Social Media Archives - Page 7 of 20 - The National Law Forum

8 Proven Ways to Boost Engagement for Your Facebook Posts

If you’re using Facebook to “sell” your law firm, you are probably disappointed in your results. You see, Facebook is about engagement and anything that smacks of a hard-sell is usually tuned out.

You will get much better results if you simply surrender to what Facebook can deliver, which is an opportunity to meet new prospects and to share your knowledge that may someday lead to new business.

A lot of new business connections occur on Facebook based on people you used to know –old high school or college friends that you connect with there and then educate them naturally on what you do now. In that sense, approaching Facebook as a referral source cultivation opportunity could be a mindset that will pay you big dividends in the future.

That said, there are certain things you can do that research shows leads to more engagement with your Facebook posts.

According to Shareaholic research, social media now drives more traffic (31.2%) to the websites of people and organizations that post on social media sites than any other channel, including search. Facebook dwarfs all other social networks for driving that traffic, accounting for 25% of all website traffic coming from social media!

BuzzSumo recently analyzed 500 million Facebook posts to discover what types of posts create the most engagement. Use this data to plot your posting strategy and you will likely see an uptick in the number of likes, comments and shares your posts get on Facebook:

Schedule evening posts. Posts published between 10 p.m. and 11 p.m. ET get 88% more interactions than the average Facebook post.
Use images. Image posts get 179% more interactions than the average Facebook post.
Pose a question. Posts ending with a question get 162% more interactions than the average post.
Use video. Videos are the most shared post type on Facebook, averaging 89.5 shares per video.
Post on Sundays. Posts published on a Sunday get 52.9% more interactions than the average post.
Keep posts brief. Posts with 150-200 characters performed the best, averaging 238.75 shares.
Post directly to Facebook. Posting with a third party tool results in 89.5% less engagement than posting directly to Facebook.
Link to longer content. Posts that link to long form content (2,000+ words) receive 40% more interactions than linking to shorter content.

Just like any social media network, the lion’s share of the attention goes to those who interact frequently – and genuinely – with followers and fans. Knowing how valuable and limited your time may be for social media marketing, you need to make efficient use of it to get the maximum benefit. These tips can help you do just that.

Article By Stephen Fairley of The Rainmaker Institute

Study Reveals How Age Affects Consumers’ Social Media Habits [INFOGRAPHIC]

A new study from Accenture Interactive’s Acquity Group entitled, 2015 Next Generation of Commerce Study, reveals that while everyone and their grandmother is on social media these days, what they like and share is vastly different.

The report is based on surveys of more than 2,000 U.S. consumers on their digital engagement habits and preferences. Responses were broken down based on demographics, including age and gender.

What the researchers found is the consumers have high expectations from brands that seek to engage with them online. Driving this trend are consumers aged 18-30, who have grown up in a digital world that thrives on sharing.

The study reveals that almost 50% of consumers under the age of 50 have tried a service or product as a result of a campaign or ad on social media. Only about 30% of those who are 51-68 were so inclined, and only 14% of those over the age of 69 would try a service or product because they saw it on social media.

What is most surprising is that Facebook is considered to be the most trustworthy channel for content created by a company or brand.

Younger generations are more likely to trust social channels than their older counterparts.

Twenty-nine percent of college-aged consumers (ages 18-22) and 32% of Millennials (ages 23-30) rank Facebook #1, while only 16% of Baby Boomers (ages 52-68) do the same. Older consumers are more likely to trust traditional media, such as print (27%) or online news (20%).

This infographic breaks down the key data points from the Acquity Group study on what channels are most trusted and what types of content consumers are most likely to share with their networks:

Article By Stephen Fairley of The Rainmaker Institute

Delaware Adds to Growing Patchwork of Social Media Laws

On August 7, Delaware Governor Jack Markell signed a law to prohibit employers from interfering with the personal social media accounts of their prospective and current employees. The new law, which also took effect on August 7, defines “personal social media” to encompass any account on a social networking site created and operated by a prospective or current employee exclusively for his or her personal use. The term does not include accounts created or operated by an employer and that are operated by an employee as part of his or her employment.

