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Navigating Tariffs: Essential Knowledge and New Legal Trends

Incainti Sofia McDonald and J. Dino Vasquez, Miller Nash LLP

Introduction

A tariff is a tax imposed by a government on goods imported into the country. Though the concept may appear straightforward, tariffs play a central and complex role in international trade policy. Governments employ tariffs to shield domestic industries from foreign competition, to generate revenue, and to leverage negotiating power in trade agreements. At the same time, tariffs can influence consumer prices, supply chains, and diplomatic relations.

The United States, like most countries, uses a structured classification and valuation system to determine how and when tariffs are applied. For importers, manufacturers, and policy professionals alike, a clear understanding of tariffs and their legal framework is essential to navigate the regulatory landscape and mitigate associated costs.

Tariffs and import duties

It is important to distinguish between tariffs and the broader category of import duties, which encompass a range of taxes imposed on imported goods. Tariffs are a subset of these duties, but other forms also exist to address specific trade concerns.

Customs duties are the most general form, typically calculated based on product category or declared value. Excise duties, in contrast, apply to specific goods such as alcohol and tobacco, and they often reflect public health or regulatory considerations rather than purely economic concerns. Anti-dumping duties are levied when a foreign company is found to be selling products in the U.S. market at prices below fair market value, potentially undermining domestic producers. Similarly, countervailing duties are imposed to counteract subsidies provided by foreign governments to their exporters, which may distort competitive conditions in the U.S. market.

Each of these duties can be imposed independently or in combination with standard tariffs, depending on the origin, nature, and purpose of the imported goods.

Categories of tariffs in the United States

In the U.S. tariff system, there are three main types of tariffs, each calculated differently and serving different regulatory purposes.

The first category is ad valorem tariffs, which are based on the value of the goods being imported. This value often reflects the declared cost of the goods, including insurance and freight, and it may be influenced by international commercial terms (known as INCOTERMS). For instance, if goods are imported with a declared value of $500,000 under Cost, Insurance, and Freight (CIF) terms and the applicable tariff rate is 10 percent, the importer would be responsible for paying $50,000 in tariffs.

The second type is the specific tariff, which is calculated based on physical measurements such as weight, quantity, or volume. Unlike ad valorem tariffs, specific tariffs are fixed and do not fluctuate with market price. They are commonly applied to raw materials or agricultural products, where valuation based on volume or weight is more practical and consistent.

The third category is the compound tariff, which combines both ad valorem and specific components. For example, imported aluminum may be taxed both as a percentage of its value and an additional amount per ton. These tariffs can be more complicated to calculate, requiring precise classification, documentation, and often additional scrutiny from customs authorities.

The Harmonized Tariff Schedule of the United States (HTS)

The cornerstone of the U.S. tariff classification system is the Harmonized Tariff Schedule of the United States (HTS). The HTS is maintained and regularly updated by the U.S. International Trade Commission. It codifies the duty rates for every type of imported product and serves as the basis for customs processing and trade statistics. Each product receives a unique ten-digit code based on its material composition, function, and other distinguishing characteristics. These codes not only determine the applicable duty rates but also assist in tracking trade data and enforcing trade restrictions.

For example, automotive wheel covers and hubcaps may be classified under HTS code 8708.70.60.45. This classification sequence begins at the section level (covering transport equipment), narrows to the chapter on motor vehicles, then further specifies the relevant part or accessory and its intended use. The general duty rate for these items may be 2.5 percent, but the rate can vary dramatically depending on the country of origin. Products imported from countries such as Cuba or North Korea may be subject to a 25 percent rate due to political restrictions, while goods from China may incur an additional 25 percent under Section 301 tariffs. These variations illustrate the importance of accurate product classification, which is often managed by licensed customs brokers due to the complexity involved.

Businesses of any size or individuals can hire a licensed customs broker; the more complex a shipment is or the greater the value of goods being imported, the more important a licensed customs broker is for risk mitigation. For those who wish to hire a broker, U.S. Customs and Border Protection (CBP) provides a list of permitted customs brokers and contact information.

Legal authorities for imposing tariffs: Section 301 and IEEPA

The U.S. government has multiple legal mechanisms at its disposal to impose tariffs, each rooted in distinct statutory authorities. Two of the most significant are Section 301 of the Trade Act of 1974 and the International Emergency Economic Powers Act (IEEPA). Each provides the executive branch with tools to respond to trade-related threats and unfair practices, although they differ in scope, purpose, and procedural requirements.

Section 301 of the Trade Act of 1974

Section 301 authorizes the Office of the United States Trade Representative (USTR) to investigate and respond to foreign trade practices that are deemed unfair or discriminatory and that burden or restrict U.S. commerce. The process is designed to be methodical, transparent, and consultative, involving multiple stages of investigation, negotiation, and, where necessary, enforcement.

Investigation

Investigations under Section 301 can be initiated in one of two ways. An interested party, such as a business, trade association, or labor group, may file a formal petition with the USTR, prompting an official inquiry. Alternatively, the USTR may initiate an investigation independently, based on its own assessment of foreign trade practices.

Consultation

During the consultation period, the USTR conducts consultations with the petitioner and seeks input from a variety of stakeholders. These include representatives from the private sector, members of industry advisory committees, and relevant agencies such as the U.S. International Trade Commission. Public comments are also solicited and reviewed through notices published in the Federal Register, ensuring transparency and public engagement.

Negotiation

If the investigation finds that a foreign policy or practice is an unfair or harmful to U.S. trade interests, the USTR will attempt to resolve the issue through negotiation. Where a formal trade agreement exists between the United States and the foreign country in question, any dispute resolution procedures outlined in that agreement are typically followed.

Retaliation

If a resolution cannot be achieved, the USTR may proceed to retaliation, imposing duties or other import restrictions on the goods of the offending country. The goal is to implement measures equivalent in value to the estimated harm suffered by the U.S. economy. Section 301 provides the USTR with broad authority to take action, which may include increasing tariffs, suspending trade concessions, restricting import licenses, or entering into binding agreements that compel the foreign country to eliminate the offending practice.

Once imposed, Section 301 tariffs remain in place for four years unless formally extended following a review.

In recent years, Section 301 has been used extensively to address trade imbalances and intellectual property concerns, particularly involving China. The USTR announced on April 17, 2025, that it would be pursuing further action targeting China’s maritime, logistics, and shipbuilding sectors. The proposed measures include new fees assessed on Chinese-owned vessel operators, fees on Chinese-built ships based on net tonnage or container capacity, and charges applied to foreign-built car carriers with ties to Chinese financing. These fees are designed to escalate over time, signaling long-term scrutiny of the sector.

Public involvement has played a significant role in shaping these decisions. For example, in connection with the maritime investigation, the USTR sought public comments and held a hearing in May 2025. More than six hundred written submissions were received, and sixty individuals testified. Based on this input, the USTR proposed modifying the structure of the tariff fees by shifting the basis of calculation to net tons. This iterative process highlights the importance of public participation in U.S. trade enforcement policy.

This procedure serves as a proactive channel for affected parties to influence tariff implementation and shape policy outcomes.

The International Emergency Economic Powers Act (IEEPA)

In contrast to the structured, investigatory process established under Section 301, the International Emergency Economic Powers Act (IEEPA) grants the president broad authority to regulate imports and other economic activities in response to national emergencies. Enacted in 1977, 50 U.S. Code § 1701 of the IEEPA enables the president to impose tariffs, sanctions, and other trade restrictions when faced with an “unusual and extraordinary threat” to the national security, foreign policy, or economy of the United States.

On April 2, 2025, President Trump invoked the IEEPA in Executive Order 14257 to declare a national emergency arising from what he characterized as “persistent and harmful annual U.S. goods trade deficits.” The administration cited a lack of reciprocity in global trade relationships and predatory foreign policies as justification for sweeping changes in the U.S. tariff regime. Following the declaration, several adjustments were made to existing tariff rates, the list of affected countries, and the scope of covered goods.

Unlike Section 301, actions taken under IEEPA do not require an evidentiary investigation or public comment period. However, they are subject to judicial review and have been the focus of considerable litigation, with plaintiffs challenging the factual basis and legality of the declared emergency. Courts have begun scrutinizing whether the IEEPA framework permits such expansive use of tariff authority absent a clear and imminent threat, and further rulings may clarify the limits of presidential discretion under this statute.

Tariff preferences, exemptions, and trade agreements

While most imported goods are subject to tariffs under the HTS, various trade agreements and development programs offer exemptions or preferential treatment to certain products and countries.

One such program is the African Growth and Opportunity Act (AGOA), enacted in 2000. AGOA allows for tariff-free access to the U.S. market for over 6,800 product categories from eligible Sub-Saharan African countries. To qualify, participating nations must meet a series of criteria, including adherence to the rule of law, democratic governance, protection of human rights, and efforts to eliminate barriers to U.S. investment and trade. As of 2025, thirty-two countries remain eligible, with South Africa being the largest beneficiary, particularly through automobile exports. However, the AGOA program is currently scheduled to expire in September 2025, and its future remains uncertain pending congressional action.

