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Does the Future Belong to Virtual Law Firms?

News August 03, 2009
Rimon Law Group was featured on August 3, 2009 in the American Lawyer in an article by legal reporter Francesca Heintz.  The story describes the continued growth of alternative-model law firms, in the midst of a struggling legal industry. The article can be viewed on the the American Lawyer's website.

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Employment Service Agreements

Insight August 02, 2009

A new company should determine which of its workers are employees and which are independent contractors. The workers’ status will determine what benefits s/he is owed during employment and at its conclusion. A new company is building its reputation not just for its product, but for its staff and for fairness as an employer as well. ATo this end, a company should have a written agreement to clarify for its workers and itself the job expectations, benefits and responsibilities. A written contract delineates scope and hours of work, how the relationship is to continue, and how it is to be terminated.

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Non−competition Agreements

Insight Michael Moradzadeh Michael Moradzadeh · August 01, 2009

Can a part-time employee hold another job while working for you? Can he or she work for a direct competitor a year after he involuntarily leaves his employment? Does this change if he owns part of your business? What if the competitor is anywhere in the world instead of in the samecounty? Different states have different laws regarding the strictures that will be enforced once a worker leaves your company. These laws are affected by the stability of the economy. It is important for your company’s future and stability, that you take full advantage of whatever protections the applicable law affords.

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What is pass-through/flow-through taxation?

Insight Michael Moradzadeh Michael Moradzadeh · July 18, 2009

In a pass-through (or flow-through) entity, the entity’s income and expenses “pass through” the entity and are treated as the income and expenses of its owners. LLCs and S-Corporations are pass-through entities. This differs from a C-Corpoartion (which is the default form of corporation) which is taxed a corporate income tax at the end of the fiscal year in addition to the personal income taxes and dividend taxes that its owners and employees pay. Federal corporate income tax is about 15% to 35% of profits, and most states also have corporate income tax. This means after a C-Corporation has paid its expenses for the year, it will be taxed at least 15%-35% of whatever is left above the amount the company started with that year. If the company is an LLC or an S-Corporation, there is no corporate tax, and indeed the owners can even apply losses of the company against their personal income.

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Should my business be a Corporation or an LLC?

Insight Michael Moradzadeh Michael Moradzadeh · July 17, 2009

If your business only has a few investors and you do not anticipate receiving outside financing in the near future, an LLC is probably best for you because of its flexibility, simplicity, and pass-through taxation (see blog entry on pass-through taxation). However, if you want a board of directors that is distinct from the officers and/or shareholders of the company, or if you are looking for institutional investors, then a corporation is probably a better form of entity because of its more organized and established structure of governance.

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What is the difference between an LLC and a Corporation?

Insight Michael Moradzadeh Michael Moradzadeh · July 16, 2009

A corporation is made up of three groups of people – the shareholders, the board of directors and the officers, although the same person can hold multiple positions. The board of directors is formally elected by the shareholders and represents their interests. It is the board of directors that hires the officers of the company, also known as the management. The management’s job is to oversee the day-to-day operations of the company. Major decisions, however, require the approval of both the shareholders and the board of directors. A corporate structure is thus a highly organized and rigid structure of governance that can often be quite burdensome. A corporation requires a slew of corporate governance documents that must be frequently updated. It also requires that annual meetings be held for shareholders and the board of directors.

LLC stands for “limited liability company”. Generally it provides the same legal protections from personal liability as a corporation, however it is governed more like a partnership than a corporation. Whereas a corporation’s owners are called shareholders, the owners of an LLC are known as members. An LLC does not require a board of directors or even officers and can simply be managed directly by its members, if so desired. It can also be structured more like a corporation, with managers that are distinct from its owners. LLCs allow for significantly more flexibility than do corporations. For instance, the owners of an LLC can allocate distributions in whichever way they see fit. Even if the ownership of an LLC is split 60/40, the owners can decide to split the profits 50/50 – something that is not possible in a corporation without a significantly more complicated structure.

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Why form a limited liability entity (Corporation or LLC)?

Insight Michael Moradzadeh Michael Moradzadeh · July 15, 2009

A limited liability entity (a corporation or an LLC) provides both financial and liability benefits. The financial benefits include the ability to deduct more business expenses from annual revenue when calculating taxable income than would be possible without an entity. Forming a limited liability entity also helps protect your personal assets in the event of a lawsuit or from debtors in a situation where your business’s liabilities exceed its assets. This means that as the owner of limited liability company, your personal assets will not be placed at risk because of the actions of your company, as long as the company is kept separate from your personal assets. This requires the corporation or LLC to: 1) make sure the company is adequately capitalized (it has the money necessary to cover the reasonably predictable legal and business responsibilities of the business); 2) that the company keeps clean accounting books and has accounts that are separate from the personal accounts of its owners or employees; and 3) that all legal documents are adequately maintained and the company complies with corporate governance laws.

Also, forming a corporation or llc usually makes it easier for a business to borrow money and to sell all or parts of the business in the future. It is important to note that the longer a business operates without a legal entity, the more complicated and expensive it becomes to transform it into one. For this reason it is very important to form a legal entity as soon as feasible.

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Counsel to Counsel: Thinking Creatively About the Practice of Law

News May 09, 2009
by Stephen Seckler, Esq. Why would any law firm client be willing to pay more than the agreed upon billing rate? Why would any law firm agree up front to discount its rates for clients who are unhappy with the service they received? Well at least one law firm is banking on being on the winning side of this billing strategy. The firm, The

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Giant Coke Adopts Pay-For-Performance

News April 25, 2009
Among large corporations, the compensation model for vendors is changing from hourly or even flat fees to pay-for-performance. That is going to change lots faster now that giant Coke has adopted the value model. In AD AGE, the bible of the marketing industry, Jeremy Mullman and Natalie Zmuda report: "Coca-Cola Co. is trying to start an

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Rimon Announces Israel Transactions Practice Group

News March 25, 2009
Silicon Valley, California, March 26, 2009 --(PR.com)-- Rimon Law Group, Inc. is launching a practice group dedicated to serving Israeli companies and entrepreneurs doing business in the United States. According to one of Rimon's Managing Attorneys, Michael Moradadeh, Israeli companies and citizens see the United States as a key market for

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