Alternative Dispute Resolution - Mediation

(Blog) — Tue, 26 Jan 2010 13:17:10 -0800

Small business owners are constantly evaluating new ways in which to control costs, reduce overhead, and increase profits. Unfortunately, disputes are an inevitable consequence of operating a business and sometimes this results in costly litigation. However, given the fact that roughly 95% of all lawsuits eventually settle, it is important to consider your cost-saving alternatives before rushing to the courthouse.

Alternative Dispute Resolution generally refers to either Arbitration or Mediation. Arbitration is generally the more formal of the two and is usually associated with a binding ruling. On the other hand, Mediation is usually non-binding and much less formal, often held in a conference room setting. This discussion will focus on the process of Mediation.

Mediation can either be ordered by a court or initiated by individuals - even if a lawsuit is not pending. The Mediator is selected from a pool of candidates by mutual agreement of the parties and is usually a retired judge with at least 15 years of experience hearing cases similar to yours. The process usually begins with the parties providing a joint submission to the Mediator that sets forth the undisputed facts of the case. Most Mediators charge by the hour and the parties usually split the cost equally.

After evaluating the joint submission, the Mediator usually will hold a scheduling conference call. This will either take place between the attorneys, or the parties if they are not represented by counsel (generally not a good idea). During the conference call, the Mediator will usually not discuss the merits of the case beyond what is needed to estimate the length of the mediation.

Once the mediation is scheduled, the parties will appear and usually meet separately with the Mediator after which a joint session will be held. The rules of evidence are greatly relaxed in a mediation, and depending on the complexity of the dispute, there may or may not be testimony of outside witnesses.

Upon conclusion of the mediation, the Mediator will usually submit an opinion. This opinion can serve as a glimpse to what the parties can expect at trial. Sometimes this is enough to result in settlement. However, other times if settlement is not possible, it can serve as an informal pre-trial of the disputed issues.

If you are engaged in a business dispute, you need to consider all of your options prior to filing a lawsuit. Or, if you have been sued, it is usually a good idea to consider mediation early in the process to avoid the costs of litigation.

At Roth Law Group, LLC, we have experience mediating business disputes and are available to discuss your legal options at 312-419-9599.

Small Claims Actions in Illinois

(Blog) — Wed, 14 Oct 2009 13:33:14 -0700

Any small business owner can tell you that collecting overdue receivables is a major hassle. Sometimes, the amount at issue doesn't justify hiring an attorney. So, what do you do? Write off the uncollectable account or proceed in court on your own? What if your small business is sued in Small Claims Court, can you represent yourself? The answer depends on the amount in controversy and the type of business structure under which you operate.

Under Illinois Supreme Court Rule 281, Small claims matters are limited to claims of $10,000 or less, exclusive of interest and costs. Notably, a corporation cannot appear as a claimant unless represented by counsel. However, a corporation can defend itself, provided the amount at issue is less than $10,000, and it does not wish to assert a counterclaim.

In summary, a corporation will need to retain counsel to initiate any collection action in the Circuit Court, regardless of the amount at issue. However, if a small business is sued in Small Claims Court, the owner can usually represent the company (even if it is a corporation) provided that it will not file a counterclaim and the amount in controversy remains at $10,000 or less.

Contact us at 312-419-9599 to discuss your collections issues.

Roth Law Group Attorney Karl W. Roth named to Board of Directors of American Legion Post 1052

(Blog) — Wed, 14 Oct 2009 12:08:27 -0700

Chicago - Roth Law Group Managing Partner Karl W. Roth has been named to the Board of Directors of the Wayne Wright American Legion Post 1052. Post 1052 is located in Chicago, Illinois and its membership supports Veterans and local charities throughout the Greater Chicagoland area.

Roth, a former Marine Major and KC130 Pilot, has been a member of Post 1052 since returning from service in Operation Iraqi Freedom.

Roth Law Group is a proud supporter of The Wounded Warrior Project.

Roth Law Group Represents LCS Construction Co. In Lawsuit Involving Public Contracts.

(Blog) — Mon, 06 Apr 2009 07:27:11 -0700

April 6, 2009

BY TIM NOVAK Sun-Times Columnist

A court battle involving a City of Chicago contractor that has been paid $140 million over the last decade to build police stations, schools and other public facilities is raising questions about how the city ensures that the businesses it hires keep their promises to subcontract work to companies owned by women and minorities.

By law, the city requires contractors to do so. It's a way to make sure women and minorities get their share of city business.

The Rogers Park firehouse at is the focus of a lawsuit fired by LCS Construction, a subcontractor hired by Castle Construction Corp. LCS president Kenneth Littwin Sr. says Castle owes his company more than $775,000 for labor and materials.
(Al Podgorski/Rich Hein/Sun-Times)

But it didn't work that way on the construction of a $10 million fire station in Rogers Park, a lawsuit claims -- an allegation that a city official says is being looked into.

