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Fiduciary Duties, Exculpation, and Indemnification in Texas Business Organizations
Statutory developments beginning in the 1990's have impacted the analysis of fiduciary duties in the business organizations context. The duties of general partners are now defined by statutory provisions that delineate the duties without referring to them as “fiduciary” duties and specifically provide that partners shall not be held to the standard of a trustee. Whether limited partners in a limited partnership have fiduciary duties is not wellsettled, but the new Business Organizations Code (“BOC”) clarifies that a limited partner does not owe the duties of a general partner solely by reason of being a limited partner. While the fiduciary duties of directors are still principally defined by common law, various provisions of the corporate statutes are relevant to the application of fiduciary duty concepts in the corporate context. Because limited liability companies (LLCs) are a relatively recent phenomenon and the Texas LLC statutes do not specify duties of managers and members, there is some uncertainty with regard to the duties in this area, but the LLC statutes allude to or imply the existence of duties, and managers in a manager-managed LLC and members in a member-managed LLC should expect to be held to fiduciary duties similar to the duties of corporate directors or general partners. In each type of entity, the governing documents may vary (at least to some extent) the duties and liabilities of managerial or governing persons. The power to define duties, eliminate liability, and provide for indemnification is addressed somewhat differently in the statutes governing the various forms of business entities.
Issues in Early Recapitalization
Minority Owned Businesses
In September 2008, MGT of America, Inc. (MGT), was retained to conduct a minority and nonminority woman-owned businesses enterprise (M/WBE) disparity study for the State of Texas (Study). to determine whether there was a compelling interest to continue a narrowly-tailored Historically Underutilized Business (HUB) program, as required by the U.S. Supreme Court decision in Richmond V. Croson, 488 U.S. (1989) The results of this study and the conclusions drawn are presented in detail in Chapters 2.0 through 8.0 of this report. A complete discussion of findings and recommendations is contained in Chapter 9.0. The following sections briefly summarize each of the study's findings, and are followed by related major communications (Chapter 9.0). Selected best practices are described in Chapter 10.0 of this report.
Conflicts, Contracts, and Costs: A Quick Ethics Update on Critical Law Practice Considerations
This presentation is intended to remind lawyers of their duties in three critical areas that affect a great majority of practicing attorneys. Those areas are: 1. A short reminder of our responsibility to analyze the rules regarding conflicts of interest and either avoid or resolve conflicts as they arise; 2. A reminder how lawyers can be protected by appropriately documenting files, including a solid attorney-client contract, outlining the expectations of both the attorney and the client throughout the representation, as well as closing letters; and 3. Keeping your law offices running smoothly and efficiently by choosing the right equipment and procedures for serving clients, maximizing your talents, and protecting yourself.
Essentials of Business Law, Review of Entity Formation and Governing Documents
The primary purpose of this outline is to address several of the more material formation issues the legal advisor many encounter in connection with the formation of a business entity in the State of Texas, and consider some of the options available to the client to address these issues.
Privacy and Data Security Law in Texas, An Overview
The import of this article is, hopefully, to make Texas attorneys aware of just how broad the considerations of privacy and data security can be. As the field grows, lawyers in Texas will inevitably have to take privacy and data security issues into account in many varied business issues, in terms of compliance, transactions, and enforcement of rights. It also seems clear that the federal actions to date indicate that there will not be an over-arching action by the U.S. Congress to address privacy matters to the exclusion of state regulation, or if such an action is taken, that it will only create a floor for minimum protections, and states will continue to be able to regulate as long as it is in a manner that is not contrary to the federal scheme. Consequently, Texas lawyers should anticipate a continuing growth in privacy law and regulation in Texas, as well as an increase in privacy claims being asserted in Texas courts. The transactional lawyer in Texas will have to be aware of, and provide allocations for, these risks in the contracts and other legal documents he or she drafts and negotiates for clients.
Initial Startup Considerations
Getting Your Client Ready to Sell
Selling a business is not for the faint at heart. Most sophisticated buyers will leave no stone unturned in examining a potential purchase target. This is particularly true for publicly traded companies, which have expanded due diligence duties imposed on them by the Sarbanes-Oxley Act of 2002. To make matters worse, most companies are not operated with a view toward being acquired. This combination can often make for an arduous, and sometimes contentious, review process. Troublesome issues ranging from the identity of the business owner to the conduct of day-to-day operations can, if not properly addressed, cause a transaction to fail. The wise attorney will anticipate these issues and will advise his or her client on what to expect throughout the process.
What are Series LLCs? An Overview of Drafting and Operational Considerations.
This paper is to discuss what the state of law is on series under the Texas statute, with some consideration of the other jurisdiction and practice pointers for resolving the issues presented by the statutory formulation for the Series LLC.
Ethics & Liability Issues Arising from Representing Multiple Parties
Choice of Entity Decision Tree
Ethics of Multiple Party Representation 2011: After the Referendum - Now What?
Choice of Entity How to Choose What Entity or Acquisition to Use
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.
