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When it comes to choosing a law firm, there are literally thousands of options available, whether you’re looking for a firm in your city or state, across the nation, or around the world. Too many people gravitate toward larger firms simply because they assume bigger is better. However, the advantages of smaller law firms offer tremendous benefits to those savvy enough to look beyond firm size.
 
One of the most common misconceptions is that the biggest law firms attract and retain the best lawyers. The truth is, talent-quality is spread throughout the industry. The best lawyers at large firms often strike out on their own to open their own offices, taking with them a small handful of highly capable peers and support staff. Today’s leading law school graduates, Millennials looking to make a difference rather than make a fortune, are narrowing their focus on one practice area and joining boutique firms rather than larger firms that tend to be full-service generalists. Other great lawyers simply want to get away from the “power track” of larger firms, choosing instead to hang their shingles somewhere that doesn’t require them putting in 60 hours every week.
 
The bottom line is, you can find great lawyers just about anywhere: in large firms, in boutique firms, and even solo practitioners. Some of the largest corporations are figuring this out and shifting their resources away from the bigger firms.
 
In an article for the American Bar Association, Pamela Bucy Pierson wrote: “For a variety of reasons…companies are expanding their in-house legal offices. As a result, companies have less need for large firms that can handle cases in multiple jurisdictions…. Growth of in-house counsel departments gives companies new flexibility to choose small law firms.”
 
It’s not just access to quality talent that’s helping smaller firms compete. Ms. Bucy Pierson also noted that technology has been instrumental in leveling the playing field, “allowing [smaller firms] to compete for large and complex cases that historically only large law firms, with their armies of lawyers and full service support, were able to provide.”
 
This is possible because economies of scale have shrunk. With the advancement of practice management software, digital payment systems, e-discovery, and AI applications for any number of legal activities, the cost of entry has become so approachable that even solo practitioners are able to take advantage of these technological efficiencies.
 
As you can see, great lawyers and cutting-edge technology are available everywhere. However, there are a number of advantages that smaller law firms actually do have over bigger firms.
 

Cost

Smaller firms charge less. According to a report from U.S. Consumer Law published in 2016, the average billable hour of an attorney at a smaller firm with more than 10 years of experience was $377. At a large firm, that same lawyer billed $473 per hour, with four-digit hourly rates becoming more and more common.
 
Larger firms may have the benefit of additional resources, but are they worth an extra $100 per hour to solve your specific legal issue? Bucy Pierson states many large firms have “priced themselves out of the market with high salaries, debt from commitments to expensive lateral hires, and large overhead costs because of offices located in pricey markets. This leaves opportunities for smaller, more financially nimble, firms to step in.” And they have. A report from Altman Weil showed 31% of Chief Legal Officers shifted legal work from higher-priced firms to lower-priced firms.
 

Efficiency

As mentioned in the previous section, larger firms are saddled with excessive overhead. That manifests in their hierarchy as well, requiring each case be reviewed by attorneys at multiple levels to ensure consistency within the firm. This overlap is all but eliminated at smaller firms whose greatest concern is getting the client’s matter resolved quickly, efficiently, and most beneficially.
 
Another example of efficiency in smaller firms is, because many lawyers handling cases are also running their firms, they have a more practical understanding of, and pay closer attention to, the firm’s profitability and financial management. This impacts the way they handle clients because they’re dealing with the same business realities that their clients are.
 
Smaller firms run lean as a matter of survival and that carries over to a more conscientious approach to customer service, thus minimizing the number of hours they bill. Big law firms tend to pressure associates to bill as many hours as possible, thus minimizing their incentive to be efficient.
 
When you combine cost and efficiency, smaller firms charge less per hour for fewer hours, a double win for their clients.
 

Service

As a group, small and midsize law firms do a better job of meeting their clients’ most important service expectations. A survey published in January 2018, found the rate of client dissatisfaction was three times higher for larger law firms than smaller firms. Why? At a small firm, a client that generates $250,000 in fees is incredibly valuable. That same client might be “small potatoes” to a large firm and would likely be treated accordingly.
 
Big or small, every legal matter directly affects the client and the client’s company in a significant way. The relationships developed between a smaller firm and its clients take time and effort to nurture. Where smaller firms fight hard for each specific case, larger firms are frequently forced to initiate tried-and-true strategies that fail to take advantage of case nuances that can only come from a deeper knowledge of the client and the client’s business.
 
Though many big firms tout their “team” of lawyers as an advantage, they can also be a disadvantage. The more people there are working on a case the more opportunity there is for misunderstandings and fragmentation between team members. That can lead to errors and additional time to fix them.
 