Specifically, the new law prohibits an employer from requesting or requiring a prospective or current employee to:

disclose a username or password for the purpose of allowing the employer to access personal social media;

access personal social media in the presence of the employer;

use personal social media as a condition of employment;

divulge any personal social media (except as otherwise permitted by the new law);

add a person, including the employer, to the list of contacts associated with the prospective or current employee’s personal social media,

invite or accept an invitation from any person, including the employer, to join a group associated with the prospective or current employee’s personal social media; or

alter settings on the prospective or current employee’s personal social media that affect a third party’s ability to view the contents of the medium.

The new law also forbids an employer from taking adverse action against a prospective or current employee for failing to comply with any of these requests or demands.

Despite these broad prohibitions, nothing in the new law prevents an employer from:

exercising its right or obligation under its personnel policies, federal or state law, case law, or other rules or regulations to require or request that an employee divulge a username, password, or social media “reasonably believed to be relevant” to an investigation of alleged employee misconduct or violation of applicable laws and regulations (so long as the social media is used solely for purposes of that investigation or a related proceeding);

requiring or requesting an employee to disclose a username, password, or other accessing credentials for (i) an electronic communication device supplied by or paid for in whole or in part by the employer; or (ii) an account or service provided by the employer, obtained by virtue of the employee’s employment relationship, or used for the employer’s business purposes;

accessing, blocking, monitoring, or reviewing electronic data stored on an employer’s network or on an electronic communications device supplied by or paid for in whole or in part by the employer;

complying with a duty to screen prospective or current employees, or to monitor or retain employee communications, (i) under federal or state law or by a self-regulatory organization, as defined in the Securities and Exchange Act of 1934 (like FINRA); or (ii) in the course of a law enforcement employment application or officer conduct investigation performed by a law enforcement agency; or

accessing, using, or viewing information about a prospective or current employee otherwise available in the public domain.

The new Delaware law continues a growing trend across the country. Twenty-one other states have similar laws restricting employer access to a prospective or current employee’s personal social media account, including Arkansas, California, Colorado, Connecticut, Illinois, Louisiana, Maryland, Michigan, Montana, Nevada, New Hampshire, New Jersey, New Mexico, Oklahoma, Oregon, Rhode Island, Tennessee, Utah, Virginia, Washington, and Wisconsin.

ARTICLE BY Katharine H Parker & Daniel L. Saperstein of Proskauer Rose LLP

Twitter Terrorism: Criminals Choose the Hack Attack

In what appears to be yet another brazen demonstration of capability following an earlier hijack of government social media sites, a group calling itself the Syrian Electronic Army (SEA) recently hacked into the U.S. Army’s main news and public information website, positing its own message for website visitors: “Your commanders admit they are training the people they have sent you to die fighting.” In response, the Army was forced to shut down the site to implement additional security measures to protect its systems.

Earlier this year, two of the U.S. military’s Central Command social media websites on YouTube and Twitter were similarly attacked and compromised. There, organization profile images were replaced by those of ISIS supporters on the official Twitter page, and two ISIS propaganda videos were uploaded to the Central Command YouTube account. Over the past several years, SEA has initiated similar attacks on the Twitter accounts of the BBC, The New York Times, 60 Minutes and the Associated Press.

Business Concerns

While the U.S. government reported that none of the internal systems were compromised and that there was no loss of classified information, the attacks have certified the anxiety of many business leaders over the potential vulnerability of their own companies, and highlight the concerns regarding the lack of knowledge or ability to prevent such attacks. Recent surveys have confirmed that risks associated with social media, whether through external portal access or internal sabotage, are among the top concerns facing businesses in 2015.

