By Hannah Stitt
California’s cannabis industry leapt further into the realm of legitimacy via the recent enactment of Section 1550.5(b) of the Civil Code and Section 956(b) of the Evidence Code: “commercial activity relating to medicinal . . . or adult-use cannabis conducted in compliance with California law . . . shall be deemed . . . [the] lawful object of a contract” (Cal. Civ. Code § 1550.5(b)), and the “exception to [attorney-client privilege] . . . shall not apply to legal services rendered in compliance with state and local laws on medicinal cannabis or adult-use cannabis . . . provided the lawyer also advises the client on conflicts with respect to federal law” (Cal. Evid. Code § 956(b)).
Received quietly by both the industry and the media, the passage of these laws means big changes for California’s cannabis industry: suddenly all contracts, including those for insurance policies, money lending, commercial leases and attorney services, are enforceable in California state courts! While leaders must continue to push the envelope for greater legal protections for the burgeoning cannabis industry in other states, California’s industries may now utilize legal services in the same manner as has traditionally benefited business people in other American industries.
“But, how does an entrepreneur with new access to the legal services industry know who to rely on?”
It can be very difficult to find high quality and cost-effective legal services — and people rarely have heaps of time to spend calling all their loose connections for a stellar legal referral, or assessing the validity of each and every review posted by a stranger with an internet connection. No matter whether your legal predicament demands immediate attention and you need to select a lawyer quickly, or if you have the luxury of thoroughly searching for the perfect representative, follow these practical steps to find a capable attorney to work for you.
DESCRIBE YOUR LEGAL ISSUE
Legal services fall into three broad categories: criminal defense, civil litigation, and transactions. Attorneys practicing criminal defense will be able to help you fight charges or cleanup a criminal record. Civil litigators assist individuals and businesses in dispute resolution, and may represent either the plaintiff or defendant in court. Unlike criminal defense attorneys and civil litigators, transactional attorneys do not spend much, if any, time in the courtroom. Transactional attorneys, sometimes called corporate attorneys, are often called upon to incorporate entities, facilitate investment or mergers & acquisitions, and create corporate governance documents such as bylaws, operating agreements, intellectual property licensing agreements and data privacy policies. Many attorneys have experience or expertise in multiple categories, but generally, will only offer services in one.
CONSULT YOUR NETWORK OR CONDUCT ONLINE RESEARCH
Contacting an attorney referred through your personal or professional network is the best way to ensure that you select a trustworthy, knowledgeable and zealous legal advocate. This is because someone that you already know (and hopefully trust and respect) has already done the leg-work of vetting the legal advocate for their skill, customer service, and overall value. However, our networks may be limited to certain industry spheres or experiences making reliance on our existing contacts a fruitless endeavor. When that is the case, online research frequently generates good candidates.
SELECT AN ATTORNEY WITH THE APPROPRIATE EXPERTISE
Many firms have websites showcasing accomplishments and describing their services. Some even publish blogs regarding important news about the industries they serve, and describing how to troubleshoot issues that frequently arise for their clients. Once you have narrowed down options based on practice area, assess whether the attorney or firm is local, shares your values, and has experience working on your issue and with clients in your industry.
“It is best to select an attorney working in the same geographic region where your business is located because laws and regulations, including the rules of civil litigation, may be geographically specific.”
Working with a local attorney also provides you with increased physical access to your attorney, facilitating effective communication and a better experience for you. Next, read through the website to get a feel for whether the firm shares your values. Many law firms share their mission, business philosophy and story on their website. This information should help you determine whether you will work well with the firm. For example: If your cannabis business has been sued by a former employee for being passed over on promotion, then its probably not a good idea to hire a firm that exclusively represents plaintiffs (i.e., disgruntled employees) or whose largest clients have interests adverse to yours.
Also pay attention to the types of services prominently featured, and the firm’s clients. Oftentimes, work history and specializations are contained in an attorney’s biography.
“Be critical: if a firm advertises that it litigates product liability matters but all of its advertised “successes” from the last five years relate to forming wills & trusts or prosecuting trademark infringement, then it may not be the appropriate firm for your needs.”
Last, if your industry is heavily regulated or subject to constraints like a lack of access to banking, then select an attorney who has provided services to others like you.
For example, an attorney who has been providing transactional services for decades to technology startups and businesses in San Francisco, California may automatically advise all clients to incorporate their businesses in Delaware. They may even include a choice of forum clause, requiring disputes to be resolved in Delaware. This attorney would likely provide you with excellent corporate governance documents, but if the attorney relied on the norm for incorporating a technology business (i.e., in Delaware), that would subject your California recreational cannabis business to jurisdiction in Delaware (a state without a legal recreational cannabis market). Even worse, incorporating in Delaware would likely prevent you and your California recreational cannabis business from asserting a compliance defense to any federal investigators should the come knocking.
Ultimately, this last step may be the most important factor to consider when selecting an attorney and may even motivate you to choose a firm that is not local to you.
USE SOCIAL MEDIA TO CROSS-REFERENCE THE FIRM’S REPUTATION
Search for the firm’s profile on your preferred crowd-sourcing website to learn about prior customers’ experiences (ex: Google Reviews, Angie’s List or Yelp). Their profile may also contain information about the costs of securing the firm’s services, and how efficient they are with client funds. If the company has high ratings after hundreds of testimonials, then it’s likely that you will also be satisfied.
After narrowing down the list of potential firms based on practice area, location, values, customer reviews and experience with your industry, call to request a consultation. It’s common practice for a paralegal to screen any potential clients. Use your written description of the issue to provide the firm with an idea of your needs. From there, the next step is usually a 30-minute free consultation with an attorney who will then decide whether the firm is capable of helping you.
Not all attorneys will take on a cannabis industry client due to a variety of practical, professional, and personal reasons. Cannabis industry business people are well advised to seek out an attorney or law firm with a demonstrated history of representing cannabis industry clients, and with subject area expertise related to the specific legal dispute or question you identified.