Business

Attorney Fees – Flat Fee vs. Hourly Rate

Question from potential client:

Dear Mr. Knellinger,

How much would it cost someone to setup a new LLC or Corporation, including drafting an operating agreement, buy/sell agreements or bylaws, etc.? Additionally, what is the charge for handling contract review, handling employment matters, including, without limitation, hiring, firing, FLSA (Fair Labor Standards Act), exempt v. non-exempt, overtime, and others.

Attorney Response:

Thank you for your inquiry. I have no flat fees for the tasks you mention because quoting them may be unfair to the potential client when complicating factors arise, as they frequently do. If a potential client is knowledgeable and experienced in business matters, they are able to explain to me the nuances of the situation which they know may impact the work that I do and the expense associated with it. I can usually provide a pretty close estimate of fees and costs in that situation. If a potential client is not familiar with the options available to her or the consequences of some “minor” fact which she may have omitted in our initial conversation, she might feel that the attorney should have anticipated that minor fact and feel that she has been taken advantage of when she is charged to address the omission. The easiest example is the most common. A flat fee is quoted for an LLC and then the attorney discovers that there are other members who thought they were lenders or vice versa. The operating agreement will be greatly complicated as a result of buy/sell, and other exit scenarios. Negotiating an operating agreement may be easy or very complicated depending on a variety of factors that the parties may not have even considered.

We offer our clients questionnaires which are designed to uncover undiscussed or undisclosed issues. Sometimes when those issues are openly discussed, the parties are not willing to go forward with the venture. For example, when I ask what each party expects of the other party in terms of money, time, and effort, frequently their expectations of each other do not match their own expectations for themselves. Another example is three persons join to form an LLC. One brings money, the other experience in the industry, and the third the labor for day to day operations. When do their interests vest? The money person wants immediate vesting when she puts in her money. The experienced person and the day-to-day person are going to be providing their experience and labor over time. Should they get equal shares immediately or should it vest as they provide the consideration they promised? Most frequently, they have come to the table expecting equal shares immediately. That discussion could change the result.

I hope that this helps you to understand why I feel that flat fees are misleading. Flat fees tend to result in the tendency and economic reality that an attorney will not ask the difficult questions because resolving them will require much more time than the flat fee will accommodate. For example, I noticed on a web site recently an attorney here in Gainesville advertising a flat fee for a prenuptial agreement for $175.00. If one understands the complicated and integrated issues that must be analyzed and addressed in such an agreement, such a flat fee is utterly ridiculous unless you consider your time worth a cent per hour. I am sure that the client could walk out with a document titled “Prenuptial Agreement”, but I am equally sure the client has been grossly short changed. If potential clients depend on the lowest common denominator in advertised legal fees, they can expect the lowest common denominator in the result as well.

I think the best course of action is to hire the attorney for a first conference at their hourly rate and exchange information, goals, and options and costs for achieving them. The client can then make an informed decision about how to go forward or whether to do so at all.

I have clients that I have continuously represented for decades even though there are attorneys that advertise much lower hourly rates. I trust that their good judgment and my fair services to them are the reason they remain. Best wishes to you in your endeavor.

Rick Knellinger
Attorney at Law


Knellinger, Jacobson & Associates | 2815 NW 13th Street #305 | Gainesville, FL 32609 | (352) 373-3334

Buying an Existing Business: Part 2
This article will address what a purchaser should consider before purchasing an existing business. Part 1 of this article addressed why a person should consider buying an existing business. Part 3 will address the legal impact of buying an existing business.

What to consider when purchasing an existing business?

Buying an existing business is a major commitment and investment. It is not something that an individual should take lightly, even if the existing business appears on its face to be profitable. Indeed, an individual must be cautious about purchasing an existing business and conduct extensive due diligence before buying the company, firm, or business. Below is a list of some questions, but not all, that a potential buyer should consider before any purchase occurs.

What is your skill set?

    • Many new business owners that purchase existing businesses may actually do it for the wrong reason. Although the existing business may be profitable at the time of purchase, it will still require strong leadership and organizational skills to keep the business afloat. The prior owner laid the foundation for success, but it will be the new owner’s task to remain profitable. You must realize certain businesses require a business owner to possess certain skills.
      • For instance, if you purchase a catering business, you must understand it will require some culinary skills and to work irregular and long hours in preparing the food for an event. A catering business owner also manages staff and works directly with its customers.
      • Another example is a person who buys a pool maintenance company. It will likely already have existing customers and therefore the business owner must possess the skill set to actually maintain and clean customer pools from day one. A business owner must understand what chemicals and equipment are necessary to complete these tasks.

