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 Corporate Law Frequently Asked Questions Q. I do not want to pay legal fees for things I think I probably do not need at this time, so why should I consult a lawyer now? A. Until you talk to a good attorney, you will not be fully aware of the different issues and risks you should consider. Our initial consultation with a potential client is always free of charge and I never advise clients to do any thing that is not cost-effective. You should view that initial consultation as an opportunity to learn more about matters that may significantly impact you or your business. You can then make an informed decision about how best to proceed. Remember the old saying, “if you fail to plan, you plan to fail.” Q. My business is just starting up. Why should I spend money on legal matters at this early stage? A. Spending a relatively small amount of money early for good legal advice can save thousands and even millions of dollars down the road. Clients often come to me after they are in the middle of a costly legal problem and almost all of those problems could have been either completely avoided or greatly reduced if they had talked to a good attorney earlier and spent a reasonable amount to have that attorney prepare appropriate documents. Good legal and accounting advice at the early stages of forming and growing a business can often also result in significant tax savings and reduced personal liability risks. Q. What type of legal entity should I form for my business? A. The common forms of legal entities for businesses include corporations (both C corporation and S corporations for tax purposes), general partnerships, limited partnerships and limited liability companies. Each one has certain advantages and disadvantages. Corporations, limited partnerships and limited liability companies provide limited liability protection for the business owners (in the case of a limited partnership, only the limited partners have that protection). Which entity is best for your business will depend on your own circumstances such as the type of business you will operate, the number of owners in the business, how the business will be managed and your plans for the future. Q. How do I protect my intellectual property? A. Intellectual property (“IP”) protection largely depends on the type of IP that needs to be protected. Marks such as “Nike” and “Pepsi” are protected as trademarks. Inventions such as a unique machine for making golf balls or a drug formula can be protected by patents. Books, music, films and similar works are protected by copyrights. Other forms of IP or proprietary information can be protected with confidentiality agreements or by laws that prohibit unfair competition. We frequently help my clients protect their IP so that their businesses can be more competitive and successful. The exact type of protection to seek largely depends on the type and value of the IP in question, but suitable protection often requires making appropriate filings with the United States Patent and Trademark Office or the United States Copyright Office. International IP protection may also be needed if you plan to use the IP outside of the United States or want to prevent others from being able to do so. Q. I am considering selling or buying a business, do you advise clients on such matters? A. Yes, we have advised individuals, private companies and large public corporations on buying and selling businesses in a wide variety of transactions ranging from a few hundred thousand dollars to hundreds of millions of dollars in value. As in all business transactions, intelligent planning and well drafted agreements can save large amounts of money and avoid significant disputes down the road. Often, the other party to a deal will propose a complex structure for the transaction and claim that it is a “win/win” arrangement for both sides. You should consult with an experienced transactional attorney to determine if that supposed “win/win” is not really “they win/you lose.” Q. I am considering selling stock or issuing stock options in my company, are there any legal issues that I need to consider? A. Selling stock or issuing stock options raises a number of federal and state securities law concerns. There are basically only three types of stock offerings: registered (as in a registered public offering like an IPO), exempt (as in a private offering exempt from registration) and illegal (as in significant potential civil and criminal penalties for the sellers). If you want to sell stock, you should consult an experienced corporate and securities law attorney to make sure that you comply with all applicable laws. There are a number of exemptions available for private stock offerings, but you need to be careful. If a private offering does not comply with all the requirements for one of more of those exemptions, the buyers could bring an action to recover the price they paid for the stock and the sellers could be subject to civil and criminal penalties. There are also strict disclosure requirements for stock sales and sellers generally must disclose all “material” information to potential buyers. Q. I have a dispute or potential dispute with one of the co-owners/partners in my business, can you help me resolve it? A. Yes, we frequently advise clients on how to efficiently and favorably resolve disputes with their business co-owners/partners. If it is possible, we work to resolve such disputes without the need for potentially costly and uncertain litigation. Such disputes can often be resolved by entering into a new agreement for the management and operation of the business, buying out the other owner or liquidating and dissolving the company. Please contact us to discuss your needs at no cost for an initial consultation. |
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