News and Updates

Your Business Partner Took Money or Signed a Deal Without You: What Now?

Owning part of a business without having control can be a great opportunity or a slow-motion nightmare. Maybe you bought into an existing company. Maybe you started a business with a partner who has the larger share. On paper, you’re an “owner.” In practice, you might feel more like a passenger… in a car you helped pay for, but don’t get to drive. This article is about what it really means to be a minority owner in a New York LLC or corporation, the risks that come with it, and how you can protect yourself, ideally before things go sideways. What It Means to Be a Minority Owner Being a minority owner (anything less than 50%, and especially under 25–30%) often means: • You don’t control major decisions. • You can be outvoted on day-to-day management. • You may not control when (or whether) money is distributed. • You might not have an automatic right to a job, salary, or role. You own a piece of the pie—but the majority owner often controls how the pie is sliced, when it’s served, and to whom. That doesn’t mean being a minority owner is bad. It just means the documents matter a lot more than the vibes. Common Problems Minority Owners Run Into Here are some of the greatest hits I see in real life: 1. “We’re Making Money… But I’m Not Seeing Any” The company is doing well. Revenues look good. The majority owner is paying themselves a nice salary or charging “management fees.” You? You’re not getting distributions… or you’re getting far less than you expected. Typical issues: • No clear policy on when profits are distributed. • Majority owner taking most of the value through salary/expenses instead of distributions. • You have no practical way to force a distribution. Good documents can set expectations: when profits will be distributed, how much should be retained in the business, and what requires mutual agreement. 2. Locked Out of Information Another common minority-owner complaint: “I have no idea what’s going on.” Red flags: • You’re not getting regular financial statements. • Major decisions are made without your knowledge. • You only find out about problems when they’re already on fire. Under New York law, owners often have certain information rights—but enforcing them can be slow, expensive, and relationship-damaging. It’s far better if your operating agreement (LLC) or shareholders’ agreement (corporation) clearly says: • What financial reports you get. • How often you get them. • What additional information you’re entitled to on request. 3. You Lose Your Job… But Still Own the Business Here’s a fun situation (for the lawyers, not for you): You’re both an owner and an employee. Things sour. The majority owner fires you. Now you’ve lost your salary, benefits, and any day-to-day involvement—but you still own your minority stake. You’re stuck: • No paycheck. • No control. • No easy way to get bought out. This is why minority owners should think carefully about: • What happens if they’re terminated as an employee. • Whether termination triggers a buyout. • How that buyout is priced and paid. 4. Surprise Dilution and “Please Wire More Money” Two classic scenarios: • The company needs cash, and the majority owner says, “We’re putting in more capital. If you don’t, your percentage goes down.” • New investors come in, and suddenly your 20% becomes 8%. Sometimes that’s legitimate. Companies need capital. But as a minority owner, you want rules around: • How new capital contributions are handled. • Whether you have a right to participate in new funding rounds. • When and how your percentage can be diluted. If this isn’t addressed up front, it’s very easy to wake up one day owning a much smaller piece of a much more complicated pie. How Minority Owners Can Protect Themselves (On Paper) The best time to protect yourself is before you sign or buy in. The second-best time is now. Here are key protections to look for (or negotiate): 1. Voting and Veto Rights on Big Decisions Even if you don’t control day-to-day operations, you can negotiate veto rights on truly important issues, such as: • Taking on major debt • Admitting new owners or investors • Selling major assets or the entire business • Changing the nature of the business • Approving large bonuses or management fees • Amending the operating/shareholders’ agreement You may not get a veto on everything—but you should at least talk about what must require your consent. 2. Clear Information Rights Your agreement should spell out: • What financial reports you receive (e.g., quarterly P&L, annual balance sheet). • How quickly they must be provided. • Your right to inspect books and records within reasonable limits. If the majority owner pushes back on basic transparency, that’s not just a legal issue—that’s a relationship issue. 3. Distributions and Cash Flow Expectations You can’t force a business to distribute money it doesn’t have. But you can: • Set a general policy (for example, a percentage of profits distributed annually, subject to reasonable reserves). • Require mutual agreement for unusually large salaries, bonuses, or related-party payments that affect available profits. This doesn’t have to be rigid—but it should provide guidelines so “we’ll figure it out later” doesn’t become “you never get paid.” 4. Exit Rights and Buy-Sell Provisions This is often the most important—and most neglected—piece. Ask: • If I want out, can I force a buyout? • What events trigger a buyout? (death, disability, termination of employment, deadlock, breach of agreement, etc.) • How is the price calculated? (formula, agreed valuation, appraiser, etc.) • How is it paid? (lump sum vs. installments, interest, security) Without a buy-sell or some kind of exit mechanism, you can easily end up stuck: unhappy, underpaid, and unable to force a change. 5. Reasonable Non-Compete / Non-Solicit Terms Minority owners are often asked to sign non-compete and non-solicitation agreements. Questions to consider: • If things go bad, can you continue working in your field at all? • Are you prevented from starting a new business even if they freeze you out? • Are the restrictions tied to a fair buyout of your interest? Sometimes the better approach is a narrower non-solicit (no poaching clients or employees) rather than a broad ban on working in your own industry. What If You’re Already in a Bad Spot? Maybe you’re reading this as a current minority owner thinking, “Great. I should have done all this three years ago.” You still have options: • Review your existing documents.Operating agreement, shareholders’ agreement, employment agreement, side letters—everything. Understand what rights you do have. • Make a list of specific issues.Lack of information? No distributions? Being cut out of decisions? Having your role reduced? That list will guide strategy. • Consider a business conversation first.Sometimes, things can be fixed with an amendment, a clearer distribution policy, or a negotiated exit—before lawyers and litigation get involved. • If necessary, explore your legal remedies.New York law does give minority owners certain protections in extreme cases (for example, oppression, breach of fiduciary duty, corporate waste), but asserting those rights is serious and needs careful analysis. This is where having your own counsel, not the company’s lawyer, really matters. When It’s Worth Calling a Lawyer It’s smart to get legal advice if: • You’re about to buy a minority stake in a business. • You’re joining a company as a minority owner and employee. • You’re being asked to sign an operating agreement/shareholders’ agreement you didn’t draft. • You’re already a minority owner and starting to feel uneasy about money, information, or decisions. • You want to negotiate your way out without blowing up the relationship. These are exactly the kinds of situations we help New York business owners and minority shareholders/members navigate ideally before “minority owner” turns into “major problem.” If you’re in that position and want a straightforward, practical review of your situation and documents, we can talk through your options and a realistic path forward. Back to News "

Launching an online course, coaching program, or paid mem bership can feel exciting until you realize how easy it is for someone to copy your content, demand a refund, or share your materials without permission. The good news? With a few smart legal steps, you can protect your hard work and your peace of mind without killing your momentum or creativity. 1. Own Your Content (and Prove It) Your videos, worksheets, guides, and recorded sessions are your intellectual property the moment you create them.But if you ever have to enforce that right, you’ll need proof. Practical steps: • Keep dated drafts, scripts, or file metadata showing you created the material. • Add a simple copyright notice on your website and materials. • Register key materials with the U.S. Copyright Office if they’re valuable or likely to be copied. This small step can make the difference between sending a polite “take it down” email and having the leverage to enforce your rights. 2. Set Clear Terms and Disclaimers Many online programs skip the fine print until a client demands a refund or claims the course “didn’t work.” You don’t need to drown people in legalese, but you do need clear, customized terms that cover: • Refund and cancellation policies (especially for digital products) • Payment plans and chargebacks • Access limits — how long members keep materials • Disclaimers for results (e.g., “no guaranteed income or outcomes”) • Intellectual property rules — what students can and can’t reuse These can appear as a checkbox at checkout (“I agree to the Terms”) or in your onboarding emails as long as they’re clearly accepted before purchase. 3. Protect Your Brand and Name Your program name, logo, or tagline might be your biggest marketing asset.A trademark protects it from copycats and confusion. Ask yourself: • Is anyone else already using a similar name in your field? • Would losing this name hurt your business identity? If the answer is yes, filing a trademark early is one of the smartest investments you can make. 4. Use Client Agreements — Even Online If you’re running a higher-touch program (like group or 1:1 coaching), go beyond simple checkout terms.A written Coaching Agreement or Service Agreement should define: • Scope and limits of your services • Confidentiality and use of materials • What happens if payments stop • Scheduling, rescheduling, and termination rights This protects both sides and sets clear expectations which actually strengthens the client relationship. 5. Mind the Compliance Details A few extra checks can keep your online business out of regulatory trouble: • Privacy Policy: Required if you collect emails or payments online. • Email marketing laws: Always include an unsubscribe link. • Testimonial disclosures: If clients were compensated or received a freebie, say so. • Sales tax: Digital products and memberships may be taxable in some states (including New York). None of these are hard to fix, but ignoring them can get expensive fast. Bottom Line If you’re serious about your online business, treat it like one.A few upfront protections can prevent thousands in losses later and help you look more professional from day one. You don’t have to figure it all out at once. Start with the basics your terms, your agreements, and your brand protection and build from there. (Attorney Advertising. For general informational purposes only and not legal advice. For guidance on your specific situation, consult a qualified attorney.) 

