Documents Set Switches that Change the Impact of Legal Rules

What you do with legal documents between my review and signing matters.  Think of the law as a system of rules and legal documents as switches that turn these rules on or off as needed.   If the default setting works for you, then the legal document may be silent on an issue because we don’t need to change that switch setting.

Imagine, for example, that you are setting up a limited liability company with two other people (or “members” in the parlance of LLCs).  At signing, one of these people, Joe Smith, asks to sign the operating agreement (let’s call it the “OA”) as “Joe Smith, LLC, by Joe Smith, its member.” You figure this is a small change and you can simply mark-up the documents and sign.

Bad idea, I’m afraid.  The OA has transfer restrictions that will work fine for most members.  But if one of the members is itself a legal entity, then it is likely that the transfer restrictions won’t work as drafted.  Instead, the operating agreement of Joe Smith, LLC can transfer control from Joe to another person, blowing right by the OA’s transfer restrictions.

By the way, it’s not a big deal to fix the problem.  It’s just that you need me to be in the loop to spot the issue and address it so that you don’t have an unpleasant and costly surprise some time down the line.

I invite your comments to this blog post and look forward to posting another missive in the near future.

John A. Myer is a corporate and securities lawyer with Myer Law PLLC in Seattle, Washington.   This posting does not constitute legal advice.

Business and Billing Philosophy

My philosophy is to provide cost effective legal services by maintaining a lean overhead structure and transparency in billing.  As a client, you want to know up front what you and I will be working on and how much it will cost to complete the project.  Only then can you assess whether the services you are buying will add value to your business.

What does this mean in practice?  On many projects, clients can help by providing information in as close to final form as the contract or offering document requires.  I will need to review your input and make sure that it is seamlessly integrated into the legal document we are drafting, but your involvement, properly structured, can save time and money.

The same is true in reviewing documents that others have drafted.  As the attorney, I need a thorough overview of the transaction so that I can spot issues, but I don’t need to reinvent the wheel.  If a document is in good shape when I review it, then my time on the deal can be minimized.

I invite your comments to this blog post and look forward to posting another missive in the near future.

John A. Myer is a corporate and securities lawyer with Myer Law PLLC in Seattle, Washington.   This posting does not constitute legal advice.