“Do you think any of that stuff is going to happen?” he asked.
“Probably not. But what if it does?”
“Then you know what you do?” he said. “Tell them, ‘fucking sue me.’”
This is dangerous advice. It will work well right up until you come across someone who will "fucking sue you". A contract, once signed, is a legally binding promise. You have promised to deliver what's on the contract, and you can be held accountable in a court of law if you fail to do so. The financial penalties for violating a signed contract can easily drive one into bankruptcy, and the reputational penalties can make it very hard to recover.
Having been in these kinds of negotiations many times over the 15 years I've been in business, and having never been sued nor ever had a deal go seriously wrong, the dad's advice seems perfectly sound.
The real point here is this:
In every significant business transaction (or indeed, major life decision), you have to choose where you're going be on the risk continuum between sheer recklessness and complete security.
At some point your efforts to be prudent cross over into excessive paranoia and then a new form of risk: that all the money and time you spend to try and keep everyone safe will be wasted if the deal doesn't go ahead at all, or if it reduces the amount of time and money everyone has to actually do the work.
Sooner or later all the de-risking stops being de-risking and starts creating new forms of risk.
I'm pretty sure the dad in this story was just advising his son to avoid making that mistake.
As the story said, the son sincerely expected to be able to do the work as it was scoped, for the price on offer. If this wasn't the case, the dad's advice would have been very different.
The reality is that when a small business is providing a service to a large company, the threat of legal action isn't really much of a motivator, as the small business likely doesn't have anything they can be sued for (aside from any insurance coverage they may have), so it's just not worth the cost and hassle of taking legal action. As a supplier, your reputation, along with the satisfaction of doing good work, are much bigger motivators to deliver a good result.
So everyone really knows, in a deal like this, that the only real option is that everyone works together to get the work done well, and if it looks like it's going off track, then you re-negotiate the agreement and if it seems irredeemable, consider cutting ties.
Legal action will barely ever be a sensible option in a case like this. I'm sure this was a key part of the dad's advice.
More specifically, my friend entered into a contract to deliver X for the old guy. When X turned out not to resonate with customers, the old guy sued him. Nobody saw it coming. My friend will probably win, and he was very lucky that he was able to get a lawyer for free. But what a massive PITA.
But, I don't think it contradicts the point of the article. The most watertight contract in the world won't prevent a vexatious client initiating legal action if they really want to; the only protection against that is to be very careful about who you do business with in the first place, and to ensure at every step of the process that both parties' incentives and expectations are aligned.
That's the point somebody was making about avoiding assholes. There is nothing you can do to avoid that risk. He will sue anyway. Your best hope is avoiding them. And each extra bit of protection you add into your contract will make you look slightly more similar to an asshole, so you'd better keep it to the probable risks.
We got the thing working well enough to use, though it would have taken some effort to revamp our manual processes to use it. Still, once over the hump, the ongoing manual effort to deliver the service would have been reduced significantly, with further reductions possible in the future as development continued. But the VP of Operations, who ran the team performing the service and who had previously held a similar position in a bank, was dead set against switching from the COTS package to our proprietary one. He thought it was too risky as it might upset the existing business.
The problem was, the existing business was not quite profitable, and probably could not have become profitable given the amount of manual effort involved. It seems to me that if you're running an unprofitable business (that isn't growing much either), the biggest risk you face is that your business will continue to be unprofitable! That's not some corner case -- that's the likely outcome! Anyway, because the VPO's objections couldn't be overcome and weren't overrulde, the project was cancelled, I was laid off, and, three years later, the company folded.
It still seems to me to be a remarkable failure of management not to see that some risks must be taken. In essence, the decision to bet the company on the software being developed internally had already been made; there was no way to get to profitability without it. But nobody seemed to realize that.
That is like saying "my grandfather smoked 3 packs and drank half a liter of bourbon a day, and died peacefully in his sleep aged 108, so all this talk about cancer and liver failure is baloney".
Whilst your point isn't necessarily invalid (I agree with you to some extent), your example isn't very good.
It pays to have the agreements air tight but you also have to watch you back and always have your bases covered. Even then, you could still get screwed even though you were in the right.
