41 posts categorized "Lawyers"

The Constitutional Oath

You can tell that President Obama and Chief Justice Roberts were anxious to get the presidential oath of office right this time around.

The one-minute ceremony was broadcast yesterday on C-SPAN, a few minutes before noon, Eastern time.

 

The Constitution says that a president shall take a prescribed "oath or affirmation" before entering "on the execution of his office," so there are good legal reasons to perform the oath not only correctly but also in a timely way.

The ceremony yesterday was timely, even arguably a few minutes premature. The Constitution, as amended by the Twentieth Amendment, says that a president's term "shall end at noon on the 20th day of January."

Here's the text of the oath from the US Constitution:

"I do solemnly swear (or affirm) that I will faithfully execute the office of president of the United States, and will to the best of my ability, preserve, protect and defend the constitution of the United States."

The President and the Chief Justice flubbed it in 2008 by misplacing the adjective "faithfully." As I recall, the Chief Justice asked then Senator Obama to repeat that he would execute the office of president of the United States faithfully. The phrasing rang false.

HandshakeBut yesterday the pair again improvised, if insignificantly, on the Constitutional text.

First, the Chief Justice asked the President to state his name, after the first person pronoun. Second, the Chief Justice prompted the President to end the oath with the phrase "so help me God." These emendations sound okay because they are traditional. Should any strict constitutionalist president in the future drop them, she will take a lot of guff.

As in 2008, the Chief Justice prompted the President to state the last phrase by expressing it first in the form of a question addressed in the second person: "so help you God?" Why not? The words aren't Constitutional at that point, anyway. But to state the phrase as people expect to hear it, the President at that point has to abandon the Chief Justice's instructions to "repeat after me."

Brian Rogers considers lawyering in the startup ecosystem

This morning I suggest you go over to Brian Rogers' blog, where Brian has answered the question I posed to him last week: “Is a Startup Ecosystem Without Lawyers a Good Thing or a Bad Thing?

Leaving the buildingI'm still reflecting on how Brian divides the startup ecosystem into three segments. He may be right about that, but I want to think about it a bit more.

For that segment of the startup ecosystem in which I think Brian is suggesting he and I work most, Brian recommends that more tasks be handled by nonlawyers within a law firm. That makes sense. But isn't a law firm that can deliver services without lawyers well on the way, possibly, to being something other than a law firm?

Those are just two initial reactions. Go read Brian's post as he has thought this through. He's advancing our important discussion on the topic of document standardization and startup legal costs.

Photo: JF Sebastian / Flickr.

Gun jumping

Last week, a New York lawyer and I were comparing notes over the phone about the proliferation of online financing platforms, ones catering, or purporting to cater, to private companies seeking funds from accredited investors.

Gun jumping

The conversation began with a question. "Does it appear to you that many of these sites are doing things that are not yet legal?"

Indeed, yes.

Though lawyers will trade URLs of the suspect sites freely amongst themselves, they - we - are all circumspect about publicly tagging domains to doubts.

Though I'm on record for asking questions - not indicting or accusing but asking questions - about what FundersClub is doing.

A comment onf the FundersClub post, asking if I had considered Joe Wallin's post about rules on general solicitation, brought home how easy it is to forget that often Congress writes laws that don't so much make law as in effect tell agencies to write rules to make law. Here's an excerpt of how I replied:

What @joewallin is talking about in the blog post you link to is an SEC release with *proposed* rules to implement the lifting of the ban on general solicitation. The key qualifier here is "proposed." The rules are not final. Unfortunately, unlike other provisions of the JOBS Act, the lifting of the ban on general solicitation did not become effective once the President signed the JOBS Act. Instead, the law said that the SEC must first write rules to implement the change, and the change won't go into effect until the SEC promulgates final rules (unless, of course, Congress passes the legislation again, this time not requiring rulemaking, but I don't know anyone who thinks this is likely).

Gif: Gee Willi / Flickr.

Startup Riot Seattle locks me out

Startup Riot is holding an event in Seattle today.

I wanted to go. I submitted an application and paid the fee.

But I was rejected!

Was it because I practice law? I don't know. Can you tell from the email thread?

Update 10:58 PM Pacific: at Sanjay Parekh's request, I have taken down the screenshot of my email exchange with him. I have also asked him why I was excluded.

I wanted to go as the blogger, commentator and analyst I am of the startup scene.

Maybe my lawyer self is getting in the way of my blogger / mentor / investor / startuper self!

