why should an attorney represent owners of a start-up entity instead of the entity.

What is the advantage of hiring a local attorney for a startup?

An attorney can present your strongest case. An experienced lawyer can evaluate evidence and present your case in the most favorable light possible, as well as inform you about the full range of legal options available to you.

Who does the general counsel represent?

Ultimately, the GC represents the corporation; not the CEO or management. The GC is accountable to the corporation's shareholders and other stakeholders, represented by the board of directors.

Who is the client in a corporation?

[1] An organizational client is a legal entity, but it cannot act except through its officers, directors, employees, shareholders and other constituents. Officers, directors, employees and shareholders are the constituents of the corporate organizational client.

What is the difference between legal counsel and general counsel?

In simple terms, GC is responsible for the legal matters of the organization whereas a CLO has a much wider remit, integrating the legal team and issues with the wider organization, the aim being to improve company performance, of which legal is just a part.

Which is higher chief legal officer or general counsel?

A chief legal officer may handle some of the duties of general counsel but will typically focus more narrowly on high-level business issues, such as mergers and acquisitions, employee contracts (to ensure they comply with equal opportunity hiring practices), and intellectual property protections.

What does it mean when a lawyer represents you?

Legal representation is the process of representing a defendant in court and the time, projects, and investigation that is involved. According to the 6th Amendment of the Constitution of the United States, everyone has the right to an attorney.

What is the Upjohn warning?

The so-called Upjohn warning takes its name from the seminal Supreme Court case Upjohn Co. v. United States,1 in which the court held that communications between company counsel and employees of the company are privileged, but the privilege is owned by the company and not the individual employee.

What is an example of the corporate client?

Corporate Client means the employer/payor of the Cardholder which has entered into an agreement with the Bank for purposes of the payment of the Cardholder's payroll, commission, bonus, and/or other disbursements. Corporate Client means a Policyholder with 30 or more employees.

What is the job of a general counsel?

Duties and Responsibilities Reviews, researches, interprets, and prepares both written and oral opinions on a wide variety of legal issues. Drafts, reviews, and approves policies and procedures, regulations, bylaws, and other legal documents.

What are the members of General Council known as?

Answer: A general counsel, chief counsel, or chief legal officer (CLO) is the chief lawyer of a legal department, usually in a company or a governmental department.

What do general counsel lawyers do?

What Do General Counsels Do? General counselors work in the business world as the main legal advisers for their respective companies.

Why is a general counsel important?

While organizations frequently retain outside law firms, general counsel play a special role: they are the go-to advisors for CEOs and boards on laws and regulations as well as public policy, ethics, and risk.

What does a business attorney do?

Business Attorneys are often approached by individuals who would like assistance in forming or reviewing business entities that they intend to use to conduct a new or existing venture. Often times, these people believe that the business attorney they hire represents them individually as well as the yet to-be-formed or already formed legal entity. Conventional wisdom would assume that to be the case—the individuals chose the attorney, they will direct the business attorney, and will pay (or direct the entity to pay) the business attorney. However, in such situations conventional wisdom is often wrong. When a group of individuals hire a business attorney and the agreement with the attorney is with the entity, or on behalf of an entity, the attorney is usually not their individual attorney.

Can an attorney represent a business?

It is always important to keep in mind that businesses are separate and distinct legal entities from their owners. As such, when individuals engage attorneys to do work for a to-be-formed entity or an existing entity, it is often the case that the attorney represents only the business and not the individuals. This is true even if the entity has not been formed, since some jurisdictions allow pre-formation actions, such as hiring an attorney, to be ratified by the business after it is formed. This is not to say that an attorney cannot also represent the individual owners—they often do—but when, for example, there are two or more individuals forming a business, it may not be possible (or ethical) for the attorney to represent each individual as their interests may conflict. Business Attorneys have a duty to act in the best interests of their client and since this cannot be done when they are conflicting interests, the attorney, to avoid a potential conflict of interest, may only represent the business or one of the individual owners.

Who did Sprengel retain to represent her LLC?

Upon learning that Mohr had retained Zbylut and LPS to represent the LLC, Sprengel withdrew $162,000 from the company’s bank account and deposited the funds into her attorney’s trust account. Sprengel then filed an involuntary dissolution lawsuit and a copyright infringement lawsuit against Mohr.

Can an attorney represent a business entity?

