General/Miscellaneous

Preserving Anonymity with LLCs

Preserving Anonymity with LLCs | Andrew Abramowitz, PLLCPresident Trump’s inimitable personal attorney, Michael Cohen, was reported by the Wall Street Journal to have used a Delaware LLC as a vehicle for payment to a porn actress of $130,000 for her silence about an alleged consensual affair with Trump. The purpose of this arrangement, apparently, was to keep Trump’s involvement quiet by using an LLC with a generic name, Essential Consultants LLC, though this goal was undermined by the fact that the publicly-filed Certificate of Formation of that entity was signed by “Michael Cohen, authorized person.” This sort of filing does not need to list any owners, and in practice is usually signed by the person with the law or accounting firm, often a paralegal, that actually prepares the filing at the client’s direction. (It’s amusing that the operation that has the financial wherewithal to pay six figures in hush money is too cheap to pay a law firm three figures to maintain the confidentiality of the principal’s involvement.)

Succeeding in Business by Doing Less

Succeeding in Business by Doing Less | Andrew Abramowitz, PLLCI read with interest an essay in the Wall Street Journal by a management professor, Morten T. Hansen, arguing that the key to success in business is selectivity, i.e., figuring out which tasks were the most important to complete, doing them well, and focusing less on the rest. Workers who take this approach are not the “hardest” workers as commonly understood, usually measured by hours spent, but they are the most effective and ultimately successful. This is an application of Occam’s Razor, which generally states that when assessing two competing theories attempting to explain a problem, the simpler one is usually the right one. Applied in this context, the correct approach to completing business tasks is to simplify the steps.

How to Think about Selecting a Law School

Yale Law SchoolI graduated from law school over 20 years ago and accordingly don’t spend as much time thinking about law school admissions as I did in the past. However, as the parent of a high school senior currently in the throes of the college application process, I’ve recently again been considering the right approach for a student to take while applying to undergraduate and graduate programs. In either case, there are myriad good options to select from, and the thought process used to narrow them down can be scattershot.

When Clients Demand One Person in a Personal Services Firm

Use of Debt Financing by Law FirmsMy wife, Leslie, pursued an entrepreneurial venture mid-career like me, founding Leslie’s Leashes, provider of pet care services like dog walking and sitting to grateful animals on the North Shore of Long Island. There are only so many half-hour time slots for pet visits in a day, especially when everyone wants theirs to be at noon, so Leslie has hired walkers as demand for her services grew. However, some of the more particular clients specifically want Leslie to be the walker.

Non-Attorney Ownership of Law Firms

Non-Attorney Ownership of Law Firms | Andrew Abramowitz, PLLCCarolyn Elefant, writing (sensibly) in Above the Law, argues in favor of loosening restrictions in the U.S. against ownership of law firms by non-attorneys. She focuses on the increasing need for small firms to partner with non-lawyer professionals and how the inability to compensate these professionals by sharing profits makes it unnecessarily difficult to function. Regardless of a firm’s reasons for wanting to bring in non-lawyer equity holders, it’s worth considering the policy rationale underlying the current restrictions.

The general fear is that non-lawyer equity holders would interfere with legal decisions that should be left to the lawyers. This is a reasonable concern. To take a concrete example, suppose I had an outside non-lawyer investor in my firm, and suppose further that I was advising a cash-poor startup company who was negotiating with an outside investor on terms that I found to be inadvisable for the client. Now, it would be in my pure financial interest (short-term anyway) to downplay my concerns and let the client proceed with the investment, since it would mean my firm would get paid. But I’m constrained by ethical obligations that require me to put the client’s interests first. If my firm’s investor, however, became aware of this issue, the investor would be expected to push me to withhold my sound advice to the client.

Making Public Companies More Long Term-Oriented

LTSE Logo: Making Public Companies More Long Term-Oriented | Andrew Abramowitz, PLLC Andrew Ross Sorkin, writing in the New York Times’ DealBook, profiles Long-Term Stock Exchange (LTSE), a new exchange that would impose unusual restrictions on its listed companies:

Among its changes to the ecosystem: the voting rights of investors (the longer you own, the more voting power you have), new disclosure policies (including a moratorium on “guidance”) and a complete rewrite of compensation schemes so that executives truly focus on the long term (it recommends vesting stock over as long as a decade).

LTSE’s rationale is to address the headwinds that have caused the number of public companies to decline significantly in recent years, leading large private company so-called unicorns to remain private, even with multi-billion dollar valuations. These companies fear that, if they became public, they would be forced to take actions to satisfy their overly short term-oriented stockholders, like activist hedge funds. In contrast, companies adhering to the LTSE listing standards would be dominated from a voting power perspective by stockholders who have stuck with the company for a long period and would have executives who are incentivized to stay for a while and not engineer fleeting short-term results to jack up their compensation.

The Limits of Networking

Business professor Adam Grant, writing in the New York Times, argues that business networking activities are overrated. (Grant is the author of Give and Take, one of the rare business advice books that I have actually read. It’s worthwhile.) Formalized networking events, Grant argues, are not only uncomfortable (we knew that already), but they’re ineffectual as a means of building real professional connections. Instead of using networking to seek to achieve things, he contends, we should reverse the order and use our great achievements to build a network.

Why Robots Won’t Replace Lawyers Anytime Soon

Ezra Klein, writing in Vox, argues that at least over the short to medium-term, robots won’t be taking our jobs. Stating that most jobs a hundred years ago involved the production of food and collection of water, he goes on to note that:

Compared to those ancestors, humans today are a massive useless class. What sort of job is “editor of an explanatory journalism web site” next to “farmer”? Would our ancestors value the work of psychologists or customer service representatives or wedding planners or computer coders?

Drug and Alcohol Abuse among Lawyers

Drug and Alcohol Abuse among Lawyers | Andrew Abramowitz, PLLCEilene Zimmerman, whose ex-husband Peter died of a drug overdose, published an arresting account of his descent into addiction. Peter was a patent attorney at Wilson Sonsini, and Zimmerman ties Peter’s story to a larger problem of drug and alcohol abuse in the legal profession. While I haven’t witnessed much of this problem firsthand in my interactions with other attorneys, the problem identified by the article is that the culture at law firms leads attorneys to hide signs of weakness, so it’s not surprising that I haven’t seen it.

Pop-Up Organizations

The New York Times writes about the rise of “pop-up” employers, essentially temporary organizations that are organized for a specific project and then go away. As the article notes, certain types of activities have been organized in this manner for a long time – Hollywood productions and political campaigns, for example. What’s changed recently is the exponential improvement in technology that can match people to tasks efficiently, allowing even complex organizations in many different industries to be created quickly.

I believe this approach could be employed in the provision of legal services. Currently, only large law firms can efficiently handle projects requiring the involvement of more than a few attorneys. But it’s not hard to imagine a portal that can be used to identify a team of attorneys to work on, say, an M&A transaction (senior and junior corporate people, tax, benefits, etc.). Of course, this sort of arrangement would have to be harmonized with existing rules for attorney client relationships (i.e., does the client engage the portal or each of the individual attorneys? How are conflicts handled?). As I’ve written about recently, my firm has joined a network of solo and small firms, and this sort of arrangement has the potential for being the basis for pop-up teams of attorneys. …