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

Is the law truly this much of an ass?

This past Sunday’s New York Times magazine had a fascinating, and ultimately disheartening, article about an entrepreneur who did what great entrepreneurs do. He developed a technology to solve a pressing social problem, specifically, the problem of people texting while driving. Everyone knows this is a huge problem. According to one study, this is now a leading cause of teen deaths in the U.S.  Read the rest of this entry »

Categorised as: The Law

Why your startup is probably breaking the law – and whether you should care [updated]


Most startups are in “bootstrapping” mode, which often includes compensating founders and early employees only with equity. In the early-stage community, we view that kind of frugality commendable, and respect founders who go all-in with equity. The problem is, labor laws require a company to pay its employees at least minimum wage (in Illinois, $8.25 per hour), to pay them regularly (in Illinois, at least every two weeks) and to pay time and a half for all hours worked over 40 in a workweek. Most state laws are similar, and the U.S. Department of Labor also enforces federal labor laws and regulations. In all likelihood, if you are a startup, you are violating these laws – even with regard to yourself.

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Categorised as: Employment Law, Legal Issues

Bike messenger or angel investor?

Coolest bike ever

As some of you know, my preferred mode of transportation is my Brompton (best bike ever, hands down), and that’s generally how I arrive at my appointments.

I am amused by the fact that people here in Chicago consistently assume that I am a bicycle messenger. I have a feeling that if I were in the Bay Area, people might instead take me for a venture capital investor.

We’re getting with the times here in the Midwest… slowly.

Categorised as: soapbox

Taking green legal practice to the next level

I deal with as little paper as possible, but as everyone knows, the “paperless office” is still a far-off land. However, I am making the most of my waste paper. It gives me tremendous satisfaction to turn verbose or contentious legal documents into … compost.

Yes, after shredding documents, I feed them to goodcounsel’s cracker-jack squad of red worms — several thousand of them at this point — who inhabit my vertical worm composter (giving new meaning to “digesting” legal documents). Come spring, these former legal documents will be returned to nature as nutrient-dense organic fertilizer, serving a higher purpose in my garden.

The Circle of Life — lawyer style. Cue the Lion King soundtrack!

Vertical Composter (Worm hotel)Future worm foodMost sane people would stop hereGetting down to work

Categorised as: soapbox

Thoughts on Howard Tullman’s recent Inc. magazine piece

I loved the piece in Inc. entitled “5 Ways to Stop Legal-Fee Madness” by Howard Tullman, a legendary Chicago entrepreneur who recently became the CEO of 1871, one of the premiere startup incubators in the area. I agree with just about everything Howard says. Stop for a moment, go read it, and come back and click “more” below to see my thoughts.

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Categorised as: Entrepreneurship, Lawyering, Legal costs, Startups

Enough to make you feel sorry for these guys?

I know that it’s hard to imagine “feeling sorry” for venture capitalists. We think of them as very savvy, sometimes sharp-elbowed people, who typically make a good deal of money.

But read Bessemer Venture Partners’ amazing page, detailing their “anti-portfolio” — companies that were presented to them for investment and that they passed on. Companies that, had they invested, they “might not still be working.”

It’s incredible to think of the opportunities passed on — Google. Apple. PayPal. Intel. FedEx. eBay. Read the rest of this entry »

Categorised as: Startups