When you are starting a business, it can be overwhelming trying to keep track of everything that you have to do to protect your business and operate legally. From incorporating and getting a business license to make the best tax election and properly protect your intellectual property, it can be hard to determine what is really necessary and prioritize your business’s most urgent needs. One thing that you have likely heard about is trademark protection. And you may wonder when is the best time to get a trademark? Do you need a trademark? Or do you really need copyrights? Do venture capital (VC) firms care about trademarks?  

In this post, we will explore what a trademark is and whether you may benefit from having one. If you have specific questions about your brand or business it is always a good idea to consult with an attorney directly. 

What is a Trademark?

A Trademark provides legal protection for anything that identifies your brand. This may be a word, name, or design, such as a logo. Anything that can be used to identify your brand to consumers can be protected by a trademark. Trademark law recognizes the importance of brand loyalty and the hard work that goes into building a brand. Many people and other companies can take advantage of the goodwill and brand recognition that you have built by copying or closely replicating their products, services, or advertising materials to look like yours, in hopes of tricking consumers. Trademark law exists to keep that from happening. It is important to note that trademarks do not apply to words, art, images, designs, or names that are not connected with a commercial brand. If you are looking to protect a visual or written work, you will benefit from copyright protection as opposed to trademark protection. 

Do I Need a Trademark?

If you have a brand, it is generally advisable to have Trademark protection for it. This protection can apply to products, services, or even your logo. A great amount of time, money, and effort goes into building a brand, so it is fiscally responsible to invest in Trademark protection to ensure that your investment is secure and that other people cannot profit off of your hard work without consequence. If you have plans to start a business or launch a product but have not yet released it into the stream of commerce, you can file an Intent-to-Use Trademark Application which will give you a year from the date of the application to begin selling it. If you have no plans to build a brand or business you will not likely benefit from a trademark, however, there may be other forms of legal protection available that would benefit your venture. The best way to determine what legal protection you need to support your business is to consult with an attorney who can get a sense of what you are trying to accomplish overall and how intellectual property law can support your goals. 

Contact the Carbon Law Group

If you have a small business, brand, or are launching a new product or service, it is important to protect your new venture. Intellectual property is the backbone of most businesses, and few people know where to start when it comes to protecting it. The experienced intellectual property attorneys at the Carbon Law Group are ready to help. Contact the Carbon Law Group today to schedule a free consultation and find out how we can support you and your business. 

Regardless of the kind or size of your business, there are legal, regulatory, and compliance issues that you will have to contend with and observe. Failure to act in compliance with state and federal laws and statutes can result in large fines, lawsuits, and even the loss of your business license. However, most small businesses cannot afford to have a dedicated attorney on staff, let alone an in-house counsel department. That is where hiring outside general counsel can be a great option.

What is Outside General Counsel?

Outside general counsel are lawyers who work for your business on a contract basis, as opposed to full-time. This means you have a dedicated attorney or even a group of attorneys who is familiar with your business and available to help you establish a strong legal foundation for your business and whenever any legal issues come up. This also means that you will only need to pay for legal help when you need it, which makes it incredibly cost-effective. Outside general counsel is also flexible, as it generally does not require you to enter into a long-term contract or penalize you for severing the agreement which makes it far simpler than having an employee on the payroll 24-7.

Benefits of Outside General Counsel for Your Small Business

Many small businesses try to handle legal and compliance issues on their own to save money when they are starting out, but often this backfires and ends up costing them far more. It is simply not possible to know what you don’t know, and most small business owners are too busy to also brush up on all relevant state and federal employment, trade, compliance, and tax laws in addition to running and growing their business. It is always a good business decision to outsource to experts so that you can both play to your strengths. Additionally, outside counsel can help you to actively protect your business’s intellectual property and to enforce your rights against infringers. If a lawsuit or legal matter comes up, your outside counsel can handle it while you continue focusing on business as usual.

Lawyers who serve as external counsel are not only readily available, they are also incredibly efficient at what they do. Regardless of the legal matter that arises, your external counsel will be able to address it promptly and efficiently. From helping you determine what business structure is right for you to aid with compliance and even mergers, acquisitions, employee and vendor agreements, sales contracts, nondisclosure agreements, franchise agreements, intellectual property rights, lawsuits, litigation, and more, outside counsel can meet all of your business’s legal needs–even the ones you did not know that you had.

