3 Areas of Law to Consider Before Launching a Startup

Entrepreneurs are typically risk-takers by nature. They have the insight not only to land on a potentially profitable business venture, but also the ability to figure out how to finance the business, court investors if necessary, and build relationships that will become the foundation of the startup business. But many entrepreneurs lack the funds to pay for professional marketing, PR and legal counsel before their startup gets off the ground. Instead, they find themselves struggling to study and master a variety of matters across different disciplines, including law, that could have a major impact on the business down the line. Worse yet, often entrepreneurs choose to simply ignore important issues and hope that nothing bad happens later.

At Brownstein and Nguyen, we understand the importance of protecting your business through careful documentation and properly executed business agreements. Here are three areas of law that entrepreneurs would be wise to familiarize themselves on or seek legal counsel about.

Intellectual Property Rights

Company names, slogans and logos as well as other marketing efforts may all be subject to intellectual property rights violations if you don’t go properly investigate before using them to promote your business. It is wise to perform due diligence before selecting a company or business name, including searching state incorporation records and trade names, local business license registrations, and Google searches for similar-sounding businesses. However, intellectual property rights don’t simply cover trade names, trademarks and logos. They also pertain to potential patents and copyrights that protect inventions and artistic creations which may be involved, directly or indirectly, in your business. Penalties for violations can range from injunctions to monetary penalties, either one of which could unravel your business before it gets off the ground.

Vicarious Liability

Did you know that you and your business could be liable for the actions of your partners, shareholders, company officers and employees? Whether it’s an employee injury or other negligent act while performing a work task, or a business tort other wrongful act or omission of a partner, make sure you’re covered against vicarious liability in unforeseen situations. In many cases, this includes ensuring that you and the business are covered by appropriate insurance against such liabilities. You will also want to ensure that partnership or shareholder contracts and employment agreements contain appropriate indemnification language to protect the business.

Contract Basics

Contracts form the basis of most business relationships, and most business litigation cases involve contract breaches. Business owners must educate themselves on what it takes to create a legally-enforceable contract, or they may find themselves embroiled in a costly legal battle down the line. Both written and oral contracts must:

  1. Reach mutual assent between the parties involved.
  2. Cover all materials and important terms, which must be clearly defined.
  3. Lay out the rights and obligations of the involved parties.
  4. Must not violate public policy.

Typical contracts for startup businesses include partnership or shareholder agreements, real estate leases, vendor and supplier agreements, and employment contracts. In addition to the primary agreement of the parties, many of these contracts also cover confidentiality, payment, default, attorney’s fees clauses and termination. It’s advisable to seek legal counsel when drafting any contract that could have a significant impact on the business.

Do you have a question about a new business venture? Stop problems before they turn into legal disputes. Contact Brownstein & Nguyen for business litigation counsel.

How to Protect Yourself When Doing Business with Family

There are numerous legal hurdles associated with startups. Many entrepreneurs lack the legal knowledge or counsel to successfully navigate the most common pitfalls, especially when it comes to their blind spots: friends and family. Involving friends and family members in a new business venture can give it the financial boost needed to succeed, but it can also cause legal problems down the line. Are you covering the legal bases to protect your business and preserve relationships down the road?

Co-Founding a Business with Family and Friends

business agreementWhen working with people they know, many entrepreneurs skip the appropriate contracts and agreements, instead choosing to rely on personal feelings and blind trust to protect the company. (“Joe would never do anything to hurt me. We are family, and will always look out for each other.”) But when there’s no written contract or legal agreement, it’s easy for bad blood to arise. When co-founding a business with friends or family members, make sure you determine in writing:

  • The long term goals of the business and how those will be achieved
  • The roles/responsibilities of each founder for the business
  • The expectations for each founder’s investment of time and capital (upfront and later)
  • Starting salaries and how you will determine raises (both for partners and for future employees)
  • The process of making key decisions
  • What percentage of the company each founder will own, and whether that percentage is subject to change
  • What steps to take if one business partner isn’t investing time or resources according to expectations
  • How to approach the sale of the company
  • Steps to take in case of legal disputes

Raising Startup Capital

Entrepreneurs often turn to the people closest to them when raising funds to start a business. Family and friends are an easy source of funding, but there are numerous pitfalls associated with raising startup capital from people in your inner circle.

