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Small Business Bankruptcies in the Wake of COVID-19

Legal AssistantBusiness Law, Resources

COVID-19 has changed many things for a lot of people. Small businesses haven’t been spared either. The enactment of the CARES Act (Coronavirus Aid, Relief, and Economic Security Act) seeks to support individuals and businesses that have been hard-hit by the pandemic.

What you may not be aware of, however, are the revisions made to certain provisions of the US Bankruptcy Code. This is to offer better, reliable, and more effective bankruptcy relief to individuals and small businesses during these critical times.

This article explores everything you need to know about small business bankruptcies and what the new revisions mean for your small business.

What Is Business Bankruptcy

Filing business bankruptcy is a federal court process that a company goes through designed to help it either eliminate the debt or repay it with the oversight of the court. This can be done in one of two ways – liquidation or reorganization.

Types of Business Bankruptcies

The various types of bankruptcies that exist are classified based on the “Chapters” of the US Bankruptcy Code in which they appear.

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Chapter 7: Liquidation Bankruptcy

This is perhaps the most commonly filed bankruptcy type of the three. Also referred to as “straight,” “ordinary,” or “Chapter 7” bankruptcy, it is typically used when a business’ debts are so overwhelming that restructuring or reorganization just aren’t feasible options. It is the best and sometimes the only choice for corporations, partnerships, or sole proprietorships that have no viable future or no substantial assets.

You might ask: How does business bankruptcy work in Chapter 7 liquidation? Usually, the court will appoint a trustee who then takes possession of all the business’ assets and distributes them among all the creditors.

Once the process is complete and the trustee receives their payment, the court issues a discharge indicating that the business owner has effectively been released from any debt obligation going forward.

Chapter 11: Business Reorganization

In this type, a company that’s elbow-deep in debt but with a realistic chance of turning things around reorganizes and continues with its business operations under a court-appointed trustee. It is typically used for corporations and partnerships as well as for sole-proprietorships whose income levels exceed the thresholds that would otherwise qualify them for Chapter 13 bankruptcy.

The court requires the company to file a detailed plan of reorganization that outlines how it intends to deal with its creditors. Some of the likely scenarios it can adopt include returning to profitability by repaying a portion of the debt and discharging others, debt recovery, and/or lease/contract terminations.

This plan is then presented to the creditor committee, who then votes on it. The court will only approve of the plan if it finds it to be fair and equitable to all parties. This process is lengthy and can often take more than a year to confirm.

Chapter 13: Wage Earner’s Bankruptcy

Chapter 13 is a reorganization bankruptcy that’s reserved for individuals and sole proprietorships since the two entities are indistinguishable. The ultimate goal, in this case, is the reorganization of the debt and not liquidation, as would be the case with Chapter 7.

That way, an individual gets to keep their property and is allowed to repay a portion of their debt each month over a three to five year period. The repayment amount is calculated based on income, total debt, and personal assets.

The Small Business Reorganization Act of 2019

As mentioned at the beginning of this article, the CARES Act includes certain amendments to the Small Business Reorganization Act (SBRA). The whole idea behind the changes was to temporarily increase the threshold required to file for relief under the revised Chapter 11 Subchapter V of the Bankruptcy Code.

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In the new dispensation, the threshold has now been increased from the previous $2,725,625 of debt to $7.5 million for one year. So, what does Subchapter V mean for your business?

  • Debtors – businesses or individuals – can now file for relief if their total debt amounts to a maximum of $7.5 million, with at least 50% of it being commercial debt.
  • The process of filing bankruptcy when you own a business will be a lot quicker. The deadline has been revised to 90 days as opposed to 120 days, as was previously the case.
  • SBRA debtors are not mandated to pay the obligatory quarterly US Trustee’s Fees, which can be quite hefty in traditional cases.
  • Debtors will be able to stretch out the duration of administrative expense claims over the entire term of the plan.
  • A plan of reorganization can only be filed by the debtor, effectively eliminating the risk of creditors filing competing plans.
  • Unless the court states otherwise, debtors do not have to provide a disclosure statement.
  • As was previously the case in Chapter 11 Bankruptcy, creditor committees will now not be appointed under the new SBRA standards.
  • A business owner can still keep their equity interest in the company even though unsecured creditors won’t receive full payment.

Preferential or Fraudulent Transfer

Keep in mind that a troubled company that seeks to make a fraudulent transfer of assets to hide them from the trustee, or a preferential transfer to pay off certain creditors prior to filing, does so at the expense of other creditors who are owed money in equal measure.

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In such circumstances, the court-appointed trustee has the right to retrieve that property and include it in the debtor’s estate. This process is called a bankruptcy clawback and is applicable for all transfers made in the 90-day pre-bankruptcy filing window.

On the other hand, if you’re a creditor potentially facing a lawsuit that seeks recovery from a trustee despite having fully performed under the terms of a contract, you may need to seek the services of a business bankruptcy attorney to defend against it.

Save Time and Money With the New SBRA

The main benefit of the new SBRA standards is that small businesses with debts amounting to less than $7,500,000 can reduce the punitive time and expense costs associated with the bankruptcy process.

That way, companies that file get to reap the benefits of the automatic stay buying them time to streamline their operations and bounce back by the time the COVID-19 pandemic blows over.

If you’re considering filing, you can chat online with a Laws101.com business bankruptcy attorney where you’ll be instantly connected to a lawyer who can give you legal guidance on your specific case or question.

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Cares Act: What Is It and Who Does It Cover

Legal AssistantBusiness Law, Resources

The coronavirus pandemic has brought with it uncertainty. The only way to assess the true potential economic impact of the virus involves not just focusing on its epidemiological profile but also evaluating the way governments, businesses, and consumers respond to it.

According to data from the US Bureau of Labor Statistics, the unemployment rate in the country has surged to an all-time high. More than 30 million people have filed for unemployment benefits in just six weeks.

The US Congress recently passed the CARES Act. This $2 trillion coronavirus relief fund is one of several countermeasures put in place to provide fast and direct financial relief to the millions of American families and businesses affected by the COVID-19 pandemic. Here’s everything you need to know about what the CARES Act is and what it covers.

CoronaVirus Relief for Workers and Their Families

The Coronavirus Aid, Relief and Economic Security Act, or CARES Act, for short, provides financial relief to American households through the Economic Impact Payments program.

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Each adult whose income was less than $99,000 will receive up to $1,200 in addition to $500 for every child they have under the age of 17. A household of four, for instance, would get $3,400 in relief funds. For the vast majority of taxpayers, no action is required on their part. The IRS will automatically calculate the amount due and send the economic impact payment directly to the account listed in their filed returns. However, for those who would much rather receive their payments through their bank account as opposed to checks in the mail, the US Treasury has a web-based portal through which you can provide your banking details.

Small Business Assistance Through the Paycheck Protection Program

The CARES Act also offers financial relief to small businesses. It provides them with the resources they require to cover overheads like rent and utilities and hire back employees who may have been laid off as a result of the COVID-19 pandemic. It offers them financial assistance to allow them to maintain their payroll at their staff’s current pay rate. The Paycheck Protection Program, or PPP for short, is implemented by the Small Business Administration (SBA). It is charged with disbursing SBA loans worth up to $349 billion, to go towards job retention and overhead expenses.

Funds expressly used for this purpose during the eight-week loan period will be forgiven, which means that small business owners won’t have to worry about paying it back. It gives small businesses and their employees the chance to find alternative methods of generating revenue to pivot the business until the existing crisis ends.

Small businesses can receive SBA loans worth up to two and a half times their average monthly payroll costs for the 12 months leading up to the crisis. This doesn’t include independent contractors since they are eligible to apply for the loans on their own.

Sole proprietors or self-employed individuals, who don’t have payroll expenses in the same way that other small businesses do, are still eligible for the loan. The amount will be calculated based on their payroll costs for the preceding 12-month period as well.

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Interest payments will be deferred for six months, and the full amount will be due in two years from the date of origination. There will be no penalties for prepaying.

Current PPP Status

Business owners will need to complete the PPP loan application form, attach all the required documentation, and submit them to an approved lender by June 30, 2020. The earlier you apply, the better since there is a funding cap, and lenders also need time to process the loan.

Economic Injury Disaster Loans

Businesses that are currently experiencing a loss of revenue can get temporary economic relief through the SBA disaster loan. Small business owners in the US can apply for a loan advance of up to $10,000. This amount won’t have to be repaid.

