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  • NFTs, Securities Fraud, and Insider Trading, Oh My!

    NFTs, Securities Fraud, and Insider Trading, Oh My!

    Last month accusations emerged that an executive at OpenSea, a leading Non-Fungible Tokens (NFT) sales platform, was possibly front-running sales by buying drops before they were listed on OpenSea’s main page and then selling them after they had been publicized by OpenSea. Such use of insider information, if true, would seem to be a classic violation of securities laws prohibiting insider trading. Or rather it would be if there were any clarity regarding whether NFTs are securities at all. Let’s take a closer look at NFTs, securities fraud, and insider trading.

    What is a Security?

    The SEC was created to regulate the sale of “investment contracts,” and the question arose quite quickly as to what constituted an “investment contract,” or a “security.” The Supreme Court case that delivered the first definitive answer on this was SEC v. W. J. Howey. That matter involved the sale of contracts that would provide the purchaser with a share of the proceeds in the profits of Florida orange groves. The Supreme Court held that these contracts were securities and announced a three-part test regarding what would be considered a “security.” A security is (1) an investment of money, (2) in a common enterprise, (3) with the expectation of profit to be derived from the effort of others. In other words, the orange trees themselves were not securities, but investment contracts that purported to provide investors with a share of the profits from the orange growers’ activities were.

    Are NFTs Securities?

    How does this translate to NFTs? On the one hand, NFTs are tokens and so far, the SEC has not taken the view that tokens by themselves, are securities. But lately, the SEC is taking a more nuanced view, asking what the token really represents. The most prominent example is the action the SEC is taking with regards to Ripple. The SEC has taken the view that Ripple’s efforts to promote its token and manage its availability make it akin to security. This is in opposition to tokens like Bitcoin or Ethereum that lack central promotion or management.

    It is my belief that the SEC will take the view that at least some NFTs are securities. Take one of the most notable NFT issues of the year: Bored Ape Yacht Club. While purchasers of BAYCNFTs are just purchasing individual tokens, there is a central organization managing the availability of BAYC, its various spinoffs, the membership benefits, and their overall market value. I believe there is a good chance the SEC will take the view that BAYC Apes function in much the same way as Ripple tokens, even though each individual Ape has its own market. This likelihood only increases if market makers like OpenSea misbehave.

    What is Insider Trading?

    Insider trading is a term that most people in the investment community have a passing familiarity with, but what does it mean, legally speaking? The body of case law surrounding insider trading is complex, but a good shorthand would be the misuse of confidential information for one’s own personal gain. The case that comes to my mind when reading about the OpenSea situation is U.S. v. Carpenter, a Supreme Court case from 1986. In that matter, the Court upheld mail and wire fraud convictions for a defendant who had been tipped by a fellow Wall Street Journal writer regarding columns that would appear in the Journal. This seems akin to trading in NFTs in advance of their promotion on OpenSea to the front page of the Wall Street Journal. This is, without doubt, a case that bears monitoring.

    Summing it All Up

    The NFT industry is ever-changing, as is the government’s regulation of the industry. If you are operating within the industry and are seeking legal advice or have invested in NFTs and believe you have been defrauded, please contact us for a free consultation at 848.202.9323 or email us at andrew@dressellaw.com. Please note that any legal question requires consideration of individual facts and this article is not intended as legal advice to any particular individual or business, and should not be relied upon as such.

  • New FINRA Reporting Requirements for Digital Assets

    New FINRA Reporting Requirements for Digital Assets

    Every year FINRA issues a new regulatory notice regarding the reporting of activities involving digital assets and every year we see FINRA-regulated entities run afoul of those reporting requirements. Why? Because the FINRA reporting requirements are much broader than most people within the brokerage and exchange community realize and much broader than is practically necessary. However, all FINRA-regulated entities and persons should be aware of these requirements.

    Who is Covered by the FINRA Reporting Requirements?

    The reporting requirements request that member firms inform their risk-monitoring analyst if the firm, associated persons, or affiliates are engaged in activities involving digital assets, including cryptocurrencies, virtual coins, tokens, and presumably the now popular asset class of non-fungible tokens (NFTs).

