Business Law

Tollefsen Law offers a broad range of experience over a multitude of legal issues in numerous industries. We have represented high tech and low tech from satellite communications to home building. Contact us and we will provide the details of relevant experience that could be helpful with your business law issues. We can assist corporate counsel with outside litigation or provide part-time in-house corporate counsel services. If you need an experienced business attorney, contact us.

Representing Business and Entrepreneurs

Our founder, John J. Tollefsen obtained a degree in Business Administration and started his practice with the goal of helping entrepreneurs build successful businesses. He added to his knowledge and experience through more than 38 years of legal practice and his own entrepreneurial endeavors. Tollefsen Law has worked on many private and public financings in a wide range of industries. By representing hundreds of businesses from formation through their inevitable challenges (like litigation or even bankruptcy), TL has the depth of experience to assist entrepreneurs and growing businesses. TL has assembled a competent team of lawyers and staff who each bring unique business knowledge and skills. TL is  experienced in assisting with business financing including private placements and securities offerings. TL has the knowledge, experience, and expertise to assist in many areas of law and business including transportation law and taxation. Unlike some business law firms, TL has significant first hand business and entrepreneurial experience allowing it to offer practical advice for small business that cannot afford ivory tower solutions.

Taxation

TL provides the experience and specialized training to advice on a wide range of tax issues domestic and international.

Answers to tax questions

Transactions

Tollefsen Law has handled complex transactions in securities transactions, oil and gas, commercial real estate, sale of business assets and many other business agreements. We have worked on many international transactions.

Business Organizations

Because of TL’s focus of representing entrepreneurs, we suggest the organization of your business be designed for defense. The economy is cyclical and it is likely that your business will face financial stress in the future. We can help you organize business entities that provide maximum protection in a financial downturn.

Business organizations, excluding some trusts, are creatures of state or federal law. For more information:

Agency, Employment, and Contracts

Most business organizations are entities separate from their owners. They have rights under the federal and state constitutions as “persons.” These legal fictitious persons can only act through human agents. Thus the law of principal-agent (law of agency) applies to most business organization transactions. In order for the transaction to be binding on the principal (the organization), the agent must have actual or apparent authority. Competent business lawyers can assist your organization drafting professional contract and agency agreements.

Tollefsen Law represents both employers and employees in labor disputes.

Tollefsen Law Business Lawyers in Seattle

Because of TL’s focus of representing entrepreneurs, we suggest the organization of your business be designed for defense. The economy is cyclical and it is likely that your business will face financial stress in the future. We can help you organize business entities that provide maximum protection in a financial downturn.


Potential New Matters

No Confidential Information.

Common Answers for the Entrepreneur:

Regulatory Compliance: It’s the Little Things…

Regulatory penalties can be devastating for a company, yet many companies, especially small companies, fail to plan for or devote resources to regulatory compliance. These companies can be confused and incredulous when they become the focus of investigations or sanctions and may delay responding until their very existence is at stake. Proper counsel can help companies understand regulators’ focus which helps them to prepare for and address compliance issues in a timely manner.

Waiver Under Washington’s Deed of Trust Act Permitted Where Technical Violations Did Not Harm Plaintiff

