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Fucking Sue Me (2011) (pud.com)
663 points by dsr12 1535 days ago | hide | past | web | favorite | 194 comments

Lawyering in general, and business lawyering in particular, is an art in which good judgment counts a lot more than mere technical precision.

From a lawyer perspective, a written contract may have all sorts of areas in which it falls short of an ideal in capturing all key issues potentially affecting a client. There are recitals (defining factual context), covenants (setting forth promises), conditions (defining when an obligation kicks in), and (often) representations and warranties (defining the extent to which parties stand behind what is purporting to be sold, etc.). In any of these areas, a lawyer can potentially find things that are inconsistent with what a client says the deal is supposed to be. Sometimes this happens because of unequal bargaining power, where a big company essentially presents a host of oppressive boilerplate terms and conditions as "take-it-or-leave-it" items. Other times, it happens because of what I call "slicko" tactics by the other party, where something that appears to say "x" in fact has a legal meaning of "not x" owing to the use of weasel wording and the like. Still other times, it happens because entrepreneurs are trying to cobble together their own contract by picking and choosing what sounds good from others they have seen and, in the process, failing to ensure that things don't conflict with each other or perhaps just omitting to address key legal issues by having put an exclusive focus on the business issues. Finally, it can come about simply because of either poor drafting by a lawyer on the other side or simple attempts by a party to overreach.

When you see this as a lawyer, what do you do about it?

First, the final say on such issues belongs to the client and not to the lawyer. So, after a high-level assessment, you talk with your client, explain the general range of issues and problems, and get direction on the desired level of response. Is the deal such as even to warrant legal review? Is it to be a high-level review only, just enough to let the client know what key risks exist and to address only egregious things that go to the heart of the deal? Is it to be comprehensive to try to catch and fix everything that is even potentially material, even if it deals only with issues that are highly unlikely to arise? Or is it to be something in between? This need not be an elaborate discussion and often takes only a few minutes. But it is vital to the process because it lets the client make an informed choice about how to proceed with the legal review.

Having gotten client direction, it is still important in all but mega-deals to keep a sharp practical focus in doing a review. What good is it to do a scorched-earth review and markup if the result will be overkill that is likely to alienate the other side (some lawyers who do this do deserve to be called deal-killers)? It really is poor business lawyering simply to proceed unthinkingly and one-dimensionally in every case to review and mark up everything no matter how remote the risk or how likely it is to be material. There is a dynamic to negotiations and nothing galls the parties more than to have to sort through a lot of lawyer comments over what they see as non-essential points for their deal.

On the other hand, it never pays arbitrarily to cut corners in doing a review. Just because a client says "spend no more than an hour on this" doesn't mean a proper review can be done with such bounds. If a lot is at stake, and a client is just being penny-wise and pound-foolish, it is better not to do the review at all than to gloss over all sorts of serious problems in the name of economy.

The lesson from this piece, to me, is that entrepreneurs can do well in keeping a sharp eye on the practicalities of managing their business opportunities and they should not let lawyers get in the way of that. A related lesson, in case a lawsuit ever did result on signing any complex contract blindly, is that entrepreneurs can act foolishly in casually inviting lawsuits by failing to manage the legal review process at all and simply signing complex contracts as is. The net of this is: use your lawyers in proper cases but make sure to use lawyers who have a good practical focus in addition to legal skill and then manage that relationship to get what you need from the services for your deal. In any deal that really matters, it is usually a mistake to proceed without lawyers and it is an equally big mistake to give the lawyers sole discretion in how to do the project. Be proactive and smart in this, just as you would be in making any other business decision.

"There is a dynamic to negotiations and nothing galls the parties more than to have to sort through a lot of lawyer comments over what they see as non-essential points for their deal."

Isn't that a strategy sometimes used to wear down the other side and make it hard for them to uncover the true intent of what one party is trying to slip by the other party? Or give added ambiguity which can be beneficial to one party or another?

If one party is out to screw the other over, then lawyering might help some.. maybe.

But if you suspect this is the case, then in most cases the deal is going to be more trouble than it is worth.

You topped the comments in previous discussion too. (Hope you are the same guy)


The lesson, or at least the lesson I've learned from dealing with lawyers at companies big and small, is that lawyering is a practice in making sure nothing can possibly go wrong.

In a way, lawyers are the QA team for the legal world. They know that the shit hitting the fan can potentially be very expensive, so they will go to extreme lengths to prevent any possibility of that happening. But just like you cannot rely on your QA team to prioritize features and bug fixes (because, really, who's going to click those 15 buttons in that precise order with that precise timing to trigger that bug), you cannot rely on a lawyer to determine your business plan.

Lawyers fill the role that lawyers fill. If you're an engineer, then you have to fill the engineer role.

What is that role? My father is a mechanical engineer, and he explained to me very early on just what it means to be an engineer. You see, an engineer could design a bridge that doesn't collapse and lasts for thousands of years, but that's not the engineer's job. The job of an engineer is to take the cost of materials, the budget, the expected longevity of the bridge, the project schedule, the prevailing environmental and geological conditions of the siting, etc. and balance all of these different variables against each other to arrive at a solution.

If we're programmers, then we're saying that we can write down instructions in such a way that a computer can execute them and produce some output. If we're software engineers, then we're saying that we can balance features, schedule, bug fixes, test coverage, etc. and eventually ship it!