- the terms would be upheld in court,
- the terms are (financially) practical to enforce.
The irony? The one sued on was one the tightest and my client was 100% in the right. But the other guy was an asshole and we hoped the airtight contract would protect us.
We settled and paid him a non-trivial sum.
Have seen it repeatedly in situations short of lawsuits where the two sides are of markedly different sizes. The smaller party can negotiate whatever they want and then the big party will still proceed to do what they want and as long as there is still more business going on (sue them and lose the rest of the work).
 Of course there are exceptions: the most important of them is stipulations that will actually cost you money. That is, the business terms. Then there are terms that can cost you reputation and non-compete clauses that make you lose other work. There are terms you want to watch out for, but my experience discussed above is that it's not the contract that gets you sued, it's the asshole on the other side that you decided to do business with.
The non-trivial amount we paid out was a little less than winning would have cost.
(Or would your firm have?)
I'm just curious to understand how your own incentives don't point you towards court. Are you in-house counsel? Are you a small shop with no litigation department?
"You don't pay lawyers to tell you what to do or not do, their job is to tell you the risk in doing or not doing the action. It's your responsibility to decide what risk you're willing to tolerate."
Sounds like you agree!
Further, ask people he's been in business with in the past not about him but about whether they'd do business with him in the future.
I'd also recommend trying to not putt yourself in a position where you can only pay a subcontractor when you get paid. When you're client is late on payment, and your subcontractor starts hounding you for cash, you won't have a good time.
The kicker is that if something goes wrong, your contract won't protect you much anyway, and giving freebies and working the extra mile is more effective.
But if I listen to lawyers or wannabe entrepreneurs, most will tell me to read the fineprints and care about them.
Bingo. HN seems to have this ingrained assumption that anyone who can construct a reasonable argument must be a wildly successful entrepreneur doling out the most sagely of advice. When in reality it's just another programmer who punches the clock for one of the big tech employers and has never taken on more risk than deciding to eat sushi or ramen in the employee-cafeteria.
I can tell you three things that will guarantee failure, but I can't say much for sure beyond that.
1) If you are protected (LLC/LLP/S-Corp/etc) then the only thing you have to lose is the company itself. It is hard to go after you personally. If all the company owns is some computers and you are paying yourself a salary, there is nothing of value for them to go after, even if you screw up royally. If they do, fold up shop and go start a new company.
2) Big companies don't really want to sue. It is much better for them to walk away and take the loss. A manager that enters a company into a lawsuit is going to get questioned as to why they let the situation get so out of control. I was pulled into a situation where the lead developer embezzled several hundred thousand dollars and the company still didn't sue him. They fired the guy and brought in other resources (myself and someone else) to clean up the mess.
My approach is:
1) I strike anything I can't stand by in the contract. I don't go as far as a lawyer might go, but they tend to draw a line that also protects them from any accusation of negligence, which can sometimes create hard to negotiate situations. Corporate lawyers attach all kinds of crazy things. A salesperson I know calls the first version of a contract from a large company the "F*ck you version".
2) For a set of standard services I provide, I use my own contract which was drawn up by a lawyer. This limits my liability to actual moneys paid to my company, and provides the client with an easy out in 30 days should they decide to drop me. I link to it in every invoice I send these clients. By the way, don't just search Google for sample contracts and try to modify for your use. It really is worth paying a lawyer to sit with you and figure out what your priorities are and craft a contract around them. He asked good questions and built something that works well in our state and represents our interests as best as possible.
He signed it without reading it because he really wanted his company to get IBMs business if they were to make a microcomputer. And it worked, they agreed to buy his languages for their PC, and asked for a referral to someone who could sell them an operating system. He personally referred them to the leading microcomputer OS maker, but could not disclose what IBM wanted to the OS maker. The IBM managers flew to meet with the OS company, but CEO could not make the meeting. His wife and lawyer did, and they actually read the NDA, and it horrified them. They spent all day wrangling over edits to it until the IBM guys left in a huff, without disclosing anything or conducting any business.
The lead IBM guy called the language company CEO and told them what had happened. The language company CEO told him not to worry, he could get them an operating system too. And he did, and he eventually became the wealthiest man in the world, all because he didn't read an NDA before signing it.
