Checklist for Incorporation (Delaware)

I realize many startups don’t worry about paperwork until later. However, they can avoid legal and tax problems by setting it up right from the start. A client asked me today, what documents do they need to set up a Delaware corporation. Here is a checklist of documents typically used for incorporation and issuing stock: Consent of Incorporator – approve certificate of incorporation – approve bylaws – designated directors Certificate of Incorporation – name of corporation – designation of registered agent – authorizing shares – Continue reading →

Swapping Services for Equity

Wouldn’t it be great to paint some walls for a hot new startup and get paid in stock instead of cash? That’s exactly what David Choe did 10 years ago.  He painted Facebook’s headquarters in Palo Alto and received stock, which today would be worth more than $1 billion (based on its current value of $76/share). Wow!  $1 billion for painting walls.  Where do I apply? Of course, this may not happen to everyone.  David Choe was an artist who painted erotic murals at the request of Sean Continue reading →

Is backdating okay?

If you are thinking of rekindling your relationship with an old flame, you came to the wrong place.  What “backdating” is about is signing an agreement today with the intent that it be effective as of a prior date. Let’s suppose you hire a web designer to build a new website.  Perhaps, you don’t know exactly what kind of website you need or how much it will cost.  You meet with your designer and toss around some ideas.  You ask for a proposal.  There are several Continue reading →

Non-Competes for Strategic Alliances

That’s an oxymoron.  Why would you need a non-compete for a strategic alliance? The whole idea behind developing a strategic alliance is to join forces, create a business partnership, leverage each other’s resources.  It seems counter-intuitive and downright offensive to be talking about non-competition at a time when you should be focusing on synergy. Raise the Issue The truth is that non-competition is the elephant in the room.  Neither party wants to bring it up or discuss it, but it may suddenly appear in the Continue reading →

How to Create Electronic Contracts

Is it legal to sign contracts electronically? That’s a question that comes up a lot.  The short answer is “yes.” Digital contracts or electronic signing has been going on for quite a while.  Of course, you are by now familiar with signing the credit card display at the grocery store.  And you pay for gas by just swiping your card at the pump.  And it is pretty hard to avoid the “buy now” button when shopping online.  Electronic transactions are very common today. So what Continue reading →

DIY Mobile Contracts

Everyone I know has a smartphone.  Everyone you know has a smartphone.  Ok, my mother does not have a smartphone.  But everyone else does. According to Business Insider, 295 million new smartphones were shipped in Q2 alone.  That’s over a billion new cell phones a year!  And there are more than 1.2 million apps available for using your smartphone! Everything is going mobile.  So, why not contracts? Just imagine.  You are at a fancy restaurant.  You just close the deal with a new customer who Continue reading →

How to create thoughtful contracts

What contracts do I need to start a business? I get that question a lot.  The truth is that’s too broad a question to answer.  You may need contracts for customers, vendors, employees, contractors, investors, users, subscribers, and even your fans. Every business is different and you want to be thoughtful about what contracts you use to build your business.  If you have too many contracts, it will be hard for you to manage and maintain them.  And, more importantly, it will be annoying for Continue reading →

Do you trust everyone who signs a contract?

I used to think I did.  Perhaps, I was too trusting. If an entrepreneur or business owner came to me for help, I wanted to jump right in.  I wanted to help them structure the next deal or negotiate a financing transaction.  I wanted to offer legal insights that would accelerate the growth of their business.  My goal was to help them build their dream. But I wasn’t always on the same page with my clients.  What some clients wanted was a lawyer that would Continue reading →

The future of contracts

For the past 200 years, contracts haven’t really changed.  Yes, we did evolve from using ink and parchment to typewriters and then word processing software but that was just the form of documentation.  The actual wording and composition of contracts have remained pretty much the same.  The future of contracts looks quite different! Imagine a bank loan agreement that automatically verifies whether the borrower maintains its required loan ratios.  Or imagine a trademark license that automatically files a trademark renewal upon expiration.  Or imagine the sale of Continue reading →

Create your own contracts!

A lawyer is telling you to write your own contracts? It’s heresy. Perhaps, I shouldn’t be telling you this.  I’ve been a lawyer for over 28 years.  I’ve spent my career drafting, revising, and editing contracts for technology-based businesses.   I know how complicated contracts can be whether you are a lawyer or non-lawyer.   Why would I recommend that you create your own contracts? Think of it this way.  It’s like writing a love letter.  Would you hire someone else to express your innermost Continue reading →