herd-law-office

The Buy/Sell Agreement Most Co-Owners Don't Have Until They Wish They Did

Mon, 04 May 2026 18:51:33 GMT

The Importance of Planning Ahead

The Buy-Sell Agreement Most Co-Owners Don't Have Until They Wish They Did

Most co-owned businesses have an operating agreement or a shareholder agreement. Far fewer have a thoughtfully drafted buy-sell and almost none have one that's been updated since the company was formed.

The result is predictable.

- A founder dies unexpectedly, and her shares pass to a spouse who has no interest in running the business but is now entitled to vote, inspect the books, and demand distributions.

- A 50/50 partnership reaches an impasse and there's no mechanism to break it.

- A minority owner files for divorce and the other owners learn that a portion of his ownership interest is now part of the marital estate.

- A trusted partner gets a great offer to leave and sell his stake to a competitor and the agreement is silent on whether he can.

These situations don't announce themselves in advance. The buy-sell either anticipated them or it didn't.

What a Buy-Sell Actually Does

A buy-sell agreement is the contract among the owners of a closely held business that governs what happens to an ownership interest when something changes. It can stand alone or live inside a broader governance document (an operating agreement, shareholder agreement, or partnership agreement). The label matters less than whether the substance is there.

Three questions sit at the center of every buy-sell:

When does the agreement get triggered?
Who is required, or permitted, to buy the departing owner's interest?
And at what price, on what terms, and funded how?

If those three questions aren't answered with precision, the document isn't doing the job it's supposed to do.

The Triggers People Forget

Death is the trigger most agreements address and often the only one. The harder cases are the ones that don't involve a funeral.

Disability. A long-term incapacity that prevents an owner from working in the business is functionally the same as a departure, but many agreements never define it or specify who decides when it has occurred.

Divorce. In community property states and equitable distribution states alike, a divorcing owner's interest can become part of the marital estate. Without a buy-sell mechanism — or a spousal consent provision — the other owners may end up with an unexpected new co-owner.

Voluntary departure. Owners sometimes simply want out. Without a put right, they can be trapped. Without a call right, the remaining owners can be stuck with an absent partner.

Termination of employment. In businesses where ownership and active participation are linked, the agreement should address whether ownership rights survive a firing or resignation.

Deadlock. In 50/50 ownership structures, the absence of a tie-breaker is a slow-motion fire. Buy-sell mechanisms — Texas shootouts, Russian roulette clauses, neutral-third-party buyouts — exist for exactly this situation.

Bankruptcy or default. A creditor of an owner can step into rights the other owners never agreed to share.

Every one of these should have an answer in the document.

How the Buyout Gets Funded

A buy-sell that requires the company or the remaining owners to purchase a departing owner's interest but doesn't say where the money comes from is a contract that often can't be performed. Common funding mechanisms include life insurance (typically cross-purchase or company-owned), disability buy-out insurance, sinking funds set aside over time, and installment notes secured by the purchased interest itself.

The right structure depends on the size of the business, the number of owners, the tax goals, and the cost of insurance. The wrong structure often gets discovered at the moment it is needed most.

Valuation: Where Most Agreements Quietly Fail

The single most common defect in older buy-sell agreements is a stale valuation. Many were drafted with a fixed dollar amount the owners agreed on at formation a number that became wildly inaccurate within a few years and was never updated.

Better approaches include a formula tied to revenue, EBITDA, or book value; a periodic appraisal by a qualified valuation professional; or a hybrid where the owners set a value annually and a default appraisal mechanism applies if they don't. Whatever the method, the agreement should specify what happens if the chosen mechanism breaks down because eventually it will.

Restrictions on Transfer

Even outside a triggering event, most closely held businesses want some control over who can become an owner. A buy-sell can include a right of first refusal, prohibitions on transfers to competitors or family members other than spouses and lineal descendants, and requirements for incoming owners to sign onto the existing agreement.

These provisions are straightforward to draft at formation, when everyone agrees in principle. They are nearly impossible to add later, after one owner has a transferee in mind that the others would never have approved.

When to Put One in Place

The right moment is at formation, when the owners are aligned, no one knows whose situation will change first, and the conversation is hypothetical for everyone.

The second-best moment is now. A buy-sell drafted in calmer times almost always serves the owners better than one negotiated under the pressure of a triggering event that has already occurred.

These agreements should be revisited every two to three years and after any material change — a new owner joining, a significant change in business value, a change in marital status, or a major shift in the company's risk profile.

A Document Worth Doing Once, and Doing Right

Operating agreements set up the company. Buy-sell agreements protect what the owners build inside it. They are not a formality, and they are not the kind of document that can be improvised when the moment arrives.

If you are a co-owner of a closely held business and you can't remember what your buy-sell provisions say or whether you have any that is the answ er to whether it is time to take a fresh look.

If you'd like to review your existing governance documents or put a buy-sell in place for the first time, the team at Herd Law Office is happy to help. Contact us to start a conversation.

Can What You Type Into AI Be Used Against You in a Lawsuit?

Fri, 10 Apr 2026 19:54:25 GMT

New Title

AI can be useful for brainstorming, organizing information, and speeding up routine tasks.

But when a problem has real legal consequences, using AI instead of a lawyer can create a second problem on top of the first one: you may be creating a written record that is inaccurate, damaging, and potentially discoverable. Recent court decisions make clear that judges are not treating AI chats as some special protected zone. They are applying the usual rules about privilege, confidentiality, work product, relevance, and discovery.

The real risk is not just “Can they get the prompt?”

That is part of the issue, but it is not the whole issue.

The bigger risk is that people use AI the way they should be using a lawyer: to test facts, explore liability, assess strategy, and decide what to do next. Once that happens, the prompt history itself can become a problem.

A person dealing with a business dispute, employee issue, contract problem, or threatened claim may think they are being efficient by pasting facts into an AI tool and asking what the law says. In reality, they may be creating material that is harder to protect, easier to misinterpret, and more dangerous than they realize.

What the recent cases show

The most concerning recent decision for New York readers is United States v. Heppner from the Southern District of New York. There, the court held that the defendant’s written exchanges with Claude were not protected by attorney-client privilege and were not protected work product. The court emphasized that the AI tool was not a lawyer, the exchanges were not confidential in the way privilege requires, and the materials were not prepared by or at counsel’s direction. The fact that the defendant later gave the materials to his lawyers did not retroactively make them privileged.

That does not mean every AI prompt is always discoverable. In Warner v. Gilbarco, a federal court in Michigan refused to compel production of a pro se plaintiff’s ChatGPT-assisted materials and treated them as protected work product, in part because they reflected the plaintiff’s mental impressions prepared for litigation. The court also rejected the idea that use of ChatGPT automatically waived work-product protection.

And in Concord Music Group v. Anthropic, the court addressed prompt-output discovery in a different context and ordered production of a large sample of prompt-output pairs under a discovery protocol. That case was not a privilege ruling, but it is another reminder that AI interactions can become ordinary discovery material when they are relevant to the claims or defenses in the case.

What this means in practice

The lesson is not that AI should never be used.

The lesson is that AI is not a safe replacement for confidential legal advice , especially when the issue involves risk, exposure, or strategy.

That matters because people often type things into AI that they would never say as casually in an email to counsel. They speculate. They overstate. They use bad facts. They ask the wrong question. They test aggressive ideas. Then all of that sits in a written record.

If litigation or an investigation follows, that record may become relevant for at least three reasons.

First, it may show what the person knew, believed, intended, or was worried about. Second, it may contain admissions, inconsistencies, or sloppy wording that an adversary would love to see. Third, it may be harder to shield than a true attorney-client communication.

Why using AI instead of counsel can backfire

Here is the practical problem. A lawyer does more than answer a question. A lawyer spots the issue behind the issue, filters facts, protects confidentiality where possible, frames advice in light of risk, and helps avoid creating bad evidence. AI does not do that. AI may generate a polished-looking answer, but it does not create privilege just because the subject is legal, and it does not exercise legal judgment. The Heppner decision is a strong reminder of that distinction.

That means the person who relies on AI instead of counsel may be exposed in two ways at once: they may get a bad or incomplete answer, and they may create a discoverable record of the problem while doing it.

A few examples

A business owner thinks a partner is taking money without permission. Instead of calling counsel, they paste financial facts into an AI tool and ask whether the conduct is fraud, breach of fiduciary duty, or embezzlement.
An executive considering a new job pastes an employment agreement into AI and asks whether the non-compete is enforceable and whether leaving could cost them equity.
A company manager dealing with a complaint uses AI to draft an internal response and includes details about personnel issues, prior conduct, and what the company is “really worried about.”

In all three situations, the person may think they are just getting organized. But they may also be generating a written trail that could later become part of the case.

The most important risks

1. You may lose the confidentiality you thought you had

Recent courts have shown real skepticism toward claims that AI chats are automatically confidential or privileged, particularly where a third-party platform is involved and counsel was not directing the work.

2. You may create harmful evidence

Even if a prompt is never admitted into evidence, it may still become part of a discovery fight, shape the other side’s strategy, or reveal more than you intended.

3. You may rely on an answer that misses the real issue

Legal problems usually turn on nuance, timing, documents, strategy, and facts that need judgment, not just a quick response that sounds plausible.

4. Your employees may be creating risk without realizing it

If team members are feeding contracts, dispute facts, employment issues, or internal concerns into AI without guardrails, the business may be creating avoidable discovery and confidentiality problems.

Bottom line

Recent cases do not say that every AI prompt is automatically discoverable. But they do say something important: courts are not giving people a free pass because the information was typed into an AI tool instead of sent in an ordinary document.

So the safest practical takeaway is this:

If the issue is important enough that you are tempted to ask AI what your legal risk is, it is probably important enough to ask a lawyer instead.

This article is for general informational purposes only and is not legal advice. The law in this area is developing, and outcomes depend on the facts, the platform used, the claims at issue, and the court involved.

Business Conflict Usually Starts Before the Blowup

Mon, 16 Mar 2026 20:44:01 GMT

Most business disputes do not begin with a dramatic betrayal or a screaming match in a conference room. They usually start with something smaller. A cost increase. A delayed payment. A vague agreement. A partner making a decision without full buy-in. A vendor relationship that starts drifting off course. A client who expected one thing and believes they got something else.

In other words, business conflict often starts the way many business problems start: with ordinary pressure and unclear expectations. Rising prices are one common trigger. So are cash flow issues, shifting responsibilities, changing priorities, poor communication, and disagreements about who has the authority to make decisions. On their own, these issues may seem manageable. But when they are layered onto a weak contract, a strained relationship, or a lack of process, they can turn into real legal and operational problems.

Common issues that lead to business conflict

Conflict can grow out of all kinds of day-to-day business issues, including:

increased costs or pricing disputes
unpaid invoices or late payments
disagreements between owners or partners
vendors failing to perform as expected
clients pushing beyond the original scope of work
unclear contract terms
one side changing expectations midstream
unauthorized decisions or commitments
misunderstandings about roles, responsibilities, or ownership

What these situations have in common is that they tend to raise the same underlying questions. What was actually agreed to? Who had authority to act? What does the contract say? What was communicated? And what is the smartest way to respond now?

Why these problems escalate so quickly

A lot of business relationships function on momentum and trust. That is not always a bad thing. But when something changes, whether it is money, timing, performance, or priorities, the gaps start to show.

That is often when businesses realize:

the contract does not clearly address the issue
the parties understood the arrangement differently
internal decision-making was not as clear as everyone assumed
important communications were never properly documented
nobody addressed the issue early because they hoped it would work itself out

Hope is useful in many parts of life. It is not a particularly strong dispute resolution strategy.

The best move is to be proactive

The most effective way to deal with business conflict is often to reduce the chances of it happening in the first place.

That usually means tightening up a few fundamentals.

Clear agreements

A good contract should do more than capture the basic deal. It should help address what happens when things go wrong or change. That can include pricing terms, payment obligations, approval procedures, change-of-scope terms, termination rights, ownership rules, and dispute resolution provisions.

The less clear the agreement, the more room there is for conflict when pressure hits.

Clear internal rules

Many disputes are not just external. They are internal too. A partner, manager, or owner acts without full authority, makes a commitment, moves money, or changes direction, and now the business has a relationship problem both inside and outside the company.

Clear internal governance and decision-making procedures can help prevent a lot of unnecessary damage.

Clear communication

Business disputes often get worse because people respond too fast, too casually, or too emotionally. One poorly worded email can make a solvable issue harder to resolve.

A more strategic approach is usually to pause, review the documents and facts, and respond with a plan instead of irritation.

What to do when conflict has already started

Once a dispute is underway, speed matters. That does not mean every disagreement needs to become a legal battle. In fact, many disputes are best resolved through practical negotiation, better documentation, or a carefully structured business solution. But waiting too long can reduce options and increase cost.

Getting help early can make it easier to:

evaluate the legal and practical issues
preserve useful leverage
avoid admissions that create bigger problems
protect important documents and communications
resolve the issue before positions harden

Often the goal is not simply to “win.” It is to protect the business, contain the distraction, and reach the best available outcome under the circumstances.

The visible problem is not always the real problem

What looks like a simple disagreement about money, timing, or performance may point to a larger issue underneath.

A vendor dispute may reveal a bad contract. A client payment issue may expose scope creep or poor approval practices. A disagreement between partners may uncover governance problems that have been simmering for years.

That is one reason it is important not to look at these issues too narrowly. The immediate conflict matters, but so does the structure around it.

A practical legal approach matters

Not every business dispute should be handled aggressively from the start. And not every issue should be treated like a minor misunderstanding either.

The right response depends on the facts, the documents, the business relationship, the amount at stake, and the client’s goals. Sometimes preserving the relationship is the priority. Sometimes the priority is getting paid, limiting exposure, or stopping things from getting worse.

That kind of judgment is hard to apply when you are in the middle of the conflict yourself.

Final thought

Business conflict often starts with a common problem that was never handled clearly enough on the front end.

The best thing to do is be proactive: use strong contracts, clear processes, and thoughtful communication to reduce the chance of trouble.

The next best thing is to get help quickly once the trouble starts. Many business disputes can still be resolved effectively, but they usually do not improve by being ignored.

Your Business Partner Took Money or Signed a Deal Without You: What Now?

Fri, 27 Feb 2026 15:48:58 GMT

Your Business Partner Took Money or Signed a Deal Without You: What Now?

Starting a business with a partner often begins with trust. You build together, divide responsibilities, and focus on growth.

But when one partner starts taking money, signing contracts, or making major decisions without the other’s approval, that trust can break down fast. What starts as confusion can quickly turn into a serious legal and financial problem.

If this is happening in your business, the right response depends on the facts, your company’s governing documents, and how the business has actually been operating. But one thing is clear: waiting too long can make the situation worse.

Not Every Bad Surprise Is Automatically Illegal

When a business owner discovers that a partner withdrew funds or signed an agreement without discussing it first, the immediate reaction is often outrage. Sometimes that reaction is justified. Sometimes the situation is more complicated.

The legal issue is not just whether you agreed. It may also involve questions like:

Did your partner actually have authority under the operating agreement, bylaws, or shareholder agreement?
Did they appear to have authority to the other party?
Was the payment a legitimate distribution, reimbursement, salary, or business expense?
Has the business been operating informally in a way that blurred the rules?

In other words, the problem may be misconduct, poor documentation, bad governance, or some combination of all three. That distinction matters because it affects what can be done next.

Common Examples of Partner Overreach

These disputes often involve one or more of the following:

A partner withdraws company funds without prior approval
A partner signs a vendor, lease, loan, or service contract the other owner never agreed to
A partner pays themselves extra compensation or takes distributions unevenly
A partner uses company funds for personal expenses
A partner hires or fires employees unilaterally
A partner commits the business to obligations that create risk for everyone else

Sometimes this happens suddenly. Other times, it starts small and grows because no one addresses it early.

Why This Happens So Often

Many owner disputes are not caused by one dramatic event. They grow out of weak structure.

Some of the most common underlying problems are:

No clear written agreement, or one that is too vague
No approval thresholds for major spending or contracts
Too much control concentrated in one person
Shared accounts with no real oversight
“50/50” ownership with no tie-breaker or dispute procedure
Informal habits that replaced the actual rules

Business owners often assume they will work things out as they go. That may work for a while until money gets tight, roles change, or trust starts to slip.

What You Should Do First

If you believe your business partner has taken money or bound the business to something without proper approval, the first priority is to get control of the facts.

That usually means:

Gathering bank records, accounting records, contracts, emails, and text messages
Reviewing the operating agreement, bylaws, shareholder agreement, resolutions, and any side agreements
Identifying exactly what was taken, signed, or promised
Determining whether the issue is ongoing or if immediate action is needed to prevent further damage

This is not the time to guess, assume, or escalate emotionally. A rushed confrontation without a clear understanding of the documents and the paper trail can make the situation harder to resolve.

Why Acting Quickly Matters

These situations can get more expensive the longer they sit.

Delays can lead to:

More money leaving the business
Additional contracts being signed
Damage to vendor, lender, or customer relationships
Loss of access to records or accounts
A more entrenched dispute that becomes harder to unwind

Even if the relationship can still be salvaged, the business may need immediate guardrails to prevent the problem from spreading.

How We Help When This Starts Happening

When an owner dispute begins, the goal is not just to react. It is to stabilize the situation, assess your leverage, and identify the smartest path forward.

That may include:

Reviewing your governing documents and business records
Explaining what authority each owner actually has
Evaluating whether the company is bound by a contract
Advising on steps to protect accounts, records, and operations
Sending a demand letter or formal notice
Negotiating restrictions, repayment, revised controls, or a buyout
Preparing for litigation or dissolution if that becomes necessary

Every dispute is different. In some cases, the best outcome is restoring order and keeping the business together. In others, the right answer is creating a path for separation before more damage is done.

How We Help Prevent This in the First Place

Many of these problems can be reduced—or avoided entirely—with better planning on the front end.

We help business owners put structure in place by addressing issues like:

Who can sign contracts, and up to what amount
When owner approval is required
Who has access to accounts and financial records
How compensation, reimbursements, and distributions are handled
What happens if owners disagree
How a partner can be bought out or removed if necessary

Good documents do more than sit in a file. They help prevent confusion, reduce opportunities for abuse, and give you a roadmap if something goes wrong.

The Right Move Is Usually Not to Wait

If your business partner has taken money, signed a deal, or made major decisions without your approval, do not assume it will sort itself out.

You may have options. You may also have urgent risks that need to be addressed before they get worse.

The sooner you understand your rights, the business’s obligations, and the practical paths available, the better positioned you are to protect the company and make informed decisions.

If you are dealing with a partner dispute, or want to strengthen your business documents before one starts, we help business owners put the right protections in place and respond strategically when problems arise.

Minority Owner, Major Problems: Protecting Yourself When You Don’t Own 51%

Thu, 26 Feb 2026 15:35:01 GMT

Owning part of a business without having control can be a great opportunity or a slow-motion nightmare.

Maybe you bought into an existing company. Maybe you started a business with a partner who has the larger share. On paper, you’re an “owner.” In practice, you might feel more like a passenger… in a car you helped pay for, but don’t get to drive.

This article is about what it really means to be a minority owner in a New York LLC or corporation, the risks that come with it, and how you can protect yourself, ideally before things go sideways.

What It Means to Be a Minority Owner

Being a minority owner (anything less than 50%, and especially under 25–30%) often means:

• You don’t control major decisions.

• You can be outvoted on day-to-day management.

• You may not control when (or whether) money is distributed.

• You might not have an automatic right to a job, salary, or role.

You own a piece of the pie—but the majority owner often controls how the pie is sliced, when it’s served, and to whom.

That doesn’t mean being a minority owner is bad. It just means the documents matter a lot more than the vibes.

Common Problems Minority Owners Run Into

Here are some of the greatest hits I see in real life:

1. “We’re Making Money… But I’m Not Seeing Any”

The company is doing well. Revenues look good. The majority owner is paying themselves a nice salary or charging “management fees.”

You? You’re not getting distributions… or you’re getting far less than you expected.

Typical issues:

• No clear policy on when profits are distributed.

• Majority owner taking most of the value through salary/expenses instead of distributions.

• You have no practical way to force a distribution.

Good documents can set expectations: when profits will be distributed, how much should be retained in the business, and what requires mutual agreement.

2. Locked Out of Information

Another common minority-owner complaint: “I have no idea what’s going on.”

Red flags:

• You’re not getting regular financial statements.

• Major decisions are made without your knowledge.

• You only find out about problems when they’re already on fire.

Under New York law, owners often have certain information rights—but enforcing them can be slow, expensive, and relationship-damaging.

It’s far better if your operating agreement (LLC) or shareholders’ agreement (corporation) clearly says:

• What financial reports you get.

• How often you get them.

• What additional information you’re entitled to on request.

3. You Lose Your Job… But Still Own the Business

Here’s a fun situation (for the lawyers, not for you):

You’re both an owner and an employee. Things sour. The majority owner fires you.

Now you’ve lost your salary, benefits, and any day-to-day involvement—but you still own your minority stake. You’re stuck:

• No paycheck.

• No control.

• No easy way to get bought out.

This is why minority owners should think carefully about:

• What happens if they’re terminated as an employee.

• Whether termination triggers a buyout.

• How that buyout is priced and paid.

4. Surprise Dilution and “Please Wire More Money”

Two classic scenarios:

• The company needs cash, and the majority owner says, “We’re putting in more capital. If you don’t, your percentage goes down.”

• New investors come in, and suddenly your 20% becomes 8%.

Sometimes that’s legitimate. Companies need capital. But as a minority owner, you want rules around:

• How new capital contributions are handled.

• Whether you have a right to participate in new funding rounds.

• When and how your percentage can be diluted.

If this isn’t addressed up front, it’s very easy to wake up one day owning a much smaller piece of a much more complicated pie.

How Minority Owners Can Protect Themselves (On Paper)

The best time to protect yourself is before you sign or buy in. The second-best time is now.

Here are key protections to look for (or negotiate):

1. Voting and Veto Rights on Big Decisions

Even if you don’t control day-to-day operations, you can negotiate veto rights on truly important issues, such as:

• Taking on major debt

• Admitting new owners or investors

• Selling major assets or the entire business

• Changing the nature of the business

• Approving large bonuses or management fees

• Amending the operating/shareholders’ agreement

You may not get a veto on everything—but you should at least talk about what must require your consent.

2. Clear Information Rights

Your agreement should spell out:

• What financial reports you receive (e.g., quarterly P&L, annual balance sheet).

