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Consents and Approvals: The First Gate to Closing an M&A Transaction

Posted: August 6th, 2025

By: Vincent Costa, Esq. email, Alex Tomaro, Esq. email

One of the earliest and most critical legal obstacles in any mergers and acquisitions (M&A) transaction is securing the necessary consents and approvals. These consents can come from a range of parties including lenders, landlords, counterparties to key contracts, shareholders, franchisors, and regulatory agencies. Failing to obtain even one required approval can delay or derail a deal entirely, expose the parties to contractual liability, or lead to regulatory sanctions.

Bank loan consents are among the most commonly overlooked but vital approvals. Many corporate loan agreements include “change of control” clauses that trigger an event of default if the borrower undergoes a significant ownership shift. Without express consent from the lender, this could result in the acceleration of outstanding debt or other penalties. Early and transparent communication with lenders is therefore essential to avoid surprises late in the process.

CMM Partner Vincent Costa and Associate Alex Tomaro recently closed an M&A transaction involving the sale and transfer of multiple family-owned businesses and real estate assets across Long Island. The deal required the team to navigate particularly complex bank consents in order to close. Discussions with multiple lenders spanned several months and significantly delayed the closing, highlighting the importance of initiating lender conversations as early as possible in the deal timeline.

Landlord approvals are similarly important in asset deals or transactions involving corporate reorganizations. Commercial leases frequently contain provisions prohibiting assignment or subletting without the landlord’s prior written consent. Ignoring these clauses may result in lease termination or default, potentially disrupting business operations or diminishing the value of the deal.

Customer and supplier contracts often present a hidden risk. Key commercial relationships may be governed by contracts containing anti-assignment or change-of-control provisions. These clauses can allow counterparties to terminate or renegotiate agreements upon notice of the transaction, placing revenue streams and supply chains in jeopardy. Identifying these contracts early in diligence is essential to maintain operational continuity.

Shareholder and board approvals also play a central role, particularly in public or closely held companies. Internal corporate governance documents, such as bylaws and shareholder agreements, may require board approval or a supermajority shareholder vote to approve a sale. In some jurisdictions, statutory requirements impose additional procedural hurdles, including disclosures and fiduciary obligations that must be met before a transaction can close.

Franchise consents are critical in deals involving franchise businesses. Franchise agreements almost always include strict limitations on the transfer of ownership interests, requiring the franchisor’s prior written approval. Failing to obtain this consent can result in termination of the franchise rights, potentially rendering a core part of the business model inoperable. In sum, obtaining consents and approvals is not just a procedural step, it is often the first and most important gate to closing. Deal teams must map out a consent matrix early in the transaction timeline, proactively engage with stakeholders, and negotiate any required waivers or consents well in advance of closing to avoid costly delays or surprises.

Obtaining consents and approvals is not just a procedural step, it is often the first and most important gate to closing. Deal teams must map out a consent matrix early in the transaction timeline, proactively engage with stakeholders, and negotiate any required waivers or consents well in advance of closing to avoid costly delays or surprises.

M&A Deals: Here’s What You Need to Know
How Commercial Contracts Can Make or Break Your M&A Deal
What Really Keeps M&A Deals on Track? A Closer Look at Governance and Fiduciary Duties
The Overlooked Obstacle in M&A: Existing Debt and Its Hidden Risks

For guidance, contact Vincent Costa at vcosta@cmmllp.com or 631-738-9100.

CMM Closes Prime Commercial Real Estate Sale of NJ Shopping Center

Posted: July 25th, 2025

Behind every successful commercial real estate sale is a team that anticipates challenges and delivers results and this transaction was no exception!

CMM recently represented a long-standing client in the sale of a premium shopping center, anchored by national grocery and retail stores, located in New Jersey.

A notable aspect of this deal was the purchaser’s assumption of the existing mortgage on the property, adding a layer of complexity that our team navigated efficiently. The sale process was expedited to ensure the buyer could leverage the benefits of a 1031 exchange, a strategic tax-deferral opportunity for real estate investors.