The Court first confirmed the general rule: when representing a business entity, an attorney’s client is the entity, not the individual stakeholders, and the individual stakeholders “cannot presume that corporate counsel is protecting their interests.”. As with almost every legal rule, however, there are exceptions.

Did Sprengel have any reason to believe that the LLC's attorneys were acting to protect her personal interests?

Further, the evidence demonstrated that Sprengel never had any reason to believe that the LLC’s attorneys were acting to protect her personal interests. Instead, the attorneys “made clear to Sprengel from the outset that their representation to her was adverse in nature” and Sprengel’s interactions with the attorneys, in fact, “were adversarial in nature” from the beginning.

Did Sprengel's attorneys devalue her share of the company?

The court noted that Sprengel did not contend that the attorneys’ conduct devalued her share of the company. Instead, the attorneys represented the LLC’s legitimate interests, some of which may have conflicted with Sprengel’s personal interests (including ownership of the copyright to the guidebook). That alone was not enough to form an ...

Is an attorney-client relationship implied?

The court observed that an attorney-client relationship between an entity’s attorney and an individual entity stakeholder can be implied under some circumstances. Factors include: the size of the entity.

Can an attorney represent an LLC?

As a general rule, an attorney representing an LLC does not also impliedly represent the LLC’s individual members. While there are exceptions to this rule, LLC members should presume that the LLC’s attorneys are not necessarily looking out for their best interests as members.

Why is it important to have an attorney on board?

Having an attorney on board at the start of your new endeavor can help mitigate (or eliminate) this additional expense.

What is the value of having a good attorney?

There is significant value in that experience, in knowing how to read between the lines and the difference between how things can be done and how they actually are done. A good attorney can give you the benefit of that experience without your having to build 100 companies yourself.

Why do you need a limited liability company?

The entire purpose of the corporate (or LLC) structure is to limit an investor’s exposure solely to the assets it puts into the entity. In other words, to make sure you don’t lose your house.

What do I need to run a small business?

Running a business (and funding one), is not an easy task. In the course of a given year, the average small business might need: (i) general company counsel, (ii) accounting services, (iii) banking services, (iv) payroll services, (v) labor counsel, (vi) IP counsel, (vii) real estate services (or counsel), (viii) funding sources (angel, institutional, or otherwise), etc.

What is the good news about forming a U.S.-based business in the 21st century?

The great news about forming a U.S.-based business in the 21st century is that you literally have more options than ever before. That’s also the bad news.

Is a good attorney on call good?

Having a good attorney on call can be useful for more than just asking questions about the Delaware General Corporation Law. Your attorney will have seen many businesses grow and succeed, and, likely, many more falter and fail.

Is it a good idea to talk to an attorney about a business move?

So whether you need help navigating the sea of options that makes up a modern business, advice on how to follow the formalities necessary to make sure you don’t lose your house, or you simply want a sounding board off which to bounce your latest genius business move, it’s always a good idea to talk to an attorney. And as with everything else you do in your business, today is always better than tomorrow.

What do founders want to think about when starting a startup?

When most founders launch a startup, one of the last things they want to think about is choice of entity. They want simplicity, low cost, and the least amount of distraction from the thousands of other things that they need to do to get their startup off the ground, but setting up an entity is necessary if founders ever want to attract investment ...

What is section 1202?

Section 1202 is one of the most exciting tax incentives for founders and investors alike. This section of the tax code allows founders and investors to exclude up to $10 million in capital gains from the sale of qualified small business stock, and stock of most startups qualify as qualified small business stock.

Do LLCs pay taxes?

As noted above, LLCs do not pay tax on their earnings and instead allocate the earnings to the members of the LLC via the K-1.

What is representation in a legal entity?

When a lawyer is involved in forming an entity, a number of options for explaining the nature of the representation have been used. In one scenario, the lawyer represents one of the constituents of the contemplated entity, and then may represent the entity later. Another scenario involves representing all of the constituents during formation, and may involve representation of the entity later. Finally, some authority uses a model where the lawyer may disclaim representation of individual constituents completely, and only represent the entity both at the formation and later stages. Each of these models presents issues from an ethics standpoint, and complications when malpractice claims are made.

When there are unresolved differences, lawyers must consider TDRPC Rule 1.07, the intermediary rule?

When there are unresolved differences, lawyers must consider TDRPC Rule 1.07, the intermediary rule, before deciding to take on the representation. Mediating disputes between clients is permitted with informed consent if neither “contested litigation” or “contentious negotiations” are anticipated. Comment 4, TDRPC Rule 1.07. A lawyer may have a hard time objectively analyzing whether potential negotiations will be “contentious.”