Merry v Nationstar –Wn App 324745-III   Background to Deed of Trust In 2007, Sharon Weirich borrowed $205,440 from Countrywide Home Loans, Inc. and executed a Deed of Trust on her real property as security. The deed identified Countrywide as the lender, Landsafe Title of Washington as the Trustee, and the Mortgage Electronic Registration Systems, Inc. (MERS) as “a separate corporation that is acting solely as a nominee for Lender and Lender’s successors and assigns.” In Bain v. Metropolitan Mortgage Group, 175 Wn.2d 83, 93, 285 P.3d 34 (2012), the Supreme Court of Washington held that the MERS registry’s business practices in creating and transferring beneficial interests with regard to mortgages conflict with the requirements of Washington’s Deed of Trust Act. Beginning in 2011 MERS made a number of assignments and changes in ownership of the note, beneficiary, and trustee using the business practices found to conflict with the Deed of Trust Act.  Following these changes, in October 2012, Northwest Trustee Services, Inc. served Mrs. Weirich with a notice of default on behalf of Bank of America. The same month Ms. Weirich executed a deed of trust to Thomas Merry. This deed of trust secured payment of a $68,000 promissory note. Ms. Weirich also executed a power of attorney and an assignment of legal claims to Mr. Merry. In December 2012, Ms. Weirich received a notice of trustee’s sale informing her that her property would be sold on April 19, 2013 to satisfy her promissory note she originally gave to Countrywide. However, property was not sold on April 19, 2013 and no sale was rescheduled within the 120-day window...

Business Liability for Foreseeable Harm

McKown v Simon Property Group, Supreme Court of Washington, March 5, 2015 Decision:  050405-McKnown-v-Simon-Properties After 40 years of practicing U.S. law, I have grown to appreciate the gift we received from our colonizing parent, the common law. The civil law systems suffer from the same rigidity that all statutes impose: one size fits all. The legislature drafts a statute as a solution to a perceived problem not understanding how it might be unjust in a different fact situation. The common law can smooth out these injustices by providing court-made law which reacts to the facts and needs of justice in a particular case. The negatives of the common law system that has decisions made by juries include unpredictability and indefensible awards. The common law has invented tools to minimize the negatives. One of those tools is “foreseeability”. It allows a court to claim that no one could have foreseen the harm so the defendant is not liable. Foreseeability is often the only legal barrier protecting a business from liability. Unfortunately it has proven to be a two-edged sword. The limits of foreseeably was highlighted in McKown v Simon Property Group. On Sunday, November 20, 2005, Dominick S. Maldonado walked into the Tacoma Mall and opened fire on shoppers and mall employees, injuring seven people. Maldonado wore a dark trench coat concealing a MAK-90 rifle and an Intratec Tec-9 pistol, and carried a guitar case filled with ammunition. McKown, an employee at one of the retail stores, tried to stop Maldonado, but was shot and wounded. Simon Property Group owned the Tacoma Mall. Under Washington Law, the Tacoma Mall is liable to McKown...

Why Organize Early?

Although many company founders are reluctant to take the plunge into creating a corporate entity, often putting this step off for as long as possible, there are some good reasons to consider forming as soon as possible. Holding Period Stock Value The IRS will look at the time between forming and value given for stock at that time, and the company’s value at any financing or liquidity event. Hypothetically, if founders gave $.01 of value for their shares at formation, and they receive a funding round that values the company at $.50/share a week later, they need to be able to convince the IRS in an audit that they created enough value in the company in that one week to warrant the 50x increase in the value of the company. In a situation like this, your company is more than likely to arouse the suspicion that you sold yourselves shares at below market value. The General Partnership Many states, including Washington, have ratified some version of the Uniform Partnership Act (UPA). Washington’s is codified as chapter 25.05 of the Revised Code of Washington. Although the preferred form of entity for most startups is a C corporation, a founder should also be attentive to the provisions of the UPA or its equivalent in his or her state. The reason for this is that many of these acts contain provisions similar to the following from RCW 25.05.055:   (1) Except as otherwise provided in subsection (2) of this section, the association of two or more persons to carry on as co-owners a business for profit forms a partnership, whether or not...

