SECTION I: SITUATION

1. CAUTION.

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You’ve just formed your limited liability company (“LLC”) and you’re finally able to breathe a big sigh of relief. The paperwork is complete, and you can finally get started with your dream business, right?

If you’ve ever taken your kids to a jump-house or indoor trampoline park, chances are you’ve seen the waiver – it’s a release of liability against the business owner for any and all claims that could arise from your child using the facility. It’s also this release of liability that gives such places the license to exist, in many cases; it’s an acknowledgement that you, as a parent, understand the risks inherent in the activity, but if you do not sign the waiver, then your child cannot participate.

Mergers and acquisitions (M&A) can be tricky transactions, a delicate dance between buyer and seller that must be choreographed in minute detail. This requires contemplation of a multitude of issues at the outset, many of which must be addressed as early as the letter of intent stage. Below are some of the top issues that should be decided upon as early as possible in the M&A process, as doing so is paramount to a successful transaction.

One of the big “if only” moments in corporate litigation concerns testimony: if only a corporation as a corporation could face deposition. Despite the legal fiction that corporations have an identity, it remains impossible, absent some serious and frightening advances in future technology, for a corporation to testify on its own behalf. To get around this dilemma, the Federal Rules of Civil Procedure include Rule 30(b)(6) (“30(b)(6)”). This rule allows a party to name an entity such as a corporation, an association or a governmental agency as a deponent, and that entity will then designate a representative to be deposed on behalf of the company. (Kentucky’s Civil Rule of Procedure 30.02(6) substantially tracks the federal rule, so this information applies to both Kentucky and federal courts.) The rub is that 30(b)(6) deponents face a different set of standards for testimony than regular deponents, and that difference could create havoc for a client, up to and including sanctions.

Municipalities can be complicated and complex entities serving hundreds to thousands of individuals and businesses, while  employing numerous people themselves. Cities, not unlike any small or big business, face similar challenges (and liabilities) as  any private corporation, only with the added mandate of providing services and protection for all of those who work or live within their boundaries.  It is impossible, of course, to eliminate all liability facing municipalities in today’s public sector legal environment. Still, liability can be avoided to a large degree with planning and consideration. With that in mind, below are five ways municipalities invite exposure to liability, and more importantly, insight on how to prevent it.

Starting a small business can be difficult. It requires a tremendous amount of passion and dedication, as well as some assistance from professionals such as accountants, insurance agents and others. While you may not need an attorney in the same measure, consulting one at the outset of the business and periodically throughout can get you off to a good start and keep you from falling into common legal traps. Here are five reasons you should consult with an attorney that will greatly benefit your small business.

In an era where Congress and the Securities and Exchange Commission (“SEC”) have been working to break down barriers to investment and equity development, it only makes sense a new bill currently wending its way through the legislative process would expand the definition of an “accredited investor.” H.R. 2187, The Fair Investment Opportunities for Professional Experts Act (“the Act”), passed the United States House of Representatives by a vote of 347 to 8 in February and now resides in the Senate. This effort would widen the pool of investors for private placements under Section 501(a) of Regulation D[1] by including those with experience and education in addition to those with a requisite net worth or salary.

Arguably, one of the most important decisions that will affect the ultimate success of a business, whatever its size, is the decision of how to incorporate that business. There is a fairly wide range of choices to choose from, from sole proprietorships on up to regular C corporations. A business entity that has seen a meteoric rise in usage in the past few decades is the Limited Liability Company (“LLC”), and for good reason – LLCs come with a host of advantageous characteristics that combine some of the best traits of several options available to business entities. LLCs combine limited liability for members with the flexibility to choose how they’re taxed, such as flow-through taxation akin to partnerships (e.g., no taxation at the entity level, as with regular C corporations). With the rise in the popularity of LLCs, however, it’s helpful to know when there are advantages to choosing the venerable C corporation form over the upstart LLC.