    While it is certainly understandable that a risk-monitoring analyst should be informed of any risky bets a FINRA-regulated firm may be placed in digital assets, the trickier part for FINRA-regulated entities is that the reporting requirements also extend to the digital holdings of associated persons. In other words, under the terms of the Regulatory Notice, firms should be reporting the digital assets of all their FINRA-licensed employees. This is an incredibly onerous imposition on firms, requiring them to keep track of employees’ investment choices. But as of now, that is the state of the law.

    What activities need to be reported?

    Regulatory Notice 21-25, the current operative FINRA notice, requires firms to report:

    • Purchasing or selling of digital assets
    • Purchasing or selling pooled funds that are invested in digital assets
    • Creating or providing management or advisory services for pooled funds invested in digital assets
    • Purchasing derivatives tied to digital assets
    • Participating in initial or secondary offerings of digital assets
    • Accepting cryptocurrencies from customers
    • Mining cryptocurrencies
    • Providing clearance and settlement service for cryptocurrencies
    • Using blockchain or other distributed ledger technologies (DLT) for recording cryptocurrency transactions

    A Vast Expansion of FINRA Reporting Requirements

    This is a wide-ranging set of transactions for firms to report and represents a vast expansion of FINRA reporting requirements. While FINRA-associated persons have long been required to report internally their accounts at institutions that engage in securities transactions, this Regulatory Notice requires reporting a whole host of transactions directly to FINRA including activities like cryptocurrency mining, which appear wholly unrelated to FINRA’s regulatory mission.

    Nonetheless, Regulatory Notice 21-25, like the notices that have preceded it, says what it says, and firms should comply. Firms, therefore, need proactive procedures for collecting the required information from their FINRA-associated employees.

    The attorneys at The Law Offices of Andrew Dressel LLC are ready to assist FINRA-regulated firms with these new reporting requirements. If you would like to contact one of our attorneys, please contact us via email at contact@d-mlaw.com, call at 848.202.9323, or visit our website www.d-mlaw.com.

    Please note that any legal question requires consideration of individual facts, and this article is not intended as legal advice to any individual or business and should not be relied upon as such.

  • How the Complex Business Litigation Program (CBLP) Works

    How the Complex Business Litigation Program (CBLP) Works

    In 2015, the New Jersey Supreme Court established the Complex Business Litigation Program (CBLP). Much like the Commercial Division in New York courts, the CBLP is designed to resolve complex business, commercial, and construction cases in an expedited manner. Restricted to cases where the amount in controversy is at least $200,000, the CBLP uses different discovery rules than the regular New Jersey civil courts in order to move complex cases along in a more efficient manner.

    What Types of Cases Are Handled By the CBLP?

    Unlike the Commercial Division in New York, the CBLP has a more limited jurisdiction. This is because New Jersey continues to maintain a distinction between Law Division and Chancery Division, something not present in New York courts.

    So, what types of cases does the Complex Business Litigation Program hear? According to the CBLP Case Management Guidelines, representative matters would include:

    • Asset purchases and sale agreements
    • Business licensing matters
    • Business torts
    • Claims related to purchases and sales of stock, assets or liabilities
    • Director and officer and director liability and indemnification claims
    • Franchise disputes
    • Intellectual property matters
    • Mergers and acquisitions disputes
    • Non-consumer business transactions
    • Non-consumer loans
    • RICO actions
    • Security interests in commercial personal property
    • State securities law matters
    • Unfair competition claims
    • Uniform Commercial Code (UCC) matters outside of consumer matters

    The Role of the Chancery Division

    Chancery Division, on the other hand, retains jurisdiction over internal disputes over:

    • Business restructuring
    • Corporate governance
    • Dissolution or liquidation rights
    • Non-compete, trade secret or restrictive covenant litigation filed to protect business interests Shareholder derivative suits

    Generally, if the dispute is between businesses or involves the relationship of multiple businesses it will belong in the CBLP. If the matter is related to corporate governance, it will belong in the Chancery Division.

    Please also note that the CBLP is designed to handle commercial litigation. Consumer claims, personal injury claims, landlord-tenant actions, workplace discrimination claims, negligence claims, and employment matters do not fall within the jurisdiction of the CBLP.

