Information Technology Law Firm

Alerding Castor Hewitt, LLP is a law firm that does a substantial amount of legal work with clients in SaaS law and as technology legal counsel.  So much so that we were asked to contribute to Corporate Blogging for Dummies, a best practices book that our friends Douglas Karr and Chantelle Flannery were approached to write.

As a law firm that utilizes blogging to reach our current and potential clients, the Alerding Castor Hewitt, LLP website was featured as an example within these pages.  Partner David Castor contributed to the sections regarding legal services and our firm's blogging site.  Using Compendium's blogware, we have been participating in blogging for over two years and have been able to connect with private equity investors and constituents in the realm of business law, including software litigation and SaaS legal consulting.

Check out Corporate Blogging for Dummies for more information on how you can use this SaaS tool to help grow your own business.  Blogging is an effective way to help build a relationship with your audience.  This book will show you how.

I was reminded today of something told to me by a friend last year:


It still takes good people who are smart to ask good questions before any data analysis tools can help develop good answers. 

Think Enron and Madoff for examples of smart people who are "bad" and purposely misuse data to manipulate and misrepresent answers.

 
See also:

Entrepreneurial Law - Developing a Good Business Model
Culture of Private Equity
Entrepreneurial Law - Proof of Concept & Proof of Scale
Fatal Flaws in Leadership
Keep the Good Ideas Coming but Stay Focused
Business Law - 10 Common Negotiation Mistakes
Funding Law - Presentations to Investors
 

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Alerding Castor Hewitt, LLP is an Indianapolis law firm focusing on business law, information technology law (including SaaS law and legal technology consulting), private equity consulting, and business and Internet litigation.

This morning I attended the Techpoint event: What it Takes to Lead a Successful Entrepreneurial Venture Today and was reminded of some fundamental leadership qualities that I see in many of the successful business owners we work with as a business, entrepreneurial and information technology law firm.

Speaking today were Daniel DeHayes, a Professor Emeritus of Business Administration with the Indiana University Kelley School of Business and Delphia Croft, the Managing Principal of Solution Revolution Consulting.

In the studies that they have conducted collectively, they have found certain characteristics to be present in the leaders of today's successful companies.  While they found several, in this session DeHayes and Croft discussed the following four traits:

• Sovereign: trust in yourself, your intuition and judgment
• Warrior-like: commitment to a greater cause than yourself (though not mercenary)
• Open: extreme self-awareness
• Intentional: possessing an intense, pro-active focus (shunning habitual thinking)

Considering these traits, I would have to agree that to be successful you must have the confidence to trust in your own capabilities, the strength to execute (while retaining the ability to quickly adapt to the unforeseeable), the humbleness to know your own strengths and weaknesses, and the determination to achieve the goals you set forth.

Successful companies don't happen on a whim, but are backed by the blood, sweat and tears of driven individuals.  If you are contemplating striking it out on your own, take a moment to reflect on the above traits and decide for yourself if you have what it takes to be a leader.

As an attorney of a business, entrepreneurial and information technology law firm, it is an honor to work with our clients - those individuals who possess the leadership characteristics to build successful entrepreneurial ventures.

The post below is fantastic.  It is by Michael P. Alerding, CPA (my business partner's father) at his accounting firm's new blog site.  He gave me permission to re-post it here (thank you Alerding & Co.).  Check it out:  Alerding & Co. Blog




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Alerding Castor Hewitt, LLP is an Indianapolis law firm focusing on business law, information technology law (including SaaS law and legal technology consulting), private equity consulting, and business and Internet litigation.

One of my favorite movie scenes is from The Jerk.  Navin Johnson is working at a carnival guessing peoples weight.  He is talking to Frosty, his boss:

There is a great article in the July-August edition of the Harvard Business Review entitled The Early Bird Really Does Get the Worm.  The article summarizes a study which found a correlation between  "morning people" and career success.  This is based on a number of traits which are commonly found in morning people.  

Traits
Agreeable
Optimistic
Stable
Proactive
Conscientious
Satisfied with Life

Being a morning person, of course I loved this!  Most days I am the first in the office.  I love getting my to-do lists together early each morning and executing on the list throughout the day.  I have found this to be an extraordinarily important practice in building and managing a successful law firm.  

