An Uber Welcome to Upstate New York

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By Matthew Pelkey

Since Uber (and Lyft) will be sharing the roadways with us Upstaters in the coming months, it’s worth taking a look at the company’s recent shenanigans.

Uber. The name is almost synonymous with ridesharing and startup success. Until recently, it was perhaps even poised to become so successful that the brand name itself would take on a common noun for ridesharing and disruptive technology. Talk to any entrepreneur or programmer with a half-baked idea and no doubt the words “Uber of _____” have been uttered in describing how their startup is going to take over the world. And for good reason, Uber dominated the startup scene raising billions of dollars and experiencing much success in its regulation-bending land-grab.

Uber has always had a problem with profitability, but so did Amazon. Now it’s important to distinguish that Amazon sells goods whereas Uber is a service (which doesn’t scale as easily), but as long as it keeps showing a plan for profitability investors seem willing to roll the dice. Meanwhile Uber is growing its customer base and reaping the benefits of investors who keep pumping cash into the company on a scale which rivals the GDP of countries like Rwanda and the Republic of Congo (seriously…look it up). Profitability it would seem (or the lack thereof), isn’t going to stop Uber. It’s business model after all is built on complete global disruption of the taxi market.

Step 1: global domination. Step 2: figure out how to make a profit.

And why not? Taxi’s are probably about as popular as congress and we all love to throw around our capitalism lexicon— Free-markets! Deregulation! Disruption! Innovation! You get the idea. It’s easy to love the romanticized idea of Uber.

But times they are a changing and 2017 hasn’t been nearly as merciful to Uber. In fact, to put it bluntly, it’s been a terrible, horrible, no good, very bad start to 2017 for the once-poised Taxi-disrupting monopoly. Now on the plus side, 2017 finally gave Uber the green light to enter the Upstate New York market after spending millions of dollars on lobbying and public relations campaigns. But short of its conquest of the New York State legislature, Uber’s challenges seem to be mounting quickly. And since Uber (and Lyft) will be sharing the roadways with us Upstaters in the coming months, it’s worth taking a look at the company’s recent shenanigans.

Medical Marijuana Expands in New York

Written by Colligan Law on . Posted in Articles, News

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By Robert Townsley

Becoming a registered practitioner under the Medical Marijuana Program could provide pain management alternatives to opioids, grow your patient base, expand your practice, and increase revenues. New York State’s Medical Marijuana Program now makes it easier for practices to certify patients by adding more qualifying conditions (such as chronic pain)[1], increasing the number of medicinal manufacturers[2], and allowing nurse practitioners and physician’s assistants to certify patients.[3]

However, only one of three patients will have their consultation covered by insurance, once registered, practitioners typically receive up-front cash and can quickly recoup their costs with just a few booked appointments.[4] Navigating the registration process for the Medical Marijuana Program, qualifying for the program, and meeting ongoing compliance requirements are vitally important – and missteps can result in steep penalties. Legal counsel ensures a smooth and lawful integration of marijuana certification into your practice.

First Annual Critical Path Life Sciences Accelerator Program

Written by Colligan Law on . Posted in Articles, News

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By David J. Colligan

The First Annual Critical Path Life Sciences Accelerator Program sponsored concluded Thursday, January 12, 2017.  As part of the final preparation of the eight startup companies who participated until the end of the program, a panel of investors was assembled to present their experiences as investors in various roles.  David Colligan of the Colligan Law Firm was selected to present his experiences as a lawyer for investors, both Angel and Venture Capital, as well as a lawyer for many startups.  Kevin Centofanti, president of Brooks Houghton Investment Bank, was selected based on his ability to assemble large pools of capital to finance rapidly growing startup companies.  Theresa Mazullo of Excell Partners was selected as Excell Partners runs several different venture capital funds that have many startup companies in their portfolios.  Lindsay Stencel of Launch NY was selected as she is a general partner of a venture fund in Columbus, Ohio and serves part-time as the seed fund manager for Launch NY here in Buffalo, New York.  Sharon Weinberg was on the panel representing Empire State Development’s new $10,000,000 fund to support entrepreneurs with actual funding.  Alex Zapesochny was on the panel because of his successful co-founding of Icardiac and other successful startups before that which had a successful run from startup to exit.

Each of the panelists were asked questions and responded to subjects of great interest to the Critical Path participants.  The panel discussed many issues and the issues were divided almost equally between “investment killers” and “real positives.”  Amongst the investment killers that were discussed were startups seeking to: penetrate a market that is too small an opportunity; having a sole founder or a small team; cap table problems; likeability of the founders seeking fundraising; length of time for life sciences to get to market; and reasonable valuations.  Amongst the subjects that were real positives, the panel discussed: big markets; experienced, diverse management teams; robust IP portfolios; strong due diligence binder; obvious exit opportunities; amongst other topics.