CMM Senior Partner Christine Malafi led the transaction with valuable support from Partner Arthur Yermash throughout each stage. The team’s collaborative efforts and attention to detail enabled them to close the deal rapidly and provide success for both our client and buyer.

This transaction underscores our commitment to delivering results for our clients. We are proud to have played a key role in this significant real estate transaction and look forward to supporting future opportunities with similar diligence and professionalism.

For more information on our commercial real estate services, please contact us.

Christine Malafi Named to Dan’s Power Women of the East End

Posted: July 23rd, 2025

Campolo, Middleton & McCormick Senior Partner Christine Malafi was named to Dan’s Power Women of the East End, recognizing extraordinary women who make the East End the thriving and vibrant place it is to work, live and do business. Malafi received her award on September 10, 2025 at the Muses in Southampton, NY.

Malafi chairs the Corporate Department at CMM, which Forbes has recognized as a Top Corporate Law Firm She has led the CMM legal team in closing countless M&A deals worth billions of dollars. She has vast experience advising on both buy-side and sell-side M&A transactions in a variety of industries, including technology, manufacturing, education, healthcare, and professional service sectors. Malafi is particularly adept at working closely and strategically with clients’ other professional advisors, including accountants, bankers, and M&A advisors, as well as forging those critical relationships for clients based on the deep network of relationships she has cultivated over years in the business.

Malafi has the unique perspective of being a corporate lawyer who spent the first half of her career as a litigator with extensive experience in municipal, insurance coverage, and fraud issues. She brings her deep understanding of litigation and the court system to all aspects of her corporate work and uses this experience to help protect clients from a variety of critical angles.

CMM’s David Green Named as President of the Sea Cliff Village Library Board of Trustees

Posted: July 15th, 2025

Campolo, Middleton & McCormick, LLP is pleased to announce that Partner David Green has been elected by the Sea Cliff Village Library Board of Trustees as President. In this role, Green will preside over board meetings and liaise with the Friends of the Sea Cliff Village Library to best serve the Sea Cliff Village community through its library.

Green, now in his fifth year as a trustee, most recently held the role of Vice President of the Board.

He is no stranger to leadership: Green oversees all internal IT matters for CMM, plays a key role in the firm’s Westbury office, and is instrumental in mentoring and training new attorneys and staff. He regularly provides CLE training on litigation topics and client relations.

As a member of CMM’s litigation team, Green represents businesses and individuals across a wide range of matters, with a particular focus on clients in the construction and real estate development sectors.

“It’s an honor to serve as President of the Sea Cliff Village Library Board of Trustees,” Green said. “Our library is a vital part of the community, and I look forward to working with my fellow trustees and the Friends of the Library to continue supporting its mission of learning, connection, and access for all.”

HIA-LI Economic Development Task Force “From Vacancy to Vibrancy: The Future of Mall Redevelopment on Long Island”

Posted: July 7th, 2025

Event Date: September 30th, 2025

Joe Campolo will moderate the HIA-LI Economic Development Task Force meeting on Tuesday, September 30, 2025. The event will be held at the Long Island Cares Center from 9:00am to 11:00am. Hear how developers are redefining mall spaces across Long Island. Panelists include Scott Burman, Founder & Principal of Burman Real Estate, Frank Vero Jr., CEO of Aurora Contractors, and Anthony W. Kim, P.E., Department Manager – Electrical Assistant Vice President, H2M architects + engineers.

Ethics and AI: What Lawyers Need to Know

Posted: June 26th, 2025

By: Richard DeMaio, Esq. email

Published In: The Legal Brief

Since the emergence of Artificial Intelligence (“Al”), many industries have grappled with whether and how to use this technology. AI is such a powerful tool because it learns from questions that people ask it. While AI poses many advantages when it comes to efficiency, it can be risky when it comes to accuracy. In the legal field specifically, the use of AI can present ethical issues that lawyers must consider both prior to and while using Al in their practice. Several of those issues are discussed here. Through careful use of AI, lawyers can ensure they are upholding both their duties to their clients, and their professional obligations. Reference to a Rule or the Rules refers to the New York Rules of Professional Conduct.

