Articles Tagged with “sacramento start up attorney”

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From November 27, through December 15, 2013, hackers stole credit card numbers and encrypted debit card PIN data from as many as 40 million credit and debit cards swiped at Target. The security breach was the second-largest data breach in United States retail history. According to Target, it “alerted authorities and financial institutions immediately after it was made aware of the unauthorized access, and is putting all appropriate resources behind these efforts. Among other actions, Target is partnering with a leading third-party forensics firm to conduct a thorough investigation of the incident.” In a letter to customers, Target warned that customer names, credit and/or debit card numbers, expiration dates, and the CVV (security codes) were stolen. Target is facing significant financial ramifications including legal costs as well as owing money to the credit card companies that must reimburse their customers. Target also faces significant damage to its reputation.

Several months ago, Forbes magazine reported on class action lawsuits over the failure of businesses to secure consumers’ personal data, such as what occurred in the Target breach. While the filing of such cases may become the trend, it does not appear that they will be successful as recent cases have been dismissed for failure to prove standing. The judges in those cases have specifically ruled that the possibility of future injury in the form of an increased risk of identity theft, is insufficient to establish a present injury, and thus, plaintiffs do not have standing.

Interestingly, just two months before the Target data breach, California Governor Jerry Brown signed into law an amendment to California’s Security Breach Notification Act. According to Forbes, the new law requires “consumer notification if ‘a user name or email address, in combination with a password or security question and answer that would permit access to an online account’ was compromised. The law applies even if that information is not combined with a name, and applies to all types of online accounts.”

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It is becoming increasingly more difficult for startups to survive. According to one report, long-term survival rates for startup companies have been plummeting over the past 20 years: Between 1994 and 2010, survival rates have declined from a nearly 100 percent survival rate in 1994 to just 25 percent in 2010. Separate studies performed by the U.S. Bureau of Labor Statistics and the Ewing Marion Kauffman Foundation — a nonprofit that promotes U.S. entrepreneurship — found that of all companies, only about 60 percent of startups survive to age three and approximately 35 percent survive to age ten.

So, why do some startups fail and how can you ensure a successful startup. Harvard Business School Professor Noam Wasserman has written a book called, “The Founder’s Dilemma: Anticipating and Avoiding the Pitfalls That Can Sink a Startup.” In the book, he has identified some reasons why startups fail. One of the major reasons startups fail is that they are co-founded by individuals who have a prior social relationship, not a prior professional relationship. According to Wasserman, such teams end up in disaster. Another major reason startups fail is that the founding teams divide the equity within a month of founding when uncertainty is at its highest.

While there are some factors that are beyond the control of startups, but may contribute to their demise, such as the economy or new government regulations, there are some things startups can do to help create a more stable company and one capable of surviving. Following are some of the factors experts say are likely to accompany a successful startup: (1) Starting the venture as part of a team and preferably with someone whom you have a prior professional relationship; (2) Drafting a business plan; (3) Starting the business on a full-time basis; (4) Starting a larger company, i.e., larger initial investment, greater number of employees, and greater size of assets; (5) Starting in a notoriously favorable industry; (6) Obtaining work experience in your targeted industry prior to starting your company; (7) Implementing and using a marketing plan; and, (8) Ensuring that financial controls are in place. These are important factors for startups to consider and implement, but what about the founders themselves.

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Last month, we discussed why collaboration and sharing physical office space is particularly important to startups. See “The Essentials for Startups: High Speed Internet and a Collaborative Environment,” September 10, 2013. In that article, we noted that while many businesses have been started and run successfully from anywhere in the world, startups are more likely to succeed in an environment where employees and/or founders are able to meet and interact in person. Prime examples of this success include companies such as Google, Twitter, and Groupon. But, is it really necessary and feasible for startups to maintain all of their functions in-house? California-based oDesk, the world’s largest online workplace, is betting that startups will quickly see the financial advantages and growth possibilities of outsourcing many key business functions. On Monday, the company announced the launch of a startup accelerator partnership program called oDesk Upstarts. Startup or seed accelerators are for-profit startup incubators, that essentially take classes of startups made up of small teams and support them with funding, mentoring, and training for a specified period of time in exchange for equity in the startups. Accelerators are privately funded and tend to focus on mobile/internet startups. oDesk Upstarts is a “slate of partnerships with more than 20 global startup accelerators aimed at introducing even more high-growth, early stage companies to the prospect of on-demand labor.” The partners will offer free outsourced labor with the goal being training, coaching, and mentoring.