Without question, social media has become a crucial advertising vehicle for thousands of businesses around the world. The number of Facebook, Twitter, LinkedIn and other social media users continues to grow at an exponential rate, allowing businesses access to many new customers and clients every day. The ability to maintain control over these new electronic profiles, however, has become increasingly difficult as the perpetrators become more skilled and the targets more prized. In one particularly publicized account in 2013, social media hackers changed the Twitter account name of a premiere fast-food company to that of its chief competitor and posted multiple offensive tweets. Thereafter, damage control was all that could be done.

Businesses in 2015 have become enthralled by virtually unlimited access to customers and business partners via online platforms. Unfortunately, many have focused on the potential profits arising from such undertakings without sufficient consideration for the problems that too frequently arise from the use of such platforms. Social media has become the soft underbelly of many growing businesses eager for success but unaware of its vulnerabilities. In addition to direct attacks, courthouses nationwide have been flooded by lawsuits tied to the use and regulation of social media sites. The governance of employee use of social media, ownership of content and retention of information gathered through social media are generating more litigation every day. While increased exposure may be the incentive, preventative medicine will likely prove integral to long-term success.

Such “preventative medicine” includes not only the appropriate policies and procedures on access to and use of social media, but also an understanding of the vulnerabilities created by using these online platforms. Most importantly, organizations must train their employees on these issues. Defending itself from perils arising out of social media starts at the first line of defense – the user.

ARTICLE BY Scott Sweeney & Ian A. Stewart of Wilson Elser Moskowitz Edelman & Dicker LLP

Gone, But Not Forgotten – A Deactivated Facebook Account Can Be Discoverable

Courts have long grappled with social media in a legal context. The struggle to understand social media issues — and to craft coherent applicable legal policy — renders Crowe v. Marquette Transportation Co. Gulf-Inland, LLC amusing to show how the less-than-honest actions of an employee-plaintiff can make these difficult legal questions fairly simple for a court.

In May of 2014, Brannon Crowe sued Marquette Transportation, his employer, for an injury to his knee that he claimed to have suffered in an accident at work. Interestingly, however, Crowe allegedly sent a co-worker a message on Facebook which stated that he received the injury during a fishing trip, and not at work. When confronted with the message to the co-worker by opposing counsel during a deposition, Crowe stated the account the message was sent from was Brannon “CroWe,” and it couldn’t be his because he didn’t have a capital “W” in his last name.

At the deposition, Crowe also said that he no longer had an account after the previous October, and his response to a discovery request for the contents of his account was that, in addition to such a request being vague, overbroad and unduly burdensome, he didn’t presently have a Facebook account. The court ordered Crowe to provide the contents of his account for the court to review in camera to determine if the contents of the account should indeed be discoverable. Later, however, Crowe’s counsel submitted to the court 4,000 pages of Facebook account information from the Brannon CroWe account, with an interesting wrinkle – the records of the account indicate that the account was deactivated – not deleted – four days after the discovery request for the account’s contents.

The court was understandably unamused, and suggested that the in camera review of 4,000 pages of Facebook account information would be a waste of time since this account information should have been produced earlier in response to Marquette’s request. The contradiction with Crowe’s testimony alone was enough to render the account information discoverable. Rather than review the documents fully in camera, the court ordered Crowe to turn over every single page of the Facebook account history to Marquette, as well as any login information for any Facebook accounts Crowe had at that time or in the past, and Crowe was ordered to consent to any authorization for Marquette to subpoena his Facebook information.

In effect, Crowe made the contents of the account discoverable through his attempts to keep it from being discovered, and that made the court’s decision on the issue clear. Luckily for Crowe, he only deactivated the account rather than deleted it, since he had a duty to preserve evidence in litigation. Spoliation of evidence is the negligent or intentional destruction or alteration of evidence that may be required in a lawsuit. Even though the evidence doesn’t look good for Crowe in the present case, had he deleted the account entirely, he would have been subject to the spoliation inference, which is a negative evidentiary inference in favor of the opposing party. A showing that a party has destroyed relevant evidence can lead to punitive sanctions against him as well.

