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new business startup: establishing your business structure

A strong sales contract is key to your business

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By Steven N. Malitz, Partner

Imagine that, for 10 years, you have sold goods to a customer with nothing more than a call and a handshake. Your cus-tomer, in turn, sells your goods to the end user. For as long as you can remember, your customer and the end users have been very happy with the performance and durability of your goods. However, the goods in your most recent shipment are not holding up well, and the end users are demanding their money back and taking their business elsewhere. Now your customer is suing you, and the relationship which had been so profitable for so many years is threatening the very existence of your business.

Although we all hope for good, long-lasting relationships with our customers, disaster can strike. Therefore, sellers must protect themselves in all relationships with a strong, well-written sales contract. The sales contract need not be long, complicated or wordy. And, one such contract can govern your relationship for years without the need of enter-ing into subsequent contracts for each sale. The provisions required in the contract depend on the particular deal at hand and the nature and quirks of seller’s business. This ar-ticle focuses on four key provisions which should be included in all sales contracts.

Warranty DisclaimerFirst, your sales contract should include a clause which waives all express and implied warranties. Under the laws of most states, every sale creates implied warranties that the goods will conform to the standards of the industry and will hold up if used properly or in accordance with a salesperson’s recommendations. Such warranties are known as the implied

By Tracey A. Salinski, Partner

As a prospective business owner, you will be faced with many important decisions, including what business structure will best suit the needs of your new venture. Understanding the various types of legal structures which are available and the selection of the appropriate structure are critical steps in establishing your new business. Liability insulation, tax treatment, and ease and convenience of administration are the three most important factors to consider. Liability insulation, or protecting and shielding personal assets from credi-tors, is perhaps the paramount factor for business owners who are, now more than ever, under increased expo-sure to customers, patients, partners and clients.

This article provides a brief overview of the liability protec-tion, tax and administrative considerations of several of the more common types of legal structures available today. Please note that this article focus on the basics of only a few of the many structures in existence and is not an all-inclusive discus-sion of every type of entity structure available.

Sole proprietorship A sole proprietorship is the most basic of the available busi-ness structures. A sole proprietorship is a “business of one” with no separate legal distinction between company and

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Sales Contract Continued from page 1 ing. For example, you can limit the amount your customer could win to the actual contract price of the goods sold. A well written limita-tion of liability clause will explicitly state the type of damages the customer can recover, and, more importantly, the type of damages for which the customer cannot sue.

Choice of Law/Forum SelectionYou have the opportunity to maintain the home field advantage by including choice of law and forum selection clauses in your sales contract. With these clauses, you can tell your customer that all disputes relating to the goods sold will be litigated and decided in your state, under its laws. Without these clauses, you may find yourself litigating a dispute in a

courtroom 2,000 miles away instead of within miles of your busi-ness. If your customer is considering suing you and your contract provides that he has to travel 2,000 miles to your state to do so, he may think twice about wasting time and money in litiga-tion. It is important to

explicitly identify which state law controls and in which state the litigation will occur. And, given that you may from time to time have claims against your buyers for failing to pay the contract price, it is also necessary to have your buyers waive any objection to personal jurisdiction—that is, you want your buyers to waive any argument that your state’s courts have no power to hale them into your state to litigate the case.

Risk of LossIncluding a risk of loss provision in a sales con-tract can also help you save money. Imagine your customer places an order with you and decides he will contract with XYZ Delivery Company to pick up the goods from your

warranty of merchantability and implied warranty of fitness for particular purpose. Given the litigation-happy world we live in, buyers will claim that such warranties require that your goods conform to industry standards 100% of the time, with no room for failure. If your goods do fail, you may find yourself in costly litigation which may not turn out in your favor. However, most states permit you to free yourself from the burdens of these warranties by waiving them in a sales contract. The warranty disclaimer must be “conspicuous” and include specific language to be effective. If properly written, this disclaimer can save your company enor-mous amounts of time and money in litigation.