The moral of the story is that you can always be sued, regardless of the agreement. But most every customer doesn't want to sue, they want to succeed. If you get good customers, they will work with you so you both succeed.
Unless you have some magical political pull, your leverage is nil. The reality is, getting to the point that the fortune 50 or .gov is suing you means that you were asleep at the switch -- getting to that point means that the business unit you are working with has acknowledged defeat (a huge step) and is going to blame you and hurt you no matter what the contract says.
also it's way easier to negotiate the "definition of done" with them. typically if all of their requirements are addressed and bugs reported in UAT are fixed by the go-live they are good. their teams take over and unless you're hosting the system (which would be covered by a separate hosting agreement) - you're pretty much done.
also smaller companies tend to demand "warranty" after the go-live (mostly due to the fact they don't have the staff to maintain the system).
My first programming job had exactly this problem. Spec started at "connect these two services together using webhooks for $700" and creeped its way up to "build a database-backed web service that replaces both of the original services and then some for $4000, plus development expenses."
It's still not done. It'll never be done. But thankfully, I got out after it was off the ground and someone else maintains it now.
It's all well and good until you find yourself in a tense standoff with a client who happens to enjoy litigation since they have an in-house counsel and money to burn. You may not identify that aspect of their personality until it is too late. Or you might think the risk is worth it.
If you are properly incorporated, can it really do more than drive you out of business?
Also, sadly, being sued for a business deal can drive you out of a small business even if you had exactly the right contract and were completely in the right and would _probably_ have won the lawsuit eventually. Going to court is fucking expensive, if they have more money to spend on it than you, they will drive you out of business. And anyone can file a suit against you no matter how much you are in the right.
First though, as for hiring a full time employee with only the ability to pay them for two months: if you're not up-front with this person you're a real jerk. I've solved this by bringing people in for contracts that are the duration and explaining that future contracts or conversion are dependent on more work coming in. Yeah, it's effectively the same except for in my scenario you may be offering the job to someone with dependents who is risk averse and definitely needs that paycheck in month three. This basically gives them the risk signal they deserve without you having to say "we've only got this much money and no idea what's going to happen in month three." I'll do almost anything before I screw up someone else's livelihood.
As for the contracts, I've gotten good enough to read most of them competently. I redline the sketchy parts and the parts my lawyers have redlined in the past. Submit my alternatives or reason why it should just be struck and keep going. It's generally around things like 100% payment at the end changed to milestones or 50/50, liable for all damages changing to liable for up to the value of the contract, etc.
There are some things you really can't mess with. If you've got a megacorp client and their AP policy is 90 days, don't bother. You're not getting it for AT LEAST 90. Likely 5-6 months if you're persistent/have a good project owner on their side. They will never agree to a change, and you're not going to sue them for a late invoice unless we're talking about large sums of money that would've dictated this is all being handled by lawyers anyway.
Other things get really tricky. Some will slide in IP ownership/transfer clauses that could essentially mean they have claim to anything your company's ever done. I've got some well written reaponse clauses that I re-submit with- but if they push back on those at all I instantly walk away.
So, yeah, do read the contracts, focus on a few key areas and look for over reach or hostile clauses and submit sane, fair responses that can be easily accepted. It's fine if you have a lawyer doing all this for you in an advisory role, by be the person who fronts the requests and make yourself part of the process. You'll learn the patterns very quickly and will need to pay your lawyer less frequently as well as you'll learn the counter-proposals so you can shape your proposals to reduce the counter proposals in the first place.
Let the esoteric stuff work itself out in a lawsuit, stuff has probably really hit the fan in that case.
As far as damages for outages and stuff, you have to assume that if you're working on a smallish (sub 500K) there's absolutely no way they're suing you for a few hours of down time if you provide good customer service during that period. I've had HUGE F ups that led to 6+ hour outages and still received highly positive post project feedback from clients because we had such a good relationship before our mistake(s), we were highly communicative and forthright during the issue, and provided a good post mortem quickly after resolution.
To that end, if you find that you often have like-warm relationships with clients, maybe you shouldn't take the risks and just have a good lawyer handy.