Buying a business can be a smart shortcut to growth, but it’s also one of the riskiest things a business owner can do without the right planning. Whether you’re acquiring a small local shop or a growing service company, the legal structure of the deal matters just as much as the purchase price. Here’s what experienced buyers look for and what many first-timers overlook. 1. What Exactly Are You Buying? One of the first (and biggest) decisions is whether you're buying: • Assets (e.g., equipment, customer lists, contracts, goodwill), or • Equity (e.g., shares in a corporation or membership interests in an LLC) Each path has very different consequences for liability, taxes, and post-sale headaches. Asset purchases generally let you cherry-pick what you want while equity deals carry more risk (and often require more due diligence). 2. What Liabilities Could Come With It? Buying a business doesn't just mean getting the good stuff. You might also inherit: • Tax liabilities (including sales tax, payroll taxes, or back filings) • Unwritten promises to customers or vendors • Employee issues (classification errors, unpaid wages, wrongful termination claims) • Leases or contracts with hidden obligations Even in asset deals, certain liabilities, like unpaid NYS sales tax, can follow the buyer. Due diligence is not optional. 3. How Will You Pay—and What Happens If You Don't? Seller financing is common in small and mid-sized business sales. That means: • You pay part of the price upfront • You make payments over time, with interest • The seller may require security, like a lien on business assets or a personal guarantee Make sure you understand what happens if revenue drops. Can the seller accelerate payments? Repossess equipment? Sue you personally? 4. Who’s Sticking Around After the Sale? Don’t assume the current owner will help with the transition unless it’s in writing. Buyers often need: • A consulting agreement to keep the seller on board for a period • A non-compete or non-solicit clause so they don’t open a competing business across the street • Clear handoff plans for relationships with key customers, vendors, and staff 5. What Are You Not Getting? Ask early: What licenses, contracts, or relationships don’t transfer automatically? • Franchise rights, liquor licenses, or certifications might require separate approval • Vendor contracts could be non-transferable or terminate on a sale • Lease assignments need landlord approval and may trigger a rent increase Final Thought Buying a business isn't just a transaction, it’s a strategy shift. It can pay off, but only if you go in with eyes open and the right protections in place. If you’re thinking about buying a business, take time to map out the risks, not just the opportunity. Back to News "

Running a business or nonprofit means dealing with people—partners, vendors, employees, clients—and sometimes, conflict is inevitable. But not every disagreement has to end in a courtroom. In fact, most shouldn’t. The key is knowing how to respond early, strategically, and with the right mindset. Here’s how to keep disputes from spiraling and protect your business in the process. 1. Don’t Ignore the Tension One of the most common mistakes business owners make is pretending a disagreement will resolve itself. Maybe someone hasn’t paid an invoice. Maybe a partner is acting without consulting you. Maybe a vendor failed to deliver what they promised. When you feel something is “off,” chances are, it is. 📌 Tip: Address the issue while it’s still a disagreement, not a crisis. Early action gives you more control and credibility. 2. Start with a Direct (but Documented) Conversation Whenever possible, pick up the phone or meet in person. A calm, non-accusatory conversation can clarify misunderstandings and preserve relationships. But always follow up in writing. 📌 Example: “Thanks for taking the time to talk earlier. Just to recap, we agreed that…” This creates a paper trail without escalating things and gives you evidence if legal action becomes necessary later. 3. Know When It’s Time to Involve a Lawyer A lawyer isn’t just for litigation. In many cases, bringing in counsel early can prevent a lawsuit. An attorney can help: • Review contracts to see what rights you actually have • Draft a demand letter that gets taken seriously • Propose a resolution that’s legally sound And importantly, a lawyer helps you evaluate the cost of escalation versus resolution. Sometimes, preserving goodwill or avoiding distraction is the smarter move, even if you’re technically “right.” 4. Consider a Demand Letter Before Filing a Claim A well-written demand letter is often the turning point. It shows you’re serious, puts legal arguments in writing, and gives the other side a chance to fix things without court. In my experience, many disputes resolve shortly after this step, especially when the other side sees the risk of inaction. 📌 But beware: A demand letter should be carefully crafted. Overly aggressive language can backfire, and vague or emotional arguments often get ignored. 5. Keep Your Emotions (and Social Media) in Check Frustration is normal, but public posts, angry emails, or venting to mutual contacts can come back to haunt you. Assume everything you say or write could one day be shown to a judge… or your client. 📌 Internal rule: When in doubt, pause. If it’s emotional, don’t send it. If it’s strategic, have it reviewed. 6. Know Your Off-Ramps: Mediation, Arbitration, or a Clean Break Litigation isn’t always avoidable, but it’s rarely the only option. Mediation offers a lower-cost, lower-risk way to reach resolution, often in a single day. Arbitration may already be required under your contract. And sometimes, the best move is simply negotiating a clean exit, even if it feels unfair. Final Thought: Control the Process Before It Controls You Legal disputes don’t have to be catastrophic. In many cases, they’re a sign your business needs better boundaries, stronger agreements, or clearer communication channels. If you’re facing a conflict—big or small—don’t wait until it becomes unmanageable. Getting the right advice early on can save you money, stress, and sometimes even the relationship itself. Want to talk strategy? I help New York businesses and nonprofits navigate disputes with clarity and control before things spiral. 

If you’ve formed a Limited Liability Company (LLC) in New York, you might think t hat filing your Article s of Organization is all you need to do. However, New York legally requires LLCs to adopt an Operating Agreement—even if you’re a single-member LLC. An Operating Agreement outlines how your LLC will be managed and helps prevent disputes between owners. While it doesn’t need to be filed with the state, it must be adopted within 90 days of formation. Failing to create one could leave you vulnerable to legal and financial issues. For LLCs with multiple owners, not having an Operating Agreement can be disastrous, leading to disputes over ownership, management, and profit distribution. Here’s why every New York LLC should have one—and what can go wrong without it. What is an Operating Agreement? An Operating Agreement is a legally binding document that sets the rules for how an LLC will operate, including: - Ownership structure (who owns what percentage of the business)- Management rules (who makes decisions and how)- Profit and loss allocation- Dispute resolution procedures- Exit strategies (what happens if an owner leaves) Even though New York law requires every LLC to have one, many businesses skip this step. That can be a costly mistake, especially for LLCs with multiple members. New York’s Legal Requirement for Operating Agreements Under New York LLC Law (Section 417), all LLCs—whether single-member or multi-member—must adopt a written Operating Agreement within 90 days of filing the Articles of Organization. While New York does not require you to submit the agreement to the state, failing to create one could expose you to legal uncertainty if a dispute arises. If you don’t have an Operating Agreement, the state’s default LLC laws will govern your business—often in ways that aren’t favorable to you. What Can Go Wrong Without an Operating Agreement? 1. Ownership Disputes Can Derail the Business If multiple members disagree on who owns what, who has decision-making power, or how profits are split, things can quickly get messy. 📌 Example: Two business partners assume they are 50/50 owners, but one contributed more startup capital. Without an Operating Agreement specifying ownership percentages, a major dispute arises when the business becomes profitable. Without a written agreement, courts will default to New York’s LLC laws, which might not reflect the members’ actual intentions. 2. Deadlocks Can Paralyze Decision-Making New York law doesn’t provide a clear solution for when LLC members can’t agree on a major business decision. Without an Operating Agreement outlining decision-making rules, a 50/50 deadlock can halt operations or even force dissolution of the LLC. 📌 Example: A two-member LLC disagrees on whether to take on a new investor. With no Operating Agreement specifying a tie-breaking mechanism, they reach an impasse and must take the matter to court—or dissolve the business. 3. New York’s Default Profit-Sharing Rules May Not Match Your Intentions Under New York law, LLC profits and losses are split equally among all members unless stated otherwise in an Operating Agreement. This means that even if one member invested more capital or works significantly harder, they still receive an equal share unless an agreement specifies otherwise. 📌 Example: One partner contributes $100,000 to start the business, while another contributes $10,000. Without an agreement stating otherwise, New York law may require profits to be split 50/50, regardless of investment. 4. An Owner’s Departure or Death Can Create Chaos If a member leaves, dies, or becomes incapacitated, what happens to their share of the business? Without an Operating Agreement, their ownership interest may pass to their heirs, potentially bringing in new, unwanted partners. 📌 Example: A three-member LLC loses one owner unexpectedly. Their spouse inherits their share and wants to sell it to an outside party. The remaining owners have no right to stop the sale because no buyout terms were defined in an Operating Agreement. This can lead to ownership disputes, financial strain, and even dissolution of the LLC. 5. Lack of Liability Protection One of the main benefits of an LLC is limited liability, meaning owners aren’t personally responsible for business debts. However, if you don’t have an Operating Agreement, a court might disregard your LLC status, making you personally liable. 📌 Example: A business is sued, and the court finds that the owners failed to follow formal business procedures because they had no Operating Agreement. The court pierces the corporate veil, making the owners personally responsible for debts. 6. Bringing in New Owners (or Selling Your Interest) Can Be Complicated Without an agreement in place, adding new members or selling your ownership share becomes unpredictable. New York’s default LLC rules may force unwanted ownership changes, or members may have no say in who joins the business. 📌 Example: One member wants to retire and sell their share of the business. The other members can’t agree on a valuation, and with no buy-sell provisions in place, the situation escalates into a legal dispute. Why Even Single-Member LLCs in New York Need an Operating Agreement Even if you are the only owner of your LLC, an Operating Agreement helps by: ✔ Maintaining limited liability protection (proving your LLC is separate from you personally)✔ Establishing business continuity (in case you bring in partners or sell the business later)✔ Preventing legal challenges to your business structure Since New York requires an Operating Agreement, it’s always best to have one in place from the start. What Should Be in Your Operating Agreement? A strong Operating Agreement should include: 🔹 Ownership percentages & capital contributions🔹 Decision-making authority & voting rules🔹 Profit and loss allocation🔹 Buyout & succession planning🔹 Rules for adding/removing members🔹 Dispute resolution procedures Conclusion If you own an LLC in New York, an Operating Agreement isn’t optional—it’s legally required. But beyond compliance, it’s one of the most important legal safeguards for your business. Whether you’re a single-member LLC or have multiple owners, having a clear, customized agreement protects you from future disputes and legal headaches. 💬 Need help drafting an Operating Agreement for your New York LLC? Contact me today to ensure your business is protected and compliant!