One element of service that’s often overlooked is strategic flexibility. Being nimble and shifting gears when unforeseen events unfold can be the difference between winning and losing in many cases. One blog post offers this insight: “Smaller firms usually are able to make and manage significant strategic changes more efficiently, and often more successfully, than large firms. Part of this is because it is easier to turn a rowboat than an oil tanker.”
 
Regardless of the size of the law firm, one of the most important considerations in choosing a lawyer is your level of confidence and trust that your lawyer will represent you and your company well. However, the advantages of smaller law firms are indisputable. Small and midsize firms charge less, are more efficient, and are more client-centric while offering similar levels of legal acuity available at large firms. Their maneuverability within the legal market and their uniquely personalized approach provide their clients with a competitive advantage, something every company can use yet is not always available from larger law firms.
 
If you’d like to take advantage of the financial benefits and superior customer service that Kohner, Mann & Kailas S.C. delivers to all its clients, please contact our business lawyers and litigators at (414) 962-5110 or send us an email.
 
 
About KMK
Kohner, Mann & Kailas, S.C. (KMK) is a value-driven law firm, offering unsurpassed legal expertise in the practice areas of business and financial services, business litigation, and commercial collections. KMK combines the resources necessary to serve the complex needs of its Fortune 500 clients with the personal care and superior customer service expected by all its clients. Founded in Milwaukee in 1937, KMK has successfully developed a local, national, and international reputation for legal excellence, continually recognized by U.S. News & World Report as one of the nation’s Best Law Firms. For more information, visit www.kmksc.com.

On May 1, 2019, the Wisconsin Law Journal announced that Melinda Bialzik, of Kohner, Mann & Kailas, S.C. (KMK), will be honored as one of the state’s 23 best and brightest female attorneys and legal leaders.
 
Since 2000, the legal publication has recognized Women in the Law honorees based on a wide variety of criteria, including: those who have achieved excellence in their respective fields and have influenced other women to pursue legal careers; those who have opened doors for women lawyers in job settings that historically were closed to women; and those who have advanced opportunities for women within a practice area or segment of the profession.
 
Robert Gegios, Chair of the Litigation Department at KMK, in nominating Ms. Bialzik, stated, “I have known Melinda Bialzik for many years, and I have been delighted to work with her at KMK since she joined our firm in 2013. Owing to her keen legal acumen, sound judgment, practical sense, and devotion to the legal profession, her colleagues and, most importantly, her clients, Melinda has become a sought-after lawyer in a wide range of practice areas.”
 
Whether in success-after-success in complex litigation matters across the country involving hundreds of millions of dollars, representing prominent railroads in important transportation litigation, or handling director and trustee duties for professional associations or charitable organizations, Ms. Bialzik stands out as energetic, effective, gracious, and selfless. Judges appreciate her high professionalism and candor, her fellow attorneys turn to her for help whenever possible, and her clients trust her to handle their most significant and sensitive needs.
 
“She is justly deserving of recognition,” said Steve Kailas, Chairman of KMK, “for her many years of benefitting Wisconsin with her hard work and marvelous devotion in the many responsibilities she undertakes.”
 
Among her outside activities, Melinda thoroughly enjoys singing. She was accepted into the music conservatory at Lawrence University prior to enrolling at Harvard Law and continues to reward audiences with her remarkable voice in her church choir and various community engagements.
 
On June 20, 2019, the Wisconsin Law Journal will recognize all honorees at Discovery World. Each honoree will also be featured in a special issue of the monthly publication, set to debut at the awards event and sent to subscribers shortly thereafter.
 
 
About KMK
Kohner, Mann & Kailas, S.C. (KMK) is a value-driven law firm with a global reputation for success and a rich tradition of results. When you need unsurpassed legal expertise in business and financial services, business litigation, or commercial collections, let our seasoned attorneys help you achieve your most important objectives. Founded in Milwaukee in 1937, KMK enjoys a local, national, and international reputation, recognized by U.S. News & World Report as one of the nation’s Best Law Firms. For more information, visit www.kmksc.com.
 
About Wisconsin Law Journal
Wisconsin Law Journal is the state’s leading provider of exclusively legal news. Publishing daily news online at www.wislawjournal.com and monthly in print, the magazine is a part of the Milwaukee-based Daily Reporter Publishing Co. Wisconsin Law Journal offers readers news, case digests, verdict and settlement reports, and much more.

