Whether you are starting a small business or running an established company, it is vital to understand business laws and regulations. But that is easier said than done. My goal is to provide business-related legal services so that you can spend more time dealing with the actual business and less time with legal intricacies of operating your business. My services include:

Business formation

You have a new and innovative product or service and you are interested in forming a new business. You may have concerns about liability, taxes, investors and other considerations. As your small business lawyers, we will assist you in deciding whether your startup business should organize as a limited liability company (LLC), partnership, S corporation or C corporation. We will form the most appropriate business organization for your new business and register the business in all jurisdictions in which it will conduct business.

Mergers and acquisitions

If your business is fortunate to thrive and become a merger or acquisition target, we can represent you as the seller; or if you are on the other side and looking to acquire a business, we can assist with the due diligence in purchasing a business. We will review various approaches in purchasing a business through merger or acquisition. We will discuss with you various structures in purchasing the stock or purchasing the assets of an acquisition target. In either case, your business will need thoughtful and comprehensive representation in all aspects of a merger or acquisition.

Government contracting

Government contractors face numerous issues when contracting with the government. And with a hands-on approach and substantial experience, we will help you navigate those legal issues. We prepare teaming agreements, subcontracts and joint venture agreements and can handle a variety of other government contract matters. As government contract lawyers for your small business, we can assist you in applying for programs for HUBZones, service-disabled veteran-owned small businesses or women-owned businesses. If your company is facing debarment or suspension because of allegations of corruption or bribery, we can assist in your defense before the U.S. government or the World Bank.

Business transactions

Once you have an ongoing business, however organized, you will have a host of various commercial transactions. We prepare agreements with lenders, lessors, partners, customers, employees, and consultants. We provide business legal services for your company, preparing confidentiality agreements, nondisclosure agreements, licensing agreements, distribution, employment agreements, independent contractor agreements, lease agreements, and many others. We will help you understand what each part of these agreements require and make sure that these agreements provide protection to you and your business.

Corporate law

Once your startup business has been created, your company will have ongoing requirements to maintain its separate status. We will assist in guiding you on how to prepare corporate minutes or resolutions of the company to maintain the corporate form and other steps to protect the limited liability of your company. You will also have to make sure that your bylaws or operating agreement continues to reflect the needs of the business organization. We are available to assist you in addressing these issues. And once your company is ready to raise additional capital from investors, we can work with you to determine whether you are subject to securities laws or fall within one of the exemptions.

Business disputes

Few businesses are immune to business disputes. If your small business was well-advised, you have an agreement that will provide guideposts on how to resolve your business dispute. If you are unable to settle your dispute, you may have a dispute resolution mechanism such as mediation or arbitration in the agreement. An alternative dispute resolution mechanism such as arbitration or mediation generally can provide a relatively quick resolution of your business dispute. If not, then you may have to consider litigation. We handle business disputes, including pre-litigation matters, mediation, arbitration and litigation.

Anti-corruption compliance

Every company should have procedures and policies to minimize its exposure to allegations of corruption or bribery. An integrity compliance program (ICP) is essential for businesses doing work internationally for the United States government or work financed through one of the development banks. We can assist in reviewing or preparing an ICP to assure that is consistent with the anti-bribery and anti-corruption guidelines from the World Bank. If your company is facing debarment or suspension because of allegations of corruption or bribery, we can assist in your defense before the U.S. government or the World Bank.

Non-profit law

We work with organizations to obtain their tax exempt status under Section 501(c)(3) of the Internal Revenue Code. There have been recent changes to obtaining 501(c)(3) status and we have worked with organizations in submitting successful applications on the simplified track by filing a 1023-EZ and the more rigorous 1023 application for larger organizations. Nonprofits also face similar legal challenges to assure that they comply with business requirements and additional requirements to assure that they do not jeopardize their tax exempt status. As a law firm for nonprofits, we work with nonprofit organizations to guide them through these issues.

FAQ Small Business Attorney in DC

What is considered a small business?

Almost all our clients fall within the definition of small business/startup as determined by the Office of Advocacy of the U.S. Small Business Administration. Under this definition, a small business has fewer than 500 employees. Small businesses encompass about 99.9% of all business organizations in the United States.

Which industries do you serve as a small business attorney?

Most of our clients are service providers such as consulting companies, law firms, accounting and bookkeeping services, cybersecurity consultants, video production companies, and lobbyists, just to name a few. We also represent foreign and domestic manufacturers and software developers.

As a small business lawyer in DC, we represent some retail operations, such as bookstores and restaurants. We also represent numerous nonprofits with varying missions. Our government contractors clients hold various IDIQs (Indefinite Delivery, Indefinite quantity Contracts) and GSA schedules.