Contact the Carbon Law Group

If you are a business owner and want to make sure that your business is protected as you expand, the experienced business attorneys at the Carbon Law Group can provide dedicated external counsel services to help you grow, regardless of the legal issues that arise for your company. We can also help you avoid legal issues by anticipating and addressing them early on. Contact the Carbon Law Group today to schedule a consultation.

As social media continues to grow and become a part of our daily lives, businesses have taken note and begun using influencer marketing as a valuable tool to reach their target market. An influencer’s personal brand is what makes them unique and stands out from every other social media profile. A brand is an influencer’s voice that allows them to express themselves and connect with their audience. For influencers working on expanding their brand and audience, it is essential to take the proper precautions to protect themselves and their social media profiles.

Growing Your Brand

When influencers are considering developing their brand, they must also consider the audience that will follow them. Potential followers are looking for influencers with whom they have shared values/interests, they identify with or are inspired by, and most importantly, a person who is their authentic self. Influencers that have grown the largest followings online have been able to capitalize on these three factors. 

Part of what makes an influencer’s brand so valuable is their engagement with their audience. When an audience is invested and connects with an influencer personally, they are more likely to engage with their content, brand endorsements, etc. Social media continues to evolve and give users new and creative ways to interact with one another and build a personal connection. In particular, Question and Answer sessions where followers send in questions and the influencer answers are an excellent way for followers to learn more about them and establish a stronger connection. Additionally, vlogging a typical “Day in the Life” and “How to” videos are other great ways for an audience to feel like they are part of an influencer’s daily life and build a genuine connection that extends beyond the app.

Lastly, using your social media account as a self-promotion tool to promote your accounts on other social media platforms is another great way to build your following. Major social media platforms such as Instagram, Twitter, and TikTok all fill a unique role in the social media market and allow audiences to be engaged in different ways. Using each platform as a tool for personal brand promotion encourages followers to be active with the influencer on all social media and results in steadier audience growth.

Collaborating with Brands

Influencer marketing has quickly become a useful tool for companies looking to directly impact consumers through a voice they trust. Brands are ultimately looking for influencers that will increase business and drive traffic to their social media profiles. In exchange, an influencer could receive the product, payment, and increased exposure by being featured on the brand’s profiles. 

An influencer’s audience and the content that they post often go hand in hand. When brands are looking for a potential influencer partnership, they will consider whether an influencer’s content, audience, and values reflect their own. This is necessary for brands to consider because when an influencer is working with a brand, they are now acting as a representation of that brand itself.

Another aspect that brands consider when choosing an influencer to partner with is their brand engagement. As discussed, engagement can come in many forms, such as likes, shares, comments, etc. Brands actively seek out influencers that have high engagement levels, regardless of the size of their following. The reasoning for this is because it shows that the influencer’s audience is actively showing interest in their content instead of scrolling to the next post on their timeline. If an influencer has an engaged audience, they are more likely to take the time to learn more about the product/brand that the influencer is endorsing.

Protecting Your Brand

Influencers can protect their brand in a variety of ways. As one continues to build their brand and audience, there is a growing need to protect their hard work. By filing a trademark, influencers can proactively protect their name and likeness from other social media users or companies looking to take advantage of an influencer’s brand without their permission. It is important to note that there is no minimum followers requirement for an influencer’s trademark to be filed. When an influencer files a trademark to protect their brand, they must be doing so because they are seeking to use their name in commerce for goods or services. When doing so, it is crucial that the influencer’s social media handles match those that are in the trademark filing.

As influencer marketing has continued to grow and be used as an asset for businesses to grow their revenue, the Free Trade Commission (FTC) has stepped in to set up new regulations that protect consumers from having their purchasing decisions unfairly influenced. The FTC  is now requiring influencers to give a disclosure any time they are endorsing a product. The disclosure can be expressed in a variety of ways, but it must be done in clear and straightforward language that will be easily understood by an influencer’s audience. The most common way is to include terms such as “advertisement,” “sponsored,” or “ad” into the caption of their post. Additionally, it is highly encouraged to utilize hashtags such as #ad or #sponsored at the end of their message to ensure that their post is in connection with another brand.

To stay up to date with FTC regulations for influencers, please visit. ftc.gov/influencers

As the novel coronavirus spreads around the world, a chaotic market for N95/KN95 masks, Personal Protective Equipment (“PPE”) such as gloves, thermometers, ventilators, hospital beds, testing kits, hazmat suits, hand sanitizer, goggles and other desperately sought-after medical supplies vital to the fight against COVID-19 has sprung up.