Another major trade agreement is the United States–Mexico–Canada Agreement (USMCA), which took effect in July 2020 as a successor to the North American Free Trade Agreement (NAFTA). Under USMCA, most goods traded between the U.S., Mexico, and Canada continue to enjoy duty-free treatment, provided they meet strict rules of origin requirements. These rules stipulate that products must be primarily manufactured or sourced within the member countries. Determining eligibility, however, can become complicated for products composed of global components or subject to variable manufacturing processes.

Current litigation

In April 2025, President Trump issued a declaration of national emergency, citing the ongoing U.S. trade deficit and lack of reciprocal trade practices as threats to national security and the economy. Pursuant to IEEPA, a series of tariffs were introduced or increased on products from various countries. This move has been the subject of significant legal scrutiny.

Several cases have been filed. Litigants have generally argued that IEEPA does not authorize the imposition of tariffs and even if it did, that no genuine national emergency exists to justify such measures. In one court’s response, the U.S. Court of International Trade (CIT) held that if the president wants to address a trade deficit through tariffs, the president already has the tariff authority specific to balance-of-payment issues provided in Section 122 of the Trade Act of 1974—not IEEPA. The Federal Circuit stayed the CIT’s nationwide injunction pending the appeal that was subsequently filed. On August 29, the Federal Circuit affirmed the CIT’s holding that the reciprocal tariffs exceeded the president’s authority. Again, the administration has appealed the case and requested that the Supreme Court make a final ruling. The eventual outcome of the case may reshape the legal boundaries of presidential authority in trade matters.

Who bears the cost of tariffs?

Contrary to common perception, tariffs are not paid by foreign exporters or governments. The responsibility for payment lies with the importer of record, which may be the brand owner, distributor, or even the final customer depending on the nature of the supply chain. The importer is responsible for the cargo declaration before the goods are shipped. Once goods arrive at port, the goods are held by CBP. The importer of record then fills then the relevant CBP entry forms for customs release. As such, where there is significant risk to an inexperienced importer, retaining a customs broker to assist with the import paperwork is recommended.

Tariffs are typically paid upon customs clearance at the port of entry. In cases where goods are routed to bonded warehouses, duties may be deferred until the products are released into U.S. commerce. The contractual terms between buyer and seller are often defined by INCOTERMS, which further clarify who is liable for tariffs and at what stage. For example, under FOB (Free on Board) terms, the buyer assumes responsibility for tariffs once the goods are loaded for shipping. Under DDP (Delivered Duty Paid) terms, the seller takes on the full burden, including import duties and customs clearance. EXW (Ex Works) places the maximum responsibility on the buyer, who must arrange and finance all aspects of the transport and importation process, including tariffs.

Mitigation strategies for importers

While tariffs are often unavoidable, businesses may implement several strategies to reduce their financial impact.

One such approach is the First Sale Rule, which permits the importer to declare the customs value based on the original sale between the manufacturer and the middleman, rather than the final resale price. By using the lower, initial transaction value, the importer can reduce the assessed tariff.

Another option is tariff engineering, where products are designed or modified to qualify for lower-duty classifications. This may involve changing the composition, assembly, or origin of the goods. For instance, importing parts separately or avoiding specific finishes can lead to reclassification under a more favorable duty rate.

Companies may also take advantage of Foreign Trade Zones. These designated areas allow goods to be imported, stored, and even assembled without incurring customs duties until they enter U.S. commerce. If the goods are ultimately re-exported or destroyed, no duties are paid at all.

Bonded warehouses offer a similar benefit by permitting duty-free storage of goods for up to five years. This can be useful for products with uncertain demand or longer distribution timelines.

Lastly, businesses may be eligible for duty drawbacks, which are refunds on duties paid for goods that are subsequently exported, destroyed, or returned. Several types of drawbacks exist, including direct identification manufacturing, substitution manufacturing, unused merchandise, and non-conforming goods. Depending on the category, companies may recover up to 99 percent of the duties initially paid.

Conclusion

In the modern global economy, tariffs are more than just taxes—they are instruments of economic strategy, tools of diplomacy, and mechanisms for enforcing trade policy. Navigating the U.S. tariff system requires a nuanced understanding of product classification, valuation, legal authority, and available exemptions or mitigation strategies. As international trade continues to evolve amid shifting geopolitical and economic conditions, businesses and policymakers must remain vigilant, informed, and adaptive in their approach to tariffs. ♦

Barrister Banter: Peter Bragdon

The purpose of the series is to bridge the gap between junior and senior business lawyers in Oregon, fostering understanding and camaraderie. For this quarter’s installment, we interviewed Peter Bragdon, the Executive Vice President, Chief Administrative Officer, and General Counsel for Columbia Sportswear Company and the winner of the 2024 James B. Castles Leadership Award. Read on to learn about his rich professional background that led him to working in-house for Columbia as well as his opinions on making mistakes, seeking mentors, and being a mentor.

  1. Tell me about your path to being a lawyer. What inspired you to pursue this career? 

I took a twisted, unconventional path, and I consider it a stroke of good fortune that I am in this role. I tend to look at careers as a collection of skills and experiences that can be put to use in a variety of ways. For me, my primary experiences are a blend of law, public policy, media, and business, and I use all of that in my role. I started out as a journalist and won a fellowship to get a master’s degree at Yale Law School. It was an amazing year, and I got a glimpse into the power of understanding the law and the multiple ways a law degree can be used to create change. I chose to go on to get my JD, hoping it would lead to opportunities in the private and public sectors and also help me find ways to contribute to civic efforts outside of work. That’s how it worked out. For example, early in my time at Columbia I was given a leave of absence to serve as Governor Kulongoski’s first chief of staff. That role didn’t require a law degree, but I doubt I would have gotten there or been able to do the job without it.

  1. What is your practice area?

Being in-house has meant being a “free-range” lawyer. Working for a public company selling products in roughly one hundred countries, there is no end to the variety of legal issues, which on a given day can include engaging with U.S. Securities and Exchange Commission, addressing a trademark issue in Europe, or looking into a construction project in India, just to name a few examples. I started out as a corporate securities and finance attorney, which was great training for thinking in a multifunctional way.

  1. How long have you been in your current role?

I have two answers. I became General Counsel in 2004. But my role has evolved steadily, as has the company. Over time I have come to oversee multiple functions within the company and eventually took on the roles of Executive Vice President, Chief Administrative Officer, and General Counsel.

  1. How have you seen the practice change since you started practicing?

I see many more in-house lawyers getting involved in a broad range of issues across organizations, managing multiples functions and being viewed as strategic partners in leadership. That’s certainly been an opportunity at Columbia, but I see it elsewhere.

  1. What do you wish you had known before you started working as a new lawyer?

Mistakes may be your best teacher…avoid them at all costs, but use every one of them to learn. I have worked with more amazing people than I can count, but a common theme that has made them amazing was how understanding they were and the room they gave me to make my own mistakes and learn. I wish I hadn’t made them, but I probably ended up better off as a result.

  1. What are your career highlights?

Meeting Ted Kulongoski when I was a journalist in the 1980s and working with him as Special Assistant Attorney General in the Oregon DOJ and as his Chief of Staff in the Governor’s office. Getting introduced to Columbia Sportswear’s management in the 1990s before the company went public, and getting the chance to join the company and grow with it. And both of those things led to civic engagement, ranging from the Board of the Oregon Community Foundation to being a member of the Port of Portland Commission.

  1. What is your favorite part of the job?

At Columbia Sportswear, we work to connect active people with their passions. That is a great mission, and I get to pursue it with many talented people across every company function. I get paid to see the world and learn something new every week.

  1. What parts of the job do you wish you could outsource to AI?

I would be happy to never read another contract. Fortunately, you can’t really outsource judgment or relationships, which are among the best parts of being a lawyer.

  1. What advice would you give a new business lawyer?

Don’t wait for business to come to you. Personally, I think some of the best parts of being a lawyer are the relationships you can build, and the opportunities to gain a holistic understanding of a business or industry. There are plenty of isolated legal issues that have to be addressed at given times, and those are important, but it can be incredibly satisfying to be engaged with management on a business effort, start to finish, bringing not only the legal skill but business judgment. I have enjoyed being at the table when ideas are first debated through to when the business effort comes to fruition (or, in some cases, doesn’t). But my best advice is to seek mentors wherever you can. You’ll be surprised how many people inside and outside the law are willing to be helpful.

  1. What advice would you give a senior lawyer who is charged with mentoring a new lawyer?

Be kind and be generous with your time. It is hard to believe many senior lawyers would have been successful if someone hadn’t done that for them. Pay it forward. ♦

Corporate Transparency Act Spring 2025 Update: A Requiem?

Michael Walker, Samuels Yoelin Kantor LLP

The Corporate Transparency Act (CTA) is a federal statute that was incorporated with some amendments into the National Defense Authorization Act for fiscal year 2021, was passed over a presidential veto, and was effective as of January 1, 2021. The act seeks to harmonize the disparate beneficial ownership reporting laws of the states into one federal system. In theory, a central database containing beneficial ownership information of U.S. business entities will allow the federal government to better combat money laundering and the financing of terrorism. The federal agency tasked with enforcing the CTA is the Financial Crimes Enforcement Network (FinCEN). The Oregon Business Lawyer has published several articles on the CTA, its implementation, and subsequent litigation over the constitutionality of the CTA.

