Inside: Considerations before entering into an equity for professional services agreement (Part 1)

Model Rules to consider when debating whether to enter into this type of contract

America has a rich history of entrepreneurs who have changed the course of history with an invention or new business enterprise. This history continues, as a modern chapter is being written in the new millennium as the information technology boom has created a “start up” hysteria. More and more individuals have taken up the dream of “starting up” their own company.

In fact, it seems like every time that I pick-up a business magazine and flip through it, half of the content pertains to “start ups” or venture capital deals. Which has made me ponder, how are these fledgling, often pre-revenue companies footing their professional service bills? Assuredly, many of these companies require outside regulatory, business formation, and/or tax planning advice. This article considers the ethics of one approach of obtaining these professional services — a professional organization providing services in exchange for equity in the “start up”.

Rule 1.7 & 1.8 – Conflict of Interests

1.7 – Conflicts Between a Client and Attorney’s Personal Interests

Contributing Author

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Jefferey Ogden Katz

Jefferey Ogden Katz is a partner at The Patterson Law Firm, LLC. He is a leading litigation attorney and has handled numerous professional liability cases...

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