 

Numerous brokers or businesses around the world have joined the gold rush for this year’s most sought-after commodities. Urgent late-night inspections at mask factories, hurried million-dollar wire transfers to secure PPEs, and more. In this frenzied, pandemic-driven market, many different types of commercial agreements are involved. Entrepreneurs in international commodity trading, especially bulk commodities, often come across documents like Non-circumvention, Non-disclosure Agreements (“NCNDA”), International Master Fee Protection Agreement (“IMFPA”), Commission Agreements, and other documents. However, the legitimacy and protection these documents afford are yet to be determined.

 

What are NCNDAs and Why You Should Consult an Attorney Before Signing One

 

An NCNDA is an agreement that is commonly used in the preliminary stages of a business transaction where the seller and buyer do not know each other but are brought into contact with each other by one or more intermediaries or brokers to fulfill the transaction. The purpose of such agreement is to ensure that (1) the intermediaries or brokers who brought the buyer and seller together are not by-passed and (2) the information disclosed during the negotiations is not revealed to any external or unauthorized party. These agreements are usually valid for a specified term.

 

In this frenzied market, as the manufacturers making these desperately sought-after medical supplies are making huge profits by supplying bulk commodities to whoever can pay the most and pay fastest, a strong and well-drafted NCNDA is vital to anyone involved in these deals to protect their interests and ensure that they are not circumvented.

 

Some key terms of an NCNDA include:

  1. Non-Circumvention Clause, which is used to prevent the contracting parties from cutting each other on any businesses covered in the agreement. A clear definition of the covered business is critical.
  2. Non-Disclosure Clause, which aims to protect any information the contracting parties intend to be held confidential. A good NCNDA will need clear language to ensure important information that the party wants to prevent from disclosure are covered.
  3. Term, which defines how long the NCNDA will run.

 

Navigating this chaotic, “Wild West” PPE market can seem daunting. It is always helpful to enlist the assistance of a professional business attorney. At Carbon Law Group, with our extensive experience in providing legal guidance to businesses in contracting and negotiation, we are confident that we can serve as strong legal support for your business. Find out how Carbon Law Group can help you protect your intellectual property rights by scheduling a meeting with us using this link.

 

We can help with:

  • Reviewing Contracts
  • Drafting strong NDAs and Non-circumvent Agreements
  • Answering compliance questions
  • Due Diligence
  • Paymaster Services

In late June, 2018, following the European Union’s groundbreaking General Data Protection Regulation (“GDPR”), California passed its own consumer privacy law, AB 375, that imposes its own set of requirements on U.S. companies with regard to consumer’s “personal information.” You can read more about GDPR here. The new California law, referred to as the California Consumer Privacy Act (“CCPA”), took effect on January 1, 2020 and established new, groundbreaking consumer privacy rights for California consumers. Fines for non-compliance of CCPA can add up quickly; these fines are in addition to any loss of goodwill or consumer trust – or expenses associated with responding to any compliance investigations.

 

What consumer “personal information” is protected by CCPA? 

CCPA takes a broader view than the GDPR of what constitutes “personal information.” CCPA defines “personal information” to include “information that identifies, relates to, describes, is reasonably capable of being associated with, or could reasonably be linked, directly or indirectly, with a particular consumer or household.” The words “relates” or “reasonably capable of being associated with/linked” open up a very large class of non-traditional personal identifiers, that goes beyond name, address, social security number, to include information such as email address, online social media handles, IP addresses, biometric information, geolocation data, browsing, and search history.

 

Who needs to comply to CCPA?

Companies that meet the following criteria  must adapt their privacy policies and reporting to CCPA’s requirements: 

  1. companies that serve or hire California residents;
  2. have $25 million or more in annual revenue; 
  3. possess the personal data of more than 50,000 “consumers, households, or devices;” or
  4. earn more than half of its annual revenue selling consumers’ personal data.

 

What protection does CCPA give to consumers? 