I have never understood evening people.  It seems that they miss out on too much and are always in reactive mode rather than proactive mode.  That creates a stressful life.  Of course that is not always true - I know many who are actually much more organized than me and run great businesses.

The study did find some positive traits of "evening people".  They tend to be more creative and intelligent than morning people.  I fully agree with those points!  The study also found that they tend to be more extroverted.  That is probably true, but I have not noticed that point to the same degree.  At any rate, those are traits that are necessary in any balanced business team.

See also:

Entrepreneurial Law - Developing a Good Business Model
Culture of Private Equity
A World of Private Equity
Rules of Funding
Entrepreneurial Law - Proof of Concept & Proof of Scale
Fatal Flaws in Leadership
Keep the Good Ideas Coming but Stay Focused
Business Law - 10 Common Negotiation Mistakes
Funding Law - Presentations to Investors
 


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Alerding Castor Hewitt, LLP is an Indianapolis law firm focusing on business law, information technology law (including SaaS law and legal technology consulting), private equity consulting, and business and Internet litigation.

Be prepared:  I'm going to get on a bit of a soapbox.  I read a recent article at WSJ.com entitled "Using Social Networking as  Legal Tool" (Linked Below).  There is nothing wrong with this article.  It very succinctly and pleasantly explains how certain law firms are using social networking and the Web to find clients for high-value plaintiff cases.  And I don't disagree with that approach.  As an attorney posting on a blog, I too hope to use social networking to get business, and would be foolish to argue otherwise.  Thus, I cannot fault the firms employing such tactics.  And I am glad that a more "mainstream" press outlet would pick up a story of this nature; highlighting the use of technology by lawyers.

The fault that I find, and what, frankly, irks me, is that this article gives no credence to the more innovative aspects of technological use that are gaining hold in the legal community.  The article highlights the practice of "ambulance chasing" for the 21st Century.  But there is so much more happening in the cyberworld.  Legal scholars like Eric Goldman are posting daily with the new and interesting ways that technology litigation and cyberlaw are being explored.  Courts are posting their opinions on-line to further the pursuit of knowledge by the populace.  Courts and communities are moving to on-line activity such as filing and case work to speed up the legal process and reduce our environmental impact.  Technology legal counsel throughout the world are espousing the virtues and pitfalls of cyberlaw.  Property rights are being generated in virtual worlds.  Privacy litigation is defining what can and cannot be exposed in the real and virtual worlds.  Software litigation is defining what can and cannot be done with these wonderful bits and bytes of information.  Cloud computing law is going to dominate the future courtrooms of the world as more and more data is put into the cloud.  All of these things are happening now.  

Our world is becoming a smaller place as we all become more connected, and lawyers are at the forefront of those debates and discussions.  Yes, I think it is very interesting that Law Firm X has 25 people on staff twittering and establishing domain names so that sufferers of acute hypersensitivity can find a law firm willing to represent them.  PLEASE don't misunderstand me because I believe that allowing those people to easily find representation IS IMPORTANT.  But it is not the only thing that is happening out there in the cyber-ether.  Instead of focusing on the new and novel way that lawyers are getting business, let's shine light on how those in the legal community are using the Web to define, explain and expand our world.

WSJ article: (online.wsj.com/article/SB10001424052748704324304575306581598351428.html

I'm going to cheat a little on this.  I read a great blog post by Jeff Ready over at the McStartup blog (www.mcstartup.com).  The blog post is all about the importance of radical innovation.  I have a place in my heart for radical innovation because I believe that in the legal community, we are the radical innovators.  ACH strives after its goal to be an information technology law firm, a venture capital law firm and a business law firm, but we go about it in a way that is radical to many other attorneys, because we are business-minded first and we are looking at the areas of business that others are overlooking.  So, rather than re-capsulate Jeff's thoughts, here they are in full quoted glory:

The Art of Radical Innovation

Following up on my post about Tom Mason and Rose-Hulman, I wanted to touch on something that Tom is a big believer in and used as the focus of his retirement speech:  radical innovation.Radically innovation refers to that type of innovation so powerful and different that it can completely change the profession, institution, industry, business, or person in one fell swoop.  Thinking about how radical innovations come about and how they impact the world around us is a favorite subject of Tom.

