Friday, April 17, 2015

Should I set up a sole proprietorship or incorporate?

“Which business structure should I adopt?”

Each option presents its own set of pros and cons. 
This overview is not intended as tax or legal advice and may not be used for the purpose of avoiding any federal tax penalties. 
Please consult legal or tax professionals for specific information regarding the most appropriate business structure for your organization.

Sole Proprietorship/Partnership

This structure is the simplest. But it creates no separation from its owner. Income from the business is simply added to the individual’s personal tax return.
Advantages: Easy to set up and simple to maintain.
Disadvantages: Owners are personally liable for the business’s financial obligations, exposing their personal assets (house, savings, etc.). 


A corporation is a separate legal entity from its owners, making it easier to raise money, issue stock and transfer ownership. Its life is perpetual and will survive the owner’s death.
Advantages: There may be tax advantages, including more allowable business expenses. It protects owners from personal liability for the company’s financial obligations.   
Disadvantages: More expensive to set up, the paperwork and formality are greater than for a sole proprietorship or LLC. Income may be taxed twice, once at the corporate level and when distributed to owners as dividend income.


After forming a corporation an owner may elect an “S-Corporation Status” by adopting a resolution to that effect and submitting the proper paperwork the IRS. You might want to hire a CPA to assist you so that everything is done properly. 
The S-corporation is taxed like a sole proprietorship, i.e., the company’s income will pass through to shareholders and be reported on their respective personal tax returns.
Advantages: S-corporations avoid the double taxation issue associated with C-corporations, while enjoying many of their tax advantages. Owners are shielded from personal liability for the company’s financial obligations. 
Disadvantages: S-corporations do not have all the tax-deductible expenses of a C-corporation. The cost of set up, the paperwork and formality are greater than for a sole proprietorship or LLC. S-corporations have certain restrictions, including having less than 100 shareholders, shareholders must be U.S. citizens and it cannot be owned by another business.

Limited Liability Company

An LLC is a hybrid between a corporation and a sole proprietorship, offering easy management and pass-through taxation and the liability protection of a corporation. 
Similar to a corporation, it is a separate legal entity, but there is no stock.
Advantages: LLCs provide the protections of a corporation, but are taxed similar to a sole proprietorship.
Disadvantages: Typically more expensive to form than a sole proprietorship, LLCs require more paperwork and formalized behavior.

Remember, the choice of business structure is not an irreversible decision. 
You may amend your business structure to accommodate your changing needs and circumstances.

    Preparing for a deposition

    During the deposition phase of discovery, lawyers usually have to take and watch depositions. 

    Unfortunately many lawyers spend a disproportionate amount of time preparing to take the other side’s deposition. 

    Though it makes sense to spend more time preparing for depositions that the attorney intends to take of opposing party and/or his witnesses, a failure to adequately prepare the client and/or any of the client's friends/family for their deposition can have catastrophic consequences for the client's case. 

    In fact, a proper and thorough prep may take hours depending on the case and the witness.

    It's a famous story that the attorney should always know how each person about to be deposed is going to answer each question. Attorneys don't like surprises because they can hurt the case. 

    The deposition will not win the case

    The single most important rule for a witness to remember is that he or she can’t win the case with their deposition. 

    The deposition isn’t given in front of a jury, and the opposing lawyer will only pick out the bits and pieces of the deposition transcript that are helpful to her case. 

    It’s vital for the witness to understand that (in general) they can only hurt your case in a deposition, not help it.  If a witness understands this fact, then usually he will be more circumspect with his answers.

    Review how the opposing lawyer might use the deposition in motions or at trial
    Remind the person about to be deposed that the opposing attorney may be trying to confuse or intimidate them.

    Remind the person being deposed that the opposing counsel will attempt to prove the opposing party's theory and/or be used to impeach the person at the trial.

    The witness needs to understand how he can potentially torpedo your case, his credibility, or both. 

