#56: Maximize Returns with Legal Due Diligence - Reduce Risk, Close Better Deals

AIME Episode 56 Transcript

Sarah Florer (00:00.408)
Welcome everyone to Alt Investing Made Easy. Today we're here with our colleague Javier Aranda. He's an attorney with FBFK Law and we're delighted to have the chance to talk to him about his areas of specialty and the work that he does. Welcome Javier.

Javier Aranda (00:26.748)
Thanks, sir. Thanks, Roland. Happy to be here and thanks so much for having me. I'm a big fan of your podcast here.

Sarah Florer (00:32.89)
thank you.

Roland Wiederaenders (00:33.062)
Well, thanks so much, Javier. And yeah, thanks for being with us. we talked a lot about this episode. You know, we're law partners, but we all have a similar experience of serving in an in-house capacity, being a lawyer that works inside with the client, alongside them. And this brings a unique perspective to our roles as attorneys. And we're going to talk about that in this episode. And it's so important.

for a show about alt investing particularly, you we represent private companies so frequently and we don't like to overstate the importance of legal, good legal representation and informing and organizing and running your company, but it actually is one of the most important areas. so in any event, Javier, maybe just tell us a little bit about your practice now.

Javier Aranda (01:28.56)
Yeah, Roland, absolutely. So I've always, I always tell people that I'm an, I'm an in-house, former in-house attorney working outside council. I, I, I'd never thought that I would work on this side as a private practice. No offense to all the private practice, council out there, yourself included, but I just always consider myself as an, as an in-house person. so yes, I've been attorney for about 14 years now. About 13 of those have been in the in-house capacity.

So now my practice revolves around a lot of helping small to mid-size, maybe some larger corporations, companies, et cetera, who don't have the capacity or the budget for their own in-house council. So I like to slide in and fill that role for them. My biggest, I guess, experience is in the technology space. I've worked for various technology companies.

on both the procurement and the sales side. Just to list off a few companies that I worked for in the past, most recently I worked for a company called Electronic Arts or EA, it's a video game company on the West Coast. Before that, a mobile video game company called Zynga. And then more locally in San Antonio, before I moved to Austin, I worked for a few different companies there, Frost Bank, USA, so both of those in the financial space, and Water Burger.

Sarah Florer (02:38.157)
Hmm.

Javier Aranda (02:48.652)
was one of the first jobs, probably one of the most fun jobs. I don't think my wife appreciated the 15 pounds I put on when I worked there. So I worked with a lot of those in those environments. so I carry that experience over to my practice now. So I do a lot of sales and procurement contracts. know contracts can be a loaded word, but just basically any time anybody purchases some sort of technology, that's where I commit and help.

Sarah Florer (02:52.686)
Hmm.

Sarah Florer (02:56.488)
Hahaha.

Sarah Florer (03:17.038)
Well, know, Javier, we were talking about how important it is for people to realize that procuring anything, but in particular technology, which everybody does, all businesses do that. It's really important that you have support because there are lot of risks and you can get yourself tied into situations that have costs that you may not realize at the beginning, but obviously come out later.

People don't always think, but the buyer beware is a real thing. And of course, the technology companies have got it worked out for all the many customers that they serve. And you need to take care of protecting your interests. So using the services of somebody like you, Javier, is so important in my view. And I know this from working in telecoms for many years, where you have really big procurement contracts with complex technology. The same rule applies all the way down.

for things that you don't actually even end up being able to use because of the complexity of the procurement documentation or even something simple that's stuck in there that you don't realize has an important meaning. So I want to emphasize here the importance of the work and the fact that you can support clients on things like that with a depth of experience. It's not just limited to tech, including financial services is another big one.

So it's really great to hear that you've got so much experience that you can use for the benefit of your clients.

Javier Aranda (04:47.654)
Yeah, absolutely. if I can kind of follow up on that Sarah, you raised some great points there. A lot of times some of my clients are on the sales side. They're focused in on selling their technology to their customers. And rightfully so, I get it. That's what pays the bills. But at the same time, they're also spending money. And the more risk you take on that could require you to spend more money, for example,

Sarah Florer (04:59.118)
Hmm.

Javier Aranda (05:13.404)
accidentally signing up for some sort of auto renewal on a license that you thought was just going to be for short term deal, two or three years. Now you're locked into another two or three year term after that when you didn't plan on using the tool. So just little things like that. You you got to be cognizant. A lot of times clients are focused more on the selling part, but they forget that they do have some leverage on the procurement side. You know, even though you're negotiating against the Google, Microsoft, Apple, AWS, et cetera,

Sarah Florer (05:24.075)
Mm-hmm.