Social media provides an abundant resource of data about a litigant, and both employers and employees alike should be a wary of even private messages sent to others in that context. When employees raise issues against employers in a legal setting, their interactions with coworkers on social media may be discoverable. This case also raises questions about how far those involved in legal proceedings can or should go to protect themselves with regard to their social media accounts. As courts become increasingly comfortable with the legal implications of social media and technology, issues such as evidence spoliation through deactivation and deletion will become more and more prominent as a trap for the unwary.

ARTICLE BY Brittany Blackburn Koch of McBrayer, McGinnis, Leslie and Kirkland, PLLC

Three Steps to Leverage LinkedIn for Your Law Firm

I have yet to find an attorney who could not benefit from having their profile on LinkedIn. It’s the number one online network for white-collar professionals.

Whether you want to connect with non-competing attorneys, non-legal professionals, or potential clients, the demographics on LinkedIn speak for themselves:

The average age range of a LinkedIn user is 30 to 49
44% of LinkedIn users report an annual income of more than $100,000
50% of members have a college degree
28% have a graduate degree

LinkedIn members are highly educated and affluent. Is this a demographic you would like to reach? For most attorneys, the answer is obvious.

The first step to using LinkedIn is to create a comprehensive profile. Use your entire bio in your profile and be sure to include your keywords in it. In other words, use the exact keywords that you believe prospects or potential referral sources would use to find an attorney with your skill sets.

For example, if you are a business attorney in Omaha it might sound like this:

“John Doe is a Omaha business attorney who works with small business owners and CEOs of mid-sized companies to create comprehensive operating agreements, buy-sell agreements and employment agreements. His Omaha business clients appreciate the fact that John is an attorney who has a strong business background, having owned and operated two different companies, including a high tech company with 25 employees.”

Next, go to the See Who You Already Know on LinkedIn page and import your email contact list. This makes it super simple to connect with people you already know who are also on LinkedIn. In addition, based on your contacts, LinkedIn will suggest relevant contacts for you to connect with on the site.

Then search LinkedIn Groups and join those where your clients and prospects are. Create content — blog posts, free reports, articles, etc. — that will attract their attention. You can also start your own group and invite contacts to join.

The key to utilizing LinkedIn effectively is to be involved and be consistent. You need to commit to investing at least 30-45 minutes every week to log in, post an update or a link to your blog, reach out to your contacts, answer any questions that are sent to you, and make yourself visible. Simply setting up a profile on LinkedIn will not lead to more referrals any more than a having a business card will automatically get you new business.

ARTICLE BY Stephen Fairley of The Rainmaker Institute

LinkedIn For Lawyers: The Publishing Tool

There is no question that LinkedIn is a powerful networking tool that can potentially turn online connections into real-world clients. That won’t happen overnight, however, and those efforts will only thrive with proper care, maintenance and pruning.

Writing Your LinkedIn Profile

Most likely you already have a basic profile, but one of the biggest obstacles lawyers face is distinguishing themselves online. Bios sound the same from one attorney to the next, and, while they might showcase a long list of achievements, they often don’t say much about the person and how he or she is a problem solver. It’s important to remember that your profile is your front door to the world. Spruce it up, and lay out the welcome mat.

Need some tips when writing your LinkedIn profile? To reach influencers, gain a following and develop a reputation as someone “in the know,” use actionable language, and try to be more lively and specific. Identifying clearly how you provide a solution will make it infinitely easier for potential clients to understand what you do and why you are the perfect fit for their job. If you think revising your online profile will easily drop to the bottom of your “to do” list, schedule it on your calendar.

Blogging on LinkedIn

With a progressive profile in place, you’re now ready to harness the power of LinkedIn. In addition to providing opportunities for connecting with colleagues, friends, and potential prospects; joining groups; and posting, LinkedIn has recently unveiled a new publishing platform. It was designed to provide users with a sophisticated, yet easy-to-use, blogging tool. For those who work at law firms that do not have blogging resources, or if you want to prove the viability of a blog before adding it to your law firm website, using LinkedIn publishing is a good option.