• How quickly they must be provided.

• Your right to inspect books and records within reasonable limits.

If the majority owner pushes back on basic transparency, that’s not just a legal issue—that’s a relationship issue.

3. Distributions and Cash Flow Expectations

You can’t force a business to distribute money it doesn’t have. But you can:

• Set a general policy (for example, a percentage of profits distributed annually, subject to reasonable reserves).

• Require mutual agreement for unusually large salaries, bonuses, or related-party payments that affect available profits.

This doesn’t have to be rigid—but it should provide guidelines so “we’ll figure it out later” doesn’t become “you never get paid.”

4. Exit Rights and Buy-Sell Provisions

This is often the most important—and most neglected—piece.

Ask:

• If I want out, can I force a buyout?

• What events trigger a buyout? (death, disability, termination of employment, deadlock, breach of agreement, etc.)

• How is the price calculated? (formula, agreed valuation, appraiser, etc.)

• How is it paid? (lump sum vs. installments, interest, security)

Without a buy-sell or some kind of exit mechanism, you can easily end up stuck: unhappy, underpaid, and unable to force a change.

5. Reasonable Non-Compete / Non-Solicit Terms

Minority owners are often asked to sign non-compete and non-solicitation agreements.

Questions to consider:

• If things go bad, can you continue working in your field at all?

• Are you prevented from starting a new business even if they freeze you out?

• Are the restrictions tied to a fair buyout of your interest?

Sometimes the better approach is a narrower non-solicit (no poaching clients or employees) rather than a broad ban on working in your own industry.

What If You’re Already in a Bad Spot?

Maybe you’re reading this as a current minority owner thinking, “Great. I should have done all this three years ago.”

You still have options:

• Review your existing documents.Operating agreement, shareholders’ agreement, employment agreement, side letters—everything. Understand what rights you do have.

• Make a list of specific issues.Lack of information? No distributions? Being cut out of decisions? Having your role reduced? That list will guide strategy.

• Consider a business conversation first.Sometimes, things can be fixed with an amendment, a clearer distribution policy, or a negotiated exit—before lawyers and litigation get involved.

• If necessary, explore your legal remedies.New York law does give minority owners certain protections in extreme cases (for example, oppression, breach of fiduciary duty, corporate waste), but asserting those rights is serious and needs careful analysis.

This is where having your own counsel, not the company’s lawyer, really matters.

When It’s Worth Calling a Lawyer

It’s smart to get legal advice if:

• You’re about to buy a minority stake in a business.

• You’re joining a company as a minority owner and employee.

• You’re being asked to sign an operating agreement/shareholders’ agreement you didn’t draft.

• You’re already a minority owner and starting to feel uneasy about money, information, or decisions.

• You want to negotiate your way out without blowing up the relationship.

These are exactly the kinds of situations we help New York business owners and minority shareholders/members navigate ideally before “minority owner” turns into “major problem.”

If you’re in that position and want a straightforward, practical review of your situation and documents, we can talk through your options and a realistic path forward.

How to Legally Protect Your Online Course, Membership, or Coaching Program

Thu, 26 Feb 2026 15:32:26 GMT

Launching an online course, coaching program, or paid mem bership can feel exciting until you realize how easy it is for someone to copy your content, demand a refund, or share your materials without permission.

The good news? With a few smart legal steps, you can protect your hard work and your peace of mind without killing your momentum or creativity.

1. Own Your Content (and Prove It)

Your videos, worksheets, guides, and recorded sessions are your intellectual property the moment you create them.But if you ever have to enforce that right, you’ll need proof.

Practical steps:

• Keep dated drafts, scripts, or file metadata showing you created the material.

• Add a simple copyright notice on your website and materials.

• Register key materials with the U.S. Copyright Office if they’re valuable or likely to be copied.

This small step can make the difference between sending a polite “take it down” email and having the leverage to enforce your rights.

2. Set Clear Terms and Disclaimers

Many online programs skip the fine print until a client demands a refund or claims the course “didn’t work.”

You don’t need to drown people in legalese, but you do need clear, customized terms that cover:

• Refund and cancellation policies (especially for digital products)

• Payment plans and chargebacks

• Access limits — how long members keep materials

• Disclaimers for results (e.g., “no guaranteed income or outcomes”)

• Intellectual property rules — what students can and can’t reuse

These can appear as a checkbox at checkout (“I agree to the Terms”) or in your onboarding emails as long as they’re clearly accepted before purchase.

3. Protect Your Brand and Name

Your program name, logo, or tagline might be your biggest marketing asset.A trademark protects it from copycats and confusion.

Ask yourself:

• Is anyone else already using a similar name in your field?

• Would losing this name hurt your business identity?

If the answer is yes, filing a trademark early is one of the smartest investments you can make.

4. Use Client Agreements — Even Online

If you’re running a higher-touch program (like group or 1:1 coaching), go beyond simple checkout terms.A written Coaching Agreement or Service Agreement should define:

• Scope and limits of your services

• Confidentiality and use of materials

• What happens if payments stop

• Scheduling, rescheduling, and termination rights

This protects both sides and sets clear expectations which actually strengthens the client relationship.

5. Mind the Compliance Details

A few extra checks can keep your online business out of regulatory trouble:

• Privacy Policy: Required if you collect emails or payments online.

• Email marketing laws: Always include an unsubscribe link.

• Testimonial disclosures: If clients were compensated or received a freebie, say so.

• Sales tax: Digital products and memberships may be taxable in some states (including New York).

None of these are hard to fix, but ignoring them can get expensive fast.

Bottom Line

If you’re serious about your online business, treat it like one.A few upfront protections can prevent thousands in losses later and help you look more professional from day one.

You don’t have to figure it all out at once. Start with the basics your terms, your agreements, and your brand protection and build from there.

(Attorney Advertising. For general informational purposes only and not legal advice. For guidance on your specific situation, consult a qualified attorney.)

Thinking About Buying a Business? Here's What You Need to Know

Thu, 26 Feb 2026 15:26:25 GMT

Buying a business can be a smart shortcut to g rowth, but it’s also one of the riskiest things a business owner can do without the right planning. Whether you’re acquiring a small local shop or a growing service company, the legal structure of the deal matters just as much as the purchase price.

Here’s what experienced buyers look for and what many first-timers overlook.

1. What Exactly Are You Buying?

One of the first (and biggest) decisions is whether you're buying:

• Assets (e.g., equipment, customer lists, contracts, goodwill), or

• Equity (e.g., shares in a corporation or membership interests in an LLC)

Each path has very different consequences for liability, taxes, and post-sale headaches. Asset purchases generally let you cherry-pick what you want while equity deals carry more risk (and often require more due diligence).

2. What Liabilities Could Come With It?

Buying a business doesn't just mean getting the good stuff. You might also inherit:

• Tax liabilities (including sales tax, payroll taxes, or back filings)

• Unwritten promises to customers or vendors

• Employee issues (classification errors, unpaid wages, wrongful termination claims)

• Leases or contracts with hidden obligations

Even in asset deals, certain liabilities, like unpaid NYS sales tax, can follow the buyer. Due diligence is not optional.

3. How Will You Pay—and What Happens If You Don't?

Seller financing is common in small and mid-sized business sales. That means:

• You pay part of the price upfront

• You make payments over time, with interest

• The seller may require security, like a lien on business assets or a personal guarantee

Make sure you understand what happens if revenue drops. Can the seller accelerate payments? Repossess equipment? Sue you personally?

4. Who’s Sticking Around After the Sale?

Don’t assume the current owner will help with the transition unless it’s in writing.

Buyers often need:

• A consulting agreement to keep the seller on board for a period

• A non-compete or non-solicit clause so they don’t open a competing business across the street

• Clear handoff plans for relationships with key customers, vendors, and staff

5. What Are You Not Getting?

Ask early: What licenses, contracts, or relationships don’t transfer automatically?

• Franchise rights, liquor licenses, or certifications might require separate approval

• Vendor contracts could be non-transferable or terminate on a sale

• Lease assignments need landlord approval and may trigger a rent increase

Final Thought

Buying a business isn't just a transaction, it’s a strategy shift. It can pay off, but only if you go in with eyes open and the right protections in place.

If you’re thinking about buying a business, take time to map out the risks, not just the opportunity.

How to Handle Business Disputes Before They Turn into Lawsuits

Thu, 26 Feb 2026 15:24:43 GMT

Running a business or nonprofit means dealing with people—partners, vendors, employees, clients—and sometimes, conflict is inevitable. But not every disagreement has to end in a courtroom. In fact, most shouldn’t. The key is knowing how to respond early, strategically, and with the right mindset.

Here’s how to keep disputes from spiraling and protect your business in the process.

1. Don’t Ignore the Tension

One of the most common mistakes business owners make is pretending a disagreement will resolve itself. Maybe someone hasn’t paid an invoice. Maybe a partner is acting without consulting you. Maybe a vendor failed to deliver what they promised. When you feel something is “off,” chances are, it is.

�� Tip: Address the issue while it’s still a disagreement, not a crisis. Early action gives you more control and credibility.

2. Start with a Direct (but Documented) Conversation

Whenever possible, pick up the phone or meet in person. A calm, non-accusatory conversation can clarify misunderstandings and preserve relationships. But always follow up in writing.

�� Example: “Thanks for taking the time to talk earlier. Just to recap, we agreed that…”

This creates a paper trail without escalating things and gives you evidence if legal action becomes necessary later.

3. Know When It’s Time to Involve a Lawyer

A lawyer isn’t just for litigation. In many cases, bringing in counsel early can prevent a lawsuit. An attorney can help:

• Review contracts to see what rights you actually have

• Draft a demand letter that gets taken seriously

• Propose a resolution that’s legally sound

And importantly, a lawyer helps you evaluate the cost of escalation versus resolution. Sometimes, preserving goodwill or avoiding distraction is the smarter move, even if you’re technically “right.”

4. Consider a Demand Letter Before Filing a Claim

A well-written demand letter is often the turning point. It shows you’re serious, puts legal arguments in writing, and gives the other side a chance to fix things without court. In my experience, many disputes resolve shortly after this step, especially when the other side sees the risk of inaction.

�� But beware: A demand letter should be carefully crafted. Overly aggressive language can backfire, and vague or emotional arguments often get ignored.

5. Keep Your Emotions (and Social Media) in Check

Frustration is normal, but public posts, angry emails, or venting to mutual contacts can come back to haunt you. Assume everything you say or write could one day be shown to a judge… or your client.

�� Internal rule: When in doubt, pause. If it’s emotional, don’t send it. If it’s strategic, have it reviewed.

6. Know Your Off-Ramps: Mediation, Arbitration, or a Clean Break

Litigation isn’t always avoidable, but it’s rarely the only option. Mediation offers a lower-cost, lower-risk way to reach resolution, often in a single day. Arbitration may already be required under your contract. And sometimes, the best move is simply negotiating a clean exit, even if it feels unfair.

Final Thought: Control the Process Before It Controls You

Legal disputes don’t have to be catastrophic. In many cases, they’re a sign your business needs better boundaries, stronger agreements, or clearer communication channels.

If you’re facing a conflict—big or small—don’t wait until it becomes unmanageable. Getting the right advice early on can save you money, stress, and sometimes even the relationship itself.

Want to talk strategy? I help New York businesses and nonprofits navigate disputes with clarity and control before things spiral.

The Importance of Operating Agreements for New York LLCs: Why Even a Single-Member LLC Needs One

Thu, 26 Feb 2026 15:18:47 GMT

If you’ve formed a Limited Liability Company (LLC) in New York, you might think t hat filing your Article s of Organization is all you need to do. However, New York legally requires LLCs to adopt an Operating Agreement—even if you’re a single-member LLC.

An Operating Agreement outlines how your LLC will be managed and helps prevent disputes between owners. While it doesn’t need to be filed with the state, it must be adopted within 90 days of formation. Failing to create one could leave you vulnerable to legal and financial issues.

For LLCs with multiple owners, not having an Operating Agreement can be disastrous, leading to disputes over ownership, management, and profit distribution. Here’s why every New York LLC should have one—and what can go wrong without it.

What is an Operating Agreement?

An Operating Agreement is a legally binding document that sets the rules for how an LLC will operate, including:

- Ownership structure (who owns what percentage of the business)- Management rules (who makes decisions and how)- Profit and loss allocation- Dispute resolution procedures- Exit strategies (what happens if an owner leaves)

Even though New York law requires every LLC to have one, many businesses skip this step. That can be a costly mistake, especially for LLCs with multiple members.

New York’s Legal Requirement for Operating Agreements

Under New York LLC Law (Section 417), all LLCs—whether single-member or multi-member—must adopt a written Operating Agreement within 90 days of filing the Articles of Organization.

While New York does not require you to submit the agreement to the state, failing to create one could expose you to legal uncertainty if a dispute arises.

If you don’t have an Operating Agreement, the state’s default LLC laws will govern your business—often in ways that aren’t favorable to you.

What Can Go Wrong Without an Operating Agreement?

1. Ownership Disputes Can Derail the Business

If multiple members disagree on who owns what, who has decision-making power, or how profits are split, things can quickly get messy.

�� Example: Two business partners assume they are 50/50 owners, but one contributed more startup capital. Without an Operating Agreement specifying ownership percentages, a major dispute arises when the business becomes profitable.

Without a written agreement, courts will default to New York’s LLC laws, which might not reflect the members’ actual intentions.

2. Deadlocks Can Paralyze Decision-Making

New York law doesn’t provide a clear solution for when LLC members can’t agree on a major business decision. Without an Operating Agreement outlining decision-making rules, a 50/50 deadlock can halt operations or even force dissolution of the LLC.

�� Example: A two-member LLC disagrees on whether to take on a new investor. With no Operating Agreement specifying a tie-breaking mechanism, they reach an impasse and must take the matter to court—or dissolve the business.

3. New York’s Default Profit-Sharing Rules May Not Match Your Intentions

Under New York law, LLC profits and losses are split equally among all members unless stated otherwise in an Operating Agreement. This means that even if one member invested more capital or works significantly harder, they still receive an equal share unless an agreement specifies otherwise.

�� Example: One partner contributes $100,000 to start the business, while another contributes $10,000. Without an agreement stating otherwise, New York law may require profits to be split 50/50, regardless of investment.

4. An Owner’s Departure or Death Can Create Chaos

If a member leaves, dies, or becomes incapacitated, what happens to their share of the business? Without an Operating Agreement, their ownership interest may pass to their heirs, potentially bringing in new, unwanted partners.

�� Example: A three-member LLC loses one owner unexpectedly. Their spouse inherits their share and wants to sell it to an outside party. The remaining owners have no right to stop the sale because no buyout terms were defined in an Operating Agreement.

This can lead to ownership disputes, financial strain, and even dissolution of the LLC.

5. Lack of Liability Protection

One of the main benefits of an LLC is limited liability, meaning owners aren’t personally responsible for business debts. However, if you don’t have an Operating Agreement, a court might disregard your LLC status, making you personally liable.

�� Example: A business is sued, and the court finds that the owners failed to follow formal business procedures because they had no Operating Agreement. The court pierces the corporate veil, making the owners personally responsible for debts.

6. Bringing in New Owners (or Selling Your Interest) Can Be Complicated

Without an agreement in place, adding new members or selling your ownership share becomes unpredictable. New York’s default LLC rules may force unwanted ownership changes, or members may have no say in who joins the business.

�� Example: One member wants to retire and sell their share of the business. The other members can’t agree on a valuation, and with no buy-sell provisions in place, the situation escalates into a legal dispute.

Why Even Single-Member LLCs in New York Need an Operating Agreement

Even if you are the only owner of your LLC, an Operating Agreement helps by:

✔ Maintaining limited liability protection (proving your LLC is separate from you personally)✔ Establishing business continuity (in case you bring in partners or sell the business later)✔ Preventing legal challenges to your business structure

Since New York requires an Operating Agreement, it’s always best to have one in place from the start.

What Should Be in Your Operating Agreement?

A strong Operating Agreement should include:

�� Ownership percentages & capital contributions�� Decision-making authority & voting rules�� Profit and loss allocation�� Buyout & succession planning�� Rules for adding/removing members�� Dispute resolution procedures

Conclusion

If you own an LLC in New York, an Operating Agreement isn’t optional—it’s legally required. But beyond compliance, it’s one of the most important legal safeguards for your business. Whether you’re a single-member LLC or have multiple owners, having a clear, customized agreement protects you from future disputes and legal headaches.

�� Need help drafting an Operating Agreement for your New York LLC? Contact me today to ensure your business is protected and compliant!

Corporate Transparency Act Blocked Nationwide

Thu, 26 Feb 2026 15:16:46 GMT

Most business owners have probably seen reminders to file their Beneficial Ownership Reports by January 1, 2024 to avoid potential large fines. These filings were a requirement of the Corporate Transparency Act, which was blocked nationwide by a District Court for the Eastern District of Texas on December 3, 2024.

At this time, it is not clear whether the Justice Department will appeal the ruling and, if so, how likely it would be to prevail. It is also not immediately clear whether the deadlines would be pushed back if the block is lifted. However, for the time being, businesses are not obligated to complete the Beneficial Ownership Report filings.

You can read more about the Corporate Transparency Act and Beneficial Ownership Information filings in an earlier post.

Demonstrate Value to Clients by Pitching an Outside General Counsel Role

Thu, 26 Feb 2026 15:14:38 GMT

Article by Alex Herd published by New York State Bar Association

The following article, written by Alex Herd, was published by the New York State Bar Association in Volume 45 of One On One on August 2, 2024. Available here.

Demonstrating value to prospective clients is vital to a business lawyer’s success. Your ability to articulate your skills and efficiency will help you convert not only prospects into clients, but also one-time clients to regular clients. You can accomplish this by effectively pitching the benefits of serving as Outside General Counsel (OGC): higher quality of service at a lower cost.

Many clients may be familiar with in-house or general counsel, but they may not have heard of the concept of an OGC. You can build long-standing relationships with clients by highlighting the key benefits of an OGC:

• Services tailored to their needs

• One-stop legal resource

• Cost-effectiveness

The Benefits of General Counsel, In-House or Outside

Businesses see their general counsel as their trusted first point of contact for any legal matter.

General counsel is relied on for a wide-ranging scope of services to meet the diverse legal needs of the client. Some key examples include:

• Contract Review and Drafting: OGCs can review, negotiate, and draft a variety of commercial contracts, such as vendor agreements, leases, licensing deals, and sales/ purchase contracts. Their familiarity with the client’s business allows them to ensure contractual terms align with the organization’s long-term objectives.

• Compliance and Regulatory Guidance: OGCs can advise clients on complying with relevant laws, regulations, and industry standards applicable to their operations. This may include areas like employment law, data privacy,or financial reporting.

• Corporate Governance: OGCs can counsel clients on matters of corporate structure, board oversight, shareholder rights, and other governance best practices. This is especially important for privately held companies andnon-profit organizations.

• Litigation Support: While OGCs do not typically handle litigation directly, they can work closely with litigation counsel to provide strategic guidance, oversee the legal process, and ensure the client’s broader interests are represented.

• Risk Assessment and Mitigation: By deeply understanding the client’s operations, OGCs can proactively identify legal risks and collaborate with the client to implement policies, contracts, and other measures to mitigatethose risks.

A business that hires general counsel is able to develop the attorney-client relationship over time. This allows the attorney to learn the intricacies of the business’s goals and typical legal needs and efficiently and holistically address any issues that arise for the organization.

The key is for the OGC to deeply understand the client’s operations, goals, and typical legal needs. This allows the OGC to address any legal issues that arise in a way that benefits the entire organization, not just the specific matter at hand.

Pitching Outsider General Counsel as an Alternative to In-House Counsel

Clients may be skeptical that an OGC with multiple clients can deliver the same particularized attention as a dedicated in-house counsel; however, this concern can be turned into a positive. Rather than maintaining a full-time in-house counsel, the client can leverage the OGC’s diverse knowledge and flexible model to address their legal requirements in a cost-effective manner.

While in-house counsel only deals with matters that arise in representing one client, OGCs have the benefit of experiences spanning multiple business sectors and legal domains, such as contracts, employment, intellectual property, compliance, and litigation. This broad expertise enables the OGC to efficiently represent the client without the high overhead of a dedicated in-house legal team.

OGCs also often benefit from a trusted network of attorneys and professionals they can consult with when legal issues cross into specialized areas. This will allow clients to avoid navigating a web of specialized attorneys. This can save them significant time, money, and energy compared to the piecemeal approach of working with multiple law firms and the need to identify a new attorney each time a different legal issue arises.

OGCs can save the client time, money, and resources by managing all of their legal needs in one place, within a budget tailored to the client’s business.

What Characteristics Should Outside General Counsel Have?

Trustworthiness is one of the most crucial qualities for an outside general counsel. Clients need to have complete confidence that they can bring any legal issue to the OGC and receive effective guidance towards a solution. Building this level of trust requires providing strong strategic advice and demonstrating a steadfast commitment to the client’s best interests.

Additionally, it is critical for an OGC to recognize the areas of law where their own expertise may be limited. Having a reliable network of trusted professionals, whether within the OGC’s own firm or external specialists, is essential for seeking additional guidance when needed to serve the client effectively.

Finally, the ability to address new and complex topics on a regular basis is key to succeeding as an OGC. Unlike specialized counsel who may handle similar matters repeatedly, OGCs must be prepared to tackle unique questions and challenges that their clients bring. While specialized attorneys may repeatedly draft similar contracts or motions, OGCs cannot rely on repetitive assignments. They must continuously expand their knowledge and adapt their approach to meet the diverse legal needs of their clients.

Alex Herd is the managing member of Herd Law Office LLC. He is an experienced business and non-profit attorney with a passion for helping small business owners and acting as a trusted advisor to his clients by serving as outside general counsel to many clients.

The Power of Custom Contract Templates: Empowering Business Owners with Legal Protection

Thu, 26 Feb 2026 15:12:04 GMT

In the world of business, contracts are the pillars upon which successful relationships are bu ilt. Whether you're a seasoned entrepreneur or just starting out, having well-drafted contract templates is essential for safeguarding your interests and minimizing legal risks. There are numerous benefits that business owners can derive from having contract templates created by a skilled business lawyer. Below are some of the ways custom contract templates can benefit your business, along with some examples where these templates would have been helpful to the business.

