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What is preferred stock? Why is it preferred? How does it differ from other forms of stock? This article answers all these questions and explains some of the typical uses of preferred stock, some common preferences which make...
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Contracts often require a certain party to use its "best efforts" either as a condition to performance or as part of performance. What does this mean? This article reviews a recent California court case which defined how California courts...
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Accelerators provide a suite of services (and, importantly, capital) to startups in exchange for equity in the nascent enterprise. This article points to a recent Wall Street Journal article questioning the value most accelerators add to...
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Can a minor form a corporation? The answer to this question is detailed in this article; as with so much in the law, the answer is "it depends." Specifically, it depends on the state in which a minor is trying to incorporate. The...
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This article pulls out the most salient points from an article in the Wall Street Journal which provided advice for the "friends and family" round of financing. The common theme of the tips is to avoid foolish mistakes just because the...
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If you incorporate your business in one state but do most of your business in another, which state's corporate law applies? This article notes a feature in California's corporate law which causes certain provisions of the California...
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As this article points out, royalty provisions are common to agreements wherein intellectual property is licensed. Of course, this raises an issue--how can the licensor ensure that they receive the full royalty payment to which they are...
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Some individuals and businesses offer to locate venture capital investors willing to put money into startups; these individuals and businesses often do this in exchange for an equity stake in the business in question, and are called finders. ...
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This article relates to an executive compensation problem. Specifically, an offer letter promised an incoming executive a certain number of stock options, but the offeror's board did not approve the grant. What can the executive do? ...
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This article analyzes the motivations which might cause one party to a contract to ask for a choice of law clause which indicates that New York's state laws will govern that contract. Neither party to the contract being a resident of...
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This article contributes to the analysis elsewhere on the internet about whether equity crowdfunding is desirable or not, and, if it is, what form an exemption for crowdfunding should take. The pros and cons of allowing crowdfunding are...
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Observing corporate formalities is important for maintenance of the corporate form; however, in some circumstances, the observation of these formalities can border on the absurd. This article tackles one such situation with potential for...
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This article reviews a recent study which analyzed both the amount of dollars funded and number of deals made by angel investor groups over a recent period. According to this article, the deal activity centered in California is still highly...
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You (or someone working for your business) sends a text message; the text message contains an original idea which you think can make some money. Who owns the text message? This article reviews copyright law, wireless carriers' terms of...
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Many employment attorneys advise that businesses maintain and follow an employee handbook? How does this help a business? An even more basic question is, what exactly is an employee handbook? This article answers both of the...
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One reason why lawyers are valuable when negotiating contracts is that they can keep horribly one-sided terms out of those contracts. This article begins a series looking at those one-sided terms, with a highlight on a provision which...
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This article reviews a recent California court decision stemming from the financial crisis which finds a difference in the protections available to directors and officers of California corporations. The article explains how directors of...
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Reverse vesting is a variant on vesting incentive stock options. This article tackles the question of how one can set up reverse vesting in an LLC structure. The article explains why such a structure is extremely uncommon (at a minimum),...
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The Uniform Domain Name Dispute Resolution Policy (UDRP) provides one way for a business to defeat a cybersquatter and gain control of a domain name which should be theirs. However, as this article details, invoking UDRP does not guarantee you...
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Modern corporate law has seen an increase in the number of available corporate forms. Before the creation of legal entities such as the LLC and the LLP, many ventures were formed as general partnerships; today, relatively few are. This...
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Angel investors have long been a source of much-needed capital for startups and early-stage businesses. However, as this article explains, recent trends show that entrepreneurs need to work harder and harder to convince angel investors to put...
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This article reviews a situation facing a new client, who is one of three inventors holding a patent and wants to license that patent to an LLC owned by some (but not all) of the inventors. As the article explains, the inventor is free to do...
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While not necessarily a follow-up, this article does consider a corollary to an earlier article about negotiating tips. This article asks what to do when the other side negotiates too aggressively (by, for example, sending over a term sheet...
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Part of a business lawyer's job can be described as "professional negotiator." While businesspeople have final say on the substantive terms of a transaction, an experienced business lawyer will likely have negotiated more deals than they can...
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A letter of intent is often a precursor to a full-blown, legally-binding contract. So what is a letter of intent? What differentiates a letter of intent from an executed contract? Which provisions in a letter of intent are legally...
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Practitioners (and others) who advocate the benefits of arbitration (when compared with litigation) often do so because they think it is quicker and cheaper than litigation. This article explains why this commonly held belief is not...
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Many employers put new employees on a limited probationary period, during which their performance is reviewed to determine whether or not the employer will retain them for a longer period. Although this practice facially seems advantageous to...
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This article addresses a common dilemma facing startups--the founder wants to invest more of their own money into the corporation, but does not want to risk losing the corporation's limited liability protection. The answers presented in this...
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More in the nature of "startup advice" than "startup law", this article highlights the rise of shared workspaces. It explains how these shared workspaces can benefit both startups (it's more than just lower rent) and landlords (who are facing...
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Dana Shultz answers a question which, as he notes, is somewhat commonly asked in the southwestern United States--can an undocumented immigrant form a corporation? He points out that the answer to this is straightforward (yes, they can), but...
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Legends on share certificates inform the holder of the shares represented by the certificate of certain restrictions to their ability to do certain things with the shares. In this article, Dana Shultz explains how and where these legends need...
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Where to incorporate is one of the first important decisions facing an entrepreneur. In this article, Dana Shultz outlines his approach to answering this question along with a couple of more traditional alternatives.
- Summary by FizzLaw Team
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Dana Shultz tells what he finds the most important factors to consider when answering the often asked question, "should I form a limited liability company (LLC) or corporation?"
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A fixed fee of $1,500 includes the following:
Preparation and filing of Articles of Organization
Preparation of Operating Agreement (including membership-transfer restrictions and buy-sell provisions)
LLC records book, seal and membership...
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A fixed fee of $2,000 includes the following:
Preparation and filing of Articles of Incorporation
Preparation of Action of Incorporator, Bylaws, and Minutes of Initial Board Meeting
Corporate records book, seal and share...
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Dana Shultz explains what two recent federal cases mean for Internet-based service providers in terms of their liability for content that is user-provided. Both cases refused to hold the online video-sharing website liable for copyright...
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While some believe that a new company will encounter serious, debilitating issues if it has more than two founders, Dana Shultz suggests that these issues can be avoided with some extra care given to arranging control and financial issues from the...
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Dana Shultz explains why giving stock as compensation can be an attractive method for early-stage companies lacking cash but warns that giving stock as compensation without putting restrictions on it can take away from the utility of the strategy. He...
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Dana Shultz identifies ways that lawyers can help reduce the likelihood that their small business clients will be surprised, or suffer "sticker-shock", at the amounts of fees owed. Business owners can request greater transparency and more accurate...