Newport Beach California Business Litigation Law Blog

Klein & Wilson Wins A Breach of Shareholder Agreement Jury Trial

By Erin Marton of Klein & Wilson posted in Business Litigation on Friday, April 5, 2019.

Roger Feldman formed GearShift, Inc., an Orange County advertising agency, with Thomas Blinn, Eric Cwiertny, Norm Tribe and Nevin Safyurtlu (Defendants). The shareholders signed a shareholder agreement giving GearShift an option to purchase the shares of a shareholder who resigned from the company. After GearShift became a huge success, Mr. Feldman decided to retire and gave GearShift a resignation letter which included a request that GearShift buy his shares. The other shareholders met with corporate counsel, Josh Wolff, and decided to exercise the option. They sent Mr. Feldman an email stating, "We accept your resignation letter." Then, GearShift asked its CPA to determine the value of Mr. Feldman's shares in accordance with the formula in the shareholder agreement. The CPA determined GearShift owed Mr. Feldman $1.1 million. The Defendants claimed shock at the number and tried to renege on their exercise of the option. Worse, with corporate counsel's advice, Defendants' stripped Mr. Feldman of all his shareholder rights and converted all profit distributions to salaries and bonuses to themselves, leaving Mr. Feldman with nothing.

Causes of contract disputes and how to resolve them

On behalf of Klein & Wilson on Monday, February 25, 2019.

Business to business contracts are established to ensure that everyone is on the same page, and to protect the interests of both sides. When written well, they help to prevent disputes from arising in the first place, because they are clear on the consequences of certain actions, and they leave nothing to interpretation.

However, no matter how well a business to business contract is written, there is still a small possibility of a dispute. This is why it is important that you understand how disputes tend to arise so that you can more easily address the underlying issues to make a resolution. The following are some of the most common causes of contract disputes, and some suggestions on how these disputes can be resolved.

California Super Lawyers® 2019: Gerald Klein and Mark Wilson

By Erin Marton of Klein & Wilson posted in blog on Tuesday, February 5, 2019.

Each year, Super Lawyers® recognizes the top lawyers in Southern California via a patented multiphase selection process involving peer nomination, independent research and peer evaluation. The Southern California lawyers who receive the highest point totals during this selection process are recognized in Southern California Super Lawyers® Top Lists.

Klein & Wilson is honored to announce that Gerald A. Klein and Mark B. Wilson have been listed in both the 2019 Super Lawyers® Top 50 Orange County List and the 2019 Super Lawyers® Top 100 Southern California List.

Gerald Klein and Mark Wilson have been selected to the California Super Lawyers® list for the last 15 years.

Lawyers - Do You Want to Do Business With Your Client? Read This First!

By Mark Wilson of Klein & Wilson posted in Legal Malpractice on Friday, February 1, 2019.

Some lawyers think the California Rules Of Professional Conduct prohibit them from doing business with clients. However, lawyers are free to engage in business transactions with clients if they follow three simple rules set forth in California Rule of Professional Conduct, rule 1.8.1:

1. the business transaction must be fair and reasonable;

2. the client must be represented in the transaction by independent counsel chosen by the client, or the client must be advised in writing to seek the advice of an independent lawyer of the client's choice and is given a reasonable opportunity to seek that advice; and

3. the client must provide informed written consent to the terms of the transaction and the lawyer's role in it.

Does Stormy Daniels Have a Legal Malpractice Action against Michael Avenatti?

By Mark Wilson of Klein & Wilson on Friday, January 11, 2019.

If Stormy Daniels' allegations about Michael Avenatti's representation are true, then Daniels likely has a legal malpractice action against Avenatti, and he could face California State Bar discipline.

Even though Michael Avenatti represented Stormy Daniels in cases outside California, Avenatti is subject to the California Rules of Professional Conduct. See California Rules of Professional Conduct (CRPC), rule 8.5(a) ["A lawyer admitted to practice in California is subject to the disciplinary authority of California, regardless of where the lawyer's conduct occurs."].

A Significant Ruling in a Legal Malpractice Binding Arbitration

By Erin Marton of Klein & Wilson on Thursday, January 3, 2019.

Klein & Wilson's client, a major employer in San Diego, hired Higgs, Fletcher & Mack, the largest and oldest law firm in San Diego, to evaluate its employment practices. After making a few tweaks to the company's policies, the law firm said the company was good to go. Years later, the company's employees filed a class action lawsuit alleging the company's policies (which the law firm blessed) violated numerous Labor Code sections. The law firm told the client it would defeat the class action in a summary judgment motion. After mediating the employment class action, the law firm determined its advice was wrong and advised the client to settle. At a binding arbitration before three retired judges, Klein & Wilson proved the law firm breached its fee agreement (by charging fees for work that had no value) and fell below the standard of care (by steering the client into Labor Code violations). On December 19, 2018, the San Diego County Superior Court entered a judgment against the law firm, ordering it to disgorge all its fees and pay damages which, after correcting the arbitration award (increasing the amount the arbitrators awarded), total $1.8 million.

Your legal rights when a landlord doesn't maintain a property

On behalf of Klein & Wilson on Monday, December 31, 2018.

Renting property as a commercial tenant helps you save money compared to purchasing property. Especially in the first few years of your business, obtaining a lease is often a wise decision. You can develop your brand and a loyal customer base before you invest in permanent real estate. After all, it can be quite difficult to predict how your business will grow or change when you first open up for business.

Renting provides you with savings that you can invest back in your business, as well as flexibility. Unfortunately, renting can also create situations that could damage your business. For example, improper or inadequate maintenance on the part of your landlord could affect your ability to use the space and the comfort of your clients or customers when visiting you.

Mark B. Wilson Certified as a Specialist in Legal Malpractice Law

By Erin Marton of Klein & Wilson on Wednesday, December 19, 2018.

Mark B. Wilson has been certified as a specialist in legal malpractice law by the State Bar of California Board of Legal Specialization.

Avoid Attorney-Client Fee Disputes By Discussing The Economics Of Litigation

By Mark Wilson of Klein & Wilson on Friday, December 14, 2018.

Many potential clients are surprised at the expenses associated with litigation. Unsophisticated purchasers of legal services do not understand the inefficiencies associated with getting their cases to trial and are frustrated by the gamesmanship over procedural matters. After paying thousands of dollars of fees and costs (with no end in sight), some clients look for a scapegoat to vent their anger. Not surprisingly, the client's lawyer is an easy target.

Setting aside pro bono work, before accepting representation for new clients, consider discussing the economics of litigation. A simple example will make the point. It does not make sense for a client to hire an attorney who charges $600 per hour to recover $10,000 in a contract dispute. The client will spend more money on the attorney than is in dispute and will be in a worse position. That client should go to small claims court without an attorney.

Failing to Perform Competently Can Subject Attorneys to Discipline

By Mark Wilson of Klein & Wilson on Thursday, December 6, 2018.

Lawyers get sued for malpractice all the time, but it is rare for the California State Bar to discipline lawyers for incompetency. Nevertheless, California Rules of Professional Conduct, rule 1.1, entitled "Competence," addresses this issue.

By way of background, lawyers act "negligently" (and can be found liable for damages) if they fail "to use the skill and care that a reasonably careful attorney would have used in similar circumstances. This level of skill, knowledge, and care is sometimes referred to as 'the standard of care.'" CACI 600. In legal malpractice cases, juries are asked to "determine the level of skill and care that a reasonably careful attorney would use in similar circumstances based only on the testimony of the expert witnesses" who testify. Id.