http://exemplarlaw.ehclients.com/index.php/// en emelia@exemplarcompanies.com Copyright 2011 2011-12-16T19:03:20+00:00 http://www.exemplarcompanies.com/site/kellogg_andelson/ http://www.exemplarcompanies.com/site/kellogg_andelson/#When:18:03:20Z Kellogg & Anderson is a Woodland Hills, California-based full service accounting and tax firm.  Founded in 1939, K&A is one of the leading providers of accounting services in Southern California.  The firm focuses on companies and organizations with annual revenues from $1 million to $10 million. K&A serves over 3,000 clients across a wide range of industries including healthcare, real estate, non-profits, business services, manufacturing, entertainment and technology. Kellogg & Anderson is a California-based full service accounting firm.  Founded in 1939, the firm focuses on companies with annual revenues from $1 million to $10 million. Industries served include healthcare, real estate, non-profits, business services, manufacturing, entertainment and technology. K&A engaged Exemplar Capital as Investment Bankers and Exemplar Law as legal representation to facilitate debt restructuring and increase working capital and to prepare for acquisitions.  Featured Customer 2011-12-16T18:03:20+00:00 http://www.exemplarcompanies.com/site/congress_proposes_bill_to_exempt_more_it_workers_from_overtime_federal_over/ http://www.exemplarcompanies.com/site/congress_proposes_bill_to_exempt_more_it_workers_from_overtime_federal_over/#When:15:35:35Z You may have heard about a new bill introduced in the U.S. Senate that would change the classification of “professionals” exempt from overtime pay requirements to include more types of I.T. workers.You may have heard about a new bill introduced in the U.S. Senate that would change the classification of “professionals” exempt from overtime pay requirements to include more types of I.T. workers. The linked article discusses the wisdom of the policy and some of its potential consequences. But I’d like to talk about a few things that the commentary has overlooked on a practical level. Suppose , hypothetically, that congress passes this bill and it is signed into law. Simply because the federal government has lifted the requirement for overtime pay for certain workers in IT does not necessarily mean that a given employer can immediately cease paying these workers their overtime wages. There are a few other hurdles that employer would have to clear, first. Watch out for State Law For example, Massachusetts law sets out in MGL c. 151 §1A the general rule for overtime pay and a list of exempted employees. This list also includes “professional person[s],” but it doesn’t appear to include IT workers. Your state’s law may be different, and employers with employees in multiple states will have to review each state’s law on overtime before they can make any changes to payment, even if the bill were to become federal law. So, let’s suppose the employee in question works and is paid in some state that has an exemption for IT workers. Are you ready to roll with a new wage policy that no longer provides overtime? Watch out for Existing Employment Agreements If the law used to be that there was an overtime requirement, then you probably got good enough advice to have that fact reflected in your employment agreement. It would be impossible to write overtime out, and attempts to do so through misclassification of employees as independent contractors often result in serious penalties. The problem is that any employment agreement previously entered into will still be in effect after the new law is passed. It’s a very real contract, not just a handbook, and if an employer tried to renege on promised overtime pay, that would breach its agreement and it would be liable to the affected employees for the lost wages, and maybe for some penalties. Employers may be tempted to just “update” employment agreements to reflect the new changes in the law. But this is like trying to “update” your mortgage by moving the decimal point over. It’s a contract, so you need the other party’s acceptance to change it! And getting acceptance isn’t enough: you may also need “fresh consideration.” After all, there are probably a lot of people who would agree to losing their overtime pay rights on the condition that they not be laid off. But from a legal standpoint, there has been no change in the position of the employee—no inducement—to accept this new agreement. In an example from Pennsylvania, when an employer tried to amend its non-competition contract with its employees, it failed to offer any new incentives like cash or promotions. When the employees sued, the courts held that no contract was ever formed because there was no consideration present to make it valid! There is no doubt that if the proposed bill were passed, it would affect a large number of people. But maybe not immediately, and maybe not properly. You can contact the author here, and follow @gerritbetz and @ExemplarCo on Twitter. General 2011-12-16T15:35:35+00:00 http://www.exemplarcompanies.com/site/crowdfunding_bill_for_small_business_ventures_moving_in_house_and_senate/ http://www.exemplarcompanies.com/site/crowdfunding_bill_for_small_business_ventures_moving_in_house_and_senate/#When:15:27:00Z On the heels of our blog in September on crowdfunding as a means to finance a startup, the Obama administration has supported crowdfunding bills, and now the House of Representatives has delivered the Entrepreneur Access to Capital Act (H.R. 2930). Crowdfunding Bill for Small Business Ventures Moving in House and Senate On the heels of our blog in September on crowdfunding as a means to finance a startup, the Obama administration has supported crowdfunding bills, and now the House of Representatives has delivered the Entrepreneur Access to Capital Act (H.R. 2930). Scott Brown (R-MA) has introduced his own version, the Democratizing Access to Capital Act (S. 1791) in the Senate, but it is still in committee.  And just days ago in Boston, I attended a lunch with a group of business lawyers to discuss crowdfunding and how it might affect business as we know it. You can read the bill in its entirety above, but I give a very basic breakdown here.  The bill adds a new exemption for rounds under $2 million, and the maximum investment per individual is either $10,000 or 10% of that individual’s annual income, whichever is lower.  Although the new rule reduces the legal expenses by simplifying compliance, compliance doesn’t disappear entirely. But if a Company uses a third-party site (e.g., Indiegogo) to handle the issuance, that site can handle many of these requirements for the Company, which is a big relief.  These requirements come in three flavors: Investor Protections The issuer (whether that’s the Company or the crowdfunding site managing the transaction) has to warn investors that the investment is speculative, and that they can’t sell the securities anytime soon. Issuers also have to quiz investors on basic matters of risk to ensure they really get it. Finally, the issuer has to have some electronic means of communication for the investors on its site.  Sharing Information with the Securities Exchange Commission The issuer has to send the SEC information like its name, address, website, and a list of employees. They also have to notify the SEC when they begin an offering and complete one. Finally, they must allow the SEC to have the same level of access to their website as any investor would have. Fraud Prevention Mechanisms Keeping in mind that all of the anti-fraud rules that exist in the securities laws still apply, there are a few additional but small burdens to prevent fraud. One is that issuers have to outsource all their cash handling to a third party custodian. This third party won’t be allowed to release any money until at least 60% is raised. This should disappoint scammers who were aiming for a long-tail approach to defrauding investors.  Another restriction is to avoid giving investment advice. I’m not sure what effect this would have on site layout—if you feature different startups on the homepage, are you implicitly endorsing investment in those startups?  Does that constitute advice? I don’t know. The SEC will clarify, I’m sure. Stay tuned. Contact the author here, and follow @ExemplarCo and @gerritbetz on Twitter. General 2011-12-07T15:27:00+00:00 http://www.exemplarcompanies.com/site/boilerplate_contracts_matter_blackberry_edition/ http://www.exemplarcompanies.com/site/boilerplate_contracts_matter_blackberry_edition/#When:15:06:47Z Earlier we blogged about forced arbitration clauses in mobile contracts, and at the time I struggled to contrive situations where hundreds or thousands of people would want to sue a carrier. As they say, you can’t make this stuff up.Earlier we blogged about forced arbitration clauses in mobile contracts, and at the time I struggled to contrive situations where hundreds or thousands of people would want to sue a carrier. As they say, you can’t make this stuff up. In October, BlackBerry users suffered a total outage of service for a period of days, and now BlackBerry’s parent company, Research in Motion (RIM) is facing class action lawsuits in the U.S. and Canada. The first article reports that the U.S. complaint relies on an implied contract between BlackBerry and End Users as its starting point for getting damages out of the mobile carrier. But BlackBerry wouldn’t leave something like that to a merely implied contract. Of course, they have a rigorous Blackberry Solution License Agreement. This agreement provides that all users have accepted its terms by “downloading, installing, activating or using the [BlackBerry] software . . . .” (emphasis mine). So much for implied terms. These terms are “express” because they are expressed explicitly in writing (but orally communicated terms are express, too!). Arbitration Rears its Head Again You guessed it—this Agreement calls for mandatory arbitration both in Canada and the U.S. in § 26(d) on page 20. So, according to this Agreement at least, those plaintiffs above can’t start this battle in a court. And what about class actions?The same §26(d) provides “No dispute between the Parties, or involving any person but You, may be joined or combined together, without the prior written consent of RIM.” So they apparently can’t team up, either. Wait—Go Back. What’s the Difference Between Express and Implied? It’s best to talk about this in the context of warranties. §19(a) and (b) on page 14. These are warranty disclaimers. Everyone is familiar with express warranties, like the mileage warranty on a car or a 1-2 year warranty on an electronic device. Those are express warranties because they’re mentioned in advertising materials. The good news is that there are warranties implied in everything that you buy! But these warranties aren’t replacement warranties. Usually they only warrant that the thing functions at a basic level, is not harmful, and is suitable for the purpose that it advertises it serves. The bad news is that many of these implied warranties can be disclaimed. “As is” usually suffices, and you bet you’ll find “as is” in §19. In fact, you’ll find even more language saying that you agree your BlackBerry might not work at all, and that if it does work, it may be unsatisfactory, the service may be interrupted, and that your transmissions may be inaccurate or go undelivered. Sounds like a great product, huh? Anything Else I Should Know About in There? §20 on page 16. This kind of limitation of liability appears in many contracts. In this case, users have agreed that they won’t hold RIM liable for incidental damages. Incidental damages are the bad things that happen as a result of some other failure. For example, a phone malfunction doesn’t cause you immediate harm in the same way that, say, a pacemaker malfunction would. But you might lose business because you couldn’t receive an email, process a payment, or do anything else you were relying on your BlackBerry for to achieve other goals. Well, you’ve “signed” away the right to sue for that. And even if you do have a claim, you’ve agreed to only take a maximum of $500. Is It Really That Restrictive? Tentatively . . . no. Even though the Agreement reaches very far, some of the terms are wishful thinking, and RIM knows it. That’s why this language appears before the warranty disclaimers: Some countries do not allow the limitation or exclusion of consequential, indirect or other damages in contracts with consumers and to the extent you are a consumer the limitations or exclusions in this section may not apply to you. Remember that each of the 50 United States has its own consumer protection laws. Some of these laws prevent the disclaimer of implied warranties, and even though the Agreement chooses New York as the state law that will be applied to it, a court in another state might ignore this for public policy reasons. It’s impossible to know which terms will be enforced and which ignored until the claims are filed and the dust settles. Be sure to read and understand your own documents, and insist on proper protection for your business. When in doubt, ask a professional! Questions? Comments? Contact the Author. General 2011-11-02T15:06:47+00:00 http://www.exemplarcompanies.com/site/update_on_amazons_silk_and_privacy_concerns/ http://www.exemplarcompanies.com/site/update_on_amazons_silk_and_privacy_concerns/#When:16:00:03Z We blogged about the privacy concerns around the Kindle’s new Silk browser not long ago. Now, the Electronic Frontier Foundation has done a more thorough review of the Kindle Fire’s Silk browser and has concluded that there are some privacy pros and cons that weren’t obvious before.We blogged about the privacy concerns around the Kindle’s new Silk browser not long ago. Now, the Electronic Frontier Foundation has done a more thorough review of the Kindle Fire’s Silk browser and has concluded that there are some privacy pros and cons that weren’t obvious before. The unexpected good news is that there are privacy benefits for users who choose to allow Silk to connect to Amazon’s servers. All data sent to and from Amazon is encrypted to some degree, which means that users connecting over an unsecured network (increasingly common in public places) can’t be spied on as easily by other users on that network. Yet, even with the default setting to allow Silk to route requests to Amazon on, no secured information will be sent (e.g., sites starting with https://). These requests bypass their servers and are handled as if you had opted to use the Silk as an ordinary browser. The expected not-so-good news is that Amazon will still log URLs associated with a given browsing session. This doesn’t include personally identifiable information, unless you provide it yourself unintentionally. Ever notice how often websites plug your searches into the URL? Do a search from Youtube’s search bar and look in your address bar. Amazon would have a record of that if it were done through Silk on their servers. If this doesn’t sound like a big deal, read about the time AOL released “anonymous” search data (also linked within the EFF article). I’ll leave you to read the EFF’s full post for more details. Contact the author via email. General 2011-10-27T16:00:03+00:00 http://www.exemplarcompanies.com/site/how_can_employers_leverage_interns_legally_and_effectively/ http://www.exemplarcompanies.com/site/how_can_employers_leverage_interns_legally_and_effectively/#When:18:47:16Z Many employers are improperly using Interns as free labor, violating the Fair Labor Standards Act. And yes, the FLSA applies to all employers, even ones who don’t have any unionized employees. Even the National Labor Relations Act (NLRA) applies to all employers, union or not. Recently, I was browsing x10i Social Media and their social blog about various topics from processing online payments with your smart phone to creating a better landing page for customers. It’s a decent (and local, for our Massachusetts readers!) resource for any small business struggling with marketing in the age of social media. One of the latest posts discusses mobilizing interns to step up a small business’s marketing game. This may sound very attractive—the interns get to learn, earn credit from their college, and you get to finally kick off your online presence or knock a few items off of the to-do list! Slow down. Be cautious with interns. Many employers are improperly using them as free labor, violating the Fair Labor Standards Act. And yes, the FLSA applies to all employers, even ones who don’t have any unionized employees. Even the National Labor Relations Act (NLRA) applies to all employers, union or not, but that’s beyond today’s topic. The improper hiring of interns has already made headlines. Last year, the New York Times reported on the increase in internships because of an oversupply of fresh college graduates looking for work. And just last September, the Times reported again on a new development: interns suing Fox Searchlight Pictures for not paying them to do menial tasks on the set of the film Black Swan. OK. So, How Can I Use Interns Legally? First, some background. The FLSA defines an employee as “any individual employed by an employer.” 29 U.S.C. 203(e)(1). The statute goes on to define “employ” as “to suffer or permit to work.” If that doesn’t sound very helpful, that’s because it’s so broad you can drive a truck through it. Interns are an exception. But what is an intern, exactly? In short, the theory is that interns work for education, not money, and that the employer is a teacher, not a beneficiary of this work, so these interns are not an FLSA “employee.” The federal regulators apply a wishy-washy six-factor test based on a 1947 Supreme Court case to determine whether an individual is a true intern or an employee. Here are the six factors: 1. The training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in a vocational school; 2. The training is for the benefit of the [intern]; 3. The [intern]s do not displace regular employees, but work under close observation; 4. The employer that provides the training derives no immediate advantage from the activities of the [intern]s and on occasion the employer’s operations may actually be impeded; 5. The [intern]s are not necessarily entitled to a job at the completion of the training period; and 6. The employer and the [intern] understand that the [intern]s are not entitled to wages for the time spent in training.  (emphasis mine) (“intern” was changed from “trainee” in the original) I won’t dive too deep into any of those here, but if you want to see an example, the U.S. Department of Labor applies it to an example that is right on the line between intern and employee. Did you notice that whether the interns get college credit is not a factor in that list? Your takeaway should be that interns are students even when they’re with you, and that by including them in your business, you’re doing them a favor at your expense. How Can Anyone Use Interns Effectively, Then? DISCLAIMER: The following is not legal advice nor a substitute for legal advice, and no attorney-client relationship is established by your reading or relying on it. Just because you can’t use interns as free labor doesn’t mean they can’t be good for your business. Interns are often your biggest champions. Think of it this way: they could be earning $0/hour anywhere, but they chose to come to you. There’s something about your business they like, and as they learn more about it, they’re able to become a great advocate for you when they go back to their friends and family. Interns are a second pair of eyes and ears. Include your interns in as many meetings, deals, or projects as you can. Have them prepare for these things as if they were flying solo, but do all the real work yourself. It’s a fantastic learning experience for them because it allows them to model how their work would play out in the real world. And, because you have done 100% of the preparation and labor, it still does not displace ordinary labor and provides no immediate benefit to you. Yet, as a peripheral benefit, interns are sure to hit upon great ideas, suggestions, or they may catch one of your mistakes and help you limit the fallout! I’m sorry to burst anyone’s bubble who was excited for extra help in these lean times. But at least you’ll have one less lawsuit target on your business and you may still be able to think creatively with a lawyer about safe ways to implement a force of champion interns! Contact the author General 2011-10-26T18:47:16+00:00 http://www.exemplarcompanies.com/site/amazons_silk_browser_is_watching_you/ http://www.exemplarcompanies.com/site/amazons_silk_browser_is_watching_you/#When:23:09:53Z One of Amazon’s strategies to propel the new Kindle Fire past the iPad includes its new built-in browser, Silk. Silk is unique because it relies on Amazon’s robust cloud services to essentially pre-load website information for users, resulting in significantly faster browsing. Amazon’s bigger machines do the heavy lifting so their lighter devices can simply surf.   