by Jason Wiener
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Welcome – and Introducing the Jason Wiener|p.c. Blog

If the 18th century can be defined as the age of industrialization and competitive advantage of the nation state, the 19th century by the power of the corporation, and the 20th by corporate financialization, then, I believe, the 21st century will be defined by ownership. There is a movement afoot. We see the footprints and we hear the rallying cry.

Our firm is dedicated to democratizing access to the promise of ownership of businesses at all levels and in all of its complex dimensions. What are we really talking about?

I joined the movement in earnest when I left BigLaw in New York City and moved to Boulder, Colorado, to become the General Counsel and a Co-Owner of Namaste Solar. When I showed up in 2009, the company had been in business for more than four years and had grown to more than 40 owners from its three initial co-founders. Namaste Solar felt like the best illustration of an intentional community. Everyone literally and metaphorically showed up with passion, commitment, shared purpose and mutual respect. Co-Owners invested their hard-earned savings, sometimes asking friends and family for a loan to buy-in. Namaste Solar offered ownership and professional development opportunities to people with specialized professional training like me, as well as to people looking for a toe-hold in the “new energy economy.” I sat in monthly big picture meetings where the CEO had the same say as someone who spent their days climbing and descending ladders affixed to homeowners’ roofs.  

Everyone showed up. I don’t just mean they plopped down and listened half-heartedly to esoteric reports. I mean people SHOWED UP. Owners engaged and prodded the CFO for more detail into monthly profit and loss statements. Installers debated (respectfully, of course) the finer points of the business strategy and volatile policy landscape with senior leadership.

This is what economic democracy should look like. We all owned the company; its reputation, integrity, confidence in its service, its people, and its success. Co-ownership didn’t just give me the personal experience with which to launch Jason Wiener|p.c., it gave ordinary people a chance to be involved in and OWN something bigger than themselves. It gave a chance to find purpose in work. I believe this is what we all strive for as human beings.

Why do I, and a growing movement of people around the world, work hard to support employee ownership? I believe in a different and better world, where economic opportunity is more equitable and available. This belief is my motivation. What follows is my vision for the world I am working to create, and how I put that vision into practice at Jason Wiener | p.c.

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We design and architect thoughtful ownership structures for organizations that have a purpose to improve social or environmental well-being, opportunity, sustainability, and equity.  We believe that ownership design optimizes the organization to address the root cause – rather than mere symptoms – of social and environmental ills, by aligning incentives, promulgating shared values, increasing transparency, inviting access to those innovators closest to the need or the problem, and therefore also solutions.

Ownership…it’s a pretty fundamental notion, however, it’s underlying attributes are often under-scrutinized and under-appreciated.

Why:

Ownership matters. There’s a movement afoot. From craft beer to taxicab transportation. From solar energy to farmland. From housing to technology. From data to golf balls. Entrepreneurs, investors and ordinary people are rediscovering an age-old business model that is conducive to people-centricity. We are learning that by bringing business and enterprise to a more human scale we can reduce dependency on governmental largesse, improve community and civic engagement, enhance durability and sustainability, and manifest economic democracy and sovereignty.

Who:

Ownership benefits those who possess it. That’s a fairly obvious statement. Ownership confers exclusive rights. For too long, ownership has been the domain of those in positions of power, those of great wealth, those with privilege, and, occasionally, and sometimes incidentally, those with unique talent. I’m not intentionally trying to be political. The current economy is not working for most people. The concentration of wealth is at the highest point it’s been since the robber barons helped to precipitate the Great Depression. Income inequality, and the consequent concentration of wealth are also accelerating. At the same time, we are living through the greatest wealth transfer in human history. Until recently, only approximately 2% of Americans were legally permitted to invest directly in private companies.

We believe in and work hard every day to construct a more positive, equitable, resilient and inclusive economy. One in which the chief contributors of value are conferred the rights to ownership. One in which ordinary people can invest in and support local business. One in which those who patronize and care about a local business can be engaged in the critical issues and decisions that it faces.

We work with all types of legal entity types to advance this mission.  We have a particular passion for cooperatives, limited cooperative associations and public benefit corporations. We do the deep thinking to thoughtfully design ownership models where those who own the business differentiate it as much as the quality of its product or service.

