The most buzz-inducing SEC filing last week (this is a relative statement, of course) was this Form S-1 filed by Fantex, Inc., seeking to register what has become known as the “Arian Foster IPO.” Foster is an accomplished running back for the NFL’s Houston Texans. The deal, in essence, is that investors will (through Fantex) be paying Foster $10 million now in exchange for 20% of his NFL-related earnings, including endorsements, coaching and broadcasting, going forward for his lifetime. So, based on those numbers, if and when Foster’s aggregate earnings from now on exceed $50 million, investors will make a profit on the investment. Fantex views this as the first of several athlete-related offerings. There has been some ridicule about the concept in the popular press, with much focus on the risks (not helped by Foster’s hamstring pull in the first game after the S-1 filing), though like most investments in individual stocks, it’s a high risk, high reward proposition.
In choosing which law firm to engage for your transactional matter, one threshold determination to make is whether to use a large or small firm, or something in between. Needless to say, I’m not disinterested on this point. The way I market my firm to potential clients inevitably portrays larger firms as not worth the cost – at least with respect to the types of matters I handle. But I spent most of my career in big firms, and there are absolutely transactions that lend themselves to the resources that a “name” firm can bring to the table.
Businesses organized as LLCs, just like with corporations, often find it advisable to form multiple LLCs to cover different lines of business to keep liabilities associated with one business isolated from the others. However, the formation of multiple entities increases the business’s administrative costs. For each new entity, there are filing fees and then ongoing franchise taxes with the state of organization and other states in which the company does business, separate tax returns, etc., so the business has to weigh these costs against the benefits of asset protection before making the decision to form new entities.
One of the provisions of the JOBS Act that has many in the investment community excited is the new crowdfunding exemption to the registration requirements. When effective, these offerings will permit sales of securities to anyone – not just accredited investors – for up to $1 million in the aggregate in each 12 month period. This represents a radical democratization of private offerings, which currently are, for the most part, marketed just to the wealthy. The SEC, however, does not share the private sector’s enthusiasm and has seemingly been slow-walking its efforts to enact rules that are required before these offerings can be introduced.
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…]