Data Room Password Tips

I often find myself adrift in a sea of data room passwords.  Not only am I remembering each unique deal name but also each deal data room and corresponding unique password.

Here are some practical tips for data room passwords:

Keep Personal and Professional Separate

The natural tendency is to use the same password for everything. That is not a good idea. It’s also not a good idea to use the same password for data rooms and personal sites. You may have to give your password to your assistant to print documents and you may not want him/her to know your personal business.

Let Your Browser Be

Many data room sites do not allow for a browser to save passwords and remember identities for easy login. It may be painful to remember all those passwords, but it’s more painful to explain to clients failure to protect their corporate information.

Don’t Sweat It

The Forgot Password button is there for a reason. Just don’t forget the answers to the secret questions.

Defining Independent Contractor

The sharing economy has led to an increasing number of independent contractors. But what is an independent contractor? A recent decision by the California Supreme Court (Dynamex Operations West, Inc. v. Superior Court of Los Angeles, No. S222732 Cal. Sup. Ct. Apr. 30, 2018) has adopted a modified “ABC” test in a case involving this question.  The court was asked to determine what test should apply in determining what “employ” and “employer” means under the California Industrial Welfare Commission wage orders (note this important limitation). The court declined to apply the Borello test in favor of a more rigid 3 factor approach known as the “ABC” test.

Under the new stricter test, a person will only be considered an independent contractor if the hiring entity can prove all three of the following:

A.  that the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;

B. that the worker performs work that is outside the usual course of the hiring entity’s business; and

C. that the worker is customarily engaged in an independently established trade, occupation or business of the same nature as the work performed.

The court declined to apply the test to other wage and hour laws.  For corporate lawyers, Dynamex is a reminder that the definition of an independent contractor is ever changing.

Link

Representations and Warranties Insurance (RWI) is insurance designed to cover losses resulting from a breach of representations and warranties.  It is increasing in popularity in the M&A world and will certainly change how escrows and allocation of risk will work.  There is a lot to read out there on RWI, but one article I found helpful is here.

Secondment Lessons Learned

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Secondment Lessons Learned – Part One

Secondment is a great opportunity for learning. In particular, I am enjoying the opportunity to learn first hand what it is clients value and how law firms can improve their services and the overall client experience. Here are a few lessons I have learned so far.

1. Clear Conflicts

Secondment Lesson: Be sure to clear conflicts otherwise you may be at risk of being the subject of heated discussion in the break rooms. Trust me, no one wants that.

2.  Be Patient

Secondment Lesson: Corporations especially large corporations have many procedures and protocols that need to be followed and can take a lot of time. This can lead to delays that lawyers in big law firms often have trouble understanding. If you have a client who is radio silent on an engagement letter, be patient as it is highly likely that this is just the way the business operates and in house counsel or your point of contact may not be able to expedite the process.

3.  Lunch is at Noon

Secondment Lesson: At the firm, lunch breaks are taken whenever lawyers can squeeze in a break between billable hour, client requests and firm citizenship activities. I’ve learned that for a large company, the masses typically lunch at noon. That is when the cafeteria lines are long, the tables full and calls may go unanswered. If you are looking to connect with the business folks, you may want to consider blocking off 12-1pm as folks take the time to refuel. This may be the perfect time for lawyers to refuel as well.

 

More lessons to come!

What is a Ratchet (IPO Edition)?

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Square Reveals Ratchet Right

In corporate speak, a ratchet usually refers to a form of anti-dilution calculation, however, the term has expanded its meaning to apply to initial public offerings. Square, the mobile payment processing company, filed its S-1 with the Securities and Exchange Commission yesterday. In the prospectus, it was revealed that certain institutional investors would be guaranteed a return of at least 20% in the initial public offering (“IPO”), regardless of whether the IPO is valued lower than the last round of private financing.

What is a Ratchet

What is a ratchet in the IPO context? A ratchet in the IPO context is similar to a ratchet in the anti-dilution context and provides that investors will receive additional shares of the company’s stock if the IPO is priced at a low value.

A Lawyer’s Take

This application of the ratchet right is great for lawyers representing investors in a late stage investment where the company is targeting an IPO. Depending on the amount of leverage your client may have, the amount of investment and a host of other factors, this may be a negotiable ask. Square’s prospectus is also a great example that although a prospectus can be lengthy and difficult to sift through, sometimes they contain nuggets of great information that one can use to be a better equipped lawyer. Learn from good examples and expand your knowledge base.

Debt and M&A

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M&A Weekly Watch

Back in my day, students didn’t tote around macbooks or ipads. We had Dell laptops and for many, they were the go to computer maker of choice. Times have changed and we hear less about Dell, especially after it went private in 2013. That has changed since the announcement that Dell has proposed to acquire EMC for $67 billion, which numerous news sources have cited as the biggest tech deal ever.

Aside from making the headlines for the overall deal size, the Dell EMC proposed M&A is big news because it will be one of the largest leveraged deals in history, with Dell taking on an estimated $50B in debt to finance this M&A.

Debt and M&A – A Lawyer’s Take

As lawyers we may recuse ourselves from business decisions, like how a deal is going to be financed but questions like this are crucial to deal structure and effective negotiations. Knowing that debt will be used in an M&A may affect closing conditions, termination rights and timing of the deal. Due diligence is normally reserved for the target, but in a debt deal, the buyer may want to do its own due diligence to ensure it’s not prohibited from incurring such debt, for example, if there are agreements with covenants requiring a certain leveraged ratio.

