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2017 Advanced Business Law Collection

The Common-Interest Doctrine (of Lack Thereof) in Texas

This article describes Texas’ allied litigant doctrine and explains how it differs from the common-interest doctrine applied in other jurisdictions. It further explores the interaction between the allied litigant doctrine and work-product privilege and provides practice tips for Texas practitioners.

The Pathological Arbitration Clause

Arbitration is here to stay. Driven by what parties perceive as deficiencies of the formal judicial system, including expense, protracted length, gamesmanship, belligerency and wastefulness, arbitration has grown exponentially in the last ten years. Because of its confidentiality, empirical statistics are difficult to come by. Nonetheless, the American Arbitration Association, the largest administrator in the world, notes a 46% increase in total case filings 2007 to 2012. Courts, both federal and state, continue wholeheartedly to sanction this trend. It is bedrock principal that arbitration is a consensual process. Its authority is derived from the arbitration clause itself. No matter how favored it may be, arbitration is, at its heart, the product of an agreement. Because the arbitration clause is the “DNA” of the whole process, it is critical that the clause be drafted properly.

Reorganizing A Failing Business

Reorganizing a failing business is generally a time consuming affair that requires an even higher level of dedication than simply running a business. Among other things, unsatisfied creditors must be kept at bay, new sources of funding sought out (a task which tends to be much more difficult for a business operating in the red than for one that is generating profit), employee fears assuaged, and so on. While most of this paper will focus on debtor/creditor issues that arise when a business reaches general insolvency (with a heavy focus on bankruptcy considerations), the key to successful reorganization begins long before a bankruptcy is filed (hopefully before a bankruptcy is even on the horizon).

A Look at Board Duties and Conflicts for Corporations and LLCs

The world of corporate governance is experiencing a paradigm shift in recent years—with the movement away from a passive governing board and a rise in shareholder activism and shareholder democracy. This shift is marked by some inherent conflict-of-interest issues including (1) an increase in the number of constituent representatives on the board; (2) the rise of the influence of private equity; and (3) equity-interest owners demanding a right to nominate directors and managers.

Patent Law Primer

This article identifies the features of several types of intellectual property protection under the law, focusing primarily on patents and patent protection.

Legal Structure and Formation of Private Equity Funds

This article is intended to be a high-level, beginner’s guide on the core terms of a private equity fund that also addresses some important considerations that are easy to overlook. It also talks about creating a private equity fund practice by lawyers.

2017 Texas Trade Secrets Update

The first step in protecting a trade-secret is to identify the type of information that qualifies as a trade secret. Under TUTSA, information must meet two requirements in order for it to qualify as a trade secret: (1) it must be the subject of efforts that are reasonable under the circumstances to maintain its secrecy; and (2) it must derive independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use.

Working Effectively with Outside Counsel (From an In-House Counsel Perspective)

arily about the managing of a relationship. Like most relationships, communication is a key component. In-House Counsel should take the initiative in defining how and by what means communications flows will work, who will be involved, and the nature and extent of those communications. After all, you ARE the client in this situation. In-House Counsel should not expect for their Outside Counsel counterparts to be mind readers. They should clearly communicate their expectations in each and every area that is important to them – and the management team they represent. Just as In-House Counsel should communicate proper expectations, Outside Counsel needs to understand that from the perspective of the In-House lawyer, the easiest ways to damage that relationship is lack of communication and surprise. In-House lawyers do not like being surprised by unexpected costs or outcomes. It is all about managing expectations and allowing their In-House Counsel counterpart the time and opportunity to similarly manage the expectations of his/her management team.

Financing the Early-Stage Company

While some companies initially can survive using the founder’s own money, many companies – especially high-growth potential companies (which are the focus of this article) – need significant investment capital to turn ideas and dreams into a real business. Success or failure in the early-stage financing process often is a keystone on which a high-growth potential company’s future depends. There are many variables to early-stage financings, and missteps during the process can haunt a company throughout its lifespan.

Fiduciary Duties of Directors in M&A Transactions

There are several landmark cases which define the duties of directors in DE and TX companies, including the duties of obedience, loyalty and care. Within the last five years, there have been a number of cases providing additional color.

Navigating Unfamiliar Terrain: Nonprofit Law for the Non-Nonprofit Lawyer

The nonprofit sector is vast. In 2011, over 1.6 million nonprofit (tax-exempt) organizations were registered with the Internal Revenue Service (“IRS”). Section 501(c)(3) and Section 501(c)(4) organizations comprised approximately seventy-five percent (75%) of that number. The nonprofit sector includes organizations of many shapes and sizes. The common link among all such organizations being what has been termed the “non-distribution constraint,” that is, nonprofit organizations may not distribute profits to private individuals in the form of dividends or otherwise. While all organizations that are exempt from federal income tax come within the “nonprofit tent,” not all nonprofit organizations are eligible for exemption. This article is intended to cover the life cycle of a charitable organization beginning with the choice of form; moving to exemption, obtaining exemption, maintaining exemption, and operating; and finishing with termination of the organization.

2017 Texas Legislative Update on Business Law

This article summarizes several pieces of legislation that were passed by the Texas Legislature in its 2017 Regular Session and that amend the Texas Business Organizations Code (the “Code” or “TBOC”). There are many other bills that were passed affecting business law, so this article should not be viewed as containing a listing of all business-related bills. The article contains summaries only and should not be relied on as a complete description of any bill or portion thereof.

Changes in the Employment Law Landscape Under the New Administration

During the last year of his tenure, President Obama’s administration released a flurry of rule updates, regulatory changes, and enforcement guidances that significantly impacted numerous areas of employment law. Many of those changes were challenged in courts, and many of those challenges resulted in injunctions and further uncertainty. Fanning those flames of uncertainty, the Trump Administration halted some of those challenges in the court system and reversed course on other regulatory changes and guidances. The Trump Administration’s actions have already brought significant changes to the federal government’s approach to employment issues. In addition to his theme of de-regulation, the Trump Administration is also reversing course on several Obama-era initiatives and guidances. One thing is certain—the area of employment law is ever-changing and fluid with the new administration. This paper highlights some of the more important developments to date, and those that are likely to occur in the future.

CEOs/CFOs: Why You Should expect Real Savings From Your Law Department

Economic downturns require Chief Executives and Chief Financial Officers to squeeze every penny of waste from the corporate budget and to trim fat wherever found. At the beginning of this decade, FMC Technologies, Inc. (“FMC Tech” and now part of the recent TechnipFMC merger) had achieved net negative legal investment over several years which can still be reproduced today in any size company. This result was achieved even though the company had doubled its annual revenues, the number and complexity of legal matters had increased, the law firms continued with their typical annual billing rate increases, and the seniority and advancement of legal department personnel was consuming a growing percentage of its total legal budget. At the same time, its outside law firms were being paid more than their standard billing rates.

Keeping an Enterprise Energized Through Financing Debt

There are several types of fundings for a company. The broadest categories are “debt” and “equity”. Almost all “equity” is an investment in the company, and some debt is, as well.2 So, while a bright line doesn’t divide debt and equity by whether they are investments or not, there is a different bright line that is more useful: For debt, the promise of the issuer is “I will pay you back”. For equity, the promise is “I might pay you back.” Much debt financing follows the same basic format but the particular content of the agreement between borrower and lender are in driven by the identity or type of the lender, the borrower’s particular business needs for funding, the regulatory environment in which the lender operates, the credit quality and collateral available from the borrower, and the prospect of repayment.