    The Discovery Process in the CBLP

    The discovery rules in the CBLP are slightly different from those in the Law Division. These new discovery rules are designed to prohibit abusive discovery while still encouraging parties to make fulsome discovery responses.

    Parties are limited to 10 depositions each and notably, where an organization designates multiple organizational representatives to testify, every seven-hour period of those depositions counts as its own deposition. This is in stark contrast to the federal rules where an organization deposition counts as one deposition, no matter the number of deponents or how long each deposition runs. Parties are also limited to 15 interrogatories, including sub-parts.

    The discovery rules are also quite detailed with regard to electronically stored information (ESI). These rules include additional requirements with regard to objections made in response to discovery requests, additional remedies related to the failure to preserve electronically stored information and permitted use of categorical privilege logs.

    Other Differences Between the CBLP and Law Division

    In addition to the changes to the discovery process, there are other differences between practice in the CBLP and the rest of Law Division. Much like in federal court, and unlike other New Jersey courts, initial disclosures are required. The parties are also required to hold a meet-and-confer prior to the initial case management conference to prepare a discovery plan. A model scheduling order is provided in the CBLP Guidelines to guide the parties and the Court.

    The CBLP is not part of the mandatory mediation program applied to other cases in Law Division. However, the judge in a CBLP matter has the discretion to order a settlement conference at their discretion and to order preparation of a settlement memorandum.

    While the Complex Business Litigation Program is designed to streamline business litigation, litigation is still a stressful prospect. If you are considering filing a lawsuit related to your business or are facing an actual or potential lawsuit in the CBLP, please contact us for a free consultation at 848.202.9323 or email us at andrew@dressellaw.com. Please note that any legal question requires consideration of individual facts, and this article is not intended as legal advice to any individual or business and should not be relied upon as such.

  • Upcoming Changes to Tax-Reporting Requirements for Cryptocurrency Transactions

    Upcoming Changes to Tax-Reporting Requirements for Cryptocurrency Transactions

    The Biden administration has been seeking changes to tax-reporting requirements for cryptocurrency since its early days. This is part of a package of changes to tax-reporting requirements the Biden administration is seeking as a means of cracking down on supposed misreporting of business income and general tax non-compliance.

    A New Reporting Regime

    Generally, the Biden administration has proposed creating a “comprehensive financial account information reporting regime.” This regime would include annual reports from financial institutions which would include gross inflows and outflows with a breakdown for physical cash, transactions with a foreign account, and transfers to and from another account with the same owner.

    This proposed tax-reporting requirement would apply to all business and personal accounts from financial institutions, including bank, loan, and investment accounts, with the exception of accounts below a gross flow threshold of $600 or a fair market value of $600. Additionally, payment settlement entities would collect Taxpayer Identification Numbers and file a revised Form 1099-K reporting not only gross receipts, but also gross purchases, physical cash, as well as payments to and from foreign accounts, and transfer inflows and outflows.

    The Impact on Asset Exchanges and Custodians

    Importantly, cryptocurrency asset exchanges and custodians would be subject to these proposed reporting requirements. There would also be reporting requirements that would apply in cases in which taxpayers buy crypto-assets from one broker and then transfer the assets to another broker. Moreover, businesses that receive crypto-assets in transactions with a fair market value of more than $10,000 would have to report such transactions. These proposed changes would take effect on January 1, 2023.

    Provisions to Watch

    These proposed changes have yet to become law, but a couple of them feature prominently in the new bipartisan infrastructure legislation before Congress. There are two key provisions that those in the crypto-industry should be aware of.

    First, it appears that the proposed reporting requirements for crypto-transactions with a fair market value of more than $10,000 will become law. This requirement appears to have bipartisan support and has not received much push back, even from those within the crypto-community.

    Second, the more important—and more controversial—change would be a clarification of the definition of the term “broker” for the purposes of determining who is required to file a 1099 form. The newly proposed definition is “any person who [for consideration] is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.” These “brokers” would be required to provide information such as names, addresses, and gross proceeds of transactions, much as equities brokers are required to do.

