A year or so ago, amidst the initial frenzy of excitement about artificial intelligence (or more specifically, about the “large language models” or “LLMs,” which enabled non-programmers to interact with AI using natural language), I mused on our blog about whether our clients should fire us and hire ChatGPT instead. (Short answer – not yet.)
As I wrote at that time, “I expect that AI tools will become increasingly helpful as assistants,” and over the past year, this has certainly come to pass here at goodcounsel. We have been finding ways to incorporate AI into our practice every day, both the general-purpose technologies used by the public, such as ChatGPT, and specialized legal tools built on top of these AI platforms, such as those offered by our partner ClauseBase.
Below, I’d like to describe a few of the ways that goodcounsel uses AI to enhance its law practice.
You may have already heard of the Corporate Transparency Act (CTA). It is a new federal law requiring most businesses to register with the Financial Crimes Enforcement Network (FinCEN). Congress designed the CTA to combat money laundering and enhance corporate accountability. This post will provide an overview of how to comply with the CTA.
Many goodcounsel clients start off in businesses as limited liability companies, enjoying the flexibility and tax-efficiency that this type of entity offers. A lesser known but quite significant advantage of LLC’s is the ability to provide incentive equity in the form of “profits interests.”
One piece of received wisdom that, with experience, I’ve come to question is that convertible notes and their stepsiblings, Simple Agreements for Future Equity (“SAFEs”), are “simple.” Yes, the documents for these types of investments are generally quite short and deal with fewer issues, so they are (as we’ve noted in the past) easier and less expensive to generate than equity documents (which is the main reason for their popularity). However, I’ve come to recognize many subtleties in how convertible instruments operate; there’s more complexity than meets the eye.
In this post, I’d like to address one such subtlety: the difference between a postmoney and a premoney valuation cap. The difference results in resoundingly divergent economics.
In my previous post about AI (specifically, AI large language models or “LLMs”) and its impact on the legal profession, I concluded that the current versions of LLMs would not replace lawyers but could serve as very able assistants. As our friends at Clausebase put it in a recent webinar: AI can take over a great many human tasks on the “production” side but the lawyer is still indispensable in carrying out key “creative” work.
Illinois employers take note: Illinois recently joined two other trailblazing states (Maine and Nevada) in requiring employers to provide a minimum amount of paid leave for employees. Thanks to the new Paid Leave for All Workers Act (the “Act”), effective on January 1, 2024, employees working in Illinois (but not Cook County) will earn and accrue up to 40 hours of paid leave each 12-month period. Employees working in Chicago are already, and will remain, subject to the Chicago Paid Sick Leave Act, and those in Cook County have the Earned Sick Leave Ordinance.
“Dilution” is one of the most discussed topics in the startup community. goodcounsel often advises startups on the implications of dilutions. In this post we describe some common scenarios, and explain what happens in terms of dilution.
Some clarification on confusing equity-related terminology
Founders often ask us about the meaning of certain equity-related terminology. We thought it would be useful to explain some commonly used (but frequently misunderstood and misused) terms.
In the olden days, customers signed agreements using quill and ink; for many, a handshake sufficed.
These days, customers purchase many services and goods online. How do customers give their consent to the terms of their purchases in cyberspace [cue eerie music]? Most of our startup clients require their customers to agree to online terms of use (TOU), whether for a website or mobile app. The TOU set out “rules of the road” for customers, such as usage rights and prohibitions, which our clients need the ability to legally enforce. This ability rests on legal acceptance of the TOU by customers – without this, there is no binding contract.