Liability LimitationAnother key provision in any sales contract is a “limitation of liabilities” clause. Without such a clause, if buyer proves your goods are non-conforming or defec-tive, buyer can hit you in the wallet for many reasons including breach of warranty, the cost of finding replacement materials, lost profits, labor costs, attorneys’ fees and other grounds. Consider a scenario where you sell goods to A for $100,000, who, in turn, sells your goods to B. If B sues A claiming that your goods are non-conforming, A will inevitably claim that your goods caused B to stop doing business with A, resulting in substantial lost profits to A. So, although the contract price for the goods was $100,000, A may claim lost profits of $1 million! Such a claim could destroy or seriously harm your business. However, many states allow you to limit the amount your customers can recover from you in court if your goods are non-conform-

Steven N. Malitz is a partner in the firm’s Chicago office. Mr.

Malitz has extensive expertise representing public and

privately-held businesses and individuals in sophisticated

business, real estate and tort litigation matters, from

inception through post-judgment proceedings. These

include matters involving breach of contract and

interference with contract, fraud, breach of fiduciary

duty, injunctive and equitable remedies, shareholder

disputes including oppression, valuation and buyout issues, intellectual property matters

including trademark and copyright issues, trade secrets

and restrictive covenant issues, leasing issues, business

and professional licensing proceedings, professional

negligence, real estate broker liability, construction

litigation, premise liability, defamation, and creditors’ rights including fraudulent

transfer, preference, post-judgment and tracing issues.

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warehouse. Based on your experience, you would have never picked XYZ to deliver the goods because its drivers always damage the goods. Without fail, XYZ destroys the goods that your customer ordered, and now your customer wants you to pay for the damage. You can protect yourself from having to pay for your customer’s mistake of choosing a bad carrier by putting a risk of loss clause in the sales contract. That clause will tell the customer that if he selects the carrier, then he is responsible for any damage that might occur to the merchandise while in transit. The language of the clause must also tell your customer that if he decides to pick up the merchandise, then title to that merchandise passes to him at the time it is placed in his trucks or with his carrier of choice, as the case may be. Once he has title to the goods, any damage becomes his concern, not yours.

ConclusionUltimately, a well drafted sales contract is beneficial to both seller and buyer. Obvious-ly, seller protects itself from costly litigation when it limits the grounds on which buyer can sue and the amount recoverable if buyer wins. If seller could not protect itself from litigation, it would have to factor such risk into the purchase price of its goods. Because seller can maximize protection through a well drafted sales contract, it can keep prices lower. The warranty disclaimer, liability limitation, choice of law/forum selection and risk of loss clauses are all key provisions in any sales contract. However, to be effective, the language in these clauses must be specific. Although this article offers a thumb-nail sketch of key clauses, it is best to consult an attorney knowledgeable about the state law at issue when drafting a sales contract. A generic contract simply won’t suffice—your sales contract must be tailored to your busi-ness and its issues, and must be drafted with an eye toward protecting your business and its bottom-line.

Tracey A. Salinski is a partner in the firm’s Chicago office. Ms. Salinski works regu-larly with corporate clients to structure and organize business entities and regularly counsels corporate clients regarding shareholder and governance matters. She also has experience negotiating and documenting a broad range of transactional matters, including letters of intent, asset and stock sales, joint ventures, buy-sell agree-ments, operating agreements, partnership agreements and non-disclosure agreements.

Her practice focuses on corporate and healthcare law. She advises and represents hospitals, physicians, physi-cian groups, dentists, and other health care providers in a variety of issues relating to operational, managerial and governance issues, share-holder matters, certificate of need (CON), physician joint ventures, negotiating physician employment and recruitment agreements, Stark Law, Anti-Kickback Statute and HIPAA matters, and asset protection.

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owner. The sole proprietorship and its owner are one and the same.

Liability Protection: Because a sole propri-etorship is legally the same as its owner, the owner has no protection whatsoever against business-related liability. The owner is per-sonally liable for any and all business-related claims and all personal assets of the owner are potentially at risk.

Tax Considerations: No tax returns for the sole proprietorship must be filed. All profits and losses are reported on the owner’s indi-vidual income tax return.

Administrative Requirements: No legal formalities must be observed and, there-fore, administrative requirements are almost non-existent. However, depending upon the type of business conducted, the owner may be required to file, and publish, an assumed name affidavit with the county in which it does business.

Corporation A “regular” or “C” Corporation is a very common form of business organization. A C Corporation may have one or more owners and is a legal entity which is separate and dis-tinct from its owners (called “shareholders”).

