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Why You Need a Business Litigation Attorney on Call
Written by: Patrick Findaro
Last Updated by
Rocio Somoza: August 17, 2022
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Download NowPatrick: Hey. Patrick Findaro here, Co-founder at Vetted Biz and Visa Franchise. Today I’m really excited to bring on attorney Eduardo Ayala, who I’ve known for about six or seven years now. We’re both based in Miami, Florida and we’re gonna talk about an issue that a lot of people don’t wanna talk about. You know, they hide underneath their pillows and they just wanna focus on the good things about doing business.
But it’s important that you also understand what business litigation is, understand the U.S. legal system in terms of how…especially how it’s applied to small businesses as everything can be going really well in your business, and then you have an upset customer, you have a client that’s not paying you, and that client was bringing in a big portion of your revenue. And what are you going to do? What are the options?
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We’re gonna talk to attorney Eduardo Ayala. Eduardo grew up in Lima, Peru, and he was in the seminary for seven years. Usually, I found it’s the other way around where the priest at my church was an economics professor and then he had a calling later in life, where you don’t see it as much the other way around, but I’m sure his experience of seven years has had a positive impact in terms of his approach and all the texts that he was reading and just absorbing so much text.
And as a lawyer, you’re reading over so many documents. But he was in the seminary for seven years in Peru, and then moved to the U.S. at age 26, worked at restaurants, behind in the kitchen, and then moved his way up to actually owning a restaurant. And then once he was legally able, then he started studying at FIU in their law school program and he graduated in the top 20% of his class.
Contents
Discussion on business litigation and lawsuits for small business owners
So Eduardo Ayala’s practice, together with other attorneys and his staff are focused on all things business-related. Today, we’re gonna really be focusing the discussion on business litigation and lawsuits for small business owners. And I have all different types of questions for Eduardo. If you have questions, please type them in the comment box, and we can ask Eduardo and see what his opinion is on matters that are related to anything litigation, lawsuit-related for small business owners. So, Eduardo, how are you, man?
Eduardo: Hey, Patrick, how are you doing?
Patrick: Doing good, thanks so much for joining.
Eduardo: My pleasure. Good to see you.
Patrick: Yeah. Likewise. And so yeah, tell us a little bit like, how’d you decide to go to law school? And what piqued your interest in really focusing on small businesses, many of which are owned by immigrant entrepreneurs?
Eduardo: Yeah. I mean, like you mentioned, I was in religious life for seven years. And that type of life, you have a lot of reading, right? A lot of studying. So I’ve always had the inclination to study and read. And then when I came to the U.S., you know, I couldn’t do that right away because of the legal paperwork. So I was in the restaurant industry, where I learned business, and I became a small business owner. Then when I stopped doing that, partly because of the 2007 crisis and other issues, and I became a resident of the U.S., I decided that the law was a good combination between my prior background, my now experience in businesses to combine that intellectual part with that experience in business and be able to help small businesses in in their legal needs, that kind of way.
Focusing on small businesses
Patrick: Thanks. Yeah, well said. So what is business litigation all about? Is receiving like a demand letter from an upset customer or supplier the same thing as getting sued, for example?
Eduardo: Well, business litigation is essentially it’s a fight or a dispute between two businesses. There’s a business on one side of the lawsuit and a business on the other side of the lawsuit, right? And usually, a term litigation refers to more specifically to when there’s already a lawsuit filed. So the demand letter, you know, technically it’s not a lawsuit, it’s just the threat of a lawsuit. But you can be assured that when there’s a demand letter, you know, there’s likely a lawsuit and you should be contacting a lawyer about that demand letter. Because, if someone already pays someone to write a demand letter, chances are you’re probably gonna be sued. Or if you are the one sending the demand letter, chances are you already in this process. So, it’s sort of the pre-lawsuit stage.
And some type of cases demand it, meaning like by law, there has to be that letter, right? Usually, it’s a letter that comes because you don’t wanna be in front of a judge and then you’re suing somebody, and the judge will tell you, “Well, did you ask them before the lawsuit?” Right? So you wanna show that there, yeah, we had a demand. But sometimes it’s required by the type of lawsuit, like, for example, a civil death lawsuit will require that you send that letter before even filing your legal claim.
What is business litigation?
Eduardo: Well, that’s a great question because, you know, we have…our clientele, they are small business owners, right? Businesses, like a bakery, a small real estate firm, a dental practice, a shop, you name it. Businesses that are between 3 employees to 20 employees, right? That’s the size of our clientele. And sometimes they ask us to negotiate contracts for them.
And some others, they want to save that legal fee, but the situation is that it will depend on your lawyer to be able to negotiate a good contract with your supplier and at the same time, don't kill your transaction.
Your lawyer could be a little bit intense and maybe he’s pulling all the thrift stores, your site and that could kill your deal and most business owners just don’t want that. And that’s partly the reason why, sometimes they try to skip the lawyer because they’re like, the lawyers gonna kill the transaction. But it’s sort of like a necessary evil because for example, we’ve helped negotiate franchise agreements with big franchise firms. And these booklets they’re so one-sided, right?
Patrick: Hell, yeah.