Most business owners have probably seen reminders to file their Beneficial Ownership Reports by January 1, 2024 to avoid potential large fines. These filings were a requirement of the Corporate Transparency Act, which was blocked nationwide by a District Court for the Eastern District of Texas on December 3, 2024. At this time, it is not clear whether the Justice Department will appeal the ruling and, if so, how likely it would be to prevail. It is also not immediately clear whether the deadlines would be pushed back if the block is lifted. However, for the time being, businesses are not obligated to complete the Beneficial Ownership Report filings. You can read more about the Corporate Transparency Act and Beneficial Ownership Information filings in an earlier post. 

Article by Alex Herd published by New York State Bar Association The following article, written by Alex Herd, was published by the New York State Bar Association in Volume 45 of One On One on August 2, 2024. Available here. Demonstrating value to prospective clients is vital to a business lawyer’s success. Your ability to articulate your skills and efficiency will help you convert not only prospects into clients, but also one-time clients to regular clients. You can accomplish this by effectively pitching the benefits of serving as Outside General Counsel (OGC): higher quality of service at a lower cost. Many clients may be familiar with in-house or general counsel, but they may not have heard of the concept of an OGC. You can build long-standing relationships with clients by highlighting the key benefits of an OGC: • Services tailored to their needs • One-stop legal resource • Cost-effectiveness The Benefits of General Counsel, In-House or Outside Businesses see their general counsel as their trusted first point of contact for any legal matter. General counsel is relied on for a wide-ranging scope of services to meet the diverse legal needs of the client. Some key examples include: • Contract Review and Drafting: OGCs can review, negotiate, and draft a variety of commercial contracts, such as vendor agreements, leases, licensing deals, and sales/ purchase contracts. Their familiarity with the client’s business allows them to ensure contractual terms align with the organization’s long-term objectives. • Compliance and Regulatory Guidance: OGCs can advise clients on complying with relevant laws, regulations, and industry standards applicable to their operations. This may include areas like employment law, data privacy,or financial reporting. • Corporate Governance: OGCs can counsel clients on matters of corporate structure, board oversight, shareholder rights, and other governance best practices. This is especially important for privately held companies andnon-profit organizations. • Litigation Support: While OGCs do not typically handle litigation directly, they can work closely with litigation counsel to provide strategic guidance, oversee the legal process, and ensure the client’s broader interests are represented. • Risk Assessment and Mitigation: By deeply understanding the client’s operations, OGCs can proactively identify legal risks and collaborate with the client to implement policies, contracts, and other measures to mitigatethose risks. A business that hires general counsel is able to develop the attorney-client relationship over time. This allows the attorney to learn the intricacies of the business’s goals and typical legal needs and efficiently and holistically address any issues that arise for the organization. The key is for the OGC to deeply understand the client’s operations, goals, and typical legal needs. This allows the OGC to address any legal issues that arise in a way that benefits the entire organization, not just the specific matter at hand. Pitching Outsider General Counsel as an Alternative to In-House Counsel Clients may be skeptical that an OGC with multiple clients can deliver the same particularized attention as a dedicated in-house counsel; however, this concern can be turned into a positive. Rather than maintaining a full-time in-house counsel, the client can leverage the OGC’s diverse knowledge and flexible model to address their legal requirements in a cost-effective manner. While in-house counsel only deals with matters that arise in representing one client, OGCs have the benefit of experiences spanning multiple business sectors and legal domains, such as contracts, employment, intellectual property, compliance, and litigation. This broad expertise enables the OGC to efficiently represent the client without the high overhead of a dedicated in-house legal team. OGCs also often benefit from a trusted network of attorneys and professionals they can consult with when legal issues cross into specialized areas. This will allow clients to avoid navigating a web of specialized attorneys. This can save them significant time, money, and energy compared to the piecemeal approach of working with multiple law firms and the need to identify a new attorney each time a different legal issue arises. OGCs can save the client time, money, and resources by managing all of their legal needs in one place, within a budget tailored to the client’s business. What Characteristics Should Outside General Counsel Have? Trustworthiness is one of the most crucial qualities for an outside general counsel. Clients need to have complete confidence that they can bring any legal issue to the OGC and receive effective guidance towards a solution. Building this level of trust requires providing strong strategic advice and demonstrating a steadfast commitment to the client’s best interests. Additionally, it is critical for an OGC to recognize the areas of law where their own expertise may be limited. Having a reliable network of trusted professionals, whether within the OGC’s own firm or external specialists, is essential for seeking additional guidance when needed to serve the client effectively. Finally, the ability to address new and complex topics on a regular basis is key to succeeding as an OGC. Unlike specialized counsel who may handle similar matters repeatedly, OGCs must be prepared to tackle unique questions and challenges that their clients bring. While specialized attorneys may repeatedly draft similar contracts or motions, OGCs cannot rely on repetitive assignments. They must continuously expand their knowledge and adapt their approach to meet the diverse legal needs of their clients. Alex Herd is the managing member of Herd Law Office LLC. He is an experienced business and non-profit attorney with a passion for helping small business owners and acting as a trusted advisor to his clients by serving as outside general counsel to many clients. Reprinted with permission from the New York State Bar Association © 2024 

