Andrew Abramowitz

Division of Labor Between Law Firms and Corporate Services Companies

Attorney Productivity | Andrew AbramowitzWhen I am estimating costs for a project for prospective clients, particularly those new to the formation of business entities and deal-doing, a common source of confusion is why there needs to be a fee paid to my law firm as well as to a corporate service company like CT Corporation or CSC. So, I thought it would be useful to briefly outline the different roles that each of us plays in the creation and maintenance of entities.

Billions and Keeping Control of Your Business

I am very much a member of the target audience of Billions, the Showtime drama about the intersection of law and finance in New York. As a corporate lawyer with the professional background to decipher at least some of the dense jargon, I sometimes have to suspend disbelief at the plot twists, including a U.S. Attorney who doesn’t recuse himself from a criminal investigation of a hedge fund that employs his wife, as well as a coordinated FBI mass arrest of politicians at a funeral service.

Pushing Back Against the SEC on Finders Rules

Legal Referrals | A. Abramowitz | NYC

As I’ve blogged about in the past, the SEC in recent years has taken a relatively strict position against payments to “finders” who are not registered broker-dealers, as compensation for introducing investors to companies. The SEC’s focus has primarily been on “transaction-based compensation,” i.e., payment to the finder that is contingent on investment by the introduced investor, which according to the SEC is a hallmark of broker-like activity that requires registration.

Early Payment Discounts for Law Firms

So, the good news for the law firm of Andrew Abramowitz, PLLC is that business has increased steadily over the past few years. The bad news is that there has been somewhat of a greater tendency among clients to be slow in paying invoices. There is a hassle factor associated with this, as it requires frequent follow-up, but the real issue, as anyone who runs a small business will know, is that lumpy income creates financial challenges. My firm has regular expenses that can’t be contingent on the timing of my clients’ payments, and the owner of the firm (yours truly) has personal expenses that are equally not capable of being deferred while I wait for payment. (All of this sounds very self-pitying, but I’ll get to the point soon. I’ve been very fortunate in life and cannot complain.)

At-the-Market (ATM) Offerings

At-the-Market (ATM) Offerings | Andrew Abramowitz, PLLCBloomberg Law’s Corporate Transactions Blog recently posted an item entitled “At the Market Offerings are Again Wildly Popular.” (I should note that I am in favor of trying to spice up securities law articles by using words like “wildly,” though if we’re being honest, there is nothing remotely wild described in that article, or this one either.) ATM offerings are a way for already-public companies to raise further capital by selling newly issued shares. They are particularly popular among life sciences companies, which often need to continually raise capital for research and regulatory clearance efforts before having significant revenue with which to fund those activities.

Should Aspiring Lawyers Take Career Advice from Older Lawyers?

Should Aspiring Lawyers Take Career Advice from Older Lawyers?On Twitter recently, a journalist asked for suggestions from other journalists on what advice one should give to college students looking to pursue that field. The TV critic Emily Nussbaum replied “I tell them not to take advice from anyone over 50, bc the industry has changed so much that our career paths aren’t replicable and our advice doesn’t match the landscape.” Is the same true for established lawyers advising students considering law as a career? (If true, I have about a year and a half left, as of this writing, in which I am capable of providing relevant and useful guidance to the young.)

Theranos and Giving Thought to Board Composition

Theranos and Giving Thought to Board CompositionOver the holidays, I finally got around to reading Bad Blood, the story of the rise and fall of the blood testing startup Theranos and its founder, Elizabeth Holmes, written by the Wall Street Journal investigative reporter, John Carreyrou, who broke the story that led to the company’s downfall. I cannot recommend the book more highly. However, you’re not here for book reviews, so let’s move on.

The SEC is Enforcing Accredited Investor Verification Rules

The SEC is Enforcing Accredited Investor Verification RulesThe SEC recently brought an enforcement action against a fund investing in digital assets for a failure to register a sale of securities under Section 5 of the Securities Act. The fund had filed a Form D with the SEC that, in itself, offers no clue as to what went wrong. The form reports the sale of fund interests under the exemption provided by Rule 506(b) of Regulation D. This is the common exemption used for private placements of securities, and by complying with the applicable rules under Regulation D, there would be a safe harbor protecting the issuer against a registration violation.

Reluctance to Engage in Accredited Investor Verification

Reluctance to Engage in Accredited Investor Verification | Andrew Abramowitz, PLLCRule 506(c), the provision arising out of the JOBS Act that enables companies to raise capital using general solicitation and advertising while still being exempt from SEC registration requirements, has always had the potential to revolutionize the capital raising process. With the ability of companies to connect easily with potential investors anywhere via the internet and social media, one could imagine a world where this supplants private placements under Rule 506(b), in which the investor base is, by definition, limited based on existing relationships with the company or its broker-dealer. While the use of Rule 506(c) has grown since enactment, it has nowhere near the usage rate of Rule 506(b). In 2017, Rule 506(c) offerings represented only 4% in dollar amount of all Regulation D offerings.

Recognizing and Combatting Strategic Umbrage in Negotiations

Recognizing and Combatting Strategic Umbrage in NegotiationsIn a recent transaction that I worked on – obviously, I can’t give too much detail to protect client confidentiality – I noticed a weird dynamic. In a typical negotiation, when the lawyers from each side are speaking without the principals present, there is some degree of emotional detachment from the ultimate outcome, even though each attorney knows his or her role is to represent the client’s interest. Lawyers will say, for example, that it’s not worth continuing to argue about a particular bone of contention because it is a “business issue” that needs to be worked out by the principals. However, in this transaction, the other attorney, though he was unfailingly polite and even-keeled, would make fairly routine requests from our side seem thoroughly unreasonable, putting me on the defensive.