We work with all types of business models to expand access to mission-aligned capital, allowing anyone who cares about the business to have an opportunity to support it financially. We also work with non-profit organizations to invest their endowment in ways that support their charitable mission, as well as non-profit organizations seeking to expand economic inclusivity.

We believe ownership will become as much a business’ product as the good or service it sells.

What:

Ownership is a bundle or rights. Ownership confers the right to control, exclude, transfer, to give access. To restrict, condition or rescind access. To bequeath. To monetize, securitize, collateralize, and to liquidate. Ownership can be exercised offensively or defensively. Ownership can catalyze or support social or environmental equity, or it can erode it.

Our mission is to democratize ownership. We believe workers, producers, farmers, entrepreneurs, creators, freelancers, crafts people, professionals ought to be in control of the means of production. We believe employee/worker owned firms are more resilient, profitable, sustainable, and durable. We believe community owned land leads to better stewardship, environmentally sustainable practices, more realistic and sustainable pricing, and healthier communities. We believe democratized capital leads to more sustainable business models, less volatility and risk, more engagement, better transparency and healthier social and financial returns.

Where:

Too often, ownership discussions happen episodically and intensively; among co-founders, with prospective investors, and when considering a liquidity event, such as a merger or acquisition. While better late than never, ownership is constant responsibility and privilege. It involves so many dimensions, all happening in a highly dynamic and unpredictable reality. We believe ownership ought to be elevated to the same attention as a company’s brand, its product design, and its business strategy.

Ownership ought to be intentional, considering at the outset the many possible trajectories the company can take. If little about a company’s logo, name, or product is left to chance, why then would ownership? That’s often what entrepreneurs do when going after venture capital or thinking about their exit.

We believe a well-architected ownership blueprint not only avoids the many problems inherent in the dominant forms of venture finance, it also clearly aligns the interests of every material stakeholder to the firm’s success. Workers’ contributions are valued with both a voice and an economic stake in the firm’s success. Early product adopters are remunerated and recognized for the risk involved in purchasing a nascent technology. Founders are sufficiently incented but have the opportunity to build high-talent, mission-aligned teams.

Involving the key stakeholders in the ownership design of the company  yields better companies, better products and better outcomes. Even better to bake stakeholder ownership into the firm’s DNA at inception. Lest it sounds like conventional ownership is ill-considered, shared stakeholder ownership is as much a destination as it a starting point. Plenty of businesses are looking to convert to employee and stakeholder ownership models.

When:

The conventional wisdom is to keep a start-up’s capitalization table simple, uncluttered and short. In other words, vacant for investor-ownership. Many firms utilize what are known as “incentive stock option” plans to incentive employee recruitment, retention and performance. An option generally involves a contractual right to exercise the option to purchase the firm’s stock or equity at a pre-defined price. These stock option plans have certain tax benefits under the Internal Revenue Code. What makes a stock option so appealing for the firm is that it does not need to account for the option as issued equity on its capitalization table until the option is exercised. Also, most conventionally structured cap tables cap the option pool at 10-15% of total common stock. Employees like options because they offer the promise of a windfall if the positive difference between the fair market value of the stock and the “strike price” is large. Many stock option plans, however, restrict the right to exercise an option to certain liquidity events or the company undergoing an initial public offering. Unfortunately, IPO (or initial public offering) activity is drying up at the moment. So, the practical likelihood that an employee can exercise a stock option for a windfall is dwindling.

We believe in a more authentic and transparent approach. When suitable, and in consideration of the many factors involved, actual and direct ownership can be a powerful and straight forward approach. Many options confer actual and direct ownership to a firm’s employees, producers, consumers or other stakeholders.  We are not daunted by the complexity. We have the experience to nestle meaningful ownership structures into many business models and entity types.

We believe there is no better time than now for a firm to consider stakeholder ownership.

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Join us on this journey. Check back regularly for updates.

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In cooperation,

Jason

by Linda Phillips

Giving Employees the Right Vacation Time

Are you following Colorado law when it comes to paying for vacation time when an employee leaves your company? What if you lump together vacation time, sick time and other time off into “Paid Time Off” (PTO)? What follows is a discussion of whether your current employee policies regarding PTO are following Colorado law, especially with regard to the limitation on the amount of time an employee can accrue PTO.