Javier Aranda (05:42.58)
It might seem like you don't have any leverage, but there are some certain key terms that can drastically minimize your risk exposure. And then of course, as you deal with smaller technology companies, a lot more of that leverage goes back to you, especially year end, quarter end. Customers forget that they do have some good leverage there to be able to work with their vendors.

Sarah Florer (05:47.767)
Mm-hmm.

Sarah Florer (05:59.513)
Hmm.

Sarah Florer (06:05.266)
Right. It's an interesting point, isn't it? Discussing the timing of when you should try and procure, which might be coinciding with when your very own salespeople are feeling pressured over meeting their quotas for their commission, right?

Javier Aranda (06:16.411)
Oh, absolutely. Absolutely. And we all know why we are on that five o'clock call on the 31st of the month because we're trying to close out that deal. I get it. But, I just want to remind my clients, you know, on both sides of the table, everybody wants to get the deal done. And it is my job to paper it correctly, minimize the risk. But at the end of the day, I'm a business partner with the team. We want to get the deal done. I'm right there with you.

Sarah Florer (06:26.179)
Yeah.

Sarah Florer (06:32.024)
Yeah.

Sarah Florer (06:42.304)
You know, Avya, when you say that, isn't it interesting, Roland, we've talked about it too, because I've got years of in-house experience, so does Roland. And when you use the term business partner, that's really important. That's a common in-house term, actually, even for an attorney sometimes, but not just an attorney, sometimes finance people. But the whole idea is that you learn really clearly about the business that you're supporting because you are a business partner. And then that just makes you a better attorney.

Javier Aranda (07:09.647)
Absolutely. I mean, I welcome and sometimes I'll just write off random calls that I'll have with some of my clients just because I want to be involved in the decision making process if I can. I want them to loop me in sooner than later. In the in-house world, you have that luxury of literally sitting a few feet away from your business partners. So it's easier to have that insight. But in private practice, that's a little bit more difficult. So if I can, I try to stress the importance of my clients of just loop me in early enough.

Sarah Florer (07:18.062)
Mm-hmm.

Sarah Florer (07:28.961)
Mm-hmm.

Sarah Florer (07:33.646)
Yeah.

Javier Aranda (07:39.44)
I won't charge you. I want to do what's best for you if I need to, you know, and so if that means just sitting in on a brainstorming call for 15 minutes before you get the paper in front of you, happy to do that. You know, I know a lot of times you just need to talk things through with your attorney. And so I welcome all those conversations. I've had them plenty of times in the in-house world. Continue to do so in private practice.

Sarah Florer (07:41.356)
Yeah. Yeah.

Sarah Florer (07:51.331)
Yeah.

Roland Wiederaenders (08:03.889)
Yeah, the conversations we had about this Javier really inspired me. remember back working as a general counsel in that role and every day, you you're rubbing elbows with the other employees there. They're non-attorneys, but they're all really smart generally. And so what I really appreciated is listening to the clients and really getting to know them and not always like what you said, taking a larger picture about maybe not billing for every

Javier Aranda (08:19.384)
Absolutely.

Roland Wiederaenders (08:33.285)
single phone call, really giving them the impression that you really value them and that you want to get to know them, want to understand the overall picture, where you're fitting in. And I think that that attitude really carries, can carry forward, even if you're working in an outsourced way, that attitude really can serve you well. I think it really, people that have served as in-house counsel, I think really are better attorneys.

Javier Aranda (09:03.461)
Well, I tend to agree at the risk of getting in trouble with any of my colleagues who did not work in-house. know, the way I see it is business partner is kind of a little term. Sarah, you nailed it. It's used a lot in in-house world. When I worked at Waterbird, we called each other family members. So we took it a step further. everything. You work better with people that who you know and who you trust. And, you know, it's easier to build that trust when you work in the in-house environment because you've got your set.

Sarah Florer (09:19.98)
Hmm.

Sarah Florer (09:25.964)
Yeah.

Javier Aranda (09:32.005)
clients, you and you see them every day. Outside counsel, private practice, a little bit different, but it's up to us as the attorneys, I think, to reach out to your clients, have them feel comfortable. Like I said, even if it's just having these phone calls, writing them off, just showing them, look, I want to be part of your team. Loop me in as soon as you can, and let's work together on this.

Sarah Florer (09:49.709)
Yeah.

Sarah Florer (09:53.271)
You know, the way I think of it, Javier, is that, you know, law school and maybe some parts of your early training, that's when you become an attorney, you know. And it was after I went in-house that I became a counselor. And that's when, and I think attorney counselor, those are two, they're the same thing, really. And ultimately, it's a real privilege to get to be a counselor on any topic for someone.

Javier Aranda (10:06.541)
Exactly.