Liability Protection: A C Corporation offers its shareholders a high degree of protection against liability. A shareholder is generally not personally liable for the debts, obligations or liabilities of the corporation. The liability of an owner is generally limited only to the amount of assets contributed to the corpora-tion by such shareholder.

Tax Considerations: A C Corporation must file its own income tax returns and pay tax

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Attorneys featured in this issue

Jim BradyGeorge Apostolides Dale BergmanWilliam Anaya Bill Braithwaite

on its earnings. Each owner is also taxed on any distributions paid from the corporation. So, taxation occurs on two levels: on the corporate level and on the owner level. This is known as “double taxation”.

Administrative Require-ments: Considerable administrative require-ments are imposed upon a C Corporation. A corporation is created by filing Articles of Incorpo-ration. The corporation must adopt written bylaws, which govern the internal operations of the corpo-ration. A shareholders agreement, which governs the relationship among the shareholders, should be considered. In addition, managing a corporation on

a day-to-day basis requires compliance with certain corporate formalities, such as conducting regularly-scheduled board meetings, preparing accurate minutes of meetings, providing formal notice of meetings and electing directors. A bank ac-count for the corporation must be established.

S CorporationAn S Corporation has the same liability protection and virtu-ally the same administrative requirements as a C Corporation. What makes an S Corporation different from a C Corpora-tion is the way it is taxed. Unlike a C Corporation, an S Corporation avoids double taxation. Earnings “flow-through” to the owners (also called “shareholders”), who pay taxes on corporate profits on their individual income tax returns. Accordingly, the S Corporation itself does not pay tax on its profits. In addition to “flow-through” taxation, the S Corpo-ration structure affords its owners an important tax savings

Business Structure Continued from page 3 feature. S Corporation earnings distributed to the sharehold-ers are not subject to Social Security (OASDI and Medicare) taxes, which often times result in substantial tax savings to the shareholders. Given these tax benefits, the S Corporation structure is one of the most popular forms of business entities utilized in the United States today, with more S Corporation returns filed each year than for any other type of business structure.

Notwithstanding the advantages of the S Corporation struc-ture, it is important to note that certain criteria must be met to be eligible as an S Corporation. These criteria include, but are not limited to, the following: an S Corporation may have no more than 100 shareholders; only individuals, estates, certain types of trusts and/or certain types of exempt organi-zations may be owners; the shareholders of an S Corporation must be U.S. citizens or permanent residents; and, only one class of stock may be issued by the S Corporation.

General PartnershipA general partnership is formed when two or more people or other business entities associate for the purpose of operating a business and sharing profits.

Liability Protection: None. Owners (called “partners”) are personally liable for all debts and obligations of the partner-ship, including liability for the acts and omissions of other partners, agents and employees of the partnership. Therefore, potentially all of the personal assets of a partner are at risk.

Tax Considerations: The partnership structure provides “flow-through” taxation to its partners, meaning that the earnings of the partnership are only taxed once, at the partner level.

Administrative Requirements: Generally, no filing is required to form a general partnership; however, some states do require a partnership registration statement to be filed. Regardless of whether a filing is required at the state level, the partner-ship should consider filing a Statement of Authority, which provides notice to the public as to the scope and authority of

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Jenifer Caracciolo

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Ron CohnBarry Chatz Andrea CoxJimmy Chatz

each partner with respect to the partnership’s business and property. A partnership agreement, which governs the opera-tions of the business and the relationship among the partners, should be executed. A bank account for the partnership must be established.

Limited PartnershipA principal advantage of the limited partnership over a gen-eral partnership is that a limited partner in a limited partner-ship is generally not personally liable for partnership obliga-tions. A limited partnership must have at least one limited partner and one general partner and the limited partner may not participate in the management and control of the busi-ness.

Liability Protection: A limited partner’s liability for partner-ship obligations is generally limited to the amount of the limited partner’s capital contribution to the limited partner-ship. The general partner has no protection against personal liability.

Tax Considerations: The partnership structure provides “flow-through” taxation to its partners, meaning that the earnings of the partnership are only taxed once, at the owner level.

Administrative Requirements: A Certificate of Limited Part-nership must be filed to form a limited partnership. A limited partnership agreement, which governs the operations of the business and the relationship among the partners, should be executed. A bank account for the partnership must be estab-lished. Some administrative formalities, such as recordkeep-ing and filing requirements, are necessary.