Colorado law states that employers do not have to offer their employees paid time off for vacations or sick leave. If you do offer vacation time or PTO and employee leaves, you are expected to pay the employee for any time that has “accrued”. So what happens if you have great employees who never take vacation? You are allowed to place restrictions on the amount of vacation pay an employee receives. For example, an employee earns 10 days a year of PTO. But the employee only uses 5 days and the other 5 days get forwarded to the next year. You can create a policy that an employee cannot accumulate more than 20 days of PTO. The Courts look at vacation time as a contract issue between a company and its employees. An employee handbook acts as a contract for purposes of this discussion. The Colorado Department of Labor provides: “An employer may establish a vacation policy in writing or by custom and practice. Employees must be made aware of the employer’s policy. Employers and employees must follow established policy unless and until that policy is changed.”

So, as an employer, you can provide in your employee handbook that an employee can accrue no more than 3 years of PTO (or a certain number of days). You have to make sure your employees are aware of the policies and usually employees sign acknowledgements that they have received copies of the handbook.

Here’s another example. Say an employee earns PTO each week. In other words, depending on seniority (some earn more PTO than others), an employee receives at least 3 hours each pay period for PTO. Putting a restriction on the amount of PTO time that can be accumulated is perfectly within the right of your company. A court case from 1998 that has not been overturned or received negative treatment has discussed this issue (City of Lamar v. Koehn, 968 P.2d 164 (Colo.App. 1998)). The case determined whether vacation time was to be included in the definition of “wages” for purposes of workers compensation. The Court state the following:

Both vacation and sick leave were subject to forfeiture if claimant accrued a specified maximum number of leave days. However, claimant did not forfeit any vacation leave under this policy and was paid his full entitlement. [The reason he did not forfeit any vacation was because he had not yet reached the maximum number of leave days.]

In this case, the Court discussed a prior decision where vacation time was looked at as a type of leave that had a reasonable, present-day, cash equivalent value, and that claimant had a reasonable expectation of receiving the benefits under appropriate reasonable circumstances. However, this Court found that because the employer policy had vacation time as capped and subject to forfeiture, it was not proper to be included in the definition of “wages” for determining workers compensation benefits.

Colorado wage law states that vacation pay (which would include PTO for purposes of this discussion), earned in accordance with the terms of any agreement, is classified as wages or compensation. If an employer provides paid vacation (or PTO) for an employee, the employer must pay, upon termination of employment, all vacation pay earned and determinable in accordance with the terms of any agreement between the employer and the employee. So take a look at your vacation and PTO policies. Are they similar to the following?

PTO Yearly Carry Over

Employees may carry up to two full years of accrued PTO leave into the following calendar year. This will allow employees the benefit to carrying up to three (3) years accrued PTO in their PTO banks. Any overage of PTO at the end of the year will be forfeited.

Payment for PTO Overages

If an employee accumulates more than 3 years of PTO and a calendar year is ending within 30 days, PTO for the final two pay periods of the calendar year shall be adjusted such that an employee can only earn 25% of the PTO that has accumulated over the 3-year cap for PTO for that employee. There will be no further accruals of PTO following the end of the calendar year until employee uses some of the accrued PTO. Upon retirement, termination or death during the year, the employee or his or her heirs or estate shall be paid for any accrued, but unused PTO.

The carry-over provisions in the second paragraph above may be a little complicated but they are perfectly within an employer’s rights. The company can cap vacation and PTO time to three years. This prevents a huge buildup of a company liability that will be incurred when an employee leaves the company. If an employee is not taking their earned PTO during the year, then management needs to encourage or force time off for those employees.