    The Impact on Smaller Miners or Network Validators

    While such a requirement may not seem onerous to a large, centralized brokerage operation such as Coinbase, there are numerous other decentralized exchanges that do not collect this type of information. Indeed, it has been the concept of decentralization that has been one of the impetuses for crypto-currency development in the first place. The proposed legislation is also not clear on whether businesses such as miners or network validators would be subject to the reporting requirements. While there have been repeated assurances from senators that such businesses are not the intended targets of reporting requirements, ultimately the rules implementing these requirements will be developed by the Department of the Treasury, a department that has an obvious interest in collecting as much useful information as possible for the purpose of collecting taxes.

    To Sum it Up: Reporting is Coming

    Legislation on these issues remains in flux, and no doubt further edits on these requirements are on the way. But the message from Washington is clear: reporting is coming and businesses operating in the crypto-space should be prepared for these tax-reporting requirements for cryptocurrency.

    The Law Offices of Andrew Dressel LLC is boutique law firm with experience in the crypto-space. If you are starting out in the crypto-business, or face litigation related to blockchain-based assets, please contact us at contact@d-mlaw.com or call at 848-202-9323. The above article is not intended to be used as legal advice and should not be considered or relied upon as such.

  • Bringing Your Employees Back? Some COVID-19 Considerations

    Bringing Your Employees Back? Some COVID-19 Considerations

    As the summer started, it looked like COVID-19 had finally been beaten. Infection rates and hospitalizations had dropped dramatically, vaccination numbers were rising and businesses across the Garden State were opening back up. The story remains largely good news. While infection rates have increased, and indeed have skyrocketed in other states, New Jersey’s infection rates remain far off their highs. The state continues do an impressive job in making vaccines available and there is a sense of normalcy in the air. If your business has not done so already, likely you are considering bringing your employees back from remote work, or otherwise expanding your number of on-site employees. However, there are a number of safety and legal measures your business should consider before doing so.

    Policies, Policies, Policies

    As an employer, your worst nightmare is to finally get your staff back on site, only to have a COVID outbreak take place. No one wants to see their valued employees’ health endangered, and no one wants to face potential litigation as a result of workplace exposure. Your best way of protecting both the health of your employees and your legal liability is through well-enforced policies.

    What types of policies should you be creating?

    1. Mask Policies. Policies concerning the use of personal protective equipment including masks. CDC and state agency guidance on mask usage continues to evolve and leaves most of us bewildered. It is our belief, out of an abundance of caution, that businesses should continue to require the use of masks, especially in client-facing roles or in indoor situations where social distancing is not possible.

    2. Sanitization policies. You should be requiring regular deep cleaning of workspaces, either by staff or outside cleaning contractors. If you are requiring employees to sanitize their workspaces, you should provide them with sanitization supplies.

    3. Exposure notice policies. You should have a policy requiring your employees to notify you of symptoms or of potential exposure. Unfortunately, you will have to rely upon your employees’ willingness to answer these questions truthfully but posing questions about symptoms and exposure on a daily basis is helpful from both a practical and legal perspective. Additionally, given the high infection rates that have emerged in some states in recent weeks, you should consider inquiring whether employees have visited those states recently.

    4. Testing policies. Consider whether you will require proof of a negative COVID test after an employee has shown symptoms, been exposed to someone who tested COVID-positive or traveled to a high-COVID infection area. If you are going to do so, you should consider whether you will reimburse your employees for testing.

    5. Quarantine policies. Consider whether you will require quarantining, which you certainly should be doing in the event of a positive test, and whether you will be paying your employees during any required quarantine.

    6. Communication policies. CDC guidelines states that “if an employee is confirmed to have COVID-19, employers should inform fellow employees of their possible exposure  to COVID-19 in the workplace but maintain confidentiality as required by the Americans with Disabilities Act.”

    But as important as developing these policies is, implementing these policies consistently is critical. You need to communicate the policies clearly to employees and supervisors and make sure they are being followed. You might consider having them sign the policy as an acknowledgement of having read it and agreeing to the policy requirements because of its importance to office safety.