To help you use the blogging platform, LinkedIn provides a built-in template that comes up when you click on the orange “Publish a post” icon at your home screen. From there, it is easy to add a photo, draft an engaging headline, drop in the text and click Publish.

Blog posting through LinkedIn allows you to share quality content on a regular basis with a built-in audience and group of followers. You can share posts with specific groups or individual connections. Another bonus of the LinkedIn blogging tool is that the pages encourage two-way conversation and discussion. Each post is equipped with social-sharing buttons, so it’s easy for other users to share, like, repost and retweet across all social networking platforms. Unlike cumbersome email campaigns or formal alerts, you can easily point and click your way to becoming a thought-leader on specific topic. And, the tool catalogs all your posts in one area for easy reference.

LinkedIn Blogging Best Practices

Successful bloggers publish at least twice a month, and more frequently to accommodate new developments or interesting news. Content should be relevant, entertaining, engaging and brief. It should include a call to action. If at all possible, it should tell a story. But most importantly, you should write about topics that affect your clients and help to position you as a valuable resource.

In fact, according to Bloomberg’s Big Law Business Report, there seems to be a sea change among in-house counsel about how to handle client development. Fancy dinners and tickets to sporting events might be nice, but it’s also important to show that you have your finger on the pulse of the market and are watching (and can report on) trends. Blogging ticks this box.

It is also important to note that, as lawyers become more and more proficient on LinkedIn, they also need to be aware of the various state bar rules. While the ABA has not yet published comprehensive guidelines on social media usage, some state bars have, including New York.

In fact, in March 2015, the New York County Lawyers Association Professional Ethics Committee released an opinion recommending that attorneys in New York with LinkedIn profiles that include information about their practice areas, skills, endorsements or recommendations – essentially, anything more than the straightforward biographical information in their profiles – should now include attorney advertising statements at the end of the “Summary” section of their LinkedIn profiles, similar to “Attorney Advertising – Prior results do not guarantee a similar outcome.”

While this doesn’t mean that LinkedIn should be abandoned as a powerful networking tool, it just will require that attorneys periodically monitor and review the content of their LinkedIn profiles for accuracy and compliance with bar guidelines.

The Confluence of Content and Social Media

Lawyers and legal marketers seem to have an ever-growing number of marketing tools and tactics at their disposal. Technology has provided us with a number of new avenues to reach our desired audiences, but just using these channels is not enough. They have to be leveraged strategically.

Lawyers should take the time to populate their LinkedIn profiles with quality information that positively reflects their personal brands. They should also make it a habit to continually update their profiles to capture recent successes, promotions, organizational affiliations, pro bono activities and published articles. Finally, with the LinkedIn publishing tool, lawyers can maximize the benefits of the social network by crafting and distributing relevant thought leadership materials to a targeted audience of engaged professionals.

ARTICLE BY

Kathy O’Brien

Jaffe

Reference Searches Through Social Media Do Not Create FCRA Claims

In their recruitment efforts, many employers will utilize social media to find suitable candidates for job openings. And, often employers will use the social media tools available to perform reference checks and/or verify a candidate’s employment history, experience and education history. Recently in California, a group of individuals challenged these social media background searches by suing the professional social media website, LinkedIn Corporation, because the information gleaned about these persons allegedly violated their rights under the Fair Credit Reporting Act (FCRA).

In Sweet v. LinkedIn Corp., Tracee Sweet, one of the named plaintiffs for the class, alleged she had applied for a position through LinkedIn. Sweet claimed the potential employer advised she had been hired following a telephone interview. A week after, the potential employer rescinded the offer and this decision was based on the employer’s review of Sweet’s references through LinkedIn.