    Most of the time witnesses don’t really understand the how important how they answer is -- For example, if a person answers in a "sarcastic" manner "Yes" when the answer is really "No". The court reporter merely records what the witness said. It is not included in the transcript, "witness said yes but really meant no" or "the witness answered in a sarcastic manner". 

    Make sure that they understand that, if the case goes to trial, their answers at trial will be compared to their deposition testimony with great scrutiny.  

    Inconsistencies can hurt credibility. 

    Verbose, rambling responses potentially can give the opposing counsel a great nugget in a motion brief. 

    Once your witness understands how his answers can be used against him, it should help control answers that make you want to bury your head in your hands.

    Don’t assume, speculate, or guess -- it's ok to say "I don't recall".
    It doesn’t help. 

    Lawyers know this but laypeople don’t, or they forget. 

    If you watch any news show during a major breaking news event then you’ll hear more conjecture than fact. 

    While this can fit into normal daily conversations, conjecture doesn’t help in a deposition. 

    The witness needs to understand why guessing at an answer is not helpful. 

    I just tell the witness that if they guess wrong then they lose credibility since they’re shown to be wrong.  

    Often the person being deposed rambles on and on. Answers need to be short. Not a lot of elaboration. 

    Words like "always" "never" or "100% of the time are not good to use.  For example, I always wear my seatbelt when driving means that the person has never ever driven one inch without wearing a seatbelt. If opposing counsel can show one instance that the person did not wear the seatbelt then the credibility of the witness is in jepardy.

    Take your time

    Often the witness goes too fast. 

    Encourage them to take a deep breath and relax before answering the question.

    If they don't understand the question, the witness needs to understand that they can say "I don't understand, can you re-phrase the question." Sometimes even the best attorneys ask questions that make no sense. 

    The main issue is that they blurt something out before you have had a chance to object or before they have had time to carefully consider their answer. 

    Encourage them to pause after each question before responding.

    A person can get tired during a deposition. Breaks are allowed. It might break the flow of the person asking the questions. 

    Ask questions that you expect opposing counsel to ask the witness. 

    Practice having the witness pause between the end of the question and the beginning of his answer. 

    Practice how you want the witness to review any documents.

    The witness needs to be prepared to answer hard questions and not get upset.

    Emotional outbursts tend to hurt the client's case.  

    Some depositions are done to merely "upset" the client.  They need to be prepared to hear questions that they don't want to answer.

    Show a sample deposition on YouTube
    It is very instructive for deponents who may not have seen a deposition. 

    Show them videos of good and bad witnesses. 

    You can make a playlist, show a snippet, and cover what the witness did right or wrong. 

    In 20 minutes, this interactive session can teach the witness a lot more and prepare them for what to expect realistically.

    Remember the privilege rules (but don’t let that prevent you from prepping the witness)

    If the witness is your client, then your preparation is covered by the attorney-client privilege. 

    People prepare for weddings and other important events in their lives, so taking the time to prepare for a deposition only makes sense. 

    Most people have never seen or been to a deposition. They are scared. So practicing for a very stressful event like a deposition makes a lot of sense. People appreciate practicing before going into a deposition.

    Prepare the client to read the deposition

    Depositions are very strange to read. The client (or witness) needs to understand that they need to actually read the deposition carefully for errors made by the court reporter.  Many times the client (or witness) does not spend the time and read the deposition.  

    Give the person being deposed a copy of a deposition or examples of badly answered deposition questions  to read prior to being deposed. Let them see some examples of how their deposition will look when it is typed up by the court report. It is usually an eye-opening experience.  

    Hoping mediation is a success? 

    Here’s what to avoid:

    Heading to mediation too soon: Early mediation fails because there is so much unknown.

    Choosing the wrong mediator: Mediators should have the right style and the right knowledge and experience to handle a case.

