owed. Otherwise, it will be very hard for you to convince a court.

A Real Payment Plan

If you do want to accept a partial payment or any kind of payment plan, it is important to note to the debtor that acceptance of partial payments doesn't affect or alter the balance on the debt itself. That understanding should be mutual, before you cash the debtor's checks or accept the debtor's money in any form.

If your debt had a written contract attached to it when it was first incurred, you can put in "no waiver" clauses or similar language that specifically gives you the right to accept partial payments or late payments, so that's clear from the beginning, without sacrificing any of your rights under the agreement.

The Entire Debt

Payment plans should also give you the right to collect the entirety of the debt, plus attorney's fees, if there is a default on the payment plan. For example, if the debtor owes you $50,000, and you agree it can pay $40,000 in a payment plan, and there is a default on the payment plan, you want to maintain the right to sue for the full $50,000—not the reduced amount.

Speak with an experienced and resourceful Chicago business litigation attorney at Ellis Legal at (312) 967-7629 today if your business has a business contract lawsuit. We can help you stay out of legal trouble. 

Make Sure That Hold Harmless Agreement if Drafted Correctly

Anytime you sign a contract, there is always a legal risk. The same goes when dealing with customers or clients. Wouldn't it be great if you could limit, or stop altogether, the risk of lawsuits? It turns out that, at least to some limited extent, you can do just that.

So-called hold harmless agreements, or exculpatory contracts, are nothing new; all of us have probably signed them at some point in our lives. Usually, they are associated with the risk of injury at an event or from participating in an activity of some kind.

But hold harmless agreements aren't just for limitations on personal injury claims. They also have some use in limiting exposure and liability in business contracts. Our Chicago business litigation lawyer at Ellis Legal explains more below.

Don't Excuse Yourself From Too Much

You cannot just hold yourself completely harmless and blame-free for any breach of a contract. If you aren't bound to the contract at all, and there's no consequence to a breach, the contract can be seen as illusory, and thus, unenforceable.

Limiting Liability

But there are things you can do or add to an existing contract to limit your liability to another party in a business transaction.

One is to limit the extent of contractual damages. So, for example, you could have a cap on the dollar figure that can be claimed for damages. Or, you could limit the type or nature of damages (for example, by excluding consequential damages, or loss of business profit damages, or similar ways that contractual damages are measured).

You can also limit, and hold yourself harmless from, unexpected events that are out of your control. So, for example, you could say that you cannot be sued if a breach is a result of something your supplier or contractor may do or not do. You could limit liability for things like weather, or storms, or law changes.

It is important when using a hold harmless, to say what you are being held harmless from. Is it all activities? Or any action or omission that you caused?

You can also include an alternative dispute resolution clause, which doesn't limit your liability, but could take the case out of the hands of a jury, if that's something you're concerned about.

Injuries and Hold Harmless Agreements

If you have a business where someone could get physically injured, it is even more important to include hold-harmless agreements. 

Be certain that the agreement says that people are signing away the right to sue for injuries both inherent and not inherent in the particular activity and that you are exculpating yourself even from your own negligence.

Remember to make any hold harmless and stand out from the rest of the agreement if it is incorporated into a larger agreement. This can be done through bolding, larger type, or putting the hold harmless on a separate contract page.

We can help you draft an enforceable hold harmless agreement. Speak with a Chicago business litigation attorney at Ellis Legal at (312) 967-7629 today.

Lawyers May be Easy Pray for Trust Account Scammers

Are you a technology expert? Can you spot a hacker? You may answer no to both of these questions—but when it comes to your ethical obligations as an attorney, you need to be careful because, ultimately, you are the one held responsible for your trust account, even if you are the one who is a victim of an online fraud or scam.

Keep reading as our Chicago business litigation lawyer at Ellis Legal explains more.

Why Are Lawyers Good Targets? 

There are a lot of reasons why attorneys are great targets for hackers and scam artists. They handle big-dollar transactions and hold and maintain significant sums of money in trust accounts, and by and large, they are not experts in technology.

Many of the problems come from the fact that funds in a trust account (or any bank account) may be available to use even though they have not been cleared by the bank. That can create a scenario where the lawyer spends or disburses funds and figures everything must be fine. Otherwise, they wouldn't have had access to the money. But that's not true. 