    Vaccination

    Vaccination has been the key to combating the spread of COVID-19 and having pro-vaccination workplace policies makes good sense from public health and legal liability perspectives. The State of New Jersey has made clear that workplaces “can require that an employee receive the COVID-19 vaccine in order to return to the workplace, unless the employee cannot get the vaccine because of a disability, because their doctor has advised them not to get the vaccine while pregnant or breastfeeding, or because of a sincerely held religious belief, practice, or observance.”

    Additionally, employers “generally may request medical documentation to confirm a disability or to confirm that an employee who requests a reasonable accommodation on the basis of pregnancy or breastfeeding was advised by their doctor to seek such accommodation. Employers must ensure that all information about an employee’s disability is kept confidential and must maintain all information about employee illness as a confidential medical record.”

    Finally, if a sincerely held religious belief, practice, or observance precludes an employee from getting a COVID-19 vaccine, an employer generally may not question the sincerity of an employee’s religious beliefs, practices, or observance, unless the employer has an objective basis for questioning either the religious nature or the sincerity of a particular belief, practice, or observance. In that case, the employer may make a limited inquiry into the facts and circumstances supporting the employee’s request.

    The decision to require vaccination is a difficult business decision but one that employers are increasingly making. Should you decide on a vaccination requirement, you should keep the above regulations in mind.

    There is still a great deal to be optimistic about regarding the fight against COVID-19. If you are considering bringing your employees back and would like assistance in developing workplace policies, the attorneys at The Law Offices of Andrew Dressel LLC stand ready to help. Please contact us at 848.202.9323 or visit our website. Please note that all clients face unique legal situations and the information in this article should not be relied upon as legal advice.

  • Crypto-Currency Regulation-Where Have We Been, Where Are We Going?

    Crypto-Currency Regulation-Where Have We Been, Where Are We Going?

    As New York Times columnist Paul Krugman noted in a recent column, blockchain is now a bit long-in-the-tooth as far as internet technologies go. Bitcoin was launched in 2009, and over the past decade-plus, countless alt-coins have hit the market. However, as tokens have become more mainstream, as well as an increased tool for ne’er-do-wells, cries to regulate the crypto space have grown substantially. Not only are we seeing this nationally, through such events as the SEC’s suit against the creators of Ripple, we are seeing this internationally as well, as the Chinese government has cracked down on the crypto-mining industry in that country. While the international regulation is certainly interesting, and well worth watching for both investors and crypto-industry professionals, now is a good time to take stock of what the regulatory environment has been in the United States for the past decade and where it may be heading.

    Crypto Regulation to Date

    The big question on everyone in the crypto industry’s minds is whether the SEC will begin to regulate crypto. Billions of dollars worth of coins are being traded on a daily basis, and it’s quite rare for trading activity of that volume to escape the federal government’s attention.  However, there is one big obstacle to that regulation, and that obstacle has to do with oranges.

    The SEC was created to regulate the sale of “investment contracts,” and the question arose quite quickly as to what constituted an ‘investment contract,” or a “security.” The Supreme Court case that delivered the first definitive answer on this was SEC v. W.J. Howey. That matter involved the sale of contracts that would provide the purchaser with a share of the proceeds in the profits of orange groves in Florida. The Supreme Court held that these contracts were securities and announced a three-part test regarding what would be considered a “security.” Security is (1) an investment of money, (2) in a common enterprise, (3) with the expectation of profit to be derived from the effort of others. In other words, the orange trees themselves were not securities, but investment contracts that purported to provide investors with a share of the profits from the orange growers’ activities were.

    Returning to the realm of crypto, the tokens themselves would appear to fall outside the ambit of the Howey test. If I purchase a token, it is not an investment in a common enterprise with the expectation of profit to be derived from the effort of others. It is more akin to buying the orange tree itself than shares in the orange juice company.

    But the crypto business has developed well beyond the simple buying selling of tokens. Investors now have all sorts of ways to make (and lose money) in the crypto space, some of which certainly fall within the definition of security. For example, crypto-mining companies and crypto-trading firms may offer shares in their business to investors; those would almost certainly be securities. If you are starting a crypto business, you need to ask yourself, are you selling the orange trees or the orange juice company?

