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March Madness – often a way for office co-workers to come together for some possibly profitable fun is also a popular excuse for breaking the law. Office gambling pools are illegal, even though they are semi-respectable. Just like with speeding, the fact that "everybody does it" won't be a defense if you're prosecuted for gambling.

Illinois law says it's illegal to make "a wager upon the result of any game, contest, or any political nomination, appointment or election." This covers bets on the Super Bowl, the NCAA finals, or penny-ante poker. There's no exception for "social" or "friendly" wagers. Illegal gambling is a Class A misdemeanor, carrying a maximum penalty of one year in jail, and a $1,000 fine. Property used for gambling can be seized, and failure to report gambling income is tax evasion. However, usually illegal gamblers bet that they won't get caught. For losers and small-time winners, that may be a pretty safe bet. Big winners, and people who take bets, run a greater risk of being prosecuted. Occasionally, an office pool will get busted.

Of course, not all gambling is illegal. The Illinois legislature has voted that certain types of bets "benefit the people of Illinois by assisting economic development and promoting Illinois tourism." In particular, riverboat casinos, horse racing, the state lottery, bingo, and "pull tabs and jar games" are legal if they're licensed by the state, follow the rules, and pay their taxes.

People who lose in the popular office gambling pool actually have a remedy under the Illinois Loss Recovery Act. If you lose more than $50 from illegal betting, you can sue the winner for their money back. Although the idea of suing the winners from a bar association poker game or law firm March Madness betting pool is intriguing - hypothetically speaking, of course, suing, and collecting, could be its own kind of gamble. After all, is it worth suing people who you have to work with every day?

NO NEED TO EXPAND THE NCAA FIELD
By Ted McGinn

    It is now the time of the year to watch, college basketball. With the unveiling of the NCAA March Madness Brackets, invariably there are teams that appear to be good enough to get in but are for whatever reason left out from the tournament field. This year more than any other year there have been calls for expanding the field. Any expansion of the current NCAA Tournament field will dilute the quality and excitement that is present and not solve the perceived problem of leaving deserving teams out of the tournament.

    Since the field has been expanded to sixty-four teams, the highest seed to ever win the NCAA Basketball Tournament was the eighth seeded Villanova Wildcats of 1985. Last season eleventh seeded George Mason made it to the final four. In addition, Kansas in 1988 and North Carolina State, in 1983 were sixth seeds that won the tournament. Other than that, no team seeded higher than fourth has ever won the tournament.

    Expanding the field to include additional teams will not create some other opportunity for a team to win a NCAA championship. The sixteenth seed has never won a game in the tournament. Accordingly, it is unlikely that any other team added would ever win a game in the tournament let alone make it to the championship.

    Expanding the field will not eliminate the yearly complaints from teams left out of the field. Unless the field is expanded to include every single team in the NCAA, there will always be teams who feel they were wrongly excluded.

    Expanding the field will also dilute the importance of the regular season. Currently, the regular season is critical as teams are forced to schedule and win games against difficult opponents in order to qualify for the tournament. If every team makes the NCAA tournament the whole regular season becomes meaningless. For all intents and purposes, essentially every team (except those in the Pac-Ten) have an opportunity by virtue of their conference tournament.

    Last time I checked, the goal of the NCAA Tournament was to find the best team in the country. The current concept accomplishes that. Furthermore, March Madness is one of the most exciting time of the year for sports fans. Expanding the field will lessen the excitement and not contribute in finding the best team in the land.

    The life blood of any business is a steady source of clients. Obviously, without clients, there is no way to generate consistent revenue needed in order to cover the expenses of the business, pay yourself a reasonable salary, and return a reasonable profit to you and/or other investors. In this competitive environment, it is often overwhelming facing large established corporate competitors. However, small entrepreneurs are not necessarily at a disadvantage.

    Do not under estimate the importance of "word of mouth" advertising. If you treat a customer well, such experience will not only lead to future business from that customer, but it can also translate into other sources of business. You treat those referred customers well, and the process repeats exponentially.

    It is also critical that you understand your advantage as it relates to the larger competitors. The larger competitors may be able to beat you at price due to the economies of scale. However, you may be able to beat them be targeting the customer and tailoring your services. As a smaller entrepreneur, you are generally able to modify or adjust your business model as the situations dictate. The larger competitors, due to the layers of bureaucracy, may often need months or years before addressing an unexpected customer need.

    It is important not to overlook the employees that you hire who directly interact with your customers. Even positions which presumably may seem unimportant could become a key determining factor of your success. Employees who are enthusiastic about their position are much more likely to keep a customer happy rather than an individual merely there to earn a paycheck.

    Do not be afraid to admit to a mistake. Many customers will accept an honest mistake, especially if an effort is made to correct the mistake. Furthermore, treat the customers special and you can be sure that you may win their business in the future. Small entrepreneurs should not be afraid of competing against the big guys. If they exploit their advantages, there is no reason that they cannot operate successfully in this competitive environment.