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So if you’re a small business owner with less than 500 employees, a self-employed person, a sole proprietor, an independent contractor, a veteran organization, or a non-profit organization that has been directly impacted by the COVID-19 situation, you are eligible to apply for an SBA disaster loan.

Businesses in specific industries that have more than 500 employees may also be eligible if they meet the SBA’s size standards. If your business is approved for a loan, the amount will be disbursed within a few days.

Job Preservation for American Workers

The implementation of the CARES Act allows the US Treasury Department to take unprecedented steps to ensure that the jobs in industries adversely affected by the coronavirus pandemic are preserved. Some of these steps include:

  • Employee Retention Credit – Employers that face closure orders are given a 50% credit of wages paid between March 13, 2020, and December 31, 2020, as an incentive to keep them on the payroll.
  • Payroll Tax Deferral – Employers and self-employed individuals can now defer the employer share of their Social Security tax to pay it off over the next two years.
  • Payroll Support – Eligible businesses can apply for payroll support to enable the continued payment of employee salaries, wages, and benefits.
  • Loan Program – Eligible businesses can apply for loans to provide liquidity and cushion against losses incurred as a result of the COVID-19 crisis.

Assistance for State, Local, and Tribal Governments

The CARES Act also established the Coronavirus Relief Fund worth $150 billion to provide payments to the state, local, and tribal governments to help them navigate the adverse effects of the pandemic. The payments are to towards:

  • Necessary expenditures incurred as a result of the public health emergency response due to the COVID-19
  • Expenses that were not accounted for in the approved budget for state and local government as at the date of the enactment of the Act
  • Expenses incurred as a result of the pandemic between March 1, 2020, and December 30, 2020

Giving America Hope for Better Days

The CARES Act has lots of provisions designed to help businesses and their employees stay afloat during the coronavirus pandemic. Its ultimate goal is to allow people to keep their jobs and flatten the nationwide unemployment curve as the country rallies to mitigate the effects of COVID-19.

If you’re a business owner, employee, sole-proprietor, self-employed person, or independent contractor who needs help accessing coronavirus relief funds, chat online with a Laws101.com attorney. You’ll be instantly connected to a lawyer who can give you guidance on how to go about it.



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When to Hire a Criminal Defense Attorney

Legal AssistantCriminal Law Leave a Comment

If you or a loved one have had a brush with the law and are facing serious criminal charges, you need to involve a criminal defense attorney right away. Of course, several things would be running through your mind at this point – like the cost of hiring a good lawyer.

It would be disingenuous to tell you not to worry about it. That the expense associated with hiring the best criminal defense lawyers is nothing compared to the price of going to prison. But it matters a great deal too.

What many people fail to realize is that bringing a defense attorney on board at the beginning of the process will save you loads in large expenses further down the line. Additionally, depending on the nature of the legal trouble you’re in, you need someone to help you navigate through your issue and safeguard your constitutional liberties. With that said, here’s when you should hire a criminal defense attorney.

Hiring a Criminal Defense Lawyer: What You Need to Know

While it would certainly be ideal to have an attorney present with you from the moment you’re placed at the back of a cop car, the reality is, it’s simply not practical. You should, however, make the effort to speak to a defense attorney as soon as possible, preferably after you’re released from police custody. This should be your priority if there are some pretty serious criminal allegations being leveled against you.

One of the main pros of seeking out legal representation early on is that a competent defense lawyer might be able to get your criminal charges list dismissed way before any formal charges are brought against you. They are also in the best position to negotiate other rights you’re entitled to that could very well increase your chances of getting a favorable outcome.

The timing here is crucial. So, it’s important to have a lawyer negotiate and bargain for your rights shortly after you’re arrested.

Furthermore, a competent criminal defense attorney can act as a mediator between you and the aggrieved party. In some instances, it is quite likely that tempers flared out of control which ultimately led to your criminal mischief and eventual arrest.

Defense lawyers have sufficient experience to be able to approach the other party and calmly argue on your behalf. The best-case scenario is the other party agreeing to drop the charges that led to your arrest in the first place and reach an amicable resolution outside of the legal system.

When to Hire Criminal Defense Attorneys

Regardless of whether or not you are at fault, fighting criminal charges that have been leveled against you is a long and emotional ordeal. Having the comfort and security that you have someone there fighting tooth and nail to secure your freedom is invaluable.

cyber criminal

You need someone with adequate experience to hold your hand every step of the way to help you navigate the intricacies and complexities of the American criminal law system. Here are some instances when you need to hire a criminal defense attorney.

1. You’re Facing Assault and Battery Charges

Depending on the circumstances surrounding the crime, assault and battery cases can vary widely in terms of defense and possible outcomes. Some are relatively straightforward while others can be quite complex, especially when they have lots of moving parts.

If someone has leveled assault and battery charges against you, you need to get a lawyer on board as soon as possible. If you attempt to defend yourself without any legal background, you could be looking at some serious jail time. Here are some defenses a brilliant defense attorney could come up with to help your case and secure your freedom.

Self-Defense

This is likely the most common defense strategy used by many lawyers to fight assault and battery charges. To prove that you were acting in self-defense when the alleged crime happened, you have to prove beyond a shadow of a doubt that:

  • There was an imminent threat of harm you were facing at that moment
  • You had a real perceived fear of harm against yourself
  • You didn’t provoke the other party
  • There was no reasonable chance of you retreating from the situation

Defense of Property

A defense attorney would be able to use this strategy if they can prove that their client was acting in defense of their property. They would have to show that the other party illicitly invaded your property, or that they were illegally withholding it from you.

property with keys

With this line of defense, the law generally allows an individual to use reasonable force to defend their property, as long as there is no existing dispute over its ownership. A good defense lawyer is in the best position to use this defense strategy in your favor.

Also read Stand Your Ground Law: Legal Rights and Liabilities.

Defense of Others

This defense tactic is a lot like self-defense. The only difference is that the accused had a real perceived fear of impending harm against someone else. The same threshold for proving the defense of others is similar to that of self-defense.

Voluntary Consent

Voluntary consent as a defense for battery and assault charges is available in some jurisdictions. The law in these states fronts that if an individual consented voluntarily to a particular act that involved some level of violence, they can’t later turn around and allege that they were assaulted.

However, if the extent of the act goes beyond the permission that was initially granted, then those are sufficient grounds for assault and battery charges. If you’re facing these charges as a result of another party alleging that you acted in a manner that went beyond the level of permission that had initially been granted, you need to hire the best defense lawyer to help you prove otherwise.

2. You’re Facing Drug Charges

Numerous illicit drugs are outlawed at both a state and federal level. Methamphetamine, cocaine, and heroin are prime examples. Associating with them at any level which includes their cultivation, distribution, trafficking or possession could see you behind bars for a long time.

drugs

A drug conviction carries with it stiff penalties. So, if you find yourself entangled in that mess, that’s your cue to call a defense attorney to get a handle on your case before you’re indicted.

The drug crimes criminal justice reform allows a criminal defense lawyer to negotiate a plea deal with prosecutors if you are what they would consider a lower-level offender. In exchange, you would render your help in catching the big fish.

Drug charges aren’t limited to drugs. Being in possession of items used in drug crimes is a chargeable offense too. So, if you were brought in and booked for possession of drug paraphernalia, you need to call and retain the services of a great criminal defense lawyer to help you deal with those charges.

There are several ways they would defend against drug charges. They could prove that:

  • Law enforcement officers carried out an illegal or unlawful search and seizure
  • The drugs and/or drug paraphernalia seized belonged to someone else
  • There’s missing evidence from the drugs seized
  • The defendant was forced to hold or carry drugs for someone else

3. You’re Facing Fraud or Financial Crimes Charges

Fraud and financial crimes are classified as a form of theft where an entity (or person) obtains money or property from another party and uses it illicitly for monetary gain. It usually involves some form of deceit or abuse of trust which is ultimately what sets these crimes apart from the more common forms of theft or robbery.

Examples of fraud or financial crimes include credit/debit card fraud, forgery, wire fraud, and insurance fraud. These types of crimes fall under the criminal law specialization category of white collar crime.

If you’ve been charged with fraud or financial crimes, you need a criminal defense attorney who specializes in white collar crime to come to your aid right away.

