How Ballard Spahr helps startups navigate common legal questions

Technical.ly is a free news resource thanks to financial supporters like Ballard Spahr, a Technical.ly client. Ballard Spahr reviewed this article before publication.

Growing a startup is so much more than creating a product and finding customers. Entrepreneurs have to endure a gauntlet of challenges that may be unrelated to their company’s core mission but are essential to maintaining a healthy business.

It can be helpful to have outside support and guidance, especially in legal matters that, if unaddressed or handled incorrectly, could have devastating consequences. Ballard Spahr, a national law firm and Technical.ly client, provides that support to startup founders through its Emerging Companies and Venture Capital Group, helping with every step of a company’s lifecycle from incorporation and financing to corporate governance and regulatory compliance.

While the firm’s clients get the full attention of their attorneys and staff, Kimberly Klayman, the practice leader of Ballard Spahr’s ECVC group, also offers expertise to the broader public through a regular column on Technical.ly, focused around startups’ most common legal concerns.

Check out a sample of previous installments in the series below, and if you’re interested in Ballard Spahr’s services, connect with them through Technical.ly’s Preferred Partners directory.

Understanding founder secondaries: Unlocking liquidity options for startup founders

Explore how founder secondaries can offer liquidity to startup founders before an exit event, and learn about the legal considerations involved in these transactions.

“The prevalence of secondaries in the current startup market continues to rise, and they are an incredibly useful tool for investors and founders to reward key holders, keep them engaged and ensure that the business continues to grow towards a lucrative later-stage exit,” said Klayman.

Is your direct-to-consumer company using ‘dark patterns’ on its website?

Learn about deceptive design practices known as “dark patterns,” their legal risks, and how businesses can mitigate potential liabilities.

“Dark patterns are generally understood to mean practices that mislead or manipulate consumers into taking actions that do not reflect their true intent, choices or consent,” said Klayman. “Federal and state regulators have responded with increased scrutiny of these practices, bringing several high-profile enforcement actions against companies for employing them.”

When and how should founders pursue a patent? Here’s what you need to know

Understand the patent process, including the types of patents available and strategic considerations for entrepreneurs seeking to protect their innovations.

“I always say have at least a conversation with counsel to understand the process and to understand where the landmines are,” said Scott D. Marty, a partner at Ballard Spahr. “At the end of the day, entrepreneurs are risk takers. They are business people and they have to make business decisions. Our job as counsel is to advise them about where the risks are and to counsel them how to address, avoid or at least minimize risk.”

Trademark protection and brand building: A guide for founders

Discover the importance of trademark protection in building a strong brand identity, along with practical steps for securing and enforcing trademarks.

“Trademark protection and brand building are critical components of startup success,” said Klayman. “By understanding the importance of intellectual property protection, founders can take the necessary steps to safeguard their brand.”

Ensuring ADA compliance: Why your startup’s website must be accessible

Understand the legal imperatives and benefits of making your startup’s website ADA-compliant, ensuring accessibility for all users and avoiding potential lawsuits.

“Ensuring that your business’ website is Americans with Disabilities Act (ADA) compliant is not only morally right, it also makes financial sense,” said Klayman.

What the HIPAA? Demystifying healthcare regulations for startups

Navigate the complexities of HIPAA compliance with this guide, offering startups insights into healthcare information privacy and security regulations essential for safeguarding patient data.

“While healthcare privacy laws and regulations may appear daunting, you can use online resources and ask legal counsel for support in navigating the healthcare space,” said Klayman. “Addressing these issues shortly after formation is key in order to avoid any unexpected hiccups in investor or purchaser diligence or unwelcome visits from federal or state regulators.”

What is my company worth? How startup valuations are determined

Uncover the methodologies investors use to assess startup valuations, from discounted cash flow analyses to the significance of founder experience and industry trends.

“As many startups are not yet profitable at the point when early-stage investors are investing — indeed many startups are pre-revenue at that point — calculating a valuation is not always simply crunching the numbers,” said Klayman. “As a result, founders and investors have to use several methods for determining valuation, and experience in the industry helps with accuracy.”

Early and often: An estate planning how-to guide for entrepreneurs

Learn why proactive estate planning is crucial for entrepreneurs, with strategies tailored to each stage of business growth to ensure long-term financial security.

“Estate planning tends to be one of those ‘to do’ items that everyone knows that they have to complete, but the actual implementation of a plan is usually pushed aside for another day,” said Klayman. “Startup founders are especially susceptible to estate planning procrastination because they tend to be focused on building and running their business and then preparing it for a sale. Early and often planning for business owners and entrepreneurs can save them time, expense, and taxes in the future, and position them for extraordinary success during both the highs and lows of the business cycle.”

Not all investors are VCs: Who are strategic investors?

Explore the role of corporate strategic investors in the startup ecosystem and understand how partnering with them can offer benefits beyond capital infusion.

“As the founder of a young startup company, it can get overwhelming to research the various forms of venture funding that are available. Strategic investors are one of many options and can often participate, rather than lead, a capital raise,” said Klayman. “Obtaining strategic funding can have many benefits, including: access to resources, insight to navigate scalability across all areas of your business, credibility of your company due to its association with one or more strategic investors, new business development opportunities, and the ability to work with an investor who has experience in your industry.”

What are the differences between SAFEs and convertible notes?

Delve into the distinctions between SAFEs and convertible notes, two popular financing instruments, to determine which aligns best with your startup’s fundraising goals.

“Convertible notes and SAFEs serve largely the same purpose. Both instruments enable founders to raise money while retaining control over their companies and deferring negotiations around valuation, investors’ rights and other thorny issues to a later date,” said Klayman. “Still, there are important differences between SAFEs and convertible notes…. Both founders and investors should consult with counsel and make sure that all parties understand and agree to the terms before entering into any kind of formal financing arrangement.”

For more insights on these and other legal topics, connect with Ballard Spahr here.