  • 90% of new companies fail during the financing stage, and 60% after receiving financing. Many entrepreneurs don’t appropriately convey the downfalls when seeking funding from family and friends.
  • Many people aren’t knowledgeable enough to determine if they’re making a good investment or a bad investment, and a familial connection muddies these waters. Entrepreneurs should take care not to fall into the trap of over-valuation of stock.
  • During the financing stage, many businesses don’t have set governance or corporate structure to determine how they’ll use the raised capital.

Entrepreneurs often fall into another pitfall when seeking funding from family and friends: ignoring legal requirements. The sale of stock, LLC interests, and limited partnership interests are subject to securities laws and other legal requirements. Failure to adhere to these requirements can result in hefty fines, even if the company has foundered. Before selling stock to family and friends, entrepreneurs should:

  • Comply with federal and state regulations for disclosure, filing, and form requirements.
  • Fully understand any exemptions (e.g. private issuer exemptions, business associates exemptions, accredited investor exemptions, etc).
  • Report all exemptions appropriately and within the required time period.

Avoid the potential pitfalls of starting a business by seeking legal counsel from Brownstein & Nguyen LLC.

Business Agreement

The Uncertain Future of EB-5 Immigration

The EB-5 program offers foreign investors seeking to immigrate to the United States a unique opportunity. Qualifying mmmigrant investors can apply for a green card for themselves, their spouse, and unmarried children under the age of 21 provided that they invest the minimum required capital in a commercial enterprise and create ten full time jobs for lawful US residents within two years. But the EB-5 program has faced significant controversy over its potential for fraud and misuse, highlighted most recently by two Vermont developers who were charged with abusing the program by defrauding investors of millions of dollars. Key components of the EB-5 program are scheduled to lapse on September 30, 2016, and many lawmakers are calling for major reforms.

Proposed Reforms to the EB-5 Program

statue of libertyThe EB-5 investment program awards as many as 10,000 visas to foreign investors annually, bringing over $15 billion of Foreign Direct Investment into the United States from 2005-2015. Developed in 1990 to stimulate economic growth in low-income neighborhoods, the program has recently come under attack for loopholes exploited by unscrupulous developers and business promoters. Congressional lawmakers are taking steps to limit EB-5 investment visa fraud, but they have not yet reached a consensus on appropriate measures. Many developers take advantage of nearby rural and low-income neighborhoods to build high-end developments in prosperous urban areas, which critics argue is an abuse of the EB-5 program. Supporters of the program contend that these urban developments stimulate economic growth by creating jobs in cities. Critics propose an increase in oversight and a limit of 4,000 visas annually for rural and low-income area projects, while developers are pushing for fewer restrictions. So far, Congress has been unable to reach a compromise. Other criticisms of the EB-5 program include national security concerns and creating discontent among immigrants dealing with longer wait-times to enter the U.S. through typical visa channels.

As we approach the lame duck session of Congress, the future of the EB-5 program remains uncertain. While it’s set to lapse on September 30, it’s likely that the EB-5 program will receive a temporary extension at least until after the presidential elections in November.

Brownstein & Nguyen provide skillful, effective representation in a wide range of immigration issues. Contact our Atlanta law offices for current information about the EB-5 program, assistance in obtaining a visa, and answers to other U.S. immigration questions.

Current Statistics on Vietnamese Immigration

Vietnamese immigration has been steadily increasing in the US since the end of the Vietnam War, when a wave of refugees began seeking residence in America. In 1980, 231,000 Vietnamese immigrants resided in the United States; by 2014, that number had increased to roughly 1.3 million. The United States receives over 80% more immigrants from Vietnam than any other country, and 3% of the overall lawful permanent residents in the US are from Vietnam, making Vietnamese immigrants the sixth largest immigrant population in the country.

Emigrating to the United States

vietnamese immigrantAt Brownstein & Nguyen LLC, we handle worldwide immigration cases, helping migrants from various economic, social, and cultural backgrounds find new homes in the United States. Our practice has helped people relocate to the US from Vietnam, Indonesia, Pakistan, Morocco, Cambodia, Thailand, Laos, Taiwan, Denmark, China, Brazil, Columbia, the United Kingdom, the Ivory Coast, Nigeria, Italy, Kenya, Israel, and a variety of other countries. Many of our Vietnamese immigrant clients enter the US with green cards sponsored by family members who are citizens or lawful permanent residents. Others obtain temporary visas so that they can work or attend school while awaiting the resolution of their permanent residency petition. As a whole, lawful Vietnamese immigrants have higher incomes and lower poverty rates than other foreign-born US residents.