I. Confidentiality

Under Rule 1.6, subject to certain exceptions, a lawyer cannot knowingly reveal confidential information, or use confidential information to the disadvantage of the client, or to the advantage of the lawyer or a third person.¹ Confidential information includes information learned during, or relating to, the representation of the client that is protected by attorney-client privilege, likely to be embarrassing or detrimental to the client if revealed, or information that the client has asked remain confidential.² Al models first require the user to input information into the AI database, then formulate a query.³ The AI engine then provides the user with an answer or feedback based on this query. When an attorney inputs confidential client information into publicfacing AI database, however, the AI may use this information to answer other people’s questions because, as stated earlier, AI learns from questions that people ask it.⁴ Regardless of whether the AI engine reveals it, an attorney still breaches their ethical duties if this information is at risk of being disclosed to the public, in this case inputted into AI.⁵ This can very easily put confidential information in the hands of third parties which, by extension, can hurt the client’s case.

Attorney-Client Privilege

Under CPLR § 4503, confidential communications between an attorney and a client are privileged, and therefore cannot be disclosed to any third parties.⁶ Attorney-client privilege is waived when information otherwise protected by the privilege is revealed to a third-party. Therefore, attorney-client privilege presents many of the same issues as confidentiality when it comes to the use of Al. Even private, or AI software that is walled-off to anyone outside of a firm, however, can pose a risk to attorney-client privilege.⁷For example, if a law firm were to use an AI model that uses only data generated by the firm, and an attorney inputs privileged information into this model, anyone else in the law firm using this model could potentially access this information, which could be a breach of the attorney-client privilege.⁸

II. Conflict of Interest

Pursuant to Rule l.8(b), a lawyer shall not use information relating to the representation of the client to detriment of the client unless the client gives informed consent.⁹ With the use of public-facing AI, there is a possibility that information relating to a client or a case entered into AI can be stored and repeated in another user’s query.¹⁰ In this situation, the hypothetical “other user” could very well be opposing counsel.¹¹ Thus, any strategy or analysis of an issue in a specific case could inadvertently fall into the wrong hands to the detriment of the client and their case, creating a conflict of interest and violating this rule.

III. Attorney Oversight of AI

Attorneys have fiduciary duties to their clients to provide both competent and diligent representation. Rule 1.1 states that competent representation requires the legal knowledge, skill, thoroughness, and preparation reasonably necessary for representation.¹² Additionally, under Rule 1.3, a lawyer shall act with reasonable diligence and promptness when representing a client.¹³ A lawyer should also not neglect a legal matter entrusted to a lawyer.¹⁴ To uphold their ethical duties under these rules, it is important for lawyers to oversee any work done by Al.¹⁵ When a client retains a lawyer, they are paying for the lawyer’s expertise and knowledge about a specific matter. If a lawyer is using AI, and not reviewing for accuracy the information AI is generating is ultimately serving as a replacement for the lawyer’s own judgment andknowledge. Thus, the lawyer’s representation would not be diligent or competent.

Another issue is presented when associates or other non-lawyer employees at a firm, including paralegals, interns, and support staff, are using AI to work on client matters. Under Rule 5.1, a lawyer with direct supervisory authority in a law firm is required to make reasonable efforts to make sure that the supervised lawyer is conforming with the Rules of Professional Conduct.¹⁶Under Rule 5.3, a law firm must ensure that the work of non-lawyers in a firm is adequately supervised.¹⁷ If an associate or nonlawyer employee is using AI for client work, whether a supervisory lawyer is aware of this use or not, there is a risk that without proper oversight, inaccurate AI-generated information could be utilized on these client matters and violate numerous ethical rules relating to confidentiality, privilege, competence, and diligence, among others.