Limited Liability Company (“LLC”)The limited liability company (“LLC”) structure has gained significant popularity since 1977, when the Wyoming leg-islature adopted the first LLC law. By 1990, all states had allowed the creation of LLCs. What sets the LLC apart from other business structures is that the LLC structure affords the

greatest flexibility among all other entity choices in terms of management structure, operations and allocation of profit and loss.

Liability Protection: Using an LLC to own business assets offers a significant layer of liability protection. Each owner (called a “member”) is generally limited to the amount of capital such member has contributed to the LLC.

Tax Considerations: The earnings of an LLC “flow-through” to the members and are taxed only once at the member level, on the member’s tax return.

Administrative Requirements: An LLC is formed by filing Articles of Organization (or in some states, a Certificate of Formation). An operating agreement, which governs the operations of the business and the relationship among the members, should be executed. A bank account for the LLC should be established. Few other administrative requirements are imposed by law.

This article is general in nature and is not intended to consti-tute individualized legal advice. It is important to remember that no one type of legal structure fits every type of business and consultation with an attorney is recommended before implementing any of the business structures discussed in this article. Ms. Salinski may be reached at (312) 876-7111 or tasalinski@arnstein.com.

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Arnstein & Lehr elevates four attorneys to partnerArnstein & Lehr recently announced four attorneys have been promoted to partner. Jenifer H. Caracciolo has been promoted to partner in the firm’s Chicago office. She is a member of both the Litiga-tion and Labor & Employment practice groups and focuses her practice in employment, municipal and commercial litigation. Caracciolo has extensive experience representing employers in a wide variety of employment-related lawsuits,

Brian Cummings Steven Daniels

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Attorneys featured in this issue

Ronnie Fieldstone

the Stark Law and Anti-Kickback Statute. She also has exper-tise in a broad range of general corporate transactional matters and counsels corporate clients on structuring and organizing business entities, as well as shareholder and governance mat-ters and asset protection. She is a graduate of Michigan State University College of Law and the University of Michigan.

Peter Shapiro joins Fort Lauderdale office Arnstein & Lehr recently welcomed attorney Peter E. Sha-piro to the firm’s Fort Lauderdale office as a partner in our Bankruptcy and Creditors’ Rights Practice Group. Prior to joining Arnstein & Lehr, Shapiro worked as an attorney at Shutts & Bowen LLP in Fort Lauderdale. He is a former CPA and has extensive experience working with reorganiza-tions, out of court workouts, and other creditor’s rights and bankruptcy issues. Shapiro is a member of the American Bankruptcy Institute, Turnaround Management Association and Bankruptcy Bar Association for the Southern District of Florida. He is admitted to The Florida Bar, New York Bar, Connecticut Bar and District of Columbia Bar associations.

Arnstein & Lehr welcomes associatesArnstein & Lehr recently welcomed to the firm ten attorneys. They include Tampa Associates Brian R. Cummings, Laurie L. Morris, and E. Tyler Samsing, West Palm Beach Associ-ate Misha J. Kerr, and Chicago Associates Raymond M. Krauze, Mark L. Littlefield, Andrew J. Sannes, Joseph W. Scharnak, Beau L. Wagner and Marc S. Zaslavsky.

Cummings, Morris and Zaslavsky are members of the firm’s Bankruptcy & Creditor’s Rights Group with Cummings and Morris also members of the Commercial Litigation Group. Samsing’s practice is focused on creditors rights, bankruptcy, real estate and related commercial litigation. Kerr focuses her practice on intellectual property and litigation. Krauze is an associate in the Construction Practice Group. Sannes is a member of both the Corporate Transactions Group and the Mergers and Acquisitions Group. Littlefield, Scharnak and Wagner are members of the Condominium & Community Associations Group.

Allan Goldberg Phillip Hudson, III Misha KerrMartin Kalish

including the enforcement of restrictive covenants, employ-ment discrimination and retaliation claims, and wage and hour disputes. As a municipal litigator, she has defended vari-ous municipalities in Illinois against Section 1983 and tort litigation, challenges to municipal incorporation and actions of municipal officials, and numerous petitions for municipal disconnections. She is a graduate of Chicago-Kent College of Law and the University of Texas.