The employer had used the Reference Searches function on LinkedIn, which allows employers to find people with whom an applicant may have worked previously. According to the class plaintiffs, this search engine allows employers to “[g]et the real story on any candidate” and to “[f]ind references who can give real, honest feedback” about job candidates. The Reference Searches function produces two types of information for paid subscribers: (1) the name and list of the search target’s current and former employers; and (2) a list of other LinkedIn members who are in the same professional network of the search initiator and “who may have worked at the same company during the same time period as the search target.” The Referencence Searches then produces results which include for each possible reference, “the name of the employer in common between the reference and the job applicant, and the reference’s position and years employed at that common employer.”

According to the complaint, each member of the class had a similar experience as Sweet. Each plaintiff believed that LinkedIn’s Reference Searches function caused them to lose employment opportunities in violation of the FCRA. The U.S. District Court rejected the plaintiffs’ claims and dismissed the action. The court explained that FCRA did not apply to the social media site and, instead, only to “consumer reporting agencies” that provide “consumer reports.”

Under the FCRA, a “consumer report” is:

[A]ny written, oral or other communication of any information by a consumer reporting agency bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part of the purpose of serving as a factor in establishing the consumer’s eligibility for . . . . (B) employment purposes.

The district court stated that the publication of the plaintiffs’ employment histories were not consumer reports because that information came solely from LinkedIn’s transactions or experiences with the plaintiffs as members of the social media website. In other words, the information that was subsequently shared to a third-party occurred solely as a result of the plaintiffs’ voluntary provision of such information. As a result, that information is excluded from the protections of the FCRA. As the district court noted, the subsequent information sharing is precisely the reason why consumers such as the plaintiffs provide such information to LinkedIn.

Additionally, the district court found that LinkedIn was not a consumer reporting agency, as defined under the FCRA. The court explained that LinkedIn did not become a consumer reporting agency “solely because it conveys, with the consumer’s consent, information about the consumer to a third party to provide a specific product or service that the consumer has requested.”

Finally, the district court rejected the plaintiffs’ argument that the list of names and information about the references included in the Reference Searches bear on the “character, general reputation, mode of living” and other relevant characteristics of the consumers who are the subjects of these searches. Instead, the court found that the results from Reference Searches are those in the search initiator’s network and not in the target’s network. Therefore, the results only communicate whether the search initiator (not the target) have the characteristics protected under the FCRA (e.g., character, general reputation, mode of living).

Written by Tina A. Syring of Barnes & Thornburg LLP

Crowdfunding? Really? Crowdfunding Rule under the JOBS Act

Count me a Luddite when it comes to social media in general, and more specifically, the supposed potential for crowdfunding and raising capital for start-ups and small businesses. My skepticism about crowdfunding admittedly has its roots in the resistance to public solicitation of non-public offerings that 20 years in state securities regulation embedded in me. Publicly solicited “private placements” before the advent of Rule 506(c) were all but certainly fraudulent. But, times (and exemptions) change.

Now, the word on the street is that the SEC has dragged its feet too long on promulgating its Congressionally mandated rule on crowdfunding under the JOBS Act, so the Republican House is going to take matters into its own hands and legislate a more rational crowdfunding exemption than the provision in the JOBS Act and proposed rule, without the need for SEC action. I can’t wait to see that hummer!

Since the subject of allowing crowdfunding for investments first arose in the initial rumblings that preceded the JOBS Act, there have been literally hundreds of articles, blogs and other commentaries tooting crowdfunding as the panacea for raising capital for start-ups and small businesses with the result that all sorts of new jobs would be created (a claim based more in hyperbole than empirical evidence.) Jobs? Perhaps some, but enough to make a national economic difference? Really? There has been at least one University of Colorado law review article on comparable legislation in Great Britain, and I have assisted a former securities law student of mine at the James E. Rogers College of Law, University of Arizona, in preparing her own article on crowdfunding that includes a review of British as well as other European capital raising crowdfunding regimes.

Most of these articles on crowdfunding appear to have been written by people who hope to profit providing services to general public crowdfunding principals once it’s lawful. A good share of them have been observations and opinions written by lawyers who regularly critique federal and state regulations, proposals and market developments. To one extent or another, the articles focus on Congress versus the SEC, or the needs for capital raising versus securities regulations.

These proselytizers and commentators have all but ignored what is truly the other side of the investment equation—the investors. I’m not talking about fraudsters. That dirty element will worm its way into whatever system is finally implemented, to one extent or another. I’m focusing here on the people who send their money to hopeful, legal crowdfunding issuers.

If the proponents of investment crowdfunding can run the “start-up businesses create jobs” pennant up the rhetorical flagpole, it’s only fair to allow me to hoist the “most start-up enterprises fail within five years” banner up right along next to it.

The unfortunate reality is that start-up businesses make horrible investments. Few of them survive at all, let alone turn a profit any time soon, let alone provide a return to investors. Investing in start-ups is like hunting ducks with a rifle, and few investors have enough “bullets” to fire.

Entrepreneurs are eternally enthusiastic, energetic and optimistic. They have to be. For many years, the dreamers (and their counsel) urged Congress and the SEC that “if only the ban on public solicitation and advertising were lifted, we could all fund our private placements.” Now that that cat is out of the bag with Rule 506(c), at least for accredited investors, the chant has shifted (predictably) to, “if only we could use crowdfunding to publicly solicit and advertise to reach non-accredited investors.”

If a start-up entrepreneur—I’ll call him “Fred”—is ready to turn to looking for funding from strangers, I think it fair to draw an inference or three about what has happened to date. First, Fred is tapped out on his own funds. Second, the bank has said or would say “no” to a loan, based on Fred’s lack of collateral or some other deficiency. Third, anyone Fred knows (and he may not know anyone) who might invest in his business—those people and businesses with whom he has a “pre-existing business or personal relationship”—have either invested as much as they are going to, or have found ways to be “on vacation in the Australian outback and hard to reach” when Fred has come calling for money the first time or for more later.

At this point, many entrepreneurs would keep working until they had saved up enough money of their own, or grew to qualify for that bank loan. A lot of business owners I’ve encountered have no interest in selling equity in their businesses to investors. But there are certainly those who are willing to do so. Whatever, at this point, “Fred” has now gone through all his own cash. His business and personal profile are insufficient to qualify for a bank loan, even if government subsidized. In other words, the professional lenders won’t touch him. Further, anyone who knows him and/or his business who might invest have either done so or won’t. With investment crowdfunding, Congress and several state legislatures and regulators have made the public policy decision to let Fred now turn to perfect strangers, the general public. So, the smallest, riskiest, least sophisticated, most poorly funded, most likely to fail business owners can turn now to the general public for investments when all the professionals and close-in people, those in the best position to know Fred and evaluate his company’s investment potential, have said “no” or “no more.”

To me, this is a public policy that makes no sense. If Congress wants to promote investment in start-ups and small businesses to create jobs, let them direct the Small Business Administration to ease their guarantee standards for SBA loans. Oh, we can’t do that because the SBA would go broke guaranteeing bad loans, thus requiring more federal funding? What’s wrong with this picture?

“Investing” in start-ups is akin to a parent “lending” money to her 24 year old. Good luck ever seeing that money again! At least she’ll get a Mother’s Day card. The non-investment crowdfunding successes to date have usually involved donors getting a sample product, a discount, or a souvenir tee shirt, baseball cap or the like in exchange for their donation. Perhaps Congress should take a hint from these crowdfunding success stories in fashioning its investment crowdfunding legislation, and mandate that investment crowdfunders distribute a commemorative sweatshirt along with their securities. That would at least give the investors something tangible to remember their investment by, and would create jobs by increasing demand for commemorative sweatshirts! Oh, wait, those are made in Malaysia.

ARTICLE BY

Philip A Feigin

Lewis Roca Rothgerber LLP

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Business Concerns

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Writing Your LinkedIn Profile

Blogging on LinkedIn

LinkedIn Blogging Best Practices

The Confluence of Content and Social Media

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