What is required for entity formation?

Regardless of the model representation chosen, it is clear that entity formation requires documentation that explicitly identifies the client or clients and identifies potential conflicts of interest. If some constituents are not represented, the lawyer should document that those constituents are not represented and may seek other counsel. Further, the constituents must be told about the nature of confidentiality in the formation process and afterwards once representation of the entity begins. When disputes arise among the constituents, the lawyer must re-evaluate whether he or she can adequately represent the entity.

What is representation of all constituents?

Representation of all constituents in the course of entity formation is quite common. The ethical issues noted in the representation of a single constituent apply to representation of multiple constituents. In addition, the possibility of known differences between the constituents adds to the risks of representation. The Restatement provides discussion of a scenario involving partnership formation under Illustrations 4 and 5 of Section 130 which notes conflicts requiring informed consent arising from different contributions to the partnership by the partners. It is also common for there to be unresolved differences that are subject to negotiation when a partnership is formed.

Why is it difficult to rely on accommodation client status?

The difficulty in relying on accommodation client status is that nothing changes the basic conflict rule that the lawyer must able to adequately represent all of the clients. When a lawyer relies on accommodation client status to represent a long time client, in a malpractice claim the new client may argue that the lawyer had only the long term client’s interests at heart during the time that the lawyer represented both clients.

What is the Texas Disciplinary Rules of Professional Conduct?

Texas Disciplinary Rules of Professional Conduct (TDRPC) Rule 1.12 (a) states that “ (a) lawyer employed or retained by an organization represents the entity.” The rule goes on to note that the lawyer’s duty is to serve the best interests of the entity, rather than that of the constituent partners or shareholders individually.

Is an ethics opinion a liability?

As one would expect with an ethics opinion, the details of potential liability with regard to this model are not discussed. Missing from the opinion is any discussion of how the lawyer may be subject to liability for an implied attorney client relationship despite the existence of the documentation regarding the organization as client. In Manion v. Nagin, 394 F.3d 1062 (8th Cir. 2005), the court acknowledged that it was possible for a lawyer to represent only the entity, but noted that giving legal advice to a constituent as to their individual situation created an attorney client relationship.

What is the easiest business entity to start?

A sole proprietorship, for example, is one of the easiest business entities you can launch. Basically, you just get to jump right in with both feet and start working.

Why is it so popular to start a sole proprietorship?

In the U.S., becoming a sole proprietorship is extremely popular because it is the easiest business entity to create. By comparison, the sole proprietorship is far less complicated than the LLC. A sole proprietorship does not require nearly as much paperwork, and it is cheaper as well.

What is LLC in business?

An LLC is a limited liability company. A limited liability company (or LLC) is basically the happy middle between a sole proprietorship and a corporation. You get some of the benefits and protections of a corporation while avoiding some of the downsides of a sole proprietorship.

How to turn a sole proprietorship into an LLC?

You simply file the appropriate paperwork and pay the filing fees to transform your sole proprietorship into an LLC. Once your LLC is formed, you should keep your business and personal finances separate and meet the requirements to stay compliant each year.

What are the advantages of LLC?

Some of the LLC advantages can offer include: 1 Asset protection: As an LLC, you do not have to worry about your personal assets getting attacked if your business runs into legal trouble. Sole proprietorship does not offer this type of protection. 2 Pass-through taxation: As an LLC, you will not pay business taxes. This is because the income taxes are passed to the owners and have to be reported on the owner’s business taxes. 3 Limited requirements: Compared to corporations, there are not as many compliance requirements your business will have to meet in order to be an LLC. 4 Credibility: Having LLC tacked to the end of your business name is just going to make you look like a more credible business. Potential customers, employees, and investors are all going to feel as though they can trust you as opposed to someone without the LLC at the end. 5 Flexible Management: With sole proprietorship, there is one person in charge. With an LLC, there is a little more flexibility to set up a system for who is in charge and who makes decisions. For some, this is more appealing than having to make every single decision by yourself.

Why is sole proprietorship bad?

One of the biggest downsides to sole proprietorship – and ultimately the reason why a lot of people decide against it – is because you have no liability protection.

What is the simplest type of business?

A sole proprietorship is the simplest type of business and it allows a single person to form and operate the business