    Failing to prep the mediator: They need information and should have time to review the case well in advance. That means receiving the information at least 2 days ahead of time. Sending the info one hour before is not enough time.

    Using tactics like silly briefs or behaving in a rude manner: Do not rant, do not be aggressive, do not take a condescending tone etc. 

    Being too emotional and not focused.  If you have anger or fear issues, the mediator is not a therapist and is not there to offer counseling. Crying during the entire mediation is not helpful. 

    Not knowing the opposition: Do what you can to gain insight into the opposing counsel.
    I have often had to introduce the 2 attorneys to each other. I've actually settled several cases after the attorneys sat and talked. 

    The attorney not preparing the client: The attorney should offer realistic guidance to the client in advance, so he or she knows what to expect and whether or not their desires are “pie in the sky” or a true possibility. Mediators don't like attorneys that promise the clients unrealistic goals and using the mediator to be the "bad guy". 

    No having your goals written down before arriving at mediation.  Often people forget everything they want to cover at mediation. The mediator is not a mind reader & can only address the goals you talk about. Bringing up new issues in the last hour usually derails the mediation.

    Not bringing required information to the mediation.  It is not the role of the mediator to do your research for you. Often I have to declare a recess and set another mediation because the parties do not bring important information (like the value of the residence, how much is in retirement accounts or the value of the business) to the mediation. I am happy to make copies for the other side so that both sides have the information they need to make informed decisions.

    Hiding assets, debts and generally being untruthful.  The mediator is not there to determine who is telling the truth. In order for both sides to make informed knowledgeable decisions, information must be exchanged. 

    There are many ways a mediation can go off track, but solid preparation ensures there is a good base from the beginning. 

    When everyone is prepared, they come to the table with an attitude more suitable to negotiate and settle the matter.

    Wednesday, April 8, 2015 (cost $149) or -- Buyer Beware -- Use FREE forms instead!

    I don't know why people pay for forms from sites like or when the Supreme Court of Texas now offers FREE Texas forms that judges are required to accept if properly completed.

    Use this website...


    These forms are approved by the Supreme Court of Texas -- other websites from other states usually don't use the proper legal terms for Texas divorces.

    We don't use the term "matrimonial" in Texas divorces.  If your form uses that wording -- it's not a form designed for a Texas divorce!


    Sunday, March 29, 2015

    Why a Good Divorce may be better than a bad marriage for kids.

    Why a Good Divorce Is Better Than a Bad Marriage for Kids

    Posted: Updated: 


    Anyone who is considering divorce knows that there is a lot of research demonstrating that divorce is difficult for children. If you're considering divorce or in the process of getting one it can seem as though researchers are shaking their fingers at you, predicting the worst for your child. As a former divorce attorney, mediator, and Law Guardian, I worked with families going through divorce as well as those who returned to court for updates and changes to their parenting plans. I've also seen acquaintances, friends, and family members who have stayed together for the sake of the children. It's time someone stood up and spoke the truth. While there is no question that divorce is hard for kids, it is a far cry better than raising your children in a violent, abusive, angry, or deeply resentful marriage.
    If you stay married for the sake of your children, you expose them to daily arguments, negative undercurrents, shouting, possible violence, and an atmosphere that is in no way calm and peaceful. This has a huge impact on your child. When parents stay in a bad marriage, kids have to cope with the fall out from a never ending cycle of disputes, resentment, sadness, and even hate. A bad marriage is an open wound that can never heal as the scab is picked off again and again no matter how hard the parents try to keep things together for the sake of the kids. Children live in a volatile environment, which even if it is not violent, it is not nurturing and loving.
    While the research is clear that divorce does have an impact on children, it fails to take into account the permanent emotional damage children suffer when they stay in one home with parents who can't get along. A divorce frees everyone from this environment and offers many benefits to children:back to back
    - Two homes where there is no constant arguing. This allows kids to just be kids without having to work around the complex negative emotions present in a conflict-filled home. Yes, having two homes is a change. It's not always perfect but two homes without fighting is almost always better than one filled with arguments and marital tension.
    - A calmer emotional baseline. Things are complicated in the months following divorce, but most families get through this transition and find a new normal. Children are no longer riding the waves of their parents' relationship on a daily basis. Things settle down and everyone is calmer and less combative.
    - Happy parents. The benefits of this are enormous. Happy people are better parents. Happy people create happy environments. Happiness rubs off on children. While it takes time to find your equilibrium after divorcing, it does happen for most people and is certainly a better outcome than living unhappily for years in a difficult marriage.
    - Children learn that compromise matters. When they see their parents co-parenting and working through the issues in a divorce, children learn that compromise is an important and effective skill. While no divorce is without challenges, getting through it shows your child how to work through hard times to achieve a brighter future. Parents who choose to mediate their divorce show their children that working together to find a solution is preferable to fighting against each other.
    - Parents who choose personal happiness teach their kids to do the same.While putting your kids first is often held up as the gold standard of parenting, deciding that your personal happiness is more important than having a nuclear family under one roof sends a powerful message to your children. It shows them that everyone deserves to be happy and that happiness is an important consideration in your life plan.
    - Divorced parents can find their parenting mojo after divorce. This isn't guaranteed, but if you have a reasonable parenting plan and are able to cooperate, each parent develops a unique parenting style from the ongoing one-on-one time with the children.