The CCPA gives California residents the following rights:

  1. to know what personal information is being collected about them;
  2. to know whether their personal information is sold or disclosed and to whom;
  3. to say no to the sale of personal information;
  4. to access their personal information;
  5. to equal service and price, even if they exercise their privacy rights;

The CCPA provides California residents with a right to be informed of the categories of personal information that a business collects or otherwise receives, like smartphone locations or voice recordings, that a company has on them sells or discloses about them; the sources of that data; the purposes for these activities; and the categories of parties to which their personal information is disclosed. CCPA also grants California consumers the right to request detailed information about the personal information a business holds specifically about them, which may include detailed logs of a person’s online activities, physical locations, ride-hailing routes, biometric facial data, ad-targeting data, and the right to obtain portable copies of their personal information from the business. CCPA also gives California consumers the right to prohibit a business from selling their personal information, and to request that a business delete their personal information.

 

When will enforcement start? 

The CCPA took effect in California on January 1, 2020, with a six months grace period before enforcement of the law begins. Starting in July 2020, offenses of the CCPA will be assessed with fines. 

 

Does compliance with GDPR ensure compliance of CCPA? 

No. The CCPA and the EU’s GDPR do not share some same key requirements. Compliance with one does not imply or guarantee compliance with the other. The scopes, definitions, and requirements of the CCPA and the GDPR are different. 



What to do if you think a business is misusing your personal information under the CCPA?

Starting July 2020, California consumers may bring a legal action for statutory damages ranging from $100 to $750 per violation or actual damages, whichever is greater. The California Attorney General may bring actions for civil penalties of $2,500 per violation, or up to $7,500 per violation if intentional. No actual damage or specific evidence of identity theft is required. A CCPA plaintiff must inform the California Attorney General of the situation within 30 days of filing a CCPA lawsuit. The California Attorney General is the sole individual who has the power to delay or block such individual litigation under the CCPA. 

Find out how Carbon Law Group can help you prepare for CCPA compliance by scheduling a meeting with us using this link.

Your business is doing well and your profit is growing – Great! But this also means that there are some new legal concerns that your growing business must face now. 

 

When Hiring New Team Members…

As your business grows, you will likely need to hire more people. Hiring can raise many potential legal concerns. 

First, while often overlooked by many small businesses, it is extremely important to clearly distinguish “independent contractors” from “employees.”  In California, we have a stringent “ABC” test for determining whether a worker is an employee or an independent contractor and it applies retroactively. The ABC test, an employment-classification test in California that presumes workers are employees rather than independent contractors, was first adopted in April by the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court. Under this test, anyone hired by a business is presumed to be an employee and the burden is on the employer to demonstrate that every worker is not an employee. The punishment of misclassification is steep, which includes a fine for each person misclassified and penalties for failure to withhold income taxes (1.5% of the wages, plus 40% of the FICA taxes (Social Security and Medicare) that were not withheld from the employee and 100% of the matching FICA taxes the employer should have paid). Criminal penalties of up to $1,000 per misclassified worker and one year in prison can be imposed as well. In addition, the person responsible for withholding taxes could also be held personally liable for any uncollected tax. All it takes is one disgruntled person to cause a huge thorn in your business.

Second, it is important to have an employment handbook to set the policies, procedures, working conditions, and behavioral expectations your business has on its employees. A handbook tailored to the way you do business helps ensure that managers across the organization handle issues consistently and provide a framework for your employees to follow. In case the need arises, a well-written handbook is the first step of a successful defense of unemployment or other legal claims because these cases often require the employer to prove that the terminated employee was on notice of a certain rule and had been warned that violating the rule would lead to disciplinary action up to and including immediate termination.

 

Stop Relying On Informal Agreements…

As your business grows, you should start to always put your business agreements in writing and stop relying on informal, verbal agreements. Having written agreements are helpful in ensuring that everyone keeps their promises and gets what they want. You should start using customized written agreements that accurately when working with business partners, lenders, and other businesses.

 

Intellectual Property Protection Issues…

When your business first started, it was probably hard to imagine that you’ll potentially later face issues with people infringing on your intellectual property assets (or vice versa). As your business grows, it becomes more and more worthwhile of the investment of time and money to get your copyrights, trademarks, patents and trade secrets legally and properly registered so you don’t have to worry about it if, and when, an issue arises.

 

Non-Disclosure Agreements…

It is crucial for your business to maintain its competitive advantage by keeping working projects, innovative ideas, or exciting new products secret and away from potential competitors. A non-disclosure agreement is a legal document that keeps the lid on such sensitive information. When working with investors, creditors, clients, or suppliers, you should use Non-Disclosure agreements to protect your intellectual property because these outside entities will have access to business information that you may want to keep private.