• Tailored Contracts to Meet Specific Business Needs

One of the main advantages of working with a business lawyer to create contract templates is the ability to customize them to suit your unique business requirements. A skilled lawyer will take the time to understand your industry, goals, and potential risks, and craft contracts that address these specific considerations. Whether it's a client agreement, vendor contract, or a partnership agreement, having templates that reflect your business's intricacies can help you establish a solid foundation for your operations.

Example: A software development company enters into a contract with a client without a clear scope of work or payment terms. As the project progresses, misunderstandings arise, leading to disputes and delays. With a well-drafted contract template in place, the company could have clearly defined the project scope, deliverables, timelines, and payment terms, minimizing the risk of misunderstandings and facilitating smoother project execution.

2. Enhanced Legal Protection

Contract templates created by a business lawyer offer comprehensive legal protection. These templates are designed with meticulous attention to detail, including critical clauses and provisions that safeguard your rights and minimize potential liabilities. By addressing potential risks and contingencies upfront, businesses can mitigate the likelihood of costly disputes, litigation, and reputational damage.

Example: A catering business signs a venue rental agreement for an event without thoroughly reviewing the terms and conditions. Later, they discover that they are responsible for any damages to the property during the event, leading to unexpected financial liabilities. A contract template created by a lawyer would have included clauses that clearly outlined the responsibilities of both parties, ensuring that the catering business would not be held liable for damages caused by factors beyond their control.

3. Time and Cost Efficiency

Investing in professionally drafted contract templates can save you significant time and money in the long run. By working with a business lawyer to create templates tailored to your needs, you can streamline your contract negotiation process. With standardized templates readily available, you can focus on negotiating specific terms rather than starting from scratch with each new agreement. This efficiency allows you to close deals faster and allocate resources to other critical aspects of your business.

Example: A startup company engages in multiple client engagements without standardized contract templates. As a result, negotiations become time-consuming and lead to delays in finalizing agreements. With lawyer-created contract templates, the startup could have expedited the negotiation process, saving valuable time and enabling them to take on additional clients.

4. Establishing Clear Employment Terms and Policies

In addition to client contracts, business owners can greatly benefit from having contract templates for employment agreements and employee handbooks. These templates help establish clear expectations, rights, and responsibilities for both employers and employees, fostering a positive and legally compliant work environment.

Example: A small retail business hires a new employee without providing a detailed employment agreement or comprehensive employee handbook. Over time, issues arise regarding work hours, overtime pay, and vacation policies, leading to misunderstandings and discontent among the staff. With a well-crafted employment agreement and employee handbook, the business could have clearly outlined the terms of employment, including work schedules, compensation policies, and vacation accrual guidelines. This would have provided clarity from the outset, minimizing disputes and promoting a harmonious work environment.

5. Compliance with Employment Laws and Regulations

Employment laws and regulations can be complex and ever-changing. Business owners face potential legal pitfalls if they fail to comply with these requirements. Contract templates created by a business lawyer ensure that employers have the necessary provisions in place to comply with relevant laws, protecting both the business and its employees.

Example: A startup company unintentionally misclassifies its workers as independent contractors, only to face legal consequences and significant financial penalties for violating labor laws. A lawyer-created employment agreement template would have included specific clauses that properly classify workers as employees, clearly outlining their rights, benefits, and tax obligations. This could have prevented the company from inadvertently violating employment laws and facing severe repercussions.

In the fast-paced world of business, having contract templates created by a skilled business lawyer is vital for protecting your interests, minimizing risks, and ensuring smoother operations. By tailoring these templates to your specific needs, you can save time, reduce costs, and enhance legal protection. Don't wait for disputes or mishaps to occur; take proactive steps today to fortify your business with expertly crafted contract templates that empower you to navigate complex business relationships with confidence.

How Clients Can Benefit from Outside General Counsel

Thu, 26 Feb 2026 15:08:51 GMT

ACTING AS OUTSIDE GENERAL COUNSEL IS A GREAT OPTION TO MEET CLIENT LEGAL NEEDS

It is common advice for lawyers that they need to specialize in one niche area of the law to have a successful practice. However, my experience has shown that acting as an Outside General Counsel to a client can be an extremely valuable option for lawyers interested in being a client’s go-to phone call for any legal needs.

While many people are familiar with in-house or general counsel, they may not have heard of an Outside General Counsel. In-house counsel are often used by large corporations that can afford to keep full time attorneys on staff who are familiar with the operations of the business. However, in-house counsel can be prohibitively expensive for most businesses that simply cannot afford a team of lawyers. By acting as Outside General Counsel, we can provide the same benefits of in-house counsel for organizations that do not need attorneys on staff full-time.

What is an Outside General Counsel?

Attorneys acting as Outside General Counsel have their own firm (and other clients) but can perform the same role and functions as in-house counsel for a fraction of the cost. It’s key to learn about the operations of each client’s organization, its goals, and typical legal needs. This way, whenever legal issues come up, you are prepared to address the client’s concerns in a way that is best for all aspects of the organization, not just the individual assignment. For someone to be a quality Outside General Counsel, they should be highly experienced across multiple business sectors and legal areas, which may include contracts, employment, intellectual property, compliance, or litigation. This allows for efficient representation without the high costs of an on-staff, in-house counsel. No matter what type of client you have, you can save your client’s time, money and energy by ensuring all of their legal needs are managed in one place, at a budget tailored to their business.

As a good Outside General Counsel, you can become a trusted advisor who serves as the first phone call whenever a business needs legal guidance. Where many attorneys structure their practice to specialize in one area of the law, you are knowledgeable in many areas of practice, so are in a position to help no matter what issue your client faces.

An easy way to understand the role is to think about how large corporations operate with in-house general counsel addressing all legal needs of the organization. This leads to one group of lawyers who are responsible for knowing the business from top to bottom and, when the need for legal work arises, they oversee a plan to get it done. This streamlines the process for the business owners, who can communicate with the same attorneys each time, knowing the team understands their operations and objectives and will provide the level of quality the business is accustomed to.

How does Outside General Counsel benefit the client?

The biggest benefit for a client using Outside General Counsel is that they will develop a long-term relationship with highly experienced counsel who understands their business but without the cost of keeping them on staff. Outside General Counsel can be retained on an hourly or monthly basis.

As Outside General Counsel, you are your client’s go-to advisor for all aspects of their business. In the event a very specialized need arises, a good Outside General Counsel will have many trustworthy contacts that they can rely on to work with them. You can help your clients by taking the guesswork out of finding the right specialist by identifying quality specialized attorneys and business professionals, such as auditors or public relations experts. You can also provide value to clients by managing the work performed by practice specialists, ensuring that the budget is appropriate for your clients’ business, and considering the overall business objectives as part of the project. There is an important difference from an attorney who simply refers a client to another professional but does not manage their overall legal needs. An Outside General Counsel can save a business owner considerable time and effort navigating legal issues.

Hiring Outside General Counsel is also an efficient option for non-profit organizations. Non-profits face additional oversight from government agencies and often have more restrictive budgets than their for-profit brethren. An Outside General Counsel skilled in advising non-profits will be able to anticipate questions from regulators to ensure compliance with relevant laws and regulations.

What qualities do you need to be Outside General Counsel?

One of the most important qualities an Outside General Counsel can have is trustworthiness. Your clients will expect that they can come to you with any legal problem and you will help guide them to the solution. This requires strong trust built on a foundation of strong strategic guidance.

Additionally, it is critical to the success of an Outside General Counsel to be aware of the areas of law where they need the guidance of other attorneys, either within their own firm or not, to rely on when advising the client. For that reason, you need a reliable network of professionals you trust for questions where you need another opinion.

Finally, to succeed as Outside General Counsel, you need to be able to address new and challenging topics on a regular basis. While specialized counsel may draft similar contracts or motions on a regular basis, you can expect to have clients ask unique questions so that most assignments aren’t repetitive of those you’ve done before.

For attorneys who enjoy the idea of being able to assist their clients with all of their legal needs, Outside General Counsel can be a great option to consider as an alternative to specializing.

This article first appeared on The New Jurist.

PRACTICE WHAT YOU PREACH: WHY ETHICAL POLICIES ARE GOOD FOR BUSINESS

Thu, 26 Feb 2026 15:06:18 GMT

The failings of the Catholic Church and other similar institutions offer lessons not just for religious organizations, but any organization faced with issues that could result in potential scandal.

The Catholic sexual abuse scandal again came to light after a Pennsylvania grand jury found that over 1,000 victims had been sexually abused by more than 300 priests over 70 years and that many employees of the Catholic Church were involved in covering up the abuse. How was it that so much abuse was able to be hidden from the public eye for so long? The answer to this question holds lessons for all institutions who want to ensure they take the right steps in the face of allegations of misconduct.

The most likely explanation is that the Catholic Church was protecting its reputation and rather than deal with the optics of priests being investigated and convicted of sexual abuse against children, the church tried to cover up the details and deal with the problem internally. In other words, the church created a de facto policy that when allegations surfaced that its priority would be to ensure that the allegations were not made public and the abuse not reported. When details did surface in the community, the Catholic Church would simply transfer the priest to a new church where the parishioners would not know he was a child abuser. As the grand jury put it, the church followed “a playbook for concealing abuse.” That “playbook” was policy. More details about this policy may be coming to light after the New York State Attorney General’s Office issued subpoenas to every Catholic diocese in the State as part of its investigation into sex crimes committed by Catholic priests.

All businesses, especially churches, should have a policy “playbook” in place so that when something goes wrong, there’s a procedure to follow with a reporting protocol. While it makes sense to consider public image, there are legal, and often more importantly, ethical considerations that should go into those policies. An organization must have a policy in place that’s rooted in doing what’s right, rather than covering up shortcomings. Buy-in from the highest levels—including the general counsel—along with resources devoted to implementation of protocol, is the only way to ensure effective compliance with policy.

This is critical when the safety of children is involved. During the decades that this abuse was ongoing, it should have been obvious to the church employees that covering up sexual abuse raised serious ethical concerns and liability.

Willow Creek Community Church, a megachurch near Chicago, recently dealt with a similar issue when the entire leadership team resigned due to frustration with the response of church elders when allegations of sexual misconduct were made against the pastor. In 2013 and 2014 the church elders were made aware of a number of complaints of harassment during the prior two decades, including unwanted touching, kissing and sexual comments made to parishioners and church employees, according to the Chicago Tribune. The church was slow to bring any investigation or punishment against the pastor, exacerbating an already damaging situation.

The churches involved in these scandals would have benefited from policies that focused on identifying abuse, reporting the abuse to authorities and demonstrating transparency with the congregation. Focusing on the safety of the children and other parishioners would have, in turn, protected the organization from reputational harm and liability. Instead, these churches went to great lengths to protect their own employees, despite knowledge of the terrible acts they had engaged in. Even though many priests may be protected by the statute of limitations, it will take years for the organization to regain the trust of the community it depended on for charitable donations.

Putting safety first isn’t an issue unique to churches. For example, it didn’t take long for a lawsuit to be filed on behalf of the families of several victims of the July 19 duck boat tragedy in Branson, Missouri, where 17 passengers drowned. The complaint, filed in federal court, seeks $100 million for negligence, wrongful death and product liability from Ripley Entertainment, Ride the Ducks of Branson, Herschend Family Entertainment and other defendants.

This unspeakable tragedy could have been avoided entirely, the complaint alleges, if the defendants had simply not sent the boat out onto the water with the reports of a storm approaching or if they had required the passengers to wear life vests. The defendants are also alleged to have ignored safety recommendations made by the National Transportation Safety Board following a duck boat accident in 1991. The defendants weren’t required to follow these recommendations by law, but they had ethical obligations to protect the safety of their customers. The defendants’ failure to create critically important policies or follow their existing policies may be to blame for the tragic deaths of their customers.

Many businesses will likely face similar decisions, even if not on the same scale as protecting thousands of children from abuse. Businesses may be tempted to create policies with the goal of saving money or alleged protection of reputation. However, more often than not, prioritizing safety through sound policy is the best investment a business can make.

This article can be viewed on Corporate Counsel.

How to Legally Protect Your Online Course, Membership, or Coaching Program

Thu, 26 Feb 2026 14:44:23 GMT

Launching an online course, coaching program, or paid membership can feel exciting until you realize how easy it is for some one to copy your content, demand a refund, or share your materials without permission.

The good news? With a few smart legal steps, you can protect your hard work and your peace of mind without killing your momentum or creativity.

1. Own Your Content (and Prove It)

Your videos, worksheets, guides, and recorded sessions are your intellectual property the moment you create them.But if you ever have to enforce that right, you’ll need proof.

Practical steps:

• Keep dated drafts, scripts, or file metadata showing you created the material.

• Add a simple copyright notice on your website and materials.

• Register key materials with the U.S. Copyright Office if they’re valuable or likely to be copied.

This small step can make the difference between sending a polite “take it down” email and having the leverage to enforce your rights.

2. Set Clear Terms and Disclaimers

Many online programs skip the fine print until a client demands a refund or claims the course “didn’t work.”

You don’t need to drown people in legalese, but you do need clear, customized terms that cover:

• Refund and cancellation policies (especially for digital products)

• Payment plans and chargebacks

• Access limits — how long members keep materials

• Disclaimers for results (e.g., “no guaranteed income or outcomes”)

• Intellectual property rules — what students can and can’t reuse

These can appear as a checkbox at checkout (“I agree to the Terms”) or in your onboarding emails as long as they’re clearly accepted before purchase.

3. Protect Your Brand and Name

Your program name, logo, or tagline might be your biggest marketing asset.A trademark protects it from copycats and confusion.

Ask yourself:

• Is anyone else already using a similar name in your field?

• Would losing this name hurt your business identity?

If the answer is yes, filing a trademark early is one of the smartest investments you can make.

4. Use Client Agreements — Even Online

If you’re running a higher-touch program (like group or 1:1 coaching), go beyond simple checkout terms.A written Coaching Agreement or Service Agreement should define:

• Scope and limits of your services

• Confidentiality and use of materials

• What happens if payments stop

• Scheduling, rescheduling, and termination rights

This protects both sides and sets clear expectations which actually strengthens the client relationship.

5. Mind the Compliance Details

A few extra checks can keep your online business out of regulatory trouble:

• Privacy Policy: Required if you collect emails or payments online.

• Email marketing laws: Always include an unsubscribe link.

• Testimonial disclosures: If clients were compensated or received a freebie, say so.

• Sales tax: Digital products and memberships may be taxable in some states (including New York).

None of these are hard to fix, but ignoring them can get expensive fast.

Bottom Line

If you’re serious about your online business, treat it like one.A few upfront protections can prevent thousands in losses later and help you look more professional from day one.

You don’t have to figure it all out at once. Start with the basics your terms, your agreements, and your brand protection and build from there.

(Attorney Advertising. For general informational purposes only and not legal advice. For guidance on your specific situation, consult a qualified attorney.)

Why Contracts Matter: Real-World Problems a Simple Agreement Could Have Prevented

Tue, 17 Feb 2026 19:41:21 GMT

Why Contracts Matter: Real-World Problems a Simple Agreement Could Have Prevented

Most business owners don’t avoid contracts because they “don’t believe in them.” They avoid contracts because they’re busy, they trust the other person, and the deal feels straightforward.

Then something goes sideways, payment gets delayed, the project scope balloons, a partner disappears, or a vendor posts something that makes your brand look terrible and everyone suddenly discovers they were relying on “we talked about it” as their legal strategy.

A contract isn’t about distrust. It’s about clarity, leverage, and a plan for what happens when life is messy (because it always is).

Below are a few common examples of where things went wrong and how a basic contract could have reduced the risk, prevented the dispute, or made the fix dramatically easier.

1) “I Thought That" :

What Happened:

A marketing consultant agreed to “revamp” a local service company’s website for $4,000. The owner expected a new design, rewritten copy, SEO setup, and ongoing updates. The consultant expected a refresh of a few pages and a new homepage layout.

Two weeks in, the owner asked for “just one more thing” repeatedly: new landing pages, blog templates, and a newsletter setup. The consultant felt taken advantage of and stopped responding. The owner felt abandoned and refused to pay the final invoice.

What a contract would have done:
A simple services agreement (plus a one-page scope of work) would have clarified:

Deliverables (exact pages/features)
What’s out of scope (and how change requests work)
Timeline and dependencies (what the client must provide, by when)
Payment milestones tied to clear checkpoints
Acceptance criteria (what “done” means)

How it could have been prevented:
A change order clause stops the slow creep that turns a good relationship into a fight.

2) “We’re Friends, We Don’t Need Paper” — The Unpaid Invoice Problem

What happened:
A small construction subcontractor completed work for a property owner who kept saying, “The check is coming next week.” Months passed. The owner disputed the amount and claimed the work was “not what we discussed.” The subcontractor had texts, but no signed agreement, no payment terms, and no dispute process.

What a contract would have done:
Even a short agreement can set t he ground rules:

Price and payment schedule (deposit, progress payments, final payment)
Late fees / interest (where permitted)
Right to stop work for nonpayment
What happens if there’s a dispute (notice + cure period; mediation/arbitration/court)

How it could have been prevented:
If the contract clearly said “50% upfront, remaining 50% due upon completion; late payments accrue X%,” the owner’s “next week” stalling becomes much harder—and the subcontractor has clear leverage to pause work earlier instead of financing the project.

3) “That’s Not What I Meant” — The Partnership Blow-Up

What happened:
Two friends launched a catering business. One handled cooking and operations; the other handled sales and social media. They agreed verbally to “split it 50/50” and “figure it out later.”

A year in, the business grew and money started coming in. One partner believed expenses should be reimbursed before any split; the other believed profits should be split first. Then one partner wanted to bring in a third person and “just dilute everyone a little.” The other refused. They ended up deadlocked, angry, and unable to separate cleanly.

What a contract would have done:
A well-drafted operating agreement (or partnership agreement) puts structure around the relationship:

Who owns what (and what “50/50” actually means)
How profits are distributed (and when)
Decision-making rules (major decisions, deadlocks, voting thresholds)
What happens if someone leaves (buyout, valuation method, timelines)
Noncompete/non-solicit and IP ownership (where appropriate and enforceable)

How it could have been prevented:
The “we’ll figure it out later” approach works until it doesn’t. Written governance is often the difference between a manageable breakup and a business-ending war.

4) “Wait… You Own That?” — Intellectual Property Surprises

What happened:
A startup hired a freelance designer to create a logo, packaging, and branded templates. They paid in full and launched successfully. Six months later, they tried to trademark the logo and discovered the freelancer had never assigned rights and claimed the company only had a limited license to use the designs.

What a contract would have done:
A contract can clearly address ownership:

Work made for hire / IP assignment language (where appropriate)
Permission to reuse portfolio samples (often fine with guardrails)
Third-party assets (fonts, stock photos) and who bears that risk
Deliverable formats (editable files, source files, brand kit)

How it could have been prevented:
The contract should say, plainly: “Upon full payment, client owns the deliverables and all associated IP; contractor assigns all rights.”

What a “Good Contract” Actually Does

A strong contract isn’t about adding legal jargon. It’s about answering the questions that cause disputes:

Who is doing what—and what isn’t included?
What does it cost, when is it paid, and what happens if it’s late?
How do changes get approved?
Who owns the work product and data?
What happens if someone breaches or wants out?
Where will disputes be handled and what rules apply?

When those issues are clear up front, disagreements don’t automatically become emergencies.

The Most Common “Contract Mistakes” We See

Even when people use contracts, problems happen if the contract is copied from the internet or doesn’t match reality. Common issues include:

Using a generic template that doesn’t fit the business model
Missing scope/change order language
No clear termination terms (or termination that’s one-sided and risky)
Overly aggressive clauses that make the contract hard to enforce
Inconsistent documents (proposal says one thing; contract says another)
Not addressing ownership of IP, data, confidentiality, and publicity

A contract should reflect how you actually operate—not an idealized version of your business.

Bottom Line

Contracts don’t guarantee nothing will go wrong. They do something more valuable: they reduce ambiguity, define leverage, and give you a clear path to resolution when something does go wrong.

If you’re relying on handshake deals, text messages, or “we always do it this way,” it may be time for a contract refresh—before the next problem becomes your most expensive project of the year.

This article is for general informational purposes and does not constitute legal advice. Contract needs vary based on the facts, the industry, and applicable law.

Can AI Really Replace Your Lawyer?

Fri, 13 Feb 2026 22:07:45 GMT

What Business Owners and Nonprofits Need to Know

Artificial intelligence is everywhere right now. You can ask a chatbot to draft a contract, write a policy, or explain “what happens if my business partner leaves” all in seconds and usually for free.

For busy business owners and nonprofit leaders, that’s tempting.If AI can write the document… do you still need a lawyer?

Short answer: AI is a powerful tool, but it is not a substitute for legal judgment, strategy, or accountability. Used the wrong way, it can quietly create expensive problems for “future you” – the you who’s dealing with a lawsuit, a breakup between partners, a denied insurance claim, or an investigation by a regulator.

How People Are Using AI Instead of Lawyers

Most business and nonprofit leaders are using AI in a few core ways:

• DIY contracts and policies

• Asking AI to draft operating agreements, partnership agreements, client contracts, NDAs, terms of service, and privacy policies.

• Dropping in a few facts about the business and asking for “a solid contract that protects us” without understanding which terms really matter, or how New York law treats them.

• HR and employment documents

• Generating offer letters, independent contractor agreements, non-competes/non-solicits, and employee handbooks “for New York” based on a short prompt.

• Relying on AI to explain who can be treated as a contractor vs. employee, and what’s “standard” without understanding New York-specific wage and hour rules.

• Governance, compliance, and disputes

• Creating corporate bylaws, board resolutions, and nonprofit policies from templates generated by AI.

• Having AI draft demand letters, cease-and-desist letters, or responses to disputes, then sending them out without legal review.

It can all look very polished. The danger is that it may not be legally accurate, enforceable, or appropriate for your situation.

The Risks of Letting AI “Be Your Lawyer”

1. No attorney–client relationship, no accountability

AI is not a law firm. It doesn’t:

• Owe you a duty of loyalty or confidentiality in the way a lawyer does

• Assume responsibility for advising you under New York law

• Carry malpractice insurance if things go wrong

If a contract AI wrote for you leaves a massive loophole, misstates New York law, or fails in court, there’s no one on the hook for that but you.

A real lawyer:

• Owes you specific ethical duties

• Is licensed, regulated, and subject to discipline

• Has malpractice coverage and professional obligations to give competent advice

AI has none of that.

