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.

Who manages a limited liability company: managers or members?

Issues to determine before formation

There are several essential questions that you must discuss with your small business attorney before forming a limited liability company. The focus of this article is on one of those questions: the management structure of limited liability companies. Members may manage the affairs of the company (member-managed LLC) or managers may manage the affairs of the company (manager-managed LLC). We will first review some of the other issues that the startup founders must consider before launching a business.

Dmitriy Shironosov © 123RF.com

Naming the Company. The first issue is the name of the company. Make sure that you have thoroughly vetted the name before you tell your startup lawyer that you want to register a certain name.

Related article: Finding a Name for Your New Business

Jurisdiction for the new company. The next critical issue is the jurisdiction in which your small business will be formed. We will devote an entire blog post in the future to choosing the jurisdiction in which your small business will be organized.

The two general choices are the state in which the business is located, say Maryland or the District of Columbia (not exactly a state but we’ll call it a state for the purposes of this blog), or another jurisdiction such as Delaware, which may have some advantages for reasons that we will explore in an upcoming blog post.

How the business will be taxed. The other issue that the small business owner will have to consider is the tax treatment of the business. The company can be taxed as a corporation or as a partnership.

Related articles:

Forming a LLC: Partnership or S Corporation Taxation

Traps for the Unwary: LLC Taxed as S Corp

Management of LLCs.

The other major issue is who will manage the business. In general, a LLC is either “member-managed” or “manager-managed”. You just have to love the lawyer who came up with the terminology for limited liability companies. In most states and the District of Columbia, if you do not designate in the operating agreement which management structure you want, the company will be treated as a member-managed limited liability company.

The language in a particular state’s LLC act is usually similar to the District of Columbia Code: “A limited liability company shall be a member-managed limited liability company unless the operating agreement [e]xpressly provides that [t]he company is or will be ‘manager-managed.’” D.C. Code Sec. 29-804.07.

Related article: Negotiating LLC Operating Agreements

One of the fundamental differences between a LLC and a corporation is the governance of the company. A corporation governance structure is rigid. The owners who are called shareholders appoint the board of directors. The board of directors provides policy oversight for the company. The board appoints the corporate officers, who control the daily operations of the business.

A LLC is much more flexible, offering numerous governance structures depending on the needs of the particular startup. The LLC owners are called members, not shareholders or partners. If you think that these terms are confusing, you are not alone.

The members usually negotiate how the LLC will be governed and they memorialize their understanding in an agreement called a operating agreement or limited liability company agreement. You need to be careful because in every state LLC act, there are some terms that are mandatory and you cannot negotiate them away. In general, the management structure of a LLC depends on whether the LLC is member-managed or manager-managed.

Member-managed LLCs.

A member-managed LLC is, not surprisingly, managed by its members. It looks a lot like a general partnership in which the partners share in the management and conduct of the company. The LLC members share the responsibility for the company’s operations. The members decide important issues by a majority vote.

Manager-managed LLCs.

A manager-managed LLC looks similar to a limited partnership. The manager may or may not necessarily be chosen from the membership ranks. The manager generally is responsible for the daily operations of the company. There are numerous approaches in how much latitude the members want to repose in the manager.

The operating agreement can be very specific about what authority the manager has and which decisions the members must vote on. There may be co-managers or even a board of managers that decide matters relating to the activities and affairs of the company.

Larger companies usually are manager-managed.

The larger the business, the more likely that the LLC will be managed by a manager. If the LLC has numerous members, then it can be unwieldy to have all of them involved in management. Members will delegate to a manager or managers authority for managing the daily affairs and activities of the company. The manager does not need to be a member of the LLC.

The members in a manager-managed LLC may have considerable authority for the operations of the company. For example, they may require a member vote on all transactions over $2500 or whatever threshold they want. That would mean that the manager would need member approval for these relatively small transactions. The members may simply be passive investors. In either event, the members retain authority for issues outside the ordinary course of the company’s activities, such as a merger or acquisition or dissolution of the company.

Related article: Dissolving a Small Business

Authority to bind the company.

Each member in a member-managed limited liability company can bind the company. As an example, if there are ten members, then each of the ten may sign a contract on behalf of the company. In a manager-managed limited liability company, the manager is the agent of the company with the power and authority to bind the company. The members do not have authority to bind the company unless they have been delegated specific authority.

Fiduciary duties imposed on those who manage the company.

This may sound like legalese but in practice who bears the fiduciary duty and the extent of that duty has practical implications. The members may in some states limit the duties imposed on those managing the company.

In general, members of a member-managed limited liability company owe to the company and the other members “fiduciary duties”. A manager has fiduciary duties to members and to the company in a manager-managed LLC. The extent of these duties varies widely from state to state. The extent to which the members may vary fiduciary duties in the operating agreement also differs widely.

Fiduciary duties usually include the duties of loyalty and care.

Fiduciary duties usually refer to the duties of loyalty and care, but the extent of these duties varies depending on the jurisdiction and whether the members have varied these duties in the operating agreement.

These duties are not trivial and are often overlooked by the founders or their small business lawyer. The duties of loyalty or care may require you to refer business opportunities to the company; or whether you have the right to compete with the company; whether you may engage in business with the LLC; what you need to disclose to other members of the LLC.

The duty of loyalty may include things like refraining from dealing with the company in the conduct of the company’s activities as or on behalf of a person having an interest adverse the company or refrain from competing with the company in the conduct of the company’s activities before the dissolution of the company.

If you are the manager in a manager-managed LLC or a member in member-managed LLC, you should know that you cannot use the LLC’s property for your personal use or if there is business opportunity presented that falls within the purpose of the LLC, you make have limitations on whether you can take it for yourself or whether you need to present it to the LLC and its members so that they can exploit it.

In certain jurisdictions, the members may not vary these obligations and duties. But in Delaware the members may agree to expand, restrict or eliminate any fiduciary duties, other than the implied contractual covenant of good faith and fair dealing.

Some states require a manager to discharge his or her duties in good faith with the care an ordinarily prudent person in a like position would exercise under the same circumstances, and in a manner that the manager reasonably believes is in the best interests of the company. Many small business owners do not recognize that they have this duty once they assume the mantle of manager in a small business.

Subject to the business judgment rule, the duty of care of a member of a member-managed limited liability company in the conduct of the company’s activities is to act with the care that a person in a like position would reasonably exercise under similar circumstances and in a manner the member reasonably believes to be in the best interests of the company. In discharging this duty, a member or manager may rely in good faith upon opinions, reports, statements, or other information provided by another person that the member reasonably believes is a competent and reliable source for the information.

Know what management structure suits your small business

Before you decide on forming your startup business, you should know what are the implications of choosing between a member-managed and manager-managed LLC. The duties imposed on the members or managers can be vastly different. You should consult with your startup lawyer and discuss with the other founders and investors before and not after your form your business.