If you need legal help to guide your business’s growth, feel free to schedule a consultation with an attorney using this link or calling our office at 323.543.4453.

CLG Founder Pankaj Raval shares some tips to consider when looking for a business attorney.

Transcript:

Hey guys, Pankaj Raval here, founder of Carbon Law Group back, talking about what to look for in a business lawyer.

Here are three things to consider when picking the right attorney. And don’t worry; this is not a shameless plug for Carbon Law Group.

First, do they understand your industry? Are they familiar with the nuance regulations of your industry? If not, are they willing to learn?

Second, are they interested in learning about your goals? You want to avoid a lawyer that has the answer to every question. Real issues are often complicated and require a thorough analysis. You want to make sure you have a lawyer willing to say they don’t know and look things up when necessary. Not all questions are easy to answer.

Third, are they responsive? You’re hiring a professional to act as an advisor. That means you want to make sure they’re communicating with you. Sure, lawyers are busy people, but so are you. Just make sure the expectations are clear at the outset of your relationship. Also, if you’re a text person over an email person, make that known.

Okay, I’ve got a confession. Of course this was a plug. Do you seriously think I was going to spend time and money recording a video not to plug Carbon Law Group? We sincerely believe we have the unique industry expertise, care about our clients’ objectives and are extremely responsive to our clients’ needs. So if you’re interested learning more about our services, call, text, DM, whatever it takes, let’s start that conversation.

The almighty dollar is a tool for creation and destruction. From concept to execution, how money comes in and how money goes out is at the forefront of every entrepreneur’s conscious. For both Fortune 500 companies and startups, understanding the key features of different sources of capital is critical to successfully funding a company.

Companies can raise capital in either of two ways: debt, or equity. Debt is when a company borrows money and has an obligation to pay money back over time with interest, e.g., a loan. Equity is when money is invested into the company in exchange for ownership rights, e.g., founders investing their own money in a startup. Early-stage companies rarely raise money by incurring debt because it is unclear whether or not the company will be able to pay back any borrowed money (the exception being convertible notes which will be discussed in a separate blog post). With this in mind, it is critical for owners of early-stage startups to know where they can find sources of equity funding, in addition to their own investment. Here are some of the most common sources of equity funding to get your company up and running.

Sources of Equity Capital

     1. Friends and Family 

Friends, family, and professional networks of founders are common grounds for early-stage sources of pre-seed and seed financing. When founders seek capital from these sources most or all of the investors in the business have some close personal connection to the founders for better or for worse. On one hand, close personal connections can allow for greater flexibility in negotiations, lower equity stakes and the potential for investors to become trusted advisors in the startup. On the other hand, close personal connections can bring about unnecessary conflicts due to personal matters, unwarranted requests for higher equity stakes from inexperienced investors and the untimely loss of personal connections as a result of unsuccessful ventures. Friends and family rounds can range from $1,000 to $150,000 – sometimes reaching $300,000 and more. However, don’t be tricked by the label of “Friends and Family” – you still need to treat these people as legitimate passive investors. These people are still entitled to certain rights depending on the type of the instrument used to raise funds (SAFE, Convertible Note, or Series Seed Preferred Stock) and they must still comply with federal and state securities laws. Hence, seeking the guidance of an experienced startup attorney is always a great idea when navigating these complex regulatory waters.

     2. Incubators and Accelerators

Incubators and Accelerators are a great way to transform ideas into businesses. Both programs provide capital, operating resources, help with management and valuable networks to help businesses grow. Some incubators look more like accelerators and some accelerators look more like incubators understand more of the difference between the two here. The goal of an accelerator program is to help a business do roughly two years of business building in just a few months. Accelerators are intense 3-6-month commitments which require startups to give up 4-6% equity in exchange for typically $10,000 to over $120,000 in seed money, in-depth training and access to a valuable network of investors, financial advisors, successful startup executives and industry experts. One of the most well-known accelerators in the industry, Techstars, accepts around 1-3% of startups for its program each year and contributes $20,000 in exchange for 6% equity of the company until the company raises a priced equity financing of $250,000 or more. Incubators rarely require equity but will grant you space and supportive services to help your startup grow. 

