Rimon Law Blog

I am attending the amazing LOHAS Forum in Boulder, CO. Ted Ning and his team blessed us with many engaging speakers.

Yesterday morning, I really enjoyed hearing Ray Anderson, who taught us how mimicking nature creates sustainable business. Next was Rob Katz, CEO Vail Resorts (owner of Heavenly on the south shore of Tahoe, among many others) discussed several of the cost saving, environmentally beneficial programs that his company’s resorts implemented. The morning ended with Spencer Sherman, CEO of Abacus Wealth Management. Spencer ran us through one of Byron Katie’s exercises designed to help us overcome our main fears about our businesses or our financials lives. Spencer’s believes that 2009 is the time of reinvigoration, which sounds exciting to me.

The afternoon session Leveraging the Power of Social Networks was overflowing! The panel got us excited about the power of social media to quickly and effectively reach our target audience and motivate people to action. McCarthur from Free Range Studios showed a YouTube teen rebuttal to her company’s well known Story of Stuff. It was inspirational & astounding to see this public teen response.

Today has been spent in deep conversations with friends, after Hunter Lovins powerful presentation this morning. I also got to see Hunter skiing on a Wii in the Vail Resorts exhibition room, which was something! While she beat Ted Ning’s score, she’s apparently not the most adept Wii player in the LOHAS community! Whomever beats Ted the worst wins free tickets to LOHAS next year. Now I know to train for next year.

What does the General Counsel of a Fortune 100 company want from a law firm?  In the case of one former GC – Theodore Banks of Kraft Foods – the answer is printed in black and white.  The ABA’s 2004 publication, “Marketing Success Stories” edited by Weishar and Smiley begins with an essay by Mr. Banks titled What We Wish We Could Get from  a Law Firm, or, Hot to Make Us Fall in Love Again.

The advice propounded by Mr. Banks is entirely commonsensical.  But it is only in recent years, if not months, that “innovative” law firms are touting their adoption of the practices that in-house counsel has wanted all along.

Bypassing the more obvious (but still sage) recommendations, here’s a summary of what one General Counsel recommends to outside counsel trying to get his business.

Getting The Client

• Firms need to distinguish themselves.  Oftentimes law firms cannot adequately answer the question, “Why should I hire you instead of someone else?”  Using vague generalities to answer this question is insufficient.  A firm must prove its capabilities for “high-quality, cost-effective service” in any relevant areas.  Rimon Law Group’s co-founder mused once that he found it odd when law firms tout that they are ranked third for this or that practice area.  As a General Counsel, my reply might be, “can you introduce me to numbers one and two?”
• Ditch the Picasso. While adequate overhead is expected, a firm that spends a lot of money on glass buildings or fancy artwork might suggest the firm is padding its bills to pay for unnecessary overhead.  In-house counsel would rather their lawyer buy a tasteful poster and pass the savings on to them.
• Do what you can to get in the door.  While a company might not be willing to try out a new firm on a billion dollar litigation, they might roll the dice on a smaller, more discrete matter.  Firms might offer new clients to work on a matter at a discounted rate, showing all along what it would cost at the usual rate, to gain a client’s trust and to expose them to the firm.

In these three categories, I’m proud that Rimon Law Group, and certain other virtual law firms, rise above.  More than most, they understand what a real brand identity means to the firm.  In the case of Rimon, we place the focus on lawyers with greater experience operating in an ultra-efficient environment and an assurance of predictable fees to our clients.  The combination of expertise and cost-effectiveness in many virtual law firms is impossible to match in the traditional law firm setting, which is often laden with overhead and leveraged to the hilt.  We’ve also acted creatively to address new clients’ needs in order to expose them to our non-traditional way of doing business.  This often comes at a cost but we’re building durable relationships in the process.

Next week, I’ll discuss Mr. Banks’s advice for keeping existing clients and also do a self-evaluation of Rimon’s practices in the areas of Listening, Communication, Billing, Staffing and Fees.

Stay tuned.

Last Thursday I had the honor of being nominated by Russ Gaskin for the American Bar Association’s Award for Excellence in Environmental, Energy and Resources Stewardship.

Founded in 1982, Green America is a national-for-profit membership organization with 120,000 individual members and 5,000 business members who are committed to creating a green economy.

The ABA Award honors the accomplishments of a person, organization, or group that has distinguished itself in environmental, energy, and resources stewardship. The ABA is particularly interested in nominations that point to specific milestones of achievement by those persons or entities being nominated, with an emphasis on creative thinking, diligence in execution of a plan or program, or sustained progress in innovation or leadership.

