California Startup Lawyer
For centuries people have sought fortune in California, but most folks in the Golden State today aren’t seeking that fortune by prospecting for gold or trying to become a movie star. They’re looking to have success by starting their own business.
California startup lawyers are essential for business founders looking for long-term success with their enterprises. From forming a corporation to hiring employees, startup founders must navigate a whole host of complex laws and regulations. California startup lawyers are well-versed in these legal matters and are invaluable when handling the most fundamental legal issues.
Typically, doing business in California requires the formation of a business entity. Statutes in the California Corporations Code govern the creation, management, and dissolution of corporations in the state. While the code covers corporations of all sizes and development stages, there are several sections that are particularly relevant for startups, including sections related to formation, organization, corporate governance, securities, shareholder rights, and mergers and acquisitions.
California startups with employees also need to navigate the state’s employment laws. Compared to most other states, California provides much stronger employee protections and provisions. A California startup lawyer can help an early-stage company develop employment policies related to wages, breaks, family leave, anti-discrimination, and anti-harassment. These policies can be designed to support the success of individual employees, leading to greater organizational success.
Companies that plan to collect data from or use data on California citizens should also be aware of the California Consumer Privacy Act (CCPA). This act is arguably the broadest and most progressive set of state laws when it comes to protecting the privacy of individual people. A startup attorney can help businesses comply with the CCPA and assist with developing policies like notifying customers about data collection and giving them ways to opt out of that collection system.
California startup lawyers can also help companies navigate the California Privacy Rights Act (CPRA), which went into effect in January 2023. The CPRA has been compared to the European Union’s General Data Protection Regulation. Both sets of laws are designed to place significant responsibility on companies when it comes to protecting personal information.
Both sweeping pieces of legislation make it compulsory to notify individuals in the event of a security breach that exposes their information. The CPRA also provides options to individuals who want to limit their information’s use, dictate how it is used, and/or delete their information from an organization’s records.
Interestingly, these privacy regulations that are primarily targeted are tech companies that are having a massive impact outside of California. Rather than create carve outs for California privacy laws, some companies are rolling out universal privacy policies informed by California laws. This push to embrace privacy protections and other Golden State laws designed for reigning in Big Tech has been dubbed “The California Effect.“
Clearly, there are many California-specific legal challenges that startups must handle, and the best approach is to seek the counsel of a California startup lawyer.
What is a Startup Lawyer?
Startup lawyers have one foot in the legal world and one foot in the startup world. They understand the common legal challenges early-stage companies face, such as how to fundraise in a manner that remains compliant with all financial regulations.
Why Do Startups Need a Lawyer?
Some people have the impression that a lawyer is only necessary in situations related to legal action. However, a startup attorney can proactively help a company set itself up for long-term success. Today’s startup lawyers are as much about corporate legal strategy as they are handling legal action.
When a business is founded, it becomes its own legal entity, and founders can form their entity as a sole proprietorship, limited liability company, or corporation. Each option has its own set of legal rights, obligations, and liabilities. If a business is created as the wrong kind of entity, it may lead to disagreements over ownership and management of the organization.
After a company or corporation is founded, it should be governed by sets of rules, methods, and operations. Collectively referred to as corporate governance, these rules and practices establish how a business operates on a daily basis. Startup lawyers can help founders establish corporate governance structures that balance their interests with those of shareholders, management, employees, and potential customers. Attorneys can also structure corporate governance that limits a business’ exposure to unnecessary risks and legal action.
Startups should also consult with a legal team regarding various approaches to fundraising. Crowdfunding is a popular approach for certain types of startups, and even though it’s done through online platforms that are household names, there are serious legal matters associated with this approach. Regulations relating to crowdfunding call for all transactions to be performed through an intermediary registered with the SEC.
There are also restrictions on the total amount of funds that a single business can raise. Disclosure regulations require sharing certain specifics with the SEC, investors, and the intermediary. Violations of crowdfunding regulations could result in guilty individuals receiving a number of penalties, including being banned from making public offerings.
Particularly promising and high-profile startups, often in the tech industry, are more likely to receive their initial rounds of funding through venture capital investors. For companies that go this route, startup lawyers can help with appropriate filings and disclosures to the regulatory bodies that oversee venture capital funding, including the SEC and financial institutions.
Some startups are fortunate enough to receive backing from friends, family members, and others who are personally connected to the business. This kind of funding is not heavily regulated, but startup lawyers can help a company receive this kind of funding to steer clear of any disagreements and litigation through the use of one or more personal funding agreements. These agreements typically include features related to potential repayment, interest rates, equity stakes, decision-making authority, dispute resolution, and property rights.
Let Our Team of California Startup Lawyers Empower Your New Business with Strategic Legal Solutions
At Fridman Law Firm, our attorneys are well-versed in the intricacies of California business laws, especially as it pertains to startup companies.
Our attorneys have significant fundraising experience that can help your business secure the capital it needs to grow. We can develop custom legal solutions to engage with funding sources, secure favorable financing terms, and channel investments to quickly scale up operations.
Our team of California startup lawyers is also experienced when it comes to business formation and structuring. We can help organizations develop a business plan, choose the right legal entity, draft contracts, and create employee policies. We also help with protecting and licensing valuable intellectual property.