When people think of a legal appeal, the typical scenario that comes to mind is when one party loses in court and they appeal in an attempt to reverse the verdict in their favor. In some cases, that happens, but appeals are not a second bite at the apple, as most people think. The process is far different from a trial, with different procedures and objectives, all of which makes the appellate lawyer a unique and highly valuable commodity.
 
Briefly, civil lawsuits arise out of disputes between people, businesses, or other entities. Before trial, both sides provide the court with a “brief” that outlines their arguments and the evidence they will use at trial. Once the trial begins, each party starts by presenting an outline of their case in an opening statement. Then, the parties present evidence: the plaintiff first, then the defendant, then any rebuttal evidence. Lastly, both parties give their closing arguments. The court instructs the jury on the law(s) to be applied, the jury deliberates, and it reaches a verdict. If one or both parties are dissatisfied with the outcome, they can appeal.
 
During an appeal, one party asks a higher court to review the trial proceedings for errors. Both parties present their arguments in briefs, which are submitted to the appellate court along with the record of evidence from the trial. Judges, not a jury, review the case for legal error only, not the factual evidence or whether or not someone lied. The appellate court announces its decision in a document called an “opinion” in which the higher court either affirms the verdict if it finds that there was no error in the trial court proceeding or, if there was an error, the higher court can reverse the verdict or order the lower court to conduct a new trial.
 
At trial, the objective is to convince the jury that one side of the case is right or the other side is wrong. In an appeal, the judges don’t care which side was right or wrong. All they care about is making sure the process was fair. So, the objective in an appeal is either to convince the judges that the trial proceeded properly (if the verdict was in your favor) or that there were procedural errors (if the verdict went against you).
 
In one article, the author explains why the appeals process is important. First, it offers checks and balances to ensure lower court judges are following the rules. Second, if a judge makes an honest mistake, the higher courts have an opportunity to step in and correct that mistake. Finally, “higher courts exist to interpret laws in ways that impact society as a whole. When a court’s ruling might be one that’s significant to a large segment of the population or it’s a very important issue for even a few people, the higher courts may want to step in and set policy. Then, the lower courts can take the policy and apply it accordingly in future decisions.”
 
As stated previously, an appeal is not a second trial, but a unique, new phase of litigation where lower court victories are defended or errors are identified. A lawyer who regularly practices in appellate courts will better navigate the appellate rules, select the right issues and arguments to put forward, write a brief that focuses on what matters to the appellate judges, and craft an oral argument that convinces those judges of its merit, thus enhancing their client’s chance of winning the appeal.
 
At trial, one side or the other wins based on the facts argued. A key appellate skill is accepting those outcomes and working around them. The trial attorney may know the facts and the strategy backward and forward, but that intimate level of engagement creates blind-spots. An appellate attorney takes the case with a fresh look at the record, the same way the appellate judges look at the case. That perspective tends to develop a better appeal based upon the actual record rather than one furthering the trial strategy.
 
Another important appellate skill is brevity. Appellate lawyers have a very limited opportunity to convince the judges of their theory of the case. Written briefs have length limits and oral arguments have time limits. Every word counts. Experience with appeals will help effectively gauge which arguments will help more than hurt, making sure to eliminate weak arguments so they don’t draw the court’s attention away from the strong ones.
 
In addition to their focus on the appellate hearings, appellate lawyers can also be valuable to trial counsel. They can develop and define issues and can help prepare motions before, during, and after trial. These efforts contribute substantially to the clients’ success in trial proceedings, but they also generate a record which will benefit their clients on appeal, an important attribute that cannot be overstated.
 
A trial is a battle. An appeal is a debate. So, during trial, you need a fighter, but you also need a lawyer who is adept at establishing issues during the trial that can be leveraged during the appeal. Then, after the trial, you need a lawyer who understands the appellate process, who can bring a fresh perspective to the overall matter, and who can identify and effectively communicate the best arguments to persuade the judges.
 
When you recognize the overwhelming benefits of adding the specialized skills of an appellate attorney to your legal team, please contact Robert L. Gegios at (414) 962-5110 or via email at rgegios@kmksc.com.
 
 
About KMK
Kohner, Mann & Kailas, S.C. (KMK) has an extremely successful and highly regarded appellate presence, which supports the firm’s trial group in diverse proceedings in state and federal courts throughout the U.S. The firm’s attorneys have an impressive record handling a variety of matters, including “bet the company” cases, and make themselves available to clients who were represented in trial courts by other firms as well as those represented by KMK’s own skilled trial counsel, both in support of and opposition to trial judgments.
 