What are your interests?

    • A potential business owner should realize that becoming a business owner is a major responsibility. Some businesses require long and irregular hours and thus a potential buyer must think hard about what specific jobs would interest them on a day-to-day basis. Although a business may be profitable to start, a new owner must maintain the same level of customer satisfaction and standards set by the previous owner. If you are not passionate about the type of work, the business may falter as a result.

Why is the existing business on the market?

    • This may seem like an irrelevant question, but it is actually one of the most important inquiries one must make. This question too often gets overlooked after a potential purchaser reviews a business’s positive revenue and profit streams. A purchaser must step back from the purchasing process and realize the person selling the business may or may not be doing it for personal reasons, such as retirement. For example, the market may have become more competitive than in previous years and it may make sense for the owner to get out before the market becomes saturated. Whatever the owner’s reason may be, it is in your best interest to determine why the business is being sold. You must not take a seller’s reason at face value.

How do you determine the right price?

    • This process requires expertise. A potential purchaser must realize that the seller wants to get the highest price for the business. An experienced business law attorney can help you with the process of analyzing the purchase of an existing business, perhaps in concert with a qualified business appraiser and a certified public accountant. The CPA would inspect the financial records of the company and report to the appraiser figures on which the appraiser would rely in formulating the fair market value and, perhaps, the purchase price. Further, that lawyer can help you negotiate and contract for the best price for the business. There are numerous market factors that go into a proper purchase price and you want to make sure you get the best possible deal to start your ownership on the right foot. Further, an attorney can provide you with sound and independent counsel and will not hesitate to advise you that a deal is bad.

How are you going to finance the business?

  • An existing business unlike a new business may have a higher upfront purchase price. However, financing the purchase of an existing business is generally easier because of its track record of previous success. It is important to understand the legal consequences of your financing options. Unfortunately, many business owners enter unfavorable agreements because they are in a hurry to buy a business. It is important that you determine the best financing route for your personal situation. A competent business law attorney can provide you with guidance and information about your financial options.

In sum, a purchaser must do his or her due diligence before purchasing an existing business entity. A purchaser must also understand the legal ramifications of purchasing the business (see part 3). Throughout this process it is important that you consult an experienced business law attorney to help you each step of the way. The Office of Knellinger, Jacobson & Associates can help you with this process. We have been serving business owners in North Central Florida and the Gainesville community for over 40 years.


Knellinger, Jacobson & Associates | 2815 NW 13th Street #305 | Gainesville, FL 32609 | (352) 373-3334

Buying an Existing Business: Part 1
Part 1 of this article will address why a person should consider buying an existing business. Part 2 of this article will address what a purchaser should consider when buying an existing business and Part 3 will address the legal impact of buying an existing business.

Why consider buying an existing business?

Many people dream about owning their own business and becoming their own boss. Many people believe that their dream is only possible through a start-up business. While establishing a new business or company is an option, it may actually be more risky than purchasing an established business that is for sale. Why not purchase a business with a proven concept, existing sales, and an established customer base?

Many of the pitfalls entrepreneurs and new business owners are challenged with relate to the finances of their businesses. In fact, 50% of businesses fail within the first 5 years.1 Of course, a business owner that has a well-planned business can be very successful. Our community, Gainesville and North Central Florida, have many examples of successful small business ventures.

Moreover, you may have a great idea or concept, but the upfront costs of actually starting the business may be too prohibitive. For instance, you will want to protect your new business from liability and therefore you will need to hire a competent business law attorney to establish your business as a LLC or other business entity. Further, you may have the upfront expense of purchasing inventory or equipment for the business. Before you know it, the business is in debt before it even earns any revenue.

Sometimes purchasing an existing business may be the most sensible solution. It also may be less risky, but this is not always the case. Of course, the market dictates what, if any, opportunities actually exist. An established business may provide the following benefits:

Goodwill (loyal customers, quality product offering)
Established profit and revenue streams
Necessary equipment (prior owner has already purchased)
Known brand
Property (owned or favorable lease terms)
Location
Permits and licenses (i.e., liquor and/or food license)
Training (generally, the prior owner will provide on-site training)

A new owner of a business can still make major changes to the existing business. For example, you may buy a pizza restaurant that is centrally located, established, and has strong sales, but only offers pizza. You may decide to increase its offerings, to say, calzones and subs, in order to increase the business’s profitability and its customer base. Alternatively, you may update a tired logo by trademarking a new one.

