Representing Startups: Choice of Entity, Protection of IP, Employment Agreements, Equity Compensation and More

Recording of a 90-minute CLE webinar with Q&A


Conducted on Wednesday, July 17, 2019

Recorded event now available

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Program Materials

This CLE webinar will provide counsel with an understanding of the critical issues which must be addressed by a startup before commencing business. The panel will discuss how to document the management role, compensation and exit strategy for the founders, the importance of entity type and structure, protection of trade secrets and intellectual property, employment agreements and equity compensation, issues with third-party contractors, and more.

Description

Entrepreneurs and existing companies start hundreds of thousands of new businesses annually, which all encounter similar challenges. The birth of a business presents the best chance to address issues, which, if done early, can avoid costly litigation later.

The roles, equity ownership and compensation of the founders must be clearly defined. There should usually be an agreement on how to transfer equity and how the business will proceed if any founder leaves the company. Equity may be a necessary component of hiring key employees, but it must be structured so as not to impair future capital raises.

The startup must immediately position itself to finance its operations, hire employees and contractors, and transact business with third parties. Intellectual property rights are vital: IP must become a corporate asset. If not, the individual claiming ownership may try to leave the company with the IP or may seek to extract a premium at the time the business is sold.

The startup's structure should limit liability, accommodate future growth and consider tax law. It must also have template contracts and procedures in place that enable it to sell to and service its customers, and it usually must do so for a limited legal budget. All of these tasks require the involvement of corporate counsel.

Listen as our authoritative panel discusses how to document the management roles, equity ownership and compensation for the founders in a startup venture. They will also discuss entity selection, employment and contractor agreements, equity compensation, protection of intellectual property and trade secrets, form contracts necessary for transacting business, and other matters to resolve before moving forward with a new business.

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Outline

  1. Selection of business entity: tax, finance and other considerations
  2. Equity structure and compensation of founders and employees
    1. Equity structure options
    2. Equity compensation for founders and future employees
    3. Shareholder agreements
  3. Employment and service provider issues
    1. Documenting the relationship
    2. Employees vs. independent contractor relationships
  4. Protecting IP
    1. Confidentiality/NDA agreements for employees and contractors
    2. Protecting company IP and branding
  5. Financing business operations
    1. Determining source of capital: debt and equity
    2. Positioning company for raising capital
  6. Form contracts to transact business with customers

Benefits

The panel will review these and other key issues:

  • How should equity ownership, management responsibilities and compensation be documented between the initial founders?
  • When are trademarks, copyrights and patents needed and how does existing IP get assigned to the new company?
  • What steps should be taken with employees and independent contractors to protect trade secrets?
  • What are the pitfalls to avoid when deciding on equity compensation for employees?
  • How can choice of entity, state of formation, and entity structure impact future capital raising and tax liability?

Faculty

Weil, Michael
Michael D. Weil

Partner
Orrick Herrington & Sutcliffe

Mr. Weil represents clients in high-stakes employment, trade secrets and employee mobility litigation throughout...  |  Read More

Joshua R. (Josh) Garber
Joshua R. (Josh) Garber

Attorney
Law Offices of Joshua R Garber

Mr. Garber is dedicated to representing startups, emerging companies, and other businesses. He also routinely...  |  Read More

Makadia, Mital
Mital Makadia

Partner
Grellas Shah

Ms. Makadia concentrates her practice on corporate and securities law. She works with companies in a range of areas,...  |  Read More

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