I bring it up here, because I believe that radical innovation is the key to success in whatever you do – and not just radical innovation, but, as Tom puts it, “continuous radical innovation” – the constant search for those things that will turn your world on its head.

It is true that most businesses are looking to innovate, but to think about radical innovation really changes the way you view things.  It’s very different from thinking about “constant innovation” or “continuous improvement” which is the mantra of many businesses today.  As Tom quipped during his speech, “General Motors followed the mantra of continuous improvement all the way into bankruptcy.”

 Put another way, and to borrow from the world of academia, continuous improvement gets college campuses wired, installs the latest lab environments in the buildings, and creates a campus environment more rewarding for the students.  Radical innovation moves the entire university experience online and does away with the campus altogether.
Continuous improvement puts shocks on your carriage.  Radical innovation replaces the horse with an engine.  Continuous improvement accelerates the reload speed and accuracy of your rifle.  Radical innovation gives you a machine gun.   You get the idea.

The challenge is to continuously seek the radical innovations in your business – to look for and to go after the very technologies that, if developed elsewhere, would bring a swift and painful end to your business.  In the mean time, of course you need to look for ways to improve your business, your products, and your practices.  However, time and resources need to be spent going after the radical, not just the better.

This probably sounds a lot easier than it is.  Radically innovation is an unpredictable, expensive, and messy business.  With limited resources, the temptation will always be to direct those resources toward the projects that will have the most immediate and predictable impact.  Just as you would imagine the mad scientist to find himself surrounded by doubters (right up until the invention actually works), you’ll find that investors, employees, partners, and competitors will view resources directed to these “rogue projects” as wasteful, silly, and distracting. 

Thus is the challenge of going after radical innovation within an ongoing enterprise.  The near term benefit sits squarely on the opposite, and in a world of business that’s often driven by quarterly numbers, high rates of employee turnover and movement, and a desire for immediate satisfaction, it can be extremely difficult to manage the balance of resources between what is today’s reality, and what might change that reality. 

The pressure will be on improving today’s reality.  But if you’re not careful, you’ll have the world’s greatest carriage company – right up until Henry Ford hands you your lunch – just ask GM.  

Your friendly neighborhood technology counsel here:  So, Mexico recently passed a new data protection law.  On April 27, 2010, Mexico passed the Federal Law for the Protection of Personal data, which is likely to be signed into law by the President in the near future.  This law not only allows for a mind-boggling $1.5 million penalty for violation, but it also applies to the private sector. Private and public entities will need to protect themselves from privacy litigation. 

This law is much akin to the EU's data privacy laws.  Meaning, among other things, that scope of the law is extremely broad.  Additionally, all data is included, but certain types of data are given greater protection.  This Sensitive Personal Data includes: "In particular, consider those that may reveal sensitive issues such as racial or ethnic origin, health status, present and future, genetic information, religious, philosophical and moral, union membership, political views, sexual preference." (translated from the Bill).  The dissemination of any information that contains this sensitive data will require written consent from the owner of the data, the individual. 

Now the $1.5 million question:  What does this mean for my business?  The simple answer is: Potentially alot.  In the world of e-discovery and privacy litigation,this issue has already begun to rear its head in the context of the EU's data privacy law.  With the number of American manufacturers and companies with a presence and facilities in Mexico, this type of broad legislation could result in the expenditure of millions of compliance dollars to craft protocols and document retention issues.  Think of the billions of e-mails that must run through a Fortune 500 company.  Now think about how many of those e-mails contain some amount of information that fits within the category I described above.  To disseminate that information, each individual has to be contacted and give written consent.  Like I said, mind-boggling.  

Obviously, society is walking a thin line between protection of information and the availability of information for legitimate purposes.  Privacy litigation both here and abroad is going to shape the breadth and direction of that line.  And then, when we think we have a handle on it all, we'll start talking about what we are going to do under cloud computing law for that data that is stuck firmly in the cloud. 