Later, when the funds don't clear (such as where the check was counterfeit), the attorney's account—including the attorney's trust account-end up debited for the amount of the check to "pay the bank back."

Common Scams

Many scams are aimed at getting lawyers to disburse funds based on the assumption that funds have cleared when, in fact, they have not done so.

One common scenario is a client who urges a lawyer to help him collect funds or money owed to the client. The funds are sent by the "debtor" to the lawyer, who disburses the funds to the creditor client. But later, it turns out that those funds never cleared, and thus, the lawyer is out the money, and his trust account has been debited.

Often, the recipient of the funds is overseas, somewhere, the scammer cannot be tracked down for the funds or ever found.

Other scams are much more insidious and hard to detect. For example, sometimes, someone gains access to the email address account of a buyer, seller, or creditor. They ask for money to be collected or disbursed, and it is—but the actual creditor or person owed money, was never involved in the transaction; his or her email was compromised by a hacker or scammer.

Look for the Warning Signs

Red flags to detect scams include what you may see as obvious: Clients who can only be contacted by an email address, but you never actually speak to them, significant sums of money are involved in the transaction and the promise of an attorney fee for what seems like not a lot of work.

You should always hold funds in your trust accounts until you get confirmation that the funds have cleared; don't give in to clients that pressure for a quicker distribution. Check with your bank to ensure that they have, in fact, received the funds that you are prepared to disburse.

Ethical problem or issue? Speak with a Chicago business litigation attorney at Ellis Legal at (312) 967-7629 if you have a problem or complaint with the ARDC. 

The Proper Use of Photo Releases

We live in an age where everybody seemingly has a camera with them on their phones or devices. It's just so easy to take a picture of something or someone and put it on our website or social media feed. And if you do get that perfect picture, you may want to incorporate that photo onto your website or advertising material.

But not so fast. Because if the picture you took has people or their property in it, you could get into trouble, if you don't have a photo release.

Yes, You Need a Release

Many of us already know that you can't just walk out in public and start taking pictures of people and publish those photos without a release. 

But many people believe that if they are taking pictures of their own employees, or perhaps of a business function, like your business' picnic or charitable event, that the pictures you take, and everybody in them, are fair game to be used in whatever marketing material that you want, wherever you want to use them.

That's not how it works. It doesn't matter who you're photographing or where. What matters is what you are using the photo for.

 If you use it for any commercial or business purposes, you must have a photo release from whomever is in that photo, or whoever owns property that may be pictured in your photos.

It doesn't matter that you aren't selling the pictures themselves for profit; if the pictures are being used, directly or indirectly, to further your business purpose (for example, on a billboard or on your social media feed that promotes your business), you need to have a release.

Public Places

It doesn't matter if the person is in a public place and can be seen by the world. The question isn't whether you have the right to take the picture—if they're in public, you do—the question is what do you have the right to use that person's likeness and image for?

Remember that releases need to be signed by parents, if someone in the picture is a minor. And owners of any property you may put in your pictures, need to sign releases as well, as people have a right to profit off of and to control dissemination of property they own, as well as their own personal likeness.

No Release Needed? 

There are limited situations when you don't need a release.

Anything being used for newsworthy or news reporting purposes doesn't require a release. And any photo you take just to keep for your own use (for example, just so you have a "history" of your company's office party) doesn't require any kind of release.

What's in a Release? 

If you do use a photo release, it should have the subject sign and provide his or her date of birth and other identifiable information. The release should specifically say that the person or the property could be used for marketing or for profit in commercial advertising materials, and the subject should agree that he or she does not get to share in monies derived from the use of either one.

Releases should not just cover the picture, but anything that is derived from them—for example, if you put the picture in a collage, or enhance it with some kind of artwork, that s derivative work, that you want covered by your release. 

.Speak with a Chicago business litigation attorney at Ellis Legal at (312) 967-7629 to help with your business with its legal issues and problems. 

When Things are Left Out of Your Business Contract

When a typical business contract is formed and agreed to by parties, it is likely the product of a lot of negotiation that occurred before the contract was entered into. And hopefully, the contract reflects everything the parties did, said, and agreed to, before the contract was formed.

But sometimes, it doesn't.

And when it doesn't, it can lead to parties complaining that the contract was supposed to say X, Y, and Z because that's what was discussed and agreed to pre-contract. Parties may feel deceived, or feel like they have a right to get out of the contract, as it is not a true reflection of what was actually agreed to.

