Horror Stories - Keeping the Monsters Out of Your Deal

Deal Us In

Halloween is a spooky season known for ghost stories and other terrifying tales. At first blush, recounting transactional law tales may not fit that bill, but this episode may just change your mind. While transactional attorneys see their share of intense and stressful scenarios, what litigators see a year or two down the road when the dust settles may just frighten you.

The Terrifying Tale of Certain State Securities Statutes That Bring Heightened Damages

Imagine this, you’ve prepared your case for months or even years, the exorbitant costs of litigation and discovery growing larger by the day, now you’re facing the grim reality that not only does your client owe 15 million dollars, the judge just trebled the damages…and ordered your client to pay the opposing party’s attorneys’ fees. Tell me that’s not enough to keep you up at night.

Jodie examines the heightened damages provisions of certain state statutes related to securities deals and how they can be used as leverage by threatening litigation related to a stock purchase agreement. Therefore, when considering a stock purchase, it’s imperative that you carefully contemplate the deal, the state you’re transacting the deal in, and whether a state securities act could be implicated.

Don’t Let a Monster Get Into Your Deal Document Definitions

Seasoned attorneys know that definitions in agreements are often fodder for litigation. One such definition is “proceedings.” Both buyers and sellers should negotiate carefully around definitions. Attorneys on both sides may end up going to the mat over what specifically constitutes a “proceeding.” Chilling stuff.

The Hair-Raising Ordeal of the Release Language

Typically, when you think about exiting an investment, you think about getting the broadest possible release. Think twice before you do that. There are times where, depending on which point and time you’re at, there are different people and entities that are associated with the corporate structure. And, if you broadly include affiliates in a release, you can end up in a terrifying situation where you’re later sued related to your participation in that potential investment. Worse, you may end up on the other side of an argument that you unwittingly, through your release language, released the other side from any and all liability.

Listen to this episode for more unnerving anecdotes involving the employment eligibility of workers, including Form I-9s, and related PPP issues. Both Susan and Jodie always recommend having an eye for detail in these kinds of situations, check strict time frames, fill out forms properly, and use experienced deal counsel to help you avoid any scary situations.

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