But there’s a catch.One of Amazon’s strategies to propel the new Kindle Fire past the iPad includes its new built-in browser, Silk. Silk is unique because it relies on Amazon’s robust cloud services to essentially pre-load website information for users, resulting in significantly faster browsing. Amazon’s bigger machines do the heavy lifting so their lighter devices can simply surf. But there’s a catch. The Silk browser will collect browsing data (Ars Technica). While preserving some level of anonymity (no personally identifiable information is recorded), Amazon will know what sites you visited, how long you stayed, etc. The value to Amazon is clear to anyone who’s ever used the “customers who bought this item also bought” feature from their main site. Being able to observe browsing even with anonymous information, is just short of mind-reading. E.g., if Amazon sees that 50% of those shopping for sleeping bags in August recently looked at the burning man site, they’re much more likely to also be interested in, say, sunscreen or yoga mats than the average outdoorsman. Fortunately there’s an op-out setting for those who don’t want to be tracked at all. Still, this practice appears to be just part of larger trend. No matter what browser you use, your activity is probably being tracked by the browser and websites that you visit. However, the fact that Amazon is routing requests through their own servers dovetails with our earlier post about wiretap laws and the importance of privacy in the web. There’s little difference between the practice outlined in our earlier post and this, except that Amazon is properly disclosing this in its privacy policy. Even with all the press, and considering how few people read privacy policies, it’s still unlikely that most users are aware of this. Contact the author via email. General 2011-10-18T23:09:53+00:00 http://www.exemplarcompanies.com/site/massachusetts_pizzeria_alleged_wage_violation_continues/ http://www.exemplarcompanies.com/site/massachusetts_pizzeria_alleged_wage_violation_continues/#When:17:02:06Z Yesterday the Globe reported that a federal grand jury will hear evidence this week about the Upper Crust Pizzeria’s alleged practice of not paying its workers properly. If you are unfamiliar with this issue, the U.S. Department of Labor initially ordered Upper Crust to pay $341,000 in damages, but Upper Crust may have deducted this later from those same employee’s earnings to avoid actually losing the cash. Yesterday the Boston Globe reported that a federal grand jury will hear evidence this week about the Upper Crust Pizzeria’s alleged practice of not paying its workers properly. If you are unfamiliar with this issue, the U.S. Department of Labor initially ordered Upper Crust to pay $341,000 in damages, but Upper Crust may have deducted this later from those same employee’s earnings to avoid actually losing the cash. The grand jury may find that there is no probable cause to believe that Upper Crust violated criminal laws, or they may recommend indictments against Upper Crust on any number of grounds. In either case, it’s terrible press and certainly has an impact on how consumers view their business (several reviewers on Yelp! have pointed it out with much disdain). Don’t let this happen to your business. Familiarize yourself with the Massachusetts wage law, overtime law and its exceptions, and a few other key laws dealing with retaliation against employees who complain and the exception to employee status: Massachusetts’ independent contractor statute. Really, read them. They’re not that long, and making yourself aware of the issues may prevent you from having to learn more about the treble damages law later on. That said, there are federal law parallels for all of these laws and while Massachusetts is generally stricter (i.e., if you comply with Massachusetts law you will have complied with federal law a fortiori), there are some significant differences. When in doubt, always consult with your attorney or general counsel with expertise in employment law.  Want to continue the conversation? Contact the author via email. General 2011-10-13T17:02:06+00:00 http://www.exemplarcompanies.com/site/who_cares_about_arbitration_anyway/ http://www.exemplarcompanies.com/site/who_cares_about_arbitration_anyway/#When:21:29:17Z Senators Blumenthal and Franken recently introduced a bill that would prohibit mobile carriers from including mandatory arbitration clauses1 in their customer contracts. This, of course, raises the question of what an arbitration clause is, exactly, and why it’s a big deal.Senators Blumenthal and Franken recently introduced a bill that would prohibit mobile carriers from including mandatory arbitration clauses1 in their customer contracts. This, of course, raises the question of what an arbitration clause is, exactly, and why it’s a big deal? Arbitration is semi-formal dispute resolution process. It’s semi-formal because it’s not as formal as a court, which brings with it voluminous rules of evidence, procedure, and entirely of the host state’s laws which decide the outcome. In arbitration, none of this is strictly necessary or guaranteed. This makes arbitration significantly less expensive for the two sides, and administratively much quicker. However, there are rules. Groups like the American Arbitration Association have publicly posted rules that govern their proceedings, and most arbitrators will take common law and state and federal laws into consideration when making a decision. So what’s the big deal? If the law passes, consumer goods companies might have to make really big changes to the way they handle disputes, do business generally, or they may even have to increase fees. Here’s why: Class action lawsuits are often impossible in arbitration. Class Actions are truly scary for consumer goods companies, because while a $200 complaint about a cell phone is obviously not worth the cost of litigation, several thousand consumers’ combined $200 issues certainly are. Damages can quickly add up to millions of dollars. Common Law precedent also can’t come from arbitration hearing because they’re not constitutionally authorized courts. This makes it safer to toe the line because losing in arbitration today has no effect on tomorrow’s arbitration hearing dealing with substantially the same issues. Finally, because arbitration has free reign to consider almost any standards they want when making decisions, companies can rely on one law—there’s less hassle dealing with the nuances of the laws of all 50 states, plus how those interact with federal law. What would happen if the bill passes? If mobile carriers can’t rely on this quick dispute resolution option, they’ll have some choices to make. They could try to revamp their practices to reduce consumer complaints—but this takes time and money. They’ll have to spend more money on dispute resolution as they navigate more complex state rules, some of which have strict consumer protection laws. In any case, this bill would probably cause a fee increase, a drop in profits, or both. Is arbitration good or bad? Don’t think of it in those terms just because there’s a bill proposal about it. Arbitration can be attractive for both parties in a dispute because of its quick resolution and low cost. At the same time, some people may be put off by it. Always ask a business advisor or lawyer if it is wise under the circumstances before including arbitration in your contracts. Want to continue the conversation? You can reach the author via email.  1.  See Verizon’s arbitration clause for example (the rest of the contract has been deleted, and the ALL CAPS formatting has been removed). General 2011-10-06T21:29:17+00:00 http://www.exemplarcompanies.com/site/intro_to_the_low-profit_liability_liability_company_and_the_b-corp/ http://www.exemplarcompanies.com/site/intro_to_the_low-profit_liability_liability_company_and_the_b-corp/#When:11:24:29Z Intro to the Low-Profit Liability Liability Company and the “B-Corp” Lately these two concepts have been coming up frequently in my interactions with entrepreneurs leaders of corporations. Many people today are concerned with more than just the dollars-and-cents bottom line and so they find the ethos behind these corporate forms appealing.Intro to the Low-Profit Liability Liability Company and the “B-Corp” Lately these two concepts have been coming up frequently in my interactions with entrepreneurs leaders of corporations. Many people today are concerned with more than just the dollars-and-cents bottom line and so they find the ethos behind these corporate forms appealing. Today, let’s nail down a quick definition of each and learn about the most important differences between the two. L3C The Low-Profit Liability Liability Company (“L3C” for short) states in its founding documents that profit generation is not its “significant purpose.” Instead, it must “significantly further” a charitable purpose.1 The purpose of choosing the L3C over an LLC or C-Corp is to hopefully be a more attractive candidate for investment from charitable foundations. This is because charitable foundations must spend their cash on a charitable purpose2 and their spending cannot benefit individuals—only the public at large. Because L3Cs explicitly state that they’re not just chasing profits, this should make it easier for foundations to invest in them. B-Corp The Benefit Corporation (“B-Corp” for short, and a wordplay on existing concepts like “C-Corp” and “S-Corp”) is a wholly for-profit entity with ordinary shares. What makes it different is its commitment to “general public benefit.”3 B-Corps submit to certification and are graded by a third-party on their performance in areas like Environment, Community, or Employees. They also have special obligations to internal oversight in the form of a “benefit director” and public oversight in the form of “annual benefit reports.” It’s like Corporate Social Responsibility with some teeth. What’s the Difference and What’s Right for Me? One big difference is that, because each form expressly dethrones profits, shareholders will have problems filing lawsuits on theories that their shares’ value isn’t being optimized. For most businesses though, the legal and business considerations that go into corporate formation have to do with funding and governance. Through that lens, there are probably limited circumstances when a L3C or B-Corp is preferred over a traditional form. One is where you are a fantastic match for funds from charitable foundations. I say fantastic because there is usually less money available than is needed for charity. To get foundation money into your L3C, your business might have to exist in a space where tax-exempt organizations don’t typically do what you do. If there are some in your space already, these are more attractive targets for foundation donations. But one big problem to keep in mind with L3Cs is that they were created to try to get around an onerous IRS approval process.4 The catch-22 is that until that same IRS process blesses the L3C form, foundations aren’t as likely to fund them. A B-Corp may be called for where public perception is very important to your business. A B-Corp doesn’t change much about the legal issues around a Company except for adding more governance requirements. However, it does bring some third-party verification of your corporate social responsibility. In other words, people are less likely to think that B-Corps are just another form of greenwashing. 1. These quotes are taken from the Vermont Statute on L3Cs. 2. Not every noble cause earns a tax-exemption! See here for a list of charitable purposes. 3. This quote is taken again from the Vermont Statute. 4. See Lang, Robert, PRIs and Private Letter Rulings (PDF Link). General, News 2011-09-24T11:24:29+00:00 http://www.exemplarcompanies.com/site/how_to_train_your_mercenary_aka_outside_litigation_counsel/ http://www.exemplarcompanies.com/site/how_to_train_your_mercenary_aka_outside_litigation_counsel/#When:12:23:59Z After 18 years in courtrooms across the country, a few truths become obvious about lawyers and their clients.  One truth is this – outside litigation counsel are not the most effective members of their client’s business team.After 18 years in courtrooms across the country, a few truths become obvious about lawyers and their clients.  One truth is this – outside litigation counsel are not the most effective members of their client’s business team. It isn’t entirely their fault.  Litigators, are, by nature and training, mercenaries, soldiers for hire with no vested interest or understanding of the larger business interests of their clients.  “Winning” a conflict, whatever the conflict is, takes precedence over common sense and big picture, sound business judgment. Let’s use the example of Joe’s Tool Shop and Bob’s Tool Manufacturers, Inc.  The two companies have a business relationship that has enabled both to build their businesses into multi-million dollar ventures over the past five years.  Everyone’s making money, everyone’s happy.  Then some disagreement emerges, often just a minor problem at the beginning.  Joe just had a fight with his wife when the problem hits his desk.  He’s in a bad mood anyway and calls up Bob and gives Bob a piece of his mind.  Bob is unamused, blames the problem on Joe, and demands that Joe fix the problem at his own cost.  Joe doesn’t want to spend the money, and has already blamed Bob, so Joe says “forget it, your problem, you fix it.”  Bob says “screw you, I’ll see you in court” and trots off to his law firm, Dewey, Cheatum and Howe, to file a lawsuit. Now if Dewey were a counselor or psychologist, he would listen to Bob, acknowledge Bob’s frustration, then help guide Bob to some practical solution to the problem.  Dewey might even bring in Joe for a joint session and help the two realize that their business relationship is largely successful and that if they work together to solve this small problem, life can proceed lucratively for both of them.  They can shake hands, apologize for overreacting (everybody has a bad day once in awhile), and get back to work.  This resolution costs a couple hundred bucks and a couple of hours of time, but then its finished.  Problem solved.  Business relationship remains intact.  Done deal. Unfortunately, Dewey is a lawyer, a Type A personality overachiever who has been specially trained in the art of courtroom combat.  Dewey only listens to Bob long enough to develop a battle plan to attack and defeat Joe at all costs (that being at Bob’s costs, not Dewey’s).  Dewey hasn’t met Joe, he has nothing personal against Joe, in fact, he doesn’t even know if Bob is in the right in this dispute, but Dewey’s been hired as a mercenary by a temporarily angry Bob to defeat Joe on his behalf. First, Dewey makes sure he’s going to be paid for his mercenary services.  If he says “I’m going to charge you $400,000 to sue Joe, conduct thorough investigation and discovery into your entire business relationship, hire an expert, and eventually explain to a group of 12 strangers why you are right and Joe is wrong and hope they agree with you,” well, Bob is going to be shocked to his senses and say “gee, it not all that bad; thanks, but I’ll handle this myself,” and walk out the door.  Dewey can’t make any money that way, so he approaches it a little differently.  “Tell you what,” Dewey tells Bob, “I bet that if I just throw a hand grenade at Joe, it will scare him into defeat.  If that doesn’t work, I’ll just charge you by the bullet after that.”  Dewey pulls out his form agreement, charging Bob $5,000 for the hand grenade [a nasty demand letter] and $375/bullet [hourly rate] thereafter.  “How many bullets is this going to take?” asks Bob as he signs on the dotted line.  “Hopefully not many,” says Dewey (he means Bob’s “hope,” not his own.) Second, Dewey starts earning his mercenary pay.  He fires his hand grenade (rarely an effective weapon) then starts shooting bullets from every angle (writing letters, filing motions, requesting every possible type of document, reviewing reams of unimportant and unnecessary documents, arguing with Joe’s lawyer whenever possible, arguing in court).  In fact, he becomes even more efficient by bringing in several associates to shoot bullets at the same time.  Ever wonder why a lawsuit complaint usually has at least three lawyers listed at the top?  A partner and several associates?  They all have remarkably bad aim, only maiming Joe and costing Joe a fortune in doctor (lawyer) bills, but not actually ending the battle (resolving the lawsuit) or even killing him (sending his company into bankruptcy).  Every month Dewey religiously assembles his bullet bill and sends it to Bob.  Cheatum and Howe pat him on the back for his success in shooting more bullets than anyone else in the firm.  Dewey Cheatum and Howe rise to the top of the ranks of the AmLaw 100 list of top grossing law firms in the country, thus justifying an increase in bullet prices to $500/bullet.  Bob keeps paying for bullets, and keeps getting pulled away from business operations to find documents, answer questions, be deposed, go to court . . . he’s losing time and money, and gaining stress.  When will this thing be over and when will life get back to normal?  Bob’s board of directors isn’t liking the excessive bullet bills.  “But I hired the most expensive gun-slinger with the most expensive bullets,” he explains to the board. Bob needs a reality check.  He has hired a high-profile mercenary with expensive bullets whose qualifications are the ability to shoot more expensive bullets without actually ending a war than anyone else.  That is poor business judgment and if he’s not careful, what started out as a small problem could cost him his company.  Dewey doesn’t care.  As long as he’s paid, he will continue firing non-fatal bullets.  Dewey is doing what he loves, what he’s been trained for, and what he is good at - combat.  As long as he’s still standing, he’ll never voluntarily stop. For a mercenary, winning any encounter with an opponent is crucial to survival and crucial to one’s reputation.  There is no compromise.  There is no meeting of the minds.  There is no agreeing to disagree.  It’s war.  At the end there is one winner and one loser.  And let’s be honest, that is just a waste of time and money for any sensibly run business.  Business relationships, even when there are disputes or problems, should not require a loser.  Both sides of the relationship should win something, that is the key to a thriving market economy.  Ever looked at the economy of countries constantly at war?  Everything’s blown up and poverty abounds. So how can you start replacing mercenaries with team players?  Three simple steps will get you started. 1. Align your outside litigator’s interests with your own.  If you are hiring counsel to efficiently resolve a business dispute, arrange a fee structure where there is a financial benefit for prompt resolution.  If you are seeking a large, monetary award, make at least a portion of their pay contingent on the size of the award.  Build in incentives to bypass common time-wasters in litigation and you’ll be amazed how your counsel will learn to be efficient 2. Analyze the firm’s work habits.  If your lawyer is available to you 24/7, that means he or she has no work-life balance and is likely suffering from chronic sleep deprivation, scientifically proven to reduce one’s problem-solving capacities.  Hire counsel who can be a creative problem solver, not someone who will merely spend sleepless days and nights writing about it, arguing with others about it, or shuffling paper relating to it.  If your counsel cannot make good life decisions for themselves, how can you trust them to make good business decisions for your company? 3. Hire for skill, not prestige.  Okay, I know it sounds cool to say your lawyers are from Harvard or Yale, or whatever, but I promise you that those credentials do not guarantee you sound business advice.  