Andrea Cox has been promoted to partner in the firm’s Miami office. Cox is board certified in Appellate Law by The Florida Bar. She focuses her practice on corporate defense, in-cluding product liability, medical device, personal injury, and commercial cases. Cox also provides trial support in complex tort and commercial litigation. She has extensive appellate experience in courts throughout Florida, including the Florida Supreme Court and United States Court of Appeals for the Eleventh Judicial Circuit. She is a graduate of the University of Florida College of Law and Florida State University.

Laura Lau Marinelli has been promoted to partner in the firm’s Litigation practice. Marinelli is based in the firm’s Chicago office and practices in the areas of commercial, con-dominium and tort litigation. She has extensive experience representing condominium associations and common inter-est community associations in litigation matters involving various injunctive and equitable remedies, as well as covenant enforcement, developer claims and breach of fiduciary duty matters. Marinelli also has vast litigation experience involving breach of contract, consumer fraud, and unfair competition claims. She is a graduate of the University of Wisconsin Law School and Winona State University.

Tracey A. Salinski is now a partner in the firm’s Business Or-ganizations & Transactions and Health Care practice groups in the Chicago office. Salinski advises and represents health care providers on a variety of matters, including operational, managerial and governance issues, joint ventures, and compli-ance with federal and state health care regulations, including

Laura Lau Marinelli

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South Florida Legal Guide recognizes nine Arnstein & Lehr attorneysNine Arnstein & Lehr attorneys received recognition in the 2010 South Florida Legal Guide. Those attorneys recognized were Dale S. Bergman, James C. Brady, Steven L. Dan-iels, Ronald R. Fieldstone, Phillip M. Hudson III, Martin Kalish, Richard L. Rosenbaum, Jeffrey B. Shapiro, and Franklin L. Zemel. Attorneys were chosen for the guide based on a peer nomination procedure. Fieldstone has been recognized in the guide each of its 10 years and Bergman has been recognized for eight consecutive years. Arnstein & Lehr was also recognized as one the top law firms in South Florida.

Providing a broad range of services in situations involving financially troubled businesses and individuals.

Tampa attorneys obtain dismissal of complaint against bank clientTampa Partners Robin S. Trupp and Ronald B. Cohn obtained an involuntary dismissal of a 10-Count Third Party Complaint and counterclaim filed against Superior Bank in the Hillsborough County, Florida, Circuit Court recently. Subsequent to filing a foreclosure action the bank sold and assigned its loan documents to an entity created by the father-in-law of the tenant who was trying to help his son-in-law protect his large investment in the subject property, at sub-stantial risk due to foreclosure. The obligors filed a counter-claim against the assignee corporation and a 12-Count Third Party Complaint against the tenant and Superior Bank. The claims sought damages of several millions of dollars based upon alleged breach of contract, tortuous interference, bad faith dealings, fraud, misrepresentation and civil conspiracy. The judge found in favor of the assignee corporation for fore-closure of the subject property for the full amount due.

George Apostolides secures judgment for bankruptcy trustee in fraudulent transfer caseChicago Partner George P. Apostolides recently obtained a judgment for a bankruptcy trustee in a fraudulent transfer case tried in the United States Bankruptcy Court for the Northern District of Illinois. The trustee sought the recovery of the proceeds of the sale of a home which the Debtor trans-ferred to his mother's trust prior to the bankruptcy filing. After a two day bench trial and post-trial briefing, the Court found that the trust was liable for the full amount requested based on the Illinois Uniform Fraudulent Transfer Act.

Phil Hudson and Hilda Piloto negotiate resolution to $100 million real estate disputeMiami Partner’s Phillip M. Hudson III and Hilda Piloto recently negotiated the resolution of a $100 million dispute between developers South Florida Federal Partners and related entities (SFFP), its lender Dexia Real Estate Capital Market and its general contractor, Moss & Associates. The confiden-tial agreement involves four South Florida buildings now occupied by the U.S. Citizenship and Immigration Services, pursuant to long-term leases. The Properties are being sold to an unrelated third party which sale will consummate the settlement process.

Barry Chatz provides thoughts on repeal of BAPCPA provisions in Financier WorldwideThe February 2010 edition of Financier Worldwide featured an article entitled Proposal to repeal certain provisions of BAP-CPA. In it, Chicago Partner Barry A. Chatz was asked for his thoughts on the Business Reorganization and Job Preservation Act, aimed at improving the impact of reorganization efforts taking place under the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA).

