What pushes business execs to call for legal help?
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Regulations, discrimination claims, patent violations are
among reasons for a business owner to call on a lawyer.
TJ Conte of Mirick O'Connell: Corporate 'divorce' is a new legal issue for business.
Business owners have a lot to worry about. There are workers to hire, competitors to outbid, suppliers to negotiate with. And then there are those nagging suspicions: Is this deal 100 percent legal? Could that firing lead to a lawsuit?
So, what keeps business leaders up at night? Some of the busiest business lawyers in Central Massachusetts have answers to that question.
A 2013 survey of corporate in-house lawyers by finance advisory firm Grant Thornton found that business leaders considered regulatory compliance their second-biggest threat, after economic uncertainty. Of those citing regulatory compliance, the largest portion worried about violating labor laws.
Those results are mirrored in this region, with labor issues from non-compete agreements to age discrimination claims prompting many consultations with lawyers. David Felper, labor and employment practice leader with Bowditch & Dewey, said the top issue he's getting calls about is the enforceability of non-compete agreements. The deals, which curtail former employees from going to work for competitors, are likely to be limited by a proposal now working its way through the state legislature. Felper said companies are worried about how they'll be able to stop employees from taking unfair advantage of relationships with clients and vendors when they move on. So far, he said, it's not clear how far the new law might go.
“You need to be patient as far as what it is finally going to look like, if and when it is finally enacted,” he said.
Felper said he's also getting queries regarding the classification of workers under state and federal law. One issue is whether a worker should be considered exempt from overtime laws as a salaried employee. Another is whether someone can legally be treated as an independent contractor rather than an employee. Felper said he advises clients to make sure they're looking closely at what a worker actually does on the job, not just their written job description, when they consider these questions.
“Make sure you do a thorough job in terms of looking at all the legal standards, not just on the federal level but on the state level, as far as whether people are properly being classified,” he said.
Discrimination claims
Felper and fellow labor lawyer Jonathan Sigel, a partner at Mirick O'Connell, both said they've seen a lot of discrimination claims in recent months. That might be seen as a bit surprising since conventional wisdom holds that people are more likely to file claims during rough economic times, when there are more layoffs. (According to the Massachusetts Commission Against Discrimination, claims jumped in 2008, hitting 3,657 that year, but the number has since bounced around between 3,100 and 3,300.) Sigel said there are plenty of legitimate discrimination claims, but the law also makes it easy to file them without real cause.
“It doesn't cost anything,” he said. “You don't need a lawyer. I think people just figure, 'Why not? What do I have to lose? I'll just roll the dice'.”
Medical marijuana and the workplace
Sigel said one issue that seems to be sparking less concern today than a year ago is medical marijuana. When the Massachusetts law allowing cannabis prescriptions took effect, he said, some employers wondered if they'd be forced to make exemptions in their drug-testing policies for people with medical marijuana cards. The answer, Sigel said, is that it's not required by law, but practically, it might make sense for employers to treat medical marijuana users as they would any worker who uses prescription medication. But he said the issue has faded into the background over the past year.
“It just doesn't seem to be coming up a lot,” he said. “Either it's not that prevalent or people don't test that much, or people see it and say 'OK, just don't be high at work.'”
Corporate 'divorces'
Of course, there are plenty of legal issues beyond labor law that force business leaders to call law firms. TJ Conte, a business litigator who's a partner at Mirick O'Connell, said a new one is a ruling by the state's Supreme Judicial Court in March concerning “corporate divorces” in which one or more partners in a closely held company push a minority shareholder out of his or her position. The court decided that even if the majority partners act improperly, it doesn't excuse the “frozen out” partner from breaking his or her own fiduciary duties, for example, by going to work for a competitor.
“If you're the minority shareholder you must seek redress through the courts, though that may take some time,” Conte said.
Patent trolling
George Tetler, a partner at Bowditch & Dewey with a focus on business planning and real estate, said another issue he's seeing more often is patent trolling. The practice, in which companies file lawsuits against the users of particular technologies, is increasingly affecting non-technical firms, he said. In one case, a client without any patents of its own faced a suit over a piece of software that it bought from a vendor to use on its website.
Tetler said some of the other questions he's hearing more reflect cautious optimism on the part of local companies. More firms are asking about taking out loans to pursue growth opportunities or about dealing with local real estate regulations to set up new facilities.
“It's been an interesting period,” he said. “I think businesses are getting a little bit more bullish about spending and increasing capital expenditures and hiring people.”
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