In which areas of the law does a small business or startup need legal assistance?

Most times, small businesses/startups need the services of outside general counsel. As outside general counsel for small businesses, we can handle most matters as a small business attorney that small businesses generally encounter. Usually, anything with the word agreement or contract is within our practice areas. This includes operating and shareholder agreements, which are used for small businesses and startups that are formalizing their relationships with their owners. Once a business is formed, then we prepare and review a host of other agreements, such as service agreements (which may be referred to as client agreements or consulting agreements), independent contractor agreements (which may be referred to as subcontracting agreements), employment agreements, teaming agreements, purchase and sale agreements, merger agreements, option agreements, license agreements, lease agreements, and the list goes on.

What factors should a small business and startup look for in retaining the services of a lawyer for small businesses?

With our extensive experience of working as a small business attorney in DC for decades now, background and experience should come right at the top of the list when looking for a small business lawyer. We think that accessibility and communication are essential for a successful relationship between an attorney and a client. Hourly rate is important but not as important as quality of service.

What kind of experience do you have in advising small businesses as an attorney?

Keith Rosten has not only legal experience but also business and practical experience that allows him to relate to the trials and tribulations of a small business owner. Keith has BigLaw experience before working for small and medium-sized businesses, first at his own law firm focused on small businesses and then with Berliner Corcoran & Rowe LLP.

Keith has substantial business experience. He received an MBA from the Tuck School at Dartmouth College. During his business studies, he worked on several group projects with small businesses, including a furniture manufacturer, a manufacturer of leak location precision equipment, real estate developer. After business school, Keith operated a successful real estate business in California and overcame numerous issues, such as asbestos abatement and underground storage tank remediation.

Keith worked as a legal adviser to a government contractor and was a legal adviser to a major initiative in Russia. Keith ran another small business, selling and marketing solar energy equipment. The business had an e-tailer component, hosted the largest solar energy forum online, and sold solar energy equipment to the government. Keith negotiated two GSA schedules for the business and obtained HUBZone certification for the business. Keith was also president of the Dartmouth Entrepreneurial Network – Washington, a networking organization for small businesses in the greater Washington, DC community.

Keith has also volunteered for Compass Pro Bono, working with local business professionals to conduct long-term consulting engagements for local nonprofits in fundraising, governance, and strategy.

With this breadth of legal and business experience, Keith is attuned to some of the challenges facing small businesses, which allows him to provide effective advice and guidance.

As a small business lawyer, do you take in-person meetings only?

Yes. We are located in downtown Washington DC and host many of our clients. For those clients who cannot come into our offices, we usually meet over Zoom or by telephone.

How do you charge for your services as a small business attorney?

We charge our clients based on hourly fees. We usually provide a budget of how much certain matters cost so that startups and small businesses know in advance the ballpark cost of the matter.

What if a client does not like our services?

Clients can terminate our services anytime if they don’t find it satisfactory.

Should my small business lawyer or startup lawyer be in the same state as me?

No, not always necessary and may depend on multiple factors. For example, though we are an expert small business lawyer in DC, we have also provided consultation to other cities’ clients.

Mergers and Acquisitions for Small Businesses

Business brokers cite the oft-worn stat that half of the deals close, and half don’t. Those M&A transactions in which the deal did not close generate a range of emotions from both the purchaser and the seller. I recently represented a client in the acquisition of a small business in which the deal died. She offered to share some of the lessons learned from seeking an acquisition target, but failing to close the deal. In this article, she provides four lessons learned from the ultimately unsuccessful negotiations. After each lesson, which are in her words, I provide some brief comments.

Lesson 1: Seek legal guidance early on.

We waited a bit on this, mostly just a rookie move; but I think it would have helped to connect with a small business lawyer out of the gates when we voiced interest with the business broker. It was clear the broker was used to working with people that did not have a lawyer involved (i.e. she sent us a LOI and just expected us to sign it), but having the guidance of someone who understood the entire process could have prepared us a little earlier on in the conversations and could have saved us a lot of time.

Discussion: The clients came to me very early in the process, and we crafted the letter of intent together. Most clients do not recognize that business brokers are often times not representing the interests of the purchaser. They only get their commission if the deal closes. They may have a form letter of intent (LOI) that cements in key business terms, which may work to the detriment of the purchaser. It is better practice to nail down key terms and conditions of the transaction at the LOI stage rather than wait until the negotiations for the purchase and sale agreement.