Jimmy Chatz completes Northwestern University’s mediation training programJames A Chatz a partner in the firm’s Chicago and Miami offices, has achieved status as a Certified Mediator in Cook

Mark Littlefield Robert E. McKenzie Hal Morris Laurie Morris Christopher Naveja Hilda Piloto

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Attorneys featured in this issue

County after completing Northwestern University’s Media-tion Training Professional Development Program. Chatz is a partner in the Bankruptcy, Creditors’ Rights & Restructuring Practice Group with more than 50 years of experience practic-ing commercial insolvency and creditors’ rights law.

Offering a full range of services to clients in the community association field.

Allan Goldberg moderates program on busted projectsIn November Chicago Partner Allan Goldberg moderated an IICLE program titled Condominium Projects in Crisis, "Where To Go From Here" at the University of Chicago’s Gleacher Center. The sessions centered around busted con-dominium projects from the perspectives of the developer, the lender, the condominium association, and individual unit owners in troubled properties. Real estate, financing, corpo-rate and bankruptcy laws were considered by Goldberg and his co-presenter panelists from each player's point of view.

The 2010 Illinois Condominium Property Act now AvailableThe 2010 edition of the Illinois Property Condominium Act is now available.

The book was compiled and writ-ten by Chicago Partners David Sugar and Allan Goldberg. It includes a summary and detailed explanation of all new condo-minium legislation taking effect in 2010.

A leader in the defense of consumer finance litiga-tion both individually and as class action cases.

John Ropiequet published in Consumer Finance Law QuarterlyChicago Partner John L. Ropiequet has published two articles in the Consumer Finance Law Quarterly Report. The article titled "TILA Rescission Class Actions Strike Out" discusses recent class action developments where homeowners seek to rescind mortgages under rights given to them by the Truth in Lending Act. A second article titled "The Supreme Court Limits Federal Preemption in Cuomo v. Clearing House Association, LLC" discusses a 2009 decision by the Court which permits state law enforcement officials to take actions against national banks.

John Ropiequet and Chris Naveja published in The Business LawyerAn article by Chicago Partners John L. Ropiequet and Christopher S. Naveja entitled “Fair Lending Developments: The End of Discretionary Pricing?” has been published by the ABA Section of Business Law in the annual survey on consumer financial services law in The Business Lawyer. The article reports on developments in both private litigation and government enforcement actions where it is claimed that lenders have engaged in practices that have racially discrimi-natory effects.

Assisting clients to deal with their environmental concerns in a cost-effective manner in the litigation, administration, and transactional contexts.

Bill Anaya provides comments on therelationship between water and real estateChicago Partner William J. Anaya served as a commentator

Richard RosenbaumJohn Ropiequet Joel Rothman Andrew SannesE. Tyler Samsing Jeffrey Shapiro

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Serving as attorneys for a number of municipalities and in the representation of both public and private clients in a multitude of governmental matters.

Attorneys secure win for municipality accused of Open Meetings Act violationsChicago Partners Hal R. Morris and Jenifer H. Caracciolo, assisted by Hoffman Estates Partner J. William Braithwaite, secured a significant result in the Illinois Appellate Court, Second District. Representing a municipality accused of various violations of the Illinois Open Meetings Act, the firm's Governmental & Municipal Affairs Group success-fully defended the notice, agenda and manner of the village's meeting. In a case of first impression under Illinois law, the attorneys convinced the Court that posting in a government building with limited public access hours of only 14 hours before the meeting still met the 48 hour posting requirement of the statute, because it was posted in fact 48 hours before the meeting. In addition, the Court agreed that a non-spe-cific agenda item reading "consideration of annexation" was sufficient to annex a controversial parcel. Finally, the court agreed that the Illinois statute does not eliminate all incon-venience to the public despite the meeting running into the early morning hours during a winter snow storm.

Dale Bergman offers insight into SEC probe of Miami’s municipal financesFort Lauderdale Partner Dale S. Bergman was quoted exten-sively in a front page article in South Florida Daily Business Review on the Securities and Exchange Commission’s probe into Miami’s municipal finances. In the article, “SEC probe likely to drive up borrowing costs for Miami,” Bergman of-fered his thoughts on the probe and whether there was some manipulation in the municipality’s book to keep covering holes in its budget, and whether the alleged manipulations deceived bond buyers investing in the city’s public works projects.

