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To quote General Norman Schwarzkopf, "The difference between conducting music and troops, is that in war the orchestra starts playing, and some son of a [gun] climbs out of the orchestra pit with a bayonet and starts chasing you around the stage." It's the same in a legal battle. The one pursuing the opponent often ends up more bloody than the one he is pursuing.

Here is a list of reasons why lawsuits don't pay:

1. The plaintiff (the one suing) is digging a financial hole for himself due to the high legal fees. Since the US does not have a loser-pays legal system, that financial hole would have to be re-filled back to zero before any financial gain is realized. So, suing is putting oneself at a financial disadvantage from the beginning.
2. The defendant (the one being sued) is also digging a financial hole for himself because he will also incur legal fees. This means that the defendant will have less money to pay the plaintiff even if a lawsuit is successful for the plaintiff. So, both sides end up below ground zero.
3. The defendant may not actually have the money the plaintiff is seeking.
4. The defendant will likely do all that is within his power to keep the money from the plaintiff through spending, hiding, protecting, bankruptcy, etc.
5. Plaintiffs tend to be so convinced they are right they are often blind to the possibility of opposing arguments. Believe it or not, the defendant may have a much better argument that would be much more convincing to a judge.
6. Lawsuits are extremely distracting and time-consuming, zapping one of creative energy required to run and operate a business at peak effectiveness. Ever been in a 6-hour deposition? Ever have to answer a 35 page interrogatory and be required to provide a multitude of documents? Then you know what we are talking about.
7. Strong force meets strong opposition. When someone feels forced to pay someone else money, there is a natural tendency for fierce opposition and lack of cooperation from the opposing party. Alternative dispute resolution tends to be more effective, and less costly generating much more favorable results for both parties.

Alternative Dispute Resolution

1. Call the opposing party. You may be surprised with how far you get. Both parties want to avoid lawsuits, so get on the telephone or set up a meeting and express your views to each other and come to an agreement. If the other party won't take your call, pass a message along that you would like to get things resolved without a lawsuit. Incidentally, attorneys will often discourage people from calling the other party. This is often because they know if the parties can reach a favorable solution, their services will not be needed.
2. Get a mediator. Rather than filing a lawsuit, give the other party a chance to meet with you and a mediator. You'll likely want to bring an attorney along to the mediation. You don't want to spend $100,000 in legal fees only to be surprised that the other side has more convincing evidence than you do.

Asset protection privacy - Wyoming has the only corporations in the US that can have a name identical to a person's.

For example, you can name your corporation "John Smith" or George Jones" and need not have the corporate identifier, e.g. "Inc." or "Corporation" at the end of the name.

This allows a person to deposit and cash checks written to them. For example, if someone is being sued and has their personal checking account subpoenead by the suing party, the checks deposited in the company account may remain private, whereas personal account details can be divulged.

You own 49.999% of the shares in the corporation and issue the rest to a trusted friend or family member for maximum protection and privacy. For example: if someone else besides Randy owns / controls the company that account - the account for Randy Jones, the company, can be protected from subpoena against Randy Jones the person. All other states require a corporate identifier next to the entity name, e.g. "Corp", "Inc", etc. Wyoming has opened new doors to financial protection and privacy without this requirement.

One such example is the limited liability company. There are provisions in LLC laws of each state such that when you are sued personally, and you are a member of an LLC, assets held inside of the LLC can be shielded from being taken from you.

When an opponent obtains a judgment against you, the judgment is generally a legal document to pay money to another party. The other party can seize many of the assets you hold directly. This may include money in a bank account, vehicles, homes, etc.

However, when assets are held in an LLC, legal provisions can protect the assets held inside of the company. The judgment creditor may obtain a charging order. The charging order says that money paid to members of the LLC can be seized by the creditor. Since you are in the driver’s seat of the LLC, you will simply let the profits pile up in the LLC. So, if you decide not to distribute LLC profits, they remain inside the LLC. Revenue Ruling 77-137 says that whoever has the right to receive the profits, if they were distributed, is required to pay the taxes on those profits whether distributed or not.

What this means is that your judgment creditor will get a tax bill but no money. Let’s say that another way: Your judgment creditor will receive a tax bill from his share of the LLC profits but – because you will decide to leave the profits in your LLC – he will not receive an actual distribution of the profits.

The limited liability company is one of many asset protection tools. The Cook Islands Trust is another tool for advanced asset protection needs.

The more assets you have, the more you want to protect them. We're discussing liquid asset protection and when to go offshore and when not to. Obviously offshore asset protection is more comprehensive as well as expensive, however holding liquid assets in excess of $100,000 offshore vehicles come highly recommended. Naturally, not everybody is looking to protect large sums of liquid assets, so we offer domestic vehicles that keep things simple while providing a great deal of protection.

In order to determine exactly what is right for you, your creditors should be taken into consideration when forming your asset protection plan, strong creditors require stronger protection. Before you weigh the pros and cons, just keep in mind that any asset protection plan is going to require maintenance, so choosing the correct route should be done with a qualified individual or professional. We offer office programs, filing and privacy services in all 50 states and all favorable asset protection jurisdictions that help you maintain your privacy, corporate compliance and regulatory needs.

One of our clients delivered a testimony in a lawsuit that had a lot riding on the case. His testimony swayed the verdict in favor of the defendant. The next thing he got in the mail was a lawsuit from the same law firm that represented the plaintiff in case where he testified. The lawyers are able to sue at no cost to them with minimal time invested, making it very expensive to defend against. The same lawyer delivered a volley of lawsuits, through the next 20 years, peppering him with documents in the mail that required his attention and money to respond to.

We set up a Cook Islands trust and Nevis LLC. In his case he just let the lawyer know that he had this in place and that no matter what happened the attorney could not get his money. The attorney gave up after 20 years of suing.

What this means is that your trust is written with instructions that clearly state the trustees duties as LLC manager, such as acceptable payees or overseeing the LLC checking account for operational and business expenses that have to be paid while you defend yourself in a lawsuit. Your trustee steps in as acting manager of the LLC and ensures timely attention to business and financial matters as instructed by your trust provisions.

Offshore Trust Protectors

The whole reason for creating offshore asset protection is to place your assets inside favorable legal jurisdictions. Naturally, your trust protector and trustee should not be subject to US court rulings. A trust protector is one more tool that can be implemented for even more flexibility. You can specify duties and responsibilities of your trust protector in the same fashion for your trustee. Trustees are selected by you, licensed and bonded trust companies provide trustee services for asset protection trusts. You can write your provisions so that you feel most comfortable with your asset protection plan and management model. This requires the counseling from a professional and should be undertaken carefully with sound advice.

Here's an example using an offshore asset protection trust that owns 100% of an offshore limited liability company.

The key elements here are shown above.

1. An offshore asset protection trust with an offshore trustee and a trust protector that you choose
2. an offshore limited liability company that is 100% owned by the trust
3. A company manager - this can be you before legal duress arises

The trust provisions are setup to protect your assets. During times of no legal duress, you are the non-interest holding manager of the LLC, that owns and controls all of your assets. You manage the company until you are under legal duress, when your trust provision kicks in and removes you from your management position and appoints the trustee. When you are no longer under legal duress, you are appointed back into the management position by the trust provisions.

The mechanics here are simple, the trust owns 100% interest in the LLC, you manage (control) the LLC that owns your assets. This is a transfer of a management position within a company, so fraudulent transfer doesn't apply. If you are under legal duress to surrender the assets of the limited liability company, the trustee is forced (under your trust provisions) to remove you from the company.