Your friendly neighborhood technology counsel here:  As you likely know, my goal is to become THE Indiana technology lawyer; however, technology is not my only area of interest.  Like many of the  folks at Alerding Castor Hewitt, technology law is a passion, but we all strive to be a full service law firm for all businesses.  Thus, in addition to tech stuff, I also litigate matters for several banking and business clients.  And, as any good lawyer does, when I see changes in the law that may impact my clients, I want to shout it from the rooftops.  One such change that, to date, has gone largely unheralded is an amendment passed to the Indiana "Get Hope. Get Help" statute (Ind. Code 32-30-10.5-8). 

For those that don't know, this provision, enacted originally in 2009, requires a lender to send a written notice to a mortgage holder regarding their default and options to avoid foreclosure before the lender can proceed with a foreclosure suit.  The intended purpose of the law is to avoid unnecessary foreclosure of residential properties by "requiring early contact and communications among creditors, agents and debtors" and "facilitating the modification of residential mortgages in appropriate circumstances."  This is debtor safeguard that lenders have to navigate before they can foreclose on a property.  The letter itself has a large "GET HOPE. GET HELP" header, hence the nomenclature.    

The new provisions amended to the statute in the 2010 session  clarify that any time before a sheriff's sale, a debtor can do one of three things with the property. They can: (1) appeal a finding of abandonment; (2) redeem the real estates; or (3) retain possession of the property until the sale.  These three things already existed in Indiana law, but are now more clearly set out and obvious.  The goal is clearly to make the options abundantly clear to all involved. 

To me the more important change is the requirement that the applicable notice prescribed by the statute must be in 14 point font.  The necessary language is "Mortgage foreclosure is a complex process.  People may approach you about "saving" your home.  You should be careful about any such promises.  There are government agencies and non-profit organizations you may contact for helpful information about the foreclosure process.  For the name and telephone number of an organization near you, please call the Indiana Foreclosure Prevention Network".  

So, all you lenders out there heed the warning of the new statute.  There are procedures that you must follow before you can even get to a court room.  While I understand the reasoning behind these provisions, they are certainly something about which lenders should be aware.  The foreclosure process is a necessarily lengthy one, and you don't want to unnecessarily extend that by using the wrong size font.   

I recently read a summary of a lecture on applying the seven deadly sins to software development.  The sins are:

Lust	Obsessive or excessive thoughts
Gluttony	Over-indulgence, over-consumption
Greed	A sin of excess like lust and gluttony, but in reference to wealth
Sloth	Laziness, indifference, apathy
Wrath	Uncontrolled feelings of hatred and anger
Envy	Resenting another because they possess something you do not
Pride	Excessive love of self

Your friendly neighborhood technology legal counsel here to discuss with you the hidden dangers lurking in your unassuming (and unread) terms of service agreements.  Janet Croswell, one of our fabulous tech lawyers, posted back on February 10, 2010 about the pitfalls that businesses face related to the clickwrap agreement (here's a link for those playing along at home  blog.alerdingcastor.com/blog/alerding-castor).  Now for those of you scratching your head and wondering what a "clickwrap agreement is", the answer is simply those pesky agreements that we all have to agree to in order to do anything on-line and that none of us actually read.  I'm fascinated by this stuff and I'll probably only read one in twenty that I ever click past.  They are the superfluous hurdle that we fly past in order to enjoy our Internet-y goodness.  But, as Janet so wonderfully pointed out, these hindrances are actually contracts to which we are binding ourselves, or worse, our companies.  "What" you exclaimed under your breath, "You mean this is binding on me?"  And I'm forced to tell you, "yes".  Which leads to the inevitable "so what" question. 

The "so what" in this scenario is that you are likely locking yourself into a venue-selection provision.  I know the phrase sounds like you are making the decision of whether your play Deer Creek or Red Rock during the next summer tour cycle, but actually you are significantly limiting your options from a litigation standpoint.  Venue is the place where a lawsuit can be brought.  Obviously, you would like to bring a lawsuit near where you are located and where there is law that favors your position, but if you agree in contract that it will be brought in Poe-Dunk, North Dakota, well then friend, that's where you are headed. 