Representing insureds, risk pools, insurance and reinsur-ance companies, exquidaters, insurance agencies and brokers, third-party administrators, and other insurance-related entities.

Mary Cannon Veed provides analysis on possible liquidation of Kemper InsuranceChicago Partner Mary Cannon Veed provided her thoughts on the possible liquidation of Kemper Insurance in a recent online issue of Business Insurance magazine. Kemper has been in voluntary runoff since 2004. Runoff is the liability of an insurance company for future claims that it expects to pay and for which a reserve has been established. Business Insur-ance magazine serves business executives who are responsible for the purchase and administration of corporate insurance/self-insurance programs, encompassing both property and liability insurance and employee benefit programs.

at The Burnham Plan Centennial Kratovil Conference on Real Estate Law & Practice Concerns. The conference explored the relationship between water shortages and the development use and ownership of real estate in regions other than the Ameri-can West. The conference was hosted at the John Marshall Law School Center for Real Estate Law in Chicago and also addressed the Great Lakes Compact, impact fees and land use solution to allocating scarce water, hydrological considerations (such as watershed location) in the allocation of water, smart growth and economic solutions to water allocation.

Counseling clients on matters related to the protection of copyrights, trademarks, and trade secrets.

Joel Rothman discusses smart phone applicationsWest Palm Beach Partner Joel B. Rothman was recently in-

Peter Shapiro Jerold Siegan Paul Starkman David Sugar Jason Tremblay Robin Trupp

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ing millions in damages, alleging that she was discriminated against based on her race, religion and disability. Tremblay moved to dismiss the woman’s complaints, highlighting its deficiencies and lack of facts that illustrated her removal was discriminatory. The federal district court agreed with Trem-blay who argued that her complaints lacked any facts that her removal was discriminatory and dismissed her complaint with prejudice, denying her leave to file an amended complaint.

Third edition of Employment Law Toolkit available soon Final edits to the third edition of Chicago Partner E. Jason Tremblay’s handbook, Employment Law Toolkit, are currently being completed with its publication scheduled for late summer 2010. The handbook is a comprehensive resource highlighting the significant employment and labor issues facing Illinois employers. It provides practical and cost-effective advice on avoiding employment and labor-related liability and complying with state and federal laws facing employers. To reserve a complimentary copy, please contact Tremblay at ejtremblay@arnstein.com.

Paul Starkman publishes book, articleon employment law-related topics Chicago Partner Paul E. Starkman’s treatise entitled Employ-ment Arbitration: Law & Practice, published by Thomson West, is currently being updated for release in fall 2010. The publication provides complete coverage of employment arbitration and is written as a practice guide for employment specialists as well as general practitioners.

Starkman also wrote an article appearing in the May 3 Online Exclusives edition of Chief Executive magazine. The article, “What You Need to Know about Monitoring Employees’ Off-Duty Social Networking Activity” examines the effect of social networking on employers and the risks involved.

Attorneys featured in this issue

Representing both private and public sector employers including union and non-union companies - from large, publicly held corporations to small, closely held and not-for-profit businesses.

Jason Tremblay secures dismissal of federal civil rights and public accommodation claimsChicago Partner E. Jason Tremblay recently obtained the dismissal of a series of federal civil rights and public accom-modation claims filed against a national seminar group. The female plaintiff became disruptive while attending a seminar being presented by the seminar group at a Chicago hotel and was asked to leave. She filed a federal complaint demand-

terviewed on South Florida Today, a daily morning news show. Rothman discussed the business of iPhone/smart phone soft-ware application development, explained how entrepreneurs can get started inventing their own software applications, as well as how to protect their intellectual property as they go through the development process.

He was also interviewed about the legal side of iPhone/smart phone applications for a Comcast Newsmakers broadcast. He discussed what application developers should do before or during the creation process, how to protect their ideas, ap-plications and iPhones/smart phones.