Sarah Florer (10:17.62)
And I think it's in-house, just like you're saying, these conversations you have about business topics, but your perspective as a lawyer, both the legal content, but also just your logical thinking and all these different things add a lot and people value that. Sometimes people need a chance to get to know that and experience it. And then it's very clear the utility of that person at the table. yeah, I really enjoyed getting to be included in a lot of types of situations that were not necessarily

purely legal, but they were under my remit when I was a general counsel and a lot of it was project managing and just making sure everybody was talking together so that, you know, in the end the right deal got signed. I think you mentioned that earlier too, something to the effect of, you know, if you have different parts of the business that aren't talking to each other, if they come together for a large technology procurement, you have better leverage. So logical, makes so much sense. And usually it's the attorney that has the bird's eye view on that because they're the one talking.

to each of the business units about the contract and then you realize it's the same contract. And so you have a lot of value add there when you get the opportunity to work. And I think it applies to when you're an external or a fractional general counsel or legal counsel when you're doing the work, because it's the attitude that matters. It's not 100 % the presence anymore. A lot of us work virtually anyway.

Javier Aranda (11:39.301)
Yeah, absolutely. I think the way I envision it is I try to work in kind of a hub and spoke system. If I can be the hub when it comes to any of the contracts and yeah, try to keep everything organized so that if someone, if finance team from my client reaches out and they're trying to work on an enterprise deal that would affect the marketing team, for example, and maybe they're just not talking to each other. They just don't know that somebody already entered into disagreement earlier.

Sarah Florer (11:46.53)
Hmm.

Sarah Florer (12:02.264)
Right.

Javier Aranda (12:08.163)
They don't realize the leverage, the buying power that they have. You you could get better volume discounting that way. You know, just business terms with real world effects to the bottom line that, quote unquote, could be legal terms, but they have that effect from a business life. Yeah, exactly. And so everyone should, yeah, yeah. Everybody at the table, whenever you hear of something like limitation of liability, indemnification, everybody never really turns and looks to the attorney.

Sarah Florer (12:11.692)
Mm-hmm.

Sarah Florer (12:25.4)
They're commercial. They're commercial in the end.

Sarah Florer (12:34.574)
To the lawyer.

Javier Aranda (12:37.561)
Yeah, rightfully so, I get it. as I try to explain the concepts to my business partners, then they start to see, OK, this could have a real world effect on my bottom line here, on my budget here. And so just asking these questions and getting their permission, because at the end of the day, lot of times, commercial terms, business terms, anything that somebody's got to cut a check for, we really shouldn't be making those calls for the business team.

Sarah Florer (13:06.702)
Yeah, of course.

Javier Aranda (13:06.745)
But I love having this discussion with them so that they can make a better educated decision.

Sarah Florer (13:12.546)
Yeah, exactly. Well, your auto renewal example is a great one, right? That's actually a commercial term, but you don't often see it until the legal document. mean, limitations of liability and indemnification are much more complex, but it's all about the money in the end, right? And so being able to explain that and start there or get to there, whatever it takes, that's part of the value that somebody like you can offer to people.

Javier Aranda (13:28.346)
Right, exactly.

Javier Aranda (13:37.659)
Yeah, absolutely.

Roland Wiederaenders (13:40.167)
Hey Javier, I thought it was interesting. I didn't know that you had worked at EA and that's been in the news recently. Do you have any thoughts about that? What's going on with that deal?

Javier Aranda (13:50.802)
My one thought is I probably should not have sold my EA stock last year. Yeah, my wife texted me about that and said, do we still have any stock? No, no, not anymore. I still have a lot of friends at EA. I'm excited for them. I haven't read too much into the pending transactions, but plan on reaching out to people just kind of see how they're doing and all that.

Sarah Florer (13:54.412)
Hahaha.

Javier Aranda (14:15.321)
Yeah, interesting stuff. When I was at EA, I think there was a huge transaction between Microsoft, company competing company. And so it happens, you know, it's an interesting time. I'm curious to see how that's going to, if there's going to be any changes. I'm a huge EA fan still. I play, I play the video games all the time. I don't get them for free anymore. Like when I worked there. my kids, my kids are a little bummed about that, but

Sarah Florer (14:40.226)
Hahaha.

Javier Aranda (14:43.236)
We still every Saturday night my kids and I have a video game night and we play a lot of FC the soccer game and so, you know, we spend a lot of great. Yeah, go ahead.

Sarah Florer (14:47.598)
That's cool.

Sarah Florer (14:51.875)
Mm-hmm.

Roland Wiederaenders (14:55.08)
Okay, so Javier, you know, we're placing ourselves in Austin. You've got to pull your jacket back so we see the badge.