KMK is a value-driven law firm, combining the resources necessary to serve the complex needs of its Fortune 500 clients with the personal care and superior customer service expected by all its clients. Founded in Milwaukee in 1937, KMK has successfully developed a local, national, and international reputation for legal excellence, continually recognized by U.S. News & World Report as one of the nation’s Best Law Firms. For more information, visit www.kmksc.com.

The apparent effects of the new Wisconsin Rules of Civil Procedure since being put in place.

 

Last year, KMK cautioned that sweeping changes were coming to the Wisconsin Rules of Civil Procedure through legislation passed by the Wisconsin legislature in April 2018 (see this feature article). As the one-year anniversary of the rule changes approaches, this article reviews how the changes have been used by litigants in Wisconsin state courts and how they are being viewed by Wisconsin state-court judges.

 

Perhaps the most prominent change in Wisconsin state-court practice is an increase in the number of motions to dismiss that are being filed in response to a complaint. Under the new Rules, motions to dismiss for failure to state a claim automatically stay the litigation for 180 days, or until the motion is decided, whichever occurs first, permitting a defendant to put a freeze on litigation simply by filing such a motion. This is significantly slowing down proceedings.

 

Another important aspect of the new Rules is their imposition of the federal “proportionality” standard to govern discovery requests. This change was prompted by the belief that discovery costs are often disproportionately high compared to the amount in dispute in a case. It is too soon to tell exactly how these proportionality changes will ultimately impact Wisconsin state-court practice, but state-court judges have reported that the new Rules require them to delve into the merits of a case much sooner than they normally do. The result is an increased focus on merits issues in the early stages of a case, added scrutiny that may or may not be beneficial, depending on case strategy.

 

There also remain several unresolved ambiguities to the requirements and the Rules’ intentions concerning issues such as disputes about electronic discovery and protective orders. When asked for clarification on these issues, the legislative sponsors of the rule changes uniformly responded that politics is the art of compromise. In other words, the legislature has left courts with the task of resolving important ambiguities in the language of the new Rules. It may take a year or more before there are any precedential decisions on these ambiguous sections, leaving litigators with unsure footing until paths are laid.

 

Another response to the new Rules concerns the cases that may not be brought because of shortened statutes of limitations for a wide variety of claims. For instance, claims for fraud could previously be brought at any time within six years of occurrence, but the new Rules shortened that period to three years. A claim that a case must be thrown out because it is beyond the statute of limitations is an affirmative defense, so attorneys unaware of the new periods might inadvertently waive a statute of limitations defense, forfeiting the defense and allowing untimely claims to proceed.

 

Some lawyers and members of the Wisconsin Judicial Council have complained that the new Rules were imposed by legislators who do not think like litigators and are not sensitive to the needs and concerns of litigants. Nevertheless, the new Rules are controlling at this time, and litigants must adapt to and wisely use them to achieve their litigation goals. However, until these issues are ultimately resolved, it is very much not business as usual in Wisconsin state-court practice, and litigants should take heed.

 

If you have questions about the new Rules, or how they can be utilized to better accomplish litigation goals, contact KMK’s litigation attorneys Robert L. Gegios, Ryan M. Billings, or Melinda A. Bialzik at (414) 962-5110 or via email at rgegios@kmksc.com, rbillings@kmksc.com, or mbialzik@kmksc.com.

 
 

About KMK

Kohner, Mann & Kailas, S.C. (KMK) is a value-driven law firm with a global reputation for success and a rich tradition of results. When you need unsurpassed legal expertise in business and financial services, business litigation, or commercial collections, let our seasoned attorneys help you achieve your most important objectives. Founded in Milwaukee in 1937, KMK enjoys a local, national, and international reputation, recognized by U.S. News & World Report as one of the nation’s Best Law Firms. For more information, visit www.kmksc.com.For more information, visit www.kmksc.com

Section 104(a) of the Federal Bankruptcy Code provides for automatic adjustments to certain dollar amounts in the Bankruptcy Code every three years. (11 U.S.C. § 104(a)). The most recent adjustments took effect on April 1, 2019, and apply to all cases commenced on or after that date. Below is a summary of many adjustments that may be relevant to business lenders and creditors.
 