Joel Rothman featured in ABA Journal article on Internet lawyer testimonialsWest Palm Beach Partner Joel B. Rothman discussed his ongoing battle with The Florida Bar over Internet testimoni-als with the ABA Journal for a feature article in its February issue entitled “Grade Anxiety: Firms fret about clients rating their work.” Rothman’s lawsuit, Rothman v. The Florida Bar, alleged the state’s professional conduct rule banning client testimonials, case results and statements about quality of work in attorney advertising violated lawyers’ and clients’ First Amendment rights.

Marc ZaslavskyBeau Wagner Franklin ZemelMary Cannon Veed

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Working closely with entrepreneurs, development stage and mid-sized private and public companies to provide counsel in all securities matters from raising capital to maintaining regulatory compliance.

Jerold Siegan represents client in large securities purchaseChicago Partner Jerold N. Siegan recently represented One Bio Corporation in connection with a Securities Purchase and Registration Rights Agreement pursuant to which the Company sold to a group of private and institutional inves-tors of an aggregate of $3 million of the company's secured 8% convertible notes and warrants to purchase aggregate of 444,298 shares of the Company's common stock. One Bio Corporation is a publicly traded bioengineering firm with its principal operations in China.

Assisting businesses in minimizing their tax risk and maximizing their business and financial goals.

Robert E. McKenzie talks with media on tax topicsChicago Partner Robert E. McKenzie was recently inter-

A R N S T E I N & L E H R L L P I S A M E M B E R O F T H E I N T E R N A T I O N A L L A W y E R S N E T W O R K

This newsletter provides information on current legal issues. The information should not be construed as legal advice or opinion in particular situations or applications. © 2010

ARNSTEIN & LEHR LLP

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viewed on various tax issues. Bob spoke with Forbes magazine on the increase in levies and liens in 2009 and the IRS’ efforts to appear more flexible in working with struggling taxpayers. He also discussed tax issues in MarketWatch. In March his comments appeared in the Baltimore Sun where he discussed the new IRS plan for tax settlements and the inconsistencies between the IRS’ reported flexibility and its enforcement sta-tistics. The article examined what taxpayers can do if unable to meet their tax obligations.

He was also asked for his thoughts in a 2010 Investment Guide article entitled “Tax Informants Are on the Loose” for Forbes.com. The article addressed how the IRS is enticing insiders to rat out big-dollar cheats and corporate tax shelters with larger paydays after Congress directed the IRS to pay tipsters at least 15% and as much as 30% of taxes, penalties and interest col-lected in cases where $2 million or more is at stake. Typically, the IRS had paid out approximately 7% of taxes owed.

McKenzie was also interviewed for “On the Money!” a weekly radio program that reaches listeners in the South Florida market. He discussed trends in IRS enforcement of individu-als, including off shore accounts, the IRS stated increase in audits among the wealthy and self-employed, and changes in tax preparer licensing.

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in this issueA strong sales contract is key to your businessChicago Partner Steven Malitz provides sound recommenda-tions for businesses to protect themselves against disaster with strong, well-written sales contracts. (Cover Story)

New business startup: establishing your business structureChicago Partner Tracey Salinski provides insight for prospec-tive business owners facing decisions on how best to structure any new business. (Cover Story)

Arnstein & Lehr adds attorneysArnstein & Lehr continues to strengthen its client service with the addition of partner Peter E. Shapiro in our Fort Luderdale office (Page 5) and associate attorneys to our Tampa, West Palm Beach and Chicago offices. (Page 6)

Other top news• In the News: Arnstein & Lehr announces that four attor-neys, Jenifer Caracciolo, Andrew Cox, Laura Lau Marinelli and Tracey Salinski are promoted to partner. (Page 5)

• In the News: Chicago Partner Jimmy Chatz completes Northwestern University’s mediation training program. (Page 7)

• In the News: The firm’s Governmental & Municipal Affairs Group recently secured a significant result in the Illinois Ap-pellate Court for a municipality accused of various violations of the Illinois Open Meetings Act. (Page 9)

• Books, Journals & Articles: The 2010 edition of the Illi-nois Property Condominium Act by Chicago Partner’s David Sugar and Allan Goldberg is now available (Page 8). Final edits are currently being completed for Chicago Partner Paul Starkman’s treatise Employment Arbitration: Law & Practice and Chicago Partner Jason Tremblay’s Employment Law Tool-kit. (Page 10)

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www.arnstein.com