Eduardo: …towards the franchisor. And it is important that the franchisee does some negotiation and some pull in on his side because, when there is a problem, especially if you’re leading for example, your business in Florida. Florida law is extremely strict when it comes to contracts. So okay, if you come with a booklet that on page 97 says that, “You don’t have a case,” you don’t have a case. The judge is gonna enforce that. So you have to be very…
Patrick: Yeah, we’ve seen with franchises where it’s like, the franchisee can’t compete with the franchisor or whatever and…in the similar industry, but the territories are not all that protected.
Franchisee vs Franchisor
Patrick: So it’s like, the franchisor can compete directly with the franchisee. But the franchisee can’t, like, do something outside the system. So we’ve seen that come in handy when the attorney, before they sign the franchise agreement, it’s like, “Hey, this is a little one-sided, let’s clean this up.”
Eduardo: Correct. And it’s important to clean it up because you’re gonna be held to that paper anyway. So you might as well negotiate some terms that are gonna load the damage from that one-sided agreement. And it is debatable where the franchisor can say, “Hey. You have no rights, I have all rights.” And that contract itself might be held unconscionable. So it’s so one-sided that the other side really got no benefit at all. But you don’t wanna be in a position that you’re litigating and you’re in a case that you’re litigating the issue of unconscionability. It’s a complicated legal issue, very fact-based. So, you want to have your lawyer, again, not kill your deal but do some tweaking to that agreement.
And there are key areas that we can identify, right? It’s not that we have to read the entire booklet. There are key components that you wanna make sure say the right thing. To put an example, arbitration clauses, right? So, do you want to…if something happens in your relationship with your franchisor or your supplier, do you wanna have to go to arbitration, or would you like to have access to the courts? Arbitration is expensive, and the world of arbitration is very Pro-corporation, pro the bigger guy. So that’s why more corporations like arbitrations and most little businesses or people don’t like arbitration. There’s a reason for that. So simple things that we can ID quickly as business litigation lawyers, that can help.
Mechanisms to protect themselves and to do some asset protection
Patrick: So, yeah. For someone that’s just starting a business, or maybe they’re now in three years, and they’re making revenue of half a million, million, and they’re making enough money. And they’re like, “Okay, I wanna protect the house.” What do you…it’s like, say someone’s clean slate, they’ve never had any litigation issues. Like what are some of the mechanisms that you would look at beyond going through their existing contracts, or suppliers, or customers to really protect themselves and do some asset protection?
Eduardo: Yeah. No, if you have that example, somebody three years clean, making good revenues, I mean, it’s great. But I will tell you, based on 10 years doing this, that it’s just a matter of time, a matter of time until you get sued. As you get bigger, you’ll get sued or you’ll sue somebody, right? It’s gonna happen in some direction. I mean, hopefully very far in the future but, I just…as you grow, it’s just the nature of…businesses have humans behind them, and humans get into misunderstandings and complications. So…
Patrick: The last time I was at your office, it’s like, crazy. Some of these people are really wronged, hearing like, you know, some of these stories of just like, people being towed, and just someone that has physical issues and their cars being towed and it’s just like, that’s not right. And you got to stand up for yourself and…
Eduardo: Yeah, absolutely. I mean, there is a lot of abuse, you know, and the bigger abuses, the little. And if you’re a small business, you want to have protections. I mean, one of the first ones we tell our clients based on actually litigating issues is the situation with compliance, right?
Business protection
Eduardo: You might not have a lawsuit today, you might be doing really good revenues, but you want to have an attorney that will help you with complying with every aspect that a business has to deal with. For example, whether it is your permitting, your business tax receipt, the payment of taxes, your labor law issues, all these little things, your business has to be by the book. Because guess what, if you have a contract, and the contract has a clause that says that, “You know, if you do something illegal,” right? “Then we don’t have to perform these contracts.” We’ve had big defendants, you know, hang on this little 100 bucks permit with the city to argue illegality and there’s hundreds of thousands of issues at stake, and try to kill your case because the contract says that you’re not complying with a silly permit.
Patrick: Oh, wow. Yeah. Because it’s anything.
Eduardo: Because it could be anything, right? Because your contract has a clause that says, “If you do something illegal, I don’t have to…”
Patrick: Yeah. And probably someone signing that, I would be naive enough, okay, I’m not gonna do something illegal. But then it’s like, oh, maybe I could go 10 miles per hour over the speed limit and that would be something illegal.
Big Corporations
Eduardo: That would be considered illegal, right? And mind you, I mean, corporations, especially the bigger ones, if you’re looking at franchisors, think of McDonald’s, think of Starbucks, think of the bigger franchise. They’re not gonna hire just about any lawyer, they’re gonna hire these bigger firms with a lot of resources and a lot of talented lawyers that will make their arguments…because they’re being paid for, and they will bring in your speeding ticket as a speeding ticket that’s a horrible violation of the law, you know, to put an example. But the example we’ve seen more is like, think of those business tax receipts that you gotta pay to the county which is just a silly fee.
Patrick: Yeah. It’s $50, $100 a year.
Eduardo: They will blow you out of proportion and paint you as the most illegal business in the world.