Our Chicago business litigation lawyer at Ellis Legal explains more below.

No Omitted Pre-Contractual Terms Allowed

The problem with this argument is that the law doesn't allow you to let in evidence of what was discussed pre-contract in order to prove the terms of the contract itself—that is, you can't say, "We agreed to X, but the contract doesn't say that." 

Rather, the law assumes that whatever is in the contract is there because the parties wanted it there, and whatever is not there was omitted because the parties wanted it omitted—even if, in reality, that's not what happened.

The Parole Evidence Rule

The parole evidence rule does allow those pre-contractual discussions and agreements to be admitted in court and used to prove the terms of a contract, but only under certain, specified conditions.

If the contract contains some kind of term that is not defined, or which is capable of two differing interpretations, the parole evidence can be used to show what the term or provision of the contract means. This also includes situations where the contract contradicts itself—that is where two different parties of the contract conflict or cannot be read harmoniously. 

As you can see, parole evidence can be used to clarify the contract, or help the parties better understand their rights or obligations, or determine what a contract means—but it cannot be used just to "add something that should have been put in there."

Completing Incomplete Contracts

There is another time when parole evidence can be used—to clarify or fill in parts of the contract that may be incomplete. When a contract is incomplete—that is, it doesn't include all the material terms or conditions—parties may try to say that there is no enforceable contract at all, as the parties never had a mutual understanding of the contract's essential terms. 

But parole evidence can be used to provide and supply terms that are necessary to make an otherwise incomplete contract into a complete one, to show that all the material terms of the contract were, in fact, agreed to even if those terms were never written into the agreement. This can turn an otherwise unenforceable contract into an enforceable contract.

Avoid problems, and make sure your business contracts are done right the first time. Speak with a Chicago business litigation attorney at Ellis Legal at (312) 967-7629 today.

Ethical Advice for Dealing With Pro Se Litigants

It may happen that you have a case, and come to learn that the other side of the case, is pro se—that is, the other side is self represented. This would only be in cases where the other side is an individual—companies cannot self-represent—but in some areas of law, particularly family and some business or contract law cases, people can, and do, opt to represent themselves.

The Dilemma

This can lead to an ethical dilemma for an attorney on the other side. 

On the one hand, you have an obligation to seize on every advantage that you can for your client—and the ability to “take advantage’ of a pro se litigant seems like a great opportunity to get your client a better outcome than he or she would have had if there was an attorney on the other side.

On the other hand, there are ethical rules to what an attorney can, and cannot do, when dealing with pro se litigants.

Being Too Nice

One of the big pitfalls for lawyers actually isn’t insidious or maliciously seeking an advantage; many attorneys actually get in trouble because of benevolence. 

The urge as a human being is to be helpful to the pro se litigant, understanding that he or she likely has no idea what he or she is doing. But being too helpful can morph into giving legal advice to the pro se litigant—a violation of your ethical duties to your client and, potentially, creating a conflict of interest.

Communicating with Pro Se Litigants

Remember that pro se litigants, although they may get more leeway from a court, are still subject to the applicable court’s rules of procedure—and you, on the other side, have an obligation to enforce them.

You are certainly allowed to, and perhaps should, couch your discussions with the pro se litigant in plain, “nonlegal” terminology so as to allow the pro se litigant to understand what you are saying.

You also would likely be allowed to tell the pro se litigant how to navigate the courts—for example, giving a phone number to a judicial assistant or telling the pro se litigant how the clerk of the court accepts submissions.

While you don’t have an obligation to file the pro se litigant’s paperwork for him with the clerk, in some cases, you may have to do so. For example, if the pro se litigant sends an answer to the complaint to you but doesn’t file it with the clerk, it is OK for you to forward the document to the clerk for filing.

Be Clear in Communications

It is important to remind the pro se litigant that you do not represent him or her. You are looking for trust, not reliance; that is, it is always good and advisable to be trustworthy and honest (and it is likely an ethics violation to purposely mislead a pro se litigant)—but you do not want a pro se litigant to be relying on you for advice about what to file, how to word a motion, or what kind of discovery to conduct.

Speak with a Chicago business litigation attorney at Ellis Legal at (312) 967-7629 if you have an ethical problem or issue with the ARDC.