Recently I did a little non-scientific research on this topic.  I posed the following question to a wide variety of people: “what is the quickest way to become CEO of a company?”  Most people couldn’t answer the question, at least not without a little prompting, but I got the sharpest contrast in responses on a single day of a business trip.  When I posed the question to a group of prestigious law school students, poised to go out and become your outside counsel, none had any idea what the answer was.  However, when I sat on an airplane next to a professional martial arts fighter and asked him the same question, he immediately responded “you start your own business.” General 2011-09-21T12:23:59+00:00 http://www.exemplarcompanies.com/site/warn_your_users_or_you_may_get_burned/ http://www.exemplarcompanies.com/site/warn_your_users_or_you_may_get_burned/#When:13:06:43Z Today’s blog brings you a cautionary tale from the land of seemingly innocuous information collection and handling. Today’s blog brings you a cautionary tale from the land of seemingly innocuous information collection and handling. Ars Technica writes about how ISPs like RCN have been cooperating with companies like Paxfire to sell your search queries in an unusual way: What commonly happens is that specific search queries (usually for brand names) made from an address bar no longer return the expected Web search results page from Bing or Google or Yahoo. If your ISP has such DNS servers configured, and your computer points to them (most ISP subscribers will by default), typing “Apple” into a browser search bar will take you directly to Apple’s webpage, bypassing the expected search results page. So, what’s wrong with this? The problem is that searches are communications with intended recipients and therefore are protected by the Wiretap act. By grabbing those communications before they arrive and using them for their own gain, ISPs may be engaging in unlawful wiretapping! You may not realize it, but you have plenty of exposure to the protections of various wiretapping laws. This is why customer service directories remind you with recordings that “your call may be monitored for quality assurance purposes.” By saying that, the customer service center is getting implied consent to record your conversation (implied by staying on the line). It’s a very easy way to stay out of trouble in places where two parties must consent to record a conversation. It’s a shame these companies didn’t follow suit in the online context. They could just as easily include in the Privacy Policy or Terms of Use a notice to customers that their searches may be redirected. But the companies doing this probably didn’t realize at the time that they were stepping dangerously close to violating wiretap laws. As businesses try to find innovative ways of generating revenue on the web, problems like this will continue to crop up. Never forget that Terms of Use and Privacy Policies are real contracts like any other. Ignore them (or copy-paste them from competitors—yes, it happens) at your own peril. General 2011-09-20T13:06:43+00:00 http://www.exemplarcompanies.com/site/crowdfunding_a_venture/ http://www.exemplarcompanies.com/site/crowdfunding_a_venture/#When:14:51:47Z Crowdfunding A Venture? Unfortunately, the Securities Act and SEC rules aren’t set up to make Crowdfunding easy. Crowdfunding A Venture? Not as Easy as It Sounds Readers may be familiar with sites like Kiva, Kickstarter, or SecondMarket and wonder if there is a way to attract smaller investments into corporations in a more scalable way than the traditional handshake-by-handshake process with Angel Investors or Venture Capital groups.After all, the acceptance rate with traditional groups is shockingly low. Unfortunately, the Securities Act and SEC rules aren’t set up to make Crowdfunding easy. The 1933 Securities Act was a response to the crash of the 1920s, and its goal can be summed up concisely: protecting purchasers of securities by informing them about the companies they’re investing in. This is why the public sale of securities requires detailed and expensive public filings (known as “registration” with the SEC). It’s also why so many of the exemptions from this registration requirement revolve around raising money among small groups of “sophisticated investors.” Funds, banks, and wealthy individuals are among the sophisticated and they may invest without forcing the company to register with the SEC. By now you can see why the Crowdfunding model doesn’t jive with the SEC. If you can only sell unregistered securities to small groups of sophisticated people, then posting your securities for sale all over the internet for anyone to purchase is a clear no-no. But not all hope is lost. Law Professor Steve Bradford covers this area marvelously in a recently released draft article, Crowdfunding and the Federal Securities Laws. You don’t have to be a lawyer to get a lot out of this, either. The big takeaway from Professor Bradford’s article for a startup or small company is that there’s more than one way to Crowdfund, and some methods won’t put you on the SEC’s naughty list. According to the professor, methods that resemble loans or that offer one-time rewards for investment rather than a share of profits are among the safer alternatives. That said, the area is still complex and the article only draws a general legal border around the issue. It doesn’t weigh what’s the best business decision. Always consult with your advisors or general counsel before taking the plunge.   UPDATE (9/13/2011):  The President’s American Jobs Act includes a proposal that would allow for crowdfunding - specifics still to come! General 2011-09-08T14:51:47+00:00 http://www.exemplarcompanies.com/site/online_legal_document_peddlers_youre_not_lawyers/ http://www.exemplarcompanies.com/site/online_legal_document_peddlers_youre_not_lawyers/#When:15:03:38Z This post was inspired by this recent story in the ABA Journal: Alabama Bar Group Files Suit to Ban Legal Zoom.This post was inspired by this recent story in the ABA Journal: Alabama Bar Group Files Suit to Ban Legal Zoom. I meet people every day who need corporate legal counsel. Often they think can’t afford it. They may think they have no choice but to spend a smaller sum of money on forms from a site like Legal Zoom. What they’re not thinking about is that Legal Zoom and others of their ilk are not lawyers. Many like Legal Zoom are essentially proprietary search engines with a non-lawyer front end and a database of forms and laws on the back end. Everybody likes to argue about whether this is the “unauthorized practice of law.” But I’d like to focus on something less technical. If a licensed lawyer did over the phone what Legal Zoom does over the web, that lawyer would be punished by state authorities for not providing competent legal representation. Every state has some equivalent to Model Rule 1.1: "A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation." I’d like you to imagine calling a lawyer for advice, but having the lawyer only ask you the same questions as he asks everybody. Imagine that when you ask for clarification, he ignores you. This isn’t competence. It actually seems kind of mean. The conclusion is that Legal Zoom might be practicing law illegally, but even if it were a lawyer, it would be punished for incompetence. Now if you’ll excuse me, I’m off to read a copy of Waiting for Godot translated by Google. General 2011-08-31T15:03:38+00:00 http://www.exemplarcompanies.com/site/false_ad_suit_can_proceed_versus_groupon/ http://www.exemplarcompanies.com/site/false_ad_suit_can_proceed_versus_groupon/#When:01:27:39Z Word came today that a lawsuit by some California tour companies against Groupon alleging false advertising will be allowed to proceed in federal court after Groupon tried to have the case dismissed. By Gerrit Betz  Word came today that a lawsuit by some California tour companies against Groupon alleging false advertising will be allowed to proceed in federal court after Groupon tried to have the case dismissed. For those of you looking for more detail, here’s the full complaint.  I’ll cherry-pick one example: Groupon bought up Google AdWords for things like "Alcatraz Tours" and then embellished them with text like "do Alcatraz at 50-90% off!" But according to the tour groups, if you clicked hoping to fulfill your dream of doing Alcatraz at 90% off, you would be met instead with an offer for acting lessons.  Well. Sooner or later, a court will decide whether this was a Bait & Switch tactic from a legal perspective.  But can we all agree upfront that this shotgun approach is a bad business strategy? By inviting customers where there’s nothing for them, Groupon is likely to turn more people off than it turns into budding actors. Business 2011-08-26T01:27:39+00:00 http://www.exemplarcompanies.com/site/lawyerclock/ http://www.exemplarcompanies.com/site/lawyerclock/#When:13:46:54Z The PAIN of hourly billing visualized!  From our friends at LawyerClock.com. LawyerClock is the only way to visualize and truly feel the stabbing pain of lawyer meetings - forbes General 2011-07-11T13:46:54+00:00 http://www.exemplarcompanies.com/site/small_business_administrations_new_women-owned_small_business_federal_contr/ http://www.exemplarcompanies.com/site/small_business_administrations_new_women-owned_small_business_federal_contr/#When:21:19:59Z Female business owners have the opportunity to significantly expand their businesses by taking advantage of the Small Business Administration’s new Women-Owned Small Business Federal Contract Program. Female business owners have the opportunity to significantly expand their businesses by taking advantage of the Small Business Administration’s new Women-Owned Small Business Federal Contract Program. By John Bateman Program Overview The Program, which became effective April 1, 2011, is aimed at expanding federal contracting opportunities for women-owned small businesses (WOSBs) and economically disadvantaged women-owned small businesses (EDWOSBs).  Specifically, the program mandates that federal government contracting officers set aside certain federal contracts for eligible WOSBs and EDWOSBs in industry sectors in which women-owned businesses are traditionally underrepresented.  The SBA has identified 83 four-digit North American Industry Classification Systems (NAICS) codes (and 300 NAICS six-digit sub-codes) that are eligible under the program. How the Program Works The process of setting aside federal contracts for WSOBs and EDWOSBs is substantially the same.  In both cases, the federal contracting officer is authorized to set aside a contract for WOSBs or EDWOSBs if certain criteria are met.  First, the contracting officer will determine if the contract is for a line of business that falls under one of the eligible NAICS codes as discussed above.  If so, the contracting officer will then determine if the anticipated value of the federal contract is less than $6.5 million if the contract is for manufacturing or less than $4 million for any other contract.  If these requirements are met, and the contracting officer has a reasonable expectation that the contract can be awarded at a fair and reasonable price and that at least two WOSBs or EDWOSBs will submit bids for the contract, then he may set aside the contract for WOSBs or EDWOSBs. Eligibility Generally, in order to be eligible for participation in the program as a WOSB, a business must be at least 51% unconditionally and directly owned and controlled by one or more women who hold American citizenship.  In addition, a woman must also manage the day-to-day operations of the business, make long-term plans and decisions for the business, work at the business full-time during normal working hours, and be the highest ranking officer in the business. To be eligible to participate in the program as an EDWOSB, an interested company must generally be at least 51% owned and controlled by an “economically disadvantaged” woman (or women).  A woman is considered to be “economically disadvantaged” if she has a personal net worth of less than $750,000, her annual adjusted gross income averaged less than $350,000 for the three years prior to pursuing certification, and the fair market value of her assets is less than $6 million.  In addition to the ownership and control requirements, an economically disadvantaged woman must also manage the company’s day-to-day operations, make long-term decisions for the business, work at the business full-time during normal working hours, and be the highest ranking officer in the company. Certification In addition to meeting the eligibility requirements discussed above, an interested business must also be certified as either a WOSB or EDWOSB.  Certification can be obtained either through self-certification or through third party certification.  Currently, however, the only method of certification available to interested businesses is self-certification, as the SBA remains in the process of approving third party certification agencies. How to Get Started This program represents a tremendous opportunity for WOSBs and EDWOSBs to significantly grow their businesses through federal contracting.  With the SBA planning to award the bulk of federal contracts during the fourth quarter of FY 2011, there is still time for interested businesses to get certified and compete for these contracts.  Interested business owners should consult the program’s website or contact an Exemplar Team Member for more information. General, Business, News 2011-06-16T21:19:59+00:00 http://www.exemplarcompanies.com/site/exemplar_to_host_professionisti_italiani_a_boston_june_event/ http://www.exemplarcompanies.com/site/exemplar_to_host_professionisti_italiani_a_boston_june_event/#When:23:11:59Z PIB Business Networking with Italian Companies:  Establishing USA-Italy Partnerships PIB in collaboration with the Unione Industriale di Napoli, Gruppo Giovani Imprenditori, and the Italian Consulate in Boston is organizing a networking event to promote partnerships between small, mid-size Italian companies and well established enterprises of the Boston and New England area. WHEN: June 22nd at 6:30PM WHERE:    University Massachusetts Club, 225 Franklin Street, 33rd floor During the evening a number of selected Italian companies will present their business model to the broad PIB audience including several interested partners.  Soon after the presentations there will a networking session with cocktails-appetizers kindly offered by our sponsors Exemplar Companies and the Italian Consulate.  The attendance to the event is free and an early registration is mandatory via the following link  News 2011-05-19T23:11:59+00:00 http://www.exemplarcompanies.com/site/bacterin_international_holdings_inc/ http://www.exemplarcompanies.com/site/bacterin_international_holdings_inc/#When:14:44:36Z Bacterin International Holdings, Inc. (NYSE - BONE) develops, manufactures and markets biologics products to domestic and international markets.  Bacterin International Holdings, Inc. (NYSE - BONE) develops, manufactures and markets biologics products to domestic and international markets.  Bacterin’s proprietary methods optimize the growth factors in human allografts to create the ideal stem cell scaffold and promote bone and other tissue growth.  These products are used in a variety of applications including enhancing fusion in spine surgery, relief of back pain with a facet joint stabilization, promotion of bone growth in foot and ankle surgery, promotion of skull healing following neurosurgery and cartilage regeneration in knee and other joint surgeries.   Bacterin’s Medical Device division develops anti-microbial coatings based upon proprietary coating technologies. Bacterin develops, employs, and licenses bioactive coatings for various medical device applications.  Bacterin’s strategic coating initiatives include antimicrobial coatings designed to inhibit biofilm formation and microbial contamination on medical devices’ drug delivery, local (as opposed to systemic) pain management, and anti-thrombotic factors for medical device applications.  Headquartered in Belgrade, Montana, Bacterin operates a 32,000 square foot., state-of-the-art, fully compliant and FDA registered facility, equipped with five "Class 100" clean rooms. Featured Customer 2011-05-06T14:44:36+00:00 http://www.exemplarcompanies.com/site/quality_vs._quantity_-_the_billable_hour_mousetrap/ http://www.exemplarcompanies.com/site/quality_vs._quantity_-_the_billable_hour_mousetrap/#When:14:37:29Z Billable hours have become a vicious task master hanging over lawyers’ heads, encouraging them to abandon all life outside of the office in quest of squeezing the most hours, and thus the most money, out of the day. Billable hours have become a vicious task master hanging over lawyers’ heads, encouraging them to abandon all life outside of the office in quest of squeezing the most hours, and thus the most money, out of the day. It discourages efficiency of work by definition (why finish a project in 8 hours if you can stretch it out to a 20-hour billable project?) and has no correlation to the “quality” of the work product. “Quality” is defined here as something of value or use to a client. Is the 20-hour brief a “higher quality” than the 8-hour brief? At best, the client will never know. At worst, it is blatant fee gouging. These facts seem self-evident to many, including veteran attorney Evan R. Chesler in the Forbes article "Kill the Billable Hour": The billable hour makes no sense, not even for lawyers. If you are successful and win a case early on, you put yourself out of work. If you get bogged down in a land war in Asia, you make more money. That is frankly nuts. Of course it is nuts, but these self-evident facts are still lost on far too many involved in the legal profession. In the January 2009 issue of the California Bar Journal, the article "Will a bad economy force more changes in the profession?", cites Richard Gary of Gary Advisors, a former chair of Thelen, Reid and Priest, as thinking the billable hour isn’t going to disappear. “We’ve been thinking about going to a different model for 20 years and it’s never happened. Maybe young people will come up with a different mousetrap.” However, [Mr. Gary] added, “I still think it’s the best way to measure value because it is a mechanism of measuring the amount of work that a lawyer did for a client on a particular matter.” With all due respect, hogwash! The amount of time spent on a project is not an accurate reflection of the end product’s value. Lawyers have forgotten that basic truth. Early in my career I found myself as plaintiff’s counsel in a small civil matter against a defendant who was a part-time lawyer who seemed to revel in the opportunity to “practice” law. I vividly recall receiving a 25-page, single-spaced motion to dismiss the case. I can only describe reading the verbose brief as exceedingly painful on the eyes and brain. My opposition brief was one page, double-spaced, setting forth the statute supporting my position. I won the motion. Which brief was more “valuable”? The one that took at least 25 hours to write or the one that successfully convinced the judge? In a more recent example of overkill, a federal judge in New York City found a $100,000-a-day fee application from law firm Dewey & LeBeouf for receivership work to be excessive. U.S. District Judge Denny Chin said that the fee request was “excessive in the context of a securities receivership where hundreds of victims of fraud have suffered substantial losses” and he questioned the firm’s billing rates which were as high as $950/hr for some partners, $605/hr for some associates, and $285/hr for summer associates. Billing rates that high deserve far more than "questioning" and partial and temporary reduction in fee allowances (Judge Chin said they could reapply for the fees later in the case). Billing $285/hr for work done by law students (remember, summer associates have not even completed law school) is unconscionable by any standard. Clients who pay such excessive fees, however, especially large corporate clients, need to acknowledge their own role in encouraging outrageous billing by lawyers. Law firm prestige, and thus the law firms that tend to attract higher net-value clients, has for too long been measured on the same scale as Fortune 500 companies – by annual revenue. Not cost efficiency. Not creative thinking. Not being able to demonstrate insightful legal opinions. Not being successful in any other arena than extracting the most money out of their clients. Every year the American Lawyer magazine publishes AmLaw 100 and AmLaw 200 lists of supposed top law firms in the country. These lists have become the Fortune 500 equivalent for law firms. I verified AmLaw’s criteria for choosing the top law firms on their website; it was disturbing. AmLaw describes “revenue per lawyer” as being “the key measure of law firm financial success, and profits per partner [as] the metric that has turned law firm managers into contortionists.” They go on to credit increases in these metrics by “surging demand for high-end legal services and unrelenting annual rate hikes” and a continuing slowdown in naming equity partners (the top echelon of law firms) and increase in the number of non-equity associates. (see the referenced article at "Lessons of the Am Law 100 2008"). Corporate clients – the “surging demand for high-end legal services” is you, accepting the definition of “high-end” as being on the AmLaw 100 list. The “unrelenting annual rate hikes” is the price you are paying for accepting this criteria and rate hikes will keep increasing at these firms until you, the client, say "no." You are choosing “pedigree” and "prestige" over “quality” in legal services and have only yourself to blame for the outrageous legal bills on your desk. In this time of economic downturn, with companies failing right and left, only the strong and flexible companies will survive. Finally, a substantial incentive to reinvent the antiquated mousetrap of billable hours has emerged. Corporate clients, stop paying outrageous hourly rates and look for quality legal counsel that will provide cost-efficient and useful services. Your company’s survival may depend on it. Lawyers, law firms, and freelance legal professionals, take the lead in offering cost-effective, solution-based services to your clients at a price that is a good value for the money.  