Options done right

In a legal and business career that spans more years than I care to admit, I’ve worn many hats (some of them at the same time): entrepreneur, company founder, early employee, investor, and attorney. Understanding an issue from multiple directions means that, perhaps unusually among lawyers, we typically counsel our startup company clients to implement legal terms that, while not representing the most aggressive possible stance, represent a fair one – one that we feel will ultimately result in the best outcome for all parties, including our client. Read the rest of this entry »

Categorised as: Capital Structure, Startups

Understanding your stock options is not optional

You’ve landed that dream job and you’re excited to get started. The company is even throwing in some stock options! Since you will be an instrumental part of the company, you might think that the company is poised to take off and those options are going to be super valuable. “Sweet,” you say to yourself. “Where do I sign?”

Well, not to rain on your employment parade, but you might want to take a moment to review the structure of those options, and to understand what exercising an option really means.

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Categorised as: Employment Law, Startups

Registered agent services: DIY or do not try?

The adage, “you have to have money to make money” really hits home when you are reviewing the budget needed to launch a business. Starting a business is expensive, and we understand that many of the entrepreneurs and businesspeople that we represent are trying to “bootstrap it,” especially at the outset of a new venture. Saving money is always on the entrepreneur’s mind, and every dollar counts. The annual fee for a registered agent averages about $250, and since most people don’t understand the value of registered agent services, this is one expense that entrepreneurs are tempted to save by doing it themselves. In this post, I’d like to talk about why that $250 can save you more than $250 worth of time, money, and grief in the future.

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Categorised as: Entrepreneurship, Startups

Changes to Illinois Angel Tax Credit Rules [Updated]


UPDATE 10/26/16: Credits are used up for 2016, and the Illinois Angel Investment Credit Program is scheduled to expire on December 31, 2016. It remains to be seen whether the Illinois legislature might reauthorize the program.

We’ve written in a past edition of our goodnews newsletter about an Illinois program to encourage investment in innovative early-stage companies, the Illinois Angel Tax Credit Program. Illinois has recently made an important change, which could affect the way that companies would want to structure an early investment round.

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Categorised as: Fundraising

Introducing Counsel-as-a-Service℠

In the days of yore, when dinosaurs roamed the earth (or thereabouts), goodcounsel offered “fractional general counsel” services. The idea of providing part-time counsel to growing, entrepreneurial companies (like those for which I had previously worked) was sound, but offering it a certain number of days each month was, in retrospect, flawed. If the billable hour is a bad measure of value (which, as a rule, it is), the billable day is not necessarily much of an improvement.

We soon got quite busy with client work of various kinds (on a fixed-fee basis, of course), and the fractional general counsel services fell by the wayside.

Things have a funny way of coming full circle, though. Read the rest of this entry »

Categorised as: Law Practice Innovation, Lawyering

Will Illinois be next to adopt “intrastate crowdfunding”?

Would you like to accept small investments in your company from your Aunt Rose, your brother-in-law Bobby and your best friend from high school? Many people are surprised to learn that, unless these friends and family members are high-net worth investors, this is not the kind of thing that is safe to do – not, at least, if you want to be fastidious about observing securities regulations. Read the rest of this entry »

Categorised as: Fundraising, Legal Issues, Securities Regulation

Delusions about dilution

With some regularity, clients tell me that they want to issue employee equity that represents a fixed percentage of the company, not subject to dilution. What startup company founders should realize is that giving out equity containing an “anti-dilution” feature is an extraordinary and unusual benefit, one that should be agreed to only in exceptional circumstances.

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Categorised as: Capital Structure, Startups

Hamstrung by Microsoft

I tweeted this earlier today. To add a little detail: I’ve long been interested in “document automation” and “document assembly” as a way to make the document drafting process more efficient (faster and less expensive) for my clients. Two great looking software packages, ContractExpress and Smokeball, rely on inserting a sidebar into Word, and both are not available for Mac. I’ve spoken to their representatives at length, and both, independently, blamed the manner in which Word for Mac is engineered by Microsoft. I don’t know the technical details, but apparently Word for Mac is different under the hood from the Windows version in a way that renders it impossible for their tools to run.

Whether or not this is accidental or intentional on Microsoft’s part, it just makes life less efficient for those of us using the Mac. My only choice, which I will explore, is to license VMWare, license a copy of Windows and license a copy of Word for Windows, and run those in parallel on my Mac. I thought I was done with Windows, but to paraphrase Pacino, it keeps dragging me back.

Categorised as: Law Practice Innovation, Lawyering

More silly lawyer habits that can bite you in the $@#!

Last year, I posted about the silly lawyer drafting practice of representing a number with both numerals and words. It’s a bad habit that many lawyers continue to use unquestioningly, and as I pointed out in that post, it can lead to potentially problematic contractual inconsistencies.

I continue to come across examples of the problem. Here’s another. See if you can spot the issue.


Categorised as: Lawyering, Legal Drafting