One of my former clients was great about this. He'd send things to me, but whenever I wanted to make a change, he would always call to discuss the reasoning. He'd then use that information going forward and not need to involve me in the loop. He knew the risks and benefits of doing or not doing the thing and could evaluate whether it was appropriate for the specific project. He saved a lot of money that way.
This a wrong attitude in its moral and legal aspects, and I think it tells us something about the very worrying ethical aspects of today's (or maybe it was always like that) startup environment.
That's an unfair misrepresentation of the article. The dad didn't say you shouldn't care whether or not you'll be able to deliver; just that endless refining of the contract won't actually help you much if something goes wrong.
That really depends; some company's legal department might go overboard with the stuff they make you sign 'or no deal'. I have seen a lot of them myself.
It is comparable to job ads; 'wanted, junior with 40 years experience in React and every other tech ever invented'. Lawyers just want/need to cover ever eventuality. If you sign that doesn't mean you broke your promise; it's just how it works.
If you don't sign this kind of contract you might never get this kind of work. Maybe it works different in different parts of the world, but we signed some crazy things (which were dealbreakers if not signed) in the past and no-one ever sued us for it ; it's just their legal department making sure the company is protected in the event of malice. Nothing to do with morals.
It depends a lot about the case though and reading Pud (who is a known shoot from the hip guy), I would say as worded here it's generally bad advice to do it like that.
Mike Monteiro talks about this in his "Fuck you, pay me" talk . He says that a lot of companies have boilerplate contracts which have outdated provisions like requiring you to hand over printouts of source code, or delivering software on floppy diskettes. The proper response is to have a lawyer yourself who can review the contract and explain to the company's legal counsel that 1) these contract provisions are unreasonable and outdated and 2) that striking these provisions will not create additional liabilities for the company. The reasons these contracts go overboard is because every time the company gets burned, it adds some scar tissue to the contract to prevent that same eventually from occurring again, regardless of whether it's applicable to the task at hand.
Maybe it works different in different parts of the world, but we signed some crazy things (which were dealbreakers if not signed) in the past and no-one ever sued us for it
I will be extremely honest. You got lucky. You put your head in the mouth of the lion, and it didn't bite. It doesn't mean that what you did was a good idea, it just means that you got away with it.
My experience has always been that if a job req calls for n years of experience in technology X, not having that demonstrable experience means you won't even get called in for an interview. Period.
So if it really is like that then these contracts are to be taken seriously, as companies will expect to be able to hold you to the terms.
That's what I take out of the anecdotes. In a sense the guy's Dad was right: the people the guy was dealing with were in another class from him and to join that class required not giving a shit and signing away his life. If he was to question it, that defined him as a person who deserved to lose everything to lawsuits (or never get the opportunity). He'd have asked questions. Not asking questions put him in the company of those who moved fast and broke stuff and didn't ask questions, and he shared in the money and opportunity.
I have a counterexample: I do a Patreon business dedicated to audio software. I've got a couple intermediate goals in there: at $700 I begin releasing certain extra plugins off a list, and at $800 I begin opensourcing my stuff one plugin at a time, my pick (there's another goal where the community specifies what's to come next, and others to accelerate the whole process).
I was at around $720 and releasing the extra plugins as promised, when a single person jumped in with $80 a month (which may or may not have been even real, sometimes pledges are fake), putting it to $800 at a stroke. The risk there is that they'd progressively dial it back as that was their pet reward they wanted, causing all further pledges to feel like they had accomplished nothing. I didn't mention this but I did ask the person if they'd be OK with a pledge level that was less than 10% of my whole Patreon all by themselves (which is the more responsible approach: try to build off smaller stuff that is more predictable)
They were offended at the idea I'd even question their money whims and bailed off the site entirely, and then another person (possibly seeing how this went?) at a $30 level bailed too, dropping it down under the $700: goodbye, extra plugin off the list.
At the time I saw this as just evidence that courting rich people with completely disposable cash was dangerous: they can be totally fickle and turn on you without even being that mad at you. My progress over months got absolutely reversed at a stroke by two people. That's annoying.