    The SEC’s Approach

    Historically, the SEC has taken the approach to date has been that tokens are not securities, just as the orange groves in Howey were not. However, recently the SEC has begun to turn a more critical eye to token issuers. The most significant recent development is the SEC’s action filed last year against Ripple Labs Inc., which seeks to charge that company and its executives with the unlicensed sale of securities. Why the change in approach? It seems the core issue is that the token sales were being used to finance company operations. In other words, the token was functioning in a way more akin to security, asking purchasers to invest money in Ripple with the increase in the value of the token to come from the efforts of Ripple Labs. The SEC has argued that given this structure, Ripple Labs was required to provide investors with the disclosures that ordinarily accompany a public securities offering, something the SEC alleges that Ripple Labs failed to do. The outcome of this case and the new SEC rulemaking on token issuances merit further monitoring.

    The crypto industry is ever-changing, as is the government’s regulation of the industry. If you are operating within the industry and are seeking legal advice please contact us for a free consultation at 848.202.9323 or email us at andrew@dressellaw.com. Please note that any legal question requires consideration of individual facts and this article is not intended as legal advice to any particular individual or business and should not be relied upon as such.

  • How Outside General Counsel Can Assist In-House Counsel

    How Outside General Counsel Can Assist In-House Counsel

    Even companies with established in-house counsel may have a need to hire outside general counsel to cover unforeseen or uncharted circumstances. Often outside general counsel is called upon to help with supplemental assistance to in-house counsel, as well as internal investigations and litigation. Here’s how we at The Law Offices of Andrew Dressel LLC are here to support.

    Supplemental Help from Experienced Attorneys

    In-house counsel often has projects that exceed the work capacity of the internal team. When that happens, we are here to step in and “pinch hit” to get you through. Whether it be advice on specific transactions, opinions on discrete legal issues, document review, contract drafting, and negotiation—we do it all.  Or, if you just need some extra-legal help on a term basis, we can do that too. Moreover, bringing in outside counsel can mean far more than an extra set of hands at the table, it also means a fresh perspective to your business and your legal issues. Whether brought on to receive and work on delegated tasks or to offer different or additional experience and perspective, outside general counsel can supplement the efforts of in-house counsel for the benefit of the business.

    Internal Investigations and Litigation Attorneys

    Allegations of corporate wrongdoing are a serious threat to any company’s future, and the steps you take, and when, matter. Whether it is an internal investigation or public litigation, outside general counsel brings specific experience to help navigate the process, as well as—in the context of an investigation—a heightened perception of independence and credibility. Often it makes sense to retain specialized counsel for these unique and trying events as these efforts always require quick decision-making, delicate efforts, and a uniquely thoughtful approach that is the hallmark of our attorneys.

    The outside general counsel will work with in-house counsel on such matters too:

    • Determine the scope of the investigation, and develop capabilities within a given budget to work to achieve the best solution.
    • Gather and assess the facts in a manner that will help to uncover all necessary and relevant information within the budget, time, and resource constraints.
    • Assign an oversight committee, where necessary, to establish a credible and objective slate of independent directors who are not implicated in the alleged wrongdoing.
    • Consider and implement remedial actions, which must be carefully considered and executed.
    • Aggressively defend the matter, in court, where it becomes necessary to do so.
    • Work with our public relations team to shape the narrative in the court of public opinion.

    Whose House?

    Whatever your needs, we can structure an outside general counsel relationship to fit your needs. Whether a matter is beyond the scope or capabilities of in-house counsel, or there just aren’t enough hours in the day to get it all done, we are here to help and provide the experience, resources, and assistance to deal with your issues. To discuss how The Law Offices of Andrew Dressel LLC can offer outside general counsel services to assist your in-house counsel in New Jersey or New York, call us at 848-202-9323 or fill out our contact form right away.

  • 6 Ways Outside General Counsel Makes Life Easier

    6 Ways Outside General Counsel Makes Life Easier

    1. Less Headaches

    Less headaches are the #1 way outside general counsel makes life easier for our clients. With great outside general counsel—ideally hired before problems arise—the client gets professional, experienced catastrophe prevention. Outside general counsel will draft airtight contracts, make sure the business avoids any obvious problems, and set the business up to deal with issues quickly and professionally. You might not always see the benefit of hiring outside general counsel, but your head will for sure feel it if you don’t.

