Let s Get Technical. Business Transactions in the Electronic Age. Elleanor Chin Davis Wright Tremaine LLP. Matt Larson Duffy Kekel LLP

Transcription

1 Let s Get Technical Business Transactions in the Electronic Age Elleanor Chin Davis Wright Tremaine LLP Matt Larson Duffy Kekel LLP MBA CLE Seminar December 4, 2012

2

3 12/3/2012 Use of Technology in Business Transactions Matt Larson Matt is a business attorney. He assists companies and individuals throughout the Pacific Northwest with mergers and acquisitions, corporate finance, and general corporate and real estate matters. Matt s mergers and acquisitions experience includes target and acquirer representation of both public and private companies, as well as real estate acquisitions. Matt s corporate finance experience includes early stage debt and equity financing, private placements, registered offerings, and investment fund formation. Matt also provides general outside counsel services, including corporate governance and drafting a wide variety of contracts and agreements. Matt is a frequent speaker on Oregon corporate law. Elleanor concentrates on litigation and alternative dispute resolution with a particular emphasis on electronic discovery. She has extensive experience counseling clients on e-discovery and managing electronic discovery in complex litigation, including antitrust matters and class actions. Elleanor represents clients in a number of industries, including telecommunications, manufacturing, health care and insurance, in matters ranging from distribution disputes to prosecution of noncompetition agreements. Elleanor is a frequent speaker on electronic discovery topics. She has been on the faculty and seminar planning committee for the Defense Research Institute Electronic Discovery Seminar, been a faculty member for the Georgetown Law Center s Electronic Discovery Academy and is an active member of the Sedona Conference Working Group 1. 1

4 12/3/2012 Introduction Transactional Practice Due Diligence Negotiations Closing Considerations for Litigation and Investigations Contingency planning Issue spotting Vendor engagement Due Diligence and Data Rooms Due Diligence General Virtual Data Rooms Types of Virtual Data Rooms Advantages of Virtual Data Rooms Disadvantages of Virtual Data Rooms Providers and Pricing FileShareVDR (Citrix); Deal Management Online; Merrill; RR Donnelly; Bowne Clean Rooms Negotiating the Transaction Exchanging Documents Missed Changes Hennig v. Ahearn, 601 NW2d 14 (Wis. Ct. App. 1999) Ethics (ORPCs 1.2(c), 4.1, 8.4(a)(3)) The Dangers of Metadata Formal Opinion Removal Methods Videoconferencing 2

5 12/3/2012 Closing the Transaction Signing Logistics Closing Transcripts Litigation Considerations Why does the possibility of Litigation matter when choosing transaction technology? Avoiding undue cost It s all part of Risk Management Having a clean record that you can authenticate Being able to satisfy substantive and procedural requirements in litigation Litigation Phases There are three phases of litigation that matter most from the documentary perspective Identification and Preservation What are you looking for the stuff and the custodians Collection Presentation 3

6 12/3/2012 Who owns the stuff? The transactional mindset is more collaborative, the litigation mindset is more polarized Access to and ownership of a shared workspace may become disputed (particularly if a one party hosts a space for others) All parties may need to be able to account for documents in their possession What is the relevant definition of possession? Contractual considerations Issues are similar for many providers of cloud services Security and confidentiality Levels of access Costs Indemnification Ability to comply with preservation obligations Ability to comply with production obligations Duration and scope of engagement and postengagement archiving Ephemeral Data Not limited to the transaction context Mobile and personal device data Social media Browser history and other temporary or short term locations 4

7 12/3/2012 Questions? Thank you for coming to today s CLE 5

8

9 Technology, Transactions and Litigation MBA CLE December 4, 2012 Fact Scenario Mothmor is a publicly traded Delaware corporation. It manufactures and distributes household cleaners, sanitizers and air fresheners, as well as insecticides and pest control products. Buzbot is a Oregon based corporation with operations in Oregon, Washington, California, Canada and Mexico that manufactures and distributes a leading brand of citrus derived cleaners and insect repellants. Buzbot and Mothmor have been in talks for some time regarding the possibility of Mothmor making a significant investment in Buzbot, if not acquiring a controlling interest. Buzbot has also been talking with a venture capital fund, Beez LP, about making a significant investment. Buzbot has a very active management team as well as in house counsel. The CEO, Ralph and the in house counsel, George have been leading the talks with Mothmor. Mothmor s representatives are its outside counsel, Ruth, with the Bingham firm and its Senior VP of Finance, Kelly. Ralph, the Buzbot CEO, is also having the conversations with Beez. George and Ralph Buzbot financials to Ruth and Kelly and have detailed discussions in regarding possible deal configurations. Ralph occasionally forwards some of the s with the Mothmor team to his contact at Beez, without telling George (or the Mothmor team). Negotiations reach a point where Buzbot retains outside counsel, the Gully firm, to represent it in discussions with Mothmor. The lead counsel is Ingrid. Ingrid sets up a due diligence repository with an electronic service provider, Ace Docs. George and Ralph have an in house paralegal load the due diligence materials into the repository. Ingrid instructs the Ace team to configure it so that she and George and Ralph have full access to all the documents and Kelly and Ruth at Mothmor have read only access. Ralph shares his password with his contact at Beez and invites him to look at the documents if he wishes. Eventually the parties agree to a stock purchase whereby Mothmor will acquire a 32% interest in Buzbot, plus significant exclusive distribution rights for Buzbot products and certain intellectual property. Ingrid and Ruth begin exchanging drafts of the various agreements and associated regulatory and public filing documents. Ingrid keeps a careful version control system in which each set of changes is saved as a new document in the Gully document management system, with an identifying footer that shows the date and the origin of the revisions (e.g., Mothmor October 13 comments to Buzbot V3). Ruth has a similar document management system but is very busy and less well organized. She has her assistant save s into the Bingham system and will occasionally run a red line against some of the versions. She also keeps documents in her own sub folders as a matter of course. DWT v

10 While the drafting and detailed negotiations are going on, Ralph is still talking to Beez about an alternative structure. He wants to see a Beez investment at a lower percentage, but still enter into distribution and licensing agreements with Mothmor. He keeps making the case to the Buzbot board even as negotiations with Mothmor wind down. As a result, the Buzbot board fails to approve the transaction at the last minute and both parties are very unhappy. Buzbot retains a second law firm, the Neel firm and one of its partners, Beau, to consider its options, particularly since Mothmor has clearly signaled they may exact damages, either in the form of a break up fee or breach of contract claim. Mothmor does not change firms, but brings on one of Ruth s litigation partners, Lee, from the Bingham firm. While the parties are weighing their options, Mothmor receives a subpoena from the SEC. It appears that Kelly s assistant told several members of his immediate family, to buy Mothmor stock a day or two before the date the deal had been expected to be announced. Beau issues a litigation hold instruction to Buzbot personnel, and also Ingrid and the Gully firm. Ruth s firm issues a litigation hold to the appropriate Mothmor personnel. USE YOUR IMAGINATION Issue spotting. Put yourself in different lawyer s shoes. DWT v