IV. Duty of Candor

Under Rule 3.3, a lawyer should not make a false statement of fact or law to a tribunal.¹⁸ This rule raises questions as to whether a lawyer should have to disclose to a court when they have used AI. For example, if an attorney uses AI to find cases supporting his/her argument in a brief or has AI re-word his/her writing to make it flow better, the attorney may be ethically required to disclose this to the court. Some Judges have even ordered that lawyers who use AI to create legal documents both disclose this to the court and certify that they took precautions to protect confidential information.¹⁹

V. Duty to Communicate

A lawyer is obligated not only to communicate with the court, but also with their client. Under Rule 1.4, a lawyer is obligated to consult with a client regarding the means that will be utilized to meet a client’s objectives.²⁰ This duty could include consulting with a client to see if they are comfortable with the use of AI for matters relating to their case.²¹ A lawyer should explain to the client both how the AI will be used, and how the client’s confidential information will be protected, so that the client can give informed consent to the use of Al.

VI. AI as Giving Legal Advice

Another issue can occur where AI is giving legal advice. Under Rule 5.5, a lawyer shall not aid a nonlawyer in the unauthorized practice of law.²² The developers of AI are likely not lawyers licensed to give legal advice, and AI itself, regardless of how advanced it is, is also not a lawyer. If a lawyer is using AI for specific legal advice, they are aiding AI in the unauthorized practice of law and violating this rule.

VII. AI is not Always Accurate/Reliable

AI is still a relatively recent development, and it will continue to develop and grow in time. However, because it is still new, lawyers should be wary of its reliability and accuracy, especially when deciding what kind of AI to use. For example, AI developed by legal research providers like Lexis and Westlaw may be more accurate than ChatGPT. In order to provide competent and diligent representation to their clients²³, lawyers must be aware of this by using reliable AI and checking its accuracy.

VIII. AI may be Inherently Biased

AI is developed by humans who have their own individual biases and prejudices that could be transferred over to the AI they create. Additionally, AI tools require training, and if the data used in this training is biased, the AI may then use this data to produce bias results.²⁴ Further, since AI builds upon historical data, the very nature of that data could be biased, thereby giving a biased underpinning to the analysis of the current data. Under Rule 8.4, a lawyer shall not engage in any conduct that he/she knows or should reasonably know is discrimination or harassment.²⁵ Therefore, lawyers must be aware that the AI they are using could have preconceived biases based on its history, development and training, and must ensure that this does not violate any duty or affect their ability to adequately represent their clients.

IX. Refusal to use AI

A lawyer’s refusal to use AI can present ethical issues in and of itself. For example, under Rule 1.5, a lawyer may not charge an excessive fee or expense to a client.²⁶ If using AI can save a lawyer time and money, this can cut down on costs charged to the client. If a lawyer refuses to be more efficient by using AI, he/she can potentially be violating this rule by charging the client more for their time than they would need to if they had used Al. Additionally, if a lawyer is not availing him or herself of technology that is available to them and that can make their practice more efficient, he or she may not be providing competent representation to their client.²⁷

Conclusion

AI can be a great tool for lawyers who are trying to be more efficient and to stay current with new legal technology as it develops. Though there are mixed views on its use in legal settings, it is likely that its use will become even more prevalent in the future. With litigation over the use of AI likely looming²⁸, the implications of AI on the legal field are yet to be fully realized. In the meantime, it is important to consider the ethical implications of its use while we await further guidance.

1. NY Cl.S Rules Prof Conduct R 1.6(a).

2. Id.

3. See Isabel Gottlieb, Generative AI Use Poses Threats to Attorney-Client Privilege, BLOOMBERG (Jan. 24, 2024), https:/ /news.bloomberglaw.com/business-and-practice/generative-ai-use-poses-threats-to-attorney-client-privilege

4.Id.