In the world of business, contracts are the pillars upon which successful relationships are built. Whether you're a seaso ned entrepreneur or just starting out, having well-drafted contract templates is essential for safeguarding your interests and minimizing legal risks. There are numerous benefits that business owners can derive from having contract templates created by a skilled business lawyer. Below are some of the ways custom contract templates can benefit your business, along with some examples where these templates would have been helpful to the business. • Tailored Contracts to Meet Specific Business Needs One of the main advantages of working with a business lawyer to create contract templates is the ability to customize them to suit your unique business requirements. A skilled lawyer will take the time to understand your industry, goals, and potential risks, and craft contracts that address these specific considerations. Whether it's a client agreement, vendor contract, or a partnership agreement, having templates that reflect your business's intricacies can help you establish a solid foundation for your operations. Example: A software development company enters into a contract with a client without a clear scope of work or payment terms. As the project progresses, misunderstandings arise, leading to disputes and delays. With a well-drafted contract template in place, the company could have clearly defined the project scope, deliverables, timelines, and payment terms, minimizing the risk of misunderstandings and facilitating smoother project execution. 2. Enhanced Legal Protection Contract templates created by a business lawyer offer comprehensive legal protection. These templates are designed with meticulous attention to detail, including critical clauses and provisions that safeguard your rights and minimize potential liabilities. By addressing potential risks and contingencies upfront, businesses can mitigate the likelihood of costly disputes, litigation, and reputational damage. Example: A catering business signs a venue rental agreement for an event without thoroughly reviewing the terms and conditions. Later, they discover that they are responsible for any damages to the property during the event, leading to unexpected financial liabilities. A contract template created by a lawyer would have included clauses that clearly outlined the responsibilities of both parties, ensuring that the catering business would not be held liable for damages caused by factors beyond their control. 3. Time and Cost Efficiency Investing in professionally drafted contract templates can save you significant time and money in the long run. By working with a business lawyer to create templates tailored to your needs, you can streamline your contract negotiation process. With standardized templates readily available, you can focus on negotiating specific terms rather than starting from scratch with each new agreement. This efficiency allows you to close deals faster and allocate resources to other critical aspects of your business. Example: A startup company engages in multiple client engagements without standardized contract templates. As a result, negotiations become time-consuming and lead to delays in finalizing agreements. With lawyer-created contract templates, the startup could have expedited the negotiation process, saving valuable time and enabling them to take on additional clients. 4. Establishing Clear Employment Terms and Policies In addition to client contracts, business owners can greatly benefit from having contract templates for employment agreements and employee handbooks. These templates help establish clear expectations, rights, and responsibilities for both employers and employees, fostering a positive and legally compliant work environment. Example: A small retail business hires a new employee without providing a detailed employment agreement or comprehensive employee handbook. Over time, issues arise regarding work hours, overtime pay, and vacation policies, leading to misunderstandings and discontent among the staff. With a well-crafted employment agreement and employee handbook, the business could have clearly outlined the terms of employment, including work schedules, compensation policies, and vacation accrual guidelines. This would have provided clarity from the outset, minimizing disputes and promoting a harmonious work environment. 5. Compliance with Employment Laws and Regulations Employment laws and regulations can be complex and ever-changing. Business owners face potential legal pitfalls if they fail to comply with these requirements. Contract templates created by a business lawyer ensure that employers have the necessary provisions in place to comply with relevant laws, protecting both the business and its employees. Example: A startup company unintentionally misclassifies its workers as independent contractors, only to face legal consequences and significant financial penalties for violating labor laws. A lawyer-created employment agreement template would have included specific clauses that properly classify workers as employees, clearly outlining their rights, benefits, and tax obligations. This could have prevented the company from inadvertently violating employment laws and facing severe repercussions. In the fast-paced world of business, having contract templates created by a skilled business lawyer is vital for protecting your interests, minimizing risks, and ensuring smoother operations. By tailoring these templates to your specific needs, you can save time, reduce costs, and enhance legal protection. Don't wait for disputes or mishaps to occur; take proactive steps today to fortify your business with expertly crafted contract templates that empower you to navigate complex business relationships with confidence.

ACTING AS OUTSIDE GENERAL COUNSEL IS A GREAT OPTION TO MEET CLIENT LEGAL NEEDS It is common advice for lawyers that they need to specialize in one niche area of the law to have a successful practice. However, my experience has shown that acting as an Outside General Counsel to a client can be an extremely valuable option for lawyers interested in being a client’s go-to phone call for any legal needs. While many people are familiar with in-house or general counsel, they may not have heard of an Outside General Counsel. In-house counsel are often used by large corporations that can afford to keep full time attorneys on staff who are familiar with the operations of the business. However, in-house counsel can be prohibitively expensive for most businesses that simply cannot afford a team of lawyers. By acting as Outside General Counsel, we can provide the same benefits of in-house counsel for organizations that do not need attorneys on staff full-time. What is an Outside General Counsel? Attorneys acting as Outside General Counsel have their own firm (and other clients) but can perform the same role and functions as in-house counsel for a fraction of the cost. It’s key to learn about the operations of each client’s organization, its goals, and typical legal needs. This way, whenever legal issues come up, you are prepared to address the client’s concerns in a way that is best for all aspects of the organization, not just the individual assignment. For someone to be a quality Outside General Counsel, they should be highly experienced across multiple business sectors and legal areas, which may include contracts, employment, intellectual property, compliance, or litigation. This allows for efficient representation without the high costs of an on-staff, in-house counsel. No matter what type of client you have, you can save your client’s time, money and energy by ensuring all of their legal needs are managed in one place, at a budget tailored to their business. As a good Outside General Counsel, you can become a trusted advisor who serves as the first phone call whenever a business needs legal guidance. Where many attorneys structure their practice to specialize in one area of the law, you are knowledgeable in many areas of practice, so are in a position to help no matter what issue your client faces. An easy way to understand the role is to think about how large corporations operate with in-house general counsel addressing all legal needs of the organization. This leads to one group of lawyers who are responsible for knowing the business from top to bottom and, when the need for legal work arises, they oversee a plan to get it done. This streamlines the process for the business owners, who can communicate with the same attorneys each time, knowing the team understands their operations and objectives and will provide the level of quality the business is accustomed to. How does Outside General Counsel benefit the client? The biggest benefit for a client using Outside General Counsel is that they will develop a long-term relationship with highly experienced counsel who understands their business but without the cost of keeping them on staff. Outside General Counsel can be retained on an hourly or monthly basis. As Outside General Counsel, you are your client’s go-to advisor for all aspects of their business. In the event a very specialized need arises, a good Outside General Counsel will have many trustworthy contacts that they can rely on to work with them. You can help your clients by taking the guesswork out of finding the right specialist by identifying quality specialized attorneys and business professionals, such as auditors or public relations experts. You can also provide value to clients by managing the work performed by practice specialists, ensuring that the budget is appropriate for your clients’ business, and considering the overall business objectives as part of the project. There is an important difference from an attorney who simply refers a client to another professional but does not manage their overall legal needs. An Outside General Counsel can save a business owner considerable time and effort navigating legal issues. Hiring Outside General Counsel is also an efficient option for non-profit organizations. Non-profits face additional oversight from government agencies and often have more restrictive budgets than their for-profit brethren. An Outside General Counsel skilled in advising non-profits will be able to anticipate questions from regulators to ensure compliance with relevant laws and regulations. What qualities do you need to be Outside General Counsel? One of the most important qualities an Outside General Counsel can have is trustworthiness. Your clients will expect that they can come to you with any legal problem and you will help guide them to the solution. This requires strong trust built on a foundation of strong strategic guidance. Additionally, it is critical to the success of an Outside General Counsel to be aware of the areas of law where they need the guidance of other attorneys, either within their own firm or not, to rely on when advising the client. For that reason, you need a reliable network of professionals you trust for questions where you need another opinion. Finally, to succeed as Outside General Counsel, you need to be able to address new and challenging topics on a regular basis. While specialized counsel may draft similar contracts or motions on a regular basis, you can expect to have clients ask unique questions so that most assignments aren’t repetitive of those you’ve done before. For attorneys who enjoy the idea of being able to assist their clients with all of their legal needs, Outside General Counsel can be a great option to consider as an alternative to specializing. This article first appeared on The New Jurist.

 The failings of the Catholic Church and other similar institutions offer lessons not just for religious organizations, but any organization faced with issues that could result in potential scandal. The Catholic sexual abuse scandal again came to light after a Pennsylvania grand jury found that over 1,000 victims had been sexually abused by more than 300 priests over 70 years and that many employees of the Catholic Church were involved in covering up the abuse. How was it that so much abuse was able to be hidden from the public eye for so long? The answer to this question holds lessons for all institutions who want to ensure they take the right steps in the face of allegations of misconduct. The most likely explanation is that the Catholic Church was protecting its reputation and rather than deal with the optics of priests being investigated and convicted of sexual abuse against children, the church tried to cover up the details and deal with the problem internally. In other words, the church created a de facto policy that when allegations surfaced that its priority would be to ensure that the allegations were not made public and the abuse not reported. When details did surface in the community, the Catholic Church would simply transfer the priest to a new church where the parishioners would not know he was a child abuser. As the grand jury put it, the church followed “a playbook for concealing abuse.” That “playbook” was policy. More details about this policy may be coming to light after the New York State Attorney General’s Office issued subpoenas to every Catholic diocese in the State as part of its investigation into sex crimes committed by Catholic priests. All businesses, especially churches, should have a policy “playbook” in place so that when something goes wrong, there’s a procedure to follow with a reporting protocol. While it makes sense to consider public image, there are legal, and often more importantly, ethical considerations that should go into those policies. An organization must have a policy in place that’s rooted in doing what’s right, rather than covering up shortcomings. Buy-in from the highest levels—including the general counsel—along with resources devoted to implementation of protocol, is the only way to ensure effective compliance with policy. This is critical when the safety of children is involved. During the decades that this abuse was ongoing, it should have been obvious to the church employees that covering up sexual abuse raised serious ethical concerns and liability. Willow Creek Community Church, a megachurch near Chicago, recently dealt with a similar issue when the entire leadership team resigned due to frustration with the response of church elders when allegations of sexual misconduct were made against the pastor. In 2013 and 2014 the church elders were made aware of a number of complaints of harassment during the prior two decades, including unwanted touching, kissing and sexual comments made to parishioners and church employees, according to the Chicago Tribune. The church was slow to bring any investigation or punishment against the pastor, exacerbating an already damaging situation. The churches involved in these scandals would have benefited from policies that focused on identifying abuse, reporting the abuse to authorities and demonstrating transparency with the congregation. Focusing on the safety of the children and other parishioners would have, in turn, protected the organization from reputational harm and liability. Instead, these churches went to great lengths to protect their own employees, despite knowledge of the terrible acts they had engaged in. Even though many priests may be protected by the statute of limitations, it will take years for the organization to regain the trust of the community it depended on for charitable donations. Putting safety first isn’t an issue unique to churches. For example, it didn’t take long for a lawsuit to be filed on behalf of the families of several victims of the July 19 duck boat tragedy in Branson, Missouri, where 17 passengers drowned. The complaint, filed in federal court, seeks $100 million for negligence, wrongful death and product liability from Ripley Entertainment, Ride the Ducks of Branson, Herschend Family Entertainment and other defendants. This unspeakable tragedy could have been avoided entirely, the complaint alleges, if the defendants had simply not sent the boat out onto the water with the reports of a storm approaching or if they had required the passengers to wear life vests. The defendants are also alleged to have ignored safety recommendations made by the National Transportation Safety Board following a duck boat accident in 1991. The defendants weren’t required to follow these recommendations by law, but they had ethical obligations to protect the safety of their customers. The defendants’ failure to create critically important policies or follow their existing policies may be to blame for the tragic deaths of their customers. Many businesses will likely face similar decisions, even if not on the same scale as protecting thousands of children from abuse. Businesses may be tempted to create policies with the goal of saving money or alleged protection of reputation. However, more often than not, prioritizing safety through sound policy is the best investment a business can make. This article can be viewed on Corporate Counsel.

