KYC (Know Your Customer) Isn’t Just for Banks

“KYC” (Know Your Customer) refers to how banks verify the identities of prospective customers. In this post I will show why KYC can be equally important for other types of businesses.
One of my European clients (“Client”) provides in-demand horticultural products. In 2013, we formed a Delaware corporation by which Client does business in North America.
(more…)Blame Your Lawyer – An Underappreciated Legal Service
In this post I will explain why, sometimes, it can be helpful to blame your lawyer for something that really is not the lawyer’s fault.
In my experience, this situation typically arises when a client is negotiating business terms with a counterparty. (more…)
Software Escrow No Longer Required
Software escrow requirements once were common in my law practice. In this post, I will explain why that no longer is the case.
I have seen such arrangements principally with respect to software that a developer hosts (software as a service – SaaS). In a software escrow, the developer delivers a copy of the software’s source code to an escrow company. The developer provides updated versions of the source code from time to time.
If the developer goes out of business, the escrow company delivers the source code to the developer’s licensee (customer). The licensee then has the right to use and modify the source code for its own internal purposes. (more…)
What Does “Amended and Restated” Mean?
“Amended and restated” is a term that lawyers use a lot. (A Google search produces approximately 792,000 results.) This post discusses that term’s meaning and why lawyers use it. This is part of Dana Shultz’s Canonical Questions on the Law™ series of questions and answers about legal issues, concepts and terminology.
“Amended and restated” can apply to virtually any type of legal document. Examples:
- Certificate/articles of incorporation;
- Corporate bylaws;
- Limited liability company operating agreement;
- Any other type of agreement;
- etc.
” Legal Tender ” Does *Not* Mean that You Must Accept Cash
This post about legal tender is a bit off-topic for this blog. However, I am writing it because it clears up a common misunderstanding, about which I recently wrote on Quora. Please see On every US dollar bill the message “This note is legal tender for all debts public and private” is printed. How is it then legal for some businesses to not accept cash?
The U.S. Department of the Treasury discusses whether the “ legal tender ” language on U.S. currency requires that cash payments be accepted. Quoting a portion of Legal Tender Status (link and emphasis added): (more…)
Canonical Questions on the Law® Series Explained
This post explains what the Canonical Questions on the Law® series is. Equally important, this post explains why I created that series of questions and answers about legal issues, concepts and terminology.
I have been active on Quora, a question-and-answer site, since 2010. In a significant change, Quora recently limited questions to 250 characters. Users no longer are able to include lengthy paragraphs containing question details. (more…)
DBA – Notice, but No Protection
This post discusses the purpose of a DBA (which is an abbreviation for “doing business as”). This expands upon a Quora answer that I wrote recently. Please see Can someone use my DBA if I operate as a sole proprietor?
Terminology
To start, I will note that business people frequently use the term “DBA”. It is short and easy to say, and people readily understand it. (more…)
Document Discriminator Appears on Driver’s Licenses
This post about the so-called Document Discriminator on driver’s licenses is somewhat off-topic for this blog. However, I find this tidbit of information so interesting that I feel compelled to write about it.
I first presented this information in a Quora answer that I wrote last month. Please see What does the DD on a Michigan driver’s license mean?
DD = Document Discriminator
DD is an abbreviation for Document Discriminator. A number of states started adding this piece of information to their driver’s licenses several years ago. (more…)
Monthly Missives Compilation Now Available
From late 2004 to early 2016, I published a not-quite-monthly email newsletter on various business-related legal topics – what I called my “monthly missives“.
I recently compiled the nearly 100 emails and have made the collection available on the Downloads page.
Apple-FBI “Backdoor” Blog on Quora
I am fascinated by the Apple-FBI dispute concerning opening a “backdoor” to an iPhone used by one of the San Bernardino killers. As a result, I recently created the Apple-FBI “Backdoor” Blog on Quora.
The blog’s first two posts list:
- Significant court filings and orders for that case.
- Quora questions and answers that help explain the nature and details of the Apple-FBI dispute.
I intend to update those posts over time, and to add new posts when it is appropriate to do so.
Photo credit: Apple vs. the FBI: A Closer Look – Late Night with Seth Meyers
Dana H. Shultz, Attorney at Law +1 510-547-0545 dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.
Attorney-Client Confidentiality vs. Attorney-Client Privilege
“Attorney-client confidentiality” and “attorney-client privilege” are terms that non-lawyers frequently mistake for one another or misuse. This post explains the difference between those terms.
While this post cites California law, similar considerations are likely to apply in other states.
Attorney-Client Confidentiality
An attorney’s obligation to maintain client information in confidence is set forth in Business and Professions Code Section 6068(e) . (more…)
Why do legal documents use Shall rather than Will?