Recently, several courts have concluded that venue selection provisions contained within a clickwrap agreement are enforceable.  The most recent cases involve the venue-selection provision in the Google AdWords contract.  In TradeComet.com v. Google, a New York District Court found that the language from Google that

"THE AGREEMENT MUST BE CONSTRUED AS IF BOTH PARTIES
JOINTLY WROTE IT AND GOVERNED BY CALIFORNIA LAW EXCEPT
FOR ITS CONFLICTS OF LAWS PRINCIPLES. ALL CLAIMS ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR THE GOOGLE
PROGRAM(S) SHALL BE LITIGATED EXCLUSIVELY IN THE FEDERAL
OR STATE COURTS OF SANTA CLARA COUNTY, CALIFORNIA, USA,
AND GOOGLE AND CUSTOMER CONSENT TO PERSONAL
JURISDICTION IN THOSE COURTS."

required the dismissal of an action brought in New York court.  The District Court went through a very succinct analysis of the standards for enforcement of a venue-selection provision and then made its determination of both (a) the enforceability of this agreement and (b) the reasonableness of enforcement of this provision in the instant case. 

Another court reached the same decision in Flowbee International, Inc. v. Google, again looking at this venue-selection provision in the Google clickwrap agreement.  In that case, the District Court ordered transfer rather than simply dismissing the action, but it nevertheless did transfer the case to the Northern District of California. 

These two cases illustrate the fact that when you click on that little box, you might be shoehorning yourself into a court that you don't want.  To date, most courts have applied the same analysis to as these courts did to determine that you, my friend, are stuck.  In fact, the District Court for Southern Indiana reached this decision in Appliance Zone, LLC v. Nextag, previously cited by Ms. Croswell.  

Now if you're sitting there wondering, "Ok, Mr. Bigshot at the information technology law firm,  what is a poor web-browser and member of the 21st century to do?"  My only answer is:  tune back in to Part 2. 

There is a good article on the Mercury News Blog today on How dot-com start-ups have changed 10 years later.  The article addresses the maturity of both technology companies and US private equity investors over the last decade.  It is an interesting read.

There has been a lot of activity in angel investor groups and venture capital investments in Indiana technology companies over the last few months.  2010 has definitely started with a bang at Alerding Castor Hewitt where we have helped five companies secure funding this calendar year.  I am traveling with two technology clients in a couple of weeks to meet with investors in Southern California. 

Still, the same rules apply when seeking funding.  An early stage company looking for funding must prove:



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Alerding Castor Hewitt, LLP is an Indianapolis law firm focusing on business law, information technology law (including SaaS law and legal technology consulting), private equity consulting, and business and Internet litigation.

Congratulations are in order to Brian Hewitt, the newest parter of Alerding Castor Hewitt, LLP, who was recognized this week as one of Indiana's 2010 top 50 Super Lawyers.

Brian concentrates his practice on estate, trust, and guardianship planning, administration, and litigation; and mediation and business law.

He is a Certified Estate Planning and Administration Specialist, a Fellow of the American College of Trust and Estate Counsel, and a member of the Probate Litigation Committee of the American College of Trust and Estate Counsel.  

Brian has spoken widely at continuing education seminars on estate planning, business succession, litigation, and mediation.

Congrats Brian! 

We are proud that you have chosen to join us as a named partner of Alerding Castor Hewitt, LLP, an Indianapolis law firm focusing on business law, information technology law (including SaaS law and legal technology consulting), private equity consulting, and business and Internet litigation.

I have taken a few weeks off of blogging.  Honestly, I felt like I needed the break, but I am excited about getting back on the saddle and writing again.

Since it has been a few weeks, let me give a brief update on what we have been up to.  Alerding Castor Hewitt has had an exciting beginning to 2010.  On January 1, Bill Boncosky joined us.  Bill is a business attorney / technology and SaaS law attorney working with privately held companies, primarily in technology industries.  Bill has spent the last seven years as General Counsel at ExactTarget.  We all have much to learn from him and are thrilled to have him as part of the team.  The IBJ put out a nice article in January on our firm's focus on entrepreneur law and Bill's joining us in this field.

This week Scott Kreider joined our business litigation group.  Scott adds to a team headed up by Mike Alerding that handles a difficult and necessary discipline for any full service business law firm – handling business disputes.  It is great to have him aboard.  Also, Mike made the IBJ's 40 under 40 the other week.  Good stuff.

Over the last few weeks our firm has helped four clients through capital funding processes - three from angel investors or private equity firms and one from a venture capital firm.  It is always encouraging to see business clients grow, and we count it as an honor to be part of their process.