This is just one example of how employers can create vacation or paid time off benefits for their employees but everyone should be aware of the responsibilities employers have for properly structuring their vacation policies. Please give us a call if you would like us to review your employee manuals or handbooks about this issue.

by Tonya Price

Choosing the Right Entity for Your Business

Last week our team held its first legal café at Green Spaces in Denver. We welcomed a group of approximately thirty entrepreneurs and discussed the nuances of entity choice. Our team was excited for the launch of what we hope will become a mainstay for the firm and a valuable resource for our community. We selected entity choice as our first topic because this early decision can often have far-reaching consequences for businesses. The right entity is critical for many aspects of the business, from protecting the social mission to attracting outside capital. Our hope is that we can help early stage entrepreneurs avoid the pitfalls of choosing an entity not well suited to their long term vision. To that end we created this presentation with an overview of entity types and strategies for choosing the right entity. Those who attended the legal cafe also had the opportunity to participate in an hour of small group Q&A with our team.

The event exceeded our expectations and our team is looking forward to hosting future legal cafes that provide useful information to entrepreneurs at all stages of developing their business.

by Jason Wiener

Press Release: Leading Colorado Cooperative Business and Sustainable Economies Law Practices Join Forces

FOR IMMEDIATE RELEASE

Jason Wiener|p.c.                                                                                     

 CONTACT:

Jason R. Wiener

Jason Wiener|p.c., a public benefit corporation                                                   Linda D. Phillips

720.445.6860                                                                                                     303.355.0401

jason@jrwiener.com                                                                                          linda@jrwiener.com

www.jrwiener.com                                                                                              www.jrwiener.com

 

Leading Colorado Cooperative Business and Sustainable Economies Law Practices Join Forces

 

The law practices of Linda D. Phillips and Jason Wiener are merging effective April 1, 2018, to scale client service, capacity, training, and impact for the firms’ collective work with cooperatives, social enterprise start-ups, sustainable growth companies and mission-oriented businesses.  Jason and Linda have been collaborating for close to a decade. In that time, the shared ownership and cooperative movement has expanded significantly.  The two attorneys will merge their practices and continue the process of building a team of dedicated, talented, multi-faceted and purpose-filled attorneys.

The merger of Phillips Law Offices and Jason Wiener|p.c. coincides with the rapid growth in purpose-oriented start-up law work, shared ownership conversions of growing and mature transitional businesses, and alternative and non-extractive financing for small- to medium-sized businesses.  The combined firm will offer higher level resources and services to the growing craft beer and beverage, renewable energy, technology, agriculture and small producer, housing and real estate, and co-working sectors, and to other worker and multi-stakeholder owned businesses.  The firm has attorneys licensed in Colorado, New York, Massachusetts, Connecticut (pending), and South Africa, and serves clients in more than 21 states and 4 countries.

Linda and Jason will collaboratively train and lead a team of junior and mid-level attorneys and staff.  The firm is committed to self-management principles and transparency.  The firm has begun open management and collaboration practices, including regular internal discussions about client service, core values, financials, and business development.

About the merger, Linda says “it’s exciting to become part of a team that shares my passion for advancing cooperative business models and helping businesses realize their visions through proper legal and management structures.”

Jason says “We are tremendously fortunate and honored to leverage Linda’s experience to bridge three generations of Colorado cooperative law and to offer such deep business law expertise to our current, new and prospective clients. Linda’s addition to our team will also help train the next generation of cooperative and sustainable economies lawyers.”

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by Tonya Price

Increasing Access to Legal Services – Process Improvement and Automation

I went to law school because I wanted to make a difference. Initially, I though I would focus on environmental issues, but through a variety of courses and internships, my focus shifted to economic inequality and access to justice. This new focus piqued my interest in how technology could expand access to legal services and led me to Michigan State University College of Law’s LegalRnD program. The program offers several courses, and as a 3L I took a course call Litigation: Data, Theory, Practice and Process, with Daniel W. Linna Jr. I had no idea what to expect, but I was excited for a hands on, practice focused class. I was not disappointed; Professor Linna introduced new concepts and challenged the traditional ideas about legal services throughout the class. We experimented with several process improvement techniques including Lean Six Sigma, Kanban Boards, design thinking, and process mapping as tools to solve for inefficiencies in legal processes. He challenged us to think about legal issues and client needs from a process point of view and was constantly asking how our proposed improvements would add value for clients. By understanding the process, we could remove most of the inefficiencies without technology and when we did employ technology, we had a crystal-clear understanding of why it was necessary and how it improved the process.

