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From personal experience, the moment someone does any work on a project they have a claim. The state of CA is extremely worker friendly in this regard. I've made this stupid mistake twice in two different startups unrelated to Immunity Project. The first time, we had someone interview for a job and attend a few meetings. We ended up not offering them the job and they filed a complaint. We fought it and ended up spending nearly six figures on legal + more then you can possibly imagine to settle. It know this sounds insane, but its true.

The second circumstance was a co-founder who stole cash from the company and was booted. Similar end result. In both cases we had no documentation (classic startup excuse), and strongly believed in the premise that if you didn't do the work, you don't deserve to be paid. We lost in both cases. One of the primary drivers in both cases was the dreaded contingency attorney. Anytime someone is able to get an attorney to take a case on contingency with minimal out of pocket cost, they have little reason to be reasonable. And because filing is the nuclear option in the first place, they don't care about fallout. Contingency attorneys are paid a % of the resulting settlement so they will drive the case as hard as needed to extract the maximum outcome. In some cases the attorney will manipulate their client in pursuit of this outcome even if its not in their clients best interest long term. It was smart for Kyle to file first because it makes it harder for the other party to retain a contingency attorney who will cover defense in the deal. This will dramatically increase the other parties cost to litigate the case.

Lessons learned:

1. ALWAYS put stuff in writing.

2. NEVER have anyone do any "work" without some written agreement on compensation.

3. The only winners in litigation are the lawyers.

4. 3pt14159 makes a great point: ALWAYS settle early. The longer you let something drag, the more it will cost. Its always best to try to settle prior to either party filing a lawsuit. In this case it sounds like Kyle tried to settle first but was unsuccessful.

ALWAYS settle early. By leaving it be you're exposing yourself. Eyes get wider and wider as you raise more and more. When that $2m wire clears, if it means writing a $300k cheque or agreeing to a $1m payout over 5 years, just do it. Don't be idealistic when there are real stakes on the line. True, they can still bring you to court later, but you'll be in a _much_ better position.

Great point. Editing my post to include this.

> It was smart for Kyle to file first because it makes it harder for the other party to retain a contingency attorney

Why would that change the calculus for an attorney considering a contingency agreement? (Honest question. I have 0 legal experience.)

Offering to cover defense increases their overall cost. If they agree to provide defense up front prior to anyone filing, and they are able to file first, they are able to make the bet that the opposing party won't file a counter. If the opposing party has already filed, they cannot make that bet, and as a result they are less likely to cover defense in the contingency agreement.

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