In my post on emailing vs. phone calls, which laid out some advantages of communicating by email, I didn’t address one thing that many people hate about email, which is that it can at times seem impossible to keep up with the volume of incoming messages. Unfortunately from an attorney’s perspective, if you miss a deadline because you lose track of an email, it won’t fly to complain to your client that you get 500 (or whatever) emails a day. Regardless of whether law school lasts for three years or two, as President Obama would have it, there is little to no attention paid there to such mundane issues as email management, though this ends up being crucial to being a reliable attorney, which is a prerequisite to being a successful attorney. [Read more…]
In my earlier post on the liberalization of general solicitation and advertising in Rule 506 offerings (to be effective September 23, 2013), I briefly mentioned the more stringent requirement, when general solicitation or advertising is used, for verifying each investor’s status as an “accredited investor.” I’d like to get into more detail about what that entails.
Current practice is for companies conducting Rule 506 offerings to have prospective investors check a box on a simple accredited investor questionnaire, and that is generally sufficient to establish the investor’s accredited investor status without further investigation by the company. Going forward, Rule 506 offerings that are not accompanied by general solicitation or advertising will continue to operate in the same manner. However, when general solicitation or advertising is used, the company must take “reasonable steps” to verify each investor’s accredited investor status. This is a “principles-based” standard that is dependent on the facts and circumstances of the investors and the offering, but clearly a checked box on a questionnaire will not suffice.
A near-constant theme in my interactions with clients and other attorneys is the relative merits of various modes of communication — email, phone or in-person meetings. After a long email chain, someone will get frustrated and say, “Why don’t we just get on the phone and figure this out?” But those same people will, on another occasion, dial into a conference call, quickly get bored, and hone their skills at computer Solitaire.
In preparing a stockholder agreement or operating agreement for a startup (for a corporation or LLC, respectively) with multiple owners, the section of the agreement that generally requires the most thought and discussion with the client relates to share transfers. While it’s possible to punt on all of these questions by having the agreement simply say that no transfers are permitted except as may be agreed by the owners, it’s advisable to at least consider the various scenarios and include appropriate provisions in the agreement. The following are some common ones:
- Permitted Transferees – Share transfers may be made to related persons (like a trust for the benefit of a family member) without consent of the company or other owners.
- Right of First Refusal/Offer – With a right of first refusal (ROFR), if an owner receives an offer from a third party to purchase the owner’s shares, the owner must first offer to sell the shares to the company or existing owners on the same terms. A right of first offer (ROFO) requires the owner to first solicit offers from the company or existing owners, and then the owner can sell to a third party if a deal is not reached. [Read more…]
The best attorney mentors I had in my early years of practice emphasized that law is a service business. Attending to the basics like responding promptly to emails and calls is at least as important, to this way of thinking, as being able to come up with an ingeniously complicated transaction structure. While I therefore have a “the customer is always right” orientation, I’d be lying if I said that it doesn’t matter whether the client was similarly responsive, organized, etc. With that in mind, here are a few tips for how clients can make the attorney-client relationship run smoothly: