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Newport Beach California Legal Blog

Business acquisition: Due diligence is a must

Acquiring a business, regardless of the terms and conditions of the deal, is a big decision that will impact your current organization in a number of ways. With so many potential issues lurking, due diligence is an absolute must.

You may want to rush ahead with the acquisition and figure everything else out later, but going down this path could cost you a lot of time and money, while also adding more stress to your plate.

How to contest undue influence as a beneficiary

Cognitive disorders such as dementia and Alzheimer’s are common in the older U.S. population. In California, there is also a concentration of wealth in this group of citizens. When combined with the complexities of your family relations, challenging a will with allegations of undue influence due to the elder’s altered mental capacity is common. At Daily Law Group, we have experience representing clients who believe their elder relative was not mentally fit when creating their will, making it invalid.

According to the Journal of the American Academy of Psychiatry and the Law, a California statutory scheme for undue influence regarding financial elder abuse, including wills and trusts, has recently been adopted. This clarification guides the testimony of mental health professionals placed in the role of expert witness in litigation. If you believe your loved one’s reduced mental capacity resulted in altering their will, a qualified expert may back your claim.

What are derivative actions taken by shareholders?

When the value of a California company is put at risk by a CEO or other individual in authority committing a crime, shareholders can take action. If you believe that the breach of duty has resulted in harming the corporation, you can assert your rights as a shareholder. There are a couple of ways stockholder relief can be found, one of which is filing a derivative action.

Company directors have legal duties and obligations to the corporation and the shareholders. As an investor, you also have rights and responsibilities. There are the transfer and voting rights that you have as a result of the ownership in a portion of the company. Also, you are entitled to dividends, paid out of the organizations’ profits and earnings. According to FindLaw, when an officer or director harms the organization, shareholders may sue them on behalf of that organization. This is called a derivative lawsuit.

Starting a business? Consider the advantages of an LLC

When starting a business, you want nothing more than to focus 100 percent of your time on the task at hand. While growing your organization is job number one, you don't want to jump the gun. Before you hit the ground running you need to form the right type of business.

While you have several options, many entrepreneurs turn to an LLC. There are a variety of advantages when compared to other types of business, including the following:

  • Limited liability: If you have concerns about being personally liable for what happens in your business, an LLC is right for you. It limits the liability of members and managers, thus giving you peace of mind at all times.
  • Flexible management: There are no specific requirements in regard to how you set up your LLC, which gives you more flexibility when compared to other options.
  • Flow through taxation: With an LLC, all profits are distributed to its members. From there, you are taxed on a personal tax level. This allows you to prevent double taxation, while also better understanding and managing your tax situation.
  • Good option for holding appreciating assets: This doesn't come into play for every type of business, but if you're looking for a way to hold real estate, intellectual property or stocks, it's often the best option.
  • Easy creation: While some types of business are difficult to create, this doesn't typically come into play with an LLC. It doesn't matter if it's a single member LLC or there are several partners, you won't have to jump through hoops to get started.

Top tips for doing business in Dubai

Located between Europe, Africa and Asia, Dubai is a bustling city with markets friendly to international businesses. If your California company is ready to make inroads to the Middle East, or Dubai specifically, getting the right business advice is critical to making the move a success. Daily Law Group has helped clients participate in the Dubai World Center initiative and navigate the UAE.

If you are ready for a fast-moving, multi-cultural environment, here are three tips to help avoid some of the most common pitfalls:

Protecting your business from fiduciary negligence

If you are in business with one or more partners in California, you know that it is a big responsibility. In this type of mutual relationship, partners owe a duty to the partnership as well as each other. Daily Law Group has experience representing partners who have experienced fiduciary negligence.

According to Findlaw, breach of fiduciary duty covers a wide range of issues. In business, there is the obligation that each partner act responsibly when directing or managing operations for the partnership. The duty of care requires that partners disclose all relevant information to the rest of the partners. Three elements must be proven to file a claim involving financial negligence:

  • That there was a fiduciary duty owed at the time of the dispute
  • The extent of the relationship
  • Whether the breach occurred within the scope of the relationship

A match made in the penal code

In a recent issue of The Gavel magazine, founding attorney James Daily had a featured article on a useful section of the penal code when helping victims of theft.

There is more to theft than simply making sure that the crime is dealt with. There is also significant damage to the plaintiff who had their money (or property) stolen in the first place.

Preventing a trademark infringement suit

Your company can establish a trademark by use or legally register it in California to represent your business or a particular product. It can be a word, phrase or symbol. When an original trademarked item and other, very similar service marks are used by multiple entities, it causes consumer confusion and is deemed trademark infringement. At Daily Law Group, we often represent clients whose inadvertent use of a trademarked item results in a lawsuit.

The infringement can move beyond the exact symbol or phrase to include packaging and color if it is an intrinsic part of the company’s public identity. Typically, the first step is to send a cease-and-desist notice. It is a demand to stop using the trademarked item with an explanation of the infringement. If you received this type of letter, it requires a response within a short period. According to the United States Patent and Trademark Office, at this point, there is still time to prevent a lawsuit. However, failure to respond may result in receiving a summons from the court.

Forming the right business entity for your startup

Choosing the right legal structure when forming your California business is critical. It impacts the documentation required, how much you pay in taxes, your ability to raise money and your liability. At Daily Law Group, we often provide expertise to clients who need help with the business structuring and formation of their startup.

When choosing the type of business entity, there are three primary factors to consider: Record-keeping, liability and taxation. Here are four common business structures for new companies.

  • Corporation - This entity remains separate from those who establish it, can make a profit and handles the duties of the overall organization. The primary benefit is that the founders have no personal liability. The downside is the amount of documentation that is required.
  • Limited Liability Company - An LLC is easy to form and offers similar liability protection to a corporation. The primary advantage is that the owner or owners is/are shielded from personal liability while profits and losses are passed through to them without taxing the business.
  • Sole Proprietorship - An individual can own and operate this type of entity. The individual has complete control over all aspects of its operation. A top benefit is that it is easy to form, and no documentation needs to be filed with the Secretary of State’s office. The downside is that the individual is personally liable for the business’s financial obligations.
  • Limited Partnership - In this business entity, two or more people agree to share the profits and losses of the company. A perk of this type of organization is that the tax burden does not pass to the individuals. A drawback is that the founders are liable for any business losses.

496 Charlie

In the Summer 2018 issue of The Gavel, James Daily provided an in-depth analysis of the impacts and uses of California Penal Code section 496(c). Click here to check it out. 

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