Foreclosure Not Outrageous

Lyons v U.S. Bank National Association (WA SC October 30, 2014) Decision: 141030-Lyons-v-US-Bank Lyons defaulted on the note secured by a trust deed on her home. In October 2011, Lyons filed bankruptcy, and in January 2012 she applied for a loan modification with Wells Fargo. On March 30, 2012, while Lyons was waiting for a response regarding her application for a modification, she received a notice of trustee’s sale from NWTS informing her that her property was scheduled to be sold  on July 6, 2012. On April 5,2012, Wells Fargo told Lyons’ attorney that the in-house modification had been approved. On April 19,2012, Lyons received the letter confirming the modification. The terms required her to pay $10,000 by May 1,2012. Wells Fargo informed Lyons they would discontinue the sale upon receipt of this payment. She paid this amount to Wells Fargo as required. However, on March 29, 2012, Wells Fargo had sold Lyons’ loan to U.S. Bank National Association as trustee for Stanwich Mortgage Loan Trust Series 2012-3 with Carrington Mortgage Services LLC as the new servicer of the loan. This was to become effective on May 1,2012. NWTS received notice of the sale and service release on April 12,2012. Lyons received notice of this sale on April 26, 2012. On April 26, 2012, Lyons’ attorney spoke with a representative of NWTS to inform it that Wells Fargo no longer had any beneficial interest in the loan after the sale, that Carrington was the new servicer of the loan, and that Lyons had received a loan modification so she was no longer in default. On June 11, 2012, Lyons’...

Making Dissident Shareholders Pay Legal Fees

ATP TOUR, INC., Etienne De Villiers, Charles Pasarell, Graham Pearce, Jacco Eltingh, PerryRogers, and Iggy Jovanovic, Appellants, v. DEUTSCHER TENNIS BUND (German Tennis Federation), Rothenbaum Sport GmbH, and Qatar Tennis Federation, Appellees. Supreme Court of Delaware, May 8, 2014 Decision: 150508-ATP-Tour-v-Bund The general rule in the United States is that each party pay its own legal fees and costs unless there is a contract or statute that provides otherwise. The “American Rule” as this is known is prevalent throughout courts and arbitrations in all 50 states. The Delaware was asked to decide whether a bylaw making dissident shareholders pay legal fees when they lose violated public policy. The court said it did not unless it was being used for an inequitable purpose. It did not matter that the bylaw was completely one-sided. It did not make the corporation liable for the dissident shareholders’ legal fees if the corporation lost the case. Excerpts from the decision: A fee-shifting bylaw, like the one described in the first certified question, is facially valid. Neither the DGCL nor any other Delaware statute forbids the enactment of fee-shifting bylaws. A bylaw that allocates risk among parties in intracorporate litigation would also appear to satisfy the DGCL’s requirement that bylaws must “relat[e] to the business of the corporation, the conduct of its affairs, and its rights or powers or the rights or powers of its stockholders, directors, officers or employees.” The corporate charter could permit fee-shifting provisions, either explicitly or implicitly by silence. Moreover, no principle of common law prohibits directors from enacting fee-shifting bylaws.   The third certified question asks whether the bylaw is...

General Solicitation One Week On

As readers of this and other startup-focused blogs will be aware, exactly one week ago today general solicitation of securities offerings to accredited investors became legal for the first time in 80 years. Prior to the 23rd of September, coverage of this upcoming shift was divided with some predicting major alterations to the landscape, others predicting hardly any change at all, and yet others delaying judgment, at least until some additional proposed rules are finalized. Reading the Tea Leaves What can we learn from the first week’s tea leaves regarding the initial reaction to general solicitation? Some notable actors were off to the races, with folks like AngelList and WeFunder immediately jumping in and offering solutions that take advantage of the broad exposure offered by general solicitation (while recognizing the need to still comply with accredited investor requirements). Leading the charge were Second Market and WeFunder. The latter has taken perhaps the most proactive stance on general solicitation, even offering to do some securities work on behalf of companies (using generic forms). These companies seem to be betting that the current window between the enactment of the rules adopted in July allowing for general solicitation and the pending adoption of any of the proposed rules will give them a significant head start on their competitors. They are also betting that any new rules won’t change things significantly (the best case for them), or at least won’t be applied retroactively. On the opposite end, FundersClub has taken a cautious “wait-and-see” approach. CEO Alex Mittal has made it clear that the VCs, angel investors, law firms and others that he has...