Update 10:47 AM Pacific: a loyal reader - and pillar of the Seattle startup scene - just sent me this picture of the event. Pretty quiet looking, for a riot.

Startupriot

Last Night's Tweetup for Seattle Blawgers

Josh King and Mark Britton hosted a tweetup for Seattle legal bloggers ("blawgers") last night at Avvo's office. The ocassion was a visit to town by California-based blogger, Eric Goldman, who runs the popular Technology & Marketing Law Blog.

Josh took the group on a tour of the office, but as implied by the picture, we mostly hung out in the kitchen, where the fridge was well stocked with beer.

Blawger meetup at AvvoVenkat Balasubramani, Dean of Seattle blawging and a world-class tweeter, was there. Venkat blogs at his long-sustained Spam Notes, "a law blog covering electronic communications, email, social networks, privacy, and more," as well as on Goldman's blog.

Asher Bearman of the Venture Alley was there. Asher's blog, which he runs with Trent Dykes (a no show last night - Trent, hope you have a note from your doctor), has gone from zero to sixty, in terms of visibility, virtually overnight. Asher promises a piece soon on implications of the JOBS Act for funds. And he wants more from me on the JOBS Act!

Michael Atkins, who runs the Seattle Trademark Lawyer blog, was there. Atkins is recently back from a trip to China, and his posts from there bring a perspective about IP law in China I doubt you'll find anywhere else.

Blawging newcomer David Ziff was there. Ziff is one to watch. He has a good blogging "voice," and he brings appropriate irreverance to the competence with which he is covering Washington State court cases (a really good niche, currently not served by anyone else, to my knowledge).

Other blawgers there I met, whose work I don't know but am looking forward to checking out, include Tonya Gisselberg, who runs the Seattle Copyright Watch, and Heather Morado, who blogs at Seattle Entertainment Lawyer.

Colette Vogele, who you find on blogs, Twitter, and digital spaces elsewhere, was there, too, kind of solidifying a California-Washington connection.

Fun meet up!

Two Lawyers Spar (Politely) Over the Significance of Open Sourcing Big Law Startup Docs

The following is a "conversation" (it took place over email) between me and Jeff Fabian, an attorney who represents startups and brand-based businesses in IP and Internet-related matters. Via tweets curated by Brian Rogers, Jeff and I discovered that we had very different perspectives on the open-sourcing (well, the promise of open-sourcing) of Gunderson startup legal templates on the Docracy site. We both thought that sharing our conversation might be interesting to those interested in the legal docs subject.

Sparring partner gym ItaliaCarleton: Jeff, what started this point/counterpoint was a response you had to a tweet from @theContractsGuy, remarking that the posting of startup docs by the Gunderson law firm, on the Docracy site, was definitely an interesting development. Your response was, "As I see it, the more would-be clients can get for free from BigLaw, the less they'll come to me before they can afford BigLaw."

Fabian: That’s right, in my practice I represent many start-ups and entrepreneurs, and it’s becoming almost a regular occurrence for these types of clients to ask how what I can provide is any different than what they can find on the Internet for free. Of course – from my perspective – there is an easy answer, but with lean businesses run by educated individuals there’s often a strong sense of “I can just do this myself.” If these people are getting branded materials from BigLaw for free (and they feel that this is all they need for the time being), then when they’ve grown and realize they actually do need a lawyer, I’ll place my bets on who they’re going to call.

Carleton: But if there is less of a mystery of what the forms adopted by BigLaw say, isn't there actually less of a perceived gap between what a good small firm or solo practitioner can provide, and what a big firm can produce?

Fabian: I’ll agree with that – especially having been on the other side of big firms in both transactional matters and litigation. I guess my concern is, how do they see what us small firms are capable of providing? Even if they see they quality (however that may be defined) of a BigLaw form, what basis do they have for comparison?

Carleton: Well, they can have their own personal experiences with BigLaw, postive and negative. And their own experiences with smaller firms, too, positive and negative. I guess I feel like there are good lawyers and indifferent lawyers, both at big firms and at small firms. The savvy entrepreneurs know this and choose the person. And if the prospective client is less sophisticated but feels that you or I are as good as, or better than, the person with whom she gets to work at a big firm, the fact that you and I can iterate off the BigLaw forms, if we want to, or if she wants us to, that only makes the pitch better for us, no?

