American entrepreneurship is alive, well, and increasingly taking the form of start-up companies. Start-ups are different from small business or "mom and pop shops" because they have huge growth potential; for example, Facebook, Instagram, and Airbnb, not the local hair salon. Because of this huge growth potential, start-ups have specialized legal issues and needs. This research guide's purpose is to assist an attrorney new to the start-up or emerging companies practice with finding sources to address these legal issues.
This guide provides resources for three of the major events in most start-up companies' life cycles: Formation, Financing, and Exit strategies. This guide does not delve into employment, intellectual property, security, or tax issues. Formation involves choosing and forming a business entity. Because of the high-growth nature of start-ups this guide focuses on incorporation. Financing involves funding the company, usually with convertible notes, angel investors, or even crowdfunding. Exit strategies often involve transactions like stock sales, asset sales, or mergers.
This guide includes primary sources, secondary sources, sample forms, and online tools for each of the three topics covered: formation, financing, and exit strategies. Because many of the issues related to formation, financing, and exit strategies involve large amounts of state law, this research guide focuses on the law of California, Delaware, Nevada, and Texas. It provides state-specific treatises, statutes, and forms for these states. However, for researchers interested in the law of different states, there are general treatises, a State Survey of formation statutes, and general forms for guidance.
Further, under the tab Current Awareness there are blogs, news sites, events, and video libraries so a practitioner may keep up to date and informed about all aspects of start-up law. For practice, sample research problems are located in a sub-page under Introduction.
Getting Started: Secondary Sources
A founder walks into your office and wants your help in forming/financing/exiting a company. What do you do? Instead of re-inventing the wheel by manually compiling the relevant primary sources, the best place to start is with secondary sources including treatises, law review articles, or state websites.
First, for very new practitioners, take a few minutes and watch the overview videos on each of Formation/Financing/Exit Strategy tabs. These videos by Bloomberg law pertain specifically to start-ups. Law blogs are another good, free place to gather a general topical overview. These are located under the Shared Secondary Sources tab, along with treatises, articles, books, and more which cover the entire start-up life cycle. Also look at the Formation/Financing/Exit Strategies tabs for sub-pages with secondary sources that are more specifically related to the issue. For example, a treatise or article only covering financing would be under Financing's Secondary Sources sub-page.
If the assignment involves drafting a document, as opposed to answering a specific legal question, the researcher may want to have Sample Documents in hand before looking at relevant statutes. This strategy allows a researcher to check the document against the statute and come up with specific provisions that may be researched through caselaw.
Know the Law: Primary Sources
Business entity law is based on state statutes, and contract law is based on state common law. The relevant statutes are available for free on government websites. The primary sources sub-pages under the tabs above include links to specific free statutes regarding formation, dissolution, and filing after a sale or merger. Annotated versions of these statutes are located in Westlaw and LexisNexis.
A relevant federal statute is the recently (2012) passed Jumpstart Our Business Startups (JOBS) Act. A PDF of the full text of the bill is available for download under Financing's Primary Sources tab. This guide also has directions on how to access the full legislative history and related documents on ProQuest Legislative Insight.
Cases may be accessed through any legal database (Westlaw, LexisNexis, or free sites like Fastcase). Westlaw and LexisNexis have specific case databases consisting only of corporate and finance cases. Searching only relevant cases results in fewer search results to shift through. This guide includes links to search the corporate and finance databases under the Formation and Financing tabs respectively.
Ready, Set, Go: Sample Documents
Nothing is better for efficiency then a really good sample document. Not one from a past deal with extraneous or missing provisions, but one that lays all relevant provisions out with explanations. Well, look no farther. This guide has compiled many reputable sample documents. These documents come from state government websites, state-specific treatises, like Delaware Law of Corporations and Business Organizations, law firm websites, like Goodwin Procter's Founder's Toolbox, Practical Law Company, and more. Each of the Formation/Financing/Exit Strategies tabs have sample document sub-pages.
Be Aware, Be Very Aware
While not a specific part of a research strategy, keeping up with what is happening in the start-up world is important; this information can change how provisions are drafted or lead to new clients. This guide includes links to current awareness sources. These sources include news websites (free and subscription), video websites, and event calendars.
The formation, financing, and sale of start-up companies are transactions, which makes understanding the transaction and having good sample documents complete with explanations very important. Finding good sample documents may also be the most challenging part of a new associate's task. New associates will not know if examples in a firm's system include or exclude relevant provisions as they are not familiar with the documents. Even if the firm has templates, a new associate may not know how to customize the template for the client. This guide strides to provide new start-up practitioners with some resources to overcome these obstacles including secondary sources, primary sources, and sample documents and tools.
The most helpful resources in this area are state government websites, state-specific treatises with forms, general treatises including forms, and Practical Law Company notes and forms. Links and further explanations of all of these sources may be found above and on individual tabs and sub-pages throughout this guide. Beyond legal sources, this guide also includes many non-legal current awareness sources. These resources are largely free, though there are some subscription services.
For further information consult the tab landing pages. To practice with this research guide consult the sub-page Research Problems for sample questions and solutions. Good luck!
Michelle Wright Knoop is a summa cum laude graduate of the University of Missouri School of Law in May, 2013. Michelle also received her undergraduate degree in finance summa cum laude from the University of Missouri in May, 2013, as part of a dual undergraduate/law program. During law school Michelle served as the Senior Lead Articles Editor to the Missouri Law Review.
After graduation Michelle served as a law clerk for the Honorable Carlos Bea of the U.S. Court of Appeals for the Ninth Circuit.
In 2014, she joined Goodwin Procter LLP's Silicon Valley office as an associate in the firm's Business Law Department.
This guide was originally created in support of Professor Diamond's Advanced Legal Research class for Fall 2012. The contents of this guide should not be taken as legal advice or as the work product of MU Law librarians.
Various electronic sources including Westlaw Classic, WestlawNext, LexisNexis, FastCase, Bloomberg Law, Intelliconnect, ProQuest Legislative Insight, and Practical Law Company are used in this electronic guide. The cost of accessing the documents and treatises through this guide will largely depend on your firm's negotiated pricing plan. However, if you have access to several options and want to compare prices, or are at a small firm and trying to decide what resource to purchase, see Kendall F. Svengalis's Legal Information Buyer's Guide & Reference Manual, 2016 edition.
Please contact a customer service representative for prices on Intelliconnect, ProQuest Legislative Insight, and Practical Law Company.