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2022 Employment Law Update

There have been many noteworthy employment law changes this year from the Biden administration as various agencies are now more or less fully transitioned from Republican to Democrat control. In addition to the shift in the White House, the Supreme Court issued several decisions this year that affected employment law. Despite these changes, one thing has certainly stayed the same, and that is the long-standing impact of the Covid pandemic. Covid has impacted the day-to-day of many, and unfortunately for businesses, it has continued to impact the business operations. Staying abreast of changes in employment law is important for businesses to ensure they remain up-to-date on all legal requirements.

2019 Advanced Business Law Brochure

17th Annual Course Advanced Business Law November 7-8, 2019 Hilton Houston Westchase.

Backdating, Rescission and Reformation

This article takes on the independent but equally meddlesome topics of backdating, rescending and reforming contracts. With respect to each, it considers in outline form: 1) the different issues within the topic; 2) who advocates for one position or another; 3) how to memorialize the understanding; 4) ethical considerations and falsification of the record; and 5) best practices.

Creative Partnership/LLC Structuring Techniques After the Tax Reform Act, Including Consideration of the New 20% Deduction

Drafting Preliminary Agreements, Including Confidentiality Agreements and Letters of Intent

Earnouts - Mechanics, Negotiation and Tax Considerations

Entity Conversions in Texas

This article focuses on entity conversions relating to corporations, LLCs and LPs in Texas under the Texas Business Organizations Code (or the “TBOC”). This article does not address situations of “reincorporation,” which term is often used interchangeably with entity conversions. Reincorporations (or more precisely, redomestications) refer to situations where an entity moves from one jurisdiction to another. For example, an existing Louisiana LLC could be re-domesticated as a Texas LLC. This article assumes the converting entity and the converted entity have been formed in Texas and will continue to exist under the TBOC. This article will first answer the question, “What are entity conversions?” Then, this article will describe the tax and other considerations to weigh in determining whether to convert an entity from one type to another. Lastly, this article will set out the steps and documentation needed to affect an entity conversion under the TBOC, with form documents attached to this article as annexes.

Fiduciary Duties, Exculpation, and Indemnification in Texas Business Organizations

M&A After the Tax Reform Act: Acquisition Structure Decision Tree

Model Company Agreements

The purpose of this paper is to present and discuss models for governing agreements for limited liability companies when a simple structure is needed.

Partnership/LLC Equity Compensation - Planning & Possibilities

Partnerships and Limited Liability Companies (“LLCs”) provide flexibility to their owners and employees, and there are innumerable ways for partners, members, and unitholders to receive compensation. The specific compensation methods depend, in part, on the tax classification of the partnership or LLC. LLCs may elect to be taxed as disregarded entities, partnerships, or C corporations. In this article we will focus most of our attention on LLCs and partnerships that are taxed as partnerships; however, we will contrast such with C corporation compensation options.

Restricting/Eliminating Fiduciary Duties in Texas and Delaware

Restricting/Eliminating Fiduciary Duties in Texas and Delaware

Tax Reform Act - Where Are We Now?

How Different Court Systems in Delaware and Texas Affect Choice of Entity Domicile Decisions

Choice of Entity and Acquisition Structure Decision Tree

Diverse Mergers: How to Divide an Entity into Two or More Entities Under a Merger Authorized by the Texas Business Organizations Code

The common conception of a merger is the combination of two entities into one surviving entity.1 However, the Texas Business Organizations Code (the “TBOC”)2 provides that through the use of the merger provisions of the code, a Texas domestic entity (an organization formed under or the internal affairs of which are governed by the TBOC3 ) may be divided into two or more new domestic entities or other organizations or into a surviving domestic entity and one or more new domestic or foreign entities or noncode organizations.4 This division through use of the merger statutes is sometimes called a divisive merger or a divisional merger.5 These provisions remain unique to Texas, although Pennsylvania provides for a statutory division but does not deal with division in its merger statutes.6 Through an illustrative, fictitious case study, this paper will consider the possibilities presented by the Texas divisional merger provisions as a tool to accomplish client goals and will provide a checklist of steps required to accomplish a divisional merger of a Texas limited liability company or limited partnership (including presenting a form plan of merger). This paper will not examine the federal income tax implications of a divisional merger.