The idea is an interesting one, but will startups outsource their labor? While investors tend to shy away from startups that outsource core business functions, outsourcing labor may be the solution to two of the biggest problems facing startups: (1) shortage of talent, and (2) limited financial resources. oDesk contends that investors should not fear outsourcing, but rather embrace it. According to the company, outsourcing labor is an excellent bridge over the early growth phase of startups, and is not “a replacement for a company building its core team[, but] a solution for reaching scalability more quickly and doing so in a flexible manner.” oDesk hopes that startups will outsource more than just accounting and HR functions. The company hopes that startups will outsource development and content creation as well. We will have to wait and see if the idea takes hold.

Immigration Reform

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According to a recent article in P-V Tech, real-estate investment trusts (REITS) are growing across the country, and California is no exception. Earlier this month, a large land sale indicated that REITS are also beginning to have a hold in the solar industry. Near Fresno, the New York-based company Power REIT purchased approximately 100 acres of land that will support over 20MW of utility-scale projects in the area.strip mall.jpg

This recent land acquisition is likely to have implications for commercial solar energy solutions in California. If you have questions about commercial real estate and renewable energy, contact an experienced commercial lawyer today.

REITS and Commercial Real Estate

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business2.jpgA California car rental startup currently faces a lawsuit, and the outcome could have significant implications for business startups across the state. According to a recent article in the San Mateo County Times, FlightCar, a Santa Clara car rental startup, has caused quite a stir at the San Francisco International Airport. And this is just another example in “the latest series of battles within rule testing tech entrepreneurs and officials.”

What is FlightCar, Inc.?

FlightCar refers to itself as “the Airbnb of car rentals at airports.” It’s the first company to create a marketplace in which vehicle owners who have parked their cars at the airport can rent them out to other airport travelers. In other words, the company hopes to allow frequent flyers to make some money while their cars remain at the airport. The self-proclaimed Harvard, Princeton, and MIT dropouts have deemed their company the “peer-to-peer alternative to the traditional airport car rental.” The three founders are young–they were only 18 years old when they created FlightCar.

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Contracts are cancelled all of the time. While it is not ideal, it is important know the potential outcomes for a breached real estate contract. Real estate contracts are different from other types of contracts because all pieces of real estate are treated as unique. This means if you were attempting to purchase real estate and the court finds that the seller breached the contract, instead of monetary compensation for the breach you can ask for the contract to be enforced and the sale completed.

Take the case of Troy Shadian, co-owner of Real Estate Analytics, LLC (“REA”). REA attempted to purchased investment property from Theodore Tee Vallas (“Vallas”). Vallas’s father handled aspects of the Vallas properties except for signing contracts. REA negotiated with Vallas’s father and when a deal was formed, Vallas signed the agreement. REA and Vallas agreed to an escrow date but REA asked to move it on two occasions. The first time, the contract was amended to take the new escrow date into account. The second time, the date was only agreed to orally by Vallas’s father. In the time leading up to the third escrow date they regularly met and the father behaved as though the escrow extension was ok. Two weeks before escrow was supposed to close, Vallas’s father contacted everyone involved and cancelled escrow and the entire contract. This led REA to sue Vallas in superior court for specific performance of the real estate contract.

To obtain specific performance after a breach of contract, a plaintiff must generally show: (1) the inadequacy of his legal remedy; (2) an underlying contract that is both reasonable and supported by adequate consideration; (3) the existence of a mutuality of remedies; (4) contractual terms which are sufficiently definite to enable the court to know what it is to enforce; and (5) a substantial similarity of the requested performance to that promised in the contract. Under California law, there is a presumption that a monetary damage award is generally an inadequate remedy for a breach of real estate contract, and therefore courts routinely grant a plaintiff’s request for specific performance. In some cases the presumption is conclusive, but in the case of commercial real estate there is a rare possibility that damages are acceptable. But it is the responsibility of the defendant to prove it.