Here’s to building a better mousetrap! General 2011-04-21T14:37:29+00:00 http://www.exemplarcompanies.com/site/alternatives_to_the_billable_hour_work_say_aba_panelists/ http://www.exemplarcompanies.com/site/alternatives_to_the_billable_hour_work_say_aba_panelists/#When:22:47:14Z Clients have a general mistrust of hourly billing, said panelist Christopher Marston, whose firm, Exemplar Companies Inc., has successfully implemented a value-pricing model.  Fees there are based on the value of the service provided to the client, rather than the time expended to complete the service. By Ramon Jimenez, Esq I have been saying this for two years now.  Clients have a general mistrust of hourly billing, said panelist Christopher Marston, whose firm, Exemplar Companies Inc., has successfully implemented a value-pricing model.  Fees there are based on the value of the service provided to the client, rather than the time expended to complete the service. According to Marston, this value-based approach to pricing is more inline with what clients want. While lawyers think in terms of increments of time, clients think in terms of value. “People are buying outcomes and solutions. They are not buying your time,” he said. Moreover, Marston believes the traditional time-based model of billing is flawed. The billable hour method is based on a perceived direct relationship between labor and the value, he explains. In other words, the more time a task takes, the more valuable it must be to the client. But—“If that were the case, the piece of coal you found next to a diamond would have the exact same value.” Marston also points out that the billable-hour method limits profits. “On every six minute increment of time, you’re making the same margin. The worst part of it is that you’ll never make [a] higher margin. You’ll always make a lower margin because clients can always cut your fees. They’ll never give you more. Billable hours cap that margin.” Exemplar’s value-based model starts with understanding the resources involved with each task at hand and determining a reserve price for those tasks. The reserve serves as the pricing floor. The firm then considers the value it adds to the transaction to determine its price. Understanding how much value it adds to the transaction is key to Exemplar’s price determinations. “You don’t want to give away value without reaping a reward,” said Marsten. For instance, clients who demand especially prompt service pay a premium for that attention. Similarly, fee arrangements that shift risk from the client to the lawyer also raise prices. For example, time-shifted billing methods—such as contingency arrangements where payment is only triggered by an event that is usually out of the firm’s hands—should always require a premium. “Where there is a ‘give,’ there should be a ‘take,’” said Marsten. “If you’re going to give the customer a contingency, then you need to price accordingly and command a premium because there will be a percentage of time you can’t collect.” Fee arrangements that are not based on time require lawyers to pay close attention to the scope of the projects they are considering. While lawyers may have control over creating the boundaries of their representation, the problem to watch for is “scope creep.”  “Put the scope on a tack board above your desk and make sure you are asking yourself the question, ‘Did the customer pay for this?’” advised Marsten, who said that scope creep happens most often when associates are doing the work of the engaging attorney. Beyond determining prices, lawyers considering non-traditional fee arrangements must observe ethical guidelines—not just the Model Rules, but also local rules and restrictions on fees that vary from one jurisdiction to another, cautioned panelist Margaret Raymond, a professor from the University of Iowa College of Law. Law Expertise, General, Capital, Business 2010-12-01T22:47:14+00:00 http://www.exemplarcompanies.com/site/ma_outlook/ http://www.exemplarcompanies.com/site/ma_outlook/#When:21:16:12Z With fragile M&A markets still recovering, smaller deals will be more prevalent than the mega-deals of recent years, given recent market turmoil. By James Myers With fragile M&A markets still recovering, smaller deals will be more prevalent than the mega-deals of recent years, given recent market turmoil. Consider the premier boutique investment bank Allen & Co.’s annual conference in Sun Valley, Idaho. In the past, the conference has been the breeding ground for such notable deals as the $19.5 billion purchase of Capital Cities/ABC by Disney. This year, partnerships and smaller buyouts are the types of deals that attendees will be focusing on. The economic woes facing the European Union are inspiring caution in the field of M&A as firms await signs of market stability and continue to hunt for bargains. The first half of 2010 saw global M&A activity at it’s lowest since 2004, largely due to the EU sovereign debt crisis. Comparatively, M&A activity was healthier in the United States, where six of the top ten deals of the year have been executed.  Expect Private Equity firms to be looking to exit some of the investments they made during the M&A boom years circa 2007. It will take time, and most importantly, liquidity, to build back up to the mega-deals. Firms that have built up cash reserves will be in a strong position to make strategic acquisitions and lead the revival in M&A activity. Capital, Business 2010-07-26T21:16:12+00:00 http://www.exemplarcompanies.com/site/social_media_mini_blog_series/ http://www.exemplarcompanies.com/site/social_media_mini_blog_series/#When:21:48:11Z Who to hire for social media As the world of Social Media continues to grow, many businesses are starting to utilize this platform in a daily basis. Many use social media to build brand awareness, promote marketing campaigns and more importantly connect with current and future customers. A firm that needs presence online should be especially careful about who they hire to do their social media campaigns. This is not only because of social media’s mass effect, but because it also takes a lot from a marketing professional to do the job properly.  Who to hire for social media As the world of Social Media continues to grow, many businesses are starting to utilize this platform in a daily basis. Many use social media to build brand awareness, promote marketing campaigns and more importantly connect with current and future customers. A firm that needs presence online should be especially careful about who they hire to do their social media campaigns. This is not only because of social media’s mass effect, but because it also takes a lot from a marketing professional to do the job properly.   When it comes to hiring a new social media talent, here are few tips for you to keep in mind.   1.     Look for a marketing expert who masters social media; not a social media intern who practices Twitter and Facebook. Social Media is a new kind of communication channel just like television, newspaper and radio during the old times. A common misconception is that social media is easy, and therefore anyone can do it. Many companies end up hiring interns to manage their social media presence. The fact is that many platforms including Twitter and Facebook only build up social media.   Since social media has grown rapidly to include various communication streams, it takes every aspect of marketing to support social media’s systemic growth for a particular company.   2.  A Social Media professional needs to understand the industry and where your brand stands.  It takes many years of education and practice to be able to perform an in-depth marketing research plan. However, it does not take much to understand the importance of knowing your unique proposition. Often times, such background marketing knowledge is the key to being able to successfully perform marketing promotion activities. Promotion strategies must adopt with target audience groups in each case.   3.  Ask if they’ve had any Public Relations and Risk Management experience.  Social media networks require constant motoring activities to maintain and protect company images. It is indeed bad to see a “hate page” appear, however it is worse to just leave it alone and not respond. That is why hiring the right social media professional is so important. Your social media lead needs to be there when negative commenting about the business appear, and should be the person to properly deal with it in a professional manner. Many times inappropriate responses can cause even more negative feedback. It is in this case where it is imperative to respond quickly so the harmful messages do not spread and affect both current and potential customers.  At the same time, it is also important to make positive PR efforts to call for support. If ever there is truly a mistake made, then the company’s best response is always to admit to it, and promise to make it better.    All of the aforementioned tips are essential elements to consider when hiring a social media person. Do not take the risk of hiring an inexpensive intern in exchange for a possible PR disaster. A true marketing professional can point your company in the right direction and avoid unnecessary trouble later on. Capital, Business 2010-06-22T21:48:11+00:00 http://www.exemplarcompanies.com/site/competition_begets_excellence/ http://www.exemplarcompanies.com/site/competition_begets_excellence/#When:11:14:07Z The Bard Center for Entrepreneurship at the University of Colorado - Denver held its annual business plan competition awards luncheon yesterday. Revolve was proud to be an in-kind sponsor for the event, awarding prizes to each of the six finalists. As the Wall Street Journal  recently pointed out, some business plan competitors inevitably come away from these kinds of competitions a bit disappointed. However, there is almost unanimous agreement among those that enter that the process of having to refine the business plan, think hard about weaknesses or areas for improvement, and then present to a group of critical experts sharpens the competitors’ business models and positions them for a greater likelihood of success. That is, competition, and all that goes with it, makes companies better. Indeed, competition begets excellence.The Bard Center for Entrepreneurship at the University of Colorado - Denver held its annual business plan competition awards luncheon yesterday. Revolve was proud to be an in-kind sponsor for the event, awarding prizes to each of the six finalists. As the Wall Street Journal  recently pointed out, some business plan competitors inevitably come away from these kinds of competitions a bit disappointed. However, there is almost unanimous agreement among those that enter that the process of having to refine the business plan, think hard about weaknesses or areas for improvement, and then present to a group of critical experts sharpens the competitors’ business models and positions them for a greater likelihood of success. That is, competition, and all that goes with it, makes companies better. Indeed, competition begets excellence. We would like to congratulate CaraSolva on their win at the competition, but we are also delighted that the other five finalists went through the demanding process and came out the better for it. And for their efforts, Revolve Inc is delighted to offer $1,000 of in-kind services to each of the finalists. Congratulations again to CaraSolva, and also to UrgentRx, Diego Zhang’s Burger Cafe, ePRepSolutions, LLC, Physical Activity Innovations, and Shelter-Me Photography, Inc.!    News 2010-06-12T11:14:07+00:00 http://www.exemplarcompanies.com/site/so_bueno_films/ http://www.exemplarcompanies.com/site/so_bueno_films/#When:20:18:30Z The Exemplar Companies, Inc. represented by Christopher Marston, and its client So Bueno Films LLC represented by Daniel Cayarga, have reached an amicable settlement with Solar Wind Productions LLC as represented by Michael and Ruby Jacobs, regarding the financing of So Bueno’s feature film “Love Stupid”. The terms of the settlement are to the satisfaction of all parties and they have further agreed to maintain those terms in confidence.  June 7, 2010 The Exemplar Companies, Inc. represented by Christopher Marston, and its client So Bueno Films LLC represented by Daniel Cayarga, have reached an amicable settlement with Solar Wind Productions LLC as represented by Michael and Ruby Jacobs, regarding the financing of So Bueno’s feature film “Love Stupid”. The terms of the settlement are to the satisfaction of all parties and they have further agreed to maintain those terms in confidence.  June 7, 2010 News 2010-06-07T20:18:30+00:00 http://www.exemplarcompanies.com/site/exemplar_ceo_christopher_marston_honored_as_2010_rainmaker_by_aba_rebels/ http://www.exemplarcompanies.com/site/exemplar_ceo_christopher_marston_honored_as_2010_rainmaker_by_aba_rebels/#When:00:36:08Z Exemplar CEO Christopher Marston Honored as 2010 Rainmaker by ABA RebelsExemplar CEO Christopher Marston Honored as 2010 Rainmaker by ABA Rebels News 2010-06-05T00:36:08+00:00 http://www.exemplarcompanies.com/site/exemplar_ceo_christopher_marston_honored_as_up_and_coming_lawyer_of_the_yea/ http://www.exemplarcompanies.com/site/exemplar_ceo_christopher_marston_honored_as_up_and_coming_lawyer_of_the_yea/#When:00:27:56Z Exemplar CEO Christopher Marston Honored as “Up and Coming Lawyer of the Year” by Massachusetts Lawyers Weekly Exemplar CEO Christopher Marston Honored as “Up and Coming Lawyer of the Year” by Massachusetts Lawyers Weekly News 2010-06-05T00:27:56+00:00 http://www.exemplarcompanies.com/site/suffering_through_the_pain_of_ma_due_diligence/ http://www.exemplarcompanies.com/site/suffering_through_the_pain_of_ma_due_diligence/#When:22:51:22Z Your inviting an expensive headache if your don’t take the Due Diligence process seriously when a Buyer for your business comes calling. The Buyer’s demands for information may seem onerous and distracting, but the consequence of a halfhearted response can be significantly more painful. You’re ecstatic! You’ve just signed a Letter of Intent to sell your business at a price that far exceeded your expectations. Soon you’ll be able to kick back and enjoy life. But wait, what’s this? A “Due Diligence List” from your Buyer that goes on for ten pages. Do you really need to dredge up all of this information, all of these documents? As painful and distracting as it might be, yes you do, and here’s why. Terms set out in a Letter of Intent reflect the Buyer’s current understanding of value and risk. Once the LOI is signed, the parties move on to contract preparation, negotiation and closing. A proper LOI will provide that the deal cannot go forward unless and until the Buyer completes a Due Diligence examination of your business. This exercise affords the Buyer a closer look at your business, refines risk, and influences contract drafting and final negotiations. Due Diligence can be a painfully detailed process and Sellers are sometimes tempted to look for shortcuts, providing partial or incomplete responses to the Buyer’s inquiries. After all, until it’s sold, you have a business to run. However, a halfhearted attempt by the Seller during Due Diligence can have severe consequences. First, a savvy Buyer can tell when you are short-arming your responses. The Buyer may attempt to insulate itself against unknown, undisclosed risks by taking harder positions in contract negotiations or seeking a purchase price reduction. Worst case, the Buyer might be spooked by your intransigence and walk away from the deal. Second, contemporary buy/sell agreements contain representations and warranties of the Seller, affording the Seller an opportunity to call out exceptions (e.g. “The Seller represents that is not subject to any claims or litigation except as described in the attached Schedule.”) Should a representation or warranty prove to be untrue, the Buyer is likely to have a post-Closing claim against the Seller. Without the proper effort required to complete Due Diligence, the Seller may miss a risk that should be disclosed in the buy/sell agreement, leaving the Seller exposed to recourse by the Buyer. Third, assuming your deal does close, the Buyer is likely to have reserved the right to press indemnity claims against the Seller for violations of representation and warranties. A weak Due Diligence effort and correspondingly porous representations and warranties make you particularly vulnerable to indemnity claims.  Depending upon how the buy/sell agreement is drafted, your exposure may be a significant percentage of the consideration paid by the Buyer. Moreover, a nervous Buyer may have required that a portion of the purchase consideration be placed in escrow in anticipation of future indemnity claims. Finally, closing of the deal turns out not to be a closing at all. You’re left with an adversarial process with an unhappy Buyer who wants a chunk of its purchase price back by pursuing indemnity claims. You won’t be kicking back any time soon. Next time, take the Due Diligence process seriously. Capital, Business 2010-06-03T22:51:22+00:00 http://www.exemplarcompanies.com/site/to_3d_or_not_to_3d_that_is_the_question/ http://www.exemplarcompanies.com/site/to_3d_or_not_to_3d_that_is_the_question/#When:12:11:19Z Today I am writing a small piece on the latest technological craze in film and asking your opinions on whether 3D is a good thing or not. Today I am writing a small piece on the latest technological craze in film and asking your opinions on whether 3D is a good thing or not.  This particular blog was inspired by a recent Newsweek article titled ‘Why I Hate 3-D (and You Should Too), I’m not opposed to 3-D as an option. I’m opposed to it as a way of life’. I remember sitting in a bar in New York about 2 years ago and having a debate with some fellow professionals about 3D and why I didn’t think it was going to catch on or would be fraught with potential issues further down the road – versus—their opinion which was “embrace it, it’s here to stay” and “it’s the next generation for film, like DVD’s was to VHS” … Well, here we are 2 years later, and 3D films are going “bang for glory” with every studio, as it seems the industry itself, and many more independent film makers talking about making their films 3D.  Now we can debate why we are here, but I think it is clear that the success of one ‘Avatar’ as the biggest grossing film of all time, is one of the main reasons why, in typical hollywood fashion, everyone has jumped on that band wagon, hiked their theatre prices, and set in motion a less than comprehensible argument for films to be made with this medium in mind. There are some questions which remain, and include, (1) Are these studio executives and indy film makers correct in their decision? (2) Have they bought into their own hype because a few films have made a few billion dollars (in part because of the over inflated ticket prices)—and so become a self fulfilling prophecy, and (3) Can this medium, (including 3D TV) survive all the hype? I recently posted the same article on my facebook page and got a few replies, all of which seemed to mirror my own sentiments and that of the Newsweek articles author.  See Below “I can’t think of one "serious" movie that would ever benefit from 3D and it would be a shame if we all had to pay extra for a movie with a great story and great acting simply because the director decided that, to keep up with new projectors, or to sell the movie, it had to be made in 3D.” “while I agree that the whole 3D craze is utterly ridiculous and that (in my opinion) in most cases, no serious director would use it unless the story, script, or some other part of the "movie" itself was weak and warranted it, I certainly think its useful and extraordinary as an option, albeit a rather limited option I hope and one that doesn’t become the norm or a necessary part of any future movie.”   “A good film works as a thoroughly immersive experience anyway without having to rely on headache-inducing sticks being poked in your eyes. When I saw ‘There Will Be Blood’ for example I felt the overall technology had taken such a leap without resorting to gimmickry that I felt completely ‘in the moment’ and privileged to be viewing it. No 3D film has achieved anything near that experience as yet.” What are your thoughts, feel free to email me. Capital, Business 2010-05-29T12:11:19+00:00 http://www.exemplarcompanies.com/site/the_power_of_the_network/ http://www.exemplarcompanies.com/site/the_power_of_the_network/#When:00:08:05Z In his ground-breaking book, “The Tipping Point,” Malcolm Gladwell identifies three types of people that make ideas, epidemics, or trends “tip” – that is, make the transition from a backwoods curiosity to the mainstream. “Mavens” are enthusiasts who know certain things very, very well, whether it’s supermarket deals or techno-gadgetry. “Salesmen” are translators who can take complex ideas and make them understandable to the average joe. And finally, “Connectors” are the people who have such a broad network of people across different spheres of life that they can introduce people to each other who never would have crossed paths otherwise. In his ground-breaking book, “The Tipping Point,” Malcolm Gladwell identifies three types of people that make ideas, epidemics, or trends “tip” – that is, make the transition from a backwoods curiosity to the mainstream. “Mavens” are enthusiasts who know certain things very, very well, whether it’s supermarket deals or techno-gadgetry. “Salesmen” are translators who can take complex ideas and make them understandable to the average joe. And finally, “Connectors” are the people who have such a broad network of people across different spheres of life that they can introduce people to each other who never would have crossed paths otherwise. This last category – the Connectors – perfectly describes what we do here at Exemplar. Sure, we have Mavens in certain areas (patents, securities, etc.) and we have Salesmen who can explain things and do it well, but our main strength as a company is in making the Connection. First and foremost we’re entrepreneurs. And that means we’re always out in the community meeting people, looking for needs to be filled, trying to build our business by building yours. That is, we’re always making connections. Some recent examples: -A woman I met at a conference makes a one-of-a-kind product. She needs a distribution channel. A colleague at Exemplar knows the management team of the perfect distributor. We’ll be connecting the two. -Some students I met at a technology expo who have come up with innovative designs relating to aircraft and would like to build and market their product. A woman I met at a technology expo works with a software company, so she knows the management team of a technology company who in turn know the team at an aircraft company who may be interested in the design the students came up with. The aircraft company may also be interested in applications of their technology in a different segment of general aviation than they have been exploring, and we happen to know the CEO of a company that can provide such a market. We’ll be exploring whether the connections are valuable. -The advisor to the previously mentioned student team has an aircraft company with a design that can benefit third world communities. He is looking for other companies that might work in concert with his idea. As it happens, we have connections to two other companies that are focusing on building their very different but complementary business models in the third world. All three of these companies are eco-friendly and humanitarian-oriented. We are happy to make the introductions to see if they can work together. None of these connections would happen if we sat on our laurels thinking about how to drive up our billable hours with a few solid customers. That’s not what we do and it’s not who we are. We are entrepreneurs focused on finding and delivering value. We pro-actively engage in the marketplace, spanning a wide range of industries, in order to find those pockets of need where we can help. We have developed a powerful network of contacts that aids our customers in ways even we cannot predict. We are Connectors. Capital, Business 2010-05-29T00:08:05+00:00 http://www.exemplarcompanies.com/site/film_financing_-_tips_6_pre-sales/ http://www.exemplarcompanies.com/site/film_financing_-_tips_6_pre-sales/#When:22:11:08Z In the area of Film Financing, Pre-sales are the act of selling specific territorial rights prior to the completion of the film. FILM FINANCING - TIPS # 6 PRE-SALES In the area of Film Financing, Pre-sales are the act of selling specific territorial rights prior to the completion of the film.  Contracts with buyers around the world are typically based on a number of elements, such as the Script, the Cast, the Genre and Budget for the film, and certain rights to distribute the film in different territories before the film is produced.  Once a particular deal is made, it is the distributor’s responsibility to insist that the producers deliver on elements such as content and making sure the cast have been contracted; if a material change to those elements is made, then the financing may collapse altogether. Pre-sale contracts with big name actors or directors will often (at the insistence of the buyer) have an “essential element” clause that allows the buyer to get out of the contract if the star or director falls out of the picture and a marquee equivalent cannot be procured. This helps explain why the movie industry is so reliant on film stars, directors and certain genres and why these actors are capable of commanding such high fees, perks and gross profits.  However, this also bodes well for potential investors as it gives an indication of the commercial viability of the film being invested in. Buyers typically pay a 20% deposit to the film’s collection account (or bank), with the balance due upon the film’s delivery to the foreign sales agent. Producers usually pre-sell as many foreign territories as possible so that they can use the value of those contracts as collateral for the production loan that a bank (senior lender) is providing to finance the production.  These lenders also only lend 80%, 50%, or less of the value of the contract, depending on the bank’s history with the buyer. When factors such as the cost of capital, i.e. fees and interest on the loan, as well as the discounted price the buyer is paying to purchase the film in advance of completion, is factored in, then it becomes more evident how important the “creative package” is in providing a valuation of the film to the end consumer. In some cases, producers may be fortunate enough to be able to procure a negative pick up deal. A “negative pick-up deal” is a deal when a studio agrees to purchase the movie from the producer for a fixed sum at a given date.  Until that date, the financing is the responsibility of the producer, who must pay any additional costs such as up front opportunity costs, including those associated with when and if the film goes over-budget. A producer will usually have a bank lend against the value of this type of contract as a way to shore-up their financing for the film. This process is commonly referred to as “factoring paper”. Most major North American studios are collateralized by the banks at 100% of the contract value with the lender taking a basic origination/setup fee. Capital, Business 2010-05-27T22:11:08+00:00 http://www.exemplarcompanies.com/site/time_to_examine_your_corporate_online_privacy_policy/ http://www.exemplarcompanies.com/site/time_to_examine_your_corporate_online_privacy_policy/#When:22:01:28Z By Benjamin Doherty The backlash Facebook CEO Mark Zuckerberg faced in response to the social-networking behemoth’s recent personal privacy changes has been well-documented. The company, which has more than 450 million users worldwide, implemented changes that placed more personal information in the public realm. For many users decrying these changes, concern stemmed from, amongst other things, identity theft and infringement on personal privacy rights.By Benjamin Doherty The backlash Facebook CEO Mark Zuckerberg faced in response to the social-networking behemoth’s recent personal privacy changes has been well-documented. The company, which has more than 450 million users worldwide, implemented changes that placed more personal information in the public realm. For many users decrying these changes, concern stemmed from, amongst other things, identity theft and infringement on personal privacy rights. Always one to have a finger on the pulse, Zuckerberg detailed the responsive measures Facebook would take in light of these criticisms. He openly acknowledged the various missteps the company made, specifically failing to fully communicate the motivations and benefits behind such changes to their user base. The lesson to be learned from Facebook’s ongoing social experiment is a powerful one: when operating a user-driven entity, public perception rules the day. Regarding your own personal online entity, examine your privacy policy to ensure its reasonableness. Where are your failings? What are the legal consequences of such failings? Are your policies infringing on your users in violation of their privacy rights? The language of privacy agreements, although commonly overlooked as boilerplate, is of the utmost importance. Ensure that you protect yourself and your entity from exposure to potential legal liability. As good, ethical business practice, communicate and disclose your policies to guarantee a positive user experience without tarnishing reputation. Capital, Business 2010-05-27T22:01:28+00:00 http://www.exemplarcompanies.com/site/lean_six_sigma_its_not_just_for_manufacturing_businesses_anymore/ http://www.exemplarcompanies.com/site/lean_six_sigma_its_not_just_for_manufacturing_businesses_anymore/#When:16:23:45Z The lessons learned by the Manufacturing Community through the application of Lean Manufacturing and Six Sigma principles readily translate to the Service Industry. Businesses including banks, hospitals, municipalities, school systems, accounting and law firms are now employing these tools to identify and eliminate inefficiencies, increasing customer satisfaction and profitability. “Lean Six Sigma” represents the marriage of two complementary principles: Lean Manufacturing and Six Sigma problem solving analytics. The principal of Lean Manufacturing found its origin in the Toyota Production System first developed for the automotive industry in the 1970s. Toyota’s objective was to produce high quality products utilizing a manufacturing model that eliminates inefficiency. On its most fundamental level, Lean theory recognizes that inefficiencies are embedded in any manufacturing process. These inefficiencies typically include delays, unnecessary movements, incorrect processing, defects, over-production and excess inventory.  Once identified, elimination of inefficiencies results in an increase in production rates, a reduction in errors and defects and ultimately, enhanced profitability. Corrective action may be as simple as realigning work flow, creating manufacturing cells, eliminating steps or ordering raw materials on a just-in-time basis. The symbolic expression of this approach is “Work Better, Not Harder”. The identification of process inefficiencies is the first step in Lean theory. This is frequently approached by “mapping” every element of an existing process and characterizing the elements as value added or value subtracting ( described as “Value Stream Mapping” or “Process Mapping”). Time delays or nonproductive loops for example are inefficiencies that need to be designed out of a process, if possible. This may be easier said than done if the root cause of the inefficiency isn’t readily identifiable. This is where the diagnostic tools of Six Sigma come into play. “Six Sigma” is an expression of production excellence. It literally translates into 3.4 defective parts per million of parts produced. It is a standard that many businesses strive to achieve but few accomplish. Most businesses would be happy to achieve Five Sigma (233 defects/million) or even Four Sigma (6200 defects/million). The birthplace of Six Sigma was the U.S. semi-conductor industry where extraordinary efforts were made in the 1980s to dramatically reduce the frequency of product defects. An entire industry has been built around Six Sigma consulting, designed to guide corporations through a maze of analytical tools and methods all aimed at pinpointing the root causes of manufacturing defects. Six Sigma is all about the graphic demonstration of collected data (e.g. Linegraphs, Pareto Charts, Ishakawa (Fishbone) Diagrams) employed to ferret out those root causes. Applying these tools to inefficiencies revealed through Lean Manufacturing process analysis can quickly solve the riddle of the whys and wherefores of an unprofitable process. As every industry strives to increase profits in challenging times, a rebirth of Lean Six Sigma is occurring in of all places the Services Industry. Service businesses including banks, hospitals, schools, municipal governments and even law firms are embracing these techniques, challenging time honored methods of procuring and delivering services.  By committing key members of their staffs to Value Process Mapping and dissecting all core service processes, they hope to wring out inefficiencies resulting in superior service delivery to their customers.  If you operate a service business, don’t dismiss the application of Lean Six Sigma to improve your processes and enhance your bottom line. Expertise abounds in the consulting community, but a word to the wise: Start small with a pilot project and build the visibility and credibility of Lean Six Sigma from within your organization. Capital, Business 2010-05-20T16:23:45+00:00 http://www.exemplarcompanies.com/site/waav/ http://www.exemplarcompanies.com/site/waav/#When:14:25:12Z We are pleased to introduce WAAV, one of our many valued customers.  WAAV manufactures mobile Wi-Fi routers and offers solutions designed for high-quality signal delivery and reliable performance.  WAAV is advancing the boundaries and potential of the mobile broadband industry by using the most advanced networks.  Thanks WAAV and we are happy to work with you! WAAV is advancing the boundaries and potential of the mobile broadband industry. They have helped pioneer the field, introducing the first Wi-Fi hotspot for vehicles in 2005.  Two years later, the AirBox® X2 became the first multiple-connection cellular router to use different network carriers. And more recently, WAAV has built equipment that streams high-quality video using different cellular networks. WAAV’s customers range from federal agencies and bus/train companies to first responders to Fortune 100 companies.  In 2008, WAAV wired the commuter rail division of Boston’s MBTA, making it the first US rail carrier to offer Wi-Fi service. In 2009, Amtrak chose the AirBox® multiple-connection 3G cellular router for wireless Internet service to President Barack Obama’s inaugural train.  Small business clients also use mobile internet for reliable Internet access in remote locations and fleet management – WAAV’s award-winning technology is changing how and where people access critical information anywhere, anytime. WAAV is located in Cambridge, MA.  For more information, please visit WAAV Featured Customer 2010-05-19T14:25:12+00:00 http://www.exemplarcompanies.com/site/the_case_for_trademarking_more_than_your_business_name/ http://www.exemplarcompanies.com/site/the_case_for_trademarking_more_than_your_business_name/#When:16:33:52Z By Mitchell A. Bragg As a business becomes better known for the products it produces or the services it renders, competitors will no doubt try to capitalize on the success.  However, many companies may not recognize the importance of utilizing federal trademark laws to protect more than just the name on the front of the building.By Mitchell A. Bragg As a business becomes better known for the products it produces or the services it renders, competitors will no doubt try to capitalize on the success.  However, many companies may not recognize the importance of utilizing federal trademark laws to protect more than just the name on the front of the building. For example, the names of specific products, specific features of products, and even specific services associated with a service business are potentially subject to protection under United States trademark law.  By federally registering these names, a business can help prevent others from capitalizing on the goodwill of a successful business concept. According to the United States Patent and Trademark Office (USPTO), “A trademark is a word, name, symbol, or device that is used in trade with goods to indicate the source of the goods and to distinguish them from the goods of others.”  While a service mark is similar to a trademark, it instead “identifies and distinguishes the source of a service rather than a product.” While there are many factors that may go into the registration of a trademark, there are two primary factors analyzed in determining whether you will be able to register a trademark alongside a competitor’s mark:  1) the similarity of the marks; and 2) the commercial relationship between the goods and/or services listed in the registration of the mark. If the USPTO does register your mark, several important documents must be filed in order to establish continued federal protection.  However, if these documents are filed in a timely manner and not subject to opposition, your mark can be protected indefinitely in the U.S.  Registration of a trademark with the USPTO can help prevent others from capitalizing on the goodwill that you have built up around a specific line of products/goods or services. It is important to note that registering a trademark will not necessarily prevent others from taking the product concept behind the mark itself.  However, it will help to protect your business from others seeking to utilize a confusingly similar name for the same or similar goods. This means that if your company registers the trademark “Carstonites” for blue widgets, a competitor will arguably not be able to register or sell the same blue widgets under the name “Marstonites.”  However, trademark laws do not prevent competitors from producing or selling blue widgets in general.  They may be prevented under patent law though.  The same is true for a business that renders services to its customers.  A valid federal trademark or service mark registration can help protect the name of your business concept. Further, if you are in the business of inventing products or services, it is important to use names that are not confusingly similar to others currently in the market place.  For example, if there is a sports drink currently on the market named “Energy Life” and it is federally registered, your business would arguably not be able to register, or potentially even sell, a sports drink named “Life Energy,” at least not without a fight from the preexisting competitor. Just because you accidently came up with a similar name to the competition’s product does not mean you will necessarily be able to use it.  This means that you may be prohibited from using a very creative name because it is too similar to that of a competitor who began using it earlier.  Also, just because you think your product name is original does not mean someone else has not already registered it with the USPTO. The above comments are merely an opinion and meant to give potential inventors and companies insight into what is involved in the case of registering a trademark or service mark.  It is not exhaustive and certainly does not cover the plethora of other considerations to be taken into account when registering a mark with the USPTO. General 2010-05-10T16:33:52+00:00 http://www.exemplarcompanies.com/site/film_financing_-_tips_5_private_equity/ http://www.exemplarcompanies.com/site/film_financing_-_tips_5_private_equity/#When:04:37:41Z The single hardest task in producing films is financing them and, when it comes to financing them, you always need an element of private equity.  There are many ways to raise private equity, some involve friends and family, and others involve private placement offerings and even crowd funding—- with each method, the costs associated versus the rewards, also vary wildly. The single hardest task in producing films is financing them and, when it comes to financing them, you always need an element of private equity.  There are many ways to raise private equity, some involve friends and family, and others involve private placement offerings and even crowd funding—- with each method, the costs associated versus the rewards, also vary wildly. Private placements, can cost thousands of dollars whereas borrowing money through loans, credit cards and personal relationships carrys a heavy weight of responsibility and can potentially create an outcast of you, especially if your film isn’t the success you want it to be, and most films aren’t. Each method of raising private equity to produce your film should be considered seriously and if in doubt, the services of a professional should be engaged.  If for no other reason than to give you a reality check, as well as to protect yourself and those you are soliciting investment from. In deciding what direction you are going to fund your film, your first consideration should be the budget of your film and this is going to be decided to some extent by your screenplay, which in turn is driven by your desire to make a particular type of film. Ask yourself: Will it be a small set piece with limited actors, such as ‘Death and the Maiden’ or ‘44 Inch Chest’, or a special effects extravaganza such as ‘Avatar’?  Since this post is not aimed at James Cameron but at independent producers who have most likely never produced a film before, I think we can safely assume that we are talking budgets of less than $2m, and in all likelihood sub $1m. So, the question becomes, Where are you going to raise this kind of capital, and How are you going to do it?  The most likely method is a private placement memorandum (PPM), a Securities and Exchange Commission (SEC) document, which is required when soliciting investment from accredited investors. These should only be prepared by a securities attorney and a business plan is usually needed to accompany such a document, especially prior to engaging such legal services.  Many people ask me why? and the simple answer is, “because the PPM is the legal fluff surrounding the business plan”.  The business plan is what will convince investors the investment opportunity is a good one and that you are doing everything you can to mitigate the risks on their investment.  (See my earlier blog on business plans. Investors want to know that you have done your research, that the management team spending their hard earned dollars can deliver a product that will sell and you have at least thought of an exit strategy to make their money back plus a healthy profit. Now should the PPM route be too costly for you, you should consider a couple of things, like, maybe the film business isn’t for you, because if you aren’t prepared to spend the money required to raise the capital for a film, then how can you expect investors who have the net worth to get your film made, to invest in you?  Also have you really thought through the entire process of producing a film from script to consumer, is there a market for your film? Just because ‘Blair Witch Project’ or Paranormal Activity’ were made on next to nothing and made small fortunes, it doesn’t mean your film will too!  For every one of those success stories, there are hundreds, even thousands that never made it “big”. That being said, we all have to get on the career ladder somewhere and not all of us can afford the costs associated with a PPM, we would much rather put that those dollars on the screen.  A person’s passion, drive and the support of friends and family have allowed many people to overcome insurmountable odds in the past and as long as you and those investing in you, whether its your local bank (unlikely) or your mother, father, brothers, sisters and credit cards (more likely) and yourself, are fully aware of the risks you are taking with their money, that (1) you do your research, (2) you just happen to be extremely talented, and (3) you can attract Brad Pitt to star in the film you are making for $10,000, then by all means go for it!  It might end up being an expensive lesson in film making, and then again it might just pay off and launch you to super stardom. The above comments are merely an opinion and meant to give potential producers some insight into what is involved in the case of raising private equity.  It is not exhaustive and certainly doesn’t cover the plethora of other considerations to be taken into account when producing a film and that lead to their success. For more information, contact Mark Andrews   Film Industry by the Numbers General, Capital 2010-05-02T04:37:41+00:00 http://www.exemplarcompanies.com/site/construction_contract_change_orders_get_it_in_writing/ http://www.exemplarcompanies.com/site/construction_contract_change_orders_get_it_in_writing/#When:04:33:47Z Change orders are a routine part of construction. No matter how much you try to plan ahead, you can never foresee every possible event. When work is altered, there is always additional cost and the additional costs can run as high as 10% of a construction budget.  Unfortunately, change orders are usually the most contentious issue amongst all parties: the designer, the builder, and the owner.  The general rule is that changes must be in writing. Change orders are a routine part of construction. No matter how much you try to plan ahead, you can never foresee every possible event. When work is altered, there is always additional cost and the additional costs can run as high as 10% of a construction budget.  Unfortunately, change orders are usually the most contentious issue amongst all parties: the designer, the builder, and the owner.  The general rule is that changes must be in writing. Most construction contracts contain a requirement that the contractor is entitled to extra compensation only if, the extras or changes to the original scope of the contract, are authorized in writing before the start of this work. The construction industry isn’t always about protocol, rather it’s about keeping the project moving. Thus, changes are often directed orally with the promise to put it in writing later. In order to minimize disputes over modifications based upon orally directed changes -maintain a written record of changes (such as, daily logs, time sheets, costs reports, schedules, letters, memos, emails, etc.). Failure to follow change order protocol can lead to substantial claims and litigation in the long run. Parties also should be aware that there are 3 exceptions (waiver, estoppel, ratification) to the written change order requirement.  It is presumed that a person knows their rights and that those rights are voluntarily relinquished if they are not asserted at the time. Thus, a waiver can result from oral statements or promises made by a person with actual authority which is intended to induce the contractor to perform extra work.  There must be evidence that the party based his actions strictly on the reliance of truth and that the party in so doing suffered damages. Estoppel requires the victimized party to show both inducement and detrimental reliance. Finally, we have Ratification which is an “after the fact” authorized approval of an unauthorized act. This approval creates a binding commitment that would not otherwise be binding in the absence of such approval. Although there are exceptions to the requirements of a written change order, the best practice should be to always get the change order in writing before commencing work, in order to avoid any possible future disputes and unexpected costs. For more information, contact Richard J. Schoenfeld, Esq.  General 2010-05-02T04:33:47+00:00 http://www.exemplarcompanies.com/site/avoiding_potential_violations_of_the_foreign_corrupt_practices_act/ http://www.exemplarcompanies.com/site/avoiding_potential_violations_of_the_foreign_corrupt_practices_act/#When:04:13:40Z Your sales agent in Sao Paulo just called with good news: You’ve won that government contract. You just need to wire $15,000 this afternoon for a “license fee” in order to close the deal. Sounds simple enough, but be careful: You might just be walking into a violation of the Foreign Corrupt Practices Act. Your sales agent in Sao Paulo just called with good news: You’ve won that government contract. You just need to wire $15,000 this afternoon for a “license fee” in order to close the deal. Sounds simple enough, but be careful: You might just be walking into a violation of the Foreign Corrupt Practices Act.   Background: The Foreign Corrupt Practices Act (FCPA) was enacted in 1977 to curb the competitive abuse of influence payments to foreign officials in order to secure or retain business. In the prototypical case, a bidder seeking the award of a government contract for goods or services uses a covert payment or gift in order to curry the favor of an official who has influence over the award. Being sensitive to this legal exposure and responding appropriately are keys in avoiding a costly violation. Elements of the Act: The FCPA applies to all U.S. persons and any foreign national that issues securities in the United States or files periodic reports with the SEC. In addition, any foreign national that commits an act within the U.S. in furtherance of an improper payment is subject to the Act. Acts which violate the FCPA include the delivery of anything of value to a foreign official with the intent to induce the official to act favorably in support of the securing or retention of business.  This need not be business with the foreign government and the attempt to induce action need not be successful. Although “corrupt intent” is an element of a violation, conscious disregard or deliberate ignorance of the acts of your representatives will in most cases satisfy this element as well. The concept of “foreign official” includes a foreign political party, a party official and even a candidate for public office. Routine payments to obtain licenses, permits or other official documents, or for the processing of government documents are regarded as “facilitating payments” and do not violate the Act. However, the nature and purpose of any requested payments should be fully understood before proceeding. Enforcement & Penalties: The SEC and DOJ have concurrent authority to enforce the FCPA. Violations may be treated as civil or criminal (or both). Criminal penalties imposed against business entities are up to $2 million and against individuals of up to $100,000 with imprisonment of up to 5 years. The Alternate Fines Act can increase these fines to twice the benefit the violator sought to obtain. Civil penalties may be up to $10,000; however, in civil actions by the SEC, significantly greater fines can be imposed based on the gain received. Injunctions may be imposed against violators a well as loss of export licenses and the ability to do business with the U.S. government. Improper acts may trip additional violations such as mail fraud, wire fraud and state commercial bribery statutes. Because the failure to record such payments is a separate violation of the Act, “off book” and “slush fund” accounting can involve a violation of the Sarbanes-Oxley Act.   Foreign Legislation: U.S.-based enterprises and individuals are not the only ones subject to legal action for the kinds of acts prohibited by the FCPA. In 1997 the Organization for Economic Cooperation and Development adopted a convention to combat the bribery of foreign officials. Thirty-eight (38) countries have ratified this convention. Examples: Some recent, very blatant violations of the FCPA have gotten the attention of regulators. In March 2010 BAE Systems plc, one of the world’s largest defense contractors, plead guilty to alleged violations of U.S. trade and export laws including FCPA in a criminal proceeding initiated by the Department of Justice. Using offshore companies and “market advisors”, BAE issued payments to officials in order to secure government defense contracts in Saudi Arabia, The Czech Republic and Hungary. BAE was required to pay $400 million in fines. In the largest case of its kind, the SEC and DOJ brought companion civil and criminal proceedings against Siemens for an alleged systemic practice of paying bribes to foreign officials to secure business in Venezuela, Mexico, Israel, Bangladesh, Argentina, Vietnam, China and Russia during the period 2001-2007. Products and services involved included medical devices, identity cards, power plants, refineries and a mobile telephone network. The combined sanctions imposed against Siemens were $1.6 billion. Fines and prosecutions under FCPA in the last 10 years exceeded those occurring over the prior 20 years, suggesting that the authorities are becoming more vigilant in their enforcement efforts. For more information, contact Greg Murrer, Esq.   General 2010-05-02T04:13:40+00:00 http://www.exemplarcompanies.com/site/100-day_integration_planning_starts_during_pre-acquisition_due_diligence/ http://www.exemplarcompanies.com/site/100-day_integration_planning_starts_during_pre-acquisition_due_diligence/#When:18:01:42Z M&A transactions require a great deal of energy and focus by all parties and their counsel. However, ineffective Business Integration can spoil even the best of negotiated deals. Don’t let poor Integration planning or weak execution ruin your profit expectations for an acquired business. BACKGROUND: Post-acquisition business integration should be considered from two aspects: (1) the integration of human capital; and (2) the integration of operations and systems. Although both are interrelated, Human Capital Integration has an emotional component which if not addressed with a reasonable degree of forethought and compassion, can quickly poison the relationship between the employees of the target and the acquirer’s management.  Operations & Systems Integration should run in parallel with Human Capital Integration and includes the more mechanical melding the target’s internal business practices with those of the acquirer so that functions such as communications, financial reporting, ordering, invoicing, manufacturing/service processes, security, policies and practices operate in the manner that the acquirer intends. This “melding” may range from maintaining the target’s status quo to a complete replacement of O&S, extinguishing this aspect of the target’s corporate identity though the wholesale installation of the acquirer’s O&S. ADVANCE PLANNING: Effective business integration does not begin on the day the target is acquired. It must begin at the earliest possible stage of pre-sale due diligence. When the likelihood of deal completion becomes reasonably certain, this is the time to move integration planning forward. Granted this timing is more art than science and may be for naught should the transaction not close; however, to wait any longer enhances the likelihood of an unhappy marriage of the businesses. Select an Integration Manager – Skills: Planning, Credibility, Integrity, and Communications. The “IM” must be involved with due diligence at a very early stage – to learn the target business and its culture. Reporting should be at a very high level (CEO, Executive Sr. Management, Board) to ensure respect and gravity. Select an Integration Team – The “IT” needs to have the correct disciplines represented: Accounting, Finance, HR, IT, Legal, Payroll, Sales and Manufacturing. It’s important to have members from BOTH SIDES of the transaction as soon as that is feasible. Decisions to be Taken Prior to Acquisition – Need to consider how the target’s employees are going to be impacted from a job, reporting and compensation/benefits standpoint: 1. Determine new business organizational structure 2. Determine new leadership and other human infrastructure issues, including reporting relationships 3. Assess if all or any part of the target operate independently 4. Determine compensation and benefits structure and how this will change for target’s employees 5. Identify stayers and goers to the extent possible 6. Determine employee exit arrangements Not all employee-related decisions can be determined prior to closing. Often employee performance and compatibility can only be evaluated through post-acquisition observation. Hasty human capital decisions can breed contempt. At the same time, dissent and incompatibility cannot be allowed to fester. The human capital component of the Integration Team should therefore move in an expedient and even handed manner. Need to consider the extent to which the target’s Systems & Operations will be retained and conversely, the extent to which the acquirer’s Systems & Operations will be installed: 1. Assess the adequacy and compatibility of target’s S&O with the acquirer’s 2. Identify which of target’s S&O will be retained 3. Identify which of target’s S&O will be replaced or absorbed into acquirer’s S&O 4. Consider implications of these changes to staffing and reporting 5. Set out a preliminary timeline for each change Processes to be Developed Immediately Prior to Acquisition – These must be ready for launch upon the day of acquisition: 1. Communications Plan: Q&A Forum; Point of Contact, Communication Channel, Q&A vetting process that is expedient yet accurate and consistent 2. Anticipate Q&A and vet matters in advance – brainstorm with all disciplines 3. Overall Integration Plan by discipline, line of business, grouping or other as applicable 4. Integration Time Line by functional area 5. Consistent, transparent process for making employment-related decisions (retention, promotion, open positions, compensation) 6. Handling of layoffs resulting from business consolidation, redundancy   IMMEDIATELY AFTER CLOSING – START OF THE 100-DAY INTEGRATION PERIOD Communication, Communication, Communication – Implement your pre-ordained Communications Plan, which should include the following: 1. All-Hands Meeting – Announce the known, definitive decisions now; disclose the lines of communication for unresolved, open or unanticipated questions and Integration Time Line. 2. Written communication affirming what was disclosed at the All-Hands Meeting. This will avert confusion and dispute and reach those who did not attend. 3. Mind Reader’s Communication – Set out anticipated Q’s with definitive A’s in writing. 4. Regularly announce decisions as they are finalized through a consistent communication channel and/or updates. Regular written communication builds confidence and community. Questions that Absolutely Need to be Answered Quickly & Consistently – Timing of responses will be dictated by need and certainty: 1. Am I going to have a job? 2. How will my benefits be changed? 3. Who will I be reporting to? 4. What are the culture, expectations, and objectives of the new owner? 5. What are the positives of this acquisition for me? 6. If I’m going, what help (severance, outplacement assistance, etc.) will I get? Not all news delivered after the acquisition closing date will be good news for employees. It is best however to deliver bad news as early in this process as possible so employees can adjust to it. In addition, indecision, decision reversals or inconsistent messages damage credibility at a time when the need for credibility is paramount. Employees appreciate directness and honesty, even if the message is adverse. If a mistake is made, it is best to admit it, apologize and move on. Clear, concise communications will serve to squelch rumors and innuendo. ONGOING MAINTENANCE: Business integration is a continuous process throughout the 100-day period. Members of the Integration Team should meet regularly to assess progress and readjust go-forward activities. These meetings may be among particular disciplines; however, to retain a solid perspective, the whole Team should assemble periodically for collective updates. A periodic Integration Newsletter (or other means of formal communication) should be distributed among employees addressing submitted questions, clarifying any prior communications, dealing with misinformation, encouraging dialogue and documenting successes. This might be done weekly and later monthly as the process winds down. As previously noted, this communication needs to be controlled by a single point of contact to avoid inconsistency or mixed messaging. CONCLUSION: Ultimately it will be important to announce the formal end of the Integration Plan. This announcement tells the employees that changes are complete, allowing them to focus solely on the future of the business. Be sure to thank your employees for supporting a successful integration program. The Integration Team needs to be formally disbanded at this time. Rewards for their good work should be considered. Remember, they have been implementing the Integration Plan in addition to doing their normal jobs. General 2010-04-30T18:01:42+00:00 http://www.exemplarcompanies.com/site/tough_times_call_for_making_sure_you_have_the_right_law_firm/ http://www.exemplarcompanies.com/site/tough_times_call_for_making_sure_you_have_the_right_law_firm/#When:04:20:05Z When I read this ABA Journal article regarding the demands of In-House Counsel, I was struck once again by how outdated the traditional law firm is.  In describing the effort by some firms’ general counsel (or “GC”) to reduce the amount of money they spend on outside counsel, the author points out that, “[t]oday’s GCs are key strategists.”  The clear implication here is that outside counsel are not strategists.  Further, one GC is quoted as stating what to us here at Exemplar is patently obvious: “The hourly rate may be an outdated approach for us and not sustainable.”  Indeed. When I read this ABA Journal article regarding the demands of In-House Counsel, I was struck once again by how outdated the traditional law firm is.  In describing the effort by some firms’ general counsel (or “GC”) to reduce the amount of money they spend on outside counsel, the author points out that, “[t]oday’s GCs are key strategists.”  The clear implication here is that outside counsel are not strategists.  Further, one GC is quoted as stating what to us here at Exemplar is patently obvious: “The hourly rate may be an outdated approach for us and not sustainable.”  Indeed. Much ink has been spent on the layoffs in the legal profession, the downsizing of the large firms, and the difficulty for new grads in finding jobs.  There is a simple reason for all of this: The services that traditional law firms provide and the manner in which they provide them is not valuable. But there is also a reason why Exemplar is growing by leaps and bounds amidst all this trouble in the profession.  We add value.  That’s it.  No bull, no fiddling with time clocks, no mess. That basic mission is easy to understand and communicate, and I had the privilege the other day of explaining to a potential customer how we do business.  I mentioned to him that we understand that he does not care how much time it takes us to complete a job so long as it is done by the deadline and is of superior quality.  He agreed.  I continued by saying that we would give him predictability in his budgeting and guarantee our work.  He laughed and said he and others in his profession had given up on attorneys, preferring to do their legal work themselves precisely because they could never predict how much the lawyers were going to cost.  I finished by saying that, unlike others, we prefer to strategize with customers up front so that we can keep costs down in the long run. Again, he smiled, half-exasperated and much impressed.  “It’s about time attorneys changed their business model.” That time has come. Do you have the right law firm? General 2010-04-13T04:20:05+00:00 http://www.exemplarcompanies.com/site/nfl_collective_bargaining_agreement_is_status_quo_good_enough/ http://www.exemplarcompanies.com/site/nfl_collective_bargaining_agreement_is_status_quo_good_enough/#When:17:13:55Z Will an $8.5 billion dollar industry be put on hold in 2011? By Bryan Natale, Exemplar Law Will an $8.5 billion dollar industry be put on hold in 2011? The NFL Collective Bargaining Agreement (CBA) expires next March as the 2010 season marks the “Final League Year” of the existing CBA and the likelihood of a 2011 lockout grows with each passing negotiating session.  In fact, the issue is so real that, in a recent letter to all NFL agents and player representatives, the NFLPA is encouraging players to place up to 60% of their performance-based pay check into a personal account.  In addition, the NFLPA has suggested that an additional 25% of 2010 paychecks be put into the same account. The way things stand today, only two things are certain at this time: we will have NFL football in 2010 and there will be a draft in 2011. So what stands between the NFL and the NFLPA? To no surprise, the most contentious item on the table is the numbers.  According to the NFLPA, the players, under the existing CBA, receive approximately 52% of the revenue pool.  However, the NFL represents that the players receive 60% of the revenues.  Although the NFLPA is content with the terms of the existing CBA, the owners of the NFL are vehemently opposed to the existing CBA which is why they opted out of it last spring, as was their right under the bargained rules. According to sources the NFL, in its proposal to players, would like to trim the portion of revenues going to players by 18%.  The owners argue that the players receive 60% of the revenues and the owners assume 100% of the costs.  Further, the owners claim that the money they have put into new stadiums and facilities, coupled with skyrocketing player costs and a down economy, makes the business model currently in place almost impossible to maintain. To push back on the owners, the NFLPA has requested that the owners open up their financial books in an attempt to justify the cut.  The NFLPA argues that until the owners agree to more substantial disclosure of the financial records and business operations, the NFLPA is hard-pressed to submit a counterproposal to the 18% cut that adequately protects the players and is justified. Although the “Final League Year” has other implications, including an uncapped 2010 season, substantial additional restrictions on player free agency and reductions in player benefits, the red flag remains how big a piece of the pie the players take home.  Until the gap is narrowed between the NFLPA and the NFL, the game clock will continue to click. On the bright side, there are some things that are agreed upon in the negotiating sessions. Both sides want to see some form of cap on rookie spending and more money diverted back to veterans and retired players. The NFLPA’s model would make players free agents after three years in the league, limit rookie spending and put $200 million back into the player pool for established players.  Despite the contentious hot items still being negotiated, there is at least some common ground. But let’s be honest, all of this back and forth is nothing new. It is simply part of the game, and it’s endemic to any pro sports league going through a long negotiation. Although there is sufficient time left to get a new CBA together, grave concern is warranted if in the spring of 2011 everything continues to stall.  But for now, expect more of what we’ve seen the last few months – a bitter game of tug of war. General 2010-04-12T17:13:55+00:00 http://www.exemplarcompanies.com/site/exemplar_colorado_open_for_business/ http://www.exemplarcompanies.com/site/exemplar_colorado_open_for_business/#When:19:18:03Z Colorado’s business landscape is about to change. Exemplar, the innovator in fixed, value-based pricing for legal, business consulting, and capital advisory services, is targeting Colorado for its next strategic move. FOR IMMEDIATE RELEASE Contact: Luke Korkowski Telephone: 720-837-2802 Email: lkorkowski@exemplarlaw.com EXEMPLAR COLORADO OPEN FOR BUSINESS Innovative Business Law and Consulting Firm Sees Opportunity in the Rocky Mountain Region Denver Metro Area, CO - Colorado’s business landscape is about to change. Exemplar, the innovator in fixed, value-based pricing for legal, business consulting, and capital advisory services, is targeting Colorado for its next strategic move. Spearheading the effort is Luke Korkowski, an experienced Colorado transactional attorney and business consultant. "The vibrant business environment in Colorado presents an excellent opportunity to serve customers looking for firms that do business differently," Korkowski said. "The startup market is more active than you would expect, given the state of the economy, and there is an impressive community of CleanTech and LOHAS (Lifestyles of Health and Sustainability) experts in the area." Korkowski continued, "Because of the active startup community, Revolve seems to be of particular interest to potential customers." Revolve is Exemplar’s subsidiary that focuses exclusively in the startup arena. "However, Colorado also boasts a large sector of mature, mid-market companies, making for a hospitable environment for Exemplar to offer its services." "There is almost no limit to the number of Colorado companies that are grasping for high-quality professional advice that comes at a known, fixed price,"Korkowski said. "We are delighted to fill that role." More information is available at Exemplar’s website, http://www.exemplarcompanies.com, and at Revolve’s website, http://www.RevolveThis.com. General 2010-04-11T19:18:03+00:00 http://www.exemplarcompanies.com/site/dont_miss_pib_event_how_is_drug_development_changing/ http://www.exemplarcompanies.com/site/dont_miss_pib_event_how_is_drug_development_changing/#When:17:11:26Z May 6th 2010 at 7 PM don’t miss what will surely be the event of the season on the Bio/Pharma calendar! Professionisti Italiani a Boston (PIB) presents “How is Drug Development Changing?” May 6th 2010 at 7 PM don’t miss what will surely be the event of the season on the Bio/Pharma calendar! Professionisti Italiani a Boston (PIB) presents “How is Drug Development Changing?” The event will feature industry leaders Renzo Canetta, MD, Vice president Oncology Bristol-Myers Squibb, and Giulio Draetta, MD, PhD, Chief Research Development Officer, Dana Farber Cancer Institute.  Doctors Canetta and Draetta will be discussing the exciting and dynamic landscape of drug development in research, industry and academia. The event is open to the public and free of charge!  Space is limited so please RSVP ASAP! When:  Thursday May 6th 2010 Where:  MIT Faculty Club, Cambridge, MA Networking with cocktails and appetizers will follow.  Register by emailing your request to contact@PIBoston.org Presented by our good friends at PIB! News 2010-04-06T17:11:26+00:00 http://www.exemplarcompanies.com/site/film_financing_-_tips_4_know_your_craft/ http://www.exemplarcompanies.com/site/film_financing_-_tips_4_know_your_craft/#When:18:19:09Z The following may seem obvious to some, or for that matter a soap box, but then again it may not—the reality is whether your a producer, a director, a screen writer or any other fundamentally crucial craft in the business of film making, and you want to be in the top 5% of successful professionals, you need to know your craft and know it well.  In fact not only should you know your craft, you should go out of your way to at least understand the other fundamental roles key to bringing a film to fruition. The following may seem obvious to some, or for that matter a soap box, but then again it may not—the reality is whether your a producer, a director, a screen writer or any other fundamentally crucial craft in the business of film making, and you want to be in the top 5% of successful professionals, you need to know your craft and know it well.  In fact not only should you know your craft, you should go out of your way to at least understand the other fundamental roles key to bringing a film to fruition. Why? Well first of all, understanding the other roles around you will help you not only appreciate their positions but also help you work with them better and in a more cohesive way.  Likewise, if they are of the same mindset, then they also will appreciate the trials and tribulations of your role.  If you’re having a bad day, unable to meet a deadline, or trying to make a deadline, then both they and you will understand each other’s points of view, which will make the frustration not appear to be as apparent, and you both will be able to offer some valuable help that will get the job done better and more efficiently.  Imagine that you are a producer dealing with a director with a problem on set or in the edit suite, being able to understand their position, and making constructive creative comments will usually win your points. What about if the roles are flipped, and you are the director in discussions with a producer, you might just be more understanding to the reasons why the producer isn’t letting you “run amok” with the stock, or why they’re saying no to the helicopter shot, thus making you more constructive with your decisions and sensitive to things like cost limitations.  It really doesn’t take much effort to be informed about the fundamentals of other peoples’ roles; there is a plethora of books, courses, and freely available knowledge on the web for those who truly care about doing the best job they can, and interacting with their colleagues in an efficient and understanding manner.   Film Industry by the Numbers General 2010-04-03T18:19:09+00:00 http://www.exemplarcompanies.com/site/film_financing_-_tips_3_business_plans/ http://www.exemplarcompanies.com/site/film_financing_-_tips_3_business_plans/#When:03:29:02Z One of the most under-valued, and for that matter, under developed tools in film financing,  are business plans.  For the most part this is because independent film makers don’t have a corporate or business background, and they simply rely on what they read or the advice of an uninformed few in putting these important business documents together.One of the most under-valued, and for that matter, under developed tools in film financing,  are business plans.  For the most part this is because independent film makers don’t have a corporate or business background, and they simply rely on what they read or the advice of an uninformed few in putting these important business documents together. It is exceptionally important to make sure that you have done your research before putting a business plan together for your film, because you want to present the most compelling argument for any investor to invest in you.  To that end, you must start by having a film project that has a higher than average chance of being made, which means attracting talent that will produce the sales numbers that will show an investor he has a reasonable chance of not losing his money.  This is really comes down to development but in the event that you have such a project, you can begin attracting the talent to support your end goal. Use your exceptional script to attract the interest of a select few senior management, a reputable co-producer (if you aren’t one already), as well as: a director, a director of photography and a line producer with great track records—- once you have achieved this stepping stone, use them as a portfolio to attract your actors.  Afterall, actors see the project as more attractive, and they are more likely to come on board a project that has a reputable team at the helm. Assuming you have gotten this far, you can begin to create your business plan with at least some of the tools and personal skill that will make your investment opportunity, “somewhat compelling” compared to the plethora of others that aren’t. Some of the key ingredients to a good business plan that investors will be looking for and I rarely see are; accurate sales projections from a reputable sales or distribution company, a full budget breakdown and a solid finance breakdown showing how the project is to be funded, and how the risk to capital will be mitigated. The above elements are rarely ever included in business plans because they aren’t easy or cheap to get—- you usually have to pay for a schedule and budget to be created, which means paying a line producer a few thousand dollars for their time. A solid financing plan that stands up to scrutiny usually requires a depth of knowledge that few independent producers possess—- nevermind the fact that sales numbers cannot be realistically achieved without working relationships with those companies. A project that has talent attached or a reasonable chance of attaching usually has a better chance of obtaining financing, but without having a solid business plan to attract that talent, your project may not even be able to get underway. However, on the assumption that you can achieve much of what is proposed above, ensure you have the following information in your business plan and you will have a better than average chance of attracting an investor’s sense of adventure.  A disclaimer, an Executive summary (a high level view of your business plan - 1-2 pages), creative overview of the project, log-line, synopsis, management team bio’s, bio’s of the actors attached or proposed, a current industry overview, a sales and distribution plan for your film, comparison films with accurate numbers that are not just achieved by pulling them from site like imdb.com or boxofficemojo.com, a budget breakdown, sales estimates and information about the company providing them, proposed schedule of events, financing, pre-production, production, post-production, sales and distribution, section on risk mitigation and risk warnings. This list is by no means exhaustive, and, if in doubt, the services of a professional should be sought in putting your business plan together.  Remember, you usually only get one chance to impress an investor and you want to present to them the best opportunity you can.  Give them no reason to say NO. Good luck Mark Andrews   Film Industry by the Numbers General 2010-03-14T03:29:02+00:00 http://www.exemplarcompanies.com/site/please_tell_me-where_are_the_basics_come_on-_just_5_common_sense_rules/ http://www.exemplarcompanies.com/site/please_tell_me-where_are_the_basics_come_on-_just_5_common_sense_rules/#When:03:22:48Z Your telephone etiquette says volumes about your company, and the care it takes with its customers.  The caller draws distinct impressions with regard to what kind of organization they are working with, their operations, their professionalism, and the quality of the staff.  Many times, it is the first impression a customer gets that helps pave the way to a successful relationship.  That being said-Your telephone etiquette says volumes about your company, and the care it takes with its customers.  The caller draws distinct impressions with regard to what kind of organization they are working with, their operations, their professionalism, and the quality of the staff.  Many times, it is the first impression a customer gets that helps pave the way to a successful relationship.  That being said-  I can’t tell you how many times I have placed a business telephone call only to be answered by the person on the other end with the grace of a gorilla in heat.  A recent call placed to an organization in the Midwest drove home the message of how good (or not so good) the first impression can be.  It went like this: Trying to talk to a human being was easy enough.  From there it all went downhill.  First the individual answered the phone and very quickly stated their opening greeting.  