     3. Crowdfunding

Crowdfunding involves a type of social platform on the internet to attract a large number of people to each invest relatively small amounts to reach fundraising goals. Crowdfunding platforms are registered with the SEC and allow entrepreneurs to pitch their business ideas, generate public interest, and reach a specific community of investors or people willing to support their ideas with relatively little cost. With crowdfunding, entrepreneurs are not forced to use traditional methods of capital markets and venture capital fundraising. Entrepreneurs can focus on a specific community of people in the crowdfunding sphere and access the traditional methods of fundraising at a later time when their idea has gained more traction. But raising funds through crowdfunding is not easy. The crowdfunding market is competitive, and the funds raised through crowdfunding cannot exceed $1.07 million in any rolling 12-month period. And even if you succeed in raising the maximum $1.07 million, which is not an easy thing to do, it can result in a messy cap table with numerous minority stockholders and future VC’s might not like that. 

     4. Angel Investors or Angel Investor Groups

Angel investors are a rapidly growing part of startup private equity markets. Angel investors are a collective class of roughly 300,000 high-net-worth individuals in the United States who are willing to invest their own money into risky startup ventures. Their motives for investing may range from a passion for a specific industry, professional interest, or a more traditional return on investment. In any event, angel investors collectively inject over $1 billion dollars quarterly in US startups. The average size of contributions per investors may vary, but a successful seed round can reach up to  $1 million, especially if it is led by an angel investor group. Angel investor groups are collaborative angel networks that share information about potential investment opportunities for other angels. In addition to individual investors and groups, super angels are well known, full-time investors that often have their own investment funds. Here is a list of some of the top angels around Los Angeles: Talmadge O’Neill, Mihir Bhanot, Anthony Saleh, Clark Landry, Jim Brandt, Ashton Kutcher – Tech Coast Angels, 12 Angels, Angel Vision Investors. These investors are more sophisticated than friends and family investors and often have their own lawyers and accountants. So, it is critical to be prepared for their due diligence requests, conduct your own due diligence, and have your startup’s legal structure and financial statements in order. Not hiring an attorney to assist you with fundraising, risks the loss of potential capital and reputation, advice and other ancillary benefits to be gained from an angel investment.

     5. Micro-Venture Capital Firms

Micro-venture capital firms (“Micro-VCs”) are institutional investors that specialize in early stage financing. Institutional investors like Micro-VCs invest using funds pooled together by LPs like pension funds, corporations, wealthy individuals, or governments looking to stimulate the startup ecosystem. Micro-VCs often have access to large funds but are very careful with where they choose to invest and so fewer deals are made each year. Here is a list of some of the top Micro-VC’s around Los Angeles: Arena Ventures, Canyon Creek Capital, Mucker Capital, Noname Ventures, Wavemaker Partners. The size of early seed rounds led by Micro-VCs may well be in the hundreds of thousands or even millions of dollars and are a sign of a rare success in early startups.  This said, founders should be careful not to give up more control and economic rights than necessary in exchange for a Micro-VC investment. Of course, dilution of the founders is inevitable in priced rounds, and you should be prepared to lose full control over your board of directors. But founders must fully understand the ramifications of dilution and that there are no hidden provisions in VC term sheets that can cost you your job as the CEO or a board member of your own startup. This is why it is critical for startups to work with an attorney that can bring both parties together and verify that both parties are on the same page regarding the terms of the investment and how to protect against future problems.   

     6. Strategic or Corporate VCs

Strategic or corporate VCs are typically subsidiaries of large corporations like Intel, Google, and SBI. Corporate VCs use corporate funds to invest in external private companies. The sole purpose of these strategic or corporate VCs is to invest within their core businesses to achieve financial or strategic returns, e.g., capture technologies that may be important to their business, or acquire critical in-house expertise. Here is a list of some of the most active strategic or corporate VC’s this past year: Google ventures, Salesforce Ventures, Intel Capital, Baidu Ventures, Legend Capital, SBI Investment, Alexandria Venture Investments.

     7. Investment Bankers and Mergers & Acquisitions

Investment bankers, brokers, or financial advisers can assist founders connect with financing sources. But, investment bankers are primarily concerned with providing growth capital to relatively mature companies looking to expand, restructure operations or enter new markets. Investment bankers also tend to be intermediaries for private placement of securities. In other words, investment bankers can help you sell securities to funds and other investors. But be warned, regulatory issues and banking fees are usually associated with intermediaries like investment bankers. Read more here. A merger or acquisition with a company rich in cash can be a viable source of capital. But any merger or acquisition triggers a myriad of legal, structural and tax issues that must be evaluated carefully before making any decisions. For early-stage startups, we recommend waiting a couple of years before selling the company to achieve a higher valuation rather than selling your potentially great idea at a much lower valuation.