Interest Rates and M&A

Many news articles have been reporting that Dell is motivated to undertake this M&A now before the rumored interest rate hikes occur. An October 12, 2015 report by Marketplace on the proposed Dell EMC M&A cited academics who don’t believe that interest rates drive M&A or that they even affect corporate decisions. Without more study on this topic, I can’t say for sure, but it’s likely that interest rates will continue to be heavily discussed in M&A.

 

What is Secondment?

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Secondment in the legal industry is when a lawyer is assigned to work directly for a client at a client’s office. Secondment can be either full time or part time depending on the client’s needs and the firm’s arrangement with the client. Typically a client will pay a fixed fee to have the seconded attorney on site, although again this can depend on the firm’s arrangement with the client and may be structured as a reduced rate in the attorney’s billable rate. A seconded attorney typically does the same work that the in-house lawyers do, be it project based (ex: the client is preparing for an IPO) or group specific (ex: the client needs extra help in the corporate group to meet the every day demands).

Secondment is a valuable opportunity for all parties. The firm is able to meet the needs of a client. The client is able to get a seasoned lawyer’s assistance for a period of time. The lawyer is able to develop new skills and build relationships. Everyone wins.

Legal life has taken a turn for me and I am currently on full time secondment. I will be writing about my experiences on secondment as well as posting on instagram fun photos of this great opportunity. Instagram: corptrends, #secondmentshorty. I’m excited about this new opportunity and will be sharing tips for law firm attorneys to provide better service with my new in-house knowledge, as well as general observations about in-house life.

What is Circular 7?

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One of the most important jobs of a corporate lawyer is to issue spot and if need be, recruit colleagues in a specialized practice area like intellectual property, employee benefits or tax to opine on a particular issue. Issue spotting is a skill (remember the bar exam?) and it can be particularly tricky when dealing with cross border transactions.

Defining Circular 7

I recently completed a transaction involving a target company with assets in China and the issue of Circular 7 was raised pretty early on. Circular 7 refers to a tax provision by China’s State Administration of Taxation that provides that:

“a nonresident enterprise transferring shares in an offshore intermediary enterprise that directly or indirectly holds an equity interest in a PRC enterprise re subject to PRC tax on the gains from the transfer if the PRC tax authorities determine that the arrangement lacks a bona fide commercial purpose and re-characterizes the indirect transfer as a direct transfer of the PRC enterprise”.

Why Circular 7 Matters to Lawyers

Tax is an area I leave to the experts given the many fine nuances and the financial risks if tax assessment/tax planning is not done well. If you’re interested in learning more about Circular 7, please see the linked article above from Deloitte. Otherwise, remember that if you are working on an M&A where a target company has a connection to China, Circular 7 may be an issue. You may not be able to opine on its particulars, but in spotting this potential issue, you have definitely made a value add to the transaction.

3 Tips for Lawyers to Feel in Control (Even When You’re Not)

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In biglaw, the work demands are either feast or famine; some days you twiddle your thumbs as you bill a paltry 2.5 hours and worry that you will never meet your billable requirements. Other days (like this entire last month for me) you are glued to your screen as you bill 15 hours each day and worry about every particular of the countless deals you’re staffed on. One thing I’ve realized is that try as we might, it is near impossible to control the work demands. Billable work comes and goes and we just go with the flow. That uncertainty can be hard for lawyers and I know that I’ve personally struggled with that. I try to find solace in areas I can control. Here are 3 tips for lawyers to feel in control even when you’re not:

Tip 1:  Feel in Control by Controlling Coffee Quality at Home

20150705_Control1Coffee for me is essential. I love going out for coffee (See my Palo Alto Coffee Guide), but when work is at an all time high, finding even 15 minutes to detour for coffee can be challenging. I can’t always control when I can take coffee breaks at the office, but I can control the process for how I make coffee at home. I take the time to use filtered water, use a grinder to grind up some fresh beans, and enjoy my cup of coffee in a nice cup or coffee tumbler. Being able to control how I make my morning cup of coffee makes me feel like my mornings are just a little better.

Tip 2: Feel in Control by Controlling Your Running Speed

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Running for me is therapeutic. Even if I only have 15 minutes between conference calls I will change into running gear and do a quick run outside. I can’t always control when I will be able to run or for how long, but I can always control my running speed when I do. I use the short running sessions for sprints, running as fast as I can back and forth on the block where my office is. I use the longer running sessions for pace runs, running at a challenging pace but not one where I feel out of breath. Being able to control how fast I run during each session makes me feel like I have more control over my exercise regiment and my therapy time.

Tip 3:  Feel in Control by Controlling the Last Thing You Read

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Like most attorneys, I find myself logging in a few hours of billable work in the evening after I get home. With cross border transactions and rush deadlines, the emails and drafting never really seem to stop. I can’t always control how late I work, but I can control the last thing I read before it’s lights out. I like to ensure that the last thing I read isn’t a work related email. Rather, I read an article from a magazine or flip open to a random page of a book of quotes on motherhood my parents gave me. Being able to control the last words I read make me feel like I have ended my day on my terms and I’m ready to face the next one.