The McTexLaw Email Alert for March 15, 2003

New on The McTexLaw Business Owner’s Resource Center:

Asset Protection: A Buy-Sell Agreement in Action

Buy-Sell agreements are different things to different people, because they protect the owners, and business itself, from all sorts of threats. In this very recent Texas case, the Court decided that a business’s fair market value must take into account the terms of a buy-sell agreement, which reduced the value of those businesses from $775,484 to $75,000. To add insult to injury, the issue in this case was to determine the value of community property in a marital estate, so it could be split into two separate property estates via divorce. As a result of these particular buy-sell agreements, Ex-wife “lost” $350,242. What this often means is that the business is saved from having to hemorrhage cash to buy back the portion allocated to a non-owner, be that an ex-spouse or a judgment creditor, cash which is critical to continued operations. Buy-sell agreements are integral parts of your business’s asset protection plan. Click the headline to get the low-down on the hurt these buy-sell agreements caused and how these sorts of agreements protect assets and promote better relations among the owners. R.V.K. v. L.L.K., Case No. 04-01-00345-CV, Texas Court of Appeals, San Antonio, February 28, 2003.

New on The McTexLaw Commercial Real Estate Resource Center:

Easements -- Show me the Money

Easements may sound boring, but in practice, they are anything but. On the one hand, landowners can get money for giving someone an easement. But on the other hand, they can bring on fusses, fights, and heartache, and they can really hurt the landowners. Whoever has an easement can typically do anything on the land in the easement area, as long as what they do is within the terms of the easement, even if it harms the owner who granted the easement. In a recent case by the Texas Supremes, the Court had to decide if an easement for electrical power lines allowed the holder of the easement to run cable TV lines, too. The issue was one of money–does the landowner get paid more money to allow cable TV lines, or does the cable TV provider get to keep that money? Click the headline to follow the money trail in this classic easement dispute. Marcus Cable Associates, LP, v. Krohn, Case No. 01-1291, Texas Supreme Court, decided November 5, 2002.

COMING SOON-THE MCTEXLAW 2003 LEGISLATIVE UPDATE

This month we are beginning a new feature on our website to help you keep up with the lunacy that goes on in Austin during the legislative session. We’re preparing a table of some of the bills filed in the Texas legislature this session that relate to these topics:

Land Use
Construction
Landlord/Tenant
Franchise Taxes
Hunting/Fishing
General Real Estate

and my favorite topic: Legislation Interesting for All the Wrong Reasons.

DISCLAIMER: this table will not be exhaustive of every single bill relating to these topics, but only the subjectively determined list of bills as chosen by Mark McPherson. An exhaustive list at this time would be practically useless, and hopelessly, long.

This table includes the bill number hotlinked to its full text, a brief description, and its status (where it is in the legislative process). Some bills will also have editorial comments by Mark McPherson. So watch your Inbox this week for our announcement once we get this on line, and for future special Email Alerts throughout the session as these bills mutate and move through the legislative process.

If you happen upon a particular bill you would like to suggest I add to my tracking list, please send an Email to brandi@mctexlaw.com.

WOULD YOU WANT GENERATION X-ER’S ON YOUR JURY?

Say you or your company is sued, and the case gets set for a jury trial. You may be surprised to know that many people, lawyers included, think cases are won and lost based on picking the jury. If so, then you would be astounded at the huge amount of dollars some parties spend on experts, just to evaluate a jury panel and advise the lawyer how to make those picks. This is part science, and part educated guess. I’ve been involved in a case where jury selection experts were used, and it is quite amazing to watch.

A recent study by the consulting firm Zagnoli McEvoy Foley, found that, out of age, race, sex, marital status, education and political affiliation, age is the only factor that significantly influences decisions on damages. It also affects decisions on liability. Given that, would it be comforting to look over that picked jury and see a lot of Gen X-ers, or not? Turns out, it depends on where you sit in a dispute, and what the dispute is about.

Gen Xers (born 1966-1976) are difficult to convince on liability, so if you are the defendant and the plaintiff has a case with huge damages but weak on liability, you may want Gen X-ers on the jury. But this would be an all-or-nothing bet, of sorts, because......

If liability is fairly clear, or is determined against you, and the dispute is on damages, you as the defendant may not want them on the jury, because they are more willing to award significantly larger sums of money as damages, particularly damages for lost income. Which leads to the question, how does the generation known for slackers (rightly or wrongly) know what lost wages even look like?

The bottom line is this. A jury trial contains more uncertainty than is apparent. Demographics, backgrounds, and experiences of the people sitting on the jury pool, none of which have to do with the merits of your case, affect the strength and weakness of your case, the very merit of your case. The alternative? Mandatory arbitration of as many possible disputes as possible, which may or may not totally solve this problem. Read the next article for another alternative idea.

A HOLISTIC APPROACH TO ASSET PROTECTION

Perhaps the best asset protection plan would be to move to a place with no, or few, attorneys. Call it a natural remedy, perhaps even holistic. The Texas State Bar recently released a report that tells you how to do just that, and the process can be broken down into a few simple rules:

Rule No. 1: Move away from cities. Although the Lone Star State has 254 counties, 50% of our population lives in a mere 7 counties, which accounts for only 3.2% of the land. Maybe lawyers are co-dependent by nature, because lawyers apparently love to be where the people are. The 7 counties with the most lawyers are:

Harris County with 26.27% of all Texas lawyers
Dallas County with 19.82%
Travis County with 10.6% (yet another price to pay for being the Capital city,
and it gets worse--see ratios below)

Bexar County with 6.58%
Tarrant County with 5.24%
Collin County with 1.59%
El Paso County with 1.58%

That’s 71.68% of all Texas lawyers for 50% of the state’s population in these top 7 counties. Can you say “disproportionate burdens”? I knew you could.

Rule No. 2: Move into less populated counties. Texas’ smallest 20 counties contain 24,024 people, and only 24 of them are lawyers. Eight sparsely populated counties don’t even have one lawyer: Borden, Dickens, Hartley, Kenedy, King, Loving, McMullen, Sherman, and Stonewall counties. These counties have a total of 15,275 residents living in veritable bliss. Until they actually need lawyer, anyway, and then things get sticky.

Perhaps the ultimate test is how many lawyers live among you, no matter how many of “you” there are. Overall, in 1992 Texas had 348 residents for every 1 attorney. In 2001, Regular Texans lost ground, slipping to only 339 regulars per attorney. Here are some of the more interesting 2001 population to attorney ratios:

Travis County: 119 to 1 (the Capital City pays the ultimate price)
Dallas County: 171 to 1
Harris County: 199 to 1
Blanco County: 225 to 1
Potter County: 231 to 1
Kendall County: 254 to 1
Bexar County: 325 to 1
(State average): 339 to 1
Midland County: 345 to 1
Mason County: 346 to 1
Nueces County: 346 to 1
Smith County: 351 to 1
Brewster County: 369 to 1
Jefferson County: 369 to 1
Lubbock County: 384 to 1
Tarrant County: 427 to 1
McLennan County: 440 to 1
Collin County: 513 to 1
El Paso County: 655 to 1
Hidalgo County: 838 to 1
Denton County: 948 to 1

So the next time a local official says they want to create more jobs in your area, you might want to make an extra effort to get those jobs, and reduce your applicable “population to attorney ratio.” Because, you see, a lower ratio is best for me too. And speaking of ratios....

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McTexLaw Email Alerts are original writings of Mark McPherson, principal attorney of the firm.
© 2003, J. Mark McPherson. All rights reserved.