
Shutting down startup: who pays for legal costs? - oopsiePoopsie
Hi HN,<p>Unfortunately, I need to shut down my startup. Currently, we have legal debt because (my awful mistake) we consulted a firm early on and they helped us incorporate and generate basic legal documents.<p>It wasn&#x27;t until it was too late did I realize I could have done this for $500 with Stripe Atlas and Avodocs.<p>Now we have over $10k of fees that the lawyer has deferred for us under the condition that we get funding.<p>When shutting down the startup (C-Corp), does anyone know what happens to these fees? How does the piercing of the corporate veil work?<p>Also, any advice on breaking the news to the stakeholders?
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greenyoda
It seems that if your current lawyer sues you (personally) for payment of the
legal costs, you'd have to hire another lawyer to defend yourself, which could
easily cost you more than $10K. (If you don't appear in court to defend
yourself, the court will issue a default judgement[1] against you.)

Here's an article about piercing the corporate veil, which mentions various
conditions under which it can happen:

[https://www.nolo.com/legal-encyclopedia/personal-
liability-p...](https://www.nolo.com/legal-encyclopedia/personal-liability-
piercing-corporate-veil-33006.html)

[1]
[https://en.wikipedia.org/wiki/Default_judgment](https://en.wikipedia.org/wiki/Default_judgment)

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oopsiePoopsie
Thanks for the insight and the links. Reading through them now.

Appreciate it <3