    2. Confidentiality

    Clients can rest assured that they can obtain legal advice and discuss legal issues knowing that those conversations will be protected by the attorney-client privilege. Freedom to work through sensitive issues confidentially ensures the safety of your business.

    3. Business First

    The outside general counsel’s primary focus is working for the success of your business. This makes life easier during partnership disagreements, executive conflicts, or board negotiations. Your outside general counsel is there to protect the security and longevity of the business.

    4. No News Is Good News

    Another benefit of obtaining outside general counsel is they can act as the business’s registered agent. This allows the outside general counsel to receive legal mailings directly and review them, saving only the most important matters for the attention of the owners. This frees up time and energy to focus on other things, all while knowing your interests are being cared for behind the scenes.

    5. Mischief Managed

    The best business lawyers make their clients’ lives so easy that the lawyers seem unnecessary. With an attorney filtering your legal materials, often an issue is handled and resolved before the business owner even knows it happened. This can prevent stress, decrease decision fatigue, and lighten the overall burden on the business owner and executive team.

    6. Year After Year

    Great outside general counsel develops a working relationship that continues throughout the many phases of the business. In a flat-fee annual arrangement, we conduct an initial audit to get to know you, your business, and your legal needs at the beginning of the attorney-client relationship. We also conduct an annual audit process to anticipate and evaluate potential legal and regulatory issues.

    To find out exactly all the ways outside general counsel can make your life easier and your business better, use the Contact form to talk to one of the partners at The Law Offices of Andrew Dressel LLC. Call us at 848-202-9323 or email us at andrew@dressellaw.com for more information.

  • New Jersey Marijuana Legalization: What Employers + Employees Need to Know

    New Jersey Marijuana Legalization: What Employers + Employees Need to Know

    After some delay, Governor Murphy finally signed legislation to legalize recreational marijuana in New Jersey. While this is a historic moment and something of an end to what has been a long legislative saga, questions still remain about the impact this legislation will have on employers and employees, including the most important question: can someone be fired for cannabis use? Unfortunately, this is still something of an open question, and therefore a question both employers and employees should approach with great caution.

    Why is this uncertain?

    The cannabis legalization legislation makes clear that employees cannot be fired for exercising what is now a right under the New Jersey constitution. But they can be fired if it is proven that the employee was under the influence at work, proof which must be provided in the form of both an actual test for THC and expert examination and testimony regarding signs that the employee was working under the influence.

    However, legislation is just the first step and there are still a host of rules and regulations for the New Jersey Cannabis Regulatory Commission to work out on how such a testing regime would work. Given the length of time, it took just to put together the basic legislation, those rules and regulations are unlikely to be finalized any time soon. Another area where regulations need to be clarified is how expert witnesses will be licensed and trained.

    What do employers need to know?

    Employers need to keep in mind that the enacting legislation signed this week contains employee protections that should not be taken lightly. While the legislation states the regulatory framework needs to be in place for employment protections to be “operational,” the employment protections are “effective” immediately. As to what the difference is between “operational” and “effective” protections are, one can only guess at what the legislature was thinking. But as an employer, I would be hesitant to ignore employment protections that have been declared “effective.” Employers should be treating off-hours use of cannabis as a private right that employees can enjoy. That is unless the employer in question is the federal government, in which case private, off-hours cannabis use is still grounds for dismissal.

    What do employees need to know?

    You have a right not to face adverse employment consequences for private, off-hours marijuana use. But don’t show up to work high. Your employer needs only to have reasonable suspicion that you are under the influence of marijuana to require a physical drug test and evaluation by an “expert” on whether you are exhibiting signs of intoxication. Given how long THC stays present in the bloodstream, and the lack of any guidelines on “expert” training, there is still plenty of leeways for employers to find that an employee was high on the job. Also, employers are still permitted to require drug tests as part of pre-employment screening and as part of a regular drug screening program. In short, if your employer really wants to know about your marijuana use, they will. Given that most employment is “at-will” anyway, the employment protections signed into law this week may amount to small comfort.