As part of the class we were asked to re-imagine a legal process and automate it using ThinkSmart’s (a legal software developer) legal workflow automation tool, TAP. I chose to create a new system for referring pro bono work to attorneys. I created an automated workflow that aggregated attorneys’ availability for pro bono work, areas of legal expertise, contact information, and location into a database that would be hosted by the State Bar Association. The rest of the process is automated with inputs from legal aid offices looking to refer clients out and attorneys in the State Bar database. ThinkSmart spotlighted the project on their blog in February.

I’ve carried many of the skills I learned in the Litigation course into my daily practice. I look forward to continuing to leverage process improvement and technology to deliver better services to our clients, create organizational documents that are legally sound and user friendly, and to evolve the practice of law for the 21st century.

 

by Tonya Price

Electing Public Benefit Corporation Status as a Limited Cooperative Association: Limiting Director Liability

All certified Colorado B-Corps, organized as Colorado Corporations or Cooperatives, are required to become Public Benefit Corporations (PBCs) by April 1, 2018. Since a number of our clients are B-Corps, we’ve been immersing ourselves in the finer points of the Colorado Public Benefit Corporation Act (PBCA), particularly as applied to Limited Cooperative Associations (LCAs). As originally enacted, the PBCA did not allow LCAs to elect PBC status despite Article 55 and Article 56 cooperatives being able to do so. It appears that the omission was simply an oversight by the drafters that was recently corrected in an amendment that allows LCAs to elect PBC status. While this was a needed amendment to the PBCA, the PBCA is not as cleanly applied to LCAs as to Article 55 and Article 56 cooperatives.  Unlike Article 55 and 56 cooperatives, the Colorado Business Corporation Act (CBCA) is not used as a gap filler for the Uniform Limited Cooperative Association Act (ULCAA), which governs LCAs. This presents a challenge to limiting director liability for LCAs under the PBCA. The PBCA is written with the corporate form in mind and references the CBCA with regards to director liability, but is silent as to how use of the PBC form will affect director liability when the entity is an LCA.

Section 7-101-506 of the PBCA lays out the duties of the directors of a PBC:

(1) The board of directors shall manage or direct the business and affairs of a public benefit corporation in a manner that balances the pecuniary interests of the shareholders, the best interests of those materially affected by the corporation’s conduct, and the specific public benefit identified in its articles of incorporation.

(2) A director of a public benefit corporation:

     (a) Does not, by virtue of the public benefit provisions of section 7-101-503 (1), have a duty to any person on account of an interest of the person in the public benefit identified in the articles of incorporation or on account of an interest materially affected by the corporation’s conduct; and

Additionally, it permits a PBC to expressly state in its articles of incorporation that a “disinterested director’s failure to satisfy this section does not, for the purposes of section 7-108-401 or 7-108-402 or article 109 of this title 7, constitute an act or omission not in good faith or breach of the duty of loyalty.” The problem for LCAs is that this provision only contemplates a corporation using the PBC form as evidenced by its reference to “articles of incorporation” and the statutory references to the CBCA. The concern for an LCA organized using the PBC form is that its directors may not be protected by the limiting language as it is currently written in the statute. Further, simply altering the express language provided in the PBCA to reference the analogous sections in the ULCAA could render the language unenforceable because it does not track the statutory language of the PBCA. This is not a concern for cooperatives organized under Article 55 or Article 56 because both Articles use the CBCA as a gap filler. ULCAA, on the other hand, was enacted as a stand-alone statute and there was no intent to use the CBCA as a gap filler.

The ideal solution is an amendment to the PBCA that makes the limiting language inclusive of LCAs. In the interim, it is prudent for LCAs using the PBC form to include the limiting language as it is written in the PBCA and include another provision that clearly expresses the intent of the LCA to apply the ULCAA provisions that are analogous to those CBCA provisions regarding limiting director liability. This statement of intent should be drafted to give parties, a court and other interpreters clear guidance to resolve conflicts of interpretation between the PBCA, ULCAA and the Articles of Organization. As a firm, and a PBC, we are invested in the implementation of this statute and look forward to following and participating in its evolution to meet the needs of the businesses that are utilizing the PBC form.