Vietnamese Immigrants in America

America is a land of opportunity, and our law offices have helped Vietnamese immigrants permanently relocate to all 50 states, including Alaska and Hawaii, and even to US territory in the North Pole. California draws the largest percentage of Vietnamese green card holders, with almost 40% of immigrants relocating there. Atlanta, Georgia has the 9th densest population of Vietnamese immigrants of U.S. metropolitan areas. Approximately 29,000 Vietnamese immigrants have relocated from Vietnam to Atlanta or the nearby suburban areas of Sandy Springs and Roswell. A recent overview of the Vietnamese immigrant population by The Migration Institute found that, overall, Vietnamese immigrants to the US were:

  • 17% less likely than other foreign immigrants to be proficient at English
  • Older than native and foreign-born populations in the US with an average age of 47
  • 4% less likely to achieve a Bachelor’s Degree or higher by age 25 than other foreign-born residents, and 5% less likely to achieve a Bachelor’s Degree or higher than native US residents
  • More likely to participate in the civilian labor force than native-born citizens or other immigrants
  • Earners of higher incomes than other members of the population, with a median household income of $59,933 (as of 2014)
  • 5% less likely to live in poverty than other immigrants and 1% less likely to live in poverty than native-born US citizens
  • 29% more likely than the overall US immigrant population to become naturalized citizens

Are you a Vietnamese citizen seeking a US green card or visa? Contact Brownstein & Nguyen law offices to handle your immigration case.

Vietnamese Woman

Immigrant Parents of Citizen Children

Family ties make for strong bonds, not just emotionally but legally as well. Spouses, fiancés, parents, and children can sponsor a loved one for a green card, expediting the process of legal residence. But gaining lawful residence is more complicated than simply having kids on American soil, and undocumented parents of citizen children have a difficult path to achieving legal status.

Can Citizen Children Sponsor Immigrant Parents?

Short answer? Yes. But there is a long list of caveats and legal hurdles.

parent and child holding handsToday, the United States is home to 5.3 million children with undocumented parents. Of these children, roughly 4.5 million are citizens of the United States. A recent study by the Migration Policy Institute examined the ramifications that parental deportation has on U.S. born children. Kids with deported parents often end up living with friends or relatives, or placed in foster care. These children often face emotional, educational, and developmental difficulties. Parental deportation can also limit children’s access to healthcare and economic benefits. So what options do families have if the parents does not have legal status in the U.S.?

President Obama’s Deferred Action for Parents of American (DAPA) proposed a temporary reprieve for parents of lawful U.S. residents who fit certain qualifications. However, the Supreme Court’s recent decision not to uphold executive action extending DAPA leaves many undocumented parents at a loss. Sponsoring a parent for legal status is more difficult than sponsoring a spouse or child. A U.S. citizen must be at least 21 years of age to petition for a parent, and the parent must also comply with U.S. requirements for a green card. The child must be able to financially support the parent, and the parent must not have over 180 days of unlawful residence in the U.S., or they become inadmissible for a period of up to ten years.

Legal Options for Undocumented Parents

Immigration matters are complicated issues, especially for undocumented parents of U.S. citizens for whom deportation can have significant consequences. Parents of legal U.S. residents who entered the U.S. lawfully may apply for an extended work visa. Undocumented parents of American citizens can apply for cancellation of removal if they face deportation. Unlawful residents may have other legal routes open to them based on their specific cases.

Brownstein & Nguyen has decades of experience handling complicated immigration cases. As an immigrant herself, Tien Nguyen has both personal and professional insight into the U.S. immigration system, and uses these insights to aggressively and effectively advocate for her clients. Contact Brownstein & Nguyen Law for an evaluation of your immigration case.