Owner Liability Protection and Piercing the Veil of Texas Business Entities
Corporation, Partnership (General, Limited and LLP) and Limited Liability Company Acquisitions Under Texas Business Organizations Code, Including Special Issues
Asset Protection Planning for the Family Business Owner, Strategic us of multiple types of entities and trusts to own and protect closely held family business holdings and related investments.
There are multiple tax and legal issues that should be considered when selecting an entity for a proposed business operation or investment. Typically, the tax consequences of the proposed structure and the limited liability available to the owners of the structure are the principal considerations taken into account. However, there are multiple non-tax issues that should also be considered by a client‘s legal advisor when selecting an entity or structure to fulfill the client‘s immediate goals. While the tax and legal issues are significant, serious consideration should also be given to the longterm non-tax issues and estate planning opportunities that a successful entrepreneur will regret not having planned for if not addressed when the entity and/or structure was designed and implemented. As with any legal planning, one must plan for the unexpected. Thus, when choosing a legal entity or structure for the client, it is important that the legal advisor take into account unexpected contingencies, particularly personal marital and creditor issues that might arise in the future. This paper will focus on the planning opportunities available to address such issues with comprehensive business entity planning.
The One Minute Manager Prepares for Mediation: A Multidisciplinary Approach to Negotiation Preparation
This article endeavors to explain simple tools that may assist lawyers and managers in preparing for mediation success.3 Part I reviews an outline for traditional legal and factual analysis of litigated cases. Part II layers economic decision tree analysis atop that foundation. Part III acknowledges that we all have biases and draws on psychological scholarship to help isolate their effects. Part IV synthesizes this analytical work into an adapted negotiation planning instrument. Finally, because different people play different roles in unraveling a dispute, Part V offers a decision tree designed to help disputants not only design a dispute resolution process tailored to their case, but also decide what roles should be cast and who would be the most effective choice for each role.
Primer on Legal Opinions
This Article will discuss a few significant topics that have been the subject of recent discussion at the WGLO Seminars and among legal opinion practitioners, including recent litigation and claims against law firms relating to legal opinions. As an initial matter, it should be noted that many of the recent claims against laws firm based upon legal opinions are related to facts assumed or stated, to negative assurances, and to the wording of the opinions as to qualifications and limitations, rather than to alleged mistakes of law in the opinions that are actually expressed.
How to Organize your Business with Respect to the Estate Tax Situation, Choosing a Business Entity in Today's Business World
This outline is intended to provide a listing and brief discussion of many of the major issues in choosing an entity. Each business owner’s situation is unique and the choice of entity in each situation can only be determined after understanding all of the goals and plans of the particular owner.
How to Organize your Business with Respect to the Estate Tax Situation, Choosing a Business Entity in Today's Business World
This outline is intended to provide a listing and brief discussion of many of the major issues in choosing an entity. Each business owner’s situation is unique and the choice of entity in each situation can only be determined after understanding all of the goals and plans of the particular owner.
Obtaining Financing for your Business
Raising money for a business invariably involves selling a security in exchange for money unless commercial lines of debt are utilized such as bank lending, other similar lending, or vendor financing. If a security is sold by the issuer company, applicable securities laws must be complied with both at the state and federal levels. Federal securities laws are primarily embodied in the Securities Act of 1933 (the "Securities Act"). State securities laws are generally set out in what is commonly known as "Blue Sky" laws. The Texas Securities laws are found in the Texas Securities Act (the "Texas Act").
How to Organize your Business with Respect to the Estate Tax Situation
Family business succession planning is the cornerstone of any successful family business owner‟s estate plan. As is often the case, however, planning for the inter-generational transfer of ownership and control of the business becomes complicated by the intragenerational conflicts of the business owner‟s heirs. These conflicts among members of the second generation, if severe enough, can render the effective management of the business by the second generation virtually impossible, leading to a loss in productivity and profitability with a resulting decline in the enterprise‟s value.
Drafting and Enforcing Complex Indemnificaion Provisions
The purpose of this article is to assist transactional and litigation attorneys negotiate and draft customized, and therefore more effective, indemnification provisions in a wide range of situations, and also to spot certain litigation issues that may arise out of indemnification provisions. This article will identify issues and provide the strategies and suggested language that can act as a starting point to protect the client’s interests in the area of the duty to defend, advancement of defense expenses and indemnification in complex transactions and litigation. This is not a survey of the substantive law of indemnification in every state and federal jurisdiction. While selected published opinions will be mentioned and occasionally discussed, this article will not focus on case law. Instead, the article is intended to be a practical guide that illustrates real-world strategies, tactics and techniques to be used when negotiating and enforcing defense, advancement and indemnification provisions.
Employment Practices: Insurance and Insurance for Nonsubscribers
How to Organize your Business with Respect to the Estate Tax Situation
Family business succession planning is the cornerstone of any successful family business owner‟s estate plan. As is often the case, however, planning for the inter-generational transfer of ownership and control of the business becomes complicated by the intragenerational conflicts of the business owner‟s heirs. These conflicts among members of the second generation, if severe enough, can render the effective management of the business by the second generation virtually impossible, leading to a loss in productivity and profitability with a resulting decline in the enterprise‟s value.