[See our list of white collar crime criminal defense lawyers]

You need to retain their services before you answer questions from any criminal investigator. Speaking to them without your lawyer present could mean incriminating yourself whether or not you are at fault. Your legal counsel will be there to ensure that your interests are protected at all costs.

4. You’re Facing Alcohol Crimes

Alcohol plays a major role in the commission of numerous crimes that would otherwise never be categorized as drug-related. However, four main offenses fall squarely under alcohol crimes. They are Driving Under the Influence (DUI), public intoxication, open container and minor in possession of alcohol.

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A DUI charge is the most grievous of them all and carries with it severe penalties. If you don’t understand your rights or alcohol-related laws for that matter, you need to hire a DUI lawyer as soon as you’re arrested.

What’s more, if you’re in a line of work where getting criminally convicted for alcohol-related crimes could lead to the loss of your professional license, or prevent you from getting one, then you need to talk to an attorney as soon as you can to prevent a bad situation from getting worse. Don’t attempt to handle such cases yourself.

5. You’re Facing Theft Charges

The general definition of theft is taking someone else’s property without their approval. However, legally, the term encompasses a wide range of categories that go beyond this.

theft

It is often defined as the act of taking someone else’s property without their authorization, to permanently deprive them of it. When theft charges are leveled against an individual, the prosecution has to show that:

  • The property was taken from the aggrieved party without their authorization
  • The accused had the requisite intent to permanently deprive the aggrieved party of the property

The degrees of theft charges vary depending on the type of property that was stolen and how much it was worth. This gives rise to the two main categories of theft: Petty theft and grand theft.

The threshold used to determine the degree of theft charges brought against an individual varies from state to state. Some defenses that a good criminal lawyer would use in a theft case include:

  • Showing that the accused had a right of ownership to the property in question. This claim would have to be supported with evidence.
  • Showing that the accused was intoxicated at the time of the crime. This would work in some instances to prove that the accused did not have the intention to steal if they, while in their intoxicated state, believed that the property belonged to them.
  • Showing that the stolen property was returned. While it might not get the theft charges dropped, it does paint a more sympathetic picture to the prosecuting officer. It makes them more inclined to agree to a plea deal.
  • Using the defense of entrapment to show that the accused was lured into committing the crime by some other party.

6. You’re Facing Homicide Charges

When one individual takes the life of another, this is regarded as a homicide regardless of the circumstances surrounding the incident. Homicide, however, isn’t always considered a crime. Examples of such incidences include state-sanctioned executions or self-defense cases that result in the death of another party.

For a homicide to be considered criminal, prosecutors have to prove willful intent or negligence of the part of the accused. If you or someone close to you is facing these charges, the best course of action is to hire a criminal defense attorney immediately. Some defense that attorneys use can range from trying to prove accidental killing to self-defense justifications.

Also read Manslaughter vs. Murder – What’s the Difference?

The Time Is Right Now

When should you hire a criminal defense lawyer? Well, there’s no such thing as “too soon”. The sooner you can get them on board, the better your chances are of avoiding a lengthy legal battle that could end up with you behind bars.

While each crime has its own unique set of circumstances that define it, getting the best criminal defense lawyer who’s ready to go to bat for you is ultimately what will influence the outcome of your case.

Don’t attempt to fight criminal charges yourself. If you must, you can follow the example of Kim Kardashian studying law and do it yourself. Otherwise, always seek legal assistance.

[Browse through our list of criminal defense attorneys]

If you have more legal questions, you can also chat online with a Laws101.com attorney where you’ll be instantly connected to a lawyer who can give you legal guidance on your specific case or question.

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Pandemic vs Epidemic: Legal Implications

Legal AssistantBusiness Law, Resources

The coronavirus pandemic has brought with it a host of legal issues that, up until a few months ago, were not considered a looming possibility. It has caused major disruptions to supply chains with businesses and customers alike, finding it increasingly difficult to meet their contractual obligations.

As a result, many legal gray areas have emerged, particularly in business interruption issues. With the economic strain felt by corporations the world over, it is now more important than ever for businesses to arm themselves with solutions that go beyond the health repercussions that come with the virus.

A question that litigators have been getting during this period is whether the force majeure clause in legal contracts justifies the suspension of performance obligations. The answer to this isn’t so straightforward. Here’s everything you need to know about it.

Force Majeure Definition

This is an extraordinary circumstance beyond an individual’s control that prevents one or all the parties under a contract from effectively fulfilling their legal obligations under the provisions of that agreement. The term is a French phrase that translates to “superior force.”

The purpose of the clause is to distribute the risk among all parties when an extraordinary event makes performance impractical or impossible. Does the corona-virus constitute a force majeure event? This all boils down to whether or not it can be classified as a natural disaster.

Pandemic vs. Epidemic

If COVID-19 has taught us anything, it’s that not all infectious diseases are created equal. Some can cause an epidemic, while others are capable of creating an even bigger monster. So what is an epidemic, and how is it different from a pandemic?

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An epidemic is a disease that affects a large number of people within a population in a particular region or community. A pandemic, on the other hand, is essentially an epidemic that spreads to multiple countries. If it is confined to one country, then it is referred to as an endemic.

An easy way to remember the answer to the question – what is a pandemic – is to remember the “p” in “pandemic.” A pandemic has a “passport,” which means it is present in multiple countries. Coronavirus may have started as an epidemic in Wuhan, China, but it now affects every country in the world.

Is a Pandemic a Natural Disaster

Getting back to whether or not the coronavirus can be classified as a natural disaster. President Trump recently invoked the provisions of the Stafford Disaster Relief and Emergency Assistance Act.

The purpose of this 1988 federal law is to provide a systematic way to offer federal assistance to local and state governments in fulfilling their responsibilities to help their citizens in times of natural disaster. This act, which is administered by the Federal Emergency Management Agency under the US Department of Homeland Security, provides federal responses in two main categories of catastrophic events – national emergencies and major disasters.

The legal conundrum arises when defining what constitutes a major disaster and whether or not a pandemic falls in this definition. According to the statute, a major disaster is any “natural catastrophe” that the President deems severe enough to warrant federal assistance.

The statute further describes a natural disaster as any drought, snowstorm, mudslide, landslide, volcanic eruption, earthquake, tsunami, tidal wave, wind-driven water, high water, storm, tornado, or hurricane. It also includes explosions and floods, regardless of the cause.

Legal Implications

Is a pandemic a natural disaster? From a legal standpoint, the coronavirus doesn’t seem to fit very well into this definition.

But, given how hard-hit the country is, and the devastating consequences it has had and continues to have on individuals, communities, businesses, and the economy at large, the President considered the resulting situation to be of sufficient magnitude and severity to invoke the provisions of the Act without any objection from Congress.

Provisions of Force Majeure Under COVID-19

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With that said, keep in mind that the applicability of the clause is contract-specific. The law also sets a high bar for any contractual party looking to invoke the clause. In the case of COVID-19, courts have to consider three things when considering their applicability.

  1. Does the pandemic qualify as a force majeure under the contract in question?
  2. Was the risk of non-performance foreseeable, and could it have been mitigated?
  3. Is it truly impossible to meet the contractual obligations stipulated by the contract?

The reality of the current situation is this: The World Health Organization’s (WHO) classification of the coronavirus as a “pandemic” triggers force majeure clauses that explicitly account for “pandemics.” If there’s no reference to a pandemic, an epidemic, or any other form of a viral outbreak within the clause, then the clause won’t be a sufficient defense due to COVID-19.

For contracts whose force majeure clause expressly accounts for pandemics, it is still not all that straightforward either. While the parties seeking to invoke the clause don’t necessarily have to show that the event was unforeseeable, they still have to prove that:

  1. They took measures to mitigate the consequences of COVID-19
  2. Performance under the terms of the contract is truly impossible

The recent government regulations, like the ban on travel, large gatherings, and movement restrictions, intended to contain the spread of the coronavirus, can make it easier to invoke clauses that previously could not be triggered by the pandemic.

But, keep in mind that non-performance can only be considered if the clauses in question enumerate the governmental regulations or orders that make it impossible to fulfill the terms of the contract.

The Way Forward

Businesses need to keep a close eye on the COVID-19 developments and monitor the potential impact it may have on their day-to-day operations and contractual obligations. Ensure that you document all the reasonable steps taken to mitigate the effects of the virus on your business operations.