Is the grass always… Oranger?: A DAY IN THE SYRACUSE STARTUP SCENE

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By Matthew K. Pelkey

Upstate’s startup ecosystem is booming. Our office is based in Buffalo, NY, but I recently had the pleasure of touring Syracuse’s startup scene and met with Nasir Ali from Upstate Venture Connect and Seed Capital Fund of CNY. I started the day with lunch in the beautiful and historic Armory Square, followed by tours of co-working spaces, stopped in to chat with the folks at Genius NY, had coffee with some finance professionals, and ate dinner at the newly renovated Syracuse Hotel—a renovation which rivals that of one of Buffalo’s most symbolic retreats, the Hotel Lafayette. Suffice it to say, it was a busy day, with so much to see in Syracuse, much of which mirrors similar developments being made in Buffalo and throughout Upstate.

Lobby of the Hotel Syracuse

Syracuse has its challenges, and in many ways, cities like Buffalo are far better-positioned to ensure sustainable growth for our future generations. I firmly believe that every community in Upstate New York can—and should—learn from one another to create a thriving, regional ecosystem. After all, while each community is unique, we all face similar challenges and legacies, from a thriving manufacturing past, now relegated to memories and inspiration. Here are a few takeaways that we can all learn from across Upstate New York’s startup ecosystem.

UberPITCH

Written by Colligan Law on . Posted in Articles, News

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By Rob Townsley

I work in a firm that usually provides legal services for startups and entrepreneurs, but pitching my own business idea in the UberPITCH startup competition last month was something I couldn’t pass up. UberPITCH, was a hybrid of the shows Shark Tank and CashCab. Call an Uber, and instead of a driver, a venture capitalist (VC) is delivered to your doorstep, and I had seven minutes to pitch my startup. The grand prize was five thousand dollars cash! And it was the first time Uber was in Buffalo, through a partnership with 43North.

After practicing my pitch in the morning and running it by a few colleagues at Colligan Law, I was ready to request my Uber and try to win $5,000! I opened the app and discovered that all the UberPITCH vehicles were in use and I would have to wait a while for my ride to arrive. It was a testament to the popularity of the mini startup competition, and also made me look forward to the day when the Uber is operating and available in Buffalo, with minimal wait times.

Critical Path Life Sciences Accelerator Program

Written by Colligan Law on . Posted in Articles, News

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By David J. Colligan

The First Annual Critical Path Life Sciences Accelerator Program sponsored concluded Thursday, January 12, 2017.  As part of the final preparation of the eight startup companies who participated until the end of the program, a panel of investors was assembled to present their experiences as investors in various roles.  David Colligan of the Colligan Law Firm was selected to present his experiences as a lawyer for investors, both Angel and Venture Capital, as well as a lawyer for many startups.  Kevin Centofanti, president of Brooks Houghton Investment Bank, was selected based on his ability to assemble large pools of capital to finance rapidly growing startup companies.  Theresa Mazullo of Excell Partners was selected as Excell Partners runs several different venture capital funds that have many startup companies in their portfolios.  Lindsay Stencel of Launch NY was selected as she is a general partner of a venture fund in Columbus, Ohio and serves part-time as the seed fund manager for Launch NY here in Buffalo, New York.  Sharon Weinberg was on the panel representing Empire State Development’s new $10,000,000 fund to support entrepreneurs with actual funding.  Alex Zapesochny was on the panel because of his successful co-founding of Icardiac and other successful startups before that which had a successful run from startup to exit.

Court Ruling Ensures There’s No Turning Back on Scajaquada Traffic-Calming Measures

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By Matthew K. Pelkey

On Wednesday, the New York State Department of Transportation will hold what is likely its final public meeting on design changes to the Scajaquada Expressway – a project that has no doubt garnered controversy and heated discussions between officials and community stakeholders. But those pushing for further traffic calming measures may have just gotten a little help from the New York State Court of Appeals.

Turturro v. City of New York (December 2016) is a case involving a 12-year-old boy who was seriously injured when he was struck by a speeding car while riding his bicycle on Gerritsen Avenue in Brooklyn. Gerritsen was a 30-mph, four-lane roadway bordered by parkland. New York City officials had received many complaints about speeding but recommended additional police enforcement instead of traffic calming – a decision that ultimately resulted in New York City being held liable for the child’s injuries.

What is important about this case is the shift from simply relying on police enforcement to curb traffic and speeding problems, to now placing an affirmative duty on municipalities to study and implement traffic calming. If a government agency is aware of a dangerous condition and fails to study or implement traffic-calming measures, it may now be liable for resulting damages and injuries. Whether our state’s highest court realizes it or not, it may have just ushered in a new era of transportation design and put an end to prioritizing automobiles over people.

