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Our Back Catalog

You can find articles from our past CLE programs here.

Differences in Drafting for Majority, Minority and 50/50 Owners in an LLC

Drafting the organizational documents for a business entity with multiple owners with differing interests is rarely “simple and straightforward”. Careful consideration needs to be given to the specific nature of the business arrangement, the ownership level of each owner, and what talents and resources each owner is bringing to the table in order to put together organizational documents that protect the key areas of concern for a client.

When is Equity Financing Appropriate and Available?

A question that often arises from emerging growth company clients is when to raise capital through the sale of its equity securities? At this point, the client has determined that it needs capital to accelerate its business and that traditional debt is either not available or desirable. These same clients generally have some revenue (or a path to revenue), but organic revenue growth will not keep pace with the client’s objectives.

Choosing the Correct Entity

Clients come to you with a sole proprietorship but you should never form one. Clients come to you with a general partnership that they have either intentionally formed, or formed as a matter of law. Both provide no tax advantage and no liability shield, and it is our responsibility to move them out of the sole proprietorship or general partnership into a better entity. LLPs seemed like a great idea for a few years, but I consider them obsolete and counterproductive. Limited Partnerships are excellent vehicles for things like oil and gas drilling or other areas where your client wants to raise money, there are numerous investors, and only one person (or one small group of people) are going to actually be involved in the operation of the business. For all other entities your options are a C Corp, an S Corp, or an LLC. A C Corp is an essential requirement to publicly trade the ownership interests or if you have a large group of investors who want a corporation. Usually you are forming either a Sub S Corp or an LLC depending upon the unique facts of your client’s proposed business, their management structure, the number of people who are going to invest, the tax treatment they want to receive, and the advice of their independent CPA. One of our jobs is to take the opaque, Mississippi mud filled, zero visibility ocean of law that the client is swimming in and simplify it to the clarity of the water of the Caribbean. It all comes down to liability shield, tax treatment, management structure, and potential expansion and enlargement of the investor pool.

When is Equity Financing Appropriate and Available - Another Take

In many ways, equity capital needs to come first. In other words, a client's business needs to result in a balance sheet that has some equity holders' equity. Assets need to exceed liabilities. Historically, a business would do this by making profits and re-investing them in its operations. However, in this paper, we are considering equity investment by outsiders, people other than founders.

The Limits of Limited Liabiity: Veil Piercing and Other Bases of Personal Liability of Owners, Governing Persons, and Agents of TX Business Entities

Sole proprietors and partners in a traditional general partnership enjoy no protection from the debts and liabilities of the business. The various business entities that provide some type of liability protection do so under slightly varying approaches. This paper considers each type of entity and the case law concerning different types of liability within that type of entity.

Recognizing Securities Law Issues in Entity Fundraising and Finance

One of the most common questions securities attorneys receive from other business law attorneys is: "When do you have to worry about securities law issues?" In response, the securities attorney likely offers a most unsatisfyingly opaque and seemingly nonresponsive answer such as: "whenever your deals involve a 'security'," followed by an arcane monolog about the definition of a "security" and the resulting complications such a definition will bring to the business attorney's deal. The intent of this article is to produce a legible map to assist business attorneys to identify when the minefield of securities laws may be implicated in their clients' transactions and addition scrutiny or diligence or the assistance of a specialist securities attorney may be necessitated.

Cyber Liability Insurance Counseling and Breach Response

Cybersecurity is an issue that evokes equal parts of fear and confusion for business leaders. Anyone who has been involved in a real data breach will easily understand why an effective graphical analogy for describing such an event is to imagine being in a building that is on fire. There is panic, there is fear, there is chaos, there is confusion. It is a crisis situation. This paper covers: 1) government notification of breach; 2) understanding basic "data breach" foundations; and 3) reporting criminal activity to law enforcement. It also contains a number of checklists.

Tax Issues for Business

An experienced tax practitioner touches on several tax issues that businesses encounter: 1) carried interests; 2) taxes on operations; 3) employment taxes and 4) franchise taxes.

Cybersecurity for Your Law Firm: Data Security and Data Encryption

Protecting client data requires taking the same precautions that are taken for protecting any other kind of data. Whether the attackers are after employee social security numbers, customer payment card data, embarrassing emails from the CEO, the company’s crown jewel trade secrets, or highly sensitive client data, the central objective is to prevent the attackers from being able to access it. Attackers that are going to try and access this data are going to do so by trying to attack the law firm itself. If they are unsuccessful at attacking the law firm directly, they will likely try gaining access through a third-party by first attacking a third-party with whom the law firm does business and then using that access point to pivot inside the law firm. Accordingly, if you want to protect your law firm’s client data from cyber attackers, you must first ensure that your law firm is adequately protected. Second, you must ensure that those third-parties with whom your law firm does business are adequately protected. If the goal is to improve law firms’ cybersecurity defenses effectively, it must begin with the basics which will be the focus of this guide.

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.

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.

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.

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.

The Litigation Front in Employment Law

This paper discusses some of the recent developments in employment litigation from the business law perspective. Rather than giving a primer on employment law, this paper covers the areas most frequently litigated within the last year. It will also briefly discuss why cases go to trial and how to best present the cases from an employer’s perspective.

How to Deal with Disasters for Your Office and Your Clients

Natural disasters seem to be becoming more prevalent each year. Attorneys must prepare their practices for such disasters and may also need to advise clients of how to prepare for disasters. This article provides advice and guidance on how to put a plan in place to prepare for and manage a natural disaster in order to minimize damages suffered by your or your clients’ businesses.

The Miscellaneous Section of a Contract

In this day of computers, forms, electronic drafting assistants, and Google searches, very few if any attorneys start a contract from scratch each time. This paper presents certain issues that can arise in connection with the miscellaneous sections of a contract from a trial attorneys’ perspective. What are some of the red flags for when the miscellaneous sections of a contract should be treated as “deal points” and when are they just “belt and suspenders”? When are these clauses merely boilerplate, and require no variation from the prior version, form or sample used?

How To Interpret A Complex Business Contract

The purpose of this paper is to suggest a methodology for interpreting a complex business contract (or any contract, for that matter) by interpreting it as a whole, rather than solely by seizing upon certain language within the contract. This paper assumes that the reader has from law school and legal practice become familiar with basic principles of contract formation, drafting and interpretation. An easy-to-read and excellent resource book on these topics is Charles M. Fox, WORKING WITH CONTRACTS: WHAT LAW SCHOOL DOESN’T TEACH YOU (Practising Law Institute (2nd ed. 2008), available inexpensively at Amazon.com and from numerous other sources. The author illustrates the process by reference to a hypothetical, complex business transaction in which an existing contract places many restrictions on the ability of a party to that contract to do other transactions (directly or through its subsidiaries), including the hypothetical transaction. The task is to identify the salient contractual provisions in the existing, restrictive contract, interpret it as a whole, and reach conclusions regarding the intent of the parties to the restrictive contract. The purpose of the task is to determine whether or not a proposed new transaction would be permitted.