This will come in handy if you ever need to invoke the provisions of the force majeure clause. Contracts that don’t have this clause will have to defer to common law doctrines of impracticability or impossibility.

If you have more legal questions, you can also chat now with a Laws101.com attorney, where you’ll be instantly connected to a lawyer who can give you legal guidance on your specific case or question.

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Business Interruption Insurance: Is Coronavirus Covered?

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The COVID-19 coronavirus pandemic has been a wrecking ball to many large and small businesses across the US. Revenues for restaurants and shop owners has dwindled due to a lack of customers. Merchants cannot get their product to market and service providers cannot deliver a service without a physical customer present.

No one could have predicted such an event that would force businesses to shutter, implode the economy and result in the highest unemployment rates in US history, practically overnight.

Experts are hypothesizing that the business interruption losses caused by the novel coronavirus could last years.

Many small businesses are unaware that they may be insured for such losses by their business insurance policy.

So, if you’re a small business owner, have a business insurance policy and suffered business losses due to the coronavirus shutdown, then here’s what you need to know about filing a business interruption claim with your insurance company.

What is Business Interruption Insurance

Many small businesses have a Business Interruption Insurance clause embedded somewhere within their lengthy commercial insurance policy.

Business interruption insurance is intended to supplement lost income and cover expenses when a business is affected by a covered set of circumstances.

So, if you have a business insurance policy, it’s likely you have business interruption insurance and your insurance company is contractually obligated to pay actual business losses if you sustained an interruption of business.

What’s Covered?

The exact amounts vary from insurer to insurer but they all generally cover the following:

  • Lost profits
  • Lease payments
  • Loan payments
  • Taxes
  • Relocation costs
  • Other unexpected business-related expenses that are incurred as a result of the business shutdown

How Do I File a Business Interruption Claim

Just like a loss claim with any other insurance policy, you should call your business insurance agent and file a claim for business interruption. Before you do that, make sure that you dust off your policy and re-read your policy terms for coverage.

If your insurance company processes your claim: great – you got lucky.

Unfortunately, in most cases regarding business losses from COVID-19, insurance companies are denying claims.

Much of the legal community believes that these denials are being made in bad faith for the overriding purpose of profitability for the insurance company.

On the other hand, insurance company lawyers are taking a very different stance on the matter. After all, with the hundreds upon hundreds of billions of dollars of business interruption loss suffered during this pandemic, paying out one claim could very well bankrupt an entire insurance company.

So if you’ve been faithfully paying your business insurance policy and your business interruption claim is denied, what do you do?

What to Do if Your Business Interruption Claim is Denied

The only recourse you have as a policyholder if you feel wrongfully denied in an insurance claim is to file a lawsuit against your insurance company.

In many cases concerning widespread losses, insurance companies make a financial bet that their payout in the form of lawsuits would be less than if they honored their claims. The insurance company knows that if it paid all incoming claims that their losses would be guaranteed to be high. Instead, by requiring their clients to sue them, the individual payouts to a policyholder may be higher, but there would be far fewer payouts, resulting in a higher net profitability.

While a lawsuit may seem daunting, a reputable, experienced lawyer will represent you on a contingency-fee basis, meaning, there are no upfront costs to you and the attorney only gets paid if you win your suit.

That said, lawsuits are time-consuming. Insurance companies know this and will try to draw out the case as long as possible to simply wear you out.

But if there’s any foreshadowing of what’s to come, President Trump contributed to this heated debate during one of his daily coronavirus task force briefings, stating:

“…you have people that have never asked for business interruption insurance, and they’ve been paying a lot of money for a lot of years for the privilege of having it. And then when they finally need it, the insurance company says, ‘We’re not going to give it’ … We can’t let that happen.”

-President Donald Trump (April 10, 2020)
(April 10, 2020) US President Donald Trump during a daily Coronavirus Task Force Briefing talks about the topic of business interruption insurance.

Recent COVID-19 Claim Denials

On March 31, 2020, Texas Governor Greg Abbott issued an executive order prohibiting a person from accessing non-essential services, which was punishable by a fine not to exceed $1,000 or confinement in jail for a term not to exceed 180 days.

As a result of this order, many small businesses suffered huge, unexpected and unpreventable losses.

Following the government shutdown, one Texas brick-and-mortar clothing boutique owner suffered significant financial losses due to a lack of customers who were no longer able to shop at her boutique as a result of the order.

She promptly filed a business interruption loss claim with her insurer, The Hartford Insurance Company, seeking to recover the benefits for which her premiums paid.

In her insurance policy, there is a specific clause that covers losses resulting from the order of a civil authority, specifically which states:

“This insurance is intended to apply to the actual loss of Business Income you sustain when access to your ‘scheduled premises’ is specifically prohibited by order of a civil authority as a the direct result of a Covered Cause of Loss to property in the immediate area of your ‘scheduled premises’.”

Figure 1: Excerpt from policyholder’s Hartford Insurance Policy

The Hartford Insurance Company denied her claim.

Bad Faith – Coronavirus Lawsuits

This particular policyholder decided to sue her insurance company claiming, among other things, that The Hartford acted in bad faith when denying her claim.

Her attorney, Andrew Cobos of the Cobos Law Firm in Houston, TX says that many others like her are having to do the same with their insurance companies.

Cobos states, “Despite the fact that pandemics aren’t specifically mentioned as an exclusionary event, Hartford sent a vague denial letter to my client and ignores the sections of their contract which provide for exactly this type of circumstance.”

Figure 2: Hartford’s claim denial letter for its policyholder’s COVID-19 business interruption claim

Cobos continues, “Insurance companies confuse their insureds by using confusing or ambiguous language in lengthy contracts. But the language in an insurance policy is no mistake—it is intentional; after all, such ambiguities allow the insurance company to deny claims more easily.”

Unfortunately, litigation is often the only way to hold insurance companies accountable. And although the litigation will take time, the potential exists for her and other claimants to recover up to three times the covered damages and their attorney’s fees.

Getting Help

If you’re a business owner in this situation, you may consider filing a bad faith lawsuit against your insurance company.

But be warned: the insurance companies are prepared to fight these coronavirus business interruption claims and make the process as drawn out and difficult as possible.

Here are some good resources to take advantage of if you’re a business owner and need help with your business interruption claim:

  • The Cobos Law Firm – Not only is this firm experienced with bad faith insurance claims, but they are handling COVID-19 claim denial cases. Additionally, they’ve made the process very clear, quick and simple for business owners to file a lawsuit completely online.
  • Practical Law White Paper – A recent legal white paper that discusses construction contracts & potential claims under business interruption, civil authority, and other insurance policies in the wake of COVID-19.
  • Valuing Business Interruption Insurance Losses – This 2014 Penn State Law eLibrary journal article discusses the complexities of valuing business interruption insurance losses after a catastrophic event.

If you need additional assistance, you can also chat now with a Laws101.com attorney, where you’ll be instantly connected to a lawyer who can give you legal guidance on your specific case or question.

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Can You Sue a Cruise Line?

Legal AssistantMaritime Law, Personal Injury Law Leave a Comment

Going on a cruise should be one of the happiest moments of your life. A cruise line can travel all across the globe; from the coldest climate in Alaska, all the way down to the warmest climate in the Caribbean. The last thing you expect to face on your cruise is an unexpected injury that you feel could have been avoided if a cruise line had been more attentive. In addition to injuries, your cruise line may also be liable for those automated solicitation calls you receive on your cell phone all throughout the day.

Whether you are facing an injury while on a cruise or an extreme amount of unsolicited free cruise robocalls, you may be entitled to file a cruise line lawsuit.

Coronavirus Cruise Ships

During the Coronavirus (COVID-19) pandemic, cruise lines operated for many months after the severity of the virus was known with the now-infamous Diamond Princess cruise ship (owned and operated by Princess Cruises, a subsidiary of Carnival Corporation).

But even after that ill-fated cruise, many other cruise lines continued to operate. Many customers requested to cancel their upcoming cruises but most cruise lines refused to refund their customers. As a result, many customers continued on their planned trips.

Further still, Carnival Cruise Lines launched campaigns to entice new customers to book trips by offering perks like free unlimited alcoholic beverages during the Coronavirus crisis.

Is there any legal merit?