Ultimately, a purchaser must still do his or her due diligence before purchasing any business (see Part 2). This includes determining why the business is for sale in the first place. Is a business owner selling his family-owned seafood restaurant because Red Lobster has moved in across the street or is the business owner retiring? Furthermore, an existing business likely has a more costly price tag. However, financing the purchase of an existing business is generally easier because of its track record of success. Whether you are considering buying an existing business or starting a new one, the Office of Knellinger, Jacobson & Associates can help you with this process.

____________________
1. U.S. Small Business Administration, Small Business Facts Advocacy, available at https://www.sba.gov/sites/default/files/Business-Survival.pdf.

Knellinger, Jacobson & Associates | 2815 NW 13th Street #305 | Gainesville, FL 32609 | (352) 373-3334

Common Questions about Independent Contractors

Many businesses that contract with individuals or businesses for goods or services are unaware of the potential liability that may arise under the contract. Under certain circumstances, the individual or business rendering goods or services to a business may actually be classified under Florida law as an employee, not an independent contractor, which may lead to a windfall of liability for the business when something goes wrong. It is important for a business to work with a competent business law attorney to ensure that it limits its liability when hiring contractors to perform any task.

What does it mean to be an independent contractor?

An independent contractor is not an employee of a business although at times it may appear that way. Rather, an independent contractor is hired by a business to provide goods or services.1 The goods or services are provided according to the terms of the contractor’s agreement with a business.2

Is an independent contractor self-employed?

Yes, an independent contractor is self-employed.3 Generally, a business owner or contractor who provides services to other businesses are considered self-employed.4

What are the benefits of using an independent contractor?

Generally, an employer is liable for any action taken by an employee if such action occurs within the scope of that employee’s employment. By contrast, an employer is generally not liable for the actions of an independent contractor.

It is in a business’s best interest to consult with a business law attorney before hiring a contractor for any major task. Although the contract on its face may deem an individual or business an independent contractor, an employer can still take certain actions before and after hiring an independent contractor that can actually nullify the contract’s effect.

What does Florida law look for when determining the status of a contractor?

Florida courts apply numerous factors to determine whether the individual or business is an independent contractor or employee. Most of these factors revolve around whether the employer had some type of control over the contractor and whether the contractor exhibited a substantial degree of independence.

Why is it important to consult with a business law attorney?

No two cases are alike and courts will determine liability on a case by case basis. It is imperative that a business owner takes preventative measures in both the screening and hiring process. For example, certain steps must be taken to ensure that the contractor a business hires is duly qualified. Further, the contract between a business and a contractor must be fashioned in a way as to limit the business’s liability. Lastly, an employer must not take certain actions while an independent contractor is performing.

The Law Office of Knellinger, Jacobson & Associates understands the needs of business owners in North Central Florida. We have helped business owners for over 40 years protect their businesses from liability. We are knowledgeable about agreements with contractors and we are here to assist your business with this process.

____________________
1. Communications Workers of America, My Employer Says I am an Independent Contractor. What Does This Mean?, http://www.cwa-union.org/pages/my_employer_says_i_am_an_independent_contractor.what_does_this_mean (last visited Dec. 23, 2015).
2. Id.
3. Internal Revenue Service, Independent Contractor Defined, https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-Defined (last updated Aug. 5, 2015).
4. Internal Revenue Service, Independent Contractor (Self-Employed) or Employee, https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-Self-Employed-or-Employee (last updated Aug. 5, 2015).





Whether you have just obtained your medical license or wish to change your practice of twenty-five years, there are various factors you should consider before joining a practice. The first question is whether you will be employed or will be a principal in the firm.

If you are to be employed you must decide whether you will be an employee or an independent contractor. That determination is frequently negotiated because it will have far reaching consequences for both parties.

An independent contractor is responsible for paying his or her own taxes on the income earned, paying workers’ compensation premiums and perhaps solely responsible for his or her own professional liability. These additional responsibilities may affect the compensation paid for services rendered. There are factors which are used to determine which category you should be in principally revolving around whether you exercise control over your actions. They include whether you control your own hours and place of work, whether you may hire a substitute or additional service providers to perform your work, whether you control the methods and procedures of your work and whether you provide the tools and facilities to provide your services. This list is not inclusive. If the Internal Revenue determines that you have categorized your position incorrectly, the employer may suffer somewhat drastic consequences including punishment for the failure to withhold and pay taxes on the employee’s behalf especially if the employee has failed to pay taxes. The employment contract should be specific in addressing these and other issues in order to minimize risks to both parties. Next up: What else should you include in your contract?