Reading this article, I see another side to it. In so many ways, dealing with rich people is a matter of virtue signaling: you simply cannot join that class without internalizing their thinking. To question the contract implies you're not going to be so rich that you can weasel your way out of any problem that might arise. If you can't think in terms of that kind of extreme liquidity and freedom of action, you're potentially a danger, a person who'll make the wrong judgement call in a crisis and bring that reality principle in. To ascend you must be breathing helium and not air, and the effect can be heard in your voice and seen in your actions, and it quickly shows up in reality: breathe more helium, lift off, stop questioning and get rich along with the other rich helium-breathers.
Yes, I'm skeptical, hence the analogy. But I'm also openly wondering if I did the right thing. Perhaps rather than asking sensible questions of some rich person who might have not had my best interests at heart, I should have excitedly celebrated the 'good fortune' and attracted another rich person who'd pledge $100 and so on, or $1000: maybe I should have carried on until my world depended on continually finding a new person who'd pledge equal to all previous people. Sort of a fractal patronage, starkly counter to my plan of doing it through sheer numbers and having a stable, predictable patronage expressed in largely statistical terms.
The people do exist, for the 'fractal' type. There's a person out there who'd pledge $1000 without blinking, and one who'd pledge $2000, $8000 and so on, provided the dream is big enough.
I feel that all those people are increasingly liable to bail and vanish in the wind when you 'call in the lawyers' or start asking questions, because it's placing a burden on their whims, and you're stepping into a world of whims where you too are expected to think nothing of all this.
The startup environment breathes dreams, not air. It's a mechanism where you will do yourself tangible harm by slowing down or questioning anything, even by sensible questions. I feel I've had a hint of that already, and I'm still deciding what to do about it, and what kind of stand to take.
You see, part of my job is being able to jump out of the 'dream' and take a larger view. I'm doing so here. I'm puzzled and undecided, because I see how this works: I do see a moral problem with chasing the fractal patronage and hyping illusory dreams, but I also see that the dream is the product and there are those who are happy to buy it if you'll avoid popping their bubble.
And one of the conditions is: you're now part of the abundance, money means nothing, don't ask questions. Money, rules, laws become meaningless. What is your dream?
I don't know whether to step into that world. I know exactly how I can prevent it 100%: ask practical questions and care wrongly. Who cares if some pissant with 1$ feels let down if they pledge and the rich people adjust their pledges to optimize their return? I'm expected to not even blink at that because my goal is bringing in even larger pledges, and we know the drill. Move Fast Break Stuff, and it's easy to identify who's breathing the helium. And I know I can imagine stuff that's pure helium, if I try; I have notebooks full of it.
But I CAN'T stop asking questions and seeing the larger picture…
I'm not sure that not asking questions is how you get to be part of the abundance.
I'm not familiar with how Patreon works so I can't be sure, but my gut feeling is that you screwed up.
You don't see (many) people here telling how they didn't put proper contacts in place, got sued and failed because of that alone.
And I postulate that it happens a lot more than most of us think.
1. Laying out legal remedies in cases of breach of contract
2. As a formalized negotiation tool to make sure both parties are on the same page
People focus on #1 but overwhelmingly, the utility for a contract comes from #2. In cases where business deals go sour, actual malice is a far trailing cause to misunderstanding and contract negotiations are a best faith effort to avoid this as much as possible.
That doesn't mean that this approach is the one single ingredient needed for success, of course.
But as an entrepreneur, I use contracts as a way to set expectations early on in the relationship. Our side agrees to do X, your side agrees to Y, this is when we agree to do it, and lets mitigate some basic and common miscommunication.
The excessive legal back and forth for small businesses and mostly friendly deals is probably unnecessary in a lot of situations, but failure to effectively communicate expectations is a killer, because a client can decide not to pay and tell you to "fucking sue me."
He seems to be a pretty nice guy overall! This one was particularly fun to read: http://pud.com/post/65374847162/how-i-deal-with-users-who-st...
I redlined pretty much four pages of the five page contract, and sent it back. That triggered an hour with their in-house lawyer were I proceeded to call the contract idiotic nonsense. Basically it was an hour of me saying, go fuck yourselves, because the contract wouldn't have let me say fucking sue me. It would have let me say uncle no matter what. It was that much of a one-way contract.