If there’s any basis for legal merit, it is that Carnival and other cruise lines appeared to have withheld information from passengers in the hopes of profiting from sales aboard the cruise ships under a business-as-usual approach.  Evidence suggests that cruise ships knew of passenger risks well before setting sail—and might even have been aware of on-board infections in the passenger pool—while downplaying such risks in public.

All of these actions are likely direct and indirect cause of numerous deaths and hundreds of permanent ailments. 

Since the pandemic began, the cruise industry has shielded itself behind centuries-old, archaic laws, such as the “Death on the High Seas Act” to avoid accountability.

And while some information regarding the difficulty of such lawsuits may be correct (in part), cruise ships are in no way immune from such legal actions.

In fact, cruise lines appear to be preparing for lawsuits as vast portions of their marketing budgets have become dedicated to discouraging former passengers from filing lawsuits for their injuries or for injuries caused to a family member due to COVID-19.

COVID-19 Lawsuits

Even though the COVID-19 pandemic is far from resolved, lawsuits are already piling up against the major cruise lines.

If you’re seeking legal action for Coronavirus-related injuries that you sustained on a cruise, there are three important things that you need to know:

  1. There are deadlines to file a lawsuit. Whenever there are lawsuits that seek to address a personal injury, there are statutes of limitations, or eligibility timelines, within which your lawsuit must be filed. In this case, the statute of limitations is one (1) year from the date of your injury.
  2. You must file your lawsuit as an individual claim. Many news sites are incorrectly reporting these lawsuits as class action claims, when, in fact, they are not. Each case must be filed as an individual claim.
  3. Potential compensation for injuries will vary from case to case. Your damages may be limited to certain categories, but a good attorney who specializes in cruise ship injuries will be able to assist in maximizing your recovery.

Other Lawsuits Against Cruise Lines

Lawsuits filed against cruise lines are not a new thing. Cruise lines have faced a number of lawsuits based on negligence and misconduct. These lawsuits can range in severity.

Lawsuits against cruise lines can include mild accusations, such as suing the cruise line for injuries sustained during a fall. Other lawsuits are more severe.

In 2018, Carnival Cruise Lines allegedly held a passenger against his will after he suffered a heart attack. The man died from his injuries, which prompted the man’s family to file a wrongful death lawsuit against the cruise line.

cruise lines

Carnival Corporation was criminally convicted by federal prosecutors for illegally dumping oily waste into the oceans during 2016. Carnival had to pay $40 million in fines and damages after being criminally convicted. Carnival was also put on a five-year probation. In 2019, Carnival violated the probation by continuing to pollute the oceans and agreed to pay another $20 million in fines.

Class Action Lawsuits

In addition to criminal and civil lawsuits, Carnival Cruise Lines has also faced class-action lawsuits. In 2012, the Carnival Corporation was involved in a class-action lawsuit for making prerecorded telemarketing phone calls offering a free cruise with the Carnival Corporation. These pre-recorded telemarketing phone calls violated the TCPA (Telephone Consumer Protection Act).

Carnival Cruise Lawsuit Update

Claimants who had received a robocall between 2009 and 2014 had until May 31, 2018, to submit a claim in the class action lawsuit. The attorney for the class action lawsuit, Philip Charvat, created a Settlement Fund of $7,000,000 to $12,500,000. This means the Carnival Cruise class action lawsuit payout would be paid to all qualifying claimants. Each telemarketing phone call made by Resort Marketing Group (on behalf of Carnival Corporation) would pay a maximum of $300 per call. You could file a claim of up to three calls per telephone number to give you a maximum payout of $900.

carnival cruise

As of August of 2018, more than 2.6 million people filed claims on these robocalls. This caused the maximum $900 payout to dwindle substantially. The attorney for the class action lawsuit requested telephone records from claimants proving that they had received these robocalls.

American Cruise Lines Lawsuit

Carnival Corporation is not the only cruise line that has faced a class-action lawsuit. In 2015, American Cruise Lines was hit with a class-action lawsuit for failing to pay its stewards minimum wage and overtime pay. The class-action lawsuit covered the time period between May 21, 2012, to January 9, 2016.

steward

In this class action lawsuit, more than 1,000 stewards were expected to qualify. There were over 700 pages of documentation for the court to review. American Cruise Lines reached a $1 million class-action settlement in violation of the Fair Labor Standards Act (FLSA).

Jones Act

The Jones Act is also known as the Passenger Services Act. This act “prohibits Non-U.S. registered ships from embarking and debarking guests at two different U.S. Ports.” If a Non-U.S. registered ship has an itinerary that includes a distant foreign port, a ship can embark and debark guests at two different U.S. Ports.

If a guest insists on embarking or debarking the ship in a port that violates the Jones Act will face penalties and fines.

Jones Act Lawyer

Employees, stewards, or other cruise line staff who spend at least 30% of their time working on a vessel are protected under federal law known as the Jones Act. The Jones Act protects the rights of these seamen by having any medical bill paid by their employer if they have been hurt on the job.

To take advantage of these rights, a cruise line employee who has been injured on the job should obtain a Jones Act lawyer. A Jones Act lawyer specializes in maritime workers who have been injured on the job. These lawyers know the protection you are entitled to have through the Jones Act.

If you have been injured on the job, document the injury along with corresponding medical bills and submit them to your lawyer for review. Your lawyer will review the documents to guarantee that you receive the coverage and reimbursement you are due.

Conclusion

If you are planning on taking a cruise, carefully read over any agreement before you sign. A cruise line will make sure they protect themselves, so it is important to know what your options are if you were to sustain an injury during a cruise.

Injuries on a cruise may be self-inflicted, such as suffering from a fall. Other injuries can be at the hands of other passengers, such as a bottle or glass falling onto you from above. Food-born illnesses are also possible on the confines of a cruise ship. Knowing what risks you face while on a cruise will help you to know the preparations to take.

If you are an injured maritime employee, you are entitled to have your medical bills paid by your employer through the Jones Act. If your employer is not willing to cover your medical expenses, you may need to consult a Jones Act lawyer. A Jones Act lawyer will review your case and ensure your injuries are covered through the Jones Act.

Whether you are a passenger or an employee, you should not have to worry about injuries or illnesses while on a cruise ship.

If you need assistance, you can also chat now with a Laws101.com attorney, where you’ll be instantly connected to a lawyer who can give you legal guidance on your specific case or question.

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Are Background Checks Legal

Legal AssistantResources

Here’s a statistic you might find interesting. More than 105 million Americans have a criminal record. This makes up approximately 33 percent of the entire population – which means there are equally as many people with rap sheets as there are with college diplomas.

If you run a small business or a large company and have a vacancy, there’s a chance that one in every three candidates has a criminal history. The same odds apply if you’re a landlord looking for a tenant for your property.

This is why you need to run comprehensive background checks to determine whether these individuals are the best fit for your company or property. But what is a background check anyway, and are they legal?

This article explores the answers to these questions in depth.

What Is a Background Check?

When you think of a background check, what comes to mind? You’re probably thinking it means looking into someone’s criminal history, right? In reality, it’s so much more than that.

Put simply, a criminal background check is the process through which you find the best candidate for a job opening at your firm or the best tenant for your property by examining not just their criminal records, but also their civil records, employment history, references, education and anything else in their background that’s relevant to your decision-making process.

Each of these forms a critical piece of the puzzle that paints the full picture of the kind of person you’re dealing with. That way, you can make an informed decision on whether or not the individual in question poses a high level of risk to your company or your property and the neighborhood at large.

It verifies that the individual is who they say they are and can do what they claim they can. Doing a comprehensive background check not only safeguards you, your company, its reputation, and other staff members, but it also keeps your clients safe.

What Does a Background Check Show?

If you’ve never run a background check on someone, you might ask, “What exactly shows up on a background check?” Well, the answer to this question depends on the type of background screening that is performed, with each type revealing some aspect of an individual’s personal information. Here are the most common ones.

1. Criminal History Background Check

A criminal history check is a common denominator in nearly every kind of background check there is. It is usually based on the information supplied by the individual like their Social Security Number.

It checks whether they have any misdemeanors or felony convictions in their past, as well as if they have any pending cases or have served any jail time as an adult. An arrest that is pending prosecution may also show up in the check, although, in some instances, arrests that did not lead to convictions may also show up.

criminal history background check image

If the person had a juvenile conviction that was sealed by the courts, it typically wouldn’t appear in the background check. Any other criminal conviction, however, will appear in the search unless, of course, the state laws of the jurisdiction in which the crime occurred expressly forbid the disclosure of this information after a specific duration has elapsed.