Launching an online course, coaching program, or paid membership can feel exciting until you realize how easy it is for some one to copy your content, demand a refund, or share your materials without permission. The good news? With a few smart legal steps, you can protect your hard work and your peace of mind without killing your momentum or creativity. 1. Own Your Content (and Prove It) Your videos, worksheets, guides, and recorded sessions are your intellectual property the moment you create them.But if you ever have to enforce that right, you’ll need proof. Practical steps: • Keep dated drafts, scripts, or file metadata showing you created the material. • Add a simple copyright notice on your website and materials. • Register key materials with the U.S. Copyright Office if they’re valuable or likely to be copied. This small step can make the difference between sending a polite “take it down” email and having the leverage to enforce your rights. 2. Set Clear Terms and Disclaimers Many online programs skip the fine print until a client demands a refund or claims the course “didn’t work.” You don’t need to drown people in legalese, but you do need clear, customized terms that cover: • Refund and cancellation policies (especially for digital products) • Payment plans and chargebacks • Access limits — how long members keep materials • Disclaimers for results (e.g., “no guaranteed income or outcomes”) • Intellectual property rules — what students can and can’t reuse These can appear as a checkbox at checkout (“I agree to the Terms”) or in your onboarding emails as long as they’re clearly accepted before purchase. 3. Protect Your Brand and Name Your program name, logo, or tagline might be your biggest marketing asset.A trademark protects it from copycats and confusion. Ask yourself: • Is anyone else already using a similar name in your field? • Would losing this name hurt your business identity? If the answer is yes, filing a trademark early is one of the smartest investments you can make. 4. Use Client Agreements — Even Online If you’re running a higher-touch program (like group or 1:1 coaching), go beyond simple checkout terms.A written Coaching Agreement or Service Agreement should define: • Scope and limits of your services • Confidentiality and use of materials • What happens if payments stop • Scheduling, rescheduling, and termination rights This protects both sides and sets clear expectations which actually strengthens the client relationship. 5. Mind the Compliance Details A few extra checks can keep your online business out of regulatory trouble: • Privacy Policy: Required if you collect emails or payments online. • Email marketing laws: Always include an unsubscribe link. • Testimonial disclosures: If clients were compensated or received a freebie, say so. • Sales tax: Digital products and memberships may be taxable in some states (including New York). None of these are hard to fix, but ignoring them can get expensive fast. Bottom Line If you’re serious about your online business, treat it like one.A few upfront protections can prevent thousands in losses later and help you look more professional from day one. You don’t have to figure it all out at once. Start with the basics your terms, your agreements, and your brand protection and build from there. (Attorney Advertising. For general informational purposes only and not legal advice. For guidance on your specific situation, consult a qualified attorney.)

Why Contracts Matter: Real-World Problems a Simple Agreement Could Have Prevented

What Business Owners and Nonprofits Need to Know Artificial intelligence is everywhere right now. You can ask a chatbot to draft a contract, write a policy, or explain “what happens if my business partner leaves” all in seconds and usually for free. For busy business owners and nonprofit leaders, that’s tempting.If AI can write the document… do you still need a lawyer? Short answer: AI is a powerful tool, but it is not a substitute for legal judgment, strategy, or accountability. Used the wrong way, it can quietly create expensive problems for “future you” – the you who’s dealing with a lawsuit, a breakup between partners, a denied insurance claim, or an investigation by a regulator. How People Are Using AI Instead of Lawyers Most business and nonprofit leaders are using AI in a few core ways: • DIY contracts and policies • Asking AI to draft operating agreements, partnership agreements, client contracts, NDAs, terms of service, and privacy policies. • Dropping in a few facts about the business and asking for “a solid contract that protects us” without understanding which terms really matter, or how New York law treats them. • HR and employment documents • Generating offer letters, independent contractor agreements, non-competes/non-solicits, and employee handbooks “for New York” based on a short prompt. • Relying on AI to explain who can be treated as a contractor vs. employee, and what’s “standard” without understanding New York-specific wage and hour rules. • Governance, compliance, and disputes • Creating corporate bylaws, board resolutions, and nonprofit policies from templates generated by AI. • Having AI draft demand letters, cease-and-desist letters, or responses to disputes, then sending them out without legal review. It can all look very polished. The danger is that it may not be legally accurate, enforceable, or appropriate for your situation. The Risks of Letting AI “Be Your Lawyer” 1. No attorney–client relationship, no accountability AI is not a law firm. It doesn’t: • Owe you a duty of loyalty or confidentiality in the way a lawyer does • Assume responsibility for advising you under New York law • Carry malpractice insurance if things go wrong If a contract AI wrote for you leaves a massive loophole, misstates New York law, or fails in court, there’s no one on the hook for that but you. A real lawyer: • Owes you specific ethical duties • Is licensed, regulated, and subject to discipline • Has malpractice coverage and professional obligations to give competent advice AI has none of that. 2. “Looks right” ≠ legally right (especially under New York law) AI is excellent at producing language that sounds like a contract or policy. That doesn’t mean: • It reflects current New York law • It’s tailored for LLCs vs corporations vs nonprofits • It’s enforceable in the way you think Common issues that show up in AI-generated documents: • Wrong jurisdiction. Provisions that might work in Delaware or California but not in New York. • Old or generic rules. Using concepts that were true under prior law or in another state. • Missing mandatory language. For example, certain New York-specific disclosures, notices, or procedural details. • Contradictions within the document. One section quietly undermines what another section is trying to do. AI doesn’t sit down and ask you: • “How are the owners actually contributing capital?” • “What happens if one of you dies, becomes disabled, or simply disappears?” • “Are you subject to New York’s specific nonprofit or employment laws?” It just writes what sounds plausible. 3. AI is only as good as the input – and non-lawyers don’t know what to tell it This is one of the biggest hidden risks. Non-lawyers usually don’t know which facts are legally important. When you ask AI for help, you decide what to include: • You might mention the basic deal terms but leave out details that completely change the analysis (e.g., how people are paid, who controls the bank account, who owns IP, whether someone is licensed). • You might forget about related documents (old operating agreements, side letters, prior board decisions) that need to be considered. • You might not realize that a “small detail” triggers an entirely different set of New York rules. AI can’t fix what it doesn’t see. It: • Can’t issue-spot like a trained lawyer • Can’t press you with follow-up questions the way a good attorney will • Will confidently generate language based on an incomplete or misleading description So you end up with a very professional-looking answer to the wrong question or to an incomplete version of the real question. 4. No strategy, only text Law isn’t just words on paper. It’s: • Strategy • Leverage • Trade-offs • Human behavior AI can draft a clause, but it cannot: • Evaluate how a clause will play out when your business partner gets angry, or when your board is divided • Tell you when a “perfectly drafted” term is a terrible idea for your relationships or reputation • Help you decide whether to push on a point in negotiation or let it go Examples: • Partner buyout:AI can describe how a buy-sell clause works.A lawyer can analyze your cap table, your personalities, your exit plans, and help design something that won’t blow up on you later. • Nonprofit conflict-of-interest policy:AI can generate a policy.A lawyer can explain how the policy interacts with New York’s Not-for-Profit Corporation Law, your AG filings, and your specific board dynamics. • Employment issues:AI can draft an independent contractor agreement.A lawyer can walk you through misclassification risk, payroll tax exposure, and whether your “contractor” is really an employee. 5. Confidentiality and data risk When you paste sensitive information into an AI system, you should assume: • That information may be stored by a third party • You may not fully control where it lives or who has technical access For businesses and nonprofits, that can create: • Confidentiality issues with client/customer data • Potential privacy obligations (e.g., if you’re dealing with certain regulated information) • Reputational risk if details leak or systems are compromised A lawyer: • Is bound by strict confidentiality rules • Can help you decide what information should and shouldn’t be shared through any tool • Can draft appropriate data-processing and confidentiality agreements with vendors 6. Contracts that “work on paper” but fail in real life AI often produces contracts that are internally inconsistent or practically unworkable. Common patterns: • No clear remedies. The contract says what people “must” do, but not what happens if they don’t. • Impossible procedures. Deadlines or approval processes that no one will follow in real life. • Unintended personal liability. Owners accidentally signing in their individual capacity instead of on behalf of the entity. • Mismatched expectations. The language doesn’t reflect the actual business deal, which becomes a problem if there’s a dispute. A real lawyer: • Starts with the actual business terms and risk tolerance • Makes sure the contract reflects what you think you agreed to • Spots gaps between your operations and what the document assumes 7. Regulatory and nonprofit-specific traps This is where “generic AI output” is especially dangerous. Some examples: • Charitable solicitation and fundraising:A nonprofit relying on AI to “tell us how to fundraise nationwide” could easily miss state registration requirements and Attorney General rules. • Automatic renewals and subscriptions:New York and other states have specific laws about automatic renewal notices, cancellation, and disclosures. AI may or may not catch them. • Professional or licensed businesses:For accountants, therapists, doctors, architects, and other licensed professionals, entity structure and ownership restrictions are not optional. • Employment and wage/hour rules:“General US law” guidance on breaks, overtime, and classification can be very wrong for New York. A lawyer can’t promise zero risk, but can at least help you understand the landscape and make informed decisions. When Does It Make Sense to Bring in a Lawyer? You don’t need a lawyer for every single document or decision. But you should think very carefully before relying on AI alone for: • Anything involving ownership or control • Operating agreements, shareholder agreements, partnership agreements • Buy–sell provisions, exit terms, or valuation mechanisms • Employment and contractor issues • Hiring/firing, noncompetes/non-solicits, independent contractor relationships • Major contracts and revenue streams • Your main client/service contracts, MSAs/SOWs, key vendor agreements • Nonprofit governance and fundraising • Bylaws, conflict policies, AG filings, real estate transactions, mergers, dissolutions • High-stakes disputes • Threatened lawsuits, demand letters, or settlement negotiations These are the areas where a mistake now can become a six-figure problem later. The Bottom Line AI is here to stay, and it can absolutely make legal work more efficient in the background. But: • AI does not replace legal judgment, strategy, or accountability • “Looks professional” is not the same as “protects you under New York law” • The more complex, high-stakes, or relationship-heavy the issue, the more you need a real lawyer involved If you’re: • Relying heavily on AI for contracts or policies • Thinking about a major deal or restructuring • Worried your documents might not match how you actually operate …it’s a good time for a legal check-up. If you’d like to talk about where AI might be “good enough” and where you really need a human lawyer in the loop, you can contact my office to schedule a consultation. (This article is for general informational purposes only and is not legal advice. Reading it does not create an attorney–client relationship. For advice about your specific situation, please consult a lawyer licensed in your jurisdiction.) 