The Nomination Narrative Russ submitted may be found here: Lara Pearson Nomination Narrative . I hope that it will inspire you and make you smile.

Forming an LLC or a corporation is an important first step to achieving tax benefits and protection from liability.  In order to preserve these important benefits, however,  it is very important that your company is maintained properly. Otherwise, you run the risk that the separate nature of your company will be ignored by the IRS or a court of law.   While there is no substitution for the sound advice of experienced counsel, a few simple steps will help ensure that you reap the benefits of your LLC or corporation for as long as they exist. The minimum requirements for maintaining corporations and LLCs is that they must:  1) maintain adequate capitalization; 2) keep clean financial and legal records; and 3) be treated as separate and distinct from its owners.

Maintaining Adequate Capitalization

Maintaining adequate capitalization means that the company must be financially prepared to cover the risks it is taking.  If a company is a high-risk company that has high potential of being sued (for example, a hospital) then it is required to have enough money in its bank account to cover such an eventuality.  The existence of insurance is an important consideration, since a company that is insured can cover its capitalization requirement by having enough liquid assets to cover the insurance deductible if and when a claim is brought against it.

Keep Clean Financial and Legal Records

Keeping financial and legal records of a corporation or a limited liability company starts from the day it is formed.  The charter (Articles of Incorporation or Formation), the bylaws/operating agreement, and the organizational consents must be carefully drafted and understood by the owners, managers and directors of the company.  They must then be adequately signed and preserved in a corporate binder.  Then, for the entire lifespan of the company, the rules of these documents must be adhered to.  Such rules may include annual shareholder meetings with corresponding minutes and resolutions by the board of directors or shareholders whenever necessary.  As a rule of thumb, whenever the company makes an important decision, it is prudent to make sure it is authorized by the appropriate parties, and properly documented.

Further, corporations and LLCs are legally required to keep and maintain clean financial records of the business, monitoring every dollar that comes in and out.  These formalities are often ignored by smaller companies where the shareholder(s), manager(s) and the director(s) are often the same people.  However, it is crucial that these formalities be observed. Otherwise the IRS or a court of law might find the company to be a mere shell and ignore it at the precise moment you wish to rely upon its liability or tax protections.  This is why both an accountant and a lawyer are important to maintaining a corporation or an LLC.

Keep Your Company Separate from its Owners

If your company maintains clean financial and legal records, you have mostly accomplished the last requirement of keeping your company separate from its owners .  However, you must also take careful measure to ensure that the owners do not mix their funds with those of the company. The owners’ personal expenses and the company’s expenses must be kept separate and distinct.  Further, the owners, managers and directors of the company must sign all of the company’s legal documents as representatives of the company and not in their individual capacities (i.e. as president of the company and not just by the individual personally).  Similarly any personal legal documents should not bear the name of the company.  If there is any confusion as to how an agreement should be framed, consult an attorney to avoid unnecessary future liabilities.

A client of mine that owns reusablebags.com recently was contacted by the Mayor of Seattle, Greg Nickels, who requested my client’s support with Seattle’s proposed Plastic Bag Fee. Residents of the city of Seattle vote on August 18 whether to implement a twenty cent tax on plastic bags distributed by merchants such as grocers and convenience stores. Many of the grocers and big drugstores already participate in a voluntary education program encouraging consumers to use reusable bags.

Seattle’s proposed tax is modeled after Ireland’s successful tax (affectionately known as a Plastax), which has been in place since March, 2002. Ireland implemented a 33 cent tax per plastic bag, which is paid by consumers at the time of purchase. This charge for plastic bags all but eliminated these harmful devils from the country (and the countryside where they’re often found blowing about in the wind).

Although nay-sayers claim that the bag tax will have a disparate negative impact on people of low income, there are several groups in the Seattle area working to ensure that such folks do get reusable bags to use. In fact, an alliance of merchants, together with the city, just donated 50,000 bags to Northwest Harvest (a supplier of Seattle are food banks) for distribution to the people it helps.

Ultimately, as long as folks who need reusable bags can get them, I think that the Seattle Bag Fee makes perfect sense and hope to see something similar implemented in and around Lake Tahoe soon.

I am in Denver, Colorado for the 7th Annual (yet my first) BALLE Conference. BALLE is the Business Alliance for Local Living Economies. BALLE’s Mission is to build Local Living Economies in North America that foster vibrant communities, a healthy natural environment, and prosperity for all. This is done through:

Catalyzing, strengthening, and connecting networks of locally owned independent businesses

Providing education and community economic development tools; and

Developing and promoting public policies that enable Local Living Economies to thrive

Paul Jensen from One Tribe Creative of Ft. Collins, CO offered a breakout session full of helpful tips for marketing local (and other) socially and environmentally responsible organizations and businesses. Of these, I found the following most helpful: (1) A brand really is others’ perception of your organization — it’s the relationship that your community has with you; and (2) branding is the way in which you tell your story, which you must do continually to thrive.