For instance, in Massachusetts, Washington, Montana, California, New Hampshire, Maryland, Kansas, and New York, convictions older than seven years won’t be disclosed in a background check. In Hawaii, convictions that happened 10 years before a background check also won’t show up in the search.

2. Background Check for Employment

These typically dig a little deeper than just getting a record of someone’s criminal history. They also examine and verify the information provided by a candidate concerning their educational background, employment history, education certificates, professional licenses, and awards.

Depending on the nature of the job, some employers may also require pre-employment screenings of the candidates’ driving records to see if they have any driving misdemeanors or felony charges. However, before you embark on running a background check on your candidates, you should be aware of the federal and state limits placed on what can be reported on these checks.

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For instance, if the candidate that you’re considering for a job is set to earn less than $75,000 annually, information that’s related to government sanctions, civil judgments, as well as, any disciplinary measures related to any professional bodies they might be members of will not show up on an employment background check.

On the other hand, if the candidate is set to earn more than $75,000 a year, all the requested information will appear in the results regardless of how long ago the incident(s) occurred.

3. Fingerprint Background Check

As the name implies, a fingerprint background check employs the use of an individual’s fingerprints in addition to other personal information to find historical records that may be relevant to the person requesting the search. This screening method is the most accurate background check you’ll ever come across since any record that comes up is associated with the specific set of prints used for the process.

fingerprint background check image

The particular information that comes up depends on the nature of the records requested by a potential employer, landlord, or any other interested party, as well as the types of databases used by the screening firm. Most background check companies use the FBI criminal records database, although they may also use other smaller Automated Fingerprint Identification Systems in addition to that of the FBI.

4. FBI Background Check

These are often used to screen candidates seeking to work with federal government agencies and companies that work with or for them. It is quite comprehensive and uncovers every little detail of any interaction an individual may have had with a law enforcement agency. These include any criminal convictions, arrests (those that led to a conviction or indictment, and those that did not), traffic offenses, and even parking tickets.

Individuals have to undergo fingerprinting by a well-known law enforcement agency. The prints are then run against those in the FBI fingerprint identification system. This vast database contains prints collected and consolidated by various immigration departments, law enforcement wings, and even previous employment screenings that the candidates may have been subjected to.

fbi background check image

The prints are also run against those in the NCIC, which is short for “National Crime Information Center.” This database has a huge compilation of criminal history data, information on wanted criminals, and even data on terrorists and known sex offenders.

It’s important to note that if a candidate passes the screening process, it does not equate to getting a security clearance. The background check is just the first of many steps in the process, which may also involve interviews with people who know the individual well in addition to a lot more extensive research on them.

5. Level 2 Background Check

If your company is recruiting for positions that involve working with vulnerable people such as children, seniors, or people with disabilities, then you’ll require a different kind of screening process known as a Level 2 background check. These types of checks are also used for people looking to become foster or adoptive parents.

Level 2 background checks examine databases that contain information on arrests, convictions, or incarceration related to violent crimes against children, people with disabilities, senior citizens, or any other individuals that would be classified as vulnerable.

It uncovers all records relating to a person, including those that may have been previously sealed by the courts. So any juvenile convictions and detentions will show up in this search.

6. Tenant Background Check

This is commonly used by landlords and real estate management companies to determine if a potential tenant is who they say they are and if there’s anything in their history that may point to a problem, like a history of evictions. Tenant background checks may vary from one landlord to the next. But, it ultimately boils down to the nature information that they want to see.

tenant background check image

Some of the most common ones are:

Criminal History Check

If you’re wondering what having a criminal past has to do with being able to get adequate housing, the answer is – nothing. It doesn’t automatically disqualify someone from being able to rent an apartment, but it is entirely at the discretion of the landlord or property manager to decide if they’re okay with it.

If an individual is denied housing based on their criminal past, the landlord is obligated to communicate this to the potential renter in writing and attach a copy of the criminal history report.

Sex Offender Registry Check

Being a registered sex offender in some states can stand in the way of renting a property. In such states, there are explicit laws regarding sex offenders and landlords. However, in other jurisdictions like California, the law prohibits landlords from discriminating against sex offenders.

Proof of Income Check

A common pet peeve of many landlords is having tenants on their property who continually default on rent. A tenant background check may require the potential renter to provide paycheck stubs or any other relevant proof of income to ensure that they can meet their rent requirements every month.

Credit Report

A credit report forms part of this type of background check to determine if the potential renter is financially responsible. While their credit score won’t be displayed, it will show details on loan accounts and their respective balances, bankruptcies, as well as whether the potential tenant has had civil lawsuits filed against them for defaulting on rent or eviction-related issues.

Employment History Check

A landlord is at liberty to request for a potential tenant’s employment history to determine if they currently have a job, or if they have had any extended periods in their past where they were without one. The landlord is also within their rights to contact the potential renter’s employer to verify that they are responsible and trustworthy.

Reference Check

Before a landlord lets their property to a potential tenant, they will likely request for references from previous landlords or property managers. This would help them verify whether the individual paid their rent on time and how well they took care of the property.

How to Choose the Best Background Check Company

When choosing a firm to screen potential employees or tenants, you need to find one that offers a comprehensive package. You might ask, “What is a comprehensive background check company?”

These are one-stop-shop companies that offer:

  • Criminal history checks
  • Social security number traces
  • Credit reports
  • Identity verification
  • Education and employment verification
  • Drug and health screenings
  • References checks

While many companies have self-service portals where you simply upload the information and wait for the results, full-service background check companies do all the footwork for you. They research all the online databases and even make physical trips to the courthouse to check for any criminal history that may not show up in the online search.

They get into the nitty-gritty of a candidate’s background to deliver all the information you might require to determine if they are eligible for a particular role in your company or if they would make a suitable tenant for your property.

Another important question you need to ask when choosing a screening firm is, “How long does a background check take, and can the company deliver within this turnaround time?” Well, it depends on the type of information requested.

Criminal background check results typically take anywhere between 1 and 3 days to compile. Universal background checks, on the other hand, performed by the FBI typically take 2 to 3 minutes when processed through the National Instant Criminal Background Check System (NICS).

But, if it is delayed at the point of sale, then it may take up to 3 business days to get the results. Fingerprint background check results take around 3 days.

Not sure about which company to go with? You can request for a free background check to make sure that they’re offering top-tier services for your company.

Improve Safety and Trust

Are background checks legal? Absolutely!

They are necessary to determine whether an individual is a potential asset or liability to your company or property. They tell you whether the candidates are credible and trustworthy.

So, if you’re in the real estate, financial services, education, construction, or health care industry, this is a critical component of the pre-employment screening process that you can’t afford to overlook.

If you have more legal questions, you can also chat now with a Laws101.com attorney, where you’ll be instantly connected to a lawyer who can give you legal guidance on your specific case or question.

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Are Mercenaries Legal?

Legal AssistantResources

Mercenaries are no strangers to the business of war. This line of work has been around for centuries and is even considered the second oldest profession in the world. Some of the world’s most feared armed forces in the historical era were made up of freelance warriors.

Remember the famous Flying Tigers? These were the three-squadron units of American volunteer fighter pilots who collaborated with the Chinese to fight the Japanese in the Second World War. President Franklin D. Roosevelt allowed for the recruitment of fighter pilots from the US Army Air Force while remaining neutral in the conflict between the two countries.

It was certainly a high-risk job, but the monthly remuneration was double to triple what the pilots’ salaries were at the time. This was in addition to the fat bonuses they received for every Japanese aircraft they successfully shot down.

For many people, the profession remains somewhat of a mystery. What are mercenaries? Are mercenaries legal? Is there a difference between mercenaries and private military companies? This article will explore the answers to these and many other questions in depth.

What Are Mercenaries – Mercenary Meaning

Before getting into whether or not mercenaries are legal, it’s important first to understand who they are and define mercenary roles in conflicts.

The standard mercenary definition put simply, is a professional soldier who is hired by a state or nation to fight their wars for them. These “guns-for-hire,” so to speak, are not driven by the conventions of patriotism, nor are they controlled by the mores of an army. Instead, they are fueled by personal gain. They are essentially freelance soldiers who fight a war between states purely for money.