Legal Considerations

Raising capital from any of the sources mentioned above is a great way to potentially grow your business. But with that growth comes a multitude of legal issues from proper due diligence and compliance with securities laws to tax considerations and corporate governance structures. The almighty dollar is a tool for creation but without proper legal counseling it can be a tool for destruction. 

If you need help with your questions about funding your business, feel free to schedule a consultation with an attorney using this link or calling our office at 323.543.4453.

 

By Ryan Urban, Loyola Law School

Today’s workplace has become increasingly regulated and complex. Employers have started to recognize the importance of complying with misclassification statutes, and are trying to educate their executives on the process.

In determining whether a worker is an employee or an independent contractor, courts in California generally apply the common law test under which the employer’s right to control the manner and means by which the employee’s work is accomplished, rather than the amount of control actually exercised, is the principal factor in assessing whether a plaintiff is an employee or an independent contractor.

On September 18, 2019, California Governor Gavin Newsom signed Assembly Bill 5 (“AB5”) into law. Thus, California businesses will soon face new challenges in their use of independent contractors. AB5 raised the bar for companies that otherwise might rely on freelance or contract workers. The new law establishes stricter criteria, known as the “ABC test”, to maintain a worker as an independent contractor. Specifically, a business must prove that:

  1. The worker is free from the company’s control.
  2. The duties performed by the worker are not central to the company’s core business.
  3. The worker is customarily engaged in an independently established business, trade, or industry.

Workers that do not satisfy all three criteria will be reclassified as employees, which could allow them to start earning a minimum wage and qualify for overtime pay, paid sick leave, and health insurance benefits.

AB5 is landmark legislation for gig economy workers and employers in California. Yet, the passing of AB5 does not mean that gig economy workers in California who were categorized as independent contractors are now automatically employees. They will still need to challenge their employers in court to apply the ABC test and reclassify them. 

If you need help with your questions about employee and independent contractor categorization, feel free to schedule a consultation with an attorney using this link or calling our office at 323.543.4453.

A Master Services Agreement (MSA) is an agreement between the two parties to a service contract that details the expectations for both parties of their work together. MSAs are not project-specific contracts, instead, MSAs state the general agreement between the parties regarding all their work together. This means that the parties may use the same MSA with different project-specific Statement of Work (SOW) for each different future projects they have together. MSAs will allow the parties to negotiate future agreements efficiently, as they will only need to focus on negotiating the project-specific terms such as the scope of service, time of service and payment terms for each project. 

What is included in an MSA varies depending on the parties using the MSA, but it usually addresses: 

    • Dispute resolution policies if conflicts arise, including whether arbitration of mediation should be used. 
    • Jurisdiction is the law that will govern the agreement.
    • Forum is the place where the hearing or meeting will take place.
    • Limits on warranty to address the agreement on the scope and coverage of the warranty.
    • Limits on liability to address who is the responsible party in the event of a lawsuit. 
    • Confidentiality to prevent the parties from sharing any confidential information with outside parties. 
    • Termination policies to address when and how the agreement may be terminated. 
    • Intellectual Property Rights, including decisions on how the parties want to handle the ownership and regulation of all copyright, trademark, patents, and trade secrets. 
    • Insurance, to address the parties’ agreement on how to handle all insurance coverage and expenses.
    • Taxes, to address how and who is responsible to pay the applicable taxes.
    • Indemnification, to address how the parties will compensate each other for losses caused by each party to the other, i.e. when a third-party sues.
    • Risk allocation, to address which party bears the risk at different stages of the transaction.
    • Force Majeure, to address the parties’ obligation and liability when things that are not within the control of the parties happens, such as issues that arise due to acts of God, flood, fire, earthquake, explosion, governmental actions and war.
    • Attorneys fees, and whether the parties bear their own costs or the loser pays.

Many small businesses use the same contract template for all clients rather than negotiating from scratch for each client before they begin work. A well-drafted MSA can serve as a good template for similar services a small business performs for different clients and reduce the chance of litigation between the parties. And by using the same MSA with different project-specific SOWs, businesses can save significant cost on drafting detailed, customized contracts from scratch every time for a new transaction. 

If you need help with your MSA, feel free to schedule a consultation with an attorney using this link or calling our office at 323.543.4453.

Call Now Button Skip to content