2. “Looks right” ≠ legally right (especially under New York law)

AI is excellent at producing language that sounds like a contract or policy. That doesn’t mean:

• It reflects current New York law

• It’s tailored for LLCs vs corporations vs nonprofits

• It’s enforceable in the way you think

Common issues that show up in AI-generated documents:

• Wrong jurisdiction. Provisions that might work in Delaware or California but not in New York.

• Old or generic rules. Using concepts that were true under prior law or in another state.

• Missing mandatory language. For example, certain New York-specific disclosures, notices, or procedural details.

• Contradictions within the document. One section quietly undermines what another section is trying to do.

AI doesn’t sit down and ask you:

• “How are the owners actually contributing capital?”

• “What happens if one of you dies, becomes disabled, or simply disappears?”

• “Are you subject to New York’s specific nonprofit or employment laws?”

It just writes what sounds plausible.

3. AI is only as good as the input – and non-lawyers don’t know what to tell it

This is one of the biggest hidden risks.

Non-lawyers usually don’t know which facts are legally important. When you ask AI for help, you decide what to include:

• You might mention the basic deal terms but leave out details that completely change the analysis (e.g., how people are paid, who controls the bank account, who owns IP, whether someone is licensed).

• You might forget about related documents (old operating agreements, side letters, prior board decisions) that need to be considered.

• You might not realize that a “small detail” triggers an entirely different set of New York rules.

AI can’t fix what it doesn’t see. It:

• Can’t issue-spot like a trained lawyer

• Can’t press you with follow-up questions the way a good attorney will

• Will confidently generate language based on an incomplete or misleading description

So you end up with a very professional-looking answer to the wrong question or to an incomplete version of the real question.

4. No strategy, only text

Law isn’t just words on paper. It’s:

• Strategy

• Leverage

• Trade-offs

• Human behavior

AI can draft a clause, but it cannot:

• Evaluate how a clause will play out when your business partner gets angry, or when your board is divided

• Tell you when a “perfectly drafted” term is a terrible idea for your relationships or reputation

• Help you decide whether to push on a point in negotiation or let it go

Examples:

• Partner buyout:AI can describe how a buy-sell clause works.A lawyer can analyze your cap table, your personalities, your exit plans, and help design something that won’t blow up on you later.

• Nonprofit conflict-of-interest policy:AI can generate a policy.A lawyer can explain how the policy interacts with New York’s Not-for-Profit Corporation Law, your AG filings, and your specific board dynamics.

• Employment issues:AI can draft an independent contractor agreement.A lawyer can walk you through misclassification risk, payroll tax exposure, and whether your “contractor” is really an employee.

5. Confidentiality and data risk

When you paste sensitive information into an AI system, you should assume:

• That information may be stored by a third party

• You may not fully control where it lives or who has technical access

For businesses and nonprofits, that can create:

• Confidentiality issues with client/customer data

• Potential privacy obligations (e.g., if you’re dealing with certain regulated information)

• Reputational risk if details leak or systems are compromised

A lawyer:

• Is bound by strict confidentiality rules

• Can help you decide what information should and shouldn’t be shared through any tool

• Can draft appropriate data-processing and confidentiality agreements with vendors

6. Contracts that “work on paper” but fail in real life

AI often produces contracts that are internally inconsistent or practically unworkable. Common patterns:

• No clear remedies. The contract says what people “must” do, but not what happens if they don’t.

• Impossible procedures. Deadlines or approval processes that no one will follow in real life.

• Unintended personal liability. Owners accidentally signing in their individual capacity instead of on behalf of the entity.

• Mismatched expectations. The language doesn’t reflect the actual business deal, which becomes a problem if there’s a dispute.

A real lawyer:

• Starts with the actual business terms and risk tolerance

• Makes sure the contract reflects what you think you agreed to

• Spots gaps between your operations and what the document assumes

7. Regulatory and nonprofit-specific traps

This is where “generic AI output” is especially dangerous.

Some examples:

• Charitable solicitation and fundraising:A nonprofit relying on AI to “tell us how to fundraise nationwide” could easily miss state registration requirements and Attorney General rules.

• Automatic renewals and subscriptions:New York and other states have specific laws about automatic renewal notices, cancellation, and disclosures. AI may or may not catch them.

• Professional or licensed businesses:For accountants, therapists, doctors, architects, and other licensed professionals, entity structure and ownership restrictions are not optional.

• Employment and wage/hour rules:“General US law” guidance on breaks, overtime, and classification can be very wrong for New York.

A lawyer can’t promise zero risk, but can at least help you understand the landscape and make informed decisions.

When Does It Make Sense to Bring in a Lawyer?

You don’t need a lawyer for every single document or decision. But you should think very carefully before relying on AI alone for:

• Anything involving ownership or control

• Operating agreements, shareholder agreements, partnership agreements

• Buy–sell provisions, exit terms, or valuation mechanisms

• Employment and contractor issues

• Hiring/firing, noncompetes/non-solicits, independent contractor relationships

• Major contracts and revenue streams

• Your main client/service contracts, MSAs/SOWs, key vendor agreements

• Nonprofit governance and fundraising

• Bylaws, conflict policies, AG filings, real estate transactions, mergers, dissolutions

• High-stakes disputes

• Threatened lawsuits, demand letters, or settlement negotiations

These are the areas where a mistake now can become a six-figure problem later.

The Bottom Line

AI is here to stay, and it can absolutely make legal work more efficient in the background. But:

• AI does not replace legal judgment, strategy, or accountability

• “Looks professional” is not the same as “protects you under New York law”

• The more complex, high-stakes, or relationship-heavy the issue, the more you need a real lawyer involved

If you’re:

• Relying heavily on AI for contracts or policies

• Thinking about a major deal or restructuring

• Worried your documents might not match how you actually operate

…it’s a good time for a legal check-up.

If you’d like to talk about where AI might be “good enough” and where you really need a human lawyer in the loop, you can contact my office to schedule a consultation.

(This article is for general informational purposes only and is not legal advice. Reading it does not create an attorney–client relationship. For advice about your specific situation, please consult a lawyer licensed in your jurisdiction.)

Board Resolutions that Matter: 10 Decisions Your Nonprofit Should Never Make Without a Paper Trail

Fri, 13 Feb 2026 22:05:10 GMT

Nonprofit leaders are busy. When the board agrees on something in a meeting, it’s tempting to treat that as “good enou gh” and move on.

But from a legal and practical standpoint, it’s not enough that the board talked about a decision or even agreed informally. For many key actions, your nonprofit needs a clear, written record, usually in the form of a board resolution documented in your minutes or by a written consent.

Think of resolutions as the “receipts” that show your board is doing its job.

Below are ten decisions that should always be backed by a formal board resolution (or clearly documented in your meeting minutes).

What Is a Board Resolution, Really?

A board resolution is simply a formal decision of the board, written down and adopted at a meeting or by unanimous written consent. It answers three basic questions:

• What is the board approving?

• Who is authorized to carry it out?

• When/under what terms does it happen?

Resolutions don’t need to be complicated. But they should be:

• Clear

• Specific

• Kept with your corporate records (minutes, bylaws, key policies, etc.)

1. Adopting or Amending Bylaws

Why it matters:Your bylaws are the “rulebook” for how your nonprofit operates. Changing them without a clear record creates confusion about which version is in effect.

Without a resolution, you risk:

• Disputes about who has authority to act

• Challenges from regulators or funders about whether actions were valid

• Difficulty showing good governance if there’s ever an investigation or dispute

2. Electing or Removing Directors

Why it matters:Your board is the legal decision-maker for the nonprofit. You need a clean record of who is actually on the board and when that changed.

Without a resolution, you risk:

• Questions about whether votes were valid

• Former directors still “on paper” with banks or regulators

• Disputes if someone claims they weren’t properly removed

3. Hiring or Firing the Executive Director (and Other Key Officers)

Why it matters:The board’s most important job is selecting, supporting, and (if necessary) replacing the executive director. This should never be done casually.

Without a resolution, you risk:

• Confusion over who is authorized to run the organization

• Employment disputes with no clear record of the board’s decision

• Problems with banks, funders, and partners who rely on your records

4. Approving the Annual Budget

Why it matters:Approving a budget is not just a “finance committee thing.” It’s a core board responsibility that shows oversight of how the nonprofit uses its resources.

Without a resolution, you risk:

• Blurred accountability for overspending or poor financial decisions

• Difficulty showing funders your board actively oversees finances

• Red flags for auditors, regulators, or major donors

5. Opening or Closing Bank Accounts / Changing Signers

Why it matters:Banks typically require formal authorization. Internally, you need a clear record of:

• Where your money is held

• Who can sign checks or access funds

• When those authorizations changed

Without a resolution, you risk:

• Former staff or board members still having access

• Banks refusing to act because documentation is missing

• Internal confusion or even opportunities for misuse of funds

6. Entering into Major Contracts or Leases

Why it matters:If your nonprofit is signing:

• A multi-year lease

• A major vendor contract

• A long-term service agreement

…that’s a board-level decision, not something to be left to a quick email chain.

Without a resolution, you risk:

• Disputes about whether the person who signed was authorized

• Board members claiming they never approved the commitment

• Difficulty walking away from a bad contract

7. Buying, Selling, or Leasing Real Estate

Why it matters:Real estate transactions are high-stakes: long-term leases, purchases, or sales of property. These often trigger additional legal requirements, lender consents, and sometimes approvals from regulators or courts, depending on the situation.

Without a resolution, you risk:

• Challenges to the validity of the transaction

• Delays or issues with title companies, lenders, or regulators

• Internal disputes over whether the board approved the deal

8. Taking Out Loans or Lines of Credit

Why it matters:Debt can significantly impact your nonprofit’s finances and future flexibility. The board should clearly approve:

• The fact that the organization is borrowing

• Key terms (amount, lender, interest rate, general repayment terms)

• Who is authorized to sign the loan documents

Without a resolution, you risk:

• Board members claiming they never agreed to the debt

• Lenders refusing to proceed or later questioning authority

• Governance concerns if cash flow becomes tight and tough decisions are needed

9. Approving Related-Party Transactions / Conflicts of Interest

Why it matters:If a board member, officer, or someone closely connected to them has a financial interest in a transaction with the nonprofit (e.g., their company is providing services), you’re in conflict-of-interest territory.

These situations aren’t automatically prohibited — but they must be handled carefully:

• Full disclosure of the conflict

• Recusal of the conflicted person from voting

• Documentation that the board determined the arrangement is fair and in the nonprofit’s best interests

Without a resolution, you risk:

• Serious questions from the Attorney General, donors, or auditors

• Potential challenges to the validity of the transaction

• Damage to your credibility and public trust

10. Changing the Mission, Programs, or Strategic Direction

Why it matters:Major changes in mission or core programs are not just program decisions — they’re governance decisions with legal and practical consequences:

• Your IRS and state filings are based on your stated purposes

• Funders may have given money for specific purposes

• Stakeholders (staff, volunteers, community) rely on a certain mission

Without a resolution, you risk:

• Misalignment between what you say you do and what you actually do

• Potential compliance questions if you drift too far from your stated purposes

• Confusion inside the organization about priorities and decision-making

How to Put This into Practice

A few simple habits go a long way:

• Use a standard template for resolutions to keep things consistent.

• Build resolutions into your agendas for big decisions.

• Keep a “Resolutions” folder with your minutes and corporate records.

• Train your board leadership and ED on when a resolution is needed.

Need Help Getting Your Board Resolutions in Order?

If you’re reading this and thinking, “We’ve made half these decisions without a single formal resolution,” you’re not alone — and it’s fixable.

A nonprofit-focused attorney can help you:

• Review your past decisions and clean up the paper trail

• Develop simple resolution templates your board can actually use

• Align your bylaws, policies, and board practices with legal requirements

If you’d like a quick audit of your governance practices or help building a practical resolution process for your board, this is exactly the kind of thing we help nonprofits with.

What Happens to Company Assets in a Business Divorce?

Fri, 13 Feb 2026 22:00:26 GMT

By: Ameera Khurshid

When New York business partners split, what happens to the company’s assets? Here’s how ownership, property, and goodwill are handled under New York law during a business breakup.

Introduction

When business partners decide to part ways, the emotional and financial stakes can be just as high as in a marital divorce. In New York, these “business divorces” often come down to one critical question: what happens to the company’s assets?

Whether you are splitting from a co-owner in an LLC or corporation, understanding how the law treats company property, cash, and goodwill can help you protect your interests and make informed decisions about the future.

• The Company Owns the Assets

A common misconception among business owners is that each partner personally “owns” a share of the company’s property. Under New York law, that is not the case. Once a business is formed as an LLC or corporation, the entity itself owns its assets. The office furniture, bank accounts, intellectual property, and even the company’s name legally belong to the business and not to the individual owners. When partners go their separate ways, they are not dividing up the physical assets; they are dividing ownership interests in the company. In practice, this usually means one partner buys out the others’ interests, or the business is sold or dissolved, and the proceeds are distributed according to the ownership percentages.

• The Operating or Shareholders’ Agreement Controls

The first step is to look at your Operating Agreement (for LLCs) or Shareholders’ Agreement or Bylaws (for corporations). These documents often dictate what happens when an owner wants to leave, dies, or becomes unable to continue in the business. Well-drafted agreements include buy-sell provisions, tie-breaking procedures, valuation methods, and rules for handling company property. For example, the agreement might specify whether remaining owners can buy out the departing partner’s interest and how to calculate a fair price.

If there’s no written agreement, then New York’s default rules will apply, for LLCs, these are found in the Limited Liability Company Law, and for corporations, in the Business Corporation Law (BCL). In either case, the absence of a clear agreement can lead to uncertainty, disputes, or even judicial dissolution, also known as court-ordered winding up of the business.

• If the Business Continues: Buyouts Instead of Breakups

In many cases, the business continues to operate after one partner leaves. Instead of dividing assets, the departing member’s ownership interest is bought out, either by the company or the remaining owners, depending on what the operating agreement states or what the owners agree upon.

The value of that ownership interest depends on a business valuation, which may be determined by:

• An independent appraiser,

• A pre-agreed formula in the operating agreement, or

• Negotiation between the parties.

This approach avoids liquidation and preserves business continuity, especially when the company has significant goodwill, client relationships, or intellectual property that could be lost in a full dissolution.

• If the Business Dissolves: Selling and Distributing Assets

If the owners cannot agree on how to proceed, one may seek judicial dissolution under LLC Law §702. In that scenario, the court can order the business to wind up its affairs.

When a court orders dissolution, it oversees an orderly process to make sure all obligations are met before owners receive anything. The court typically appoints a receiver or liquidating partner to sell company property, settle debts, and collect any money owed to the business. Once liabilities are paid, the remaining funds are divided among the owners according to their ownership interests or as stated in the operating or shareholder agreement. If the agreement doesn’t specify distribution terms, the court follows New York’s default rules under the Limited Liability Company Law for LLCs or Business Corporation Law for corporations, ensuring a fair and proportionate allocation of what remains.

This can be a fair but inefficient outcome, especially when valuable assets like trademarks, client goodwill, or ongoing contracts are forced to be sold.

• Handling Intangible Assets: Goodwill, Clients, and IP

In modern businesses, the most valuable assets are often intangible. New York law treats goodwill, which is the reputation, client loyalty, and brand recognition of a business, as a distributable asset, but distinguishing it can be tricky.

In professional practices (like law, healthcare, or consulting), courts differentiate between enterprise goodwill (value attached to the business itself) and personal goodwill (value attached to an individual’s reputation). Only the former belongs to the company.

Other intangible assets, such as trademarks, websites, and proprietary materials, are typically owned by the business entity and can be sold, transferred, or retained by agreement during the split.

If the owners cannot agree on how to divide these assets, the court will usually step in. It may appoint an appraiser to determine their market value and order the assets to be sold, with the proceeds distributed based on ownership percentages. In some cases, one owner may be permitted to keep certain assets, if they buy out the others’ interests. Without a clear plan, these disputes can become costly and delay the resolution of the business breakup.

• How to Avoid Asset Confusion in the Future

The best way to avoid a messy division later is to plan ahead. Before problems arise:

• Keep a clear record of who contributed what to the business.

• Separate personal and company property.

• Establish buy-sell and valuation procedures in your operating or shareholder agreement. Consult a lawyer for this.

• Decide how intellectual property and client relationships will be handled if someone exits.

A few proactive steps at the start of the partnership can prevent years of stress and costly litigation later.

Conclusion

A business breakup does not have to destroy what you have built. In New York, company assets do not simply get divided up like personal property. They are managed and distributed according to law, contracts, and fairness principles.

If you are navigating a potential business divorce or ownership dispute in New York, The Herd Law Office can help you understand your options, protect company assets, and move forward with clarity and confidence.

Nonprofit Year-End Governance: A Simple Guide to Staying Compliant Going into 2026

Fri, 13 Feb 2026 21:50:30 GMT

Running a nonprofit means keeping your mission front and center while meeting real legal requirements. Year-end is the best time to button up governance, fix small issues before they become big ones, and set your board up for a smoother year ahead

Below is an action-oriented checklist focused on New York rules and Attorney General (AG) expectations.

1) Board Minutes & Annual Actions: Prove the Board Is Doing Its Job

Why it matters: Good minutes and annual resolutions protect the organization and directors, and they’re the first thing grantors, auditors, and regulators review.

What to do now

• Close the loop on minutes. Ensure all 2025 board and committee meetings are documented, approved, and signed.

• Annual resolutions. Document officer elections/appointments, committee slates, banking authority, contract signers, and compensation decisions.

• Consent calendar discipline. Routine items go on a consent agenda; sensitive items (compensation, related-party matters) get standalone discussion and recorded votes.

• Document oversight. Note in the minutes when the board reviewed finances, key risks, and compliance items (conflicts policy, whistleblower policy, fundraising).

2) Related-Party Transactions (RPTs): Identify, Vet, and Paper Them Properly

Why it matters: NY law requires special treatment for transactions with directors, officers, key persons, or their businesses/family. These are common (e.g., renting space from a board member) and not inherently wrong but they must be properly reviewed and documented.

What to do now

• Run a year-end conflicts sweep. Ask each director/officer/key person to update their annual disclosure vendors, leases, paid services, family ties.

• Use the right approval process. For any RPT, the board (or an authorized committee) should:

• Determine the transaction is fair, reasonable, and in the organization’s best interest.

• Document alternatives considered (e.g., other bids/quotes).

• Exclude the interested person from deliberations and votes.

• Record it well. Minutes should identify the interest, summarize facts, show the vote, and capture the fairness finding.

3) Policies That Must Actually Work (Not Just Sit in a Binder)

Why it matters: New York’s Not-for-Profit Corporation Law expects working policies, not window dressing.

What to do now

• Conflict of Interest Policy. Confirm you have annual written disclosures from all directors, officers, and key persons and that you used them when RPTs arose.

• Whistleblower Policy. Make sure the procedures are known to staff/volunteers, with named reporting channels and no-retaliation language.

• Document retention & signing authority. Refresh who can sign what (and at what dollar limits). Ensure you have a practical records schedule.

4) NY Charities Bureau Registration & Fundraising: Finish the Year Clean

Why it matters: Most NY nonprofits that solicit contributions must register and file annually with the AG’s Charities Bureau. Fundraising activities (including online) can trigger extra rules.

What to do now

• Check your registration status. Are you properly registered to solicit? Are all required annual filings current? Note any extension deadlines.

• Professional help? If you use professional fundraisers or fundraising counsel, confirm they’re registered and that your written contracts include required terms.

• Commercial co-ventures. Cause-marketing (“$1 per sale goes to X”) needs a compliant written agreement and specific disclosures.

• Donation acknowledgments. Ensure receipts include required information (and quid pro quo disclosures when donors receive something of value).

5) Compensation & Key Decisions: Show Independent Review

Why it matters: Compensation for executives or insiders draws scrutiny. The process matters as much as the outcome.

What to do now

• Independent approval. Compensation should be set by independent directors using comparability data (e.g., salary surveys, similar roles).

• Paper the process. Minutes should reflect the data reviewed, who voted, and the final determination.

6) Restricted Gifts, Grants, and Reporting: Keep Promises Clear

Why it matters: Donor restrictions are legally enforceable; missteps create reputational and legal risk.

What to do now

• Gift acceptance hygiene. Confirm you have clear rules for restricted gifts and the power to decline problematic donations.

• Grant calendars. Map reporting deadlines for Q1/Q2 to avoid scrambling—and reflect oversight in minutes.

7) Leases, Vendors, and Insurance: Align the Paper

Why it matters: Your obligations in contracts must match your insurance coverage and internal controls.

What to do now

• Contract spot-check. Look for indemnity clauses, personal guaranties, assignment/consent limits, and auto-renew dates.

• Insurance match. Verify that required additional-insured/waiver-of-subrogation provisions are actually endorsed on your policies.

Quick Year-End “Green-Light” Checklist

• ✅ All 2025 board/committee minutes complete and approved

• ✅ Annual disclosures collected; RPTs reviewed and documented

• ✅ Conflict & whistleblower policies used in practice

• ✅ NY Charities Bureau registration/filings on track; fundraising agreements compliant

• ✅ Executive pay approved by independent board with comparability data

• ✅ Gift restrictions tracked; grant reports calendared

• ✅ Key contracts and insurance aligned; renewal/termination dates mapped

When to Call A Lawyer

• You found (or suspect) a related-party transaction and need it reviewed and papered correctly.

• Your minutes, policies, or filings aren’t complete—or you’re not sure what’s missing.

• You used a fundraising consultant, platform, or cause-marketing campaign in 2025.

• You need to clean up bylaws/board structure, update officer/authority, or refresh committee charters.

• A grantor or auditor asked questions you’re not comfortable answering yet.

This article is general information for New York nonprofits and not legal advice. Reading it does not create an attorney-client relationship. Attorney Advertising.

The FTC’s Noncompete Ban Is Dead. What Smart NY Employers Should Do Now

Fri, 13 Feb 2026 21:47:38 GMT

The FTC’s Noncompete Ban Is Dead. What Smart NY Employers Should Do Now

Bottom line: The nationwide FTC ban on employee noncompete agreements is off the table. A Texas federal judge vacated the rule in August 2024, and on September 5, 2025 the FTC formally dropped its appeals and agreed to the vacatur. The Rule will not take effect.

That doesn’t mean “anything goes.” Expect continued case-by-case enforcement against overreaching restrictions, plus active state law (including possible new NY legislation). Now is the time to tune your agreements and practices—not to shelve them.