Sarah Florer (15:02.606)
It's committed, it's commitment.

Javier Aranda (15:02.819)
Listos, there it is. We have a huge game tonight. big game tonight, qualified for the championship of the Lamar Hunt Cup. First time in Austin FC history that Austin is gonna be hosting a championship game. So I'm taking my boys, we're gonna sit in the general section. We're gonna get all sweaty and wet with people throwing beer and water all over the place, but it's gonna be amazing.

Roland Wiederaenders (15:04.772)
Okay, big game tonight.

Sarah Florer (15:13.558)
wow.

Sarah Florer (15:26.83)
It's going to be worth it on a school night. Better than Halloween.

Javier Aranda (15:29.948)
yeah, my wife was not too happy I got tickets on a school night but it's okay these things don't happen very often.

Sarah Florer (15:36.046)
No, Well, hey, you know what we didn't get a chance to talk about yet, Javier, is a little bit more about you and what got you into the practice of law? Like what made you interested about becoming a lawyer and also with a focus on technology, I guess, to a certain extent?

Javier Aranda (15:55.387)
Sure, yeah, absolutely. So I wish I could tell you I had an awesome story of when I was inspired to make these amazing closing arguments and no, I never had any idea that I was gonna be an attorney. I grew up in a tiny farming town in the Rio Grande Valley population less than 2000, one stop light. actually I was a huge math nerd.

Sarah Florer (16:03.406)
Yeah.

Javier Aranda (16:19.739)
I competed in math competitions in high school, UIL, were number sense and calculator. And it wasn't until when we qualified for the state meet, held in Austin, that I set foot on the campus of UT Austin, instantly fell in love and said, okay, I am leaving my tiny town. I'm gonna explore something different for college. And that's where I went. But again, I was a math major, it's math and economics. So nothing to do with the law, no history, no philosophy.

Sarah Florer (16:20.632)
Mm-hmm.

Sarah Florer (16:42.133)
cool.

Javier Aranda (16:49.243)
I started off my career as a banker, eventually became a loan officer. I decided I wanted to change careers, go back to school. So my late 20s, early 30s went to law school. I always had an affinity for contracts, maybe just the analytical side of it. But when I worked at a bank, I saw when loans went bad and inevitably the people they called in to fix it were the attorneys.

Sarah Florer (17:09.752)
Mm-hmm.

Javier Aranda (17:18.043)
And I always saw them as the ultimate problem solvers. So I thought, you know what? I shouldn't say that I'm a math guy or a reading guy or a law guy. I'm just a problem solver. whether they're numbers or words. And that's what drew me into the contract side and the legal side. There were not very many math majors at my law school. But I think it helped me think a little bit more analytically in how I address these problems.

Sarah Florer (17:18.136)
Bye.

Sarah Florer (17:29.976)
Mm-hmm.

Sarah Florer (17:45.102)
Mm-hmm.

Javier Aranda (17:47.427)
And just using that together with what I did learn when I was working at the bank of working at a bank headquarters, being a loan officer, working on the sales side, working with people directly, supporting clients, customer service, all these things together just kind of helped me, I think, become the lawyer that I am now. But yeah, I never had any aspirations of winning the big case, you know, all that. But it is what it is. know, I'm happy.

Sarah Florer (18:01.933)
Mm-hmm.

Sarah Florer (18:12.686)
Well, you know, I went to law school later too. I went to law school after working for seven years. Also, I worked in an area, a part of finance, you could say. But I do think it's interesting because I describe myself as a problem solver also. I wonder, you know, and I will say that all that math team stuff, because I did some of that too when I was younger, it comes out nicely when you like can quickly do a calculation and people are like, you just, you know, it's fun to show off a little bit.

Javier Aranda (18:27.575)
good.

Javier Aranda (18:40.706)
yeah, everybody's reaching for the calculators and yeah you can...

Sarah Florer (18:42.446)
Yeah, you're like, that's 28%.

Javier Aranda (18:47.607)
Yeah, exactly. My kids still think that's cool. They're not in junior high yet. At that point, I'm pretty sure I'll do some coolness points, but for now, they, yeah.

Sarah Florer (18:53.895)
just wait, they'll stop. Roland has the most experience with that. His kids are all past or mid to late teenagers and past.

Roland Wiederaenders (19:04.776)
Yeah, and it's funny, I mean, we're, they're all liberal arts people just like me, you know, so I have a hard time relating to the math. I struggled with math. I know algebra.

Javier Aranda (19:04.867)
I'm gonna have to pick your brain.

Javier Aranda (19:13.573)
Did you? Yeah, it's... You know, I...

Sarah Florer (19:15.694)
Roland likes to say, all I need is algebra. That's what kids learn in seventh grade now.