This post, about why many legal documents use Shall rather than Will, is based on a Quora answer that I wrote. See Why was “should” substituted for “would” in the 1800s? For example, why did people say, “I should like to have some pie” rather than “I would like to have some pie”?
Future Tense – Shall vs. Will
Although few people other than linguists are aware of the following, proper use of shall or will in the future tense depends on whether the subject is the first, second or third person. For example: (more…)
Why I Like Being a Lawyer
This post (which, I admit, is a bit off-topic for this blog) is based on a Quora question that I answered.
Q. Attorneys: Why do you love being a lawyer? (Kindly exclude financial reasons.)
A. For me, “love” would be an overstatement. However, I consider myself quite fortunate in that:
- I get a great deal of satisfaction from helping my clients (for a startup, everything I do is significant).
- As a solo I am my own boss, so I get to do what I want when I want.
- My training to “spot the issue” is valuable in all aspects of my life, not just my work.
- The vast majority of my professional interactions are with people having greater-than-average intelligence, ambition, integrity and accomplishments.
- Because I need to have many clients (startups don’t have a lot of money for legal fees), I learn about many different types of businesses.
Dana H. Shultz, Attorney at Law +1 510-547-0545 dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.
Consumer Reports: Legal Websites May Lead to Unintended Results
The September 2012 issue of Consumer Reports magazine includes an article that examines legal websites LegalZoom, Nolo and Rocket Lawyer (Legal DIY websites are no match for a pro). The article’s conclusions and recommendations:
- “Using any of the three services is generally better than drafting the documents yourself without legal training or not having them at all. But unless your needs are simple…none of the will-writing products is likely to entirely meet your needs. And in some cases, the other documents aren?t specific enough or contain language that could lead to ‘an unintended result’….”
- “The sites offer basic legal advice that might help save you money spent on a lawyer. If you use them for document prep, at minimum get all needed signatures to preserve your rights and prevent disputes….”
- “But many consumers are better off consulting a lawyer. The websites let you search for one and provide such information as education, background, and licenses…. We recommend checking with your state bar association for any disciplinary actions.”
As concerns finding lawyers online, a resource not among the legal websites mentioned by Consumer Reports is Avvo, which has a comprehensive database of lawyers in all states, frequently including information about qualifications and practice areas.
Dana H. Shultz, Attorney at Law +1 510 547-0545 dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.
Re-incorporation Won’t Save Amazon Affiliate from Termination
This post is based on a question that I answered on LawPivot: Q. I have a web business that has been adversely affected by the termination of Amazon’s affiliate program in California, where I currently run the business, resulting from the state’s new sales tax law. Does each state have its own requirements as to what constitutes “doing business” in that state, and is there any way I could maintain CA as my primary place of residence, were I to incorporate in a different state?
When “Doing Business” isn’t “Doing Business”
Significant responsibilities or liabilities can depend on whether one is “doing business” in a state. As this post explains (principally referring to California law for examples), “doing business” can mean three different things in three different contexts.
Doing Business as a Foreign Entity
First, an out-of-state entity will need to register with a state as a “foreign” entity if it is doing business in the state. As explained in “Doing Business in CA? Be Sure to Register”, the term used in the California Corporations Code is to “transact intrastate business”, which is defined as “entering into repeated and successive transactions of its business in this state, other than interstate or foreign commerce” (emphasis added). (more…)
What is the Difference between a Lawyer and an Attorney?
From time to time – most recently on Quora – people ask what the difference is between a lawyer and an attorney. Here is what I was taught many years ago….
Although most people (including, it appears, most lawyers) treat the terms as synonyms, they can have different meanings:
- “Lawyer” denotes a profession (I am a lawyer).
- “Attorney” denotes the relationship of a lawyer to his or her client (as an attorney I represent my clients).
I recently pulled my decades-old Black’s Law Dictionary off the shelf. (Yes, sometimes there is information that is better researched in printed form rather than online.) It cites case authority stating the “lawyer” and “attorney” are synonymous.
However, the dictionary also provides the the following definition for “attorney”: “In the most general sense this term denotes an agent or substitute, or one who is appointed and authorized to act in the place or stead of another.” It then explains specific uses of the word – attorney at law, attorney in fact, etc. – and, thus, supports the distinction made above.
Dana H. Shultz, Attorney at Law +1 510-547-0545 dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.
What If I No Longer Need My DBA?
Let’s assume that you have been doing business under a fictitious business name (FBN – also known as a DBA for “doing business as”). You are about to shut the business down, so you would like to get rid of the DBA as part of you effort to minimize the likelihood of any ongoing obligations or liabilities. How can you do this?
