OBJECTIVE: The purpose of the Legal Audit is to assist management in controlling losses, avoiding business disruptions, and achieving business goals through preventive planning. Good management is proactive, not reactive.

1. Disaster Planning: If your premises are damaged by fire or other casualty, how would you run your business until an alternate facility is available? A written disaster plan should include at least the following:

• A. Access to critical business information: Arrange for off site storage of business information.
• B. Backup facilities: Identify companies that supply temporary business facilities, emergency equipment and supplies.
• C. Safeguard vital business records: Fire proof vault on premises to protect original contracts, Wills, deeds, and original legal documents.
• D. Protect computer information: Scan for viruses; establish passcodes and firewalls.
• E. Use "Force majeure" clauses in contracts to avoid liability to customers and third parties if business is unable to perform its obligations during contingency periods.

2. Insurance Review: Proper Coverage for Business and Individual Needs Avoids Financial Catastrophe.

• A. Comprehensive Public Liability: Coverage must be sufficient to protect all operations, property, and vehicles used in the business.
• B. Life and disability: Imperative for owners and key employees.
• C. Excess liability coverage: Are you adequately covered for collision with school bus?
• D. Other policies: Consider key-man, business interruption, and long-term care insurance.
• E. Review items:
• 1) Beneficiary designations: Review at least annually and change as necessary.
• 2) For best premium, obtain competing quotes 3 months prior to renewal of policies.

3. Establish Calendar of Key Renewal and Expiration Dates.

• A. Tax payments, returns, and extensions.
• 1) Unpaid payroll taxes: IRS will pursue all "top" executives for personal liability.
• 2) Consider using outside service for payroll and sales tax returns.
• B. Insurance policies: Your business cannot afford a policy lapse due to oversight.
• C. Contracts with customers, suppliers and third parties.
• 1) Failure to send timely renewal notices may cause contract benefits to lapse.
• 2) Beware of "evergreen" clauses that automatically renew undesirable contracts.
• D. Bank loans and lines of credit: allow sufficient time to renew loan terms or obtain alternate financing. Always have a secondary lender available in reserve.
• E. Real estate leases: allow 6-12 months to negotiate a renewal or to plan for relocation.
• F. Business licenses and corporate filings: timely filings avoid late fees and penalties.

4. Business Plan: Developing a written plan, which states the company's long-term mission, and adapts to market changes, is an important planning tool that gives proper direction to the business. The plan is akin to a rudder that keeps the ship on course.

• 3) Consult with financial advisers to obtain a firm grasp of company's break even point and important financial ratios.
• 4) Timely financial reports must be available to management to forecast cash flow shortages and other potential problems.
• 5) Conduct a periodic valuation to determine the worth of the business.

5. Contracts Audit: All major business relationships should be documented in writing. Oral agreements are not worth "the paper" they're written on.

• A. Service providers and sellers of products need sales order form to protect their interests:
• 1) Language to limit open-ended warranties and damage exposure.
• 2) Provide for limited buyers' claim period.
• 3) Assess interest and attorneys' fees if buyer defaults (collectible only if in written agreement).
• B. Buyers need purchase order form to provide at least the following:
• 1) Firm pricing and delivery dates.
• 2) Specifications for products/services.
• 3) Maximize warranty coverage.
• 4) Right to return defective goods at seller's expense.
• 5) P.O. terms control conflicting seller's terms.
• 6) Obtain manufacturer's certificate of insurance or suitable indemnity.
• C. Engagement letters with consultants and outside contractors should be used to specify scope and cost of work and avoid billing surprises.

6. Employee Relationships.

• A. Prevention of workplace liability: To avoid legal sanctions for a hostile work environment, adopt a written anti-harassment policy and train your supervisors at least annually.
• B. An employee handbook, along with consistent anti-discrimination policy uniformly applied, and educational seminars will eliminate many legal problems and minimize damages.
• C. Illinois New Hire Report: Names and social security numbers of new employees must be reported to Department of Employment Security (IDES).
• D. Interviewing: Consider drug and background checks for key positions.
• E. Family Medical Leave Act: Certain employers obligated to grant up to 12 work weeks of leave for serious health condition of employees, their parents, children and spouses.
• F. Americans With Disabilities Act: Reasonable handicap accommodations are required.
• G. Discharge: Build record of "constructive discipline" to justify termination; providing for arbitration of claims may save exposure to statutory damages and attorneys' fees.
• H. Do not classify personal as "independent contractors" if they are truly employees; otherwise risk liability for back taxes, plus value of employee benefits not received.
• I. Overtime Pay: Required for non-management employees; employees cannot waive.
• J. Employee Leasing: Consider this as an economical alternative; saves administration and cost of benefits.

7. Secrecy Policy Imperative to Protect Proprietary Information.

• A. Establish written policy to safeguard trade secrets and confidential business information.
• B. Employees should acknowledge secrecy policy in writing or sign confidentiality agreements.
• C. Establish controls: Limit access to secret documents and sensitive information stored on computers; stamp files "confidential".
• D.Employees should sign a non-solicitation agreement prohibiting them from taking your customers. Where appropriate, employees can be required sign non-competition agreements if restrictions are reasonable as to time and territory.