Now, in 2025, the direction of the CTA has taken an abrupt turn. Following several lawsuits that had temporarily enjoined FinCEN from enforcing the CTA, FinCEN extended the reporting deadlines for most reporting companies until March 21, 2025. In addition, FinCEN announced that during the thirty-day extension period, it would “assess its options to further modify deadlines, while prioritizing reporting for those entities that pose the most significant national security risks.” On March 2, 2025, the Treasury Department announced the suspension of enforcement of the CTA against U.S. citizens, domestic reporting companies, and their beneficial owners, and further announced its intent to engage in a rulemaking to narrow the reporting rule to foreign reporting companies only.

The interim final rule issued by FinCEN

Following that announcement, on March 21, 2025, FinCEN issued an interim final rule (the IFR) that limits the definition of a “reporting company” under the CTA to include only non-U.S. companies and their non-U.S. beneficial owners. In describing its rationale for issuing the IFR, FinCEN stated:

As the preamble to the Reporting Rule states, “[s]mall businesses are a backbone of the U.S. economy, accounting for a large share of U.S. economic activity, and driving U.S. innovation and competition.” The vast majority of domestic small businesses are legitimate and owned by hard-working American taxpayers who are not engaged in illicit activity. The Secretary [of the Treasury] has assessed that exempting them would ensure that the Reporting Rule is appropriately tailored to advance the public interest, considering the burdens imposed by the regulations without sufficient benefits. The Attorney General and the Secretary of Homeland Security have concurred that collecting BOI [beneficial ownership information] from domestic reporting companies would not be “highly useful in national security, intelligence, and law enforcement agency efforts.

The text of the IFR provides for this change by redefining the term “reporting company” at 31 CFR 1010.380(c) to remove the previously defined term “domestic reporting company” at 31 CFR 1010.380(c)(1)(i). By taking this step, any entity that meets the definition of the previously defined term “domestic reporting company” is no longer within the scope of the reporting rule and therefore is no longer required to file BOI reports with FinCEN.

In addition, the IFR exempts foreign reporting companies, and their U.S. person beneficial owners, from the requirement to provide the BOI of any U.S. persons who are beneficial owners of the foreign reporting company. As such, foreign reporting companies that only have beneficial owners that are U.S. persons will be exempt from the requirement to report any beneficial owners.

So, what BOI reporting requirements remain after the IFR? The IFR retains the requirement for foreign reporting companies and their beneficial owners (excluding U.S. persons) to report their BOI to FinCEN. It has extended the deadline for those companies to file initial BOI reports, or update or correct previously filed BOI reports, to thirty days after the date of the publication of the IFR (i.e., March 26, 2025) or thirty days after their registration to do business in the U.S., whichever comes later.

In addition, the introductory portion of the IFR stated that FinCEN was accepting comments on the IFR and will assess the exemptions, as appropriate, considering those comments. FinCEN intends to issue a final rule this year. Comments on the IFR were due on May 27, 2025.

The future of the CTA

It is difficult to assess the future of the CTA at this point. FinCEN could reverse its position expressed in the IFR, although this is unlikely based upon the rationale described in the IFR. It is also possible that additional litigation could develop regarding whether FinCEN exceeded its statutory authority under the CTA when it issued the IFR. While Congress could act to repeal the CTA or attempt to override the IFR, at this time there does not appear to be significant momentum in Congress for either action. Hence, for the time being, attorneys advising foreign reporting companies will still need to watch the developments from FinCEN and the possible issues that could impact the substantive requirements and procedures for CTA reporting. For attorneys advising domestic reporting companies, the IFR gives sufficient authority to advise clients that CTA reporting is not currently required, at least until FinCEN issues a “final” rule that changes those requirements. ♦

Beginning at the End: Post-Transaction Integration Considerations

Justin Monahan, Otak

In the December 2024 edition of this newsletter, Erich Merrill and I cowrote an article discussing considerations of buying and selling a business from the perspectives of the buyer and the seller. As a follow-up, this article takes a closer look at integration activities that follow an acquisition and merger to outline practices that have proven effective and those that have not.

This article addresses integration considerations regarding strategic alignment, cultural integration, organizational structure, human resources, technology systems, operations, marketing and communication, legal and compliance matters, and financial integration. These considerations do not necessarily apply to the parties until the integration occurs, hence their being labeled as “post-transaction” activities. However, if parties only try to deliberately address these integration considerations after a deal is struck, then that is too late for any meaningful action to occur. To achieve successful integration, the parties must think about what the end state of integration will look like from the start of the transaction. This can be difficult to fully appreciate because often there are only key leaders from each of the companies involved in critical pieces of the initial negotiations or even deal-making. After a deal is struck and the parties get into the weeds of integration in earnest, there will be additional input from all different corners of each company that will need to be managed. But intentionally structuring the end state of integration into the fabric of the deal itself will help keep everyone focused on the shared vision that excited the companies’ leaders in the first place.

Strategic alignment

When negotiating a deal, through-thinking—conceiving of the deal all the way through to the resulting performing merged entity—prompts the establishment of a clear vision: Why are we joining forces? What is the strategy driving each company? Is the shared goal to achieve economies of scale, geographic expansion, vertical integration, or diversification, or is the goal to capture specific innovations or intellectual property? Further, moving beyond visionary statements to developing critical success factors and key performance indicators (KPIs) can not only help the parties quantify transactional considerations such as earnouts but also provide a bright line for the full team to clearly understand future success. Without strategic alignment to provide the bedrock for the parties to weather all the ups and downs of integration and business, the integration process risks becoming fragmented and ineffective.

Cultural integration

A challenging and often underestimated aspect of post-merger integration is cultural integration. Cultural misalignment can lead to disengagement, turnover, and reduced productivity at the employee level and failure to achieve business objectives at an organizational level. As mentioned above, one hindrance to cultural integration is that often only need-to-know key leaders are involved in deal discussions. In target entities—those being acquired—these need-to-know leaders are often founders or principals who have defined the culture for many years. These leaders have built a team around them that appreciates this culture. If the acquisition serves as a retirement path or other exit for these key founders and principals, the resulting entity and culture can quickly take on a character that differs drastically from what the team is used to.

While the confidentiality of sensitive deal discussions is often necessary, the parties need to plan for rapid and deep engagement with tier-two and tier-three leaders in the target firm. This engagement may include identifying cultural similarities and differences between the parties and defining a desired culture for the resulting entity. To support these goals, training and change-management programs should also be discussed in advance. Mergers between companies with vastly different working styles, communication norms, and management philosophies require careful cultural due diligence and proactive measures to bridge gaps.

Organizational structure

Each integration process must establish a new organizational structure that reflects the needs of the merged entity. This includes redefining leadership roles, reporting relationships, and determining who has decision-making authority. It may also mean streamlining layers of management to eliminate redundancy. Although there can be pain points in doing that, a clear organizational structure helps ensure that employees understand both their roles in the merged entity and how decisions will be made.

Human resources and talent management

Successful integrations need to resolve uncertainties about human resources and talent management. Employees are the core assets of any organization, and managing human resources during a merger is critical to maintaining morale and retention. The key founders and principals know the fate of their roles if exit schedules or retention provisions are directly negotiated into the deal, which may be critical if they are tied to earnouts structured over a certain number of years. But the tier-two and tier-three leaders discussed earlier are going to be the future of the company, and the parties should think early and often about making these leaders not just culturally comfortable but also financially comfortable. Integrating parties may consider promptly introducing a new class of bonus, buy-in, or other compensation structures to immediately capture the attention and loyalty of these emerging leaders.

Each party will need to understand the impact that the resulting benefits, performance management systems, and policy and procedure changes will have on the resulting entity’s employees. Prompt and transparent communication, coupled with a deep functional understanding of how these changes will impact staff, will help mitigate the risk of losing valuable employees during the integration.

Technology systems

Always an interesting challenge is combining two technology infrastructures. Two approaches are to leave the target firm alone or to transition them over to the acquiring firm’s systems over time. After all, the target firm built the business using their own familiar enterprise resource planning (ERP), customer relationship management (CRM), and other core platforms. It could be disruptive to the staff to change the way they do their jobs. I have seen this disruption when target firms take the immediate “phase in” approach; the process gets messy, territorial, confusing, and ultimately inefficient.

On the other hand, the parties will need to deliberately evaluate what works best given the scale of the transaction. While prompt and thorough technology transitions can be technically complex and costly, they may be ideal for ensuring business continuity and enabling long-term synergies. Another consideration is, of course, cybersecurity. A clear technology, data, and user onboarding process for the target entity could be the clearest path to ensuring there are no gaps in the resulting entity’s cybersecurity platform.

Operations

Operational integration focuses on combining the day-to-day functions of the two companies to improve efficiency and customer service. Depending on the nature of the businesses involved, this requires leaders in each firm to identify overlapping processes and design streamlined workflows; harmonize supply chains, logistics, and procurement functions; consolidate manufacturing or service delivery operations where feasible; align quality assurance and control standards; and implement joint customer service models. These analyses will be impacted by a number of external considerations as well, such as the terms of supplier contracts with ongoing engagements, the nature of their work with each firm, and the expectations of customers. This is often a longer-term project that fits in with ongoing efforts to consistently review policies, procedures, and workflows to provide the best experience for staff and clients or customers alike.