In the acquisition of a small business, the key consideration may be the price. Nevertheless, sometimes it is not clear what the purchaser is getting for the price. This is especially true if the transaction is structured as an asset deal. The owner may intend on keeping some of the intellectual property. Is the purchaser keeping any of the working capital? At what point does the deposit go “hard”—non-refundable. Usually the owner will not be allowed to compete with the business being purchased for some period of time—how long? What will be allowed in terms of due diligence and at what point will the prospective purchaser be given access to some of the more sensitive information to a small business such customer lists.

The more key considerations you can nail down at the outset in the LOI, the higher the likelihood that you will recognize whether there is a good chance that the deal will go forward. And the clients are correct: do not let the broker be the lead in your negotiations.

Related article: Checklist for Buying or Selling a Small Business

Lesson 2: Be specific about due diligence requests.

Coming from the tech world, I am used to very detailed diligence processes with M&A deals post signature of the LOI. I was incredibly surprised with this deal that there was no transparency about what we would get post signature of the LOI, nor was there the invitation to really ask for a lot. We forced the ask actually and we were told that we got very limited access to client details, staff interviews and more. My partner and I spent a good amount of time coming up with a very detailed diligence request list that we were unsure if the company would have complied with, but we felt we needed to see / have access to in order to feel good about the deal.

Discussion: Due diligence checklists are meant to be intrusive because in any small business, the owner may want to secrete certain transactions. Run for the hills if you hear that there were off balance sheet transactions that would make the company look more attractive. The main issue in mergers and acquisitions of small business is that due diligence can be very time-consuming and then you find out that the owner has been hiding something all along. I have represented several sophisticated buyers who had a chunk of money that they wanted to spend but simply could not find a company that met their criteria or found a prospective seller who was willing to be subject to the due diligence that would have been required to satisfy the purchasers that they were getting what they thought that they were getting.

Due diligence is and can be informative, but you should recognize that the small business owner, even if he or she has received a non-disclosure agreement, may still resist providing certain sensitive information. Sometimes creative ways are needed to provide the assurance to the prospective buyers without having the seller reveal everything about the company.

Then we should refer back to Lesson 1. The earlier in the process that you can determine that there may be some insuperable barriers, you may save yourself a lot of time. You can let the seller know at the outset what information you will require before you close on the transaction.

Lesson 3: Early misalignment is a sign of the future to come.

At the end of the day, if you don’t agree on the terms pre-LOI signature, it’s not a good sign. The owner felt that the company was worth more than how we valued the company. She wasn’t willing to budge, but in the same sense wasn’t willing to provide all the details about her client base and pipeline to help make us comfortable with the company’s overall potential and valuation. From what information we did see, it appeared a good amount of the company revenue was attributed to one client who had been working with the company for over a year; and that the average client lifecycle was about three years–meaning that we could purchase the firm and then lose its major client within a year. Obviously, this raised some flags with us.

Discussion: My friends in private equity tell me that buyers and sellers should come to within 15% of the fair market value for a company. If you can’t come to within reach on the valuation for the company, it is better to walk away early. It will be a bridge too far and you are simply spinning your wheels. If you can come to within 15%, then there should be no reason that you cannot bridge the gap through mechanisms such as earn-outs. And it is good to have some alignment of interests. Even after closing, you will have a continuing relationship with the other party, either by way of a consulting agreement, an earn-out, seller-financing.

Lesson 4: Better understand certifications for government contractors.

We needed to better understand the certification status associated with the business and contracting business in general (for example, 8(a), women-owned, HubZones, etc.) to also factor that into the decision.

Discussion: Government contracting adds a whole other layer of complexity to a merger or acquisition. If the seller has substantial business in the government space, then you will have to add whole new set of vocabulary to your transaction. If the target company is a party to a government contract, and particularly if the business is a holder of an indefinite delivery/indefinite quantity contract (IDIQ) or a long-term General Services Administration (GSA) contract, you need to try to structure the purchase transaction so you will not lose the government contract.

After the purchase, you may need to go through a process known as a “novation” in which the existing government contract is transferred to the new company (in an asset purchase) or is confirmed for the existing company (in a stock purchase). And if the company has qualified for one the classifications that may give it a preference in government contracting, you need to make sure that the business is able to maintain the certification. This may sound obvious but some purchases may not be aware of all of the requirements to maintain a certain certification.

Purchasing a small business is not for the faint of heart. Transactions under a million dollars are especially difficult because they require the same amount of due diligence and legal fees as a larger transaction. The time expended on due diligence and the amount in legal fees may seem disproportionate to the value of the deal. But I have seen clients making the investment of time and money in small deals with good rewards at the end. And if you follow these four lessons, you may be able to reduce the time and expense of acquiring a small business.