If you buy or sell fresh produce, it may be a matter of when, not if, you’ll need an attorney familiar with the Perishable Agricultural Commodities Act.
“Everyone in the produce industry needs an attorney at one point or another in their business,” said Jason Klinowski, an agricultural and food law attorney with Chicago-based Freeborn & Peters LLP.
Just about anyone who has been involved in a PACA action will tell you that it’s a good idea to check out PACA attorneys before you need one rather than wait until you find yourself in a potential PACA predicament.
Although failure to pay and commercial collections are the most common scenarios requiring a PACA attorney, there are a plethora of other services he or she can provide.
Issues involving licensing, trademarks for new products, determination of personal liability and wrongful load rejections are some instances when you may need one, Klinowski said.
If you want to grow your business by buying a competitor, you’ll need an attorney who can handle mergers and acquisitions, he added.
A PACA lawyer can make useful suggestions on sales terms and procedures or help PACA licensees who are having difficulties with the U.S. Department of Agriculture, said Ralph Wood of the Law Office of Ralph Wood, White Plains, N.Y.
“Unfamiliarity with USDA regulations can lead to non-compliance issues with serious consequences,” he said. “A PACA lawyer can provide pointers to help keep a PACA licensee out of trouble.”
Dallas-based Bruce W. Akerly, who heads the bankruptcy and creditor’s rights practice group for Cantey Hanger LLP, said he has been contacted by growers, brokers, sellers and buyers regarding a variety of general business transactions, including business formation, tax, credit applications, various contract issues, mediation, employment and immigration, bankruptcy, general collections, customs and transportation issues.
The right stuff
Choosing the right attorney and asking the right questions can make a big difference in how you fare if you’re involved in any legal action.
“The evaluation process is critical,” Klinowski said.
Probably the most important consideration is a lawyer’s familiarity with the produce industry and experience with PACA law.
“PACA practice is a legal niche with relatively few full-time practitioners,” Wood said.
When selecting a lawyer, ask what percentage of the attorney’s practice is PACA related and how many years the attorney has been engaged in PACA-related work, he suggested.
Ask to see sample cases the lawyer has handled, and ask for names of clients you can speak to.
If you have a regular lawyer with access to the databases of federal cases, you can have that attorney do a search for PACA cases in the area where you are looking to retain an attorney, then determine which attorneys did well in those cases, he said.
USDA sometimes provides businesses with the names of PACA attorneys.
Most PACA lawyers are located in key areas of the country – mostly on the West and East coasts, Akerly said.
“Some of these attorneys handle matters throughout the country and engage local counsel with experience in PACA issues,” he said. “I believe it best to locate an attorney nearest to your situation.”
Also, ask about the attorney’s level of experience in the area of the legal issue being addressed, terms of the engagement and how often the attorney will be in communication.
“Some attorneys simply do not communicate well,” Akerly said.
Klinowski emphasized the importance of seeking an attorney who has extensive experience with PACA law – “not just once or twice in a career.”
Rules and procedures are unique when practicing before the USDA, he said, and differ from those in state or federal court.
PACA attorneys should be familiar with the produce industry.
“If you don’t understand what your client does to make a living, you don’t have any business representing that client,” Klinowski said. “You’re going miss something; you’re not going to give the best counsel possible.”
Finally, you should be able to have a personal connection with your attorney.
“Relationships are important,” Klinowski said. When choosing a lawyer try to determine if there is “anything of a personal nature that would be toxic for an attorney-client relationship.”
Make a deal
It’s impossible to say what you’ll pay for the services of a PACA lawyer, but you may be able to work out a deal.
“Flexible fee arrangements are common practice these days,” Akerly said. “It is generally easy to find a fee arrangement to suit the client’s needs.”
Contingency arrangements take the guesswork out of fees, he said. However, any client should be careful when evaluating what legal work will be involved.
“In some situations, because the PACA lawyers knows the area of law so well, they are able to proceed in a fashion that will net them more in a contingent fee than if the matter had been handled on an hourly basis,” Akerly said.
Ask what the case will entail and how much time it might take, he suggests. Then you can estimate the hourly versus contingent fee and make an informed decision.
Hourly rates vary widely in different parts of the country and are based on the level of experience of the attorney, Wood said. They may be recoverable.
It’s important to have the right legal language in your invoice so that you can recover attorney’s fees, Klinowski said.
“We always recover attorney’s fees unless there truly is no money to pay them,” he said. But he added, “If the client doesn’t have a right to recover attorney fees, we can’t create one.”
Klinowski also suggested asking attorneys about ways to reduce costs.
“There are a lot of things law firms can do that don’t necessarily have to be done by your lead trial counsel,” he said, such as research or damage calculations.
That’s one way a fully staffed office may have an advantage over a solo practitioner or two- or three-person staff.
“A larger firm would be able to use professionals with lower hourly rates or paralegals or other non-attorney staff to do some of the sludging through the mud that has to be done but you wouldn’t want to pay an attorney for,” he said.
Klinowski said he meets with clients, discusses the strengths and weaknesses of their cases and talks about what it would cost to meet clients’ goals and how long that would take.
“The risk you’re taking is you get what you pay for,” he said. “That’s very, very true with attorneys. You absolutely get what you pay for.”