Marketing and communication

Depending on the nature of the transaction, tremendous effort may go into marketing and communication. How the merged entity presents itself to the market and communicates with stakeholders can significantly impact its reputation and market position. The market and stakeholders will wonder: Did the target entity just supply the acquiring entity with a significant new capability, services line, or market position? How are the target’s key founders or principals going to function as ambassadors of the resulting brand going forward, capitalizing on the personal brand they have built in the industry under the new flag? Similar to the IT and systems integration described above, we have seen both gradual and prompt integration strategies in this regard. Which option is best for a given transaction will depend on the depth and breadth of the target firm’s brand. It is crucial for the parties to align early and consistently on branding decisions to keep the flow of the branding tied to their strategic evolution. In addition, clear and consistent internal communication helps reduce uncertainty and foster employee engagement throughout the integration process.

Customers, suppliers, investors, and other stakeholders need assurance that the merger will bring added value rather than disruption. External branding, marketing, and communication in regard to market presence is important, but you cannot beat picking up the phone or making time to meet key clients, customers, and industry partners to describe the enhanced capabilities of the resulting firm. And every effort should be made to ensure continuity of service and fulfillment during the transition. If clients are already spooked just by the news of a transaction, the parties certainly do not want to validate their fears with a dropped delivery.

Legal and compliance matters

Legal and regulatory considerations must be carefully addressed during integration to avoid liability and ensure compliance with laws in all operating jurisdictions. A robust due diligence process can reduce the future burdens for the merged entity in administering contracts, liabilities, and obligations. If the transaction has strong intellectual property components, or is contingent on regulatory approvals, these threshold considerations must be tirelessly documented, confirmed, and indemnified in the deal process. There are always plenty of administrative details to attend to, such as updating legal entities, licenses, and registrations.

Financial integration

Combining financial operations is vital for reporting accurately, budgeting effectively, and realizing cost synergies. This may translate into integrating accounting systems and financial reporting frameworks and agreeing on the accounting treatment of each aspect of the resulting business. Financial integration becomes particularly important if key earnouts are staked to the KPIs established as part of the negotiations. It will not do the parties any service to haggle through detailed KPIs and a multi-part earnout strategy if they immediately walk into a stumbling block over a detail of revenue recognition or cost allocations among parts of the firm. Sound financial integration will provide the foundation for measuring merger success and ensuring clean deal administration.

Conclusion

Integrating two companies after a merger or acquisition is a delicate and intricate process that requires attention to strategic, operational, human, technological, legal, and financial dimensions. Each area discussed must be thoroughly addressed for the integration to succeed. Effective post-merger integration is not just about merging assets but about building a cohesive, unified organization that is greater than the sum of its parts. Companies that approach integration with a structured, strategic, and people-centric mindset are more likely to unlock the full value of the deal and position themselves for long-term success, and limit distractions, hiccups, and mishaps along the way. ♦

Barrister Banter: Catherine Meyer

The purpose of the series is to bridge the gap between junior and senior business lawyers in Oregon, fostering understanding and camaraderie. For this installment, we interviewed Catherine Meyer, General Counsel at Alliant Systems and Executive Committee member and Treasurer for the Corporate Counsel Section of the Oregon State Bar. Read on to learn more about her path to law, her current role, and what she’s learned about the field.

  1. Tell me about your path to being a lawyer. What inspired you to pursue this career? 

Late in my undergraduate studies, I figured out I was going the wrong direction. It was around then I discovered an interest in public policy, and it ultimately led me to start thinking about practicing law. And the more I thought about it, the more it made sense for me. I wanted a career that would challenge me for the long-term and provide opportunities for a stable future, and my friends and family all told me they thought I had the right personality for it.

  1. What is your practice area?

I am a corporate/commercial attorney working as the only in-house with a construction company—so, sort of a transactional commercial generalist with a strong construction component. In my role, I help guide one specific company through a variety of legal issues that arise for them, allowing me to customize my advice to their specific needs. This is a solid departure from law firm culture, where law firm attorneys keep their very detailed legal advice separate from advice related more to business goals or processes.

  1. How long have you been in your current role?

Just over a year.

  1. How have you seen the practice change since you started practicing?

AI definitely brings up a lot of changes, although it seems to affect some areas of practice more than others. It seems like a great tool for improving and economizing document discovery.

  1. What do you wish you had known before you started working as a new lawyer?

I wish I had known how long it can take for new lawyers to feel at all comfortable in the role and to find a position that is a good fit. For me, I didn’t really enjoy practicing law until I went in-house five years after passing the bar.

  1. What are your career highlights?

I ran my own very small firm before joining another firm. After practicing in Oregon for three years, I moved to British Columbia and became licensed there and in Washington. My first in-house position was with a multinational consulting company, and I gained more and more responsibility for the broad variety of topics that arise as part of a small legal team. I also learned to work with internal stakeholders with a business focus—a rather different dynamic from working in a private firm.

I am proud to highlight one particular achievement. When I was still in private practice, I had the unique opportunity to help hone the arguments that prevailed on an appeal to the Oregon Supreme Court. I worked on a small team to research extensive legislative history, and was part of final logistical discussions with appeals counsel as to how to build that research into the arguments that won the case.

  1. What is your favorite part of the job?

I love being a resource for my teammates, to help them succeed in their mission.

  1. What parts of the job do you wish you could outsource to AI?

This is a tough question because, right now, I don’t trust AI to give me the right information. I currently use it only to get me pointed in the right direction. As AI improves, I hope to see that it could help reduce the time needed to review contracts.

  1. What advice would you give a new business lawyer?

We are all always learning, so do not worry too much about what you don’t know. Find a mentor who will invest in your success, and focus on building skills.

  1. What advice would you give a senior lawyer who is charged with mentoring a new lawyer?

Ask a lot of questions of the new lawyer; don’t assume the new lawyer’s experience is what you think you remember of your early years. The most valuable advice will vary by person, and understanding the new lawyer’s experiences, goals, and concerns can help make a mentoring relationship much more meaningful. ♦

Balancing the Scales: How Lawyers Can Cultivate Health and Well-Being Today

Melissa Jaffe, Law Offices of Melissa B. Jaffe PC

Overall stress levels for men, women, and children in our culture have been steadily increasing for decades. We know that chronic stress results in measurable decreases in cognitive functioning and increases in long-term life-threatening illnesses, including cancer, heart disease, and diabetes. I know firsthand the importance of managing chronic stress. When I recently received a cancer diagnosis, my doctors agreed that it was imperative that I take steps to reduce my chronic stress in order to combat a recurrence of the diagnosis.

This article is a wake-up call for you, your colleagues, and your clients. For the legal industry, the call has been blaring for over a decade.

As business counselors, we are humans tasked with guiding other humans as well as corporations that have hundreds or thousands of humans working for them. How can we maintain our personal well-being while also handling the professional well-being of others?

The American Bar Association (ABA) and the state of Oregon have some thoughts on these matters. Let’s review quickly.

Where we started

In the mid-2010s, there wasn’t much data about substance abuse disorders and mental health concerns in the legal profession. To fill this gap and determine the scope of the problem, the ABA Commission on Lawyer Assistance Programs (CoLAP) partnered with the Hazelden Betty Ford Foundation to conduct the landmark survey of over 16,000 legal professionals (the Study). The Study examined alcohol use, substance abuse, mental health issues, and help-seeking behaviors. It revealed concerning insights, such as over one fourth of participants reporting mild to severe depression and nearly as many reporting using alcohol and drugs in a “problematic” manner.

The Study results were so alarming that in September 2017, then-President Hilarie Bass requested the ABA Board of Governors create an ABA Presidential Working Group to examine and make recommendations regarding the current state of attorney mental health and substance use issues with an emphasis on helping legal employers support healthy work environments.

“The number of lawyers struggling with these [mental health and substance abuse] issues is shocking. It is up to our profession to identify solutions to assist those already suffering, as well as to minimize those who will have to address these issues in the future. Instead of being disheartened, we should view this information as a clarion call. We need to change,” wrote President Bass.

The Working Group released their seminal report, “The Path To Lawyer Well-Being: Practical Recommendations for Positive Change,” including over forty-four specific recommendations for judges, lawyers, legal employers, insurance carriers, law schools, bar associations, and legal regulators. As of February 2025, nearly every state has created their own well-being taskforce. Summits, conferences, and third-party institutes have emerged over the past decade, and the legal industry appears to be truly committed to improving well-being.

Oregon’s role

Oregon has been doing its part to address the well-being of lawyers. Here is a brief timeline of key events:

  • 2018—The Oregon State Bar (OSB) and the Oregon Supreme Court adopted a continuing legal education requirement for mental health and substance use.
  • 2019—The OSB and the Oregon Attorney Assistance Program (OAAP) host a Wellness Summit.
  • 2021—OSB’s House of Delegates approved Delegate Resolution No. 5, which directed a Conference of Well-Being Stakeholders.
  • 2022—The Conference convened. During the conference, other Workgroups were formed to meet afterward and discuss topics such as structural impediments to well-being, reducing stigma, and lawyer education.
  • 2023—The Oregon State Bar Professional Liability Fund composed a Legal Industry Well-Being Workgroup Report. As stated in the report, and most notably for business lawyers, one of the 2022 Workgroups identified the following as immediately actionable steps: “training in, and support of, well-being in the workplace, and [addressing] the disconnect from purpose and meaning in the work for many in the profession.”