Nonprofit leaders are busy. When the board agrees on something in a meeting, it’s tempting to treat that as “good enou gh” and move on. But from a legal and practical standpoint, it’s not enough that the board talked about a decision or even agreed informally. For many key actions, your nonprofit needs a clear, written record, usually in the form of a board resolution documented in your minutes or by a written consent. Think of resolutions as the “receipts” that show your board is doing its job. Below are ten decisions that should always be backed by a formal board resolution (or clearly documented in your meeting minutes). What Is a Board Resolution, Really? A board resolution is simply a formal decision of the board, written down and adopted at a meeting or by unanimous written consent. It answers three basic questions: • What is the board approving? • Who is authorized to carry it out? • When/under what terms does it happen? Resolutions don’t need to be complicated. But they should be: • Clear • Specific • Kept with your corporate records (minutes, bylaws, key policies, etc.) 1. Adopting or Amending Bylaws Why it matters:Your bylaws are the “rulebook” for how your nonprofit operates. Changing them without a clear record creates confusion about which version is in effect. Without a resolution, you risk: • Disputes about who has authority to act • Challenges from regulators or funders about whether actions were valid • Difficulty showing good governance if there’s ever an investigation or dispute 2. Electing or Removing Directors Why it matters:Your board is the legal decision-maker for the nonprofit. You need a clean record of who is actually on the board and when that changed. Without a resolution, you risk: • Questions about whether votes were valid • Former directors still “on paper” with banks or regulators • Disputes if someone claims they weren’t properly removed 3. Hiring or Firing the Executive Director (and Other Key Officers) Why it matters:The board’s most important job is selecting, supporting, and (if necessary) replacing the executive director. This should never be done casually. Without a resolution, you risk: • Confusion over who is authorized to run the organization • Employment disputes with no clear record of the board’s decision • Problems with banks, funders, and partners who rely on your records 4. Approving the Annual Budget Why it matters:Approving a budget is not just a “finance committee thing.” It’s a core board responsibility that shows oversight of how the nonprofit uses its resources. Without a resolution, you risk: • Blurred accountability for overspending or poor financial decisions • Difficulty showing funders your board actively oversees finances • Red flags for auditors, regulators, or major donors 5. Opening or Closing Bank Accounts / Changing Signers Why it matters:Banks typically require formal authorization. Internally, you need a clear record of: • Where your money is held • Who can sign checks or access funds • When those authorizations changed Without a resolution, you risk: • Former staff or board members still having access • Banks refusing to act because documentation is missing • Internal confusion or even opportunities for misuse of funds 6. Entering into Major Contracts or Leases Why it matters:If your nonprofit is signing: • A multi-year lease • A major vendor contract • A long-term service agreement …that’s a board-level decision, not something to be left to a quick email chain. Without a resolution, you risk: • Disputes about whether the person who signed was authorized • Board members claiming they never approved the commitment • Difficulty walking away from a bad contract 7. Buying, Selling, or Leasing Real Estate Why it matters:Real estate transactions are high-stakes: long-term leases, purchases, or sales of property. These often trigger additional legal requirements, lender consents, and sometimes approvals from regulators or courts, depending on the situation. Without a resolution, you risk: • Challenges to the validity of the transaction • Delays or issues with title companies, lenders, or regulators • Internal disputes over whether the board approved the deal 8. Taking Out Loans or Lines of Credit Why it matters:Debt can significantly impact your nonprofit’s finances and future flexibility. The board should clearly approve: • The fact that the organization is borrowing • Key terms (amount, lender, interest rate, general repayment terms) • Who is authorized to sign the loan documents Without a resolution, you risk: • Board members claiming they never agreed to the debt • Lenders refusing to proceed or later questioning authority • Governance concerns if cash flow becomes tight and tough decisions are needed 9. Approving Related-Party Transactions / Conflicts of Interest Why it matters:If a board member, officer, or someone closely connected to them has a financial interest in a transaction with the nonprofit (e.g., their company is providing services), you’re in conflict-of-interest territory. These situations aren’t automatically prohibited — but they must be handled carefully: • Full disclosure of the conflict • Recusal of the conflicted person from voting • Documentation that the board determined the arrangement is fair and in the nonprofit’s best interests Without a resolution, you risk: • Serious questions from the Attorney General, donors, or auditors • Potential challenges to the validity of the transaction • Damage to your credibility and public trust 10. Changing the Mission, Programs, or Strategic Direction Why it matters:Major changes in mission or core programs are not just program decisions — they’re governance decisions with legal and practical consequences: • Your IRS and state filings are based on your stated purposes • Funders may have given money for specific purposes • Stakeholders (staff, volunteers, community) rely on a certain mission Without a resolution, you risk: • Misalignment between what you say you do and what you actually do • Potential compliance questions if you drift too far from your stated purposes • Confusion inside the organization about priorities and decision-making How to Put This into Practice A few simple habits go a long way: • Use a standard template for resolutions to keep things consistent. • Build resolutions into your agendas for big decisions. • Keep a “Resolutions” folder with your minutes and corporate records. • Train your board leadership and ED on when a resolution is needed. Need Help Getting Your Board Resolutions in Order? If you’re reading this and thinking, “We’ve made half these decisions without a single formal resolution,” you’re not alone — and it’s fixable. A nonprofit-focused attorney can help you: • Review your past decisions and clean up the paper trail • Develop simple resolution templates your board can actually use • Align your bylaws, policies, and board practices with legal requirements If you’d like a quick audit of your governance practices or help building a practical resolution process for your board, this is exactly the kind of thing we help nonprofits with. 

