The Information Overload Dilemma

Feb 16, 2010 - by Nicole Black

Two weeks ago, thousands of attorneys and other legal professionals descended upon Manhattan to attend LegalTech New York, hoping to catch up on the latest legal technologies and innovations.

The annual LegalTech conference is sponsored by ALM with the goal of helping lawyers and law firms learn about the latest advances in legal-related technology. It features multiple educational tracks focused on a variety of legal technology issues, from ediscovery to knowledge management, cloud computing and social media.

One particularly interesting part of the conference was one the keynote presentations — “I3: The New Convergence of Intelligence, Intuition and Information” which featured a panel including Malcolm Gladwell (link to:http://www.gladwell.com/), the New York Times bestselling author of “Blink” and “Outliers”; Thomson Reuters Chief Strategy Officer David Craig and Dr. Lisa Sanders, New York Times Magazine Diagnosis Columnist and technical advisor to the television program “House, M.D.”

Defining Due Diligence

Feb 18, 2010 - by Aaron Booth

In the business world, Due Diligence refers to the act of investigating information related to people and businesses. This can be on a voluntary basis as in conducting a background check on a future employee, or it can be a legal requirement as in investigating the legal issues around a corporate takeover bid.  However, the most common type of Due Diligence performed in business typically relates to that which is performed in relation to a merger or acquisition (M&A).

The M&A process involves buyers and sellers of businesses connecting with other buyers and sellers to complete transactions that result in one business acquiring another or two business combining into one. For example, in a typical sell-side M&A deal, a seller put together a confidential information memorandum (CIM) and distributes that document to potential buyers.   When serious buyers are identified, letters of intent are signed and the seller shares additional information with the buyers.

This is the preliminary Due Diligence, and the point at which interested buyers investigate more detailed information to determine if they will submit a letter of intent to enter into a purchase and sale agreement and close the transaction. Once a final buyer has been identified, the real Due Diligence begins. It is at this point that the potential buy and seller have agreed to share all information related to the business so that the buyer can investigate the financial statements, tax returns, inventory, fixed assets etc. in an effort to verify their understanding of the state of the business and to finalize a purchase price. In some instances, Due Diligence has been described as a process in which buyers look for reasons to reduce their risk and lower the purchase price prior to the close of a transaction.

Gatekeeping the Virtual Data Room

Mar 18, 2010 - by Jim Rench

The use of a virtual deal room (“VDR”) has become commonplace in modern merger and acquisition practice, replacing the formerly prevalent document room.  The advantages of a VDR include reduced cost; reduced security concerns; accessibility to multiple parties simultaneously and 24/7; reduction in actual deal time; and an electronic data trail establishing who saw what and when.

An important consideration in the deployment of a VDR is the question of who will serve as the gatekeeper to the VDR, determining what information is appropriate for posting and what level of security and access to assign to such information.

In our opinion, the Seller’s legal counsel is the appropriate gatekeeper to the VDR. Personnel of the seller, while more familiar with the information, are typically the least familiar with the deal process and potential legal issues posed by the information.  They are also the least likely to have the time, with the additional stress of gathering and producing due diligence information already layered on top of their routine daily duties.  And while deal intermediaries are certainly the most familiar with the deal-making process, they are not legal counsel and necessarily familiar with the legal issues posed by the information.

Jack Be Nimble, Jack Be Quick…How to Handle Market Risk

Apr 22, 2010 - by Joel Lessem

Recently, I have been reading Steve Blank (founder of 8 technology companies) on how to successfully take a technology to market.   He has a tremendous blog with all his articles. Here is my summary of some of Mr. Blank's key points.

There are two types of risk for a Research and Development based company - market risk and technology risk. For example, technology risk applies to Life Sciences firms when they are searching for a cure for a terminal illness – it may take them 10+ years to prove the drug works.  If they find the cure, however, there really is not a market risk; the product will be in large demand.

For software companies, like Firmex, the market is risky.  When starting a software company you need to  align what you build with a significant group of customers (market).

When tackling risk, the fundamental source of failure is assumption.  Whenever you start a project the only thing you can safely assume is that your assumptions are flawed.

North Carolina Lawyers can use Cloud Computing Services in their Law Practices

Jun 8, 2010 - by Nicole Black

The North Carolina State Bar (NCSB) recently issued a proposed formal ethics opinion (proposed 2010 FEO 7), which may assist lawyers in assessing the risks of using a particular cloud computing product in their law practice.

The primary issue addressed by the NCSB was whether a law firm may use SaaS-based platforms, such as law practice management software, and thus store confidential client data on servers located offsite and controlled by a third party.

The NCSB concluded that it was permissible for lawyers to do so as long as steps were taken to “effectively minimize the risk of inadvertent or unauthorized disclosure of confidential client information and to protect client property, including file information, from risk of loss.”

Importantly, the NCSB stated that a lawyer is not required to guarantee that a system is “invulnerable to unauthorized access” and that a law firm’s duty to protect confidential client information does not compel a particular method of handling the information, nor does it prohibit the use of third party vendors who may have access to the data.