Andrew Abramowitz

Interesting Legal Reads of the Week

Some interesting legal reads for the week of May 26, 2014:

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Term Sheets and Letters of Intent

Particularly for complex and important transactions in a company’s life-cycle – mergers and acquisitions, institutional funding rounds, joint ventures, etc. – it’s typical that the transaction process start with the preparation of a non-binding (usually) term sheet or letter of intent.  These documents are no more than a few pages long and are more informally drafted than definitive agreements.  The purpose is to set forth just the big picture terms of the deal.  For example, a term sheet for an investment round would list the amount being raised, type of security, price per share/unit and various terms of the security (e.g., dividends, management rights, transfer restrictions).  But it would not get into, for example, detailing the company representations about its business that will eventually be contained in the definitive purchase agreement.

There are some attorneys who think that the term sheet/LOI is a wasted step and that the parties should proceed immediately to drafting definitive documentation if they are interested, but I think it’s useful for everyone involved to get the most important substantive terms out on paper and make sure the parties have a meeting of the minds about them before getting lost in the weeds of negotiating the provisions of definitive agreements.  This is not to say that those provisions aren’t important, but the more open issues there are at a particular time, the more likely it is that the parties will get sidetracked and lose sight of the important parts of the deal.

I mentioned earlier that most term sheets and LOIs are non-binding.  Even so, there are typically provisions within the document that are expressly binding, just not the core business terms of the deal that are subject to further negotiation.  Terms that are typically binding include confidentiality, governing law and (if applicable) exclusivity provisions.  There are some cases, however, where the whole term sheet or LOI is stated to be binding, often when the parties want to start business activities right away, though there are still provisions detailing how the parties will go on to draft and negotiate definitive agreements.

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Interesting Legal Reads for the Week of May 19

Some interesting legal reads for the week of May 19, 2014:

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Can Employee Autonomy Initiatives Be Implemented in Big Law?

This Slate.com article profiles an experiment undertaken at the electronics retailer Best Buy, where “knowledge workers” (i.e., not the sales associates that deal directly with the public) were managed under a Results-Only Work Environment, or ROWE.  There are details in the article, but essentially the workers were granted complete autonomy on how they did their jobs – whether they worked in the office or from home, whether or not they attended meetings, etc. – and they were judged purely on results, such as an increase of sales, or whatever metric is appropriate for the particular worker.

employee autonomyAlthough there are good and bad ways to implement such a plan, I broadly agree with the proposition that improving employees’ sense of autonomy will maximize performance (as well as happiness).  However, I don’t believe that most of my former large law firm colleagues share that view.  Unless there has been a sea change in attitudes over the four years since I left that world, that particular workplace is likely to be highly resistant to ROWE-like initiatives.

Even though the majority of work that a typical large firm attorney does (even the litigators) can be done anywhere – emails, phone calls and drafting/writing – there is a culture of judging attorneys based on their physical presence at the office at particular times, i.e., an emphasis on face time.  And this has remained the case long after technology has made it possible to work remotely.  An oddity of the New York law firm version of face time is that far more attention is paid to the hour at which an attorney leaves than when he or she arrives, so whether you arrive at 7am or 10am is far less important than whether you leave at 7pm or 10pm.  I recall many interviews at firms in which the interviewer would say things like “Oh, there’s no face time here.  People can leave at 7pm.”  Contrary to the interviewer’s statement, there is very much face time judgment involved at such a firm: if you left the office at 4pm to get home for your kid’s little league game, and then caught up on work at home from 7pm to 10pm, you’re a slacker.  Again, I hope for the sake of those currently working at large firms that there has been some change along with how society has evolved generally, but it wouldn’t surprise me if big law remains a big holdout on these issues.

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Interesting Reads of the Week

Some interesting legal reads for the week of May 12, 2014:

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Is Entrepreneurial Activity in Permanent Decline?

This article from vox.com highlights a new Brookings Institution study detailing a longstanding decline in startup activity in the U.S., as measured by the share of all businesses that are one year old or younger.  The question for me is whether this is a permanent state of affairs, with basically all business activity destined to be done via large and established institutions, or whether the U.S. can be expected to regain its entrepreneurial spirit, which has propelled its success in the past.  I think the latter is the case, though admittedly this may be a case of wishful thinking, since increased startup activity would be good for my business.  The following are some factors that could increase entrepreneurial activity in the coming years: …

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Interesting Legal Reads for the Week of May 5, 2014

Interesting Legal Reads for the Week of May 5, 2014 Read More »

The Latest from the SEC on Private Offering Regulation

Keith F. Higgins, the Director of the Division of Corporation Finance at the SEC, recently spoke at the 2014 Angel Capital Association Summit.  His speech came in the midst of much JOBS Act rulemaking that I’ve blogged about frequently, and his remarks provide some useful insight into what the SEC is thinking about these days, although he includes the standard disclaimer that he’s speaking for himself and not the whole agency.  In particular, I thought the following topics that he covered were worthy of note: …

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Interesting Reads for the Week of April 21

Some interesting legal reads for the week of April 21, 2014:

Leonard M. Rosen, founder of Wachtell Lipton
Leonard M. Rosen, founder of Wachtell Lipton
  • A nice obit in the Wall Street Journal for Leonard Rosen, one of the founders of Wachtell Lipton, whose son Adam is a neighbor and friend.  I met Leonard a couple of times, once on a beach in Florida, where he spent about 20 minutes playing catch with my son.  Great guy and great lawyer, who will be missed.

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Income Share Agreements

I blogged last year about an IPO for a football player – the public offering of a share of the right to receive 20% of Arian Foster’s future football-related income.  There is a movement afoot now to introduce this concept in a much broader way:  the sale of a share of future earnings as a means for college students to finance their education, as an alternative to incurring student debt.  The current state of affairs is summarized in this Slate article. …

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