What changed

• The 2024 FTC Rule is vacated nationwide. The Northern District of Texas held the FTC lacked authority for such a sweeping rule and that the rule was arbitrary and capricious. The court’s order set the Rule aside; it never took effect.

• The FTC ended its appeals. On Sept. 5, 2025, the FTC moved to dismiss its Fifth and Eleventh Circuit appeals and acceded to vacatur.

• But enforcement isn’t gone. The FTC and DOJ can still challenge non-competes and look-alikes when they harm competition. Agencies have said they’ll continue policing abusive restraints even without a blanket rule.

Where New York stands

• No statewide ban—yet. Governor Hochul vetoed a broad ban in 2023 and has favored a narrower approach. New bills introduced in 2025 would restrict many noncompetes (especially for lower-wage workers) but have not been passed as of the date this article is published. However, there may be developments in 2026 or later.

• Current NY test = reasonableness. New York courts enforce noncompetes only if (1) necessary to protect legitimate interests (trade secrets, client relationships, unique services), (2) reasonable in scope/duration/geography, and (3) not harmful to the public.

Practical playbook for NY employers and nonprofits

1) Use noncompetes sparingly and narrowly

• Reserve for senior, truly key roles or in sale-of-business deals; keep durations short (often 6–12 months).

• Tie the clause to real protectable interests (document the “why”).

• Avoid blanket “industry-wide” or “nationwide” bans unless facts justify it.

2) Prefer safer alternatives

• NDA/Confidentiality: Comprehensive but tailored definition of confidential info; clear carve-outs; robust return-of-materials and device/drive access cooperation.

• Non-solicitation (customers/employees): Narrowly define “customer” (e.g., those with whom the employee had material contact in past 12–18 months).

• Non-interference/Non-raiding: Calibrate to real risks in your industry.

• IP/Work-made-for-hire + invention assignment: Especially for creative/technical roles.

• Reasonable “Garden Leave” (paid notice periods) for a handful of truly sensitive positions.

Why: Courts are more receptive to targeted restraints; agencies are less likely to view them as anticompetitive than broad noncompetes.

3) Align agreements with how you actually operate

• Role-based scoping: Map each restriction to job duties and access rights.

• Access minimization: Use IT permissions so fewer employees need sweeping restrictions.

• Compensation alignment: Consider bonuses/RSUs with forfeiture-for-competition that are lawful in NY (careful drafting required).

4) Update your onboarding/offboarding

• Onboarding: Signed agreements before start date; device and account policy acknowledgments; data classification training.

• Offboarding: Exit interview script; reminders of continuing obligations; certificate of compliance (return/deletion).

• For nonprofits: Ensure restrictions align with mission, do not chill whistleblowing, and don’t create private-benefit optics.

Red-flags that trigger enforcement or lawsuits

• Noncompetes for low-wage or non-sensitive roles

• “No future employment in our industry” language.

• One-size-fits-all templates used across unrelated roles.

• Retaliation or threats to enforce plainly unenforceable clauses

Action checklist

• Inventory your current contracts by role; flag any noncompetes used below director level.

• Replace many noncompetes with NDA + non-solicit tailored to recent customer contacts.

• Tighten definitions (confidential info, “compete,” “customer”), duration (≤12 months), and territory (facts-based).

• Train managers not to threaten enforcement casually; route disputes through counsel.

• Plan for NY changes: Keep a “patch file” ready if Albany moves a new bill in 2026.

FAQs

Can we keep our existing noncompetes?Yes—subject to NY reasonableness limits and antitrust risk. Consider narrowing at renewal and pairing with stronger NDA/non-solicit.

Will the FTC come after us now?Not for violating the vacated rule. But the FTC can still pursue unfair methods of competition on a case-by-case basis (e.g., collusive or coercive restraints).

What about future NY law?A broad ban failed in 2023; targeted bills resurfaced in 2025 and may return. Build portable agreements that will age well under likely NY reforms.

Attorney Advertising; Not Legal Advice

This overview is general information based on developments through Sept. 24, 2025. Outcomes vary by facts, industry, and employee level. For client-specific drafting or enforcement strategy, please contact our office.

How to Break Up With Your Business Partner Legally (and Peacefully)

Fri, 13 Feb 2026 21:46:11 GMT

Starting a business with a partner often feels like a marriage: you share ideas, resources, and dreams for the future. But just like in personal relationships, sometimes things don’t work out as planned. When it’s time to part ways, handling the separation with clarity and care can protect your business, your finances, and your peace of mind.

Here’s how to break up with your business partner legally and (hopefully) peacefully.

Step 1: Review Your Governing Documents

The first place to look is your operating agreement (for LLCs), shareholders’ agreement (for corporations), or partnership agreement (for general/limited partnerships). These agreements often outline:

• How ownership interests can be bought out

• Valuation methods (appraisals, formulas, or negotiated price)

• Voting rights for approving a separation

• Procedures for dissolving the business if buyout isn’t possible

If you don’t have these documents in place, state law (in New York, that means the LLC Law, Partnership Law, or Business Corporation Law) will fill in the gaps, but that usually leaves less control in your hands.

Step 2: Get a Clear Picture of the Business

Before negotiations begin, you’ll need to know the numbers:

• Current financial statements

• Outstanding debts and obligations

• Contracts with employees, vendors, and customers

• Intellectual property or licenses held by the business

This information helps both partners understand what’s really at stake and can reduce suspicion or accusations later.

Step 3: Explore Options for Moving Forward

There are several ways to separate:

• Buyout – One partner purchases the other’s ownership interest.

• Third-Party Sale – The business (or its assets) is sold, and proceeds are split.

• Dissolution – The company winds down, pays debts, and distributes what’s left.

• Restructuring – Sometimes, adjusting roles or percentages solves the conflict without a full exit.

Each option has tax, liability, and operational consequences, so it’s important to evaluate carefully.

Step 4: Put the Agreement in Writing

Handshake deals may feel faster, but they’re risky. A formal separation agreement should cover:

• Purchase price and payment terms

• Release of claims between partners

• Handling of ongoing liabilities (e.g., leases, loans)

• Non-compete or non-solicitation provisions, if appropriate

This written agreement ensures clarity and reduces the chance of future disputes.

Step 5: File the Right Paperwork

Breaking up isn’t just between you and your partner—the government needs to know too. Depending on the path chosen, this may include:

• Amending the business’s operating agreement or corporate records

• Filing dissolution papers with the New York Department of State

• Notifying the IRS and NY Department of Taxation and Finance

• Updating bank accounts, licenses, and permits

Skipping these steps can leave you personally liable for taxes or debts.

Step 6: Keep It Professional

Even when emotions run high, maintaining professionalism is crucial. Consider:

• Using a neutral mediator to help resolve disputes

• Communicating clearly with employees, clients, and vendors

• Focusing on business goals instead of personal grievances

The goal is not just to end the partnership, but to protect your reputation and future opportunities.

Final Thoughts

Ending a business partnership doesn’t have to mean burning bridges. With the right legal steps and a focus on fairness, you can move on cleanly and set yourself up for success in your next venture.

If you’re considering a separation, working with an attorney can ensure the process is handled properly, with minimal disruption and maximum protection.

Disclaimer: This article is for informational purposes only and does not constitute legal advice. For advice tailored to your specific situation, consult with an attorney.

5 Clauses Every Business Contract Should Have (But Many Don’t)

Fri, 13 Feb 2026 21:43:47 GMT

When it comes to running a business, contracts are the backbone of protecting your interests. Most business owners know to include the basics: price, services, deadlines, but it’s the missing details that often cause the biggest headaches later.

Here are five essential clauses that belong in almost every business contract, yet are too often left out.

1. Dispute Resolution Clause

Without clear rules, disagreements can spiral into costly lawsuits. A dispute resolution clause sets the ground rules:

• Will disputes go to mediation first?

• Will arbitration replace litigation?

• Where will disputes be resolved?

A well-written clause can save you from spending months (and thousands of dollars) in court.

2. Payment Terms

It’s not enough to say how much is owed—you also need to define when and how it gets paid. Clear payment terms protect your cash flow and reduce the risk of disputes. They can cover:

• Due dates (e.g., Net 30, Net 60)

• Late fees or interest for overdue invoices

• Whether payment is by check, credit card, ACH, or another method

• Upfront deposits or milestone payments

When payment terms are vague, you’re left chasing money. When they’re clear, you’re more likely to get paid on time.

3. Termination Clause

Many contracts explain how they begin, but not how they end. A termination clause answers:

• Can either party walk away early?

• Is notice required (30 days, 60 days, more)?

• Are there penalties or obligations that survive termination?

This prevents situations where one side feels “stuck” or blindsided.

4. Intellectual Property Clause

In today’s business world, ownership of ideas, content, and creations can be just as important as physical goods. An intellectual property (IP) clause clarifies:

• Who owns the work product created under the contract

• Whether usage rights are limited or broad

• What happens if either party wants to reuse or license the work

This is especially critical in industries like design, software, consulting, and marketing where disputes over “who owns what” can derail relationships.

5. Indemnification Clause

This is a fancy legal term for “who pays if something goes wrong.” If your partner’s mistake leads to a lawsuit, do you want to be on the hook? Indemnification clauses shift responsibility to the party who caused the problem, protecting your business from unnecessary liability.

Final Thoughts

Contracts aren’t just paperwork—they’re tools to prevent disputes, manage risk, and keep business relationships healthy. By including these often-forgotten clauses, you’ll avoid common pitfalls and keep control of your business.

If you’re unsure whether your contracts cover these essentials, it may be time for a professional review. The good news? With the right guidance, strengthening your contracts is easier—and less costly—than fixing problems after the fact.

Can I Be Sued Personally If My Business Gets Sued?

Fri, 13 Feb 2026 21:42:37 GMT

Short answer: It depends on how your business is structured and how y ou’ve operated it.

If you’re a small business owner, this is one of the most important legal questions you can ask. Whether you run a solo consulting firm, a restaurant, a retail store, or a nonprofit, understanding the risk of personal liability could be the difference between a manageable dispute and a financial nightmare.

The Role of Your Business Structure

The first layer of protection comes from how your business is set up:

• Sole Proprietorship or General Partnership: You are the business. If the business is sued, your personal assets—bank accounts, home, etc.—are at risk.

• LLC (Limited Liability Company): Generally protects your personal assets if you follow the rules and maintain the company properly.

• Corporation (C-Corp or S-Corp): Also offers personal liability protection, but comes with more formalities.

In both LLCs and corporations, the legal entity is designed to be separate from you personally. That’s the whole point. But that protection isn’t automatic or bulletproof.

How Personal Liability Can Still Happen

Even with an LLC or corporation, you can still be sued personally in some situations:

• You personally guaranteed a loan or lease. That’s a contract you signed, not your company.

• You co-mingled business and personal funds. This is one of the most common mistakes that leads to “piercing the corporate veil.”

• You committed fraud or intentional misconduct. Courts don’t allow business entities to shield individuals from personal wrongdoing.

• You failed to maintain company formalities. Especially with corporations, sloppiness can undermine your liability shield.

• You were negligent in a professional service. For licensed professionals (e.g., lawyers, doctors, architects), a corporate structure may not fully shield you from malpractice claims.

Nonprofits Aren’t Immune Either

If you sit on a nonprofit board or run a nonprofit, don’t assume you’re safe. Personal liability can arise if:

• You breach fiduciary duties

• You authorize illegal acts

• You co-sign debts or leases

Insurance Helps, But It’s Not a Substitute

General liability insurance, professional liability, and directors & officers (D&O) coverage can all help cover defense costs or settlements, but they don’t eliminate your legal obligations. If your business is underinsured or uninsured, the risk shifts back to you.

So, What Can You Do?

If you’re wondering whether you personally could be at risk, that’s not something to leave to guesswork. A few things to consider:

• Is your business structure actually protecting you the way you think it is?

• Are you following the best practices for maintaining that protection?

• Do you need to revise your contracts or change how you sign documents?

• Do you need additional insurance coverage?

• Are there specific risks based on your industry?

Every business is different, and so is every risk profile.

Let’s Make Sure You’re Protected

We work with New York business owners and nonprofit leaders to help limit personal liability, fix past mistakes, and structure things the right way from the start. If you’re unsure whether your setup really protects you—or if you’ve already been threatened with legal action—let’s talk.

Employee Equity Without the Headache: Simple Ways to Reward Key People

Fri, 13 Feb 2026 21:40:42 GMT

Equity-style incentives make people think like owners, stick around longer, and push growth. You don’t need a Silicon Valley cap table or a 200-page plan to make that happen. There are streamlined tools that fit small businesses and nonprofits-with-revenue arms just fine.

The Core Question

“How do we share upside without giving up control or creating a tax/administration mess?”

Good news: you have options beyond straight stock or membership interests.

Fast-Track Options You Should Know

1. Phantom Equity / Profit-Sharing Units

• What it is: A promise to pay cash bonuses tied to company value or profits—no actual ownership issued.

• Why it helps: Mimics equity economics with zero dilution and minimal paperwork.

• Best for: Owners who want to keep the cap table clean but still share upside.

2. Stock Appreciation Rights (SARs) / “Value Units”

• What it is: Employees get the increase in value over a starting point—like options without the purchase.

• Why it helps: Aligns incentives with growth; easier to explain than options.

• Best for: Companies expecting a clear valuation event down the road.

3. Profit Interests (for LLCs)

• What it is: A slice of future profits and appreciation, not current value.

• Why it helps: Can be granted tax-free if structured properly; real ownership without buying in.

• Best for: LLCs comfortable with K-1s and some tax planning.

4. Bonus Pools with Objective Triggers

• What it is: A formalized annual/quarterly bonus tied to EBITDA, revenue milestones, or project wins.

• Why it helps: Simple to administer; everyone understands cash.

• Best for: Teams motivated by near-term wins, not long-term exits.

5. Restricted Stock / RSUs (for Corporations)

• What it is: Actual shares or share equivalents that vest over time or on milestones.

• Why it helps: “Real” equity feel; strong retention hook.

• Best for: C-corps or S-corps ready to manage 83(b) elections and valuations.

Design Levers That Make These Plans Shine

• Vesting That Matches Reality: Time-based, performance-based, or hybrid. Tie it to what truly matters.

• Clarity on Payout Events: Sale, recapitalization, yearly distributions—define the “when” up front.

• Good Leaver / Bad Leaver Rules: Reward loyalty, not drama. Spell out departures.

• Communication Tools: Simple one-pagers and calculators so employees “get it” and stay motivated.

Quick Self-Check: Are You Ready for an Incentive Plan?

• Do you have at least one person you’d hate to lose?

• Do you expect the business to grow in value over the next 2–5 years?

• Are you willing to be transparent (at least a little) about financial metrics?

• Do you want retention without handing over voting control?

If you’re nodding, you’re a candidate.

What Clients Love About These Structures

• Customizable: You can reward one key employee or dozens.

• Scalable: Start small, expand later.

• Predictable: Formulas deliver consistent, non-emotional payouts.

• Motivating: People engage differently when they see a slice of the upside.

Let’s Make This Real (Without the Headache)

Pick the goal—retention, performance, succession—and we’ll map the simplest tool to it. The details (tax hooks, vesting triggers, paperwork) are where things go off the rails or come together smoothly. Let’s aim for the latter.

Disclaimer: Informational only, not legal advice. Specific facts change outcomes. Call counsel to apply this to your situation.

You Signed What?

Fri, 13 Feb 2026 21:36:46 GMT

The Contract Clauses Most Business Owners Don’t Realize They’ve Agreed To

A business owner recently sent me a contract for review after signing it. The agreement was for a routine vendor relationship, and the owner assumed it was “just boilerplate.” Turns out, it required her company to:

• Personally guarantee the vendor’s fees

• Waive the right to sue in court

• Indemnify the vendor for damages caused by the vendor’s own negligence

All of that was buried in the “standard terms.”

This happens more often than you’d think.

The Devil’s in the Clauses

Here are five common contract provisions that quietly shift risk onto your business unless you know what to look for.

1. Indemnification

“Client agrees to indemnify and hold harmless Vendor…”

Sounds harmless. It’s not.This means you may have to pay for the vendor’s legal bills, losses, or even third-party lawsuits even if your company did nothing wrong. These clauses are negotiable but often go unchecked.

2. Governing Law & Venue

“This agreement shall be governed by the laws of Delaware…”

If a dispute arises, you might be dragged into court across the country.For NY-based businesses, that’s expensive and logistically painful. Unless there’s a good reason, contracts should default to New York law and courts.

3. Personal Guarantee

“The undersigned agrees to be personally liable…”

That signature on page two? It may not just be for the company, it could make you personally responsible for the full contract amount. If you’re signing on behalf of an LLC or corporation, it’s critical to confirm that the signature block reflects that. One missing word can collapse your liability shield.

4. Automatic Renewal (“Evergreen”)

“This agreement will automatically renew for successive 12-month terms…”

Many owners are surprised to find they’re locked into another year, often with just 30 days to cancel before the term renews. These clauses aren’t inherently bad, but you need to understand how to exit cleanly.

5. Limitation of Liability (or Lack Thereof)

“In no event shall Vendor be liable…”

Meanwhile, the agreement is silent on your company’s liability. Without a balanced clause, you’re fully exposed. Good contracts limit both sides’ exposure, ideally to the value of the contract itself.

“But It’s Just a Template…”

That’s the problem. Templates and AI-generated contracts are a starting point, but they don’t know your risk tolerance, business model, or industry norms. And vendors often send contracts that lean heavily in their favor. If you’re not reading with a trained eye, you’re signing away leverage you didn’t know you had.

What To Do Before You Sign

Before entering any agreement—vendor, client, partnership, or otherwise—ask yourself:

• Do I understand what happens if things go wrong?

• Am I personally on the hook?

• Who controls where and how a dispute is resolved?

• What happens if I want out early?

If you’re not 100% sure, it’s worth having a lawyer review it. Even a 15-minute review can catch something that saves thousands or keeps you out of court.

Need a fast, flat-fee contract review?I help NY businesses and nonprofits flag the risks, fix the language, and sign with confidence.

This article is for informational purposes only and does not constitute legal advice or create an attorney–client relationship.

Mergers, Acquisitions & Ownership Transitions

Fri, 13 Feb 2026 21:34:56 GMT

Mergers, Acquisitions & Ownership Transitions

• Structure and negotiate business sales, acquisitions, and buyouts

• Guide ownership transitions between partners or family members

• Draft and review letters of intent, asset purchase agreements, and related documents

• Coordinate legal due diligence and ensure smooth closings

Whether you're buying, selling, or restructuring a business, ownership transitions carry high stakes and often, tight timelines. We help clients navigate these changes with a focus on clear documentation, practical planning, and protecting what matters most.

We advise on all aspects of small and mid-sized business transactions, including:

• Internal buyouts between partners or family members

• Sales to third parties or strategic investors

• Entity reorganizations or mergers

Our services include drafting letters of intent, negotiating deal terms, conducting legal due diligence, and preparing the full suite of closing documents. We work closely with your accountants and advisors to ensure that the legal structure supports your financial and operational goals.

For clients exploring a sale or transition in the coming year, we also provide early-stage consultations to help evaluate options and avoid surprises down the line. From handshake to closing table, we’re here to help you move forward with confidence and clarity.

Alex Herd, Managing Attorney

Fri, 13 Feb 2026 21:33:45 GMT

Alex Herd, Managing Attorney

Alex Herd founded the Herd Law Office in 2024 to provide business owners and nonprofit leaders with clear, reliable legal support—whether they’re launching a new venture or navigating complex challenges.

Alex partners with clients across all stages of growth, from startups and solo founders to established organizations managing disputes, acquisitions, and restructuring. No matter the size, every client receives the same commitment: responsive service, practical guidance, and legal solutions that make sense for real-world decision-making.

Rather than overwhelm you with jargon or generic templates, Alex focuses on simplifying the legal process so you can move forward with confidence. His goal isn’t just to solve problems—it’s to help you build a stronger foundation for your mission and long-term success.

Prior to creating the Herd Law Office, Alex worked exclusively for boutique law firms that shared the same goal of providing cost-effective services to small and mid-sized businesses and non-profits through a hands-on approach where the clients’ goals always came first.

Alex has demonstrated his ability to be a thought leader in his field and has been published on topics such as why ethical practices are good for businesses and how clients can benefit from using outside general counsel services. He has also taught multiple Continuing Legal Education classes, on the topics such as petitioning the New York State Attorney General’s Office, structuring an outside general counsel practice and ethical considerations for promoting legal services through social media.

Outside of legal work, Alex enjoys spending his time managing fantasy baseball teams, playing board games, vacationing with his wife, Carolyn, and being a dad to his daughter Zoe.

Long Island Business Lawyer

Long Island Business Attorney

Bringing on Investors Without Giving Away the Farm: What You Need to Know

Fri, 13 Feb 2026 21:30:11 GMT

At some point in your company’s growth, you may find yourself c onsidering outside investment, whether it’s from a friend, an angel investor, or a more formal venture capital group. That money can unlock new opportunities, but if you’re not careful, it can also cost you more than it’s worth, especially if you accidentally give away too much control or take on obligations you don’t fully understand.

Here’s what business owners in New York should know before bringing on investors.

1. Not All Investment Is the Same

One of the first decisions is how the investment will be structured. Some common types include:

• Equity Investment – The investor receives shares in the company in exchange for capital.

• Convertible Notes – A loan that converts into equity later, often during a future funding round.

• SAFE (Simple Agreement for Future Equity) – A popular tool in early-stage startups, allowing investors to buy future equity under certain conditions.

• Revenue-Based Financing – Investors are repaid as a percentage of revenue until a fixed return is reached.

Each of these comes with different rights, risks, and impacts on your control of the business.

2. Valuation Isn’t the Only Term That Matters

It’s tempting to focus on how much your business is worth, but the real power often lies in the details of the deal:

• Voting Rights – Do investors get a say in how the company is run?

• Board Seats – Will they have formal influence over decisions?

• Anti-Dilution Protections – Could they prevent their ownership from shrinking if you raise more money?

• Exit Rights – Can they force a sale or cash out under certain conditions?

An investment can seem generous on paper until you realize it gives someone else veto power over your next move.

3. Equity = Permanent Ownership

When you give equity, you’re not just sharing profit, you’re sharing control. That’s not inherently bad, but you need to plan for it:

• Are you prepared for what happens if you and the investor disagree?

• Do you have a clear operating agreement or shareholders' agreement that sets expectations?

• Have you considered vesting schedules or drag-along/tag-along rights to protect everyone’s interests?