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A helpful post from Venture Beat recently touched on what all start-up owners should consider when choosing a business lawyer for their operation. Of course, choosing an attorney is a personal matter and at the very least you must be able to see yourself interacting with this person on a frequent basis. If you do not hit it off or simply cannot envision working well with the attorney, no matter what their background, you should look elsewhere.

business2.jpgBut so long as you can hold a conversation with the legal professional and can envision a working relationship, what else matters? The article asks some questions worth considering.

Who will actually be working on your legal matter?
You may have a great conversation with one person only to learn later that someone hidden in a cubicle is actually doing most of your legal work. There are a wide range of firms and organizational structures. From the outset, you should talk with the actual person who will be providing advice and handling the actual legal matter for your company. There are too many high-quality legal professionals to not have direct contact with your attorney.

How do fees work?
It is cliche to state that fees shouldn’t be the main concern. And it is well known that picking any service for the price alone can lead to bare bones quality. But at the same time, it is naive not to assume that price does not matter. Of course it matters, and as a startup it is critical to get good value for every dollar spent, including on legal fees.

There is no right or wrong answer to fee arrangements except to say that they should be transparent. Understand from the beginning how things will work and exactly what services will be provided. Clarifying at the outset may prevent significant complications down the road.

Has the attorney worked with other start ups before?
Legal experience matters. While the lowest fees can likely be secured by the youngest attorneys, there is a lot to say for paying for past success. Like any profession, there are incredibly diverse skill sets between attorneys working in different areas. That might even mean different skills between those working with early-stage startups as compared to more “mature” companies. A lawyer who has worked with those in a similar position to your business is a tremendous asset. As the VB article suggests: “Look for a lawyer that understands the inception-to-launch process.”

Do they understand your industry?
This one is a little more specific than others, but it is certainly helpful if the attorney actually understands the specific of your industry–or at least is familiar with the basics. Legal principles as they relate to businesses generally apply to all, no matter what the industry. But that does not mean that any business attorney is fine. If they can relate to the specifics of your needs, then the more tailored legal help you will receive.

For help on any of these issues in the Sacramento area, please consider contacting our start up attorney today.
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The prime objective of a start-up is to get work done quickly. In doing that, most of the time they do not execute an appropriate background verification and criminal check before hiring the resources. This could be extremely hazardous and might lead to various legal issues. This acts as a blemish to the reputation of the company and might lead to a cancellation of the business license. But at the same time, companies must be incredibly careful about how they go about this process.handcuffs.jpg

Understanding the Law

Perhaps most importantly, local companies should be aware that the Equal Employment Opportunity Commission recently released guidance on businesses using arrest and conviction records in the hiring process. This is a common practice, and many startups may have assumptions about how the law does or does not apply to these matters. At the very least it is critical to be aware of the basics of the law and how they might apply to you.

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Starting a new business is an incredibly exciting adventure. While there are countless different issues that need to be handled beforehand, there is one area that is often neglected: delineating the relationship between different founders. In the rush to advance the business itself, there may be cut corners as it relates to ensuring those involved in a venture have safe, secure legal understandings between one another. 5351289407_f6b5e459f3_m.jpg

For this reason, founders of a start-up enterprise must be vigilant about memorializing various items in a Founder’s Agreement. This is an absolutely critical initial step that should obviously be created in conjunction with a legal professional.

What is included in a Founder’s Agreement?
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Dealing with the many different aspects of a commercial real estate contract can be an incredibly stressful and time consuming process. In many cases it requires several rounds of negations. If sticking points cannot be sorted out, then that time and energy might even be wasted. That is why Letters of Intent (LOI) are often desired by both buyers and sellers. These letters essentially formalize negotiations and streamline discussion so that it is more likely that a favorable understanding will be reached in as efficient a manner as possible.

What Exactly is a Letter of Intent?

contract.jpgIt is critical to have legal help when working on these letters. A legal professional will explain how he LOI should include the following: