Crowdfunding Disputes

Unpacking The Legal Challenges in Crowdfunding Disputes

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Crowdfunding has become a prevalent means of raising capital for startups and businesses alike. It offers a unique opportunity for entrepreneurs to access funds and build a community of supporters. A tenacious business law attorney can help you stay updated on the relevant regulations and anticipate future fulfillment challenges while minimizing legal risks.

Common Legal Hurdles in Alabama Crowdfunding Disputes

Securities Law Compliance

Crowdfunding campaigns in Alabama usually involve the offer and sale of securities, such as equity or debt instruments. Ensuring compliance with federal and state securities laws is vital. The Alabama Securities Commission and the Securities and Exchange Commission (SEC) have specific regulations governing crowdfunding to protect investors. Violating these regulations can lead to legal disputes and regulatory penalties.

Misrepresentation and Fraud

Accusations of misrepresentation or fraud can arise when campaign creators make false or misleading statements about their projects. Backers who feel deceived or misled may take legal action. It’s crucial that you provide accurate and transparent information about the project’s status, risks, and potential rewards to avoid these disputes.

Intellectual Property Conflicts

Crowdfunding campaigns that involve product development or creative works can lead to intellectual property disputes. This includes issues related to copyright, trademark, and patent infringement. You should ensure that your project does not infringe on the intellectual property rights of others.

Contractual Disputes

Clear and comprehensive contractual agreements between campaign creators and backers are essential. Disputes can arise when the terms and conditions are unclear or when either party fails to fulfill their contractual obligations. You should have a reliable and accomplished attorney draft a well-defined agreement to prevent misunderstandings and legal conflicts.

Consumer Protection Laws

Alabama has consumer protection laws that defend the rights of consumers, including backers in crowdfunding campaigns. Violations of these laws, such as deceptive advertising or unfair business practices, can lead to legal disputes and regulatory actions. It’s important to adhere to these laws to maintain the trust of backers. If you find your project legally challenged, you should consult with a strategy-driven attorney to move forward. 

Tax Implications

Crowdfunding income may have tax implications. Campaign creators and backers should be aware of the tax consequences of their financial transactions. Failing to account for these tax obligations can result in disputes and legal issues with state tax authorities.

Types of Crowdfunding Disputes

Crowdfunding conflicts can arise from a variety of issues:

  • Non-Delivery of Rewards or Products: This can be due to production delays, logistical issues, or even mismanagement of campaign funds.
  • Quality and Performance Disputes: Backers may dispute the quality, functionality, or performance of the products or services received from a campaign. 
  • Funding and Financial Disputes: Backers may question the use of funds, suspecting misappropriation or financial mismanagement by the campaign creator.
  • Creator Backer Disputes: Disputes may occur between campaign creators and backers over communication, updates, or disagreements regarding campaign progress.
  • Platform-related Disputes: This may include disagreements over fees, platform policies, or the handling of campaign funds by the platform.
  • Legal and Contractual Issues: Disputes can arise over the interpretation or enforcement of legal contracts.
  • Taxation and Financial Reporting: Tax-related disputes can occur when backers or campaign creators are uncertain about the tax implications of crowdfunding income or when there are discrepancies in financial reporting.
  • Refunds and Chargebacks: Disagreements can emerge when backers request refunds or initiate chargebacks with their payment providers due to dissatisfaction with the campaign’s outcomes.

Handling Disputes with Backers or Contributors Without Going to Court in Alabama

Communication is key in avoiding any type of dispute. You should reach out to the contributors promptly and professionally. A neutral third party, such as a seasoned attorney can facilitate discussions between you and the backers to help reach a compromise. Mediation can be less adversarial than litigation and may lead to mutually agreeable solutions.

You may be able to negotiate a mutually acceptable resolution without having to go through expensive and lengthy litigation. This may involve offering partial refunds, alternative rewards, or addressing specific concerns raised by backers. A dedicated attorney can provide guidance on your rights and responsibilities and help you explore potential legal options. 

While disputes are never ideal, how you handle them can define your reputation as a crowdsourcing creator and contribute to the overall success of your projects.

How Can an Attorney Help You Prevent Crowdfunding Disputes

Before launching your campaign, you may want to consult with a knowledgeable business law attorney with experience in crowdfunding projects. They will help you create a detailed plan that outlines the project’s scope, timeline, and potential risks. 

You can share this plan with backers to demonstrate your commitment to transparency and accountability. It’s critical to create a clear and legally binding agreement that outlines the responsibilities of both backers and the project creator. Your attorney can help you with this and draw up the terms and conditions to address potential issues such as refunds, delays, and project changes.

An attorney can also anticipate potential challenges and outline strategies for mitigating them in the project plan. They can help you create fixed Standard Operating Procedures on how you will handle unexpected setbacks.

Choose an Experienced Business Law Attorney for Your Project’s Success

The seasoned and terrific corporate law attorneys at the BHM Law Group have the resources and knowledge to tackle all legal challenges related to crowdfunding campaign disputes, ensuring your venture is protected. Our attorneys have a deep understanding of crowdsourcing regulations, contracts, and backer relations, and will work hard to help you achieve your campaign goals. To schedule a consultation, call us at (205) 964-9764 or fill out this online contact form.

 

drone regulations for businesses in Birmingham Alabama

Drone Regulations: Balancing Safety, Privacy, And Innovation

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Drones are used extensively in remote exploration works, maritime work, mining, agricultural land management, geological survey, aerial photography, urban transport and delivery, and more. If you are a stakeholder involved in the manufacture, distribution, or use of drones, you may want to consult with a knowledgeable business law attorney to learn about applicable laws and your legal rights.

Drones: Safety and Privacy Issues in Alabama

The rise of autonomous drones has raised significant safety and privacy concerns. There is always the risk of accidents because of unforeseen circumstances and system failures. Most drone crashes occur due to unexpected and extreme weather conditions. The risk of mid-air crashes with other flying crafts is a real concern too.

Safety has become a pressing issue now because of congested airspace. Regulators consider different measures for addressing these concerns. The implementation of remote identification systems may enable authorities to track and identify drones. This is useful in mitigating real security threats posed by rogue drones as well.

Most airspace in the US is managed by the Federal Aviation Administration (FAA.) Currently, there are no statewide drone laws applicable in Alabama. Taking this into account, there are local drone policies enforceable at the county, city, and town levels. Advances in technology are making a substantial impact on drone regulations.

Drones are increasingly being equipped with sophisticated sensors and cameras capable of capturing high-res data and images. This is beneficial for different applications. It also raises the potential for invasion of privacy and surveillance. There are jurisdictions that have recently introduced laws restricting drone usage without specific permits.

AI integration in drones presents a pressing concern for both privacy and safety. This is especially true in the context of law enforcement and military applications. For instance, AI-powered drones can be weaponized or used for targeted surveillance. Considering the broader implications of advancing drone technologies has never been more necessary with regulators working towards striking a balance between safety and innovation.

Impact of Drone Regulations on Safety, Privacy, and Innovation

More than 400,000 drones are registered by the Federal Aviation Administration (FAA) to operate commercially in the United States. Drones may be used for assessing damage after a storm or delivering medical supplies to nearby hospitals. First responders may also use drones for providing situational awareness.

Significant strides have been made by the US drone industry and Uniform Law Commission (ULC) in regulating drones. In recent years, there has been a shift from creating blanket policies to considering stakeholder views. Drawing an arbitrary flight ceiling has been cautioned against repeatedly by both the US Department of Transportation and the FAA.

Drone regulation has primarily been focused on safety. Based on this, increasing attention is now paid to data protection laws and privacy too. On a global scale, drone regulation witnesses varying levels of maturity ranging from principles-based data protection regimes, such as General Data Protection Regulation (GDPR) to the patchwork of state and sectoral laws in different jurisdictions.

The development of a consistent operational and regulatory framework for drones must consider product and design liability issues. These are connected to the development of ‘fail-safe’ functions and other drone-specific airworthiness standards.

AI’s impact on drone regulations has become a multifaceted and complex issue requiring careful consideration by industry stakeholders and policymakers. It’s necessary to strike a balance between innovation, safety, and privacy.

The Need for Balanced Regulation 

Ideally, regulatory intervention should allow innovation to breathe and duly impact the recreational and commercial use of drones. This is not an easy feat since the rapid development of industry technology requires ongoing and active regulatory attention. In the present legislative scenario, regulators are working on assessing the various risks.

There has been extensive progress made by the ULC since it realized that creating a 200-foot “line in the sky” will not work. The ULC now understands that it has to take innovation and progress into account while prioritizing safety and privacy. The current proposal balances property owner rights and the need for drones to have access to airspace above their property.

The existing ULC proposal recognizes the various capabilities of drones that make them transformative in inspection, logistics, and search and rescue. The ULC also understands that the quiet enjoyment of property can be challenged without careful measures in place. The law now allows courts to consider other factors, such as the number of times a drone flies over a property and the length of time spent by the drone on a particular piece of property.

Other factors considered by drone regulators to determine whether it caused any substantial interference include the time of the day the drone flew, whether it was visible, and the reason why it flew over the property. The “Tort Law Relating to Drones Act” gives courts the power to analyze each case on its unique aspects.

Get an Insightful Case Evaluation from Our Seasoned Business Law Attorneys

The experienced business law attorneys at the BHM Law Group can help you attain your objectives in the drone industry without fearing unnecessary lawsuits. Our attorneys have the legal resources and knowledge to help you navigate the conflicting and complicated patchwork of airspace restrictions. To schedule your consultation, call us at (205) 964-9764 or fill out this online contact form.

environmental business law in Birmingham-min

The Legality of Geoengineering Projects: A New Frontier in Environmental Law

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Federal and state laws both play a significant role in the US when it comes to environmental issues. Geoengineering, also known as climate engineering, is the large-scale, scientific manipulation of climate with an aim to mitigate the potential threats to the environment from climate change.

Several private players are entering the geoengineering industry looking at the growing business opportunity it offers due to rapidly escalating environmental concerns. To ensure the legality of your geoengineering projects, you should have a skilled business law attorney on your side with experience in handling the legal aspects of complex environmental issues.

What is Geoengineering?

Geoengineering refers to the large-scale, direct, and purposeful attempts made at manipulating or intervening in the earth’s ecosystems, such as lakes, rivers, atmosphere, oceans, seas, and their biological, chemical, and physical processes. Most plans designed to reverse climate change now increasingly include geoengineering projects of different types.

These projects mainly focus on reducing rising atmospheric carbon dioxide and mitigating its consequences. A wide array of proposals form part of geoengineering projects, including reflecting sunlight back into space to slow down warming. The effect of geoengineering projects on natural environments and global warming is, at best, partly predictable.

The complications arising out of an unsafe project are likely to extend beyond the objectives and the consequences cannot always be guaranteed as being benign. Geoengineering projects need to be regulated wisely because of the inherent high stakes on a global level. Sophisticated legal instruments and implementation systems are required for these projects.

Necessity to Regulate Geoengineering Projects

A lot can go wrong when government entities and private players begin modifying complex global climate systems. For instance, solar radiation management projects that block sunlight from ever reaching the Earth can create harmful consequences for the planet. These projects involve dumping tiny reflective particles of sulfuric acid into the complex atmospheric system.

In 1991, Mount Pinatubo erupted and spewed tons of volcanic ash into the air, which temporarily cooled the planet by approximately one degree Fahrenheit. The event was also attributed to causing droughts in the African Sahel and floods along the Mississippi River in the same year. Regulators fear that deploying solar radiation management techniques may create similar side effects.

In the US, the National Environmental Policy Act (NEPA) is generally considered for geoengineering projects. There are other environmental laws that are considered for a limited subset of geoengineering techniques. This includes the Clean Air Act, local and state laws governing the cultivation of genetically modified organisms, and others.

Biggest Legal Issues in Climate Engineering

Currently, there is no law that directly addresses climate engineering projects. This is because the US government still maintains that most forms of carbon dioxide removal have a local impact. The focus on regulators right now is on inducing R&D and deployment. In fact, the recent budget bill allows for tax incentives to companies that invest in carbon dioxide removal.

The international community is stressing the need for a global agreement under the United Nations to manage solar radiation and the impact of geoengineering projects to mitigate its effects. This was made obvious when Luke Iseman and Andrew Song led “Make Sunsets” and tried to replicate the effect of volcanic eruptions by spewing sulfur dioxide through helium balloons into the stratosphere.

The team obtained permission from the Federal Aviation Administration and Reno International Airport and launched their balloons. Paul Newman, Chief Scientist for Earth Sciences at NASA’s Goddard Space Flight Center, commented on the demonstration by saying that the Antarctic ozone hole can become worse by spewing sulfur into the stratosphere. It also increases the risk of sulfur rain and other side effects.

Such gimmicks have made the most ardent advocates of geoengineering projects realize the importance of more specific laws under the Environmental Act to govern climate engineering. The fact that private players can spray aerosols and other substances into the upper atmosphere without any checks or violations of laws needs to change.

Climate change tort actions in the past have tested the court’s capabilities for assigning liabilities and ascribing responsibility to individual parties for causing damages. There needs to be specific regulations and laws for affixing responsibility for the negative impact caused by climate engineering projects.

Scope of US Environmental Law Extending to Climate Engineering Projects

Scientists have begun exploring and implementing techniques that directly control or influence regional and global climatic systems for offsetting the effects of climate change. The US Clean Air Act is not yet set up for dealing with the impact of geoengineering projects. Its primary focus is on regional air-quality standards and emissions made by vehicles and power plants.

As per UCLA environmental law professor Edward Parson, the US environmental law has the bearings to be used for controlling nascent climate engineering technologies. Pertaining to this, as the research expands into this field, it’s integral for federal and state agencies to map out dedicated regulatory strategies for authorizing and controlling potential requests for climate engineering experiments.

Legal Help is Here from Experienced Business Law Attorneys in Alabama

At the BHM Law Group, our seasoned environmental law attorneys have successfully helped several individuals and organizations with their environment-related compliance and other legal issues. Our attorneys have decades of experience in helping businesses streamline their operations while keeping them aligned with local, state, and federal laws. To request your complimentary consultation with our legal team, call us at (205) 964-9764 or complete this online form.

cryptocurrency lawyer in California

Emerging Trends in Laws Affecting Digital Currencies and Blockchain

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Public interest in Bitcoin, Ethereum, and other cryptocurrencies has significantly grown in recent years with multiple industries and investors recognizing the advantages of cryptography and blockchain technology. The use of blockchain and digital currencies is on the rise. With new use cases emerging, potential legal liabilities are becoming visible too.

A competent business law attorney with experience in blockchain technology and cryptocurrency can help you identify common legal issues unique to your industry and business and provide the right legal advice and representation.

Contractual Concerns

One of the most striking features of cryptocurrencies and blockchain technology is their self-executing smart contracts. These are a set of digitally-specified promises that usually act as a basis on which the various parties to a transaction fulfill their obligations. Smart contracts are used to automatically pay the other party after they have fulfilled their contractual obligations.

The inherent complexity and unique nature of smart contracts make it difficult for legislators to fit them into the legal framework of traditional contract law. There is no single federal contract law in the US, which applies to the entire nation. The Electronic Signatures in Global and National Commerce Act of 2000 is currently the only exception that provides limited legal validity to these contracts.

Privacy Concerns

The chief reason for introducing Bitcoin and other cryptocurrencies was to provide anonymity in user transactions. However, privacy concerns related to data theft have become a main concern in the digital currency space. Continuous improvement in blockchain analytic tools is only adding to the threat of this anonymity.

There is no comprehensive federal data protection framework in the United States. Instead, the existing privacy and data security laws are very sector specific. This includes the California Consumer Privacy Act (CCPA), the Health Insurance Portability and Accountability Act (HIPAA), and the Gramm-Leach-Bliley Act.

Privacy concerns arising from existing privacy and data security laws are not entirely addressed by these existing laws. For instance, distributed peer-to-peer network architecture in blockchain technology is known to contradict the traditional notions held under the CCPA. In fact, the CCPA is ineffective and inapplicable to digital currencies because it is a centralized, controller-based data processing system.

Financial Fraud and Data Theft

Financial fraud and data theft add to the existing legal concerns surrounding digital currency. Many users engaged in illegal activities get enticed into using blockchain by the promise of anonymity and freedom from regulations.

A Cornell University researcher identified a key security flaw in the Ethereum blockchain in 2017. This flaw places $250 million at risk of theft. Ledger, a crypto wallet maker compromised over a million email addresses in one of the largest data security breaches involving the crypto market.

Tax Implications

Cryptocurrency is considered to be property and not currency for US federal income tax purposes. This means that US taxpayers cannot use blockchain currency for purposes listed under the Internal Revenue Code. Furthermore, taxpayers are obligated to report financial transactions involving digital currencies on their annual tax returns. This reporting needs to be done in US dollars.

This means that US taxpayers are required to determine the fair market value of cryptocurrencies by converting them into US dollars at the time of each transaction. It can get burdensome to report cryptocurrency holdings to the IRS. Individual taxpayers need to keep diligent records of the price at which the digital currency is purchased and sold.

Cryptocurrency is classified as a capital asset by the United States. This makes individual investors liable for paying capital gains taxes on any profits realized. Unfortunately, the obligation applies even if you purchase cryptocurrency from another country. Additional reporting requirements for US investors purchasing their digital holdings on foreign exchanges are still unclear.

Intellectual Property

Cryptocurrency has gained widespread popularity among intellectual property-intensive industry verticals. This includes the automotive, pharmaceutical, consumer goods, and luxury industries. Goods traceability in these industries is important and “grey” or counterfeit goods is still a primary concern.

The use of cryptocurrencies in IP-intensive industries has raised concerns involving:

  • IP authorship and ownership
  • Tracking and controlling the distribution of IPS (registered and unregistered)
  • Establishing and enforcing licenses, exclusive distribution networks, and licenses through smart contracts

Money Laundering

There is an ongoing debate about cryptocurrency enabling criminal organizations to get away with money laundering, fraud, and other financial crimes. This stems from the ability of traders to remain completely anonymous. Digital currency has been in use for a while on dark market sites to buy and sell illegal items.

Different governmental agencies have accepted a “new generation of criminals” for drug dealers that use cryptocurrency for exchanges. According to the Chainalysis, Bitcoin exchanges had $2.8 billion in criminal activity-related transactions in 2019. There are several anti-money laundering rules in place to prevent criminals from converting their crypto into cash. However, these are not always helpful or useful.

Businesses can easily get roped into illegal dealings if they are not careful. An experienced attorney can help in conducting due diligence and identifying the potential threats related to different types of transactions.

Our Reputable Business Law Attorneys are Ready to Help You

At the BHM Law Group, our skilled business law attorneys strive to keep up with emerging trends in the fast-paced business world. You can count on us to be aware of all relevant laws that apply to your business and to help you strategize for maximizing profits. To schedule your consultation, call us at (205) 994-0902 or fill out this online contact form.

 

virtual mediation

Challenges and Opportunities of Virtual Mediation in Commercial Disputes

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Mediation is successful in commercial disputes where informal attempts may have failed to bring different parties to an agreement. Online mediation continues to be a popular and convenient choice for alternative dispute resolution in the United States. This is especially true after the pandemic. Based on this, there are challenges to remote mediation that every business owner should be aware of.

Having a skilled business law attorney with a firm grasp of the opportunities and challenges associated with virtual mediation can help you achieve the best outcome in your commercial dispute.

Challenges to Virtual Mediation

Commitment Challenges

There are several advantages to in-person mediation which cannot be replicated in virtual mediation. The commitment of a party to attend in person encourages them to pursue a solution. This is partly fueled by the effort involved in getting to an organized mediation session at a physical location. Parties often realize that exiting an online meeting is easier.

Group Dynamics

It’s easier to observe reactions during an in-person meeting. There are several compensating benefits to a mediator. They can observe everyone at the same time. In-person meetings also allow for informal and accidental meetings on the way to the bathroom or coffee machine. This can be helpful in coming to an agreement.

Security Threats

The doctrine of confidentiality is a key reason why parties choose mediation for dispute resolution. This doctrine ensures that any sensitive financial information or personal information of businesses and corporates shared during the proceedings doesn’t become public knowledge. There are no records created during physically conducted mediations. All data and documents are stored and recorded in virtual meetings.

Virtual mediation proceedings are at a threat of Zoombombing and other cyber-attacks too. An unwarranted individual may be present in the peripheral space unaware of others. This can compromise the private and confidential nature of the proceedings. Less control of the mediation, cyber security concerns, and possible recording of a mediation session can serve as a vital disadvantage.

Digital platforms are required to keep the process transparent, safe, and acceptable so that confidentiality can be maintained during virtual sessions.

Opportunities for Virtual Mediation

Easier Logistics

The convenience and flexibility offered by online dispute resolution is one of its most remarkable benefits. There is no need for parties to physically visit the mediator’s office, which can save substantial amounts of time. It also empowers the mediator to quickly schedule the next session.

Online mediation has fewer logistical challenges than in-person mediation. The session doesn’t require multiple people from different locations to meet at a particular spot. This is particularly helpful during commercial disputes as you don’t have to take any time away from your operations. Online mediation is less time-consuming and inexpensive.

Minimal Stress

Disputing parties, during joint mediation, traditionally meet with the mediator and talk through various issues. In commercial disputes, meeting with the other party can be uncomfortable and triggering. Online mediation allows different people to join the session from the comfort of their homes.

They don’t have to be in the same room which can ease the pressure and help arrive at a resolution. Remote mediation facilitates a less stressful environment, which can allow participants to think more clearly and focus on resolving the dispute. Virtual mediation allows people to take part in better decision-making.

Improved Engagement

Many mediators worried about the impact of online mediation sessions during covid-19. With that said, this concern quickly disappeared in the face of the tremendous benefits and opportunities. Virtual mediation can be helpful in improving party engagement. Remote video conferencing software can be helpful in improving the collaborative focus during a session.

Mediators can take better control of the meeting using a screen-sharing feature to display notes, documents, and other materials. All parties can collectively focus on the topic at hand without any distractions. Online screen sharing usually brings better results as compared to paper documents.

Better Communication

Good communication is necessary during mediation, which makes it important for the mediator to remain in control and facilitate the session. Virtual conferencing has entirely changed the communication process. It has completely switched the medium of communication to video-based. Many mediators find video conferencing to benefit the overall communication process and mediation session.

They provide mediators with improved control and facilitate turn-taking. Online video conferencing allows for muting participants. Mediators can request all other parties to mute while someone is talking. This is useful in allowing each participant to share their opinion in an unpressured way. Participants can engage in more constructive conversations with the help of the mediator.

Choose a Knowledgeable Business Law Attorney to Protect Your Rights

The client-focused business law attorneys at the BHM Law Group are part of a multi-jurisdictional and multi-disciplinary team with a wealth of resources. Our attorneys are prepared to help you overcome all business and legal challenges within the sphere of alternative dispute resolution. Our dependable legal services based on years of experience and continuing education help our clients to always have the upper hand. To set up your consultation, call (205) 994-0902 or reach us online.