2017 Texas Legislative Update on Amendments to Texas Business Organizations Code

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

Considerations in Drafting Limited Liability Company Agreements and Limited Partnership Agreements

Given their structural flexibility and tax advantages, it is little wonder that limited liability companies (“LLCs”) and limited partnerships (“LPs”) have eclipsed the corporation as the primary entities of choice for new businesses in Texas. LLCs and LPs offer a myriad of almost limitless options on ownership structure, company governance and almost all other aspects related to the operation of the entity. However, as it is often said, with much freedom comes much responsibility. A practitioner who puts together a limited liability company (“LLC agreement”) or an agreement of limited partnership (“LP agreement”) for a client should be well versed in the overall structure of these entities and the variables that should be considered in drafting the operative agreement. Both LLCs and LPs are so-called “creatures of contract” in that the Texas Business Organizations Code (“TBOC”) chapters on LLCs and LPs give great deference to the LLC agreement or LP agreement to define the rights and obligations of the members and partners, respectively, of these entities. This paper analyzes select provisions of the LLC agreements and LP agreements that practitioners are likely to have to address in drafting an agreement for a client.

Drafting Sensitive Issues in Company Agreements

Equity Incentive Compensation in Limited Liability Companies

Choice of Entity: Tax Overview

This outline discusses certain relevant federal income and Texas state tax considerations relating to the selection of an entity for engaging in business or investment. The outline begins with a discussion of the classification of entities for federal tax purposes and, in particular, the check-the-box regulations. It then provides a summary of some of the principal tax considerations relating to sole proprietorships, C corporations, partnerships, limited liability companies and S corporations. This outline does not address the taxation of trusts and estates, regulated investment companies, real estate investment trusts, real estate mortgage investment conduits, cooperatives, exempt organizations or insurance companies.

The Walking Dead: Forfeitures and Involuntary Terminations of Filing Entities

Management Responsibilities of Governing Persons of Corporations and Limited Liability Companies

Although this paper will focus primarily on LLCs, it is worthwhile to consider the duties typically imposed on corporate directors, as the same duties show up in cases involving LLCs. Directors have a duty to discharge their responsibilities in accordance with the duty of care, the duty of loyalty, and the duty of obedience. The duty of care mandates that a director discharge his or her responsibilities with the care that an ordinarily prudent person would exercise in similar circumstances. Corporate statutes based on the Model Business Corporation Act use the phrase “an ordinarily prudent person in a like position would exercise under similar circumstances.”1 This statutory language allows a court to look to a particular organization rather than a hypothetical entity. Applying this standard, a court may consider the background, qualifications, and experience of a director and the role the director plays in the corporation when measuring the director’s conduct. The ordinarily prudent person standard is associated with tort-law and simple negligence, but in the corporate world, it has been incorporated into the duty of care and case law applies a gross negligence standard. Directors also usually enjoy the benefits of the business judgment rule. The duty of loyalty requires a director to act in good faith in what the director reasonably believes to be the best interests of the corporation and to not derive a personal profit or advantage at the expense of the corporation. The duty of loyalty comes into play if a director or officer wants to compete with the corporation or take an opportunity of the corporation for the director’s own benefit. The duty of obedience dictates that a director obey the law and the corporation’s organizational documents. Corporate statutes commonly provide a procedure for approval of a director’s conflicting interest transaction. Most corporate statutes now permit the corporation’s formation document to relieve directors from monetary liability for breaches of the duty of care. The provisions of the TBOC governing for-profit corporations (like the predecessor Texas Business Corporation Act) do not explicitly set forth or define the fiduciary duties of corporate directors; however, case law generally recognizes that directors owe a duty of obedience, a duty of care, and a duty of loyalty.

Structuring Law Firm Organizations and Related Ethics Issues

This paper reviews the four principal forms of business entities used by Texas lawyers to organize themselves, along with eight informal sets of relationships that are being used in daily law practice to varying degrees. This paper is not intended as a complete analysis of choice of entity matters. There are ample materials elsewhere, indeed entire books, that consider the legal and tax implications of choosing one entity over another. The goal of the authors is to survey the four principal business entities and the eight informal relationships and highlight selected issues, and the liability and ethics implications that they present.