Poorly structured equity deals are one of the leading causes of founder disputes and they’re often preventable.

4. You Can Keep Control—If You Plan Ahead

The key to a successful investment deal is knowing what you’re willing to give up and what’s non-negotiable. A well-drafted investment agreement can:

• Limit investor control to financial oversight

• Preserve your ability to make day-to-day decisions

• Set clear expectations for future rounds, exits, or buyouts

• Protect you from surprise liabilities or dilution

5. You Only Get One First Impression

Investors expect clean legal paperwork and a clear plan. If your company’s books, contracts, or structure are a mess, it may kill the deal or leave you at a disadvantage during negotiations.

Having a business lawyer help you get ""investment ready"" means:

• Fixing formation issues or outdated agreements

• Cleaning up your cap table

• Anticipating investor due diligence

• Structuring the deal so it aligns with your long-term goals

Bottom Line: Get Help Before You Say Yes

Investment can be a smart way to grow, but only if the terms are right. Before you take any money, or give away any equity, talk with a lawyer who understands how to protect your interests while keeping your business attractive to investors.

If you're considering raising funds or already have a potential investor lined up, let’s talk. I help New York businesses structure investment deals that support growth without giving away the farm.

Can Nonprofit Directors Be Paid?

Fri, 13 Feb 2026 21:26:34 GMT

If you’re involved with a New York nonprofit — especially a smaller one where the same people wear many hats — it’s natural to wonder: Can board members be compensated for their time and effort?

The answer is: Yes, under certain conditions. But the ""how"" matters just as much as the ""whether.""

Paying Directors for Serving on the Board

New York’s Not-for-Profit Corporation Law (N-PCL) permits director compensation, but only if it’s permitted by your bylaws and handled with care:

• Check your bylaws first. Many nonprofits (often unknowingly) include default language that prohibits board compensation altogether. If that's the case, you'd need to formally amend your bylaws before making any payments.

• Follow a proper approval process. Compensation decisions must be made by disinterested directors — that is, people who won’t personally benefit from the vote. That vote needs to be well-documented and comply with your conflict-of-interest policy.

• Payments must be reasonable. This isn’t just about fairness — it's a legal requirement. Excessive or poorly justified payments can trigger scrutiny from the IRS or the NY Attorney General’s office.

In practice, paying directors just for board service is rare, especially for public charities. But in some cases — such as with highly active working boards — it may be justified.

Paying Board Members for Other Roles

What happens when a director also takes on non-board work — such as acting as an executive director, fundraising consultant, or accountant?

In those cases, compensation may be structured outside the board role, either:

• As an independent contractor, with a clear scope of services and a written agreement

• As a W-2 employee, if the role is regular and ongoing

That said, these arrangements bring their own complications:

• Are you tracking and separating board duties from paid work?

• Will the payment change the board member’s fiduciary status?

• Does the arrangement risk your 501(c)(3) status or trigger IRS reporting?

If the line between volunteer and compensated professional gets blurry, the nonprofit may need to file additional disclosures on Form 990 and possibly revise its policies.

So What’s the Right Move?

There’s no one-size-fits-all answer — and what’s permissible may not always be practical or advisable.

A few key questions to consider:

• Do your bylaws need to be amended?

• Is the payment structure the most tax-efficient and legally sound?

• Could this create public perception or donor trust issues?

If you're thinking about compensating a board member — or you’re a director unsure how your nonprofit should approach it — it’s worth having a conversation before money changes hands.

Let’s talk through your specific situation, review your governance documents, and put the right protections in place.

The Legal Side of Growing Pains: When to Bring in a Lawyer as Your Business Scales

Fri, 13 Feb 2026 21:24:42 GMT

Grow ing a business is exciting—but it’s also when legal problems tend to sneak in.

Most entrepreneurs start out lean: DIY website, handshake deals, maybe a contract you pulled from the internet. That works—for a while. But as your business grows, so do your risks, responsibilities, and visibility.

The question is: When should you bring in a lawyer?

You don’t need to call a lawyer every time you send an invoice—but there are key moments in your growth when legal help can save you time, money, and future headaches.

Here are six signs your business is scaling—and it’s time to get a lawyer involved.

1. You’re Hiring People (or Contractors)

Hiring sounds straightforward—but legally, it’s a minefield.

If you’re bringing on your first employee (or contractor), you need to:

• Classify them correctly

• Follow wage and hour laws

• Have the right agreements in place (offer letters, NDAs, etc.)

• Understand your tax and insurance obligations

Even seasoned business owners accidentally misclassify workers—and the penalties can be brutal.

Tip: A short meeting with a lawyer before hiring your first person can protect you from fines, lawsuits, or disputes later.

2. You’re Working with Bigger Clients or Contracts

As your business grows, so does the size of your deals. Bigger clients usually come with longer, more complex contracts—and more negotiation.

If you’re signing contracts you don’t fully understand, you’re taking on unknown risks. Worse, you may be agreeing to terms that hurt your business (like giving up intellectual property rights or agreeing to one-sided liability clauses).

Tip: A contract review or negotiation strategy session can save you thousands later—and help you negotiate from a position of strength.

3. You’re Building a Team or Bringing on a Partner

Adding a co-founder or partner? Planning to give someone equity or ownership?

You must have a clear, written agreement—one that covers ownership percentages, roles, decision-making power, exit terms, and what happens if someone wants to leave (or doesn’t pull their weight).

Tip: Partnership disputes are one of the top reasons small businesses fail. A lawyer can help you prevent them before they happen.

4. You’re Making More Money (Congrats!)

More revenue is a good thing—but it usually means:

• More contracts

• More customers

• More exposure

• More at stake

Now’s the time to make sure your business is structured properly (LLC? S Corp?), your agreements are strong, and your legal foundation can support your growth.

Tip: A “legal health check” can identify gaps before they become liabilities.

5. You’re Launching New Products, Offers, or Services

Thinking of expanding what you offer—or how you deliver it? Whether it's a course, a subscription, an e-commerce line, or a digital product, new offers often mean new legal considerations:

• Consumer protection laws

• Terms of service and disclaimers

• Payment disputes

• Data privacy rules

Tip: If you're moving into new territory, bring in legal support to make sure you're protected.

6. You’re Starting to Feel Exposed (Because You Are)

This is more of a gut-check than a checklist.

If you’ve ever thought:

• “I hope no one sues me.”

• “I probably should have a better contract.”

• “I don’t know what I don’t know…”...then it’s time to bring in a lawyer.

Tip: A good business lawyer isn’t just there for emergencies—they help you avoid them altogether.

Bottom Line: Growth Is the Best Time to Build Your Legal Foundation

You don’t need a full-time legal department to run a strong business—but you do need someone in your corner as the stakes get higher.

Think of legal support like insurance, but smarter: it protects your time, your money, and everything you’ve built.

Want to Make Sure Your Business Is Legally Ready to Scale?

We help small business owners and nonprofits grow with confidence by taking the legal guesswork off their plate. Let’s build a legal foundation that grows with you.

hat to Include in an Annual Legal Checkup (and Why It Matters)

Fri, 13 Feb 2026 21:22:06 GMT

Running a business means juggling a lot — and legal issues often take a backseat until something goes wrong. But just like you schedule checkups for your health or finances, your business deserves the same attention.

An annual legal checkup can help you:

• Catch small issues before they become big problems

• Make sure your documents and practices still match your goals

• Protect yourself from unnecessary risk

• Feel confident heading into the next phase of growth

Here’s what that checkup should cover — and why it’s worth your time.

What to Review in an Annual Legal Checkup

1. Business Structure

• Is your current structure (LLC, S Corp, nonprofit, etc.) still the best fit?

• Have there been ownership changes, new partners, or shifts in how you operate?

2. Operating Agreement or Bylaws

• Are roles, decision-making, and ownership reflected accurately?

• Would the agreement hold up if someone left or a dispute came up?

3. Contracts & Templates

• Are your core contracts up to date and tailored to your current services?

• Do your templates cover the right legal protections (payment terms, IP, dispute resolution)?

• Are there handshake deals that should be formalized?

4. Employment & HR Basics

• Are your workers properly classified (employee vs. contractor)?

• Do you have updated offer letters, agreements, or an employee handbook?

• Are you complying with current labor laws in your state?

5. Licenses, Permits & Filings

• Are all business licenses, permits, and registrations current?

• Have you filed any annual reports or corporate updates required in your state?

6. Intellectual Property & Branding

• Are your name, logo, website, and content protected?

• Should you consider registering a trademark?

7. Insurance & Risk Management

• Do you have the right insurance coverage in place for your size and services?

• Are you exposed to unnecessary legal or financial risks?

8. Website, Privacy & Online Activity

• Are your website terms of service and privacy policy up to date?

• Do you collect customer or donor data in a legally compliant way?

Real-World Example: The Growing Business With Hidden Gaps

A successful boutique consulting firm reached out for help with a potential investor. They’d grown quickly over the past two years — hired a few contractors, launched new services, and built up a strong client base.

But when we started reviewing the legal side, a few things surfaced:

• Their operating agreement hadn’t been touched since day one. It didn’t reflect how profits were actually being shared or how a new investor could be brought in.

• Their client contract didn’t match their current offerings — and was missing important terms like late fees, dispute resolution, and IP ownership.

• Their contractor agreements were outdated, and one worker should likely have been classified as an employee.

• They’d rebranded with a new logo and name — but hadn’t taken steps to protect their intellectual property.

They weren’t in crisis — but these issues could’ve created major problems if they’d moved forward without fixing them. After a full legal checkup, we brought everything up to speed and built a plan for growth with a solid legal foundation.

Why It Matters

Legal checkups aren’t about chasing paperwork — they’re about protecting what you’re building.As your business grows, so does the risk of something slipping through the cracks.

A little legal maintenance each year can help you:

• Avoid costly disputes or fines

• Strengthen your position in deals and negotiations

• Plan with more clarity and confidence

Want Help With a Legal Checkup?

We offer flexible support options for small businesses and nonprofits. Whether you need a simple review or a deeper dive, we'd be happy to help you stay legally healthy.

Essential Contracts Every Small Business & Non-Profit Should Have

Mon, 02 Feb 2026 21:26:47 GMT

Contracts are the f oundation of a legally secure business or non-profit organization. Without them, businesses can face miscommunication, financial loss, or even lawsuits. Whether you’re a solo entrepreneur, a small business owner, or managing a growing non-profit, having the right legal agreements in place is crucial.

In this article, we’ll break down the essential contracts every small business and non-profit should have, why they’re important, and how they can protect your organization.

1. Client Service Agreement (For Businesses Providing Services)

What It Does:

A Client Service Agreement outlines the terms of service between your business and your clients. It ensures that expectations, deliverables, payment terms, and liability protections are clearly defined.

Why You Need It:

• Prevents misunderstandings about the scope of work.

• Ensures you get paid on time by setting clear terms.

• Protects against legal disputes over service quality or delivery.

Key Clauses to Include:

• Scope of Work (What services are included?)

• Payment Terms (Deposit required? Late fees?)

• Timeline and Deadlines

• Refund or Cancellation Policy

• Liability Limitations

2. Independent Contractor Agreement (For Hiring Freelancers & Contractors)

What It Does:

This contract sets the terms of engagement for freelancers or independent contractors you hire. It ensures that they are legally classified as non-employees, protecting your business from misclassification lawsuits and tax penalties.

Why You Need It:

• Avoids disputes over ownership of work produced.

• Clearly defines payment and project expectations.

• Protects against misclassification issues that could lead to IRS penalties.

Key Clauses to Include:

• Payment and Invoicing Terms

• Intellectual Property Ownership (Who owns the work created?)

• Non-Disclosure Agreement (NDA) Clause

• Independent Contractor Classification

3. Employment Agreement (For Hiring Employees)

What It Does:

An Employment Agreement outlines the terms of employment for hired staff. It ensures that roles, responsibilities, compensation, benefits, and termination policies are clearly defined.

Why You Need It:

• Avoids misunderstandings between employers and employees.

• Protects confidential information with a non-compete or NDA clause.

• Provides legal protection if an employee is terminated or disputes arise.

Key Clauses to Include:

• Job Title and Responsibilities

• Compensation and Benefits

• Termination Policies (At-will employment?)

• Confidentiality and Non-Compete Clauses

4. Partnership Agreement (If You Have Business Partners)

What It Does:

A Partnership Agreement is critical for businesses with two or more owners. It lays out ownership percentages, roles, profit-sharing, and exit strategies to prevent future disputes.

Why You Need It:

• Clearly defines who owns what and how decisions are made.

• Prevents conflicts by outlining dispute resolution methods.

• Protects the business if a partner wants to leave or sell their share.

Key Clauses to Include:

• Ownership Breakdown

• Decision-Making Authority

• Profit and Loss Distribution

• Exit Strategy and Buyout Plan

5. Non-Disclosure Agreement (NDA) (For Protecting Confidential Information)

What It Does:

An NDA ensures that sensitive business information, such as client lists, financial data, and trade secrets, remains confidential when shared with employees, vendors, or business partners.

Why You Need It:

• Prevents employees or contractors from stealing or misusing confidential information.

• Protects proprietary business practices, strategies, and trade secrets.

• Gives legal grounds for action if information is disclosed without permission.

Key Clauses to Include:

• Definition of Confidential Information

• Duration of Confidentiality Obligation

• Penalties for Breach

6. Terms and Conditions Agreement (For Businesses with a Website or Online Services)

What It Does:

A Terms and Conditions (T&C) Agreement defines the rules users must follow when using your website, purchasing your products, or engaging with your online services.

Why You Need It:

• Limits your legal liability for website usage.

• Protects your intellectual property (content, images, branding).

• Sets expectations for returns, refunds, and service policies.

Key Clauses to Include:

• Acceptable Use of Website

• Payment and Refund Policy

• Liability Disclaimer

• Privacy Policy

Conclusion

Contracts are an essential tool to protect your business, employees, clients, and intellectual property. Whether you're running a small business or a non-profit, having well-drafted contracts can prevent costly disputes and legal headaches.

Need help drafting or reviewing a contract?Contact us today to ensure your agreements are legally sound and tailored to your business needs.

Employees vs. Independent Contractors: Why It Matters for Your Business

Mon, 02 Feb 2026 21:24:01 GMT

In today’s business landscape, companies rely on a mix of employees and independent contractors to meet their operational needs. But what’s the difference, and why does it matter? Misclassifying workers can lead to costly legal and financial consequences, so it’s essential for business owners to understand the distinction.

Key Differences

The primary distinction between an employee and an independent contractor comes down to control and independence. Employees typically:

• Work under the direct control of the employer regarding tasks, schedules, and processes.

• Receive benefits like health insurance, paid time off, and unemployment protections.

• Have taxes withheld from their paychecks by their employer.

On the other hand, independent contractors:

• Have more control over how and when they complete their work.

• Often use their own tools and resources.

• Are responsible for their own taxes, including self-employment taxes.

Why Misclassification Can Be Costly

Misclassifying an employee as an independent contractor—whether intentional or not—can result in serious penalties, including:

• Back pay for wages and overtime.

• Liability for unpaid payroll taxes and benefits.

• Fines from the IRS, Department of Labor, and state agencies.

Beyond financial consequences, misclassification can also lead to legal disputes and damage a company’s reputation. Government agencies are increasingly cracking down on misclassification, making it more critical than ever for business owners to get it right.

How to Protect Your Business

Understanding the classification rules is just the first step. If your business works with independent contractors, it’s important to:

• Understand the difference between an independent contractor and employee.

• Have clear, written agreements outlining the nature of the work relationship.

• Ensure contractors operate with autonomy in their work processes.

• Regularly review classifications to stay compliant with evolving laws.

While these guidelines provide a starting point, classification decisions can be complex and fact-specific. If you’re unsure about whether your workers are properly classified, consulting a business attorney can help you avoid costly mistakes.

If you have questions about worker classification or need guidance on structuring your workforce, contact us today. We can help you navigate the complexities of employment law and protect your business from unnecessary risks.

Navigating the AI Revolution: Legal Considerations for Small Businesses

Mon, 02 Feb 2026 21:22:20 GMT

The rise of Artificial Intelligence (AI) has ushered in a new era of possibilities for businesses of all sizes. From automating tasks and improving customer service to unlocking valuable insights from data, AI tools are transforming the way small businesses operate. However, this technological revolution also brings with it a unique set of legal challenges that business owners need to navigate.

The Legal Landscape of AI for Small Businesses

• Data Privacy and Security:

• Customer Data: AI tools often rely on customer data. Small businesses must ensure they comply with data privacy regulations like GDPR and CCPA, which govern data collection, use, and storage. This includes obtaining proper consent, implementing robust security measures to prevent data breaches, and minimizing the risk of data misuse.

• Intellectual Property:

• Copyright and Ownership: AI-generated content, such as images, text, and even music, raises complex copyright questions. Determining ownership and ensuring proper attribution or licensing can be crucial.

• Employment and Hiring:

• Algorithmic Bias: AI-powered recruitment tools can inadvertently introduce bias, leading to discriminatory hiring practices. Businesses must carefully evaluate and mitigate these risks to ensure fair and equitable hiring processes.

• Contractual Issues:

• The Temptation of AI-Drafted Contracts: Many small business owners are drawn to the efficiency of using AI tools to draft contracts, operating agreements, and other legal documents. These tools can generate templates quickly and potentially save time and money.

• However, it's crucial to understand the significant risks associated with relying solely on AI for legal drafting: AI-generated documents may contain errors, omissions, or outdated information. Legal contracts require precision and attention to detail. Even minor errors can have significant legal and financial consequences. AI tools cannot provide legal advice or tailor contracts to the specific needs and circumstances of your business. They lack the nuanced understanding of complex legal issues and cannot anticipate potential legal challenges. If an AI-generated contract contains errors or omissions that lead to legal disputes or financial losses, your business may be held liable.

How a Small Business Lawyer Can Help

Navigating the legal complexities of AI can be daunting for small business owners. A qualified business lawyer can:

• Conduct a thorough AI risk assessment: Identify potential legal and ethical risks associated with your specific use of AI tools.

• Develop and implement data privacy policies: Ensure compliance with relevant data protection regulations and protect your customers' information.

• Advise on employment law issues: Ensure your hiring practices comply with anti-discrimination laws and that your business is prepared for the evolving workforce.

• Review and refine AI-generated drafts: Identify and correct any errors, omissions, or ambiguities.

• Tailor contracts to your specific needs: Ensure that your contracts accurately reflect your business objectives and protect your interests.

• Provide expert legal advice: Guide you through the legal complexities of your business transactions.

• Stay abreast of emerging AI regulations: Keep you informed of any new laws or regulations that may impact your business.

The Bottom Line

AI presents both exciting opportunities and significant challenges for small businesses. By proactively addressing the legal considerations and seeking guidance from experienced legal counsel, you can harness the power of AI while minimizing potential risks and ensuring long-term success.

Disclaimer: This article provides general information and should not be construed as legal advice.

8 Year-End Questions Every Business Owner Should Consider

Mon, 02 Feb 2026 21:19:52 GMT

Is Your Business Ready for the New Year?

The end of the year is the perfect time to reflect, reset, and make sure your business is protected and positioned for growth. Small issues—like outdated contracts, missing filings, or partnership disagreements—can snowball into bigger problems if left unchecked. Asking yourself the right questions now will give you peace of mind and a clean slate heading into the new year.

Here are 8 key areas every business owner should review before the calendar turns to January:

1. Are Your Contracts Up to Date and Protecting You?

Why It’s Important:Outdated or unclear contracts can leave your business vulnerable to disputes, missed payments, or unexpected liabilities. If your agreements with vendors, employees, or clients haven’t been reviewed recently, they may not reflect your current business needs or provide the protections you deserve. Now is the time to ensure your contracts are clear, enforceable, and aligned with your goals.

Questions to Consider:

• Do your client agreements clearly outline payment terms, responsibilities, and expectations?

• Are there contracts with vendors, employees, or partners that need renewing or revising?

• If a vendor doesn’t deliver or a client doesn’t pay, do you know what happens next?

2. Is Your Website Legally Compliant and Protected?

Why It’s Important:Your website is often the first point of contact for customers and partners, but failing to meet legal requirements can lead to fines, disputes, or lost trust. Many businesses overlook essentials like Terms of Service, Privacy Policies, and ADA compliance. If you host original content, tools, or branding, you also need to ensure your site is protected against unauthorized use.

Questions to Consider:

• Does your website have up-to-date Terms of Service and a clear Privacy Policy?

• Have you reviewed your website for ADA compliance to ensure accessibility?

• Are you using contracts, like licensing agreements, to protect content or tools on your site?

3. Do You Have the Right Business Entity—Or Any Entity at All?

Why It’s Important:Running your business without a formal entity, like an LLC or corporation, can expose your personal assets to risk. Even if you already have an entity, it’s worth revisiting whether it still supports your growth and tax goals. A well-structured business entity provides liability protection, tax advantages, and clarity around ownership.

Questions to Consider:

• Are you running your business as a sole proprietorship and exposing yourself to personal liability?

• Would forming an LLC, corporation, or partnership provide better legal and tax protections?

• If you already have an entity, is it structured to support your future growth?

4. Could a Partnership Dispute Be Brewing?

Why It’s Important:Business partnerships can be key to growth, but without clear agreements and open communication, disagreements can arise and create significant problems. Whether it’s about roles, ownership, or exiting the business, unresolved issues can hurt relationships and your bottom line. Addressing potential disputes now helps avoid bigger conflicts later.

Questions to Consider:

• Do you and your partners have a clear agreement about roles, responsibilities, and ownership?

• Is there a plan in place for handling disagreements or someone’s exit from the business?

• Are there unresolved disputes with partners that need to be addressed?

5. Are Your Financial and Legal Records in Order?

Why It’s Important:Neglecting financial or legal filings can cause unnecessary stress, penalties, or delays in the new year. Whether it’s state filings, licenses, or corporate records like meeting minutes, keeping everything up to date gives you a clean foundation to operate and grow your business smoothly.

Questions to Consider:

• Are your state filings, licenses, and permits up to date?

• Have you cleaned up overdue legal or financial tasks that could cause problems next year?

• Are your corporate records, like ownership documents or meeting minutes, current?

6. Is Your Brand Trademarked and Protected?

Why It’s Important:Your brand—whether it’s your name, logo, or products—represents the hard work you’ve put into building your business. Without a trademark or proper protections, someone else could copy or misuse your branding, leaving you without legal options. Protecting your intellectual property now will safeguard your business reputation and value.