You’re now probably wondering: Are private military contractors mercenaries? With a global market that spans over $100 billion, the line between private military contractors (PMCs) and mercenaries can get blurry, but the two are entirely different. One is legal, and the other is not (depending on the context).

Difference Between Mercenaries and Private Military Companies

PMCs work for private military companies. Both PMCs and mercenaries work for money. However, the difference between the two lies in whom they work for and how they operate.

Mercenaries are essentially individual soldiers who can be hired by whoever pays them. PMCs, on the other hand, are recruited into an organization (the private military company) that serves as the intermediary between the professional soldiers they employ and the governments that seek their services. A large number of the PMCs who work for private security companies are ex-army soldiers or ex-members of a national police force, who have the necessary training and experience required for their line of work.

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Unlike mercenaries whose resources are limited to light arms, PMCs have access to more complex and heavier military artillery like planes, helicopters, tanks, and sophisticated firearms. Another glaring difference between the two is the scope of work they can undertake.

Mercenaries are typically deployed to frontline combat. PMCs working for security companies, on the other hand, can work in several other areas, including gathering intelligence, providing logistics and transportation services for high-value assets, and even providing executive protection for targeted high-risk individuals.

Both mercenaries and PMCs wear a mix of special operation uniforms and casual civilian attire depending on the context of their operations. Mercenaries, however, earn more than their PMC counterparts since they get to negotiate the terms of their contracts directly and don’t have to share their earnings with any institution.

Anyone who has the set of skills required to become a PMC can also be a mercenary.

Are Mercenaries Legal – the Geneva Convention

The 1989 International Convention made the recruitment, use, training, and financing of mercenaries illegal. It also forbids the recruitment of people to fight in an armed conflict or for private gain.

According to the convention, any individual who is not a member of any armed force that is a party to the conflict is considered a mercenary. It further stipulates that all states should consider mercenary activity an offense for which the individual in question ought to be prosecuted or, at the very least, extradited.

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However, the United Nations Mercenary Convention, which came into force in October 2001, was ratified by only 35 countries. These include Italy, Ukraine, Germany, Poland, and Saudi Arabia. Countries like the US, UK, and Russia that actively use PMCs did not ratify the convention.

So, as to whether mercenaries are legal or not? The answer to this is – it depends on the country in question. The use of PMCs and mercenaries is legal in countries that did not sign the UN treaty. Additionally, if a professional soldier is hired by a sovereign nation to fight for them, then they are legal to that country. But if they are captured by the opposing country’s government or any other country that’s a party to the UN Treaty, then they would be considered illegal.

The Legality of Private Military Contractors

Many countries prefer to enlist the services of PMCs for several reasons. For one, a country may lack the requisite human resources in its armed forces, so recruiting PMCs is the only way they can bump-up their numbers.

It is also a cost-efficient way for governments to get top-notch highly-skilled security operatives on an as-needed basis without having to maintain them on their full-time payroll. It’s a great way for governments to sidestep responsibility for any acts committed by PMCs, as well as the control and regulation of democratic bodies.

While PMCs are legally bound by the laws of the country where their respective companies are headquartered, the legality of their actions comes into question when they operate in countries outside their parent states. In 2003, for instance, the Bush administration amped-up the use of PMCs during the Iraq invasion. It also recruited several of them in the Afghanistan war. These PMCs were not bound by Iraqi or Afghan laws, nor were they bound by US laws since their operations fell outside the jurisdiction.

Conventional soldiers can be court-martialed if they violate any of their respective military laws. This, however, doesn’t apply to PMCs. One way to hold them accountable would be for aggrieved parties to file civil lawsuits against them.

International Humanitarian Law

There is a consensus that leans towards private military security companies and their employees as civilians (non-combatants) under the existing International Humanitarian Law (IHL). This law is what ultimately differentiates civilians from combatants and serves as a regulatory framework to determine what an individuals’ behavior should be when they are in a war zone.

Civilians in a war zone are supposed to be protected from direct attacks against insurgents provided that they do not actively participate in the conflict. However, combatants are required to abide by directives, such as:

  • Adhering to the laws of war
  • Openly carrying weapons
  • Ensuring that they are easily recognizable through a uniform or any other appropriate signage
  • Operating under a clear line of command

In addition to these, combatants are accorded “combatant privilege,” which means that if they are captured by the opposing forces, they are to be treated as prisoners of war as opposed to criminals. The distinction between combatants and civilians when it comes to PMCs, however, is not as clear-cut as you would expect.

For starters, they are considered civilians for the most part, but they hardly refrain from taking an active role in the conflict. However, in most cases, advocates representing these individuals usually alter the perception of the PMCs’ use of force to be in self-defense as opposed to using force in combat.

Role of Private Security Companies

It’s no secret that the US government relies heavily on PMCs for security. However, PMCs are generally not employed in frontline combat parse and can, therefore, not be considered mercenaries even though both work for money.

PMCs, however, enjoy a good reputation since they offer a wide variety of skill sets and are employed by reputable organizations. Aside from combat operations, they are employed in executive protection companies whose services come in handy for high net worth individuals.

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Other roles of private security companies include:

  • Providing security for oil exploration companies
  • Protecting oil rigs
  • Conducting counter-drug operations
  • Fighting terrorism
  • Engaging in armed conflicts to stop genocides and civilian slaughter
  • Providing intelligence and operational support in military operations
  • Combating rebel forces
  • Developing security plans for private organizations
  • Training security personnel and national police forces
  • Protecting foreign political dignitaries

The educational backgrounds of private military contractors vary widely, and their respective requirements depend on the type of work they are contracted to do. While not all private contractors have a military background, those that do have a competitive advantage over the rest when it comes to all matters security and defense.

For instance, when hiring an industrial security officer from a private security company, they should have at least three years’ experience working for the Department of Defense or the US Government, and know how to work with systems like e-QIP and JPAS.

The Rise in Popularity of Private Military Security Companies

The last three decades have seen a surge in the use of private military security firms. This has contributed to the expansion of this multi-billion dollar industry. One of the reasons for this can be traced back to the end of the Cold War.

The Cold War

In the decades following the end of the Second World War, most nations went through a period of hyper-militarization after the establishment of the Warsaw Pact and NATO – which the US is a part of. This period was known as the Cold War.

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It allowed several countries to expand and fortify their military power and also brought with it a heavy financial burden which most countries were struggling to carry. When the Cold War drew to a close, several of these countries decided to offload this burden by downsizing their military forces.

The US, in particular, reduced the number of its army personnel by 35 percent, effectively cutting costs by a whopping $100 billion. This move suddenly meant that several individuals who had previously been employed by their respective country’s military apparatus were now jobless searching for new employment opportunities to sustain themselves and their families. This led to the formation of private military companies that drew from the pool of elite, well-trained ex-soldiers and grew to become the multi-billion dollar industry it is today.

The Mogadishu Syndrome

The other reason for the rise and subsequent growth of private military security companies is the so-called Mogadishu Syndrome. In 1993, the United States led a mission dubbed “Operation Restore Hope.” This was as a result of a UN Security Council Resolution that was adopted to authorize the use of all means necessary to establish a safe and secure environment for humanitarian relief operations in Somalia.

But, the mission was abandoned after public outrage when a firefight erupted in the war-torn country, which led to the death of 18 American soldiers and more than 300 Somali locals. Many Americans called into question the necessity of getting involved in humanitarian conflicts, particularly where American interests were not directly at stake.

This gave rise to the concept of the “Mogadishu Syndrome,” which refers to the unwillingness of governments to intervene in conflicts for humanitarian reasons other than for their national interest. So the best way for governments to circumvent this is through the use of PMCs rather than have their actual army troops on-site. This has contributed to making the private military security industry the thriving success it is today.

It’s All About Perspective

More often than not, the word “mercenary” is considered pejorative, especially by those in the industry. However, whether you want to call these ex-army individuals hired directly or through a company, “mercenaries” or “private military contractors,” they all exist to fight wars for money.

PMCs, however, do more than combat-related operations. They use their specialized skills to provide executive protection for high-profile individuals, residential, commercial premises, events, and even maritime security. They are an efficient way of meeting the diverse security demands of states, corporations, and individuals.