This shift in duty has the potential to fundamentally alter the DOT’s current design plans for the Scajaquada. It also likely ensures that the speed limit remains at 30 mph.

Why Do Cap Tables Kill Startup Companies?

Written by Colligan Law on . Posted in Articles, News

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By  John A. Moscati, Jr. and David J. Colligan

As lawyers practicing in the startup space, our clients often come to us with less than perfect cap tables.  Some don’t even know what a cap table is.  A cap table is a spread sheet that shows the ownership of the company by class of owner, timing of investment and various rights held by owners of the capital stock of the company.  To an experienced investor, a cap table tells the story of the company.  Like all stories, it has a beginning, middle and end.  By reading a cap table and asking questions based on its content, an investor can see when the company started, who the founders were, when significant pivots occurred, how much capital has been raised, and when.  Unfortunately for many entrepreneurs, they have written the story of their companies by issuing equity and granting various rights to founders, friends, family, and early investors, without an appreciation of how potential future investors will “read” this story.

If a startup wants to create a cap table spreadsheet, we advise them to identify shareholder groups by class (i.e., founders, angel investors, friends and family, etc.); and to include number and class of shareholders or shares or units issued followed by percent of outstanding, and if applicable, percentage of ownership fully diluted.  Where applicable, footnotes should disclose any conversion right or other preferences and any options, warrants, option pools or other rights to acquire equity should be disclosed (and included in the “fully diluted” calculations).

New Overtime Rules – December 1, 2016

Written by Colligan Law on . Posted in Articles, News

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By Joseph F. Saeli, Jr.

We would like to remind our clients and friends that the new U.S. Department of Labor rules for determining whether employees are exempt employees take effect on December 1, 2016. If an employee is not exempt, they must be paid one and one half times their normal hourly rate for all hours worked above forty in a week.

The key parts of the new rules are:

  • Exempt employees must be paid an annual salary of at least $47,476. (The current requirement in New York State for exempt executives and administrative employees in $35,100).
  • The new minimum salary for Highly Compensated Employees is $134,004.
  • Employers may use non-discretionary bonuses and incentive payments to satisfy up to 10% of the salary level. (This was not previously permitted).
  • The salary levels will be automatically updated every three years.
  • There is no change in the job duties tests for the exempt categories.

In addition to meeting these salary tests, exempt employees must also meet the job duties tests for one of the three exempt categories, professional, executive or administrative. Also, they must be salaried. An hourly employee can never be exempt.

If you have employees who are currently exempt, but do not meet the new salary requirements, you are faced with a difficult decision. The options some employers are considering include the following:

  • Change the employee’s status to hourly, and pay overtime for all hours over forty in a week.
  • Change the employee’s status to non-exempt salaried, and pay overtime for all hours over forty in a week. (This is possible, but the hourly rate calculation for determining overtime pay can be complicated).
  • Increase the employee’s salary to meet the new requirements.

Please let us know if we can assist you in complying with these new rules.

This article is meant to convey general information, and not to provide any legal advice. Legal advice should be provided only by an attorney who is familiar with all the circumstances about which advice is requested.

 

New Department of Labor rule could mean more money in your paycheck

 

The Laws of LinkedIn in the Workplace

Written by Colligan Law on . Posted in Articles, News

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By Erin M. Gormley

In a culture where viewing someone’s social media profile can serve as the modern equivalent to an in-person networking opportunity, it is crucial to be hyperaware of our online personas. And with public perception at the forefront of everyday life and business, our sense of ownership over social media channels and accounts can often be distorted. How much control do we have over our web presence, specifically on LinkedIn?

LinkedIn is an invaluable tool for networking and exploring employment opportunities. But what happens when the ownership and responsibility of a LinkedIn account becomes unclear? Say for example, an employee builds contacts using their employer’s company email address, and then no longer works for the company.

Generally, the presumption is that the individual portrayed on a LinkedIn profile owns the account, and therefore has discretion – regarding profile content and who has access. However, that is not always the case. A look at the recent case law shows that the following factors have been labeled as important in determining what rights ex-employees, and their former employers, have to the LinkedIn accounts that they access and maintain:

Creation of the Account

It is important to be aware of what the status of the account was: (1) prior to the start of the employee’s employment, (2) during their employment, and (3) after the termination of their employment. Factors to be considered are whether or not the employee already had the LinkedIn account prior to beginning the term of their employment, whether or not the creation of the account was a condition of their employment, and who created and provided content for the account – the employee or employer. If the employee inherited an account from the previous holder of their position, or otherwise received access to an account that was created by the employer as a condition of the employee’s employment, it weighs toward a finding that the employer is the owner of the account.