Something For You To Think About If You Have Been Subpeonaed For Deposition: Lawfirm Sanctioned for Allowing Client to Conceal Information in Deposition

http://www.law.com/jsp/nylj/PubArticleNY.jsp?id=1202495378439&slreturn=1&hbxlogin=1#

This New York Law Journal describes how a New York law firm was sanctioned for allowing its client to conceal information during a deposition, specifically, the fact she'd found a new job within two weeks of being terminated from her old job. This was an important piece of information in valuing the plaintiff's claim for wrongful termination/discrimination.  What was particularly interesting about the article was that the judge stated that it was while viewing the video of plaintiff's deposition that he was able to determine the deponent was lying.

The judge said it became clear when he saw the videotape of the deposition. "The body language and evasion is on the videotape," he said. "It's shocking and deeply disappointing to the court." 

In the right cases, capturing the demeanor of a witness on video during deposition can add powerful additional evidence to the record. I have used this technique against the other side with good success recently in the courtroom, and the additional cost of videotaping the deposition, and synching the video to the written transcript, was very well worth the expense to my client in the end. 

Read the online article and consider searching for “deposition” on YouTube.com for live examples of what NOT to do if you are going to be deposed.  Juries are comprised of your neighbors, and they are smart, capable people.  Tell the truth, and with the assistance of a reputable and capable lawyer, you will prevail and persuade the trier-of-fact.

The Second of the Seven Deadly Sins of the Construction Industry: Knowing Your Cash Position

The Second of the Seven Deadly Sins of the Construction Industry:  Knowing Your Cash Position

Seven Avoidable Mistakes Construction Businesses Commonly Make

Last week, I discussed accountability as the first of seven important internal controls to help solidify your company in a fluctuating market.  Over the next few weeks, I’m going to discuss seven mistakes commonly seen in the construction industry, and talk about ways you can institute internal controls to correct these situations.  This week we turn to your cash position.          

It should go without saying, but here it is:  Cash is King.  This phrase is a short-hand reference to the importance of cash flow in the overall fiscal health of your business.  Sufficient cash on hand is critical for funding short-term operations, purchases and acquisitions. 

If you have a plan implementing employee accountability, then cash planning will become your guide to success.  Establish a business plan that represents the “translation” of the revenue and profit plan into cash flow planning.  The plan should answer questions such as: When are large expenditures due?  Does your line of credit at the bank have to be cleared for 30 days each year?  Is your principle reduction on debt larger than depreciation, or visa versa?  What are the expected and manageable terms of our revenue billings?  What can be done to increase cash now and each week? 

Many companies are profitable, but cash poor. Just like you prepare, work and manage a construction schedule, so must you prepare, work and manage construction draws and requisitions.  Just like you project the substantial completion of a job, so must you project your cash flow by project so you can manage your business’ needs.

It is essential you know how to manage your cash flow.  Be clear with your billing and collection agreements. Make sure your billings are accurate and timely, which will allow you to be aggressive in your collections. Resolve disputes as quickly as possible.  Contact clients and customers who owe you money to address any issues.  This communicates to your clients and customers that you care, are on top of your billing and collection process, and that you actively manage cash at your company.  The squeaking wheel will often be the first to get paid.  Get in line for your payment, and stay there.  A proactive approach involving your construction management team will reduce the number of days in receivable, increase cash flow, and reduce write-offs.    

Don’t fall prey to hiding inefficiencies in your equity strength.  Many old line companies have large equities and strong cash flow, a position often described as “idle cash”. Most such companies are profitable, but when analyzing the components of their profit, there is often significant room for better performance.  Areas you can look to for improvement of your profit are:  interest, purchase discounts from paying early, cash discounts on quantity purchases (because your company has “the cash” to negotiate), and negligible interest expense (because your company doesn’t have to borrow). 

The form of your company may affect your bottom line.  For example, an “S” corporation that pays dividends to its stockholders when their salaries are below market, artificially increases profit on the books.

While we’re talking about corporate status, newly-approved SB392 authorized the issuance of a contractor’s license in California to a limited liability company, mirroring the provisions regulating contractor’s licenses issued to a corporation. The law became effective January 1, 2011.  California is now in conformity with most states on this issue.  The sponsors of SB392, the Senate committee on Business, Professions and Economic Development, “believe that the LLC form of business has needed flexibility for distribution of profits and losses separate from control and ownership which benefits commerce with no foreseeable detriment.”  The primary difference between SB392 and a similar bill that failed to get out of committee last year is that SB392 requires a contractor electing to organize as an LLC to carry $1,000,000 in liability insurance or $500,000 in liquid assets to “ensure that workers are protected despite the absence of case law dealing with limited liability companies.” This bond requirement likely means the LLC form is effectively only available to larger contractors with sufficient bonding capacity...another reason to effectively manage your cash position!