We have also been involved with many businesses and business owners through customer deals and strategic business growth matters.  We will write more on some of those matters in future posts.  

I was a guest lecturer the other week at Purdue’s entrepreneurship capstone course.  Man I felt old, but I was very encouraged by the enthusiasm, drive and smarts from this class.  

So there is the fire hose version of the last few weeks.  2010 is off to a strong start for ACH.  I am looking forward to what is coming down the pike.


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Alerding Castor Hewitt, LLP is an Indianapolis law firm focusing on business law, information technology law (including SaaS law and legal technology consulting), private equity consulting, and business and Internet litigation.

Closing in on the end of 2009 I have to say that I am quite pleased with the commitment Indiana showed this year to be a State that supports and promotes innovation, entreprenuership and business growth.

This week I had breakfast with Larry O'Connor, Executive Director of Butler University's Business Accelerator.  Larry is a former CEO of Bank One Indiana.  Following his "retirement", Larry became CEO of The IndianapolisMuseumm of Art, and recently took the position to lead theAcceleratorr program.

On the program's website, Larry describes theAcceleratorr as follows:


While Butler is continuing its work with mid-market companies, 2009 also showed growth of incubator programs and the birth of new angel investment groups in Indiana.  As an entrepreneurial law / private equity attorney, the health of these groups means a lot to me in terms of support and growth of my clients.

2009 was a strange year for businesses.  Private capital was hard to come by due to economic constraints.  Lending was tight.  The corporateenvironmentt seemed to be mired by corporate fraud (Madoff, Durham).  Despite all of this, Indianapolis proved to be a great place for businesses to launch and grow. 


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Alerding Castor Hewitt, LLP is an Indianapolis law firm focusing on business law, information technology law (including SaaS law and legal technology consulting), private equity consulting, and business and Internet litigation.

Employers invest so much time and effort into (a) finding and hiring the right candidates for the team, and (b) developing those individuals to work at their most efficient levels for the company. 

Let's face it, it can take years to get a company up and running effectively, and certain key individuals play a huge role in making that happen. 

You don't want to lose them.

While I firmly believe that everyone is replaceable, some employees are just harder to replace than others because they add so much value.

Give them an incentive.  One option is to tie their salary to the success of the company.

Instead of traditional stock options (which could make it difficult down the road should the employee leave the company for any reason) business owners may want to consider offering certain individuals profit interests.

Not only would it build loyalty and increase an employee's desire to see the company succeed, but the company owners would retain all of the equity interest.

A bit simpler than stock options, profit interests are typically tied to employment and end upon the employees departure.   This eliminates employers dealing with minority shareholders and the host of issues that may arise from them.

Alerding Castor Hewitt, LLP is an information technology law firm that has helped dozens of start-ups with their business and legal needs, including documentation for profit interest agreements.

The other day I wrote a post on my reasons not to use the term "affiliates" in licensing agreement negotiations.  See post here.  My general point is that the term has no common meaning in the law and may create ambiguity in the contact.

I addressed several different definitions of the term in laws, but the term is not only defined differently in law, it is also used differently in business.

For accounting companies, for instance, the Interstate Commerce Commission defines the term as companies controlled by the accounting company alone or with others under a joint agreement.  So, “affiliates” falls outside of typical entity ownership structures and to companies with controlling interests through contractual relationships.

In the banking industry the term is commonly used to refer to an FIB which processes credit card data for other financial institutions or financial institutions that issue MasterCard or Visa cards.  The term here has nothing to do with ownership structures.

In television and radio industries, affiliates are companies not necessarily under common ownership which have contracted with a network to broadcast its programs.

In the Internet world a marketing affiliate refers to a company who links to another company via a weblink which then allows the hosting company to obtain a commission on sales made as a result of user’s clicking through that link.

"Affiliate" is a term that is used in contracts when the parties want to refer to an entity relationship but do not want to take the time (or don't know how) to define it.  Again, it is best to avoid this term, but if you must use it, make sure to define it clearly in the contract. 



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Alerding Castor Hewitt, LLP is an Indianapolis law firm focusing on business law, information technology law (including SaaS law and legal technology consulting), private equity consulting, and business and Internet litigation.