Preference-Related Adjustments

  • Minimum Amount of Suit – The minimum dollar thresholds for preference claims brought against a creditor in a bankruptcy case where the debtor has primarily non-consumer debts has increased to $6,825 (from $6,425).
  • “Home town” lawsuits – Legal proceedings brought by a trustee or debtor to recover a consumer debt of less than $20,450 (increased from $19,250) or to recover a non-consumer debt of less than $13,650 (increased from $12,850) should be filed in the defendant’s home-town federal district or bankruptcy court.
  • For more information on these defenses to preference claims asserted against creditors, please review our Preference Defenses: Update on the BAPCPA Reforms article.

 

Debtor-Related Adjustments

  • Small Business Debtor – A small business debtor is now defined as one that (among other things) has aggregate noncontingent liquidated secured and unsecured debt as of the petition that are not more than $2,725,625 (increased from $2,566,050). This increase is significant as more businesses may qualify as small business debtors. In a Chapter 11 case, where the debtor is a “small business debtor”, there is no unsecured creditors’ committee to represent the interests of the debtor’s unsecured creditors, and the debtor has a longer exclusive period to file a plan. On the upside, there is greater administrative oversight because the small business debtor must file certain periodic reports related to profitability and cash flow that are not required for larger debtors.
  • Chapter 13 Debtor – A person may file a Chapter 13 case if (among other things) the person has noncontingent, liquidated, unsecured debts of less than $419,275 (increased from $394,725) and noncontingent, liquidated, secured debts of less than $1,257,850 (increased from $1,184,200). This increase is important as debtors that previously did not qualify to be debtors under Chapter 13 had to turn to Chapter 7 or 11. Now, more debtors may qualify under Chapter 13 which may require more active and/or frequent participation of creditors.
  • Involuntary Chapter 7 or 11 Petition – The minimum aggregate claims needed to commence an involuntary chapter 7 or 11 petitions is $16,750 (up from $15,775). For more information and detail on the filing of involuntary petitions, please see our Involuntary Petitions article.

 

Claims

  • Administrative Priority for Real Estate Deposits – A claim arising from the pre-petition deposit of money in connection with the purchase, lease, or rental of property or the purchase of services for the personal, family, or household use of such individuals, that were not delivered or provided is entitled to administrative priority up to $3,025 (increased from $2,850). This increase entitles more claims to be bumped up to administrative priority (which get paid before unsecured creditors).

 

Exemptions

Many of the federal exemption amounts have increased, including the homestead, wildcard, individual retirement account, and household items exemptions. For a more detailed list of the exemption adjustments, please review our Exemptions and Lien Avoidance Summary article.
 

Chapter 7 Dismissal – Presumption of Abuse

The court may dismiss a Chapter 7 case whose debts are primarily consumer debts (or convert it to a Chapter 11 or 13) if the court finds the granting of relief would be an abuse of the provisions under Chapter 7.

  • Means Test – The court shall presume abuse exists if the debtor’s current monthly income (less certain deductions) and multiplied by 60 is greater than (a) the lesser of 25% of the debtor’s nonpriority unsecured claims or $8,175 (increased from $7,700) or (b) $13,650 (increased from $12,850).

 

If you have any questions regarding this article or other bankruptcy-related matters, please contact attorney Matthew P. Gerdisch (mgerdisch@kmksc.com), attorney Samuel C. Wisotzkey (swisotzkey@kmksc.com) or attorney Devon E. Daughety (ddaughety@kmksc.com) at (414) 962-5110.
 
For a full list of the adjustments, click here.

 
 

About KMK
At Kohner, Mann & Kailas, S.C. (KMK), the attorneys in the Business & Financial Services group are prepared to provide coordinated legal counsel across a wide array of creditors’ rights activities. KMK is a value-driven law firm, combining the resources necessary to serve the complex needs of its Fortune 500 clients with the personal care and superior customer service expected by all its clients. Founded in Milwaukee in 1937, KMK has successfully developed a local, national, and international reputation for legal excellence, continually recognized by U.S. News & World Report as one of the nation’s Best Law Firms. For more information, visit www.kmksc.com.

(§ 522)—Exempt assets are assets that unsecured creditors (and some secured creditors) cannot reach. Some key points about exemptions are the following:

  • A. Exemptions are for people—not for corporations, partnerships, or LLCs. But, two individuals working together might not be a partnership and each may be able to claim exemptions. (e.g. the “mom-and-pop” business customer)
  • B. Exemptions generally apply to assets used by the debtor and dependents of the debtor for household purposes, or as “tools of the trade.”
  • C. The assets subject to exemptions must be “crossed out” of the balance sheet when evaluating the collectability of the debtor.
  • D. State exemptions v. Federal exemptions. Thirty-six states elected to opt out of the federal exemptions. In opt-out states, debtors can only use the state law exemptions. (If debtor recently moved, which state’s exemptions apply?) In the other states (and Puerto Rico and the Virgin Islands), a debtor can choose either the federal exemptions or the state law exemptions. Wisconsin has not “opted out”, and Debtors frequently choose Wisconsin State exemptions if they have substantial equity in their property because the homestead exemption is larger than the federal exemption. If they do not have substantial equity in their property, debtors frequently choose the Federal exemptions because the wild card exemption is larger than the state exemption.
  • E. Federal exemptions (1)

Partial list of the “popular” items:

• Homestead: $25,150

• Motor vehicle: $4,000

• Household items: $13,400 (but not more than $625 per item)

• Jewelry: $1,700

• Wild card: $1,325, plus up to $12,575 of unused homestead

• Books, tools of trade: $2,525

• Non-credit life insurance contract: No Limit

• Credit life insurance contract: up to $13,400

• Personal injury claim payment: up to $25,150

• Professionally prescribed health aids

• Social security, unemployment, veterans’ disability-type benefits

• Alimony, support, maintenance reasonably necessary for support

 

NOTE: A husband and wife can double up all of the federal exemptions.

 

NOTE: ERISA-qualified retirement accounts are protected from creditors, with no limit on the value of the account (Patterson v. Shumate, U.S. S.Ct). An individual retirement account (IRA) qualified under the Internal Revenue Code may be exempt up to $1,362,800 (2) (and the court can increase the exemption beyond $1,362,800 (3) “if the interests of justice so require”).

 

  • F. States with unlimited homestead exemptions:

• Florida • Iowa • Kansas • Oklahoma • South Dakota • Texas

 

But, a “sort of” $170,350 (4) cap on state homestead exemptions for homestead acquired within about 3 years, 3 months of the bankruptcy (1215-day period).

 

  • G. Tenancy by the Entireties homestead. Tenancy by the Entireties is a special form of real estate ownership available only to a husband and wife for their homestead. A creditor of only one spouse, generally, cannot enforce a claim against a Tenancy by the Entireties property. Many, but not all states allow Tenancy by the Entireties ownership and the scope of the protection varies among the states that do allow it. Generally, though, in most Tenancy by the Entireties states, if only one spouse files for bankruptcy protection, the entire Tenancy by the Entireties homestead is kept out of the bankruptcy estate—so in effect the bankruptcy debtor-spouse can enjoy an unlimited homestead exemption. However, creditors of both spouses can seek to enforce the claim against Tenancy by Entireties property (up to the applicable state or federal homestead exemption amount). Some of the states that allow Tenancy by the Entireties include:

• Alaska • Arkansas • Delaware • Florida • Hawaii • Illinois • Indiana

• Kentucky • Maryland • Massachusetts • Michigan • Mississippi • Missouri

• New Jersey • New York • North Carolina • Ohio (only TBEs created before 1985)

• Oklahoma • Oregon • Pennsylvania • Rhode Island • Tennessee • Vermont

• Virginia • Wyoming

 
Lien Avoidance. Generally, assets subject to liens, cannot be kept by the debtor under the exemptions. However, in certain circumstances, the Bankruptcy Code allows a debtor to avoid (set aside) a lien to free up exemptions (§ 522(f)).

 

1. Judgment lien. The Bankruptcy Code allows a debtor to eliminate a judgment lien that impairs an exemption (except judgments for domestic support obligations cannot be eliminated). For example, in Wisconsin, a debtor can set aside a judgment lien that cuts into the debtor’s Wisconsin homestead exemption ($75,000 for a single debtor; $150,000 for joint debtors—e.g. husband and wife).

 

2. Security interest lien. The Bankruptcy Code also allows the debtor to set aside any non-possessory/non-purchase money security interest in household items, animals, crops, tools of the trade, and professional prescribed health aids, to the extent of the debtor’s exemptions in such assets. So, for example, a husband and wife in business together may each keep from the otherwise “secured” creditor $15,000 worth of tools of the trade ($30,000 combined) if they filed their bankruptcy in Wisconsin. (Some courts, in other states, have held that § 522(f)(3) limits the “tools of the trade” security interest avoidance to $6,825 (5) per debtor. However, a Wisconsin bankruptcy court has held that this limit does not apply in Wisconsin cases.)

 

If you have any questions regarding this article or other bankruptcy-related matters, please contact attorney Matthew P. Gerdisch (mgerdisch@kmksc.com), attorney Samuel C. Wisotzkey (swisotzkey@kmksc.com) or attorney Devon E. Daughety (ddaughety@kmksc.com) at (414) 962-5110.