In California, the answer is provided in the Business & Professions Code. Section 17920(c) says (emphasis added) “A fictitious business name statement expires when the registrant files a statement of abandonment of the fictitious business name described in the statement.” (more…)
Why Your Lawyer Need Not Sign an NDA
Once in a while, when I send an engagement letter, the prospective client wants to add confidentiality provisions to protect its trade secrets. The following is the explanation that I provide as to why such provisions – let alone a separate nondisclosure agreement (NDA) – are not required in an attorney’s engagement letter.
California Business and Professions Code Section 6068 specifies the fundamental obligations of an attorney. Subsection (e)(1) states that each attorney must “maintain inviolate the confidence, and at every peril to himself or herself to preserve the secrets, of his or her client.” (Emphasis added.) Attorneys in other states have similar obligations.
Legal Fees: Avoiding Sticker Shock
I just got off the phone with the founder of a website that caters to small businesses. He commented that small-business owners routinely suffer sticker shock when they receive invoices from their attorneys. I responded that lawyers can do three things to reduce the likelihood that the amounts of their fees will be a surprise. (more…)
When should I apply for a DBA?
This post continues the last post’s discussion of the fictitious business name (FBN – or, colloquially, the DBA for “doing business as”). I am writing this because of a client’s question as to when his company should apply for a DBA / fictitious business name.
California Business & Professions Code Section 17910(a) states that a Fictitious Business Name Statement must be filed within 40 days of the time when the registrant first used the FBN to conduct business in the state. (more…)
So how important is this legal stuff, anyway?
Two recently-acquired clients had similar situations that brought up the importance of complying with legal requirements.
Each company is a multi-founder startup where one founder became non-productive, and even somewhat detrimental to the business. The other founders wanted to move the problem founder off to the side, where he could cause no more trouble, in a manner that would be fair to everyone involved.
Unfortunately, each company had failed to comply with some of the most basic legal requirements: Holding annual shareholder meetings to elect directors, annual board of director meetings to appoint officers, etc. As a result, in each instance we had to spend time and money taking corporate actions, and recording those actions appropriately in meeting minutes, before the real problem could be solved.
How High an Interest Rate Can I Charge?
I recently had a conversation with an attorney in Louisiana, who mentioned that in that state, the annual interest rate on a promissory note was limited to 12%. I told him that in California story is much different.
Article 15 (Usury) of the California Constitution states (simplifying a bit) that the annual interest rate on a loan or forbearance (refraining from requiring payment for a period of time) is limited as follows:
- If arising from money or goods supplied for personal, family or household purposes, the maximum interest rate is 10%.
- If arising from money or goods supplied other than for personal, family or household purposes, the maximum interest rate is the greater of (a) 10% or (b) 5% plus the rate charged by the Federal Reserve Bank of San Francisco on advances to its member banks.
- If the agreement between the parties does not specify an interest rate, it will be 7%.
Should I Deposit a Check Marked “Payment in Full”?
A customer owes you money but is disputing the amount that should be paid. To your surprise, you receive a check for half of the amount in question. On the back, the customer has written “Payment in Full”. If you deposit the check, will you give up the right to ask for the other half of the disputed amount?
The answer depends on which state’s law governs the transaction. I will provide an answer based on California law.
Do I really need a lawyer to review this contract?
I have wanted to write this post for several months, but until now I have held off because of concern that it would come across as a lawyer saying “buy my services”. Today, though, a conversation with a client drove home how important this topic is.
On several occasions, clients have asked me to dig them out of trouble that occurred because they had entered into agreements without the advice of legal counsel. Some examples:
The Top Ten Legal Mistakes of Startup and Early-stage Companies
I am pleased to make the article “The Top Ten Legal Mistakes of Startup and Early-stage Companies” available as a Free Download on the Downloads page.
Here are the ten mistakes that are discussed:
- Failing to comply with corporate formalities
- Pretending that employees are independent contractors
- Neglecting to provide and update an employee handbook
- Failing to establish or adhere to discipline or termination procedures
- Failing to ensure that the company owns its intellectual property
- Believing that “open source” means “no restrictions”
- Thinking that all NDAs have the same terms
- Believing that websites can unilaterally change their terms of use
- Using another company’s standard-form agreement
- Giving “family jewels” to an overseas supplier
Related post: Top Ten Intellectual Property Mistakes of Startup Entrepreneurs
Dana H. Shultz, Attorney at Law +1 510 547-0545 dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.
A Law Blog for Startup and Early-stage Companies
After a number of in-house legal positions, I started my own solo law practice in 2004. Most of my clients are startup or early-stage companies, typically technology-related.
For most of the time since then, I have published a well-received monthly e-mail on various legal topics for clients, colleagues and friends.
Now, having received encouragement from a number of people, I am starting my first blog. The tag line for my practice is “High-touch Legal Services for High-tech Companies”, so I have decided to call this the “High-touch Legal Services Blog”.
I hope you will find my posts both interesting and informative.