Our days of waiting in line for tickets may soon be over. For several years now, airlines, movie theaters, and other industries have been successful in utilizing a ticketing system that includes online check-ins and at-home ticket printing, and theme parks may be the next to jump on board.
Installation of a no-line ticketing process for amusement parks has been attempted before by Cygnus, a company that possessed successful software, but poor management. Cygnus’ internal issues caused a decrease in customer satisfaction and financial strains that nearly caused the company to fail.

Despite Cygnus’ downfalls, Steve Brown took on the role of CEO for the company in 2007. Brown had previously acquired extensive experience in the theme park industry while serving as vice president of ticket strategy and sales for Six Flags and also working for Disney for 16 years. Seeing an opportunity in fine-tuning the no-line concept, Brown completely reorganized the company, renamed it “Accesso”, and turned the business around.

Along with internal alterations, Brown also changed the way in which the no-line concept would be implemented and utilized by his customers. Previously, Cygnus would sell a software program to the theme park that had to be installed on the park’s servers and overseen by their own staff. Alternatively, Accesso’s technology involves storage of its applications on a remotely hosted server, or “cloud”, that can be accessed through the internet.

This change in structure allows the client, the theme park that is supplying the easy-ticket service, to bear less of the burden that is associated with the software, and Accesso can now better satisfy its customers. A second upgrade that Brown has employed is the availability of Accesso’s services via iPhone and Android apps, which allows park visitors to simply purchase a ticket with their smartphone and scan the actual phone at the park entrance. This has eliminated the additional step of printing an online-bought ticket at home, and ticket purchasers will no longer have to worry about potentially forgetting to bring their ticket with them.

This modernized service is not only useful for large parks such as Disney or Sea World, but local zoos and other small venues can efficiently offer this ticketing system, as well.

Steve Brown used his knowledge of theme park ticketing trends and his innovative ideas to successfully turn around a business that was on the brink of failure. If you are interested in restructuring your business or starting a new one, our business attorneys at the Law Office of Knellinger, Jacobson & Associates can help you with everything from choosing the best corporate structure for your business to drafting contracts. Our office can also assist you with protecting your intellectual property if you have created a new product or have an idea for a new product. Call us today to schedule an appointment and let our Gainesville business lawyers help with your business.

Starting a business inspired by a passion can be a risky and intimidating journey, but it can also lead to rewarding and life-changing results. Fitz Koehler’s Gainesville-based fitness company, Fitzness International, proves this to be true. Koehler originally came to Gainesville as an undergraduate student at the University of Florida with a passion for exercise and has spent the last 20 years turning her hobby and healthy lifestyle into her dream career.

Koehler began her career serving as the fitness director for a cruise ship company and then became an instructor on the Cardio Jam television series. She then enrolled in graduate school and earned her master’s degree in exercise and sports science.

Koehler’s company, Fitzness, has a unique philosophy in that the focus is not on fad-diets and expensive weight loss techniques. Instead, Koehler encourages healthy eating, regular exercise, and the general overall improvement of the client’s health. Fitzness is designed to cater to the needs of every individual, regardless of age and current state of fitness health.

Fitzness has flourished into an international company, which includes a website that features online interview segments with celebrities such as Bruce Jenner and Brooke Shields. The company has also grown significantly as a result of Koehler’s writing endeavors and her radio and television segments. She has written articles for well-known online sources and women’s and fitness magazines, and she is the author of several books that focus on fitness and healthy lifestyles.

Starting and maintaining a successful company like Fitzness is no easy task, and ensuring the well-being and growth of a new company is also challenging. Proper planning and good decision making are crucial to ensuring the success of a business, and with these tools it is possible to turn a passion into a successful career as Fitz Koehler has done.

If you are interested in starting a new business or expanding your current enterprise, let the experienced business attorneys at the Knellinger, Jacobson & Associates assist you. We can help you choose the best corporate structure for your business, draft and negotiate contracts, as well as help you prepare for expansion.