 
 

(1) All of the figures stated have been updated effective 4/1/19, and next scheduled to adjust on 4/1/2022. See Doc. 2019-01903 Published 2-12-19. Numbers adjusted with the Consumer Price Index (CPI) every 3 years (2019).
(2) Id.
(3) Id.
(4) Id.
(5) Id.

 
 

About KMK
At Kohner, Mann & Kailas, S.C. (KMK), the attorneys in the Business & Financial Services group are prepared to provide coordinated legal counsel across a wide array of creditors’ rights activities. KMK is a value-driven law firm, combining the resources necessary to serve the complex needs of its Fortune 500 clients with the personal care and superior customer service expected by all its clients. Founded in Milwaukee in 1937, KMK has successfully developed a local, national, and international reputation for legal excellence, continually recognized by U.S. News & World Report as one of the nation’s Best Law Firms. For more information, visit www.kmksc.com.

The ultimate step in creditor collection brinkmanship is the decision to start an involuntary bankruptcy petition against a debtor. There are myriad reasons to commence an involuntary petition against a debtor. For example, the involuntary may be used as a last resort after all other efforts to obtain payment have been exhausted or appear useless; or, the involuntary may be used as an emergency measure to invoke the powers of the Bankruptcy Code to prevent precious funds and other assets from disappearing into the pockets of insiders and/or other preferred creditors.

 

The basic requirements of the Bankruptcy Code for filing an involuntary petition are rather simple, although it must be kept in mind that each new case presents different facts and other special issues and considerations. Legal counsel must be enlisted in each case to assess the issues and prepare the petition, if appropriate. The most common ground for an involuntary petition is that the debtor is generally not paying its debts as they come due, although debts which are subject to bona fide dispute (as to liability or amount) are not counted in the assessment of the debtor’s payment default. However, the debtor cannot simply claim that the unpaid debts are disputed, but must show real issues concerning the enforceability of the claim. Another basis for an involuntary petition is that substantially all of the assets of the debtor have been placed in the control of a custodian (i.e. a receiver for an assignment for the “benefit” of creditors).

 

If the debtor has fewer than 12 creditors, an involuntary petition may be commenced by only one creditor, so long as the creditor is owed at least $16,750(1) and the claim is not contingent or the subject of a bona fide dispute (as to liability or amount) with the debtor. If the creditor’s claim totals say $3,000.00, then the creditor must seek out another creditor to join in the petition so that the aggregate claims of the petitioning creditors are at least $16,750(2). If the debtor has 12 or more creditors, an involuntary petition must be filed jointly by three or more creditors with aggregate claims of $16,750(3).

 

If the debtor does not timely answer the petition, then the Bankruptcy Court may enter an order for relief for the Chapter 7 liquidation. As an alternative to contesting the petition, the debtor may choose to voluntarily convert the case to a Chapter 11 reorganization. If the debtor contests the petition, the debtor will seek to attack the eligibility of the petitioning creditors (i.e. whether there are sufficient numbers of petitioning creditors, whether the claims are disputed) and the grounds for the involuntary (i.e. whether the debtor is generally not paying its debts).

 

A delicate issue can arise for a lone creditor who is pretty sure the debtor has more than 12 creditors, but the creditor does not know who they are and the debtor won’t share its list of creditors. Does the creditor stand by while all of the account receivable proceeds go to insiders? Or, does the creditor file the involuntary petition alone? If the debtor contests the petition and the Bankruptcy Court dismisses the petition for failure to have the required number of petitioning creditors, then the Bankruptcy Court could assess the debtor’s costs and attorneys’ fees in defending the petition against the creditor. Worse yet, if the Court finds that the creditor filed the petition in bad faith, the Court could grant judgment against the creditor for any damages proximately caused by the filing of the petition, or for punitive damages. Courts have bent the rules a bit where creditors made reasonable efforts to locate other creditors and where the creditors were seeking to preserve preference claims and fraudulent transfer actions for the benefit of all creditors. Also, courts have allowed additional eligible creditors to come on board to join the petition after it is filed so as to retroactively fulfill the three-creditor requirement.

 

An involuntary petition can be an effective means to provide a supervised forum to scrutinize the debtor’s pre-petition transactions and the orderly liquidation of the assets. The involuntary petition can be prepared and filed very quickly and when used in the correct circumstances can catch substantial assets for the benefit of all creditors.