Hands

Benefits of an LLC vs. Sole Proprietorship

To be successful, entrepreneurs should familiarize themselves with various aspects of business and law. Contract basics, vicarious liability, and other areas of business law can make or break your business down the road. Before diving into a new venture, however, entrepreneurs must first consider which type of legal ownership structure best suits their business needs. Often, this means choosing between individual ownership and a limited liability company (LLC), partnership or other legal entity.

Sole Proprietorship v. LLC

business woman with filesA sole proprietorship is the simplest way to start a business. You simply make sure to have all necessary governmental licenses or permits, personally obtain any necessary financing, and get to work. All the assets and contracts of the business (such as leases) are placed in your personal name.

On the other hand, creating a limited liability company requires a little more effort. Forming an LLC begins by reserving a name with the Secretary of State’s office, creating and filing articles of organization, and paying a filing fee (typically several hundred dollars). LLCs with multiple members should seek qualified legal advice on drafting an operating agreement to protect all of the owners and the company in the future. LLCs must be sure to carefully maintain corporate records and not to co-mingle business and personal assets and finances in order to protect the owners from personal liability in the event someone contests their LLC status. LLCs must also file separate tax returns from  owners. In most cases, however, the benefits of an LLC are worth the additional effort and expense.

Pros and Cons of a Sole Proprietorship

Many entrepreneurs choose to operate as a sole proprietorship for the ease of use and cost-effectiveness. For example:

  • Sole proprietorships do not require filing articles of organization with the state, payment of filing fees, or corporate documents such as operating agreements
  • Starting a sole proprietorship has fewer initial and ongoing costs and fees than an LLC
  • A sole proprietor may use personal funds and loans to raise capital for the business
  • Income taxes are filed and paid as part of the owner’s personal income tax returns
  • Business assets, contracts, licenses, etc. do not need to be transferred to another entity

However, a sole proprietorship leaves the business owner potentially responsible for all losses, debts, and legal liabilities of the business. Any of one of these risks, should it come to pass, is enough to doom an otherwise successful business. For example, a single lawsuit by a competing business or customer could result in a financially devastating judgment against the owner.

Benefits of Forming an LLC

While starting a business as a sole proprietorship may offer some initial benefits, forming an LLC gives business owners protection from individual liability, thereby substantially reducing the risk to both themselves and their businesses. For that reason, an LLC is typically the preferred method of starting of a business, whether it has one owner or multiple owners. Some reasons why include:

  • LLCs allow pass-through taxation on each member’s individual income tax returns
  • An LLC with multiple owners allows them to pool resources to raise capital, increase credit, and create financial leverage
  • An LLC limits the liability of each owner for legal claims arising out of contract disputes, personal injury claims, business torts and other litigation
  • An LLC may borrow against business assets more readily than individuals
  • With a well-written and thought out operating agreement, LLC owners can agree in advance on all aspects of ownership and operation of the business, reducing the risk to themselves and the business from future disputes

Jay D. Brownstein has over 25 years of experience advising business owners on corporate and contract matters, helping them to manage and avoid legal risks, and representing them in shareholder and partnership disputes and other business litigation. If you’re starting a new business and need help properly setting up an LLC, drafting partnership or other business agreements, or protecting your company in a business dispute, call Brownstein and Nguyen law offices for legal advice.

Businesswoman with Files

Who Is Affected by the Supreme Court’s Ruling on Immigration Reform?

This June the Supreme Court reached a ruling on President Obama’s immigration plan. The Deferred Action for Parents of Americans (DAPA) executive order proposed a temporary reprieve from deportation for undocumented immigrants who have resided in the United States since 2010 and have a child who is a citizen or a lawful permanent resident. The executive order also expanded Deferred Action for Childhood Arrivals, broadening the scope of immigrant children eligible for relief. On June 23, 2016 the Supreme Court reached a 4-4 deadlock, effectively blocking Obama’s executive order by leaving in place a decision of the lower federal appeals court.

What the Supreme Court’s Decision Means for Immigrants

immigration reform rallyThe Supreme Court’s ruling affects as many as 5 million immigrants currently residing in the U.S. Undocumented immigrants whose legal status hung in the balance are now unable to seek relief from deportation. According to the Migration Policy Institute, 3.6 million people living in the U.S. are undocumented parents of underaged legal permanent residents or U.S. citizens. In all, approximately 10 million people, including legal immigrants, undocumented immigrants, and lawful citizens, live in households affected by the Supreme Court’s ruling. In addition to providing temporary relief from deportation for parents of lawful residents, the plan proposed expanded deferred action for undocumented immigrants who were brought to this country as children, but were not eligible for relief under a 2012 executive action. Immigrants protected by the 2012 action are not affected by the 2016 Supreme Court ruling.