5. Id.

6. CPLR § 4503.

7. See Isabel Gottlieb, Generative AI Use Poses Threats to Attorney-Client Privilege, BLOOMBERG (Jan. 24, 2024), https://news.bloomberglaw.com/business-and-practice/generative-ai-use-poses-threats-to-attorney-client-privilege

8 Id.

9. NY Cl.S Rules Prof Conduct R 1.8(b).

10. See Isabel Gottlieb, Generative AI Use Poses Threats to Attorney-Client Privilege, BLOOMBERG (Jan. 24, 2024), https://news.bloomberglaw.com/ business-andpractice/generative-ai-use-poses-threats-to-attorney-client-privilege

11. Id.

12. NY CLS Rules Prof Conduct R l.l(a).

13. NY CLS Rules Prof Conduct R 1.3(a).

14. Id. at 1.(b ).

15. Tracy Duplantier, AI and Ethical Concerns for Legal Practitioners, LEXIS NEXIS (Jan. 8, 2024), https://www.lexisnexis.com/community/insights/legal/b/thought-leadership/posts/ai-and-ethical-concerns-for-legal-practitioners

16. NY CLS Rules Prof Conduct R 5.l(a)(2).

17. NY CLS Rules Prof Conduct R 5.3(a).

18. NY CLS Rules Prof Conduct R 3.3(a)(l).

19. See Sara Merken, Another US judge says lawyers must disclose AI use, THOMAS REUTERS (Jun. 8 2023), https://www.reuters.com/legal/transactional/another-us-judge-says-lawyers-must-disclose-ai-use-2023-06-08/

20. NY CLS Rules Prof Conduct R l.4(a)(2).

21. See Janine Cerny, Steve Delchin, & Huu Nguyen, Legal Ethics in the Use of Artificial Intelligence (Feb. 2019).

22. NY CLS Rules Prof Conduct R 5.5(b).

23. See NY CLS Rules Prof Conduct R l.l (a), R 1.3(a).

24. See Janine Cerny, Steve Delchin, & Huu Nguyen, Legal Ethics in the Use of Artificial Intelligence (Feb. 2019).

25. NY CLS Rules Prof Conduct R 8.4(g).

26. NY CLS Rules Prof Conduct R 1.5(a).

27. See NY CLS Rules Prof Conduct R 1.l(a),

28. See Isabel Gottlieb, Generative AI Use Poses Threats to Attorney-Client Privilege, BLOOMBERG (Jan. 24, 2024), https://news.bloomberglaw.com/business-and-practice/generative-ai-use-poses-threats-to-attorney-client-privilege

HIA-LI’s 37th Annual Trade Show Executive Luncheon

Posted: May 30th, 2025

On May 29, 2025, Joe Campolo presented as a panelist at HIA-LI’s 37th Annual Trade Show Executive Luncheon, where he discussed the HIA-LI’s Innovation Park and the influence it has on Long Island economic development. Held at the Suffolk Federal Credit Union Arena, the event brought together business leaders and elected officials from across the region.

New York Lieutenant Governor Antonio Delgado and Suffolk County Executive Ed Romaine opened the event with remarks emphasizing the importance of economic growth on Long Island and throughout the state. The panel discussion focused on major regional projects and initiatives driving development.

Moderated by Marc Herbst, Executive Director of the Long Island Contractors’ Association, the panel also featured Jim Coughlan, Principal at TRITEC Real Estate Co.; Tracey Edwards, Senior Vice President at Sands New York; and John Hill, Deputy Director for Science at Brookhaven National Laboratory’s Electron-Ion Collider.

HIA-LI Executive Luncheon: Campolo Joins Panel to Discuss Economic Development on LI

Posted: May 19th, 2025

Event Date: May 29th, 2025

EVENT DETAILS
Date: May 29, 2025
Time: 11:30am to 1:00pm
Location: Suffolk Credit Union Arena – SCCC Grant Campus, Crooked Hill Road, NY 11747

Campolo Moderates HIA-LI Economic Development Task Force Meeting: South Bay Village

Posted: May 16th, 2025

Joe Campolo moderated today’s meeting of the HIA-LI Economic Development Task Force, which featured an exclusive preview of Rechler Equity Partners’ new vision for the former Island Hills Golf Course in Sayville, NY. The reimagined development—now known as the South Bay Project—was shaped through months of community engagement and guidance from an advisory committee of local leaders. The result is a bold yet thoughtful plan that honors the character of the Sayville area while promising significant economic impact. Speakers included Gregg Rechler, Managing Partner at Rechler Equity Partners; Jim Morgo, Morgo Private Public Strategies; and Mike Dawidziak, Strategic Planning and Consulting.