    If you have any questions about this article, please contact tmcginn@lavellelaw.com.

RESOLVING THE SHAREHOLDER DISPUTE-WHEN YOU DON’T WANT TO DANCE WITH YOUR PARTNER ANYMORE
By Matthew Sheahin

Frequently small to mid size companies are formed by friends, business acquaintances, or on the basis of some other personal or professional relationship. The company may involve two shareholders with an equal State in ownership. The company may be profitable and grow over a number of years, but eventually a dispute between the shareholders occurs that cannot be resolved by the shareholders themselves. If no resolution occurs, litigation is sure to follow, and the shareholders are them faced with our expensive and time consuming lawsuit. There are multiple solutions to this problem, but once litigation begins the solutions narrow. This is mainly because once litigation is filed it is very rare that the shareholders will want to remain in business with one another regardless of the merits of the dispute. Therefore, the case will either be resolved at trial or by way of motion if there are no facts in dispute. However, more after, one of the parties will simply buy out the other party by way of settlement and a stock purchase agreement.

There are many different issues that can effect a settlement of the shareholder dispute. However, the two main documents involve a settlement agreement and a stock purchase agreement. Once the parties arrive at a number that the purchasing party is comfortable spending and the departing party accepts receiving for the value of worker interest in the company, there is still the matter of documenting this sale and transfer of ownership. Therefore the settlement agreement becomes very important because it must outline the duties of each party with regards to settlement. Important points to remember include

∙ Confirming the presence of equipment and inventory in the business;
∙ The departing party representing that he is not aware of any pending lawsuit claims proceedings by any other business party governmental agency or other entity;
∙ Must resolve how to deal with taxes on individuals or the company depending on how the business is organized and how the individual shareholders are taxed;
∙ Must contain provisions regarding confidentiality, non-competition, non- solicitation and other provisions to protect the purchasing party from post settlement conduct of the departing party;
∙ Obtaining keys to all company offices warehouses or other storage facilities, as well as, keys to all company vehicles;

If you find yourself in a dispute with your fellow shareholder(s), it is best to consult the advice of an attorney early on. There certainly is the chance that an attorney maybe able to help you in resolving the dispute prior to litigation being filed by you or against you. However, if litigation does ensue, it is imperative that you retain an attorney.

If you have any questions regarding this article please contact msheahin@lavellelaw.com.

You’re probably too busy to read this article…
Common mistakes made by small businesses and how to avoid them.
By James D. Voigt

Just like driving with your “check engine” light on, small business owners often make simple mistakes that end up with a large price tag. This is the first article in a series on the most common mistakes made, and some practical tips to avoid them. Perhaps the most dangerous of these mistakes is co-mingling funds. It could be an open door to losing your protection from liability.

A term like “co-mingling funds” sounds like something only a crook would do, but don’t be surprised if you have done it yourself without even realizing it. The most common way that people co-mingle funds is by paying a business debt or obligation with personal funds. I recently had a client that owed a large federal tax bill on his business. He used the equity in his home to pay that bill, and we are treating that payment as a loan to the business. If we were to fail to properly document that loan with a promissory note, our client would be co-mingling funds. The same is true every time you pick up office supplies for your business, and pay with your personal debit card.

    Another way to co-mingle funds is to pay your personal obligations with business funds. This is more obvious. Most business owners know that you have to pay yourself with dividends, payroll, or some other legal method. However, there is one way to co-mingle funds that surprises even most lawyers. Business owners often hold their business accounts and loans at the same bank where their personal accounts are held. Do not be surprised if the bank has a right to offset one account against another.

    A former client overdrew his personal account. The bank recovered the overdraft of $17,000.00 by debiting his business account, which was held at the same bank. We found that our client had given the bank permission to do exactly that when he signed the flurry of forms necessary to open the business account. Even though it was not intentional, this was co-mingling of funds.

    To avoid co-mingling, you must document every time that money moves between your business and personal accounts. That document might be a pay stub, a promissory note, or a simple reimbursement slip. A few tips on avoiding co-mingling:

Perhaps this all sounds like a lot of hassle, but our office is here to help. We can prepare promissory notes and other documents for less than you might think. We can even keep track of your loans and repayments for you, calculate the interest, and maintain all the records. A little preventive maintenance can go a long way toward keeping your business running smoothly.

Please call me anytime for questions at (847) 705-9698, or for a low-cost audit of your business practices to see where you may need to make some changes to keep your business the well-oiled machine you need it to be.

This newsletter is a publication of Lavelle Law, Ltd. We attempt to highlight and discuss areas of general legal interest that may lead to planning opportunities. Nothing contained in this Newsletter should be construed as legal advice or a legal opinion. Consultation with a professional is recommended before implementing any of the ideas discussed herein.

NO NEED TO EXPAND THE NCAA FIELD By Ted McGinn

NO NEED TO EXPAND THE NCAA FIELD
By Ted McGinn