By: Ameera Khurshid When New York business partners split, what happens to the company’s assets? Here’s how ownership, property, and goodwill are handled under New York law during a business breakup. Introduction When business partners decide to part ways, the emotional and financial stakes can be just as high as in a marital divorce. In New York, these “business divorces” often come down to one critical question: what happens to the company’s assets? Whether you are splitting from a co-owner in an LLC or corporation, understanding how the law treats company property, cash, and goodwill can help you protect your interests and make informed decisions about the future. • The Company Owns the Assets A common misconception among business owners is that each partner personally “owns” a share of the company’s property. Under New York law, that is not the case. Once a business is formed as an LLC or corporation, the entity itself owns its assets. The office furniture, bank accounts, intellectual property, and even the company’s name legally belong to the business and not to the individual owners. When partners go their separate ways, they are not dividing up the physical assets; they are dividing ownership interests in the company. In practice, this usually means one partner buys out the others’ interests, or the business is sold or dissolved, and the proceeds are distributed according to the ownership percentages. • The Operating or Shareholders’ Agreement Controls The first step is to look at your Operating Agreement (for LLCs) or Shareholders’ Agreement or Bylaws (for corporations). These documents often dictate what happens when an owner wants to leave, dies, or becomes unable to continue in the business. Well-drafted agreements include buy-sell provisions, tie-breaking procedures, valuation methods, and rules for handling company property. For example, the agreement might specify whether remaining owners can buy out the departing partner’s interest and how to calculate a fair price. If there’s no written agreement, then New York’s default rules will apply, for LLCs, these are found in the Limited Liability Company Law, and for corporations, in the Business Corporation Law (BCL). In either case, the absence of a clear agreement can lead to uncertainty, disputes, or even judicial dissolution, also known as court-ordered winding up of the business. • If the Business Continues: Buyouts Instead of Breakups In many cases, the business continues to operate after one partner leaves. Instead of dividing assets, the departing member’s ownership interest is bought out, either by the company or the remaining owners, depending on what the operating agreement states or what the owners agree upon. The value of that ownership interest depends on a business valuation, which may be determined by: • An independent appraiser, • A pre-agreed formula in the operating agreement, or • Negotiation between the parties. This approach avoids liquidation and preserves business continuity, especially when the company has significant goodwill, client relationships, or intellectual property that could be lost in a full dissolution. • If the Business Dissolves: Selling and Distributing Assets If the owners cannot agree on how to proceed, one may seek judicial dissolution under LLC Law §702. In that scenario, the court can order the business to wind up its affairs. When a court orders dissolution, it oversees an orderly process to make sure all obligations are met before owners receive anything. The court typically appoints a receiver or liquidating partner to sell company property, settle debts, and collect any money owed to the business. Once liabilities are paid, the remaining funds are divided among the owners according to their ownership interests or as stated in the operating or shareholder agreement. If the agreement doesn’t specify distribution terms, the court follows New York’s default rules under the Limited Liability Company Law for LLCs or Business Corporation Law for corporations, ensuring a fair and proportionate allocation of what remains. This can be a fair but inefficient outcome, especially when valuable assets like trademarks, client goodwill, or ongoing contracts are forced to be sold. • Handling Intangible Assets: Goodwill, Clients, and IP In modern businesses, the most valuable assets are often intangible. New York law treats goodwill, which is the reputation, client loyalty, and brand recognition of a business, as a distributable asset, but distinguishing it can be tricky. In professional practices (like law, healthcare, or consulting), courts differentiate between enterprise goodwill (value attached to the business itself) and personal goodwill (value attached to an individual’s reputation). Only the former belongs to the company. Other intangible assets, such as trademarks, websites, and proprietary materials, are typically owned by the business entity and can be sold, transferred, or retained by agreement during the split. If the owners cannot agree on how to divide these assets, the court will usually step in. It may appoint an appraiser to determine their market value and order the assets to be sold, with the proceeds distributed based on ownership percentages. In some cases, one owner may be permitted to keep certain assets, if they buy out the others’ interests. Without a clear plan, these disputes can become costly and delay the resolution of the business breakup. • How to Avoid Asset Confusion in the Future The best way to avoid a messy division later is to plan ahead. Before problems arise: • Keep a clear record of who contributed what to the business. • Separate personal and company property. • Establish buy-sell and valuation procedures in your operating or shareholder agreement. Consult a lawyer for this. • Decide how intellectual property and client relationships will be handled if someone exits. A few proactive steps at the start of the partnership can prevent years of stress and costly litigation later. Conclusion A business breakup does not have to destroy what you have built. In New York, company assets do not simply get divided up like personal property. They are managed and distributed according to law, contracts, and fairness principles. If you are navigating a potential business divorce or ownership dispute in New York, The Herd Law Office can help you understand your options, protect company assets, and move forward with clarity and confidence. 

Running a nonprofit means keeping your mission front and center while meeting real legal requirements. Year-end is the best time to button up governance, fix small issues before they become big ones, and set your board up for a smoother year ahead Below is an action-oriented checklist focused on New York rules and Attorney General (AG) expectations. 1) Board Minutes & Annual Actions: Prove the Board Is Doing Its Job Why it matters: Good minutes and annual resolutions protect the organization and directors, and they’re the first thing grantors, auditors, and regulators review. What to do now • Close the loop on minutes. Ensure all 2025 board and committee meetings are documented, approved, and signed. • Annual resolutions. Document officer elections/appointments, committee slates, banking authority, contract signers, and compensation decisions. • Consent calendar discipline. Routine items go on a consent agenda; sensitive items (compensation, related-party matters) get standalone discussion and recorded votes. • Document oversight. Note in the minutes when the board reviewed finances, key risks, and compliance items (conflicts policy, whistleblower policy, fundraising). 2) Related-Party Transactions (RPTs): Identify, Vet, and Paper Them Properly Why it matters: NY law requires special treatment for transactions with directors, officers, key persons, or their businesses/family. These are common (e.g., renting space from a board member) and not inherently wrong but they must be properly reviewed and documented. What to do now • Run a year-end conflicts sweep. Ask each director/officer/key person to update their annual disclosure vendors, leases, paid services, family ties. • Use the right approval process. For any RPT, the board (or an authorized committee) should: • Determine the transaction is fair, reasonable, and in the organization’s best interest. • Document alternatives considered (e.g., other bids/quotes). • Exclude the interested person from deliberations and votes. • Record it well. Minutes should identify the interest, summarize facts, show the vote, and capture the fairness finding. 3) Policies That Must Actually Work (Not Just Sit in a Binder) Why it matters: New York’s Not-for-Profit Corporation Law expects working policies, not window dressing. What to do now • Conflict of Interest Policy. Confirm you have annual written disclosures from all directors, officers, and key persons and that you used them when RPTs arose. • Whistleblower Policy. Make sure the procedures are known to staff/volunteers, with named reporting channels and no-retaliation language. • Document retention & signing authority. Refresh who can sign what (and at what dollar limits). Ensure you have a practical records schedule. 4) NY Charities Bureau Registration & Fundraising: Finish the Year Clean Why it matters: Most NY nonprofits that solicit contributions must register and file annually with the AG’s Charities Bureau. Fundraising activities (including online) can trigger extra rules. What to do now • Check your registration status. Are you properly registered to solicit? Are all required annual filings current? Note any extension deadlines. • Professional help? If you use professional fundraisers or fundraising counsel, confirm they’re registered and that your written contracts include required terms. • Commercial co-ventures. Cause-marketing (“$1 per sale goes to X”) needs a compliant written agreement and specific disclosures. • Donation acknowledgments. Ensure receipts include required information (and quid pro quo disclosures when donors receive something of value). 5) Compensation & Key Decisions: Show Independent Review Why it matters: Compensation for executives or insiders draws scrutiny. The process matters as much as the outcome. What to do now • Independent approval. Compensation should be set by independent directors using comparability data (e.g., salary surveys, similar roles). • Paper the process. Minutes should reflect the data reviewed, who voted, and the final determination. 6) Restricted Gifts, Grants, and Reporting: Keep Promises Clear Why it matters: Donor restrictions are legally enforceable; missteps create reputational and legal risk. What to do now • Gift acceptance hygiene. Confirm you have clear rules for restricted gifts and the power to decline problematic donations. • Grant calendars. Map reporting deadlines for Q1/Q2 to avoid scrambling—and reflect oversight in minutes. 7) Leases, Vendors, and Insurance: Align the Paper Why it matters: Your obligations in contracts must match your insurance coverage and internal controls. What to do now • Contract spot-check. Look for indemnity clauses, personal guaranties, assignment/consent limits, and auto-renew dates. • Insurance match. Verify that required additional-insured/waiver-of-subrogation provisions are actually endorsed on your policies. Quick Year-End “Green-Light” Checklist • ✅ All 2025 board/committee minutes complete and approved • ✅ Annual disclosures collected; RPTs reviewed and documented • ✅ Conflict & whistleblower policies used in practice • ✅ NY Charities Bureau registration/filings on track; fundraising agreements compliant • ✅ Executive pay approved by independent board with comparability data • ✅ Gift restrictions tracked; grant reports calendared • ✅ Key contracts and insurance aligned; renewal/termination dates mapped When to Call A Lawyer • You found (or suspect) a related-party transaction and need it reviewed and papered correctly. • Your minutes, policies, or filings aren’t complete—or you’re not sure what’s missing. • You used a fundraising consultant, platform, or cause-marketing campaign in 2025. • You need to clean up bylaws/board structure, update officer/authority, or refresh committee charters. • A grantor or auditor asked questions you’re not comfortable answering yet. This article is general information for New York nonprofits and not legal advice. Reading it does not create an attorney-client relationship. Attorney Advertising. 