Javier Aranda (19:22.503)
my, well, I will say this. I thought I was a math guy until I'm trying to help my fifth grader with his new math homework and they're just doing things completely different. So now I feel, okay, I feel my age now. It's a whole different world.

Sarah Florer (19:28.706)
Yeah.

Sarah Florer (19:34.383)
Yeah, it's so true. It's so true. And I think, you know, it's really cool actually because kids today have access to much more stringent and difficult mathematics courses because I guess the overall level of ability is increasing at an earlier age and there a lot of internet resources and whatnot that help kids who are really into it get further into it. So, of course, AIs come along and I'm not sure how much we need mathematicians in the future, but that's a different issue and we can discuss it at a different time.

Javier Aranda (19:55.087)
Yeah, absolutely.

Javier Aranda (20:00.443)
People say the same thing about lawyers, we'll just keep that between ourselves.

Sarah Florer (20:03.628)
So.

Yeah, exactly. Well, that's where this whole idea of especially being a counselor, a legal counselor, somebody who can come and understand your business and assimilate data and help you solve problems is actually a very human aspect to that. So hopefully AI will be a ways away before it can replace that.

Javier Aranda (20:29.369)
Yeah, absolutely. I always tell people, mean, I'm a big, while we mentioned the buzzword AI here, I'm a big proponent of AI and AI components and features and all that. Because I do realize, and I hope others do too, is that you do need that human touch. You know, you do need, especially a trusted business and legal advisor who knows your business and who is not just going to say, this doesn't match our template, let's change it. You know, I always ask the question of why.

Sarah Florer (20:36.76)
Hmm. Hmm.

Sarah Florer (20:52.771)
Right.

Javier Aranda (20:55.139)
I always tell people I try not to quote unquote over lawyer a deal. The same red lines that might apply to this deal may not apply to the next one. And you don't understand the difference unless you ask the questions and are familiar with the business. And that's where the true value add of the attorney comes in, I think.

Sarah Florer (20:59.758)
All

Sarah Florer (21:12.43)
That's really great advice actually and a great thing to point out because I think sometimes people don't realize that they fear the lawyer process and that might be why they don't seek help. what Roland and I seek to do here and I think we're actually it's working out pretty well is to demystify that and share, you know, we're people too and we want things to you to succeed. I mean, one of my things is I find that

just generally business and the economy is so important. It's such a part of daily life the whole world over. And anything that I can do to contribute to the success of businesses and keeping the economy healthy is a win for me on that day. So I think that's a human approach to all of that.

Javier Aranda (22:00.825)
Yeah, absolutely. mean, the problem's got to get solved somehow. And so I feel it's better if you can get someone who you feel comfortable with and who you trust to help you solve that problem, whether that's someone in-house or out. Either way, there got to be a trusted business partner to help you get through to solve that problem.

Sarah Florer (22:05.388)
Hmm.

Sarah Florer (22:19.21)
Exactly.

Roland Wiederaenders (22:22.098)
Yeah, we talked about that. Just the importance of getting attorneys involved at the outset. one issue, Javier, I wanted to bring up and make sure that our audience understood. If you have a technology company, making sure that anybody that touches your technology signs a very important agreement. And Javier, I bet you can read my mind and know what I'm talking about.

Javier Aranda (22:47.833)
Yeah, I wish I could see all those agreements that are being signed. This is my number one request, I guess. But yeah, I mean, I think we're going with this role. And I've had many clients that will loop me in on the 11th hour saying they got to sign this deal by five o'clock. And I realize, you know, maybe they've had it for a while. You know, maybe they just didn't realize that there was something quote unquote legal that needed to be reviewed. There's so many times where I've gotten a request saying,

Sarah Florer (22:50.687)
haha

Javier Aranda (23:17.487)
This will be quick. It's a one pager. Just give it the old once over and let me know we can sign it in the next 10 minutes. The one pager has a link to their 40 page online T's and C's that nobody bothered to read. And maybe they're not negotiable. I get it. But you at least want to know what you're signing up for. And technology companies, it's part of the business model. They're going to put as little information as possible while still trying to

Sarah Florer (23:30.893)
Yeah.

Javier Aranda (23:46.723)
abide by the laws, you know, so they might just put that URL and you don't know what it is, you got to click into it and read through it, you know, they've done their part, they've given you the terms for you to review. But it might be difficult for someone who's not familiar with the contracts process to know that they have to click in there, review it and what actually is important, you know, so I'm huge with, you know, doing those quick risk reviews, you know, and this is where AI really helps, I think, you know, where you can run a contract or some

online terms through an AI tool and just kind of hone in on some of the specific issues that could affect you. And then maybe just draft a real quick additional terms and conditions addendum to your order that you're signed to your one pager, you know, that way you're not having to negotiate the whole new agreement, but you're still addressing those four or five key issues that really could be deal breakers if you think about it. And so you want to make sure you cover at least those

Sarah Florer (24:27.522)
Hmm. Yeah.

