This is part 2 of our series written by legal consultant Beth R. Jacobson, PLLC, entitled The Biggest Mistakes You Can Make When Negotiating a Consulting Arrangement with A Pharma/Biotech Company. Today’s section will cover Pitfall Number One: What Do You Know About This Company?
The doctor has a few lunch meetings with the company and is ready to sign on with them based solely on their rosy depiction of the company and its prospects to be some day as big as Pfizer.
Big mistake with an easy and simple remedy. Simply by going on the internet, through a website as easy as Yahoo Finance, the doctor would have discovered that this company is near bankruptcy (the financial statements show that the company only has cash on hand for another two months of its burn rate) and that top management is currently under investigation for fraudulent conduct and insider trading by the officials. This is mistake number one because it behooves anyone to do research on a company before getting too far down the road to see if these are people that you want to associate with and who are going to have the requisite funding to pay you. This research is simple and very valuable.
It will also give you information as to what the company’s history is and who the major players are. You should also go a step further and spend some time reviewing the company’s SEC filings and its website. Lots of information is there for you to review and if there’s nothing there that gives you reason to be concerned, such information may give you valuable insights for further negotiations (for example, the SEC filings may state what other consultants receive in terms of cash and equity).
Part 1: Introduction
Part 2 : Pitfall Number One: What Do You Know About This Company?
Part 3 : Pitfall Number Two – Agreeing to Below Market Compensation
Prepared by BR Jacobson, PLLC
If you have any questions regarding the topics discussed above or if you would like further information about BR Jacobson, PLLC, please visit their website at http://www.brjacobson.com/ or send an email to beth@brjacbson.com.