The FTC’s Noncompete Ban Is Dead. What Smart NY Employers Should Do Now Bottom line: The nationwide FTC ban on employee noncompete agreements is off the table. A Texas federal judge vacated the rule in August 2024, and on September 5, 2025 the FTC formally dropped its appeals and agreed to the vacatur. The Rule will not take effect. That doesn’t mean “anything goes.” Expect continued case-by-case enforcement against overreaching restrictions, plus active state law (including possible new NY legislation). Now is the time to tune your agreements and practices—not to shelve them. What changed • The 2024 FTC Rule is vacated nationwide. The Northern District of Texas held the FTC lacked authority for such a sweeping rule and that the rule was arbitrary and capricious. The court’s order set the Rule aside; it never took effect. • The FTC ended its appeals. On Sept. 5, 2025, the FTC moved to dismiss its Fifth and Eleventh Circuit appeals and acceded to vacatur. • But enforcement isn’t gone. The FTC and DOJ can still challenge non-competes and look-alikes when they harm competition. Agencies have said they’ll continue policing abusive restraints even without a blanket rule. Where New York stands • No statewide ban—yet. Governor Hochul vetoed a broad ban in 2023 and has favored a narrower approach. New bills introduced in 2025 would restrict many noncompetes (especially for lower-wage workers) but have not been passed as of the date this article is published. However, there may be developments in 2026 or later. • Current NY test = reasonableness. New York courts enforce noncompetes only if (1) necessary to protect legitimate interests (trade secrets, client relationships, unique services), (2) reasonable in scope/duration/geography, and (3) not harmful to the public. Practical playbook for NY employers and nonprofits 1) Use noncompetes sparingly and narrowly • Reserve for senior, truly key roles or in sale-of-business deals; keep durations short (often 6–12 months). • Tie the clause to real protectable interests (document the “why”). • Avoid blanket “industry-wide” or “nationwide” bans unless facts justify it. 2) Prefer safer alternatives • NDA/Confidentiality: Comprehensive but tailored definition of confidential info; clear carve-outs; robust return-of-materials and device/drive access cooperation. • Non-solicitation (customers/employees): Narrowly define “customer” (e.g., those with whom the employee had material contact in past 12–18 months). • Non-interference/Non-raiding: Calibrate to real risks in your industry. • IP/Work-made-for-hire + invention assignment: Especially for creative/technical roles. • Reasonable “Garden Leave” (paid notice periods) for a handful of truly sensitive positions. Why: Courts are more receptive to targeted restraints; agencies are less likely to view them as anticompetitive than broad noncompetes. 3) Align agreements with how you actually operate • Role-based scoping: Map each restriction to job duties and access rights. • Access minimization: Use IT permissions so fewer employees need sweeping restrictions. • Compensation alignment: Consider bonuses/RSUs with forfeiture-for-competition that are lawful in NY (careful drafting required). 4) Update your onboarding/offboarding • Onboarding: Signed agreements before start date; device and account policy acknowledgments; data classification training. • Offboarding: Exit interview script; reminders of continuing obligations; certificate of compliance (return/deletion). • For nonprofits: Ensure restrictions align with mission, do not chill whistleblowing, and don’t create private-benefit optics. Red-flags that trigger enforcement or lawsuits • Noncompetes for low-wage or non-sensitive roles • “No future employment in our industry” language. • One-size-fits-all templates used across unrelated roles. • Retaliation or threats to enforce plainly unenforceable clauses Action checklist • Inventory your current contracts by role; flag any noncompetes used below director level. • Replace many noncompetes with NDA + non-solicit tailored to recent customer contacts. • Tighten definitions (confidential info, “compete,” “customer”), duration (≤12 months), and territory (facts-based). • Train managers not to threaten enforcement casually; route disputes through counsel. • Plan for NY changes: Keep a “patch file” ready if Albany moves a new bill in 2026. FAQs Can we keep our existing noncompetes?Yes—subject to NY reasonableness limits and antitrust risk. Consider narrowing at renewal and pairing with stronger NDA/non-solicit. Will the FTC come after us now?Not for violating the vacated rule. But the FTC can still pursue unfair methods of competition on a case-by-case basis (e.g., collusive or coercive restraints). What about future NY law?A broad ban failed in 2023; targeted bills resurfaced in 2025 and may return. Build portable agreements that will age well under likely NY reforms. Attorney Advertising; Not Legal Advice This overview is general information based on developments through Sept. 24, 2025. Outcomes vary by facts, industry, and employee level. For client-specific drafting or enforcement strategy, please contact our office. 

Starting a business with a partner often feels like a marriage: you share ideas, resources, and dreams for the future. But just like in personal relationships, sometimes things don’t work out as planned. When it’s time to part ways, handling the separation with clarity and care can protect your business, your finances, and your peace of mind. Here’s how to break up with your business partner legally and (hopefully) peacefully. Step 1: Review Your Governing Documents The first place to look is your operating agreement (for LLCs), shareholders’ agreement (for corporations), or partnership agreement (for general/limited partnerships). These agreements often outline: • How ownership interests can be bought out • Valuation methods (appraisals, formulas, or negotiated price) • Voting rights for approving a separation • Procedures for dissolving the business if buyout isn’t possible If you don’t have these documents in place, state law (in New York, that means the LLC Law, Partnership Law, or Business Corporation Law) will fill in the gaps, but that usually leaves less control in your hands. Step 2: Get a Clear Picture of the Business Before negotiations begin, you’ll need to know the numbers: • Current financial statements • Outstanding debts and obligations • Contracts with employees, vendors, and customers • Intellectual property or licenses held by the business This information helps both partners understand what’s really at stake and can reduce suspicion or accusations later. Step 3: Explore Options for Moving Forward There are several ways to separate: • Buyout – One partner purchases the other’s ownership interest. • Third-Party Sale – The business (or its assets) is sold, and proceeds are split. • Dissolution – The company winds down, pays debts, and distributes what’s left. • Restructuring – Sometimes, adjusting roles or percentages solves the conflict without a full exit. Each option has tax, liability, and operational consequences, so it’s important to evaluate carefully. Step 4: Put the Agreement in Writing Handshake deals may feel faster, but they’re risky. A formal separation agreement should cover: • Purchase price and payment terms • Release of claims between partners • Handling of ongoing liabilities (e.g., leases, loans) • Non-compete or non-solicitation provisions, if appropriate This written agreement ensures clarity and reduces the chance of future disputes. Step 5: File the Right Paperwork Breaking up isn’t just between you and your partner—the government needs to know too. Depending on the path chosen, this may include: • Amending the business’s operating agreement or corporate records • Filing dissolution papers with the New York Department of State • Notifying the IRS and NY Department of Taxation and Finance • Updating bank accounts, licenses, and permits Skipping these steps can leave you personally liable for taxes or debts. Step 6: Keep It Professional Even when emotions run high, maintaining professionalism is crucial. Consider: • Using a neutral mediator to help resolve disputes • Communicating clearly with employees, clients, and vendors • Focusing on business goals instead of personal grievances The goal is not just to end the partnership, but to protect your reputation and future opportunities. Final Thoughts Ending a business partnership doesn’t have to mean burning bridges. With the right legal steps and a focus on fairness, you can move on cleanly and set yourself up for success in your next venture. If you’re considering a separation, working with an attorney can ensure the process is handled properly, with minimal disruption and maximum protection. Disclaimer: This article is for informational purposes only and does not constitute legal advice. For advice tailored to your specific situation, consult with an attorney. Back to News "