 

For more information on this article or other bankruptcy-related matters, please contact attorney Matthew P. Gerdisch (mgerdisch@kmksc.com), attorney Samuel C. Wisotzkey (swisotzkey@kmksc.com) or attorney Devon E. Daughety (ddaughety@kmksc.com) at (414) 962-5110.

 
 

(1) FR Doc. 2019-01903 Published 2-12-19. Numbers adjusted with the Consumer Price Index (CPI) every 3 years (2019).
(2) Id.
(3) Id.

 
 

About KMK
At Kohner, Mann & Kailas, S.C. (KMK), the attorneys in the Business & Financial Services group are prepared to provide coordinated legal counsel across a wide array of creditors’ rights activities. KMK is a value-driven law firm, combining the resources necessary to serve the complex needs of its Fortune 500 clients with the personal care and superior customer service expected by all its clients. Founded in Milwaukee in 1937, KMK has successfully developed a local, national, and international reputation for legal excellence, continually recognized by U.S. News & World Report as one of the nation’s Best Law Firms. For more information, visit www.kmksc.com.

Railroad law encompasses all legal matters that relate to railroad services. However, railroad law, as a specific area of law, doesn’t really exist. Instead, it is made up of various areas of law applied to railroads and trains.

 

Last week, Melinda Bialzik presented Update on Spoliation during the National Association of Railroad Trial Counsel’s 2019 Special Litigation Conference held in Houston, TX, March 20-23. In the presentation, she highlighted a party’s duty to preserve evidence and defenses to claims of spoliation, as defined as “the destruction or significant alteration of evidence, or the failure to preserve property for another’s use as evidence in pending or reasonably foreseeable litigation.”

 

The National Association of Railroad Trial Counsel (NARTC) is a 64-year-old organization made up of the top railroad trial attorneys from across the United States and Canada. Membership in NARTC is limited to lawyers who handle litigation and/or related matters for railroads or their affiliated entities, or who handle litigation or other legal matters directly affecting railroads.

 

For more information about KMK’s railroad law practice, call Melinda Bialzik at (414) 962-5110 or email her.

 
 

About KMK

Kohner, Mann & Kailas, S.C. (KMK) is a value-driven law firm with a global reputation for success and a rich tradition of results. When you need unsurpassed legal expertise in business and financial services, business litigation, or commercial collections, let our seasoned attorneys help you achieve your most important objectives. Founded in Milwaukee in 1937, KMK enjoys a local, national, and international reputation, recognized by U.S. News & World Report as one of the nation’s Best Law Firms. For more information, visit www.kmksc.com.For more information, visit www.kmksc.com

Be sure you establish your business in a way that leverages benefits and fits your needs.
 
When setting up a new business, the prime initial question is whether to establish a limited liability company, a corporation, a general partnership, or a sole proprietorship. The answer in significant part depends on how you want to deal with the risks of potential personal liability. This consideration is also of concern in evaluating any present entity.
 
Corporations
With a C-corporation, the owners become stockholders, and they have very limited personal liability, unless they fail to properly operate the business as an actual corporation.
 
Limited Liability Companies
If you register the entity as an LLC and comply with other filing and legal requirements, the members (owners) also have limited liability, and their personal assets are generally shielded from the debts of the business.
 
Sole Proprietorships
The major drawback to a sole proprietorship is that the single owner’s personal assets are not shielded from the debts of the business.
 
General Partnerships
If there are two or more owners, the business can be set up as a general partnership. However, the general partners are personally liable for the debts of the business.
 
In addition to the liability issues, it is also important that you consider the tax implications of utilizing one of these options to structure the new business entity.
 
If you have questions about the formation of a new business entity, contact attorney Matthew P. Gerdisch at 414-962-5110 or via email at mgerdisch@kmksc.com.
 
 
About KMK

Kohner, Mann & Kailas, S.C. (KMK) is a value-driven law firm with a global reputation for success and a rich tradition of results. When you need unsurpassed legal expertise in business and financial services, business litigation, or commercial collections, let our seasoned attorneys help you achieve your most important objectives. Founded in Milwaukee in 1937, KMK enjoys a local, national, and international reputation, recognized by U.S. News & World Report as one of the nation’s Best Law Firms. For more information, visit www.kmksc.com

 
As temperatures rise and our weather begins to settle back into seasonally appropriate norms, the folks at KMK want to assure everyone who has trusted us with their business that we stayed “on the case” through the worst of it. Should Old Man Winter decide to send another Polar Vortex our way, we offer this survival guide to help all those in its chilling path.



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