Javier Aranda (24:44.603)
At minimum, if you can do more by all means do more loop in your attorney earlier sooner than later so you can learn more about the deal and kind of give you the advice accordingly but at minimum, you know, just just be cognizant that when you submit something for review There's probably gonna be some more to to the review process than you're thinking So just please on behalf if it's not me on behalf of your contracts attorney your tech attorney wherever here She is, please loop them in as soon as possible and have them make that determination

Sarah Florer (25:15.01)
No, it's true. And I think there can always be other things buried in there in those terms and conditions, including documents that touch on IP rights, documents that touch on confidentiality, documents that take you to a whole other privacy policy and privacy statement, and then on to data protection. And you're kind of missing all of that. And it's linked together, and it can be complex how it...

Roland Wiederaenders (25:17.619)
We are then.

Sarah Florer (25:43.567)
things supersede or override each other. So it's one of those things that it's an example of why lawyers seem to make things complicated. Things are complicated. Right?

Javier Aranda (25:53.925)
They are, they are. And sometimes unnecessarily so, but they are nonetheless. Somebody thought it through and made the decision to make it a little bit more complicated so that you may be as a customer or the client, don't click that link, don't read those terms. But that's what I'm here for.

Sarah Florer (26:08.546)
Mm-hmm. Right.

Roland Wiederaenders (26:12.157)
And so, you know, as in-house attorneys, there are some top issues that I think we should really counsel our clients to talk about. You know, when they're interviewing their attorneys, make sure that they cover these. First, you know, we've talked about procurement, making sure that you buy what you need, but no more, no less. Don't get locked into any kind of terms that are going to cost you unnecessary expense in the long run.

The other issue that I think is really important for in-house counsel is making sure that the company owns its technology. I think this is the pitfall for starting out with a technology company is that any employee or contractor that touches the company's technology that's being developed, whether it's software like EA, inventions like maybe an electric motor, whatever it is, that the employee...

and the contractor signs over all their rights in the IP that they're working on to the company. This is automatically taken care of if you're an employee under the work for hire doctrine, but for contractors particularly. that's after procurement, I would say those employee issues are number two and most important for in-house counsel.

Sarah Florer (27:34.447)
And that's, I think, something you probably have a lot of experience with, right, Javier?

Javier Aranda (27:38.491)
Absolutely, I'm rolling. I'm glad you asked this because I was Eager to jump in when Sarah mentioned this earlier about making sure you got the IP rights and all that Yes, a hundred percent especially if you're turning around and incorporating that intellectual property into something you're selling You know, you don't want to sell something to an end-user customer that you don't have the rights to do so, you know and so I hate to make it so basic but sometimes Tech companies that sell their tools forget about that part

Sarah Florer (27:58.606)
Mm-hmm.

Javier Aranda (28:06.638)
You know, they're so focused on the selling part. Yeah, they need to make sure that they're receiving either the licensing rights or ownership rights, if that's what they're purchasing. You you also mentioned the renewals. we mentioned a little bit earlier about the real world dollars and cents examples, but it's true. You sometimes people will sign something, sign an agreement and say, yes, it's OK, we negotiated.

Sarah Florer (28:07.106)
It's interesting.

Javier Aranda (28:36.026)
These are the terms that we negotiated. It's just in this paper. Yes, it references their online terms, but don't worry about it. This is what we negotiated. Then you go into their online terms and you see that the online terms supersede anything that's in any transactional document, like an order form or a statement of work. So whatever work you think you did upfront on negotiating into that order form got negated because nobody bothered to update what actually supersedes. So yeah, absolutely. I mean, you might think you sign up for a deal.

Sarah Florer (29:01.166)
Hmm.

Javier Aranda (29:03.52)
you make that deal and it might not be anything that's malicious by the the the your vendor you know they just may not remember that's that's buried in their turn in their online t's and c's and it's something that needs to be addressed.

Sarah Florer (29:08.439)
Mm-hmm.

Roland Wiederaenders (29:18.281)
Well, then go ahead, sir. I was just going to bring up the next issue that I think is really important for in-house counsel to address is the enforceability of non-disclosure agreements. Why don't we talk about those? if somebody, we're thinking about partnering with somebody, but we need to know something about their technology and they're going to disclose something to us. Maybe we're going to disclose our technology to them.