Are You Affected by Obama’s Blocked Immigration Plan?

The proposed DAPA/DACA+ policy contained specific parameters for granting relief from deportation. To qualify for President Obama’s proposed DAPA plan, immigrants would have needed to:

  • Have a child born in the US before November 21, 2014
  • Have permanently resided in the US since January 1, 2010
  • Pay taxes (or be willing to pay taxes)
  • Have committed no significant crime or posed any threat to US National Security

To qualify for the DACA+, immigrants must have:

  • Been a child brought to the US illegally before January 1, 2010
  • Have resided in the US before their 16th birthdays
  • Been in school, have graduated or earned a GED, or have been honorably discharged from the military
  • Have committed no significant crime or posed any threat to US National Security

The President’s executive orders would have made it possible for qualifying immigrants to seek a reprieve from deportation, as well as legally authorizing undocumented immigrants to work as long as they paid taxes. The Supreme Court decision leaves the fate of millions of immigrants up in the air, with no clear legislative or executive plan to allow them to continue to stay in our country, contribute to our economy, and pay their fair share of taxes.

The attorneys of Brownstein & Nguyen law offices have decades of experience dealing with complicated immigration cases. For legal advice or assistance on immigration law in Atlanta, please contact our offices.

Immigration Rally

Immigration, Executive Orders, and the Supreme Court

The Supreme Court recently heard and decided the case of USA v Texas. This lawsuit was instituted by twenty six states, challenging the constitutionality of President Obama’s immigration executive actions, including the 2014 executive order creating DAPA (Deferred Action for Parents of Americans). This program provided deferred action from removal (or deportation) to law-abiding immigrants. About 4 million immigrant parents of children born in the United States would have qualified under the program, allowing them to remain in the U.S for up to 3 years.

Passports and Visas AtlantaPresident Obama vs. the Supreme Court

The primary question before the Supreme Court involved the extent of the president’s power to interpret and implement federal laws in a manner consistent with his own policy goals. Article II of the constitution obligates the president to ensure that laws are faithfully executed, a provision with its roots in the American Revolution. Another controversial issue raised by this case is the tradition of prosecutorial discretion, or the ability of the executive branch to determine whether to prosecute individuals who are accused of violating federal law. Could the executive branch rely on a traditional exercise of discretion in delaying deportation in the least crucial immigration cases?

Historic Precedence

The Obama administration relied upon the 1985 ruling in Heckler v. Chaney to support the constitutionality of DAPA. In that case, the Supreme Court found that the Food & Drug Administration could legally exercise discretion not to enforce a governing statute. However, the court further observed that the principal of prosecutorial discretion is not unlimited. For instance, this principal cannot be employed to justify a broad policy decision that would exclude an agency’s legal duties (e.g., the executive branch is not allowed to stop enforcing duly enacted federal drug policies). The Supreme Court therefore needed to decided in USA v. Texas whether Obama’s immigration policy was akin to a prosecutor refusing to press charges in certain cases, or whether it was a broad policy decision that abdicated the executive branch’s constitutional duty to faithfully execute the law.

Supreme Court Deadlock

Following the death of Justice Antonin Scalia, only 8 Justices of the Supreme Court heard the case of USA v. Texas. The court deadlocked on the constitutional questions before it, with a split vote of 4 to 4. Unfortunately, this amounts to a non-decision and leaves in place a lower appeals court ruling permanently blocking President Obama’s executive actions on immigration. As a result of the Supreme Court’s failure to affirmatively decide this important issue, millions of law-abiding residents who would have been eligible for relief under DAPA may one day face deportation despite having U.S. born children with lives here and who need their parents for support.

At the Atlanta attorney offices of Brownstein & Nguyen, we have decades of experience handling matters for thousands of clients in the complicated area of immigration law. If you, a family member or friend need help with legal immigration, contact our offices for a case evaluation.