Next steps

Despite the strides being made in improving lawyer well-being, I learned during my time as a part of the Washington State Bar Association Wellness Taskforce that taskforces across the country are struggling with where to best find trainers and supportive confidential resources that are not immediately tied to a state’s bar. Not surprisingly, lawyers seem universally reluctant to use OAPP services due to a distrust of complete confidentiality and the risks posed to individual positions and status of firms due to the very real stigma against seeking help for substance abuse and mental health struggles. Similarly, law students fear they may not even be accepted into a state bar should they admit to needing support.

Luckily, there have emerged truly neutral, confidential, and independent options for firms and individuals that are seeking help and are unwilling to risk potential disclosures—third party coaches and wellness assessment providers, such as the Institute for Well-Being in Law, are becoming increasingly available.

Additionally, there are some initial steps that you can take as an individual or as part of a firm:

  • Check-ins—If you are in a firm, you can encourage quarterly check-ins with staff to see how they feel about their caseload, the ability to voice their opinions, and overall efficacy. These small check-ins can help staff feel important and heard within the firm culture. Solos have a slightly more challenging feat, as accountability and support are key to achieving wellness. Seek out the assistance of a coach or group of peers to meet regularly. The group might consider an event or meetup that does not include alcohol as the focus.
  • Take the pledge—The ABA Well-Being Taskforce released a pledge, which encourages firms and individuals to reflect upon their own well-being and the culture of their working environments. The pledge encourages attorneys and firms to review their values and work to bring their daily behavior in alignment with those values. Annually, the ABA requests a written submission of manifested action taken to achieve wellness goals, then publicizes pledge signatories. Most high-profile national firms have joined as signatories and re-commit annually. This simple act of self-reflection and accountability is the easiest way to commit to incorporating well-being into your practice. The pledge is designed to be more than “lip service;” rather, it’s an attempt to get billable-hour-hungry attorneys to slow down and prioritize their own well-being. Having a trained advisor assess attorneys and conduct firm-wide value statements (where the entire firm works together to synthesize its members values) is critical to improving corporate culture, including providing reflective and wellness-centered advice to clients.
  • Play—Taking time away from the intellectual challenges of career pressures is one of the most effective ways to regulate one’s nervous system. Anything that gets your mind and body out of a highly anxious and pressured space for at least thirty minutes a day counts as play, from baseball to improv comedy to board games. From a physical standpoint, walking for about 150 minutes a week can provide some stress relief. If you need to take a walking meeting, do it.
  • Mindfulness practices—Mindfulness includes allowing your mind to literally “let go” of thought and simply breathe. It’s harder than it sounds, and often beginners need some guidance. Luckily, you have an abundance of options—simply search for “mindfulness” in the app store on your handheld mobile device. Some of the most popular apps include JKZ Meditations, Headspace, Calm, and Insight Timer. One of my favorite practices to listen to the Sharon Salzberg’s Metta Hour Podcast while walking for thirty minutes daily. Just ten minutes of daily meditation is all it takes to change your brain. These easy-to-incorporate apps can change your life and help you achieve your goals of the ABA pledge.
  • Retreats—For those who feel they are ready for a big shift, mindfulness retreats for lawyers are some of the absolute best opportunities to reflect on one’s mental and behavioral patterns while receiving support in beautiful locations around the world. Mental health CLE credits, which are now required for Oregon lawyers, are becoming increasingly available for retreats. Multi-jurisdictional attorneys can often gain credit in multiple jurisdictions and gain an opportunity to see firsthand the difference mindfulness, self-reflective practices, and intentional journaling can have on your day-to-day life.

In my personal wellness journey after receiving my cancer diagnosis, I was absolutely blown away to read multiple studies and articles stating that making lifestyle changes is the best way to reduce risks for not only cancer but also other major ailments like cardiac disease and Alzheimer’s. After prioritizing meditation, daily walking, mindful listening, and other wisdom practices, I personally experienced greater concentration, better sleep, more enjoyment even in the most stressful situations, and an overall deeper connection to family, friends, colleagues, and acquaintances. Fundamentally, we owe our clients the best of ourselves. Personal wellness is critical to deliver that obligation. ♦

Generative AI in Practice: Copyright and Data Protection Considerations

Emily Maass and Leigh Gill, Immix Law

In December 2024, Apple released a new version of its mobile operating system—iOS 18.2, which includes Apple Intelligence and offers a ChatGPT extension. While this may sound like a tech story rather than a legal one, just below the humdrum march of technology are important legal considerations. Though artificial intelligence (AI) has been around for generations in an academic context, it has only recently become mainstream with important considerations for business attorneys. Before you click “update,” it is important to consider both the copyright and data protection implications of incorporating this technology into your practice.

Copyright and AI

In the two years since the release of ChatGPT, technology lawyers have seen the ubiquity of AI tools (and the adoption of those tools) outpace the developing law in the field of copyright. There are two key issues:

  • What is the propriety of using someone’s copyrighted work to train an AI?
  • Who owns the output of the AI tool?

These issues are intertwined, and there are currently more questions than answers. Ongoing litigation is extensive on the first issue, and in most cases the defendants (developers of AI tools) are asserting a fair use defense. Mark Lemley, a tech law luminary, has opined that permitting copying of works for a non-expressive purpose such as training an AI is consistent with copyright law’s objectives. If successful, a fair use defense would help reduce the universe of possible answers to the second question, but it wouldn’t answer the question.

The generative AI on the market is powered by machine learning algorithms, which means that the output is dependent on patterns found within large databases of information. For example, chatbots and spelling suggestions on your phone produce each word in a sentence as predicted by the sequence of words preceding and matched against a database of similar content. AI databases are typically black boxes, and there’s no clarity as to which copyrighted works may be in the database. Extensive litigation is ongoing—authors and publishers assert their copyrighted works are infringed by inclusion in the database. Tech companies respond that databases are transformative, the output doesn’t match the input, and any use of copyrighted works is fair use and non-infringing.

For consumers (including lawyers) who choose to use AI tools to generate new content, there is a somewhat separate question of ownership in the resulting work. If the content owners are successful in proving infringement, they could also assert that output of the tools is a derivative work in which they have rights. If the fair use defense is successful, the technology companies may claim ownership in the output. (Read your terms of use—commonly used AI tools typically do not claim ownership from users. Microsoft’s tools claim only limited use of customer data and allow users to own the output of its Copilot product, even going so far as offering to defend copyright claims arising from use of Copilot.) Only time and extensive litigation will determine whether fair use applies.

Agencies responsible for the administration of intellectual property laws have been quicker than courts to provide guidance, but there remains significant uncertainty. The U.S. Copyright Office has stated that it will issue a copyright registration to a human author who provides a work that was generated with AI tools only if the human (and not the AI) selected, arranged, and otherwise created the expression. The Copyright Office has refused registration for works that were machine created, regardless of how many programming decisions were involved in directing that machine to produce the output.

Guidance from the Copyright Office distinguishes between “assistive uses” of AI systems and “prompt engineering” on page eighteen of their copyrightability report: “The Office concludes that…prompts alone do not provide sufficient human control to make users of an AI system the authors of the output….While highly detailed prompts could contain the user’s desired expressive elements, at present they do not control how the AI system processes them in generating the output.” Quite apart from the ethical issues of using this developing technology in practice, if a lawyer uses a machine to produce a work product, there are no rights of authorship in that work product.

Legal AI and data protection

Attorneys are not immune from the pressure to incorporate AI into the tools of our trade. A quick online search lists dozens of tools claiming to leverage AI to make your practice faster, better, smarter, and more profitable than opposing counsel. Attorneys are expected to maintain competence with technology in their legal practice, and a firm’s comfort with adopting new technology can be determinative of its capacity for growth and longevity in an increasingly challenging legal market.

While this drive to innovate is nothing new for the legal profession, neither is the persistent nagging concern of how innovation may clash with our age-old promise to preserve client confidential information. Not all AI is created equal, and advertising a technology tool as “AI for lawyers” does not guarantee that the developers offer a product that can stand up to an attorney’s obligations to their clients. When considering adoption of a given AI tool, the question of whether it is designed to support a lawyer’s confidentiality obligations should be top of mind.

AI tools are frequently black boxes with respect to data provenance and disposition. This places a heavy due diligence burden on the law practice to thoroughly understand how the AI tool was trained and how the AI tool will use and protect the practice’s data once it is entrusted to the AI tool. As a starting point, consider these questions when performing due diligence on a potential new AI tool for your practice:

  • What data is used as training data for the AI tool? Can the vendor confirm that it was lawfully obtained and can be used by you for any purpose without infringing on the rights of third parties?
  • Does the vendor grant itself a broad license to use your data or disclose it to third parties? Check the terms and conditions, which are typically not up for negotiation.
  • Will your data be segregated on the AI tool’s systems, or combined with other users’ data?
  • Will the data you put into the AI tool (e.g., details about your practice, cases, work product) be used as training data?
  • Is it possible that your data (or your client’s data) could appear in another user’s output?