    Friday, March 27, 2015

    What newly licensed family law attorneys need to do

    I have mentored many newly licensed attorneys over the years.

    Here is a short list of things a Harris County family law attorney needs to do:

    1.  Get a phone number and never change it.

    2. Network, network, network at every opportunity.

    3. Always be professional and nice to all attorneys that you interact with - you never know if that person might end up a judge or you might need a "favor" in the future.

    4. Take your resume and introduce yourself to each judge and associate judge. Offer to accept some free and/or small fee cases to help you learn.  Many people don't like being appointed to "missing parent" cases so you can offer to do one for free or at a huge discount to gain experience.

    5. Volunteer at Houston Volunteer Lawyers to gain some experience.

    6. If you are a mediator, agree to do free mediations at the Dispute Resolution Center. Offer to co-mediate with an experienced mediator.

    7. Join the Houston Bar Associate's Family Law Section and attend their monthly luncheons.

    8. Attend the Advanced Family Law Section meeting each August. Even if you cannot afford to attend, go. Hang out and talk to attorneys and judges. Don't stay in your room.

    9. Join Facebook attorney groups - there are many. You can learn a lot reading other posts.

    10. There are many free internet sites to advertise on. Some are yelp,, Do this at least once a year since sites pop up all the time. Keep your information current. Answer questions on avvo and spend the time to answer their profile questions - it will get you a higher ranking.

    11. Don't put all your marketing money in "one basket". There is not one site that will be "magical". Everyone claims they have the best site but basically that is wrong. I've never found the "magic" website.

    12. When you accept a case, call opposing counsel and introduce yourself. If possible, take opposing counsel out to coffee or lunch. Get to know other attorneys on a personal basis. You can learn a lot hanging out with more seasoned attorneys.

    13.  Keep your overhead low.

    14. Return phone calls, text and emails promptly. This is the biggest complaint the State Bar of Texas has for attorneys.

    15. If you have a "bad feeling" about a potential client - don't take them -- it's not worth it.

    16. If a client does not "trust" you then withdraw.

    17. Always document all communication with clients - even via text and email. Clients often "forget" how much they call or email you.

    18. Send out monthly bills. Let clients see where their money is going. I always offer a few "no charge" phone calls or emails but I show the contact on their bill.

    19. If a client does not pay you as agreed, consider withdrawing. If their plumbing at home breaks they will find the money to pay a plumber - so why not you?