    The attorneys at The Law Offices of Andrew Dressel LLC are monitoring the progress of legalization legislation and stand prepared to advise our clients on legalized cannabis in New Jersey. If you are interested in starting a business in the New Jersey cannabis industry please reach out to our attorneys by either calling at 848.202.9323 or contacting us through email at andrew@dressellaw.com. We look forward to helping you with whatever inquiries you may have.

  • Why You Should Always Hire Counsel to Draft Your Contracts

    Why You Should Always Hire Counsel to Draft Your Contracts

    Leave the Contract Drafting to the Attorneys

    Nowhere is the old saw “an ounce of prevention is worth a pound of cure” truer than in the realm of contract drafting. As a commercial litigator, time and again I have seen companies spend millions on litigation because they failed to take the necessary steps years earlier to ensure that their contracts were properly drafted and sufficiently clear. And almost always the reason the contracts were not sufficiently clear and detailed is because the parties thought they could save some money doing things without a lawyer. These are just some of the common pitfalls I’ve seen.

    Failure to Set Forth Consideration

    A promise is made, and a promise is broken, certainly the courts will enforce that promise in the event you decide to sue, right? Not so fast. Unless the contract at issue sets forth obligations flowing both ways, i.e., a “promise for a promise,” the broken promise may not be legally enforceable. This is called “consideration,” and unless both parties’ consideration is set forth in the contract, it may not be a legally binding contract.

    Failure to Name the Parties

    More and more business organizations involve multiple entities. Corporations, limited liability companies, a manifold of partnership types—the world of business organizations is incredibly complex. Unless a contract specifically sets forth exactly what entities have what obligations, you may find yourself with an unenforceable contract, or just as bad, a defendant that may have no assets with which to satisfy any judgment you might obtain.

    Failure to Define Terms

    As a litigator, ambiguity is often my friend, but in a properly drafted agreement, there should not be much ambiguity for me to work with. Nailing down what each term means makes your contracts clear and strong and prevents clever lawyers from trying to find wiggle room on undefined terms when matters break down.

    Failure to Include the Boilerplate

    Many a business owner has sighed looking at the lengthy document prepared by their counsel. Surely, they think, the contract did not need to be this long. But all that boilerplate at the end serves very important purposes. Items like a merger clause, which confines the parties’ agreement to the language contained within the contract, a dispute resolution clause, which sets forth how and where disputes between the parties are to be resolved, a choice of law, which sets forth the set of laws to be used in interpreting a contract, are all likely to be overlooked by a non-lawyer drafting their own agreement but are vital to the outcome of any future disputes between the parties. And, although much of it can seem to be rote or obvious, that is exactly the point—to avoid surprises later.

    Failure to Consider the Contract from a Non-Party’s Point of View

    The drafters of an agreement have often discussed the subject of the agreement at length and may have understandings about the agreement that do not ultimately make it into the language of the agreement.  This can be a fatal error. Having someone who was not part of these discussions actually put pen to paper is helpful because those individuals will seek to describe the agreement in its entirety, making every aspect of the agreement explicit.

    Failure to Consider the Worst Case

    Experienced counsel will have seen all the ways contracts can eventually “go wrong” and will endeavor to create a contract that puts you in the best possible position in the event the parties end up in a dispute. Most parties think things will always be smooth sailing, that everyone will live up to their obligations, and that present conditions will simply continue. However, being well positioned in the event things do not go well is important. Experienced counsel will set terms so that when a dispute arises you are well-positioned in that dispute.

    Whenever you or your business find yourself negotiating a contract of importance, it is key to hire experienced counsel who can recognize the subtleties that can lead to unintended consequences down the road. The Law Offices of Andrew Dressel LLC is a sophisticated firm with the skills necessary to both avoid unfortunate surprises in your agreements, as well as to negotiate the most favorable terms possible for you and your business. Whether you are seeking counsel for a “one off” contract or to engage an outside general counsel on a regular basis, please contact us through our online form, or by calling us at (848) 202-9323.