Frustratingly, it’s not uncommon for these questions to be met with somewhat vague responses that beg even more questions. If you choose to incorporate AI into your practice, there are some steps you can take to help safeguard your data and your clients’ confidentiality:

  • Adjust your software settings to prevent the AI tool from running constantly in the background or otherwise automatically collecting data from your email, phone calls, or other device applications where you input, process, or store sensitive or confidential information.
  • Turn off the AI tool’s “wake word” or any other setting where the AI tool tries to guess that it should start recording, to prevent any unintended collection of data. Configure your privacy settings so that you are required to turn on the AI tool directly. (See Lopez et al v. Apple Inc., Case No. 5:19-cv-04577.)
  • Avoid inputting confidential information into an AI tool unless the vendor can provide you with legally binding assurance that the AI tool is expressly designed for the practice of law and safeguarding sensitive data.
  • Always notify your clients and obtain their consent before using an AI assistant in meetings or conversations, recording a phone call, or using other AI tools when working with their confidential information.
  • Regularly check your software and devices for recordings or other data storage from AI tools to confirm that the AI tool is only collecting data when directly prompted by you.
  • Configure your settings to automatically delete your data at regular intervals (e.g., every thirty days). Confirm that the deletion is permanent and that your data is not being stored elsewhere on the vendor’s systems.
  • Beware of relying too heavily on AI-generated outputs. Outputs containing factual statements, quotations, or citation might be the result of an AI hallucination. Also, remember that AI outputs are only as good as the training data used to develop the tool and the clarity of your prompt.

Lawyers must be aware of newly developing technology, and they have a duty of competence in the tools they use. AI is everywhere, and it is bound to become a key underlying technology in the practice of law. In these days of early adoption, attorneys must take care when selecting AI-driven technology solutions, with a focus on client confidentiality and quality work product. AI tools can be a valuable resource, but they are not a substitute for good, careful lawyering. ♦

Barrister Banter: Melissa Jaffe

The purpose of the series is to bridge the gap between junior and senior business lawyers in Oregon, fostering understanding and camaraderie. For this article, we interviewed Melissa Jaffe, the owner and principal attorney of the Law Offices of Melissa B. Jaffe, PC and a member of the Business Law Section Executive Committee. Read on to learn more about her path to law, her practice, and her advice for junior and senior lawyers.

  1. Tell me about your path to being a lawyer. What inspired you to pursue this career? 

I worked at a club in college called the 9:30 Club in Washington, DC. At the time, I mostly did it for the free concerts, but witnessing the amount of behind-the-scenes work that went into each production was inspiring. Eventually I was tasked with reading and even redlining contracts, and I was hooked—I knew I wanted to be a transactional lawyer. I was able to problem-solve, be creative, and interpret different perspectives from different stakeholders, and I was responsible for making sure all the details were tracked and executed. If there was a disagreement, I was routinely called upon to mediate. It was fast-paced, detailed, and incredibly satisfying to witness how many lives were impacted with each event.

  1. What is your practice area?

I am a transactional business lawyer with a focus on intellectual property and privacy law. My skill set is called upon regarding artists, producers, entrepreneurs, new business technology (such as cryptocurrency), and new endeavors of all kinds.

  1. How long have you been in your current role?

I became a lawyer nearly twenty years ago. I have owned my own practice for the last seventeen years.

  1. How have you seen the practice change since you started practicing?

Technology has changed everything in my practice. I literally think everything has been updated—my staff is all remote, I use AI to assist with scheduling and managing calendars across different time zones, and all my clients have some internet component, which has caused privacy issues to increase exponentially. From a business ownership perspective, when I started my practice, I would use Yellow Pages ads. Now I have marketing strategy sessions that include social media, apps, and video presentations. I own a multi-jurisdictional practice; I’m licensed in CA, OR, and WA and will sit for the HI bar shortly. Almost all my meetings are remote through Teams or Zoom.

  1. What do you wish you had known before you started working as a new lawyer?

I really wish I would have invested in a joint MBA/JD. Running your own firm is so much more than just billing and emails. There are aspects of accounting, management, marketing and PR, and feeling responsible for staff that add additional layers of stress I wasn’t necessarily prepared to encounter. Luckily, I enjoy learning and was able to grow along with my practice. Honestly, I remember thinking I was finished with classwork once I graduated from law school, but it turned out I wasn’t, not by a long shot!

  1. What are your career highlights?

There have been so many. When I started my career in Portland, I would give free talks to artists on the basics of intellectual property. About ten years later, I was called on to write a brief on copyright law in a very high-stakes litigation. Based on my talk, the artist was able to deftly negotiate a derivative rights clause to his contract that ultimately won him a lot of money. I think the particular nuance escaped many of the corporate lawyers when drafting the agreement. He contacted me after the judgment was rendered to thank me. I truly changed his life for the better. That was very gratifying.

Another person who joined my office as an assistant went on to run her own incredibly successful creative business. We are still in touch, and I know many of her business decisions were based on the talks we had had years prior.

When I am able to get my clients, staff, or audience members to understand the importance of legal theories or intellectual property issues—when I see the light bulb turn on—that is intensely gratifying for me.

  1. What is your favorite part of the job?

My favorite part of my job is making the world a better place for my colleagues, clients, and their clients. There is such an impact we get to make, and I believe it’s an impact that deeply enriches others in the long term. Watching business grow, multiply, and even sell has a certain magic to it. It is an honor to assist clients turn an idea or a small venture into something that can support their families and even generations into the future.

  1. What parts of the job do you wish you could outsource to AI?

I am learning to love marketing. Promoting myself and my business is a tough thing for me because my name is also my law firm name. As a solo practitioner it can feel uncomfortable to talk about myself. At times, I wish I could avoid it entirely and hand it off to AI.

  1. What advice would you give a new business lawyer?

My biggest advice to new business lawyers is to turn your devices off while with family, especially if you have children. I understand we are a competitive group, but it makes a big difference for mental and ultimately physical wellness to just be present with loved ones.

My second piece of advice is to engage in service. My community service through the Business Law Section, Intellectual Property Law Section, Oregon Women Lawyers, House of Delegates of the Oregon State Bar, and state bar taskforces has allowed me to meet others who are passionate about the practice of law. The pro bono work I’m engaged in is some of the most impactful.

  1. What advice would you give a senior lawyer who is charged with mentoring a new lawyer?

I recommend senior lawyers remain vulnerable and open with their mentees. I have made great friendships with my mentees and discovered some pretty serious circumstances that truly needed attention. I’m grateful I was able to help in sometimes profound ways. Other times, just remaining available means a lot to a brand-new lawyer.

The Lawyer’s Role in the Pac-12 Rebuild

Tim Crippen, Black Helterline LLP

Disputes in 2023 arising out of ten members’ departure from the Pac-12 illustrated the ways a business attorney can augment a litigation team in complex disputes. In 2023, Oregon State University (OSU) retained my firm, Black Helterline LLP, and me to serve as business counsel, augmenting the team at the OSU Office of General Counsel. OSU also retained special litigation counsel Keker, Van Nest & Peters LLP of San Francisco. I was effectively embedded with OSU’s Office of General Counsel for a number of months, providing a variety of business legal services as these disputes played out.

The background of the case is well-known to college sports fans but may be unfamiliar to others. The Pac-12 is an NCAA Division 1 college athletics conference founded over a hundred years ago. Until August 1, 2024, members had for decades included OSU, Washington State University (WSU), University of Oregon (UO), and University of Washington (UW) among other premier western U.S. athletics programs.

College athletics conferences provide competitive opportunities for college student-athletes in numerous sports by coordinating competition among their members. As businesses, the conferences typically acquire member universities’ media rights and license them to media partners such as Fox, ESPN, CBS, or the CW Network. The premier conferences’ media rights will sell for hundreds of millions of dollars, or more, per year and are usually licensed under multi-year contracts. The conferences also make money from the NCAA based on their members’ performance in men’s and women’s college basketball tournaments in March and from the College Football Playoff (CFP). For the Pac-12, its longstanding relationship with the Rose Bowl is another source of revenue. The conferences’ net revenues are distributed to the member schools, and the schools use those distributions as major sources of funding for their athletic departments.

In exchange for the schools’ grant of media rights, the conferences provide numerous services to member schools, including coordination of competitions and championships for multiple sports as well as support for student-athlete mental and physical health and growth. In the Pac-12’s case, the conference also operated the Pac-12 Networks and produced media content from all of the member schools. (Until 2024, the Pac-12 employed nearly two hundred people.)

The Pac-12 is an unincorporated nonprofit association under California law. The Pac-12 is governed by the terms of the Pac-12 Handbook, which includes its Constitution and Bylaws. The business of the Pac-12 is governed by the Pac-12 Board of Directors, which, prior to the departure announcements, consisted of the president or chancellor of every member institution.

In 2022, UCLA and USC announced they would leave the Pac-12 and join the Big Ten conference in the summer of 2024. After they announced their departure, they were excluded from Pac-12 board meetings and votes. None of the parties exactly went to the mat on figuring out their precise status as members who had announced departure, but they were generally excluded, including from numerous discussions in 2023 concerning the Pac-12’s next media rights deal.

