About UCI Applied Innovation:
UCI Applied Innovation is a dynamic, innovative central platform for the UCI campus, entrepreneurs, inventors, the business community and investors to collaborate and move UCI research from lab to market.
About the Cove @ UCI:
To accelerate collaboration by better connecting innovation partners in Orange County, UCI Applied Innovation created the Cove, a physical, state-of-the-art hub for entrepreneurs to gather and navigate the resources available both on and off campus. The Cove is headquarters for UCI Applied Innovation, as well as houses several ecosystem partners including incubators, accelerators, angel investors, venture capitalists, mentors and legal experts.
Follow us on social media:
Facebook: @UCICove
Twitter: @UCICove
Instagram: @UCICove
LinkedIn: @UCIAppliedInnovation
For more information:
cove@uci.edu
http://innovation.uci.edu/
2. Any size organization should implement effective
compliance and ethics programs, per Amendment 673,
US Sentencing Commission, Guidelines Manual, section
8B2 (Nov. 2013).
The US Sentencing Guidelines provide a model to help
mitigate the risk of compliance failure.
Therefore, achieving consistent legal compliance in
today’s highly regulated environment is critical.
Promising to obey the law is no longer enough.
Note that various agreements, like corporate credit
agreements, commonly include additional
representations and covenants that the borrower/issuer
has implemented and maintained policies and
procedures ensuring compliance with specified laws.
3. The legal risk appetite is appropriate and expected
risks are commensurate with expected rewards;
Management has implemented an appropriate system
to manage, monitor and mitigate legal risk;
This system informs the organization of the major
risks, as part of a broader appropriate culture of risk-
awareness;
There is recognition that legal risk management is
not only essential to the successful execution of the
organization’s overall strategy, but that it is part of
the organization’s culture;
The organization’s culture does not become overly
reactive, rather should encourage targeted training.
4. At the start!
Help select a form of entity
Help understand the legal implications of
contracts
Help identify and protect intellectual assets
Advise on real estate and other transactions
Attorney-client relationship:
Mutual respect and trust
Value
5. Choosing the form of entity
Capital considerations
Licenses, permits and legal documentation
Asset protection
6. State of formation
Limited liability
Taxation
Raising capital
Governance
Structures include: sole proprietorships,
partnerships, LLCs, limited partnerships, S
corporations, and C corporations
7. DE or NV?
State of primary operations
Entity formed in a non-operating state
Costs of forming an entity in a non-operating
state:
-Fees to register as a foreign entity in the operating state
-Agent for service of process
-Annual franchise taxes
9. How much capitalization is sufficient:
-Self funded
-Outside investors
Founders’ stock-price, common v. preferred
Securities law compliance
Periodic Valuation of Stock
10. Promissory notes
Convertible notes
Debentures
Common stock
Preferred stock
Options
Warrants (issued directly by the company)
11. Federal, State, City and/or County licenses
and permits
Employer ID numbers
Export/import licenses
Right to use the chosen entity name
13. State partnership act
General and limited
Legal formalities
Content:
How managed
How profits and losses are allocated &
distributed
Avoid boilerplate!
14. Identification of IP Assets
-Patents
-Trade secrets
-Copyright
-Trademarks
15. Re-cap of aforementioned concepts
Enterprise Risk Management
ISO 31000
New way of viewing legal risk management
What about the lean business model canvas?
16. Risk and Insurance Management Society (RIMS) Risk
Maturity Model for ERM, is an umbrella framework of
content and methodology which details requirements
for sustainable and effective ERM, with seven attributes
creating ERM’s value and utility in an organization: 1)
ERM-based approach; 2) ERM process management; 3)
risk appetite management; 4) root cause discipline; 5)
uncovering risks; 6) performance management; and 7)
business resiliency and sustainability.
Criticism of ERM: completely misses entity-threatening
risks, missing the fundamental point of formalized risk
management, which is to increase certainty that
objectives are achieved with a tolerable level of risk to
senior management and the board.
17. Definition of risk: effect of uncertainty on objectives
(source: ISO 31000:2009, ISO/IEC Guide 73:2009).
Risk only arises when an organization sets out to
achieve something.
Risk arises from those internal and external factors and
influences that the organization does not completely
control but that may cause it to fail to achieve its
objectives or may cause delay.
Such factors and influences can also lead to those
objectives being obtained early or even exceeded.
Risk is neither positive nor negative, but the
consequences that the organization experiences may
vary from loss/detriment to gain/benefit.
Managing risk is a process of optimization that makes
the achievement of objectives more likely.
18. Depending on the organization, effective
regulatory compliance and legal risk
management (while overall goals for most all
organizations) can have varying structures
and dimensions.
Scope: a) as a project: there are defined
objectives with scope being progressively
elaborated throughout the project life cycle;
and b) as a program: generally larger in scope
than a project and provides more significant
benefits.
19. Officers and directors, D & O insurance
Employment law issues:
-compliance with wage & hour laws, OSHA and other
applicable state and federal laws
-employees v. consultants & independent contractors
Bank account, business license, sales tax
resale number/account, general liability
insurance
Life insurance
20. Set risk tolerance, identify potential risks,
prioritize risk tolerance, manage & mitigate
risk
See the connections
Develop risk management mentality
Look ahead
Manage regulation by rethinking
Focus on insight
ISO 31000 framework
21. Legal Property Rights: a) given to companies & individuals to protect
certain creations (primary motivation to take risks); b) can be:
patents, copyrights, trademarks.
Understand product life cycle, which is determined by: a) rate of
technological change; and b) fads/trends.
Challenge is for the organization to tap into the creativity of the
individual employee.
Organizational culture not only must support creativity to make
intrapreneurship possible, but also understand how to handle that
creativity.
Managing & Promoting Innovation includes coordination of creative
minds in project management, as well as other cross-functional team
members.
New Venture Division: completely independent division that is given
a complete set of support functions to manage a project start to
finish and bring a new product/service to market.
Joint Venture: allows 2 organizations to pool resources to take on a
risky R&D project with costs, risks and eventual profits shared.
22. Educate yourself on various aspects of starting a business.
Seek relevant professional advice BEFORE starting a business.
Always factor in the proposed exit strategy in making
significant business decisions.
Identify and appropriately protect assets.
Do you due diligence BEFOREHAND!
Do NOT use a name/logo without the attorney conducting a
trademark search.
Do NOT ignore your long-term goals when choosing form of
entity.
Do NOT sign up for anything that is not researched.
Do NOT sign a contract unless you have sought professional
legal advice.