Sarah Florer (29:18.567)
I've... Sorry, go ahead, Roland. No, no, go ahead.

Roland Wiederaenders (29:47.013)
And maybe there's a future agreement that we're going to be entering into, but we want to make sure that we can't steal each other's technology. So those mutual NDAs are really important.

Javier Aranda (30:00.091)
Yeah, absolutely. Sometimes people get excited. They have a potential deal and they want to talk about it with their potential client. And they just need to slow down a little bit and think, OK, what exactly are we talking about here? What am I disclosing here? And yes, I want to win this person's business, but at what cost? And so you want to make sure that you step back a little bit, maybe formalize things a little bit, get an NDA, a non-disclosure agreement, or a confidentiality agreement. Normally those are quick, a couple pages long.

Sarah Florer (30:18.158)
Hmm.

Javier Aranda (30:29.53)
but they will spell out what you can and cannot say. A lot of times people say, well, at the end of the day, we're just going to chit chat for now and then we're going to sign a master agreement later in our MSA or master services agreement or master or whatever sales agreement has confidentiality language in there. We'll be fine. Well, that's true, but you have to focus, understand when are you actually signing an agreement versus when are these conversations had? And if you're having these confidentiality discussions, confidential discussions before you sign the MSA, then they're not covered.

Sarah Florer (30:32.494)
Hmm.

Javier Aranda (30:59.554)
Also, what is the scope of the confidentiality language that's in your MSA? Is it about any and all conversations? Is it specific to the subject matter that's covered by that agreement? And if it is, you might be having conversations that are outside the scope and therefore are not covered by the confidentiality provision that's in there. So these are all things that just, have to, again, ask your attorney if you have one on staff or hopefully if you're not, by all means reach out, but just talk it through. See, are we covered?

Sarah Florer (30:59.598)
Hmm.

Sarah Florer (31:22.883)
Mm-hmm.

Javier Aranda (31:29.314)
Just a simple question. It won't take long to get you that NDA in place, two pages mutual, if you want to feel more comfortable. If you know that you're the only one who's going to be disclosing and you don't want to take on any liability for protecting someone else's confidential information, just make it one way to where they just protect your information. either way, ask those questions, think about it a little bit, pick up the phone, call us up, we'll get something in place.

Sarah Florer (31:48.61)
Right.

Sarah Florer (31:54.063)
Yeah, no, it's like one of those threshold issues that seems very simple, but it's actually really fundamentally important. And another example of why a two-page document, the shorter the lead goal document doesn't mean the less important the issues, right? So it's one of those that's really packed, the NDA.

Javier Aranda (32:10.584)
Right, exactly.

Javier Aranda (32:16.026)
Right, exactly. can be very, very important. Nobody realizes how important it is until somebody's run afoul of it and then they, know, hindsight's 20-20.

Sarah Florer (32:19.138)
Yeah.

Sarah Florer (32:25.962)
Yeah, that's when litigation colleagues get involved. you know what, Javier, something Roland and I talked about before, this webcast is Alt Investing Made Easy. We focus on education for sponsors and investors in deals. And I think your services and what you're talking about here is so important for people who might be watching this because really all of what we're talking about here is about risk management and future cost mitigation.

Javier Aranda (32:29.134)
Exactly.

Sarah Florer (32:56.064)
So putting an effort in hiring even for project by project basis an attorney who can help you on your procurement contracts, get your sales contracts if you need them, if you're leasing, get your lease contracts, whatever it is, whether you're more of a private equity style investment or commercial real estate, there is legal work that needs to be attended to. Why is it important? It's important because if you don't do that later you could have a problem.

that is an unanticipated out of budget cost that directly impacts the returns you have available for your investors. this isn't just it's a nice to have that you have really great legal documents, everything's a tight ship, all of that. It's actually all about money in the end and the risk that you could have because when things are loose and you're in your

involved in business of any kind, there's always something that can happen that just ultimately costs money. If you could have avoided that, you kind of feel a little foolish later or potentially in trouble with your investors.

Javier Aranda (34:03.736)
Yeah, absolutely. specific to your clientele here, which on the investment side, you want to make sure you do the right due diligence on your side. And if you're trying to raise money, can bet somebody's going to do due diligence on you. And so you want to make sure that your contracts state what you think they do. A lot of times people think, yeah, we can sell our company or parts of it to raise money. And we've got this book of business, these contracts that we can sell.

included part of the sale, yet they're non-assignable. So you need to make sure that you have the right language that allows you to assign this contract to someone who purchases you. If you don't, then you can't. And it's not the deal that you thought it was.

Sarah Florer (34:48.362)
Exactly.