Paul used the Be Local Northern Colorado campaign that One Tribe worked on to demonstrate several ways in which an organization can brand themselves locally in order to showcase and increase the value they offer to their community. Gailmarie Kimmel, the Co-E.D. of Be Local Northern CO also shared her experiences with the branding of her BALLE network.

What a refreshing way to conclude a great conference!

Who would have thought that two museums would be battling out for the right to use THE COLD WAR MUSEUM? Although the Cold War ended in 1991, two museums currently are warring over who gets to use the term COLD WAR MUSEUM as their service mark.

The Cold War Museum endeavors to maintain a historically accurate record of the people, places and events of the Cold War.

The Cold War Air Museum is a non-profit flying museum dedicated to the preservation of Cold War era aircraft.

On February 27, 1997, Francis Gary Powers, Jr. applied to register the service mark THE COLDWAR MUSEUM for museum services. His application lists a first use date of July 13, 1996. Presumably, the PTO found the mark merely descriptive and Mr. Powers therefore registered his mark on the Supplemental Register. On February 4, 2003, Mr. Powers, again applied to register the service mark THE COLD WAR MUSEUM for museum services on the Principal Register. (The Principal Register provides numerous benefits, including nationwide ownerhsip rights and presumed notice of those rights.) Not surprisingly, by Mr. Powers’ second application also was denied under Section 2(e) of the Trademark Act, based on the mere descriptiveness of the mark.

In response to the descriptiveness refusal, Mr. Powers filed a 2(f) Declaration of Acquired Distinctiveness alleging that his mark had become distinctive of museum services by virtue of the fact he made use of THE COLD WAR MUSEUM mark exclusively and continuosly for the 5 years prior to his making the claim of distinctiveness. This is common practice amongst applicants.

In order for marks to be registerable on the Principal Register, they must be “distinctive”, meaning that they have the ability to function and be recognized as a brand. A mark that describes a purpose, feature, characteristic, or function of the product or service that it’s used to promote typically does not function as a brand and will be considered “merely descriptive” by the USPTO. The PTO will not register “merely descriptive” marks on the Principal Register unless acquired “distinctiveness” is proven. Distinctiveness sometimes may be proven through 5 years’ exclusive and continuos use, though more proof is required for more descriptive marks.

Unfortunately for Mr. Powers, given the highly descriptive nature of THE COLD WAR MUSEUM mark, the PTO Examiner remained unconvinced that the mark had acquired distinctiveness and she therefore maintained her 2(e) refusal to register. In response to this, Mr. Powers submitted over 200 pages ofevidence that his THE COLD WAR MUSEUM mark had indeed acquired distinctiveness. Based on the evidence submitted by Mr. Powers, the Examiner withdrew her 2(e) refusal and allowed the mark THE COLD WAR MUSEUM to become registered on the Principal Register.

Three years later, on April 18, 2007, Cold War Air Museum, Inc. filed a Petition to Cancel the federal service mark registration for THE COLD WAR MUSEUM on the grounds that the mark was merely descriptive at the time of registration and thus should not have been registered. After a full Cancellation proceeding, the Trademark Trial and Appeal Board (TTAB) granted the Petition filed by Cold War Air Museumon October 20, 2008, ordering the THE COLD WAR MUSEUM mark cancelled. Mr. Powers appealed the TTAB’s ruling to the Federal Circuit (CAFC), which just reversed the TTAB on November 5, 2009.

The issue on appeal was whether or not the Registrant (Mr. Powers) was required to submit evidence of distinctiveness during the Cancellation proceeding. The CAFC found that Mr. Powers’ THE COLD WAR MUSEUM application (and more importantly, all of the evidence submitted therewith ) was made of record in the Cancellation proceeding because Trademark Rule 2.122(b) provides that the record in a Cancellation proceeding automatically includes the file of the registration at issue. Because Mr. Powers proved acquired distinctivenes in his registration application, and the Air Museum did nothing to rebut this evidence, the CAFC ruled that the Board erred in determining that the mark had not acquired distinctiveness. Therefore the Board reversed the TTAB and the THE COLD WAR MUSEUM registration will not be cancelled.

The morals of the story?

If museums can engage in lengthy trademark disputes, so can you! Descriptive marks cost more and are more difficult to protect, which is why trademark attorneys routinely discourage you from falling in love with them. Choose and protect your marks wisely.

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