I could not understand the person, because besides talking very fast, they were talking as if they had marbles in their mouth. I also had to ask the individual to repeat their name.    Since my initial interactions were at best below par, and certainly well below the quality I would want my own company to be presenting, I have drafted the following telephone etiquette rules that customer service individuals should keep in mind—- rules which must be implemented to ensure that a quality impression is being placed in the minds of every customer who calls your company looking for assistance.  Etiquette Rule #1- Make sure you speak clearly and identify your organization and yourself.  Understand how you are coming across to the individual on the other end of the telephone.  Always use a pleasant and friendly tone. “Hi, you have reached ABC customer service, this is John H. speaking. How can I help you”?  During my phone call, and as I began to speak about what the issue was that I was calling about, I was interrupted by the representative, indicating “Sir I cannot help you unless you give me a case number”. Now understand it was not a polite interruption but rather a brash “take that” type remark!  Telephone Etiquette Rule #2- Do not interrupt the person while he/she is talking to you. For example, a simple, “I can help you, do you have a case number that I can reference” will convey a real “can-do” attitude and professionalism.  During my call, after I provided the case number, I stated the reason why I was calling, and gave details of the issue.  The representative then told me: “Hold on you will need to speak with a supervisor” and I was put on hold.  “Hello?”  (Silence) … Nice.  Etiquette Rule #3- Before placing a caller on hold let them know the reason why, and ask the caller if it is ok. For instance, “I will need to have you speak to a supervisor, may I place you on hold and have one assist you?” would suffice.  Let’s continue- Now I hear ringing, and then get the automated recording that all lines are busy.  You know the drill.  After a while, a representative answers, and I begin all over again.  After a few questions, the representative says “We will have to check further into this and someone will call you back.”  I do not get a good feeling about how my issue is going to get resolved.  Did you get the key word “someone”?—- I get transferred to a supervisor, they listen to the issue, and now “someone” will have to call me back.  I had to ask several questions as to what was happening with the issue and why they needed to call me back.  More questions, and finally, I think I understand.  Etiquette Rule #4 – When further research is needed, the customer service representative should nicely explain why it will take more time, and reassure the caller feel that the problem is owned, and things are in control. For example, a possible response might be: “I am going to need to check with our accounts payable area to see how they wish to process this. May I have a telephone number that you can be reached at?”  Finally, after speaking with a supervisor and finding that I should hear something back from “someone” within 24 hours, I said “Thank you”.  The supervisor say’s “You’re welcome”, and immediately hangs up the line.   Etiquette Rule #5- When hanging up and completing a call, make sure the caller hangs up first, and make sure you send them off with an understanding that they will actually be called back.  Make the caller feel like their issue is going to receive its necessary attention. For instance, the representative might say, “I will make sure this is followed up with, and you will receive a call back in 24 hours.  If you have any other concerns please feel free to call me”.  So now ask yourself this question?  What do you think my impression of how this company is and its management?  What is your impression?  Simple telephone rules.  They say so much about an organization, its customer care, and how professional they are.  They seem so basic and yet many times are not followed. I know there are more rules, but let’s start with the basics first! (Please)  Steve Monticone General 2010-03-14T03:22:48+00:00 http://www.exemplarcompanies.com/site/essential_living_foods/ http://www.exemplarcompanies.com/site/essential_living_foods/#When:17:02:17Z We are pleased to introduce Essential Living Foods, one of our many valued customers.  ELF is a Certified Organic Conservation Driven Importer and Distributor focused on making available internationally the highest quality, ecologically sound organic commodities from around the globe What makes Essential Living Foods so special?  The type of foods and products they promote and the “farm to table” approach to sustainable business practices.  Essential Living Foods has made an unwavering commitment to true quality- in every aspect of the company.  Thanks Essential Living Foods and we are happy to work with you!  E.L.F. has made an unwavering commitment to true quality. They travel the world year-round in search of the most exotic foods emerging from indigenous cultures and untouched ecosystems. They use the purest techniques and cutting-edge technologies in growing, harvesting, drying, and packaging – all to ensure best products available. They cut out the middleman and connect you directly to their sustainable farms.  How great is that? Essential Living Foods mission is simple and benefits everyone involved, according to E.L.F.’s CEO, Amrit Khalsa.  “Our mission is to provide highly nutritious foods that are also great tasting, in a way that supports sustainability, environmentalism, and fair trade practices.  We want to make our consumers healthy and happy when they eat our products, help make the earth healthier by supporting organics, and strengthen communities by providing decent employment – both in our offices and for the farms that supply us.” Another thing that makes Essential Living Foods so great is their belief in a “farm to table” model of sustainable business, where small farmers are supported by fair prices, the earth’s ecology is protected by organic, sustainable farming techniques, generous donations from the sales of the products goes back to source communities, consumers benefit from our great tasting, healthy foods, and their employees and partners have a rewarding, values-driven place to work and earn a living.  Exemplar Law Partners is honored to work with a company that demonstrates such values.  For more information, please visit http://www.essentiallivingfoods.com Featured Customer 2010-03-01T17:02:17+00:00 http://www.exemplarcompanies.com/site/positioning_business_to_succeed_in_the_low_carbon_economy_a_climate_change_/ http://www.exemplarcompanies.com/site/positioning_business_to_succeed_in_the_low_carbon_economy_a_climate_change_/#When:19:12:29Z The Boston Harbor Hotel was the location of a regional summit focusing on the impacts of climate change on all aspects of business. This all-day climate change summit on Friday, February 12, featured a speaker from the EPA, policy makers from the six New England states, and prominent business leaders. The speakers dished out perspectives on how businesses can position themselves to benefit from state and national energy and environmental initiatives. The message of the day for businesses: Vision and values give a company a sense of direction, but long-term success depends on embracing sustainable business practices. Global climate change is accelerating and sustainable business will depend not only on being very finely tuned to these changes, but also being expert in understanding how they interact and tangibly affect our economy. By Mary Beth Ayvazian, Esq. The Boston Harbor Hotel was the location of a regional summit focusing on the impacts of climate change on all aspects of business. This all-day climate change summit on Friday, February 12, featured a speaker from the EPA, policy makers from the six New England states, and prominent business leaders. The speakers dished out perspectives on how businesses can position themselves to benefit from state and national energy and environmental initiatives. The message of the day for businesses: Vision and values give a company a sense of direction, but long-term success depends on embracing sustainable business practices. Global climate change is accelerating and sustainable business will depend not only on being very finely tuned to these changes, but also being expert in understanding how they interact and tangibly affect our economy. The US is lagging in the fight against climate change and may lose its place as a world power as a result of it. One of the most crucial battles the United States faces against climate change is its struggle for energy independence, public officials and private business leaders agreed. The U.S. must pull the reins on foreign oil for the sake of the nation’s national security. But energy independence also means job security, something weighing heavy on the minds of Americans as the national jobless rate continues to creep higher. “We’ve already lost our competitive advantage,” was the stark statement posited by Thomas King, CEO of National Grid, an international energy delivery company. In the U.S., National Grid delivers electricity to approximately 3.3 million customers in Massachusetts, New Hampshire, New York and Rhode Island, and operates the electricity transmission and distribution network on Long Island, serving an additional 1.1 million customers. Mr. King also said that the scientific debate on climate change “needs to end, and bold leadership is called for to move the United States forward in a sane march toward energy independence to catch up with China and major European countries. Numerous participants commented that given the risks involved in new business investments, reliance on governments and regulatory agencies doing the right thing is not enough. They could fail. Or institute restrictions on commerce that are unfriendly to businesses. Companies need help in understanding greenhouse gas regulations and policies; obtaining grant and loan information for new energy and energy efficiency technologies; interpreting existing SEC disclosure requirements as they apply to business or legal developments relating to the issue of climate change; and in general, maximizing their opportunities while mitigating their risks. In addition to legislative and administrative policy-making, companies need to be apprised of the judicial rulings in the climate change arena. Companies not paying attention to the courts and the potential impact on their businesses should think again as there have been a few important cases in the last few months which pave the way for the viability of nuisance claims relating to climate change impacts. In Connecticut v. American Electric Power, 2009 WL 2996729 (2d Cir. Sept. 21, 2009), the 2nd Circuit court allowed lawsuits to proceed against utilities that allegedly emit 10% of America’s man-made greenhouse gases. Under federal nuisance theories, the plaintiffs seek an injunction forcing the utilities to cap and then reduce emissions. The 5th Circuit similarly ruled in Comer v. Murphy Oil, 2009 WL 3321493 (5th Cir. Oct. 16, 2009),  that Gulf Coast residents and property owners could sue numerous energy, fossil fuel, and chemical companies for Hurricane Katrina’s havoc. Although, we don’t yet know the eventual outcomes of these cases as an appellate decision that a complaint meets the low threshold for survival does not go so far as to uphold a verdict or injunction, a door has been opened, and companies should be looking to their own policies and compliance issues to mitigate against possible lawsuits that disrupt and cost thousands and thousands of hours and dollars to defend. For more information, please contact , Exemplar Law Partners, LLC. General 2010-02-15T19:12:29+00:00 http://www.exemplarcompanies.com/site/tax_another_business_expense/ http://www.exemplarcompanies.com/site/tax_another_business_expense/#When:02:24:03Z In the world of business, especially in today’s economy, it’s the “survival of the fittest” elimination process which weeds out the weaker companies from the sea of competitors. One of the key “separators” is cost management.  A company’s ability to critically analyze and effectively manage its business expenses is its competitive advantage. Although each industry carries its own costs, there are certain expenses that every for-profit business must account for. One of the standard cash out-flows is taxes. But are taxes really a business cost? Taxes share some of similar characteristics with other traditional costs, such as advertising and R&D, but they also have distinguishing features. By: Emily Dunn In the world of business, especially in today’s economy, it’s the “survival of the fittest” elimination process which weeds out the weaker companies from the sea of competitors. One of the key “separators” is cost management.  A company’s ability to critically analyze and effectively manage its business expenses is its competitive advantage.  Although each industry carries its own costs, there are certain expenses that every for-profit business must account for. One of the standard cash out-flows is taxes. But are taxes really a business cost? Taxes share some of similar characteristics with other traditional costs, such as advertising and R&D, but they also have distinguishing features.  One of the main similarities taxes and other business expenses share is that they are a necessary cost of simply doing business. Effective planning and management of all of your company’s operating costs will increase predictability, cash flow, and ultimately, your company’s bottom line. In addition, in order to ensure your company’s profitability, taxes and business expenses must be built into the pricing structure. Finally, taxes can serve as an indicator of how well any company is being managed.  However, taxes are different from other business expenses in the following aspects: 1. Taxable income can be manipulated. Strategic tax planning provides a company the ability to reduce its effective tax rate lower than the unaltered income generating statutory tax rate. Many tools can be used to manipulate the company’s effective tax rate such as amount, rate, timing, character (ordinary or capital), and source (domestic or foreign). By outsourcing through a subsidiary, companies can improve their tax position with tax holidays and lower overhead. In addition, credits and deductions can be applied to lower taxable income such as foreign tax credits, deferral of taxes, accelerating deprecation deductions, and interest deductions. 2. When a tax expense appears on the company’s balance sheet, it does not carry the same quantifiable value as other business expenses (e.g. salaries, R&D, etc.). The reporting method is different for taxes than other expenses. On the company’s income statement, tax expenses can be found hiding in the footnotes providing details on where they were incurred, what the permanent deductions are (e.g. R&D credits) and when assets will expire. Taxes are also located on the company’s cash flow statement. 3. Effective tax planning brings “value” to the company. Make sure your company’s tax strategy correlates with your company’s business plan. By having these two plans match, your company is better able to justify its tax position on audit. 4. Taxes impact every aspect of business including: the form (e.g. corporation or partnership), location, financing (e.g. debt or equity), and method of acquiring equipment (e.g. lease or purchase). Unlike other business expenses such as salaries, which are predictable, taxes are more flexible. The sustained tax rate will indicate how well the business is being managed, and successful management of a company’s tax rate can pose as a positive indicator to potential investors. Since effective management of your company is an important responsibility, then having a tax strategy that works is a positive indicator for market growth. It is wise for every entrepreneur to learn how taxation works, how taxes affect the operations of the business, and to seek the advice of an expert to develop a business plan that incorporates your tax needs. Seek the proper tax advice to learn how you can successfully manage your company’s tax rate to make it a positive indicator of your business! For more assistance with managing your company’s tax rate, please ask our experts at Exemplar.  General 2010-02-12T02:24:03+00:00 http://www.exemplarcompanies.com/site/film_financing_-_tips_2_film_financing_finders/ http://www.exemplarcompanies.com/site/film_financing_-_tips_2_film_financing_finders/#When:23:57:22Z Finders are individuals who source finance for producers to get their film projects funded, but for the most part, they are rarely informed about the craft which they are being engaged.  By this, I mean that most finders are not “full-time finders”, but merely seizing on an opportunity that they consider may make them a quick buck.  Most finders usually have a full time job in finance, or are self employed in the film industry, and they happen to have made a few connections with some independent producers that need someone to find them money.   (By Mark Andrews) Finders are individuals who source finance for producers to get their film projects funded, but for the most part, they are rarely informed about the craft which they are being engaged.  By this, I mean that most finders are not “full-time finders”, but merely seizing on an opportunity that they consider may make them a quick buck.  Most finders usually have a full time job in finance, or are self employed in the film industry, and they happen to have made a few connections with some independent producers that need someone to find them money.  Their knowledge of film finance and the requirements of most investors is limited, and they usually don’t recognize their fiduciary responsibilities from either a legal or moral standpoint.  In the worse case scenario, should you be unfortunate to meet certain individuals, since they literally contract producers (or not), do little or no due diligence on both the producers side, or the financing sources sides, and they send project information out to prospective financiers without any legal right to do so in the hope of simply “getting lucky”. This of course can have serious ramifications for most individuals with film projects, since your project is now being passed around town to everybody and their mother, which naturally dilutes the very essence and value of the project.  Afterall—Who wants a project that everybody has seen, and what many may have passed on?! Not to mention, there are many legal ramifications of soliciting investment from investors without a license (which many finders don’t have). So what can you do to protect yourselves from the more unscrupulous individuals who serve to give the legitimate Finders or Executive Producers a “bad name”?.  Well first of all, you can do your own due diligence on them: find out and ask for proof of any films they have financed or produced and how they did so, ask for a formal contract and ensure that the terms of the contract are not unreasonable, make sure the contract provides for them to give you a list of the prospective financiers they intend to approach in the event you already know them.  Also, it would be wise to have your lawyer review the contract and make sure you are protected from any fall out between you and the finder because either the finder was not licensed, or some inadvertent warranty was made without your permission.  Finally, it would be wise to consider preparing a proper offering memorandum to be presented to legitimate equity investors. Alternatively, you can do your homework, learn about film financing and raising capital in addition to networking.  Hard work never hurt anyone, and learning to raise money for your film the hard way is both a rewarding and an invaluable skill to have.  Networking these days is easier than it’s ever been with social networking sites such as LinkedIN, Facebook and ASW to name a few, and if you are fortunate enough to live in Los Angeles (or not as the case may be ) there are more than a few social events to put on your calendar every week.  That aside, prepare a specific course about film financing, read books on it, retain the services of an entertainment legal professional or find a mentor with the experience you don’t have yet!   Film Industry by the Numbers General 2010-02-02T23:57:22+00:00