When Is the Right Time to Hire a Securities Attorney?

Almost every client who calls us starts the conversation the same way. They've been doing syndications for years. They've raised capital from investors they know. Deals have closed. Investors have been paid. And then something happened. A sophisticated investor's attorney flagged their documents. A peer told them their PPM wasn't right. A deal underperformed, and they got nervous. And now they're calling. What they're really asking is, how bad is it? And what do we fix first? What a few years ago actually means in terms of exposure, that's what I want to get into. Because the timing of when you hire a securities attorney is one of the most consequential decisions in this business. My name is attorney Kim Lisa Taylor. I am the founder of Syndication Attorneys. We work with real estate syndicators and fund managers, about 500 clients and over $5 billion in private capital raised. I've had this conversation more times than I can count. Syndicators typically find us at one of 3 moments. What each one looks like and what each one costs, well, let's go through that. Moment 1, before the first raise. This is the right time. You're preparing your first offering. You've been told you need a PPM and an operating agreement. You're doing your first deal and you want to raise money from investors properly. You hire a securities attorney. You get your structure right. You pick the right exemption, 506 or 506, fund versus syndicate, entity setup, fiscal year election, offering documents, investor qualification process, blue sky filings, everything in order before the first investor wires. The cost is straightforward. You pay for the document package. You pay to build the structure right, and you go raise money knowing what you're doing. Every deal after that adds to a compliant track record. You know how to document what needs documenting. You understand the rules because you built your system around them from the start. I've never had a client one time say they called us too early. Not once. Moment 2. After a few deals before a problem. You've done 2, 3, 4 deals. Things have been going well. Nobody's complained, but somebody said something that made you start to wonder that something might not be right. Maybe you read something that made you wonder about your documents. Maybe a more sophisticated investor asked questions you couldn't fully answer. Maybe a peer told you about a compliance issue and it sounded familiar. This is still a good time, the second best time. There's retroactive exposure. Your prior deals may have compliance gap, but it's bounded. You know what the history is. We can review it, assess what needs to be addressed, and build the right structure going forward. The cost here is higher than moment one. There's more to review. Sometimes things may need to be corrected, but most of it is manageable. You're still ahead of the problem. You came to us before an investor complained, before a deal went sideways, before anyone hired an attorney or complained to a securities regulator. Moment 3: After a problem arrives. This is the most expensive time. A deal underperformed, an investor is unhappy, someone hired an attorney, or you got a letter from a state securities regulator asking you to produce all documents related to your offering. Offering documents, marketing materials, investor correspondence, financial reports, tax filings, investor lists and contact details, etc. Now we're no longer talking about compliance setup, we're in defense territory. Attorney's fees for securities disputes are not in the same realm as offering document fees. They're usually a whole different order of magnitude. And the legal fees add up fast. The exposure isn't just this deal. Every prior deal where the documents weren't right, where investor records were thin, where distributions didn't follow the operating agreement waterfall exactly— all of that is now potentially in play. Every prior offering is part of the record. That's what most syndicators don't see when they first call us. They think they're dealing with one problem. They're often dealing with several years of accumulated missteps. Let me be specific about what a few years means. If you've done 3 deals over 3 years under a non-compliant structure, that means 3 Form D filings that may need to be reviewed, 3 sets of investor files that could be thin on documentation, 3 sets of marketing materials and investor emails, financials, and tax filings that are permanently discoverable. Operating agreements that may have waterfall or management fee language inconsistent with your actual distribution practice. Any one of those deals underperforming later brings all 3 into scope. That's not a hypothetical. That's how investor disputes work. A thorough attorney doesn't just review the deal where the problem happened. A securities attorney or regulator doesn't just review the deal where the problem happened. They look at the pattern. Let me clear up something about our intake process, because there's a misconception about what the first call actually is. The consultation is where we listen to what you've built and tell you how we can help, which services fit your situation, and what working with us looks like. What it isn't is a legal advice session. Attorney rules don't allow us to give legal advice before there's a fee agreement in place. And we follow those rules the same way we're telling you to follow yours. If you want my direct assessment before engaging us, that option exists too. A paid 1-hour consult with me. We go through your deal structure, your entity setup, your current offering. If your matter needs more than an hour, that's what an engagement is for. And if you move forward with us, the consult fee is credited towards your legal fees. Some people find out their setup is largely fine— a few things to tighten up, but nothing urgent— and we'll tell them that. We don't manufacture problems. Sometimes we find real gaps. We'll tell them that too. We're screening our clients as much as they're screening us. If you can't follow directions here, you're probably not going to follow the securities laws either. We want clients who want to do this right. So, here's the practical answer. Do I need to hire an attorney now? If you haven't raised money yet, the answer is yes. Get the structure right before you start. The cost of proper setup is small compared to what the cost to fix it later, if it even can be fixed if you do it wrong, is. That cost is high. If you've raised money and you've never had a securities attorney draft your documents, The answer is yes. Do it for your next raise so you know you're compliant going forward. If you have a deal underperforming right now and investors who are unhappy, yes, schedule a consultation before anyone sends you an email with legal language. The time to understand your exposure is before the demand letters start showing up. And if everything is going well and you want to keep it that way, yes, A compliance review is a business risk management step. It's not a sign something is wrong; it's a sign you're paying attention. If you want to have a conversation about your specific situation, your current offering structure, what you've built so far, and where the gaps might be, schedule a consultation, and we'll tell you how we can help. The link is in the description: syndicationattorneys.com. Backslash schedule. If this raised a general question, drop it in the comments. I read them. Subscribe if you want more of this so we can keep you informed of new videos.