Numerous factors could have driven UCLA and USC to leave the Pac-12 but ultimately, one can infer that they made the decision to leave because they expected to make more money in another conference. And presumably they believed more money would help them stay competitive or improve the strength of their athletic programs, which ultimately should inure to the benefit of their student-athletes and the universities at large.

On July 27, 2023, the University of Colorado announced its intention to depart the Pac-12 for the Big 12. Then, on August 4, 2023, in a bombshell, just as Pac-12 members believed they were about to sign a new multi-year media deal, UO, UW, and three other universities announced they would leave for the Big Ten and Big 12 conferences.

That left the Pac-12 with OSU, WSU, UC Berkeley (Cal), and Stanford University (Stanford). Cal and Stanford elected to join the Atlantic Coast Conference and announced as much on September 1, 2023.

On August 29, 2023, two days before Cal and Stanford announced their departure, the Pac-12 commissioner called a board meeting for September 13, 2023, and intended to include all twelve members—including those who had announced plans to withdraw—to discuss an employee retention plan and go-forward governance approach.

As with many types of business organizations, board control is a major fulcrum on which power is balanced. In the Pac-12’s case, allocation of the hundreds of millions of dollars of revenue the conference would receive, and even the continuation or dissolution of the conference, could have been on the table. Had the conference member institutions voted to dissolve effective August 1, 2024, when the ten members departed, OSU and WSU would have found themselves scrambling to find a conference to join—or would be independently scheduling hundreds of sporting events—for the 2024–2025 academic year, with perhaps none of the revenue usually derived from the Pac-12 to support their athletic programs.

On September 8, 2023, OSU and WSU filed a Complaint and Motion for Temporary Restraining Order (TRO) in Whitman County Superior Court in Washington, the home of WSU. The TRO requested, in effect, that the Court prohibit the Pac-12 from holding a board meeting that included, or permitted the votes of, the departing ten member schools’ presidents and chancellors. The Bylaws provided that if a member delivers a notice of withdrawal prior to August 1, 2024, “the member’s representative to the Pac-12 Board of Directors automatically shall cease to be a member of the Pac-12 Board of Directors and shall cease to have the right to vote on any matter.” (Complaint for Breach of Bylaws, Declaratory Judgment, and Injunctive Relief.)

The departing ten members had arguments against the plain interpretation of this language espoused by OSU and WSU, but the Bylaws plus the precedent that UCLA and USC had been excluded since their announcement, allowed OSU and WSU to prevail. The matter was appealed to the Washington Supreme Court, which denied review, letting the trial court’s grant of a preliminary injunction stand. The matter was settled in principle in December 2023 and a final settlement agreement was inked in March 2024. Among other things, the departing members left the conference intact with OSU and WSU as its sole members and left funds in the conference (including future expected revenues) for OSU and WSU to use to rebuild and support their athletics programs as they set the course for their futures.

As a business lawyer embedded in a project like this, skills from other types of business work become useful. This was a membership dispute over control of a business; it resolved, as they often do, in a deal that resembled a buyout. In any buyout transaction, the value of the target needs to be ascertained, which involves legal due diligence.

In the case of the Pac-12, many key contracts are significant sources of value for the conference and its members. For example, the Pac-12’s relationships with the Rose Bowl and the CFP provide significant revenue. Because the member universities were mostly public bodies, however, and therefore subject to public records laws, many of these highly sensitive and confidential contracts were never previously put into the possession of the member universities out of reasonable concern that providing them to the universities would make them subject to public disclosure, which could undermine the conference’s negotiation positioning in the future and potentially violate confidentiality provisions in these agreements. Said another way, the members had never seen the Rose Bowl or CFP contracts, which is a customary practice amongst conferences in college sports. As part of informal discovery in the dispute, we reviewed a number of these contracts to verify our understanding of the obligations of the parties and the benefits that the conference could expect from them.

The control dispute related to a unique business type: the California unincorporated association. Case law on fiduciary duties for these types of organizations is limited. Whether members owe each other fiduciary duties and the extent of any such duties, of course, were on the parties’ minds. Being able to draw analogies from and research other fiduciary duties in closely held business entities helped analyze these issues.

Likewise, the economics of the conference are somewhat like a cooperative or even more so like a law firm or other professional services firm. Familiarity with these types of business helped client and counsel understand the business model quickly, which helped with valuation, among other issues.

Broad dealmaking experience also came into play in numerous ways. The Settlement Agreement among the Pac-12, the ten departing members, OSU, and WSU involved control of the organization but also a compromise where OSU and WSU would allow the departing members to have a vote on certain matters. Additionally, allocation of future revenue, responsibility for conference liabilities, and responsibility for allocation of intellectual property assets were decided. These types of issues are constantly at play in business break-up, buyout, and merger and acquisition deals, and the experience of a business lawyer can help expedite negotiations.

Likewise, there were ancillary deals to be made while OSU and WSU were in control of the Pac-12, including scheduling competitions for the two conference members for the 2024–2025 and 2025–2026 seasons. Because these needed to be negotiated while in active litigation against the Pac-12 and departing schools, OSU and WSU counsel took the lead in negotiating these deals with third parties but obtained conference support and buy-in when needed.

Not every case will call for a multi-attorney team and other experts, but even a smaller case involving business interests could benefit from the experiences of a business transactions lawyer familiar with legal due diligence, business entities and fiduciary duties, and contract drafting and negotiation.

The Pac-12 has recently announced that, effective July 1, 2026—at the expiration of a two-year NCAA grace period allowing OSU and WSU to operate a conference with only two members—San Diego State University, Colorado State University, Boise State University, Fresno State University, Utah State University, and Gonzaga University have agreed to join the conference. A new era for OSU, WSU, and the Pac-12 begins. ♦

Buying and Selling a Business: What to Prepare For

Erich Merrill, Miller Nash LLP and Justin Monahan, Otak

The overall volume and valuations in merger and acquisition activity in the U.S. have increased in 2024 from some lower activity in 2022 and 2023. We have seen industry publications reporting that in the architecture and engineering industry, for example, target firms are achieving valuations at EBITDA multiples of 11.4x, 13.8x, and higher—well above historical medians in the 6x–7x range. Mergers and acquisitions that generate inorganic growth remain a key maneuver for firms looking to incorporate specific resources from smaller firms, augment specific capabilities, scale new growth platforms through geographic and capability expansion, and in some cases transform both firms by reshaping service offerings with transactions of scale. In this article, we are going to review several issues that have been significant deal and drafting points in recent transactions to flag approaches for buyers and sellers alike.

Considerations for potential buyers

We will begin by looking at preparations for a potential acquisition from the perspective of potential buyers.

  1. Intellectual property

Based on transactions with which the authors have recently been involved, intellectual property of the target business continues to be of major interest to buyers. Buyers typically are looking for one of two opportunities in an acquisition: the ability to extend an already successful or potentially successful business platform into a new area or onto a larger scale, or the addition of operations that expand the sectors in which the buyer’s business operates. In each case, obtaining the ability to offer a product or service that others cannot is a key factor to a successful acquisition.

Intellectual property can provide this exclusivity. Buyers should spend significant time reviewing intellectual property assets of the seller’s operations in the due diligence phase of acquisitions. Diligence should go well beyond confirming that the seller holds patents, registered trademarks, or trade secrets that appear to offer value to the buyer. Buyers need to verify that key employees have assigned rights to the seller, that trade secrets have been protected in practice, and that third parties do not hold patents or other intellectual property rights that pose a risk of infringement claims against the seller (and, after the transaction, against the buyer). In addition, buyers need to assess the degree of competitive protection actually provided by the intellectual property held by the seller. Analysis of patent scope and possible invalidity are critical as part of the diligence process.

  1. Non-competition agreements between parties and with employees

Much has been written about the FTC’s April 23, 2024, rule potentially affecting non-compete agreements. (See the most recent coverage from the Oregon Business Lawyer in this issue’s article, “Federal Trade Commission Non-Compete Ban: December 2024 Update.”) However, that rule is in limbo following the August 20, 2024, ruling by Judge Ada Brown of the Northern District of Texas that blocked it, pending potential appeal. At the state level, ORS 653.295 and applicable case law have set criteria for the enforceability of non-compete agreements between employers and employees. It is generally clear that non-competes are permissible in the bona fide sale of a business. These are important tools for acquiring firms: target firms may have valuable relationships with clients, customers, suppliers, and subconsultants. The economic benefit of a successful transaction generally provides reasonable consideration to make an owner’s non-competes enforceable. There are additional requirements on non-competes under state law which are worthy of addressing in a future article; anyone needing guidance on this should seek experienced transaction counsel.

In the context of professional services, protection against seller competition may also take the form of non-solicitation provisions for clients and staff. When considering mid-level management, federal and state rules are trending toward invalidating and limiting non-competes. Non-solicitation agreements may continue to be enforceable, although there are circumstances where certain clients may effectively hold a “monopoly” over a business sector, and affected employees may argue that a non-solicitation agreement is effectively a non-compete that frustrates their ability to earn a living. This may be true of, for example, certain government clients such as Departments of Transportation that simply govern an entire field of work. In these cases, counsel should pay careful attention to other restrictive details, such as the duration of the non-solicitation following an employee’s exit, to improve the likelihood that a court might enforce the agreement.