Roland Wiederaenders (34:48.488)
Yeah, Sarah, we've seen deals blow up because the legal isn't done correctly, right? And that's the first thing that you go to with the due diligence checklist. You go to all the written documents of the company. These are all the agreements that we've been talking about. All your agreements with employees, know, confidentiality, non-disclosure licenses represent all the company's assets. And man, they're so important. And it really can't overstate that.

Sarah Florer (35:09.208)
Mm-hmm.

Roland Wiederaenders (35:16.202)
even though we are attorneys and like to think of ourselves as being more important than we are sometimes.

Sarah Florer (35:16.535)
Yeah.

Javier Aranda (35:21.689)
You

Sarah Florer (35:22.606)
Well, it's true though that, know, and this is interesting because this, you know, speaks to if you're trying to attract money, either for a full sale or partial sale of your business or your company, your house needs to be in order and an attorney is vital to that. If you are a newer company or an investment vehicle that's just been set up, you don't necessarily have all that documentation in place yet, but you need to review it in your target acquisition.

or you need to be prepared that you will eventually need all of that documentation. And that speaks to, you and you've got these investors that you've disclosed information to and made promises to about the investment returns. So in both cases, can't avoid the fact that, you know, a company, functional operational company actually has a lot of documentation, legal documentation that needs to be attended to and the people to do that are attorneys.

I know sometimes people like to try to do that on their own too and I've not yet seen one situation where that didn't lead to more problems than solutions.

Javier Aranda (36:30.83)
Yeah, absolutely. And the earlier you can put it into your business process, the more you can incorporate your attorney that will at least ask those questions that, I mean, we don't have to do all the grunt work for you, right? We can review the terms, but the more that you work with attorneys and the better processes you'll have of maintaining your contracts in order, know, housing them correctly, you know, cause when someone says, you know, I think

Sarah Florer (36:39.384)
Mm-hmm.

Sarah Florer (36:53.197)
Exactly.

Javier Aranda (36:57.934)
We signed a deal with that company maybe 15 years ago, but let's see if I can find that contract buried in someone's inbox. That person may not even work here anymore. But if you have a more robust set procedure with an attorney who's helping you out in house or outside, you'll have those contracts more readily available because it's at the front of your mind.

Sarah Florer (37:03.054)
Hmm.

Sarah Florer (37:06.466)
There, that's...

Sarah Florer (37:17.322)
Exactly.

Roland Wiederaenders (37:20.511)
Well, we're coming up on 40 minutes, Sarah, what do you think?

Sarah Florer (37:23.512)
Well, we have one last question, Javier, and that is I want to get to it since we discussed it earlier. And often we like to ask our guests, you know, just for a little more personal flavor. you know, being an attorney is a busy job. Being a father is a busy job. So do you have any personal mission statement or something that motivates you that you'd like to share with everybody?

Javier Aranda (37:45.583)
Yeah, I actually have a couple, not trademarked or anything like that, just a couple of slogans that I came up with on my own. put them on my bracelets here. It's just something to remind myself and to remind my two boys, they're eight and 10, so they're in their little formative years, is one of them is focus, achieve, success. it's a brief statement. You can interpret it however you want. I tell my kids the focus part of it.

It could be reading, could be running your laps, kicking the ball around, whatever it is, focus on the tasks you have. Achieve same thing. You define, you know, what it means to achieve something, but it could be scoring that goal. It could be just, just progressing and just improving. then the same thing with success. You know, everybody wants to win the game, hit the game winner, whatever. It doesn't have to be like that success again, is measured by the amount of effort that you put into it and what you're trying to get out of it. So in short, there's one.

That's the positive one. The other one that I just kind of kicked myself around about is just says, get over yourself. And it's just the constant reminder to myself that role. Like you mentioned, attorneys like to think we're important. I constantly remind myself that I'm not that important because I know there's a lot bigger things in this world that are going on. And I just want to make sure that I can contribute as best to what I can that's within my control, you know? And so anything else just.

Sarah Florer (38:47.15)
Ha

Javier Aranda (39:08.726)
Let it be, you know, and that's what I'm trying to teach my kids, you know, is just focus on yourself, control what you can control, but don't let that head get too big.

Sarah Florer (39:19.117)
I think that's great.

Roland Wiederaenders (39:19.519)
That's really good. I think that's a good place to wind this up with. That's great advice.

Sarah Florer (39:22.286)
Yeah. Yeah. Thanks so much for being here today, Javier. And to everyone out there, thanks for joining us today. We hope you enjoyed this episode. If so, please like and subscribe. Follow our channel.

Roland Wiederaenders (39:35.337)
And remember everyone, take aim with your alternative investing strategies.

Sarah Florer (39:40.312)
See you next time.

Javier Aranda (39:42.106)
Thank you both.