    20. Put your money into your IOLTA account and don't withdraw it until you have earned it. Be safe -- not sorry!

    21. Never do anything to risk your law license - you worked too hard for it. Remember if the State Bar of Texas receives a complaint against you then you have the burden to prove you are innocent. Always document everything in the client's file.

    22. If you withdraw from a case, immediately have a copy of all pleadings for your client to pick up. Be sure to have a form for them to sign that shows they received a copy of their file. Your notes are yours and you do not give client's copies of your notes! Notes are attorney work product and they belong to you only.

    23. Find some mentors to guide you.

    Thursday, March 26, 2015

    Locate a parent service through the TX A G office

    Go to the TX A G website and find the "Application for locate- only services" to ask the TX A G to try to help you find a "missing" parent.

    Complete the application form and mail it to:

    Office of the Attorney General
    Child support division - MC 040
    State Parent Locate Service
    P O Box 12017
    Austin, TX 78711-2017

    This service can only be used for:
    establishing a court order for paternity, child support or medical support
    collecting court-ordered support
    enforcing custody or visitation.

    The State Parent Locator Service only provides information about the missing parent's possible location(s). They obtain the latest available address and employment information from state and federal records, and forward that info to the applicant.

    This agency will not verify or investigate the information obtained and cannot guarantee that the missing parent will be found.

    You can only use this service if you qualify --
    you must be the custodial parent with physical possession of the children or
    the person who has had physical possession of the children for over 6 months (if you are not one of the parents) or
    the legal guardian or managing conservator with legal custody of the children or
    a court with jurisdiction to enforce custody or visitation or
    the attorney of the chldren for whom paternity and/or support is sought.

    Friday, March 20, 2015

    2015 Texas Legislature in Session - laws might be changing

    Every other year the Texas legislature meets and votes in new laws.

    The area of family law is impacted every time the TX legislature meets. They always "tweak" some laws.

    So...PLEASE read the date of my blog posts! Laws change. I try to update this blog but my old blog ( is "broken" and I cannot access it any longer -- I cannot delete incorrect or update this old blog.

    If new laws are passed then they usually (not 100% of the time) go into effect September 1st of the odd numbered year (in this case 2015)...

    As each legislative session begins many bills are submitted. Many never make it out of committee. Of the few that make it through the committee process only a few are actually approved by the legislature.

    Be aware that the TX legislature "controls" the Texas Family Code - if you don't like something in the current laws -- unfortunately it is too late to impact the 2015 laws.

    If you want to change TX laws -- you need to begin NOW for the 2017 legislative year. You need to have a legislature write & agree to submit a bill for consideration. This is not easy or a quick process.

    Stay tuned for my comments on the new laws -- we won't know for a few more weeks that actually is revised/changed/new for Texas families...

    Wednesday, March 11, 2015

    Benefits of mediation for minor children

    The Benefits of Mediation for Your Children

    Being involved in a family court dispute is one of the most emotionally draining experiences a person can have, especially if child custody or visitation is involved.  

    During traditional family court litigation, if the parties cannot agree on how to resolve issues involving their children, they are turned over to a judge.   

    After hearing testimony and reviewing evidence, the judge will decide which parent has primary custody of the children and how much the other parent is allowed to see them.

    Using mediation in Texas family court cases allows the parties to maintain control over their dispute.  

    Mediation encourages the parties to create their own settlement.  

    When parents do not have to fight over their children in court, they are less hostile toward each other.  

    Maintaining a peaceful relationship will provide multiple benefits for the entire family.

    When custody or visitation is disputed, the courts often appoint an attorney called attorney ad litem to the case to meet with the children and offer an opinion on these issues to the court.  

    Of course, both parents will be ordered to pay for the attorney ad litem's time. Fees usually start at $500 and can run into the thousands - I've seen some ad litems charge $15,000 for difficult and complex custody cases. 

    If the parents can work out these issues in mediation, their children will not have to meet with a stranger to discuss their relationships, which can often be scary for them.