So are mercenaries legal? Yes – to the nation that hired them.

If you have more legal questions, you can also chat now with a Laws101.com attorney, where you’ll be instantly connected to a lawyer who can give you legal guidance on your specific case or question.

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Bad Faith: When to Fight Your Insurance Company

Legal AssistantPersonal Injury Law Leave a Comment

Imagine the shock of losing a loved one to a tragic accident.  Family members might rely on each other for comfort, but will rely on the life-insurance policy, a binding contract, to assist with financial considerations in the wake of such a loss. 

Now imagine that your life-insurance company decides that it would rather save money than paying what it rightfully owed under the policy. This is called insurance bad faith and, as terrible as this may sound, this is relatively common and is exactly what happened to Brian Flores and his “good neighbor” State Farm.

Case Study: Estate of Nathan S. Foyil v. State Farm Life Insurance Company

Video Credit: Dolcefino Consulting (dolcefino.com)

In the wake of the U.S. Supreme Court legalizing gay marriage, Brian Flores married the love-of-his-life, Nathan Foyil. These two gentlemen lived in Houston, Texas, where Brian worked in public education and Nathan in the oilfields.  In late 2017, tragedy struck.  Nathan slipped in his bathroom and suffered internal bleeding. Nathan would later be hospitalized and ultimately died from his injuries on October 31, 2017.

For a long time prior to his death, Nathan maintained life-insurance coverage through State Farm.  When Nathan and Brian married in 2016, Nathan changed his policy to reflect Brian as the beneficiary.  

In the weeks following the passing of his late-husband, Brian submitted a claim with State Farm to collect on Nathan’s policy as its beneficiary.  State Farm ultimately denied Plaintiff Flores’ claim, but waited roughly six months—until May 9, 2018—to notify Brian of its decision.

Between Nathan’s passing and State Farm’s ultimate decision to deny coverage, State Farm corresponded with Brian and led him to believe that they would honor the policy. They didn’t.

The temptation of saving money meant more to State Farm than did the well-being of its beneficiary.  State Farm’s actions forced Brian to file a bad faith lawsuit.  

Bad Faith Definition

Insurance bad faith is a legal term under United States law that describes a tort claim that an insured party files against an insurance company for its bad acts.

The law demands that insurance companies owe a duty of good faith and fair dealing to the persons they insure. This duty is often referred to as the “implied covenant of good faith and fair dealing” which automatically exists by operation of law in every insurance contract.

If an insurance company violates that covenant, the insured person may sue the insurance company on a tort claim in addition to a standard breach of contract claim. That means that if the insurance company’s bad acts were particularly egregious, the insured policyholder may be able to recover an amount larger than the original face value of the policy in a bad faith insurance lawsuit.

Fight Back

Death is inevitable, but that doesn’t make it any less difficult.  It is particularly difficult to lose a loved one in a sudden tragedy and individuals close to the deceased are particularly vulnerable during the mourning period. 

Unfortunately, tragic circumstances present the opportunity for fraudsters to take advantage of the family members of the deceased. Death policies are expensive for the insurance company to pay out and some insurance companies will do anything to find a reason not to cover you.

If you find yourself in this unfortunate situation, contact a lawyer who specializes in bad faith insurance claims. Any reputable bad faith insurance lawyer will give you a free consultation on your particular case and should work on a contingency fee basis.

If you need assistance, you can also chat now with a Laws101.com attorney, where you’ll be instantly connected to a lawyer who can give you legal guidance on your specific case or question.

When to Hire an IRS Tax Lawyer

Legal AssistantBusiness Law, Tax Law Leave a Comment

Money is a major pain point for most people, but you know what’s even more stressful? – Having to deal with the IRS.

Tax season is right around the corner, and for most people, it means having to comb through mountains of paperwork and file your returns like an upstanding tax-paying member of the society. But did you know that you could potentially be losing money if you don’t let a professional help you with the process?

And, what about that notice from the IRS that showed up in the mailbox informing you that you have accrued interest on unpaid balances? This is all news to you. As far as you know, you’ve been diligently paying all your taxes, so the notice you’ve received just doesn’t add up.

That would be the perfect time to get in touch with an IRS tax lawyer to help you make sense of everything and get your affairs in order. Here’s everything you need to know about when to hire an IRS lawyer.

When You Need to Hire an IRS Tax Lawyer

You’re probably wondering why you would need a tax attorney and not a certified public accountant to handle your tax issues. While both professionals offer invaluable help to taxpayers, their roles are completely different.

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If you have a complicated tax-filing situation on your hands, then you want to bring an accountant on board. Complex tax situations could involve anything from having a business (or two) that has a lot of money coming in and out, having kids, being divorced, etc.

They know how to minimize your tax liability without undermining federal law. You would typically call on an accountant to handle your financials when you need a little help with the filing process.

A tax attorney, on the other hand, is the person you call when your tax issues take a legal turn – usually for the worst. You call them when you need help dealing with legal tax matters such as halting wage garnishment, canceling account levies and property liens, getting help with unfiled returns, and even coming up with a legally binding compromise with the IRS on matters related to your tax debt.

When you’re in some kind of trouble with the IRS or have any sticky issue that’s outside the scope of crunching numbers, then you call on a tax attorney, not an accountant.

The type of tax attorney you choose depends on the specific kind of tax help you need. For instance, if your tax issues have to do with estates and trusts, then you need a tax lawyer whose specialty lies in these areas.

How to Dispute the IRS

Having to deal with the IRS can be the most daunting and frustrating experience, especially if they claim that you owe them money. It can be a nightmare!

The good news is that you can dispute IRS tax debt when they allege that you owe hundreds or even thousands of dollars in back taxes. Here’s how to go about it.

1. Read the Tax Collection Notices Sent by the IRS

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Pay close attention to the type of notice you receive. The CP notice number indicated on the top/bottom right corner identifies the type of notice you have on your hands. For instance:

  • CP-14 is a notice typically received four to six weeks after filing your return, to inform you that you owe taxes
  • CP-504 is the final warning notice of unpaid tax balances
  • CP-1058 is a Notice of Intent to Levy. It lets you know that the IRS intends to put a tax levy on or garnish your wages to recover what you owe in back taxes

2. Contact the IRS Immediately

Once you receive any notice from the IRS, get in touch with them as soon as you can to let them know that:

  • You dispute the tax debt that you allegedly owe
  • You are not waiving your right to a tax hearing or settlement
  • You’ll be in touch with a tax professional to help with the IRS dispute

It’s important to let a tax lawyer handle the IRS dispute resolution process for you. Attempting to do it on your own might not yield the outcome you expect.

It’s also important to read and understand the Taxpayer Bill of Rights to familiarize yourself with what you are entitled to, to make sure that you’re treated fairly during the process.

3. Request an Appeal

The next step of the IRS dispute process is to make a written request to the IRS Office of Appeals. Some important information you need to include is:

  • Your contact details
  • The tax period you are disputing
  • The reasons for the dispute
  • Facts and evidence to back up your reasons
  • Quote the law or authority that supports your reasons

Mail the letter to the address listed on the “Rights to Appeals” section in the letter that came with the IRS correspondence.

4. Get the Best IRS Tax Attorney to Represent You

Legal tax matters are often complex to deal with, particularly if you don’t have a background in tax law. Getting unlimited representation is the best strategy since it gives your lawyer the right to represent you in any way they see fit when resolving your tax issues. They are highly qualified and experienced to deal with any IRS dispute you have to get the best possible outcome.

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5. IRS Tax Dispute Resolution

The final step in the tax resolution process is the actual resolution. While it is possible to get an outcome that results in zero payments, more often than not, you may have to pay a much smaller amount on the balance you owe. Some of the payment options available include:

  • Applying for an Offer In Compromise
  • Applying for monthly installment payments
  • Settling as much of the debt as you possibly can

These options are available to you based on your ability to pay. Your attorney will be able to negotiate a tax debt relief program that works for you.

Get the Best IRS Tax Lawyer in Your Corner

Knowledge is crucial when it comes to IRS tax dispute resolutions. So, going it alone is not an option if you want to get the best possible outcome from the process. Get the best IRS tax lawyer to represent your interests and resolve your tax issues once and for all.

If you have more legal questions, you can also chat now with a Laws101.com attorney, where you’ll be instantly connected to a lawyer who can give you legal guidance on your specific case or question.