8. Corporate Maintenance.

• A. To maintain good standing, diary and file Annual Reports on time.
• B. Keep Minute Book and corporate records current. Document salaries and distributions to shareholders.
• C. Avoiding Personal Liability: Use correct corporate name and sign only in officer capacity; maintain separate business bank account; do not use unregistered "assumed names."
• D. Buysell agreements are imperative for owners: Provides exit plan to cover events of death, disability, retirement, and disagreement.

9. Protect Business from Theft and Fraud.

• A. Employees
• 1) Beware of resume fraud; keep resumes on file--misrepresentation justifies discharge.
• 2) Establish internal controls to prevent false vendors, diversion of assets, etc.
• B. New customers: Verify financial condition before extending credit.
• C. Financing scams: Do not pay up front financing fees without obtaining written loan commitment from bona fide lending institution.
• D. Never divulge bank accounts or financial information without independently verifying the recipient; require them to sign non-disclosure agreement in advance.

10. E-mail and Internet Usage: Important to establish formal policy governing employee use:

• A. No confidential information should go on Web.
• B. Product/service descriptions must be updated--delete obsolete warranties, etc.
• C. Avoid publishing admissions against the company's interest.
• D. Site protection: register domain name.
• E. Security: Establish passwords and "firewalls."

11. Litigation Avoidance: Consider nonbinding mediation or arbitration as alternatives to costly litigation.

12. Asset Protection and Estate Planning:

• A. Write or update last will and testament to reflect current needs; guardianship provisions are necessary to protect minor children.
• B. Estate taxes can be minimized, probate can be avoided, and assets can be protected from creditors with planning.

13. Retirement and Succession Planning.

• A. Review personal finances and establish goals for next year, 5 years and 10 years from present date.
• B. Retirement planning: Establish a plan and contribute maximum amount; consider deferred compensation plans.
• C. Successorship planning:
• 1) Buy-sell agreements are imperative if 2 or more owners. Agreement addresses:
• 2) Transfer of stock in events of death, disability, disagreement or retirement
• 3) Establishes formula or method to establish value of stock in event of transfer.
• 4) Establishes method of payment of purchase price.
• 5) Planning assures continuity of business and best price for retiring owner. Saves families of deceased owners from "fire sale" sales price.

The firm can provide complete trademark, copyright, and trade secret advice and counsel, including trademark searches, to any individual or company desiring to create or protect their intellectual property. With over 31 years of experience in all types of intellectual property matters, we have the ability to explain clearly what is required to those who have little or no familiarity with legal requirements in these areas. Our working relationship with knowledgeable co-counsel in other jurisdictions enables us to help clients to protect their rights under U.S. law.

We have handled many trademark licensing agreements involving well known cartoon characters and brand names. We have also prepared numerous patent licensing agreements and have excellent relationships with top patent law firms in the Chicago and Washington D.C. areas to fulfill the client’s complete patent research and filing requirements.

Our active client list includes many U.S. and foreign companies. The firm also has experience in U.S. requirements for operating in the food industry.

Our trade secrets practice includes practical advice on establishing effective policies to safeguard trade secrets and proprietary information and to protect against employee misappropriation or departure by carefully structuring employee confidentiality and non-competition agreements.

In addition to counseling clients in traditional legal matters, Pullman & Gotkin offers a unique preventive law approach to business transactions, which includes problem solving and business planning. The firm assists it clients in drafting business plans, both as an internal management tool and to raise outside financing. It also assists the client in assembling helpful advisory boards to provide the best available advise and counsel. As part of the firm’s value-added service, its network of business colleagues, with diversified management skills, offers a breadth of experience that is available as a resource to help clients meet their business goals.

We have a great deal of experience in the food industry and in other goods industries at all levels, including manufacturing, brokerage, distribution and retail. We are able to provide antitrust advice and counsel for proposed distribution, sales, and marketing planning.

Pullman and Gotkin has assisted numerous clients in mergers, acquisitions and business sales in diversified industries throughout the United States and in many foreign jurisdictions. The firm’s long-term planning approach encourages business owners to adopt plans of succession by which strategic steps are implemented to position the business for a sale or transition years in advance of the intended target date.

Our firm is actively engaged in representing builders, renovators, investor groups, and individuals in the purchase, development, and sale of various types of real estate. Our services include entity structuring, partnership planning, lender relationships, contract review and negotiation, and closing services.

Having represented numerous builders, roofers, and contractors, as well as individual owners seeking construction services, the firm is actively involved, on a regular basis, in construction matters. We have an intimate knowledge of various AIA and construction contracts. Our activities typically involve the negotiation and drafting of appropriate contracts, review and assessment of mechanic’s lien issues, and establishing construction escrows.

In addition to the foregoing real estate matters, the firm represents both landlords and tenants in the area of commercial and industrial leasing.

Consistent with its philosophy of pro-active planning, Pullman & Gotkin encourages its clients to attend to their personal estates, so that the maximum value of their assets can be passed to desired beneficiaries. In order to provide unimpeded access to records and financial information to family and friends in the event of an untimely death or disability, the firm has created a personal estate data sheet that clients can use to record important financial information. The form is designed to concisely compile key financial data, including account numbers, the location of vital records, and contact names. By providing a copy of the form to their executors, family or trusted friends, clients are able to avoid the additional trauma of handicapping the efficient administration of their estates. A complimentary copy of the form is available on this web-site.

The firm also counsels clients on the use of Wills, Trusts, and Powers of Attorney to meet their personal objectives.