Questions to Consider:

• Have you trademarked your business name, logo, or any unique product names?

• Could someone else copy your branding or ideas—and would you have legal grounds to stop them?

• Are you using tools like NDAs or licensing agreements to protect your intellectual property?

7. Do You Have Loose Ends to Tie Up Before the New Year?

Why It’s Important:Lingering conflicts or unresolved tasks can slow down your business’s growth and create unnecessary stress. Whether it’s unpaid invoices, broken agreements, or policy gaps, tying up loose ends now ensures you can start the new year with a clean slate and clear focus.

Questions to Consider:

• Are there unpaid invoices or broken agreements that need resolving?

• Do you have lingering disputes with vendors, clients, or employees?

• Are there contracts or policies that need updating to prevent similar issues next year?

8. What’s Your Plan for the Unexpected?

Why It’s Important:While no one likes to think about stepping away from their business, the unexpected can happen. A clear plan—whether for succession, a partner’s exit, or a future sale—ensures your business can continue operating smoothly, protects your family, and preserves the value of what you’ve built.

Questions to Consider:

• If you had to step away from the business tomorrow, would your team know what to do?

• Do you have a succession plan or buy-sell agreement in place for partners?

• Is your estate plan aligned with your business operations and goals?

Closing Thought:

The end of the year is the perfect time to ask yourself whether your business is protected, positioned for growth, and ready to face new challenges. Taking the time to address these questions now will give you peace of mind—and set you up for success in the new year. If you’re unsure where to start, don’t hesitate to ask for help.

Non-Profits Frequently Asked Questions: A Comprehensive Guide

Mon, 02 Feb 2026 21:14:49 GMT

Non-profit organizations encounter a unique set of legal issues that often differ from those of for-profit businesses. From compliance with tax laws to questions around compensation and governance, non-profits face complex challenges that can impact their operations and longevity. Here, we’ll discuss some of the most common legal questions non-profits ask to help these organizations stay informed and compliant.

1. What are the basic legal requirements for starting a non-profit?

Starting a non-profit involves several foundational steps to ensure legal compliance:

• Select a Structure: Most non-profits choose to incorporate to benefit from liability protection and organizational structure.

• File Articles of Incorporation: This legal document, filed with the state, includes the organization’s name, purpose, and details of its initial directors.

• Obtain 501(c)(3) Status: Many non-profits apply for tax-exempt status with the IRS. This process includes submitting Form 1023 or Form 1023-EZ, allowing donors to receive tax deductions and exempting the organization from federal income tax.

Additionally, non-profits should be aware of state-specific requirements that may apply to operations and fundraising activities.

2. What are the tax benefits of becoming a 501(c)(3) organization?

Obtaining 501(c)(3) status offers several financial and operational benefits:

• Federal Tax Exemption: Non-profits with this status are exempt from federal income taxes on activities related to their mission.

• State Tax Exemptions: Many states offer additional tax exemptions, such as sales or property tax relief.

• Charitable Deduction for Donors: Contributions to 501(c)(3) organizations are tax-deductible, which can encourage donations and improve fundraising.

However, to maintain this status, non-profits must adhere to IRS regulations, including limits on political activities and annual reporting obligations.

3. Can a non-profit pay its directors?

Yes, non-profits can pay their directors, but there are specific guidelines to follow to ensure compliance with tax-exempt regulations:

• Reasonable Compensation Only: Compensation must align with industry standards and the director’s responsibilities. Excessive payment or “private inurement” (where funds disproportionately benefit private individuals) could risk the non-profit’s tax-exempt status.

• Conflict-of-Interest Policies: Directors involved in compensation decisions should recuse themselves from voting on their own pay to avoid conflicts of interest.

• Transparency: Compensation must be disclosed on the non-profit’s IRS Form 990, which is public. Additionally, state regulators may require similar disclosures to promote transparency and prevent abuses.

Many non-profits choose not to pay their directors, relying instead on volunteer support, but for organizations that do, clear documentation and transparency are essential.

4. Are non-profits allowed to pay employees?

Yes, non-profits can employ staff and offer salaries for work that supports the organization’s mission. The “non-profit” designation means only that profits cannot benefit private shareholders, not that the organization cannot pay for services.

Compensation should be set based on industry standards to avoid issues with the IRS, which may question excessive salaries. Consulting salary benchmarks or a compensation committee helps ensure fair, defensible wages and avoid jeopardizing tax-exempt status.

5. What do non-profits need to do to maintain tax-exempt status?

To retain their tax-exempt status, non-profits must comply with specific IRS and state requirements:

• File Annual Reports: Non-profits are required to file Form 990, 990-EZ, or 990-N annually. This report includes financials and operational details.

• Comply with State Laws: Non-profits may also need to submit state-specific filings or renew registrations for fundraising activities.

• Avoid Conferring Private Benefits: The non-profit’s resources should not improperly benefit insiders, such as board members or staff, which could lead to IRS penalties or a loss of tax-exempt status.

Failure to meet these obligations can result in fines or the revocation of tax-exempt status, making compliance critical.

6. Can a non-profit engage in political or lobbying activities?

Non-profits are subject to limitations on political and lobbying activities:

• Lobbying: Non-profits may engage in lobbying as long as it remains an “insubstantial” portion of their overall activities. Electing 501(h) status can help organizations stay within legal lobbying limits.

• Political Campaigning: Non-profits cannot support or oppose political candidates. Violating this prohibition may lead to the loss of tax-exempt status.

Organizations should establish policies to guide advocacy efforts and ensure compliance with IRS regulations on political activities.

7. What liability protections exist for board members?

Board members and officers of non-profits typically have some level of liability protection:

• State Volunteer Immunity Laws: Many states offer legal protections for volunteer board members if they act in good faith and in the organization’s best interests.

• Directors and Officers (D&O) Insurance: This insurance policy can cover legal fees and damages if board members are personally sued in connection with their role.

Non-profits should also adopt a conflict-of-interest policy and keep accurate records of board meetings to demonstrate responsible governance and further shield board members from liability.

8. Are non-profits allowed to engage in commercial activities?

Non-profits can participate in commercial or revenue-generating activities, but with limitations:

• Related vs. Unrelated Income: Income generated from activities directly related to the non-profit’s mission is generally tax-exempt. However, revenue from unrelated activities is taxable and subject to unrelated business income tax (UBIT).

• Risk to Tax-Exempt Status: Non-profits that generate substantial income from unrelated activities may risk losing their tax-exempt status, as the IRS may see this as operating primarily for profit.

To manage this risk, some non-profits set up separate for-profit subsidiaries for unrelated activities, allowing the non-profit to maintain its primary tax-exempt purpose.

9. Do non-profits need to register for fundraising?

Yes, non-profits must comply with state-specific fundraising laws:

• State Registration: Many states require non-profits to register before they solicit donations, even if online.

• Annual Reporting Requirements: Non-profits often need to submit annual reports to state regulators detailing their fundraising and financial activities.

Non-compliance can result in penalties or restrictions on fundraising activities. Organizations should stay informed about each state’s requirements, especially if they conduct multi-state or online fundraising.

10. What internal policies should a non-profit have in place?

Non-profits should adopt several policies to manage governance and promote accountability:

• Conflict-of-Interest Policy: Ensures that board members disclose any personal interests that could influence decision-making.

• Whistleblower Policy: Protects individuals who report unethical behavior or legal violations.

• Document Retention Policy: Outlines the length of time that records should be retained and can aid in compliance with federal or state laws.

These policies not only ensure ethical governance but also align with best practices that donors and regulators look for in non-profit operations.

11. How can non-profits protect their intellectual property?

Intellectual property (IP) protection is important for non-profits to safeguard brand identity and original works:

• Trademarking Names and Logos: Registering trademarks with the U.S. Patent and Trademark Office (USPTO) helps prevent others from using the organization’s brand identity.

• Copyrighting Original Materials: Publications, educational materials, and other works can be copyrighted to protect the organization’s content.

• Using Licensing Agreements: If the non-profit allows others to use its content (e.g., curricula or educational materials), licensing agreements can clarify terms and safeguard the organization’s rights.

Conclusion

Navigating the legal landscape as a non-profit requires careful attention to rules and regulations designed to promote accountability, transparency, and ethical governance. By addressing these common legal questions, non-profits can ensure compliance and focus on their mission. Legal advice from a business law professional can further help non-profits mitigate risks and maintain their tax-exempt status.

What is a Holding Company and When Should You Consider One?

Mon, 02 Feb 2026 21:10:30 GMT

In the landscape of modern business, structuring a company effectively can be pivotal to its growth and protection. One structure that has gained considerable attention among entrepreneurs and business owners is the holding company. But what exactly is a holding company, and how can it benefit your business strategy? Let’s break down the essentials.

Understanding a Holding Company

A holding company, in simple terms, is a business entity created primarily to own other companies’ stock and assets rather than to produce goods or services itself. Unlike an operating company, which is actively involved in day-to-day business operations, a holding company’s primary role is to hold control over its subsidiaries. Its assets typically include stock, intellectual property, real estate, or other valuable assets owned by its subsidiary companies.

The concept of a holding company often draws on the benefits of centralizing control while minimizing liability risks. Rather than risking all assets in one entity, assets and operations are separated, offering distinct advantages in managing and safeguarding business interests.

Key Benefits of Holding Companies

Holding companies provide a range of benefits, particularly when it comes to asset protection, tax efficiency, and centralization of control:

• Asset Protection: One of the most compelling reasons to form a holding company is to protect valuable assets. By keeping assets in a holding company separate from operating entities, you reduce the risk that a lawsuit or financial trouble affecting one subsidiary will compromise all assets.

• Tax Efficiency: Holding companies can sometimes help reduce the overall tax burden, allowing for tax advantages through dividend deductions, interest deductions, or tax deferral strategies.

• Control and Management: A holding company can consolidate ownership, making it easier to manage a group of subsidiaries. This arrangement can provide greater control over subsidiary operations while allowing flexibility and agility for each subsidiary.

• Streamlining Funding and Investments: Holding companies facilitate investments, allowing for smoother transactions when acquiring, financing, or selling parts of the business. This structure also makes it easier to manage risks and rewards across diverse ventures.

When Should You Consider Forming a Holding Company?

While holding companies offer many advantages, they are not ideal for every business. Here are some situations where a holding company may be especially beneficial:

• Expansion into Multiple Business Areas: If you own or plan to acquire multiple businesses or assets that operate in various sectors, a holding company structure allows you to centralize management while minimizing liability between different ventures.

• Real Estate Investments: A holding company is often used by real estate investors to separate each property’s liabilities, protecting each asset from potential lawsuits or financial setbacks linked to other properties.

• Intellectual Property Protection: Businesses that heavily rely on intellectual property, such as patents or trademarks, often place these assets in a holding company. This approach shields valuable intellectual property from potential risks associated with operating companies.

• Planning for Succession or Sale: A holding company can streamline business ownership transition, making it easier to sell, transfer, or divide interests in the business among multiple parties.

• Tax and Liability Management: For companies in high-liability industries, such as construction or manufacturing, forming a holding company can be an effective way to separate and protect valuable assets, mitigating risks associated with direct ownership.

Seek Professional Advice for Optimal Results

While the benefits of a holding company can be significant, setting up and managing one can involve complex legal and tax considerations. A business lawyer can help you navigate regulatory requirements, assess potential tax implications, and determine the best strategy for your specific needs.

How to Avoid 50/50 Deadlocks in Business Partnerships

Mon, 02 Feb 2026 21:03:24 GMT

Forming a business partnership often feels like a natural step toward s uccess. You share the responsibilities, risks, and rewards equally, and it may seem logical to split ownership 50/50. However, one of the most common pitfalls of a 50/50 partnership is the risk of a deadlock—a situation where partners cannot agree on a critical decision, leaving the business at a standstill.

In this article, we’ll explore the key ways to prevent and resolve deadlocks in business partnerships, ensuring that your business can keep moving forward. Whether you're in the early stages of forming a partnership or looking for ways to fix existing issues, these solutions can help.

Why Deadlocks Are Dangerous

A deadlock occurs when two equal partners in a business can’t agree on a major decision, leading to a stalemate. This can be extremely damaging, especially when fast decisions are needed to keep the business running smoothly. Without a way to break the tie, a deadlock can cause:

• Operational Delays: Key decisions about the business—whether about finances, strategy, or management—get delayed.

• Deteriorating Relationships: Ongoing disagreements can damage the trust and communication between partners.

• Financial Loss: A deadlock could mean missed opportunities, stalled projects, or even the dissolution of the business.

• Dissolution: If proper planning wasn't done ahead of time, your only option may be to dissolve the company.

So, how do you prevent or resolve a 50/50 deadlock before it threatens the business? Here are some of the best options.

1. Set Up a Tie-Breaking Mechanism in the Agreement

When forming a partnership, it's critical to plan for disagreements ahead of time. This can be done by building a tie-breaking mechanism directly into your partnership or shareholder agreement.

What You Should Ask Your Lawyer: What kind of tie-breaking mechanism fits your business best? Can you trust an external advisor to make key decisions?

2. Use a Buy-Sell Agreement

A buy-sell agreement outlines the process if one partner wants to leave the business or sell their share due to a deadlock. This agreement can include a ""deadlock resolution clause"", which sets terms for what happens if partners reach an impasse.

What You Should Ask Your Lawyer: How can a buy-sell agreement protect both parties if a deadlock occurs? Is a shotgun clause the right choice for your partnership?

3. Consider an Advisory Board or Committee

An advisory board or a small committee of trusted business experts can be invaluable when resolving deadlocks. Rather than allowing the business to stall due to disagreements, the board can step in to provide guidance or even make final decisions in certain circumstances.

What You Should Ask Your Lawyer: What responsibilities should you give an advisory board? Should they have final say on specific decisions?

4. Avoid a 50/50 Split in Ownership

While a 50/50 split seems fair, it can create deadlocks easily. One way to prevent this is by adjusting the ownership structure slightly so one partner holds a majority, even if it’s just by a small margin (e.g., 51/49).

What You Should Ask Your Lawyer: Would a 51/49 ownership split cause tension in your partnership? Is a supermajority vote a better way to avoid deadlocks?

5. Mediation or Arbitration

Mediation and arbitration can help partners resolve disputes without going to court. These processes are less formal, faster, and usually less expensive than litigation.

What You Should Ask Your Lawyer: Should mediation or arbitration be included in your partnership agreement? How do you choose the right mediator or arbitrator?

6. Divide Responsibilities

Another strategy is to divide responsibilities based on expertise. For example, one partner might take full control of financial decisions, while the other manages operations. This reduces the need for joint decision-making and can help prevent deadlocks.

What You Should Ask Your Lawyer: How should responsibilities be divided to avoid overlap? Can these divisions be clearly outlined in a legally binding agreement?

7. Escalation Process

An escalation clause in your partnership agreement outlines a formal process to follow if partners cannot agree on a decision. This may include:

• Internal Discussions: A rule requiring both parties to attempt to resolve disputes through formal discussions.

• Mediation: If discussions fail, involve a mediator to help resolve the issue.

• Sale or Buyout: If no agreement is reached, the escalation clause may trigger a sale, buyout, or other formal resolution process.

What You Should Ask Your Lawyer: How should the escalation process be structured? Should there be a time limit on each stage to avoid long delays?

Conclusion

Deadlocks in business partnerships can cause significant disruptions, but the right planning and legal mechanisms can prevent or resolve them effectively. Whether it’s building a clear dispute resolution process, introducing a buy-sell agreement, or using a trusted advisory board, taking proactive steps ensures your business won’t be derailed by disagreements.

Ready to protect your partnership from deadlocks? Contact our legal team today to discuss the best strategies for your specific business situation.

What Does It Mean To Have a Lawyer on Retainer? How Can That Benefit Clients?

Mon, 02 Feb 2026 21:01:20 GMT

In the fast-paced world of business, legal issues can arise unexpectedly, and when they do, having access to a trusted lawyer can make all the difference. One of the best ways to ensure you have legal support when you need it is by keeping a lawyer on retainer. But what exactly does that mean, and how can it benefit your business?

Understanding Lawyer Retainers

A retainer is a payment arrangement between a lawyer and a client, where the client pays an upfront fee to secure the lawyer’s services for future legal needs. Essentially, the lawyer agrees to be ""on call"" for your business, ready to offer advice, draft documents, or handle legal issues as they arise. In return, the client guarantees a level of compensation for the lawyer’s availability and services.

There are different types of retainers, depending on the needs of the client and the structure of the lawyer's services, and they often tie into the broader payment structure the lawyer uses. Let's explore the most common payment structures in business law.

Payment Structures for Lawyers

• Hourly Billing: The traditional and most common billing structure is hourly billing, where the lawyer charges a set rate for each hour of work they perform on your behalf. When a client has a lawyer on retainer with an hourly billing arrangement, the retainer fee is essentially a prepayment. As the lawyer works on various matters, the time spent is deducted from the retainer amount. Once the retainer is depleted, the client typically replenishes it or pays additional fees for continued services.Example: You retain a lawyer for $5,000, and the lawyer charges $500 per hour. As they work on your cases, their time is deducted from the $5,000 until it’s exhausted, at which point you can add more to the retainer.

• Flat Fee: In a flat fee arrangement, a lawyer charges a set amount for a specific service or a bundle of services, regardless of how much time it takes. In this structure, a retainer might be used to pay for the flat fee in advance, ensuring the lawyer is available when needed to complete the defined service without unexpected additional costs.Example: Your lawyer might charge a flat fee of $2,000 to draft your business contracts or handle a trademark filing. This fee is agreed upon upfront and remains fixed, no matter how much time is required to complete the task.

• Subscription Model: Some law firms offer subscription services, which provide ongoing legal support for a monthly or annual fee. This model works well for businesses that need regular legal guidance without the unpredictability of hourly billing. With a subscription, you pay a set amount for access to legal advice, document reviews, or even certain court filings. A retainer in this case may act as the initial payment to establish the subscription.Example: For $500 a month, your lawyer agrees to provide a certain number of hours of legal advice, document drafting, or consultations as needed.

Benefits of Retaining a Lawyer Before Problems Arise

One of the greatest advantages of retaining a lawyer is having proactive legal counsel. By engaging a lawyer before you’re faced with a legal issue, you gain:

• Ongoing Legal Guidance With a lawyer on retainer, you don’t have to wait for an emergency to get advice. Your lawyer can help you navigate everyday legal questions, review contracts, advise on compliance matters, and help you avoid risks that could lead to litigation.

• Faster Response Time When you retain a lawyer, you’re essentially at the front of the line for legal assistance. Since the lawyer is already familiar with your business, they can address issues quickly and efficiently.

• Cost Savings Addressing legal problems early often reduces the overall cost. Without a retainer, you may find yourself scrambling to find legal help when an issue arises—often leading to more expensive, reactive solutions. Having a lawyer already on retainer helps control costs and avoid last-minute fees.

• Peace of Mind Retaining a lawyer gives you confidence that your legal matters are in good hands. Knowing that you have a trusted advisor who understands your business and can step in at a moment's notice allows you to focus on growth rather than worry about potential legal pitfalls.

Conclusion

Having a lawyer on retainer ensures that your business has continuous access to legal expertise. Whether you’re paying hourly, opting for a flat fee, or subscribing to ongoing services, a retainer establishes a relationship where your lawyer is ready to help whenever you need them. Investing in legal guidance before problems arise not only saves time and money but also helps your business thrive in a complex legal landscape.

Federal Judge Strikes Down FTC's Non-Compete Ban, Which Was Set To Go Into Effect September 4

Mon, 26 Jan 2026 21:04:21 GMT

On August 20, 2024, a Federal Court in Texas struck down the FTC's nationwide ban on non-compete agreements that was set to take effect on September 4. The Court's ruling applies to all employers across the country. While it is possible that the FTC may appeal the ruling, it faces significant challenges in doing so, leaving the future of the ban in question.

What Should Employers Do Now?

• Employers who have existing non-compete agreements no longer need to scramble to amend their contracts or notify employees of the change.

• However, New York was already considering a state-wide ban of non-compete agreements and may revisit the issue now that the federal ban has been struck down.

• Employers should therefore be very careful when using non-compete agreements to make sure they are very narrowly tailored to follow existing New York requirements.

• Alternative strategies, such as non-solicitation, confidentiality and ""work for hire"" clauses can still help employers protect their interests without the need to worry about a new ban to non-compete clauses.

Please feel free to contact me with any questions you have.

What steps can you take to make sure your business is prepared for non-compete agreements being banned?

Mon, 26 Jan 2026 21:01:43 GMT

Non-compete agreements will be banned nationwide starting September 4, 2024 unless there is a successful legal challenge to the recent FTC rule before then. There are steps employers must take before the rule goes into effect, and several recommended options they may wish to consider.

The rule will ban almost all non-compete agreements across the country, including causing existing non-compete clauses to be void, with exceptions only made for certain company executives who reach set salary thresholds. This creates two key issues that will impact almost all employers:

• Employers who have existing non-compete agreements will need to analyze if those agreements will be impacted by the rule and, if so, provide notice to these employees that the non-compete will no longer be valid; and

• Employers will need to evaluate alternative options to protect their business interests.

Steps You Can Take Now

• Evaluation: Evaluate any existing non-compete agreements you have to determine if they will be affected by the rule on September 4, 2024.

• Notice: For any agreement that will be affected, prepare written notice to the employees informing them that the non-compete agreement will no longer be effective on September 4, 2024.

• Commence Legal Action: If you are aware of any employees who violated an existing non-compete, you should consider bringing a legal action before the new rule goes into effect.

• Negotiate: Negotiate with any employees who would qualify as ""executives"" exempt from the FTC rule to add or update non-compete agreements before the rule goes into effect.

• Alternatives: Discuss alternative ways to protect your legal interests. Some options may include:

• Non-Solicitation: This prevents employees from targeting your other employees or your clients if they leave.

• Confidentiality: This limits the employee's ability to use confidential information of the business.

• ""Work for Hire"" Language: You can make sure that any work product created by your employees as part of their job belong to your company and not to the employee.

It is important to understand your options and obligations before the FTC Rule begins. This is a complex area of law so feel free to contact us with any questions or concerns you may have. An experienced business attorney can help give you peace of mind.