The next discussion point in this series will provide tips and tools to avoid poor business decisions.  Stay tuned!

Condo Owner Recovers against General Contractor

I was not involved in the trial of this case, but it was going on just down the hall in the Santa Barbara Courthouse.  News of this jury's verdict is published here for your information. 

http://www.tricomediate.com/verdicts/construction-defect-sb/264-condo-owner-recovers-against-general-contractor-march-2011

General Contractor Recovery against Developer $5.8 Million

Check out this report on a verdict I recently obtained for my general contractor client:

http://www.tricomediate.com/verdicts/business-disputes-contracts-sb/267-general-contractor-recovery-against-developer-58-million-may-2011

The Seven Deadly Sins of the Construction Industry

The Seven Deadly Sins of the Construction Industry:

Seven Avoidable Mistakes Construction Businesses Commonly Make

Wrath, greed, sloth, pride, envy, lust and gluttony…now that I have your attention:  whether you are a custom home builder, or high-end commercial contractor, the absence of appropriate internal controls can be fatal to your business.  As a civil litigation attorney who has seen the underbelly of many-a-contractor under very stressful circumstances, the ability to solidify your company in a fluctuating market with appropriate internal controls is the difference between success and failure.  Over the next few weeks, I’m going to discuss seven mistakes commonly seen in the construction industry, and talk about ways you can institute internal controls to correct these situations.      

The first of the seven avoidable mistakes is the failure to hold your people accountable.  The president of the company cannot do it all.  In very basic terms, ‘accountability’ means that every employee knows what is expected of him or her each and every day, how his/her job performance relates to the profits and sales of the company, and how his/her success is measured objectively.  Objectively measurable standards include sales objectives, gross profits, labor productivity, meeting schedules, material controls, and production overhead, for example.

                              

Employees must understand what ‘accountability’ means to your sales and profit.  Making a profit is directly connected to lead generation, estimating, pre-construction activities, purchasing and inventory control, labor scheduling and productivity, deliverables, equipment and vehicle maintenance, job costing, and quality control.  The estimating staff needs to understand how their efforts relate to sales and profitability no less than the foreman in the field making the project come out of the ground.  If employees are clear about the expectations you have of them, the objective measurement of their performance, and their role and job duties, then your whole team will be guarding the company’s sales and profits, not just upper management.   

Once achieved, accountability must be managed.  Managers are the hub of the accountability wheel.  Managers must communicate with employees, troubleshoot, support achievement of objectives, and simultaneously stay out of the way and let your employees do their jobs.  Managers, working with accountable employees, are a valuable resource to the company.  Employee standards linked to the profit and sales plans of the company must be clear to the employees. Objective standards of performance allow for a more open dialogue when a problem arises, because there is less room for blame or confusion over who had responsibility for the task.

Of course, securing ‘accountability’ doesn’t mean there aren’t ever any problems.  As one of my clients often says, “Construction is a blood sport.”  In any business, problems arise daily, especially in construction.  Accountability is a tool to mitigate the problems, and their effects on profit and sales. Accountability creates a process by which you can avoid making the same mistake over and over again.

Stay tuned for my discussion on the second avoidable mistake:  ignoring your cash position!

Welcome!

California offers unique challenges to small businesses, contractors and developers. By drawing together resources and new developments in one easy-to-access location, these updates are designed to help you navigate the maze of laws affecting your contracts, indemnity provisions, insurance, liens, and bonds, for example.  We'll discuss best practices, risk management strategies, and how to make the most out of difficult situations!  My law partner, Naomi Dewey, offers a blog specific to labor law issues, and I recommend you investigate her blog at californiaemployment.blogspot.com.

As an attorney with a practice dedicated to helping small businesses, I am committed to helping you access the information you need - but nothing in this blog is intended to replace the informed advice of an attorney, tailored to your specific issues. If you need to speak to a lawyer, I offer initial one hour consultations at no charge.  Although my practice is venued primarily in San Luis Obispo, Santa Barbara, Ventura and Kern Counties, with the miracles of modern technology, I can provide cost effective representation statewide.  Most importantly, if I can't help you, I will do my best to refer you to someone who can.