  1. Larger deals: HSR reporting and clearance—new FTC rules

Buyers in larger transactions need to consider whether a filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 will be required. When such a filing is required, both parties must spend significant time and money gathering and submitting detailed information about their operations, the proposed transaction, competitive overlap, the market in which the companies compete, and other required information. The parties submit the required information and must then wait for agency review and clearance to proceed. Not only can the process significantly delay the transaction, but the filing fees alone constitute a major expense.

The Federal Trade Commission recently adopted a final rule, which is estimated to triple the time and effort needed to complete the required filings. The good news is that filings are generally not required for transactions having a value of less than $119.5 million. If you are involved with a transaction above that amount, it is always wise to consult with experienced counsel who can help guide you through the HSR process.

  1. Diligence process

Once some basic concepts and intents begin to be shared and agreed between the parties, due diligence can begin in earnest. The overall assessment of strengths and weaknesses of a business or business line will take many forms: financial condition, succession planning, contract rights and restrictions, and intellectual property that will be part of the deal all need to be evaluated.

A critical piece of due diligence will be the risk assessment associated with potential claims against the target that the buyer will need to evaluate. These include employment-related claims, tax underpayment/reporting, participation in multi-employer pension/welfare plans, and claims related to privacy and data security. The risk profile of each business will be different, and subject matter experts should be used within given market sectors to inform the decision making of the buyer. Although parties this far along in the process may be less and less likely to find true “no-go” risks, the sum of risks and items requiring workouts and attention may start to affect the deal valuation. If the buyer is interested in the transaction because they are picking up a piece of intellectual property or a specific customer base, the due diligence process may become particularly focused. A broad acquisition of a large performing firm, on the other hand, may span out across a broad range of potential topics and risks.

For any transaction to be successful—something the parties look back on after the dust settles to see the acquired assets performing well in the context of the buyer’s business—it is critical that risks are assessed and valued appropriately at this stage of the process. Most practitioners will maintain a detailed log and checklist of items that will be evaluated as part of their process.

Considerations for potential sellers

The process of selling a business is frequently completely new to sellers. We list below several key considerations that sellers should be aware of when preparing to sell a business.

  1. Orderly records; due diligence production

Although orderly records by themselves may not define the success or failure of a transaction, it is wise for sellers to insulate themselves from claims by having orderly records that support the buyer’s due diligence. If there are unwelcome surprises for the buyer after due diligence, a buyer may insist that the very format of the due diligence production from the target thwarted proper due diligence and that the buyer is entitled to (a) a reduction of the purchase price prior to closing or (b) a remedy or indemnification after closing. Attractive acquisition targets can also demonstrate orderly record-keeping and the consistent use of best practices throughout their business.

  1. Protection of intellectual property

As noted above, patents, strong trademarks, and trade secrets are usually ascribed significant value by buyers. Sellers considering a business sale should therefore spend the time and resources to ensure that any intellectual property they may have is appropriately protected and documented.

Potential sellers should expect that buyers will require extensive warranties regarding intellectual property in the acquisition agreement. These warranties virtually always place the risk of infringement claims on the seller. Potential sellers should therefore obtain freedom-to-operate opinions or other advice from intellectual property counsel to assure themselves that infringement risk is minimized or can be accurately disclosed to the extent it exists.

Sellers sometimes believe that it is helpful to obtain a valuation of their intellectual property assets. Our experience is that such valuations do not facilitate the sale of the business and are not worth obtaining. Most buyers put little stock in valuations of intellectual property. Their lack of faith in valuations appears to be well placed. With the exception of valuations of patents or other intellectual property that has a history of earning royalties, valuations of intellectual property vary widely, appear to have little correlation to business advantage, and are often highly speculative.

  1. Transition process during and after sale

Attractive acquisition targets can demonstrate a focus on succession and transition planning within their organizations. Too often, acquiring firms find themselves disappointed when they pay significant amounts to current company leaders, only to find those leaders promptly transitioning out of the company business and handing the reins, along with all the accompanying learning curves, to emerging leaders.

Another thing an acquiring firm does not want is to be the savior to a company whose leadership is looking to exit amid a floundering, late-stage effort. Rather, attractive acquisition targets can demonstrate both immediate and durable value-add propositions for acquiring firms that mirror the motivations of the acquiring firms in the first place: adding specific capabilities while giving the target firm access to broader platforms and resources. There are many transition-planning strategies available to companies wishing to make themselves attractive targets, which we may explore further in a subsequent article.

  1. Earnout terms

Frequently, sellers and buyers resolve disagreement over acquisition price by agreeing that part of the price will be paid after closing based on how the business performs—commonly called an “earn-out.” Sellers can find earn-outs attractive because they potentially increase the purchase price.

Sellers should know several things about earn-outs. First, the buyer, not the seller, will be in control of the business after closing, which is the period during which performance of the business will be measured for the earn-out. Second, it is critical that the earn-out criteria be carefully and completely defined in the purchase agreement. Close coordination between the seller’s financial teams and legal teams is critical in this regard to avoid disagreements over whether an earn-out has been earned and how much the seller is entitled to receive. Third, sellers need to assess whether they will continue to work for the buyer for the time that is often required in order to earn the earn-out. We often see sellers decide that they are ready to move on, leave the business before the end of the earn-out period, and negotiate a compromise amount to be paid rather than the full potential earn-out.

  1. Rollover equity—liquidity; control over the process

Buyers will often insist that sellers take part of the purchase price in the form of stock issued by the buyer, rather than being paid the entire purchase price in cash. Sellers need to consider these facts when faced with such an offer:

  • Unless publicly traded, stock in the buyer is not liquid. Sellers must consider whether they are willing to hold the buyer’s stock indefinitely, without the ability to convert it to cash, or what alternative exit mechanisms may be available under the relevant stock plan.
  • A seller willing to take buyer’s stock as part payment of the purchase price should usually negotiate a right to require the buyer to purchase the stock from the seller on a future date. Such a right will often involve a formula price since there is no market price for the buyer’s stock. Sellers should make sure that the formula is reasonably predictable and verifiable, and that the seller retains a reasonable right to challenge a calculated price that the seller believes to be incorrect.
  • As with an earn-out, sellers who agree to take buyer stock as part of the purchase price should attempt to negotiate some degree of control over the buyer’s operations post-closing. For example, the buyer should not be able to sell key components of its business or incur unreasonable levels of debt without the seller’s consent.
  • A seller willing to take buyer’s stock as partial consideration should also insist that a tag-along clause be included in the acquisition documents. This clause gives the seller a right to sell a proportional amount of stock, if the buyer’s major shareholders in the future sell a significant portion of their stock to a third party. A buyer will likely impose a companion clause—the drag-along clause—on the seller, so that the buyer is able to require that the seller sell stock if the buyer or its major shareholders want to sell the whole company.
  1. Areas of focus for buyers

As mentioned above in the discussion of the due diligence process, buyers are likely to spend significant time on evaluating possible employment-related claims, tax underpayment/reporting, participation in multi-employer pension/welfare plans, and claims related to privacy and data security. Sellers should keep these areas in mind well prior to a proposed sale of the business and adopt business practices meant to minimize the potential for claims or liability in these areas. In recent transactions the authors have handled, some of the most contentious negotiations of transaction terms have focused on these areas.

  1. Involving an investment banker/broker

Sellers should give serious consideration to retaining an investment banker or business broker to assist with the sale of their business. Potential sellers are sometimes tempted to sell their businesses on their own, wanting to avoid the expense of a banker’s or broker’s commission.

Our experience is that retaining a skilled business broker or banker is worth the expense. These professionals typically bring a larger number of potential buyers to the table, resulting in a higher price for the business. In addition, we have been involved in numerous acquisitions where a skilled banker or broker is able to effectively act as a mediator when the parties seem unable to agree on a crucial transaction term. In these situations, the deal often proceeds toward closing with the help of the broker or banker’s shuttle diplomacy to keep the parties at the bargaining table and resolve the key issue.

  1. Involving M&A counsel

As with retaining a business broker or investment banker, potential sellers sometimes question the benefit of hiring counsel experienced in merger and acquisition transactions. Just as physicians have different specialties, attorneys have varying levels of expertise in different areas of law and business. Counsel that has served well for routine contract, corporate, and litigation matters may or may not also have the experience to provide efficient representation for a sale of the client’s business. Potential sellers should consider contacting and interviewing counsel with significant merger and acquisition experience. Such counsel can work in full cooperation with existing company general counsel, if requested to do so, so that the background knowledge and experience of the company’s general counsel is available for the seller’s benefit in the sale transaction.

Conclusion

Signs suggest that mergers and acquisitions will continue at a significant pace in 2025 and beyond. As is clear from the issues raised in this article, the topic touches many different areas of the law, implicating intellectual property, employment law, corporate law, and regulatory schemes. Careful preparation before an acquisition occurs will be beneficial to both buyers and sellers in the transaction and the operation of the ongoing business. ♦