In retrospect, upon receiving the contract, it's clear it was gross incompetency and also possibly intended to scuttle the work in-progress and take ownership of what had been produced so far. It was a vindictive contract.
What I should have done, is publish the work with a sane research/education license (non-commercial), and published this stupid contract and outed the company and thrown them under the goddamn bus for trying to push me under one first. Dicks. 6 years later and that's what I regret not doing.
> They say entrepreneurs are risk takers.
> I think of myself as too lazy and irresponsible to fully understand the risk.
What is the difference? He took fairly large risks and they paid off, the situation could have been different, but engineers working 80 hours/week to pay off debt don't usually write blog posts about how they came to be there.
If you want to learn about how a professional deals with contracts, payments, and contracting I'd say to check out "Fuck you. Pay me"  that gives a reasoned explanation of negotiations, what to expect, and reasonable ways to react/behave.
 - https://www.youtube.com/watch?v=jVkLVRt6c1U
On the one hand, I actually did something similar to his second story. I hired two full time employees with only enough cash for a short period of time. I relied on finding more clients to stay afloat. It didn't work out well in the end for me.
On the other hand, at no point during that process did I ever consider myself "too lazy to understand the risks". I don't think that's a good trait. I considered the risks and knew exactly what I was getting in to. I had backup plans and exit strategies. It was a calculated and considered risk that I decided was worth taking. I also decided that I was OK with the worst case scenario outcome.
Not knowing the risks is foolhardy. Knowing the risks, and making the conscious decision that some risks are worth taking is a different thing entirely.
(On the other hand, I failed, he succeeded, so full respect too him for making it work. Maybe his strategy is better after all. Maybe along the way there was a risk I consciously choose not to take that he would have blindly taken that would have changed the outcome for me. And there were limits for me. I was prepared to risk losing cash savings, but not my home, and I wasn't prepared to go into debt to make it work)
Contracts aren't there for when things are going smoothly, they are there to save your ass when things go wrong.
Case b: This is a one-time deal, they have no reason to care. be more careful.
I am in no way an expert, but looking at the incentives the other side of the negotiating table is surely more important (and way cheaper and quicker) than lawyering up a contract?
Things like that are really bad to sign. You can end up with no business and a collection agency taking a cut of your salary for years.
I rarely question clients contracts unless they fuck with the payment terms, or unless they impose unreasonable work guarantees. Almost nothing else matters in a contract.
If the contract is unreasonable I don't hestitate to say "this bit isn't practical". If they don't agree to adjust to fair and reasonable terms I drop the client/contract.
I really hate working for companies who impose exploitative terms because they hold the more powerful position in the relationship. I'd rather tell em to go elsewhere.
I wonder if they still haven't gotten sued...
I've been at companies who fight every contract tooth and nail, and companies who are much more relaxed. It's the large companies who (rightfully) have more to worry about in terms of law suits.
Legal risk is like any other. (Running out of cash is another) You just have to figure out which ones to protect against at which time. As they say in financial markets, "If you hedge away all the risks, you aren't left with any returns"
Aha, I laughed out loud. I love this guy.
Edit: he has an account on HN. Username is obvious.
> I’m not sure what the lesson is here.
I guess the lesson is entrepreneurs make progress by recklessly disregarding the risks they take with other people's lives and money, and they keep doing it because it works for them and that's all that matters to them.
That is exactly why you incorporate. And there are folks who will come after you personally if you don't pay them what you owe them. They're called the government. Dad's bad advice won't get you out of that one.
You think he'd spent enough on lawyers that he'd have gotten that advice at some point.
Time kills all deals though, and NOT getting the deal done imho is a big risk factor. So an imperfect contract is better than no contract..
It will provide you with cover for mistakes as well as alleged negligence. Sometimes even when you're right, the legal costs to defend yourself are just as high as being guilty.
In Australia, it'll cost around the $1k/year mark for a smaller agency but absolutely worth it.
> “Worry about that in 2 months,” Dad said.
Gosh, and people wonder why tech employees seem disinclined to be loyal to companies.
Because these days, many do. Far better imho than the world of Full Time Employment and its endless office politics and keeping up of appearances. No need to ask for permission to work on a project or give more attention to your own family.