Corporate formation, governance and operation A corporation is a legal entity created through the laws of its state of incorporation. Individual states make laws relating to the creation, organization and dissolution of corporations. The law treats a corporation as a legal "person" that has standing to sue and be sued, distinct from its stockholders. The legal independence of a corporation prevents shareholders from being personally liable for corporate debts. The legal person status of corporations gives the business perpetual life; the death (or, in today's climate, discrediting) of an official or a major stockholder does not alter the corporation's structure, even if it may affect the stock price.
A corporate lawyer can help a client create, organize or dissolve a business entity. To form a corporation, an attorney drafts articles of incorporation, which document the creation of the company and specify the management of internal affairs. Most states require a corporation to have bylaws defining the roles of officers of the company. Corporate lawyers also deal with business entities in the forms of partnerships, limited liability companies, limited liability partnerships and business trusts; each form has its own set of legal rights and responsibilities, organizational structure and tax burdens. Attorneys help their clients decide which of these legal forms is best suited for the business they want to run and the relationships the principals want to build with each other.
A corporate lawyer who helps a client form a company might later be called upon for other legal advice related to the start-up or management of the business, like reviewing a lease for office space or equipment, or drafting employment contracts, non-disclosure and non-compete agreements. Corporate lawyers might research aspects of employment law or environmental law or consult with another attorney who specializes in that field. Business executives also seek advice from attorneys on the rights and responsibilities of corporate directors and officers.
Mergers & acquisitions
One major corporate practice area is mergers and acquisitions ("M&A"). Through acquiring (buying) or merging with another company a business might add property, production facilities or a brand name. A merger or acquisition might also work to neutralize a competitor in the same field. Corporate attorneys provide legal counsel about proposed transactions. To help evaluate a proposed venture, a corporate lawyer (usually a team of corporate lawyers) reviews all of the company's key assets and liabilities, meaning financial statements, employment agreements, real estate holdings, intellectual property holdings and any current, pending or likely litigation. This is called due diligence. The corporate lawyer can then assess the situation and raise specific issues with the client -- for example, who's responsible for the Environmental Protection Agency investigation of that piece of property the company owns, or what happens to the employees of the target company or to the stock options of the company's directors?
Corporate lawyers consult with their clients about these questions and together lawyer and client determine which parties should accept current or potential liabilities. Then the lawyers draft the merger or acquisition agreement and negotiate in detail the terms of each party's rights, responsibilities and liabilities.
Venture capital
In a venture capital practice, a lawyer works on private and public financings and day-to-day counseling. This means they help new businesses find money for their ventures, organize their operations and maintain their legal and business structures after formation. In venture capital, as in any corporate law position dealing with emerging companies, lawyers help build and expand businesses. Their responsibilities can include general corporate work, like drafting articles of incorporation and other documents, as well as technology licensing, financing, and mergers & acquisitions.
Some lawyers find this type of work less confrontational than M&A practice because the client is working with other parties toward a common goal. Sometimes, in mergers & acquisitions, the parties see the process as a zero-sum game in which each must get the best deal no matter how it may affect future relations with the other company.
Project finance
The development and construction of power plants, oil refineries, industrial plants, pipelines, mines, telecommunications networks and facilities and transportation systems involve the cooperation of many different entities, many different lawyers and really large sums of money. Project finance attorneys specialize in these deals. They form a project entity, a corporation, partnership or other legal entity that will exist for the term of the project, and they draft power purchase agreements and construction contracts and negotiate financial terms with lenders and investors.
Corporate securities
Some corporate lawyers specialize in corporate securities law. On a federal level, the Securities Act of 1933 requires companies who sell securities to the public to register with the federal government. Corporations have to follow certain protocols regarding disclosure of information to shareholders and investors depending on the size of the corporation and the type of investor. If shares of a company's stock are traded on a public stock exchange, the company has to file detailed reports with the Securities and Exchange Commission and distribute parts of those reports (the prospectus) to shareholders. The Securities Act of 1934 addresses the obligations of companies traded on a national stock exchange.
In accordance with these laws, corporate attorneys prepare reports for initial public offerings, yearly and quarterly disclosures, and special disclosures whenever something happens that might affect the price of the stock, like impending litigation, government investigation or disappointing financial results. Even if you don't specialize in corporate securities law, the issuance of stock and the creation and distribution of the reports are subject to a whole host of rules with which corporate lawyers must be familiar.
Intellectual property
Corporate lawyers often advise their clients on intellectual property matters. Intellectual property law can include research and analysis of trade secret issues, patent and trademark licensing and protection, software licensing and copyright law.
Non-legal roles
Business clients frequently look to their lawyers for advice directly related to the operation of their business but only tangentially related to the law, such as how to deal with special interest groups, how to respond to concerns about product safety, whether to fire an executive, how to plan for the possibility of adverse media coverage, how to create a business plan, how to cope with a serious ethical lapse, whether to close a factory and what kind of compensation plans should be offered to employees.
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