Fabian: Perhaps, but I wonder what perception that gives the prospective client—if the expectation is that we will be basing our work off of someone else’s. If we’re using a BigLaw form, that would seem to suggest that we think the BigLaw forms are worth copying (because they are superior to our own). If I were the potential client, that would make me question the lawyer’s personal capabilities. For savvy entrepreneurs, the intricacies of custom drafting are typically not within their purview, and I would expect them to question the additional value we can provide.

Carleton: I don't think they care where the documents came from, they care about the advice they are getting. As a lawyer, you can't escape making the call when you say this, that or the other template is a good starting place. In a sense, you "own" the document whenever you recommend that a client use it (regardless of who wrote the doc).

Fabian: It seems that we may be addressing our concerns to different potential-client bases. I agree with your points insofar as they apply to experienced business owners; however, for Generation Y entrepreneurs shopping for their first attorney (which describes many of my clients), the issue is demonstrating that your time is worth their money. When the mindset is, “I’ve got a form, not a lot of money, and I know my business better than anyone—why should I pay some lawyer to type my information into the blanks,” the proposition becomes a very tough sell. Of course, we know that working with forms is still a time- and thought-intensive process that requires an understanding of contract law principles and experience with negotiating, challenging and enforcing contractual language, but many casual business owners don’t appreciate that this is the case. As a result, I still see the availability of free BigLaw forms online as an impediment to obtaining new clientele in this sector.

Jeff Fabian is an attorney who represents clients in trademark protection, trademark enforcement, and Internet-related legal matters. For more information about Jeff's practice, visit FabianIP.com.

Photo: "Sparring Partner Gym - Italia," by Arturo de Albornoz/Flickr.

Crowding Lawyers Out of Startup Financings

Startups raising seed funds struggle to keep legal costs down.

The cash a new venture needs to launch, especially in the web industry, often is modest. But with some notable exceptions, lawyers are reluctant, or unable, or unwilling, to scale fees back to be proportionate with the size of the financing.

Entreprenuers - and their angel and VC investors - don't want stock issued without complying with securities laws. But they also don't want to spend $20,000 on a $400,000 seed financing.

Fred Wilson famously issued a $5,000 legal fee challenge to lawyers: do the seed round at or under that cap. Lawyers (like me) squirm, because in the popular entrepreneurial mind, a lot of stuff (organizational work, IP assignments, reverse vesting negotiations, terms of service, the first licensing agreements, reviews of vendor contracts) can get lumped into that budget as "clean up" incidental to the financing.

Leaders like Ted Wang have shown up to address the problem: his "Series Seed" deal docs go beyond the standardized term sheets (almost every incubator and angel organization has a favorite) and give companies and their investors an actual set of contracts that can be customized (but, ideally, not negotiated!) and signed. Deals in Seattle using Series Seed have been done for $7,500. On the other hand, some firms can't resist "improving" the forms, and fees approach what you'd have with negotiated documents.

Comes now crowdfunding! This is the phenomenon of raising small amounts of capital in small increments from many people. Kickstarter is a poster child for it. Local company Rotomotive is using Kickstarter now to raise money. But Rotomotive can't issue stock its supporters. Wouldn't it be cool if startups could actually issue stock to supporters via crowdfunding?

Changes are coming to US securities laws that will make that possible. Last week, the House passed a bill to authorize a federal securities exemption for crowdfunded offerings. Senator Scott Brown has introduced a similar bill in the Senate (with some huge differences, though; more on that very soon). Because the Obama administration has endorsed the House bill, it's likely that a crowdfunding exemption in some form will become law.

5811904191_20041b20edLawyers hate the idea. I can't find a single one who would represent a startup for a crowdfunded offering. What we worry about are the unsophisticated investors who, experience strongly suggests, will be the first to later say they did not understand how risky this all was, that they though the IPO was imminent, that things have changed and they need their money back now.

A lot will turn on the details of the final crowdfunding legislation, but Sen. Brown's bill is promising in this respect: it will require crowdfunded offerings to be conducted on a crowdfunding platform, and charge the platform with performing basic due diligence on the entrepreneurs who use it, and on the deal terms offered. If they're smart, the platforms will determine a standard set of deal terms.

Crowdfunding, the investment version, will give entrepreneurs an alternative to "friends and family" (for which there is no actual exemption) and to accredited investors (angels) for their initial seed funds. Done right, crowdfunding will also solve the problem of legal fees - by making lawyers unnecessary.

Image by Los Angeles Personal Injury Attorneys.

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