“You have to. I already paid your entrance fee,” said Bob. They couldn’t have known at the time, but this would be the first step to a second career for Joey Landreneau. Based on the popularity of the jambalaya he’d always bring to potluck dinners, a friend had volunteered him for a booth at the Alachua Good Life Jubilee Festival. He sold out in an hour and a half. A few months later, Joey’s weekends were consumed with cooking classics from his southern Louisiana upbringing for festivals throughout Alachua and the surrounding counties, having fun and collecting steady additional income to boot. Word of his Creole specialties spread quickly, and the requests for catering came rolling in shortly thereafter. Just a few years later, Landreneau’s Louisiana cooking would be featured at the Black and White Gala, serving a formal dinner for 250 people at Gainesville’s largest annual charity event.

Landreneau learned to cook from his mother while growing up in Southern Louisiana, where food was an integral part of everyday life. From red beans and rice to shrimp whatever, Landreneau enjoys cooking Creole classics and busting the myth that Cajun food must be extremely spicy or full of cream. He believes a good product sells itself, a fact demonstrated by the popularity of his signature items like shrimp-stuffed bread and chicken vermillion, not to mention his fried turkeys which fly off the shelves every year around Thanksgiving. Joey takes pride in using wholesome products like Tony Chachere’s Original Cajun Seasoning with no salt or MSG and preparing Cajun food with an eye toward health. With weekly lunches for the University of Florida College of Medicine and a burgeoning partnership with local business Omi’s Kitchen, Landreneau is happy to have a full-time catering clientele. However, this doesn’t prevent him from daydreaming about the future. Down the road, he’d love to deliver his products from the setting of a Cajun market, offering both prepared items and meals customers could enjoy cooking at home.

Do you have a passion you’d like to turn into a business? Let us help you with the finer details, from trademarking, to registering, to drafting employment or partnership contracts. With more than 30 years of experience, the law office of Knellinger, Jacobson & Associates can help make your idea a reality.

Restaurants often struggle in a staggering economy. Although some independent restaurants in Gainesville have closed, many franchises are flourishing.

Franchise owners and operators recognize that franchises help their owners succeed. When owners purchase a franchise, they do not have to take care of many details that an owner of an independent restaurant must handle. Franchises have a specific menu and ambiance. If a restaurant owner needs help, he can contact the franchise support number and get assistance. Additionally, owners can benefit from national advertising that independent restaurant owners may not be able to afford. Franchise owners may also be able to obtain substantial discounts on bulk supplies.

Furthermore, customers know what to expect when they go to a franchise. Whether customers are frequenting a franchise in their hometown or one in another area, the food, décor and pricing will be similar.

Popular franchises that are thriving in the Gainesville area include Domino’s Pizza, Burger King, Moe’s Southwest Grill and Subway. The profitability of many of these franchises has encouraged a number of owners to purchase multiple restaurants. Additionally, some independent restaurant owners in the area have successfully created their own franchise restaurants.

If you are seeking to open a restaurant or another business, a franchise may provide benefits that will assist you in becoming profitable. Nevertheless, your finances, the amount of support you need, your willingness to adhere to the rules of the franchise and other factors will influence your decision.

Whether you choose to own a franchise or an independent business, the Law Office of Knellinger, Jacobson & Associates can help you with the process of starting a business or purchasing a franchise. We can review franchise and partnership agreements. Our attorneys can also help you arrange financing and aid in negotiating with employees, vendors and other third parties who are essential to your business growth. Contact our office to learn more about our business services.

A few new restaurants opened this past September and October. Hardee’s and Red Burrito opened at 7300 Newberry Road in Gainesville, Florida. Hardee’s encouraged customers to attend the Grand Opening on October 15, 2011 by offering complimentary biscuits to the first 50 people attending the opening event. Hardee’s is not new to Gainesville, but the four Hardee’s restaurants that were formerly in the area closed a decade ago.

Customers looking for bakery items, ice cream, coffee, smoothies and other beverages will enjoy the new Patticakes, which opened in late September. Jan and David Patterson own the Patticakes restaurant. They hope that the restaurant will be a community meeting place where people can relax to enjoy a beverage and snack.

Church’s Chicken no longer has a license, and the University Avenue location is closed. However, the vacant building may be replaced by Southern Chicken, which is now seeking a license. Another restaurant, Virtually Cuban, is currently closed but may reopen shortly.

If you have a restaurant or other business that is opening or shutting its doors, a business attorney can help you take the necessary steps to secure or dispose of inventory and possibly limit personal liability. Business closings can be very stressful, but having the assistance of an experience lawyer can help to make it less so. The business attorneys at the Law Office of Knellinger, Jacobson & Associates can help you negotiate prices, draft contracts and assist you with other legal details.