breach of fiduciary duty

One of the nice things about the being a Justice of the United States Supreme Court is that you never have to explain yourself. You don’t have to ask questions at oral argument. You don’t have to read the briefs filed by the parties, not really, because you can interpret the facts stated and arguments

Although the big financial meltdown began around 2007, financial fraud lawsuits are still all the rage among trial lawyers these days. It usually takes a couple months for an investor to realize they’ve been swindled by a bank and a couple years for the lawsuits to be investigated, filed, litigated, and then sent to trial. 

Fred Wilson, the always inspiring venture capitalist, posted yesterday A Challenge To Startup Lawyers:

We closed an investment recently. It was a seed round. Our firm priced the round and we were joined by a number of small VCs and a few well known angels. We agreed to close on a standard set of "light preferred" documents without negotiation. There was no investor counsel on the transaction. We just signed the standard documents which were tweaked to reflect the round size, share price, and board provision in the term sheet.

The legal fees for this transaction were $17,000. I talked this over with the entrepreneur and we agreed to pay the legal bill. We are both big fans of the law firm involved and felt they earned their fees on this transaction.

But I’ve been thinking about this situation over the past week and I’d like to issue a challenge to startup lawyers. When you have a seed stage company that needs to incorporate and close a seed round where all parties are willing to close on a set of standard docs without negotiation and where the investors agree to go without counsel, I think the legal fees for such a transaction should be $5000 or less. I just don’t see why it should cost more than that.

Down in the comments, DGentry asked:

Why have a lawyer involved?

If the documents are standardized and previously vetted, then what value does the presence of a lawyer provide?

To which Fred replied, "maybe that’s what we have to do. but there are filings to be made, the charter, the state forms, etc. i think you need someone to do this stuff for you."

There’s an unspoken requirement in Fred’s reply: Fred doesn’t want just anyone to do that "stuff," or else he’d ask someone at his office to do it. He wants a lawyer to do it.

Why?


Continue Reading

As I have written many times before on this blog, and as I know from my own experience, defamation lawsuits against major media outlets are no joke. Defamation law across the United States has been mostly settled for the past generation, and so most newspapers, television stations, publishing houses, and film production companies have editors

I’ve sued several multinational banks for breaches of fiduciary duty and breaches of contract, and have always been amazed their lack of any accountability or responsibility. It’s not just a handful of instances of banks selling a company’s loan to their competitor and bank lawyers lying to federal regulators. They live in a different

[UPDATE: In related news, a federal judge in San Francisco recently ignored a forum selection bylaw that tried to force derivative suits to be filed in the Delaware Chancery Court. “A bylaw unilaterally adopted by directors…stands on a different footing [from contractual forum agreements],” Judge Seeborg wrote. “Particularly where, as here, the bylaw

I already made one post out of The Social Network (i.e., Why Mark Zuckerberg Won’t Sue For Defamation Over The Facebook Movie), which is one more than I expected, but apparently there’s another legal issue in there.

Gawker and Business Insider published a scoop yesterday on the "dirty tricks" that Mark Zuckerberg used to

[Update, May 2012: Leo E. Strine, Jr., Chancellor of the Delaware Court of Chancery, referenced this post in his thoughtful new law review article, Our Continuing Struggle With the Idea That For-Profit Corporations Seek Profit, 47 Wake Forest L. Rev. 135 (2012).]

[UpdatesFrancis Pileggi has his take (courtesy

If you suspect your employer has violated securities, tax, or government contract laws, you can contact our firm for a free, confidential, no-obligation consultation using this form.  

Corporate Counsel reported yesterday:

The new federal whistleblower law is proving a hot item for many plaintiff law firms. Attorneys say that tipsters with visions

As The Legal Intelligencer reported,

The Muffin Man ImageWhen a top-level executive suddenly quits to take a job at a competing firm, the courts have the power to block the start of the new employment if the evidence shows that such an injunction is needed to prevent a likely misappropriation of trade secrets, the 3rd U.S. Circuit