Elements of an NDA for Startups to Ponder

I participated in a session yesterday on IP protection for technology companies that presented a wealth of good advice on certain provisions of Nondisclosure Agreements (NDAs) to which founders and IP owners should pay close attention. These agreements are sometimes confusing to the uninitiated, and often drafted in a manner that heavily favors the side producing the document. Knowing what to look for when an NDA is pushed across the table (or the electrons arrive at your inbox) is of utmost importance when discussing technology with a potential partner. Of course, some partners (such as VCs) will generally refuse to enter into NDAs at all. Often times these people talk to so many companies about their ideas in the course of a business day that there is simply no practical way for them to avoid running afoul of the provisions of an NDA. At the opposite end of the spectrum are mutual NDAs, where the terms apply (generally equally) to both sides. Mutual NDAs are far less likely to contain one-sided provisions. A unilateral NDA, however, presents the opportunity for one side to fine tune the language to benefit themselves (as either the recipient or discloser of confidential information), and may contain some tricky clauses for which every startup founder should watch out. I outline a few of these in this post. Residual Information Clauses One clause to be keenly aware of is what is known as a “residuals” or “residual information” clause. These are often structured to permit the recipient to freely use any information that is retained in his or her unaided memory (i.e., anything that they...

General Solicitation Now Allowed. What’s Required?

As has been continuously reported in the media, and on fine law blogs, today marks the end of the 80 year ban on general solicitation (public advertisement) for securities sales. This means that for the first time since the Securities Act of 1933 was enacted, companies will be able to go out and solicit groups of accredited investors to invest in their startups, provided that they: Check a box on their form D indicating that they have generally solicited; Take additional steps to verify that their investors are in fact accredited (one page questionnaire no longer good enough); and Ensure that they do not accept any funds from non-accredited investors. #1 is self explanatory. #2 requires a bit of attention, because in the past is was sufficient to have an investor fill out a basic questionnaire verifying that they comply with the definition of “accredited”, as defined in Rule 501 of Regulation D. Now, however, those generally soliciting investments must take “reasonable steps” to ensure that the investors are indeed accredited, and must keep proof of having done so. This means that you will need to ask for personal financial documentation, such as copies of form W-2 or 1040, bank statements from past three months,  and brokerage statements from your potential seed or Angel investors. Many will scoff at this intrusive requirement. #3 is also important. While a “regular” Rule 506 offering still allows for up to 35 non-accredited investors, if you check the box indicating that you’ve generally solicited, you may not sell ANY shares to non-accredited investors. In addition, the SEC took the confusing step of issuing...

Building Your Moat: A Conversation with Greg Gottesman

This morning I attended an event hosted by Joe Wallin, attorney at Davis Wright Tremaine and founder of Startup Law Blog. Joe had Greg Gottesman, managing director of venture capital firm Madrona Venture Group, in the house for a Q&A session that began with some stories about Greg’s background and a successful business that he spawned out of a startup weekend. The session also touched on the importance of patents to early stage companies, what he considers to be differentiating factors of successful companies, and implications of the lifting of the ban on general solicitation (effective today) for companies hoping to rely on an exemption under Regulation D as they look to raise funding.  The hour-long discussion gave attendees the opportunity to present questions to one of the top venture capital funders in the Seattle area. Below are some highlights of the meeting based on my notes and recollection. Building Your Moat The session started with a question about businesses with “sharing economy” models, such as Rover.com, and whether Madrona had any others in its portfolio. Greg mentioned this as a growing area, and that he had thought of several other ideas, including connecting personal chefs with hungry households, and renting out extra storage space in people’s garages and homes. The problem was that every time he came up with an idea, it seemed as if someone had already started a corresponding business somewhere, and he then lost interest. One problem with this model, he said, was that it is very difficult to build this sort of company up from scratch and gain a critical mass of users in...

10 + 7 =