A city contractor -- Castle Construction Corp. of Markham -- pulled a bait-and-switch on the construction of the firehouse, according to the lawsuit and other records. Castle promised city officials it would subcontract all of the masonry work on the job to a minority-owned company, for $1.5 million.

Instead, records show Castle hired a white-owned masonry company -- for $550,000 less.

Then, after most of the work was finished, Castle fired the white-owned subcontractor, LCS Construction of Downers Grove.

LCS president Kenneth Littwin Sr. is now suing Castle, saying the company has refused to pay more than $775,000 it owes for labor and materials.

Beside raising questions about city monitoring of contractors, the suit could also lead Mayor Daley's Public Building Commission to seek monetary damages from Castle for failing to live up to its commitment to give minority-owned companies 23 percent of the work on the Rogers Park fire station.

"We're troubled by the circumstances that appear before us right now,'' said Kevin Smith, spokesman for the building commission. "There are sufficient irregularities [that] we intend to look closely at the measures we have in place to make sure that the expectations we have of the general contractor and the use of minority subcontractors are met.''

Castle faces similar allegations involving work for the CTA, which fired the company last October, according to a CTA spokeswoman. Castle owes money to subcontractors it used to build two CTA equipment-washing facilities, including $216,000 to Littwin's company, according to its lawsuit filed by the Roth Law Group.

John Eannace, an attorney representing Castle president Robert Blum of New Lenox, declined to comment.

Castle and Blum could also be facing other legal problems. A federal grand jury recently subpoenaed three Illinois state agencies, seeking records on any contracts Castle and Blum got under ousted former Gov. Rod Blagojevich. Blum is a friend and business associate of former top Blagojevich adviser and campaign fund-raiser Christopher Kelly.

The firehouse deal dates to March 13, 2007. That's when the Chicago Public Building Commission awarded Castle two contracts -- $10 million to build the fire station and another $21 million to build a new 7th District police station in Englewood.

Castle committed to hiring George Anthony Garth Masonry, a minority-owned company, to work on both projects. Castle said it would pay Garth $1.5 million for the fire station and $3.8 million for the police station.

But Garth Masonry, faced with "financial difficulties,'' couldn't handle both projects, according to court records in the Littwin case. So Castle hired Littwin's company to do masonry work on the fire station that began in September 2007, records show.

Castle should have first gotten permission from the Public Building Commission before replacing Garth's company, according to a report last August by Trinal Inc., a minority-owned company the commission uses to monitor minority- and woman-owned business enterprise participation on city jobs.

"Castle never notified the PBC of any difficulties meeting its M/WBE commitments,'' the Trinal report says.

"There was no documentation provided to explain or support Castle's contention that it was impossible for G.A.G. Masonry to perform on the project. Additionally, there was no documentation provided to explain or support the 'numerous deficiencies' that led to terminating LCS Construction and the supposed re-engagement of G.A.G. Masonry as a replacement'' on the fire station project.

Castle maintains that Garth's company was always involved in the firehouse project, providing "quality control services and other construction management services'' while Littwin's workers laid the bricks, according to a letter Blum's son Anthony sent Littwin after Littwin's company was fired in November 2007 -- after nearly all of the masonry work was done.

Garth's attorney Jeff Corso said Garth was surprised to learn that Castle had hired someone else to do the masonry work on the fire station. "Castle had LCS do some of the work, and we complained about that,'' Corso said. "We went in and said, 'We're supposed to be on the job.'"

Littwin sees himself as having been "caught in the middle."

"And I'm still trying to collect my money,'' he said.

Avoiding Personal Liabilty - The Importance of Observing Corporate Formalities

(Blog) — Wed, 01 Apr 2009 09:29:53 -0700

Most small business owners understand the importance of shielding themselves against personal liability arising from their corporate activities. At The Roth Law Group, we counsel our corporate clients to observe recognized corporate formalities to avoid "piercing of the corporate veil" which could leave business owners personally liable for the liabilities of their businesses.

For example, many new business owners are not aware that comingling of personal and business funds can have dire consequences. In order to avoid this, we suggest that our clients establish and fund business bank accounts before they conduct their first corporate transaction. Case law has established that business owners who use their business accounts for personal expenses might be liable for comingling.

Next, it is important that accounting records be well maintained and kept up to date and that the company be adequately capitalized so that it is able to cover its liabilities. For instance, if a company is ordering on credit without the means of paying its suppliers, the owners might be later found personally liable if the business later defaults. Also, this helps avoid comingling of accounts between business and personal.

Insurance is also important and we recommend that our clients obtain a Commercial General Liability Policy as well as Director and Officer insurance prior to beginning operations. Again, if your business is not adequately insured, the possibility of personal liability is very real.

Finally, good record keeping and staying up to date with the Secretary of State is an ongoing obligation. If a business fails to file its annual report, they may lose their "good standing" status, which essentially wipes away thier corporate shield.

These examples are not intended to provide an exhaustive list of corporate formalities and business owners are encouraged to consult with a corporate attorney to make sure they are in compliance with all formalities recognized by law.