Understanding Americans with Disabilities Act (ADA) Website Lawsuits

Mon, 26 Jan 2026 21:00:47 GMT

In recent years, the rise of ADA (Americans with Disabilities Act) troll lawsuits has become a significant concern for businesses. These lawsuits are often used by opportunistic individuals or entities to exploit the ADA for financial gain, threatening lawsuits against businesses for alleged non-compliance with accessibility standards. As a business lawyer, I aim to shed light on this issue, provide guidance on how to protect your business, and explain how legal assistance can help if you find yourself facing an ADA lawsuit or threat.

What Are ADA Troll Lawsuits?

ADA troll websites are often started by individuals or organizations that systematically search for websites and physical locations that are not fully compliant with ADA accessibility standards. They then send demand letters or file lawsuits against businesses, seeking settlements or damages. While the ADA's goal is to ensure accessibility for people with disabilities, these trolls exploit the law for monetary gain rather than advocating for genuine accessibility improvements.

Protecting Your Business from ADA Trolls

• Proactive Compliance:

• Website Accessibility: Ensure your website meets the Web Content Accessibility Guidelines (WCAG) 2.1 standards. This includes making sure your site is navigable via keyboard, providing text alternatives for non-text content, and ensuring sufficient color contrast.

• Physical Location: Regularly audit your physical premises to comply with ADA standards, such as providing accessible parking, entrances, restrooms, and customer service areas.

• Regular Audits and Updates:

• Conduct regular accessibility audits for both your website and physical location. Use tools and consultants specialized in ADA compliance to identify and fix potential issues.

• Stay updated with the latest ADA guidelines and ensure your business adapts to any changes in the law.

• Employee Training:

• Train your employees on ADA requirements and the importance of accessibility. Empower them to assist customers with disabilities effectively.

• Documentation:

• Maintain thorough documentation of your compliance efforts. This includes audit reports, records of updates made to your website or premises, and training logs for your employees.

Legal Recourse: How a Lawyer Can Help

If your business is sued or threatened with a lawsuit by an ADA troll, seeking legal assistance is crucial. Here's how a lawyer can help:

• Evaluate the Claim:

• An experienced business lawyer can assess the validity of the claim against your business. They will determine whether the alleged violations have merit and if the lawsuit is being used as an exploitative tactic.

• Responding to Demand Letters:

• If you receive a demand letter, a lawyer can help draft a response that addresses the allegations while protecting your business interests. They can negotiate on your behalf to reach a resolution that avoids costly litigation.

• Defending Against Lawsuits:

• Should a lawsuit be filed, your lawyer will develop a robust defense strategy. This may involve challenging the plaintiff’s standing to sue, proving your compliance with ADA standards, or highlighting any frivolous or malicious intent behind the lawsuit.

• Settlement Negotiations:

• In cases where settling is the best option, your lawyer can negotiate a fair settlement that minimizes financial impact and includes terms to prevent future litigation from the same plaintiff.

• Preventive Legal Advice:

• Beyond immediate defense, a business lawyer can provide ongoing legal advice to help you maintain ADA compliance and reduce the risk of future lawsuits. This includes advising on best practices, conducting regular compliance reviews, and keeping your business informed about legal developments.

Conclusion

ADA troll websites pose a unique threat to businesses, exploiting well-intentioned laws for profit. By proactively ensuring compliance, conducting regular audits, training employees, and maintaining thorough documentation, you can protect your business from such threats. However, if you do find yourself facing a lawsuit or demand letter from an ADA troll, seeking legal assistance is crucial. A knowledgeable business lawyer can help you navigate the complexities of ADA compliance, defend against exploitative claims, and secure the best possible outcome for your business.

Simple Legal Solutions for Common Business Headaches - Free Webinar

Mon, 26 Jan 2026 20:57:01 GMT

Running a business is full of challenges, but you don’t have to face them alone!Join me on Tuesday, August 6h at 12:00 PM EST for an exclusive, FREE webinar designed to address the most common legal headaches business owners encounter.This is your chance to gain valuable insights and practical solutions that can save your business time, money, and stress.What You’ll Learn:✅ Dealing with Non-Paying Clients: Strategies to ensure you get paid for your hard work.✅Navigating Partner Disputes: Effective ways to manage and resolve conflicts with business partners.✅Vendor Agreement Issues: Steps to take when a vendor fails to deliver on their promises.✅Preparing for Business Growth: Legal considerations for major changes like hiring your first employee or adding a new partner.Why You Should Attend:�� Experienced Guidance: Learn from a seasoned legal professional with years of experience in business law.��Interactive Q&A: Get your specific questions answered in real-time, time permitting.��Actionable Advice: Walk away with concrete steps you can implement immediately to protect and grow your business.��Connect with Peers: Hear questions from other business owners facing similar challenges and share experiences.Who Should Attend:- Small business owners- Entrepreneurs- Startup founders- Anyone involved in running or managing a business- Those considering starting a business- Professionals who work with business owners- Reserve Your Spot Today!Don’t miss this opportunity to arm yourself with the knowledge you need to overcome legal challenges and drive your business forward. Spaces are limited, so be sure to secure your spot now by clicking the link below to register!

https://us06web.zoom.us/webinar/register/WN_fdnz48wgQWWxXMnKKOewUw#/registration

Navigating the Path to Buying a Business: Essential Steps and the Power of Due Diligence

Mon, 26 Jan 2026 20:55:38 GMT

Are you considering buying a business? Congratulations on taking this exciting step ! However, buying a business requires careful planning, strategic decision-making, and thorough investigation. In this post, we will guide you through the essential steps involved in the business acquisition process, with a particular focus on the critical role of due diligence.

Step 1: Perform Preliminary Assessment

The preliminary assessment involves evaluating the initial information available about the target business. Review financial statements, market data, customer reviews, and any other relevant documentation. This step will help you narrow down your list and identify the most promising candidates for further consideration.

Step 2: Conduct Comprehensive Due Diligence

Due diligence is the cornerstone of any successful business acquisition. It involves a systematic and thorough investigation of the target business's financial, legal, operational, and commercial aspects. This process helps identify potential risks, opportunities, and hidden liabilities. Key areas to focus on during due diligence include:

a) Financial Analysis: Review financial statements, tax records, and cash flow projections to assess the target business's financial health and profitability.

b) Legal Compliance: Scrutinize contracts, licenses, permits, and any pending litigation to identify legal risks and ensure compliance with laws and regulations.

c) Operational Assessment: Evaluate the target business's operations, including supply chains, inventory management, technology systems, and key personnel, to understand its efficiency and scalability.

d) Customer and Market Analysis: Analyze customer demographics, market trends, competitive landscape, and growth potential to determine the target business's market position and future prospects.

e) Intellectual Property and Assets: Assess the target business's intellectual property rights, patents, trademarks, copyrights, and tangible assets to ensure their protection and value.

Step 3: Structure the Deal and Negotiate Terms

Once you have completed due diligence and gained a comprehensive understanding of the target business, it's time to structure the deal and negotiate the terms of the purchase. It is important to seek professional advice from a business lawyer to ensure that the transaction is structured in a way that maximizes your interests and minimizes risks.

Step 4: Close on the Purchase

After finalizing the deal terms, it's time to close. This involves drafting and signing the necessary legal documents, transferring ownership, and fulfilling any outstanding conditions. Thoroughly review the legal agreements with your lawyer to protect your rights and ensure a smooth transition.

Conclusion:

Navigating the process of buying a business can be complex, but by following these essential steps and placing due diligence at the forefront, you can make informed decisions and increase your chances of a successful purchase. Remember, seeking guidance from a knowledgeable business lawyer throughout the process is invaluable in safeguarding your interests. Embrace this exciting journey with confidence as you embark on the next chapter of your entrepreneurial adventure.

Please note that this post is a general guide and not intended as legal advice. For specific legal matters related to your business acquisition, it is advisable to consult with a qualified business lawyer.

Employers Need to Know About Recent Changes to New York Employment Laws

Mon, 26 Jan 2026 20:51:16 GMT

New York recently enacted a number of new laws that affect employers operating in New York. Employers should be aware of new obligations they now face. Below is a brief summary of some of the new requirements:

Minimum Wage: Rates increased to $16/hour in NYC, Westchester, Nassau and Suffolk and $15/hour elsewhere, with annual 50 cent increases thereafter through 2027.

Overtime Exemptions: Minimum salary thresholds for administrative and executive exemptions were raised on January 1, 2024 and will continue to increase annually through 2026, following Department of Labor guidance.

Freelance Protections: As of May 20, 2024, freelancers contracting for over $800 within 120 days are ensured written contracts, payment terms, retaliation protections and a private right of action for noncompliance.

Human Rights Act: The statute of limitations for unlawful discriminatory claims was extended from 1 to 3 years effective February 15, 2024, aligning with NYC standards.

Social Media Privacy: As of March 12, 2024, employers cannot demand access to personal online accounts of employees or prospective employees.

Pay Transparency: Regulations on posting minimum and maximum pay ranges for most job opportunities took effect September 17, 2023. Businesses with four or more employees must list compensation ranges for job postings, promotions or transfers.

Non-Compete Ban: Earlier this year, the FTC announced a rule that would ban non-compete agreements nationwide. The rule has not yet gone into effect and it may still be challenged, but employers should be aware of the possible implications.

Employers should review policies and monitor developments closely to ensure ongoing compliance. With new bills anticipated, the legal landscape in New York continues to rapidly evolve.

FTC Announces Rule Banning Non-Compete Agreements Nationwide

Mon, 26 Jan 2026 20:40:43 GMT

On April 23, 2024, the FTC announced a rule that would ban non-compete agreements nationwide. The rule, which is scheduled to go into effect 120 days after being published in the Federal Register, would also make existing non-competes unenforceable. There is an exception for senior executives with existing non-competes, which may remain enforceable.

The FTC largely views this rule as a big win for employees and expects it to result in a large increase in patents filed, business formation and employee earnings.

Employers who relied on non-compete agreements may need to consider alternatives, such as non-disclosure agreements (NDAs). The FTC also encourages employers to compete on the merits by improving wages and working conditions.

New York recently considered legislation to ban non-compete agreements within the State. The bill was ultimately vetoed to reconsider income limits associated with the ban. However, it was likely that the State would impose some sort of ban on non-competes in the near future.

There is a possibility that the FTC rule will face legal challenges that may delay or stop it from coming into effect. However, employees and employers should plan for the possibility that non-compete agreements, including those already in effect, may be unenforceable later this year.

All Business Owners Need to Know About the Beneficial Ownership Information (BOI) Filing Requirements

Fri, 23 Jan 2026 22:59:28 GMT

• As of January 1, 2024, many business owners in the United States are required to fill a Beneficial Ownership Information report (BOI) with the Financial Crimes Enforcement Network (FinCEN).

• Failing to do so can result in fines or even criminal charges.

What is a BOI Report?

• The BOI report provides information to FinCEN about the company, such as its name, any d/b/a names, its address and taxpayer ID.

• It also requires that every owner who controls at least 25% of the company provide information about the owner, such as name, birthdate, address, and a form of identification.

Does my business need to file a BOI?

• Generally, if your business is a corporation or limited liability company (LLC), you will need to file a BOI unless an exemption applies.

• Other entity types may still need to file depending on if they were required to file with the Secretary of State or similar office in order to form.

• Many of the exemptions have to do with whether the company is otherwise already required to disclose beneficial ownership information to the government for other reasons.

When do I need to file a BOI Report?

• If your business existed before January 1, 2024, you have until January 1, 2025 to file the report.

• If your business was formed after January 1, 2024, you have 90 days to file after receiving notice the business was formed.

• If any of the information changes or you realize it was inaccurate, you must file an update with FinCEN within 30 days.

Do I need to hire a lawyer to file a BOI Report?

• You don't need to hire a lawyer and can file the report directly with FinCEN.

• However, a lawyer can help you determine if you business may be exempt from the requirement. A lawyer can also file the report on behalf of your business and remind you to update the information in the event anything has changed.

Choosing a Business Structure: Key Factors to Consider

Fri, 23 Jan 2026 22:37:09 GMT

One of the first major decisions all new business owners face is determining what type of legal structure to form. The common choices are sole proprietorship, partnership, limited liability company (LLC )or corporation. While it may seem like a confusing technicality, the business structure you choose has important implications and can impact your business for years to come.

As you start weighing your options, here are some key factors we recommend considering:

• Liability Protection - Does the structure protect your personal assets from business debts and lawsuits? A sole proprietorship provides no legal separation between you and your business. This means your personal assets could be at risk if the business faces lawsuits or debts. An LLC or corporation establishes liability protection so that your personal finances and home are sheltered from business liabilities.

• Tax Treatment - How do you plan to pay yourself? The structure you choose for your business will have different tax consequences and options available for paying yourself as an owner. LLCs also offer flexibility as owners can elect to be taxed as an s-corporation.

• Formation Requirements - Do you know the cost to start each type of business? Sole proprietorships have very limited formation requirements. But to operate an LLC or corporation you must file articles of organization or incorporation with the State. LLCs have publication requirements that can be costly. Corporations are required to hold an initial board meeting after forming.

• Ownership Structure - Are there multiple owners now or plans for investors? Partnerships and LLCs accommodate multiple members, while S-corporations are generally limited to 100 shareholders. S-corporations also require owners to be U.S. Citizens and the business to be U.S. based.

•

• Management Structure - Who will be in charge of important decisions for your business? Corporations have more formal management structures with a Board of Directors who make high-level decisions along with Officers, such as a President or Secretary. LLCs don't have a Board of Directors but may have Managers and Officers.

• Capital Raising Ability - Do you anticipate seeking investments in your business? If you intend to attract outside investors, a corporation tends to be viewed more favorably than other structures by potential funding sources.

• Compliance Burdens - Are you prepared to oversee corporate requirements? While corporation must follow more stringent guidelines, such as tracking stock ownership and conducting annual shareholder meetings, LLC compliance is moderate and simpler than maintaining corporate status.

These are some of the considerations when deciding which structure best fits the needs of your new business. It is a good idea to consult with an attorney before forming your business to make sure you choose the right structure. Changing the business structure after it is formed can be costly and may result in tax consequences.

Starting a Business? Key Factors to Consider When Choosing a Business Structure

Fri, 23 Jan 2026 22:34:28 GMT

As you start weighing your options, here are some key factors we recommend considering:

How Clients Can Benefit from Outside General Counsel

Fri, 23 Jan 2026 22:18:46 GMT

The failings of the Catholic Church and other similar institutions offer lessons not just for religious organizations, but any organization faced with issues that could result in potential scandal.

This article can be viewed on Corporate Counsel.

How to Keep Your Nonprofit in Good Standing with New York State

Mon, 19 Jan 2026 15:38:02 GMT

How to Keep Your Nonprofit in Good Standing with New York State

Maintaining legal good standing for a nonprofit organization in New York State requires adherence to specific regulatory requirements. This article outlines the essential compliance steps that every nonprofit must follow to remain legally active, transparent, and able to solicit contributions, hold assets, and pursue its charitable mission.

1. Register With the New York State Attorney General’s Charities Bureau

Most New York nonprofits that engage in charitable activities, hold property for charitable purposes, or solicit contributions must register with the New York State Attorney General’s Charities Bureau. Registration is generally required at the outset of operations unless the organization qualifies for a statutory exemption.

New York State Attorney General

Begin with Form CHAR410 for initial registration. The registration must accurately reflect the nonprofit’s mission, board members, and fundraising plans to avoid delays or rejections.

2. File Annual Financial Reports (CHAR500)

After registration, a nonprofit must file an annual financial report (Form CHAR500) with the Charities Bureau. This report provides detailed information about the organization’s finances, programs, and governance for the previous fiscal year.

Annual financial reporting is required for most registered charities, and the filing must be completed by the deadline specified by the Charities Bureau. Failure to file can jeopardize the organization’s good standing and ability to solicit funds legally in the state.

3. Submit Financial Reports to the New York Department of State

In addition to filing with the Attorney General, certain nonprofits must file financial disclosure reports with the New York Department of State under Executive Law Article 7-A. These reports include:

Annual Financial Reports for registered charities whose annual reports were filed with the Charities Bureau, due to the Department of State no later than the 15th day of the fifth month after the nonprofit’s fiscal year ends.
Funding Disclosure Reports for nonprofits that make significant in-kind donations to others.
Financial Disclosure Reports for nonprofits that make certain public communications above specified spending thresholds.
These additional filings help ensure transparency in financial support and public communications.

4. Comply With IRS Form 990 Filing Requirements

Although this is a federal requirement, timely filing of the IRS Form 990, 990-EZ, or 990-N is critical for maintaining both federal tax-exempt status and state good standing. New York State regulators review these IRS filings as part of annual disclosure obligations.

Failing to file IRS Form 990 consistently can lead to automatic revocation of federal tax exemption, which in turn affects state compliance.

5. Maintain Proper Corporate Governance

Under New York law, nonprofit corporations must adopt and follow sound governance practices. This includes:

Maintaining accurate and complete minutes of board meetings.
Ensuring the board of directors fulfills fiduciary duties regarding oversight, reporting, and compliance.
Keeping corporate records accessible at the organization’s principal office.

Willful failure to file required reports or maintain governance standards may constitute a breach of duty by the board under state law.

6. Maintain a Registered Agent and Address Records

Nonprofits incorporated in New York must designate and maintain a registered agent whose address is filed with the Department of State. If the registered agent or office address changes, the nonprofit must file the appropriate Certificate of Change to update this information. Failure to do so can impede service of process and lead to noncompliance warnings.

7. Monitor Tax Exemptions and Permit Requirements

Exemptions from state and local taxes, including sales tax and employment tax reporting, require separate applications such as Form ST-119.2 for sales and use tax exemption. New York nonprofits should confirm and renew any applicable tax exemptions annually to prevent unintentional lapse of benefits.

8. Establish a Compliance Calendar

To avoid missing deadlines, nonprofits should maintain a compliance calendar that tracks:

Charities Bureau annual report due dates
Department of State financial filings
IRS Form 990 filing deadlines
Registered agent updates and corporate record updates

Tracking all deadlines systematically reduces the risk of noncompliance and preserves good standing.

9. Seek Professional Guidance

Nonprofit compliance obligations can vary based on revenue, activities, and fundraising practices. Engaging legal counsel or a compliance specialist helps ensure that all state and federal requirements are understood and met in a timely manner.

Conclusion

Maintaining good standing with New York State requires meticulous attention to registration, reporting, governance, and financial transparency. Nonprofits that fulfil their annual filing obligations with the Attorney General, submit required reports to the Department of State, maintain sound governance, and meet all federal and state tax requirements position themselves to operate without interruption and fulfill their charitable objectives.

Legal Red Flags Your Business Should Spot in 2026

Mon, 05 Jan 2026 16:18:22 GMT

Legal Red Flags Your Business Should Spot in 2026

As businesses enter 2026, the regulatory landscape is evolving rapidly. Businesses and established companies alike must remain vigilant to avoid legal pitfalls that can threaten operations, finances, and reputations. Identifying legal red flags early allows businesses to address risks proactively and maintain compliance with federal, state, and local laws. Below are the key legal warning signs businesses should monitor this year.

1. Inaccurate or Incomplete Formation Documents

Errors in entity formation documents, such as Articles of Organization for LLCs or Certificates of Incorporation for corporations, can create serious issues. Incomplete filings, misspelled names, or inaccurate statutory designations can result in rejection by the Department of State or future challenges to the entity’s legal existence. Businesses should review filings carefully and correct discrepancies immediately to maintain valid legal standing.

2. Noncompliance with Licensing and Permit Requirements

Operating without the necessary federal, state, or local licenses can trigger fines, cease-and-desist orders, or criminal liability. Industries such as finance, healthcare, food services, and construction are particularly regulated. Businesses should regularly audit licensing requirements to ensure they remain valid and complete.

3. Intellectual Property Risks

Failing to protect trademarks, patents, or copyrights exposes a business to infringement claims and brand dilution. Unauthorized use of third-party intellectual property can result in litigation. Conducting thorough trademark searches, registering marks promptly, and maintaining records of IP ownership are essential preventive measures.

4. Inadequate Contractual Protections

Contracts are the backbone of business relationships. Ambiguous, incomplete, or poorly drafted agreements can result in disputes, financial losses, and legal liability. Key contracts should clearly define terms, obligations, remedies, and dispute resolution procedures. Businesses should review and update agreements regularly to reflect changes in operations or law.

5. Data Privacy and Cybersecurity Gaps

With the rise of digital commerce and data-intensive operations, regulatory scrutiny over data privacy is intensifying. Failure to comply with federal and state privacy laws, including the New York SHIELD Act and the California Consumer Privacy Act, can result in significant penalties. Businesses should implement robust data protection measures, maintain clear privacy policies, and conduct regular security audits.

6. Employment and Labor Compliance Issues

Employment law remains a critical area for businesses in 2026. Misclassification of employees, failure to comply with wage and hour laws, or inadequate workplace policies can trigger audits, lawsuits, and fines. Businesses should ensure compliance with federal and state employment regulations, maintain accurate records, and provide employee training as needed.

7. Tax and Financial Reporting Red Flags

Late filings, inaccurate reporting, or failure to pay taxes can expose a business to penalties, interest, and enforcement actions. Regular review of accounting procedures, tax filings, and internal controls is necessary to ensure compliance with IRS regulations and state tax codes.

8. Noncompliance With Environmental Regulations

Businesses operating in industries that affect air, water, or land quality must adhere to federal and state environmental laws, including the Clean Air Act, Clean Water Act, and applicable New York State regulations. Failure to comply can lead to costly fines, remediation orders, and reputational damage. Environmental compliance audits and proactive reporting are essential preventive measures.

9. Failure to Maintain Corporate Formalities

For corporations and LLCs, failing to observe governance requirements, such as holding annual meetings, maintaining accurate records, or properly documenting resolutions, can expose owners to personal liability and weaken the legal protections of limited liability. Maintaining proper corporate formalities under New York Business Corporation Law § 623 and Limited Liability Company Law § 417 is critical.

10. Regulatory Changes and Industry-Specific Updates

Rapidly changing laws in areas such as fintech, healthcare, cannabis, and artificial intelligence create ongoing compliance risks. Businesses must monitor federal, state, and local updates that affect their operations. Proactive legal review and consultation can prevent inadvertent violations and ensure timely adaptation to new requirements.

Conclusion

Legal compliance is a continuous obligation, not a one-time task. Businesses that proactively monitor these red flags position themselves to mitigate risk, avoid costly disputes, and operate with confidence in 2026. Partnering with legal counsel to conduct regular audits, review contracts, and update internal policies is a strategic approach to maintaining business integrity and long-term success.

By Ameera Khurshid