Pitfalls in the Citizenship Approval Process

Despite the seemingly straightforward steps listed on the U.S. Citizenship and Immigration Services (USCIS) website, acquiring U.S. citizenship is not a simple undertaking. For example the second step – “determine if you are eligible” – is deceptively complicated. While at first it appears to be a simple “yes” or “no” answer, within that question is an eligibility worksheet that lists 15 mandatory factors.

Residency Requirements

Generally, applicants seeking citizenship must have been a permanent resident for at least five years. This means that the applicant both (1) possesses a permanent residency card (green card) and (2) has lived in the U.S. for five years. Residency can be established in a variety of ways including mortgages, rental agreements, utility bills and other documents that substantiate residency.Passports and Visas Atlanta

The USCIS also examines how often applicants leave the country during their residency period. Applicants cannot live or travel outside of the United States for a cumulative total of 30 months or more. However, exceptions might apply if trips outside the U.S. are unavoidable, for example extended family visits for medical reasons. Additionally, within those 30 months no single trip can last longer than a year unless a specific exception in the law applies.

Tax Requirements

An additional requirement not included in the eligibility worksheet is being current on all U.S. tax obligations. all applicants must file tax returns and either (1) pay any overdue tax debts or (2) be in good standing in a repayment program.

The above are only a few of the many issues to look at when determining eligibility for citizenship. For more information about citizenship, check out our website here.

If you believe that you meet all the requirements for citizenship, that is not the end of the process. The USCIS can and does request supporting documentation to substantiate each eligibility factor. Tracking eligibility and maintaining documentation is critical for a smooth approval process. The immigration approval process is complicated and full of pitfalls. For example, if an LPR (lawful permanent resident) overstayed their visa, is ineligible for continued residence, or deemed removable from the United States for any one of myriad reasons, filing a citizenship petition can result in the USCIC placing the applicant into removal proceedings.

Seeking legal advice early in the process is one of the best ways to avoid problems, delays or denials of citizenship applications. For expert assistance with citizenship and other legal immigration needs, contact the immigration attorneys at Brownstein & Nguyen today.

Do Contracts Need to Be In Writing to be Enforceable?

Generally, contracts come in two varieties – written or verbal – both of which may be legally enforced depending on the circumstances. Verbal contracts can be difficult to enforce because often there is no solid evidence of the specific terms of the agreement. While verbal agreements under the right circumstances may be enforced, certain agreements must be in writing to be binding. With written contracts, it is critical that all the essential terms or elements of the agreement must be laid out or the else the parties’ intent may be unclear and the contract deemed ambiguous.

Enforced ContractsLegal Contract Atlanta

The following contracts should be in writing:

  • Trust contracts involving a grantor, trustee, or a beneficiary
  • Situations involving the co-sponsoring or agreement to pay another person’s debt
  • Contracts that take longer than one year to complete such as employment or providing goods or services
  • Contracts involving the purchase or sale of real estate
  • Contracts that could last longer than the life of a party or parties involved
  • The transfer of property from a person’s will at death during the probate period

Uniform Commercial Code Statutory Laws

The Uniform Commercial Code (UCC) refers to the enforceable laws of commerce throughout the United States. Each state has adopted a version of the UCC within its statutory laws. It’s important that specific state laws are checked in an effort to make sure a contract is compliant.

Article 2 of the UCC applies to contracts. UCC Section 2-201 states that any contract for goods with a value or price of $500 or more must be in writing to be enforced. However, there are exceptions to this rule for certain verbal contracts. One example of an exception would be if a buyer receives and accepts goods, in which case a contract between buyer and seller will be enforced. If only a portion of the goods are received, then that portion will be enforceable.

Best to Have Your Contract in Writing

It’s always advisable to have any business contract or agreement in writing, although other types of contracts can be made verbally. If something goes wrong with an agreement, having a written contract that is enforceable through the courts is the best way to protect a business’ interests in regard to contract’s subject matter. In many cases, verbal business agreements can be difficult and costly to enforce.

Breach of Contract

If a breach of contract situation occurs or is suspected to be happening, whether resulting from a verbal agreement or written agreement, it’s important to obtain legal advice as soon as possible. Contact the Atlanta law offices of Brownstein & Nguyen for expert assistance involving the specific legal issues involved in your contract dispute and, importantly, to learn how to preserve your legal rights and what remedies are available.