>The job of an engineer is to take the cost of materials, the budget, the expected longevity of the bridge, the project schedule, the prevailing environmental and geological conditions of the siting, etc. and balance all of these different variable against each other to arrive at a solution

I'm not a lawyer, but I would assume that a good lawyer adopts an analogous process: they take the value of the contract, the prevailing legal conditions, the case history, etc., etc. and balance all these different variables against each other to arrive at a solution.

I think the problem with many corporate lawyers is the same as with many corporate programmers working at large, traditional corporations: risk takers are heavily penalized, and those who make traditional, low-risk decisions are rewarded. You know, the whole "nobody ever got fired for using Java" bit.

But lawyers working in private practice, or partners in firms with a lot of power, will presumably be willing to balance risk against reward, and try to optimize accordingly.

Lawyers: please correct me if I'm assuming incorrectly here.

With lawyers, if everything goes perfectly then they just did their job. If anything goes wrong they're entirely blamed for it. Since they are paid by the hour, there is an explicit incentive to spend as much time as possible to make sure everything goes perfectly.

Typical agency problem. It's up to the client to tell the lawyers when they are done.

Now, the very very best lawyers, the ones who have a waiting list of clients, would prefer to spend less time on each contract. They want it done right and done fast so they can move on to the next thing. They fall outside this dynamic. But in any given field of corporate law there are only a handful of these. If you are at a startup, you are not using these lawyers (and don't need to). You need to be able to recognize the point at which your lawyer's comments pass the reasonable risk/reward tradeoff and ask them to put their pencils down and stop work.

If you don't tell your lawyers what you want, they will try to remove every problem.

Tell your lawyers you want decent terms, and you don't want to spend forever working on contracts, and have them explain the risks you face from the contract the other party proposed.

Failing to engage with lawyers and then not liking their results is like managers who fail to engage with software developers and then don't like the results. You need to tell them what you want.

My approach:

I take the contract to the lawyer, discuss it with them, decide what is worth negotiating on and not. I do the negotiations. The lawyer advises.

Most contracts don't require me taking them to a lawyer. I read them 4-5 times over, annotate them with questions, talk with the client, see what we need to clarify, and go for it. Those that do involve questions I want to clarify with a lawyer before clarifying with the client (where raising a question may make me sound greedy or dramatic, etc).

Most contracts are designed to cover one or both sides in the event that something goes wrong. The boilerplate can usually be quickly identified once you have some practice. The rest is going to be operational stuff and you don't want to sign the contract to find out what is in it. These sections establish expectations on what is done and how you interact.

But whatever you do, don't have your lawyer do the negotiation for you. Madness lies that way. Business negotiations are not the same.

as technical folks, i don't think we fully understand the different types of lawyers there are.

you know that eye twitch you develop, when someone asks if you can fix their computer because you "work with computers"? it's similar for lawyers.

in my first two businesses, i didn't do enough [serious] transactions to need lawyers.

in my third business, i reviewed and wrote our initial contracts, which were eventually reviewed by other lawyers, but that took a ginormous amount of my time and sanity.

(for fellow people who suffer from impostor syndrome -- can you imagine walking into every meeting with a client and thinking "is this day i'm revealed as an incompetent contract writer?")

for the next set of contracts, i decided i needed a lawyer and got a recommendation from a friend of a friend. this lawyer turned out to specialize in immigration, not business; but assured me that they could get it done.

inevitably, in my first deal involving them, i landed in the back-and-forth lawyering described in pud's article (and so many comments here). i really needed the revenue in the company bank account sooner rather than later, so after 4 weeks, i gave in, and signed the contract, but 3 months later got burned.

this cost me time, money (both from the customer, AND the law firm), and many nights of sleep.

then i had the fortune of becoming friends with a lawyer that specializes in contract litigation. i begged him to draft my contracts, and he refused. he then explained his specialization was in tearing contracts apart, finding points of leverage for his client, and to a lesser extent, being involved in settlement negotiation (but not leading it).

to you and i, this sounds like the perfect person to draft a contract. to him, it's an unneeded source of liability that can increase his malpractice insurance rates. he did however, take a look at my originally-blessed contract and tell me to make a few changes, especially rip out the arbitration clauses in my contracts, because arbitration is hella expensive (it really is).

so today, i have a business contracts lawyer, an employment lawyer, and when needed, a lawyer experienced in business contract litigation.

and for those of you wondering about the cost, it's not that expensive.

i do a quick review of contracts i receive and clearly explain any industry-specific terms and practices to my lawyers, and have them do the final signoff.

i don't do retainers, in fact, my business and employment lawyers refused a retainer agreement. due to the new custodial laws on how lawyers must account for client money (after a few high-profile cases of attorney-client theft), they don't feel it's worth it for the limited amount of business i do. pay as you go.

Just like pentesters are good and competent at breaking security but might not necessarily be good designers of secure software or systems.

"If you don't tell your lawyers what you want, they will try to remove every problem."

You have crappy lawyers ;)

Of course, crappy lawyers are an epidemic, but that doesn't make them less crappy.

(your advice is completely correct in regards to dealing with such lawyers, but you are better off not hiring them in the first place)

Part of the situation is that the output of a lawyer cannot be measured clearly. The same is true for programmers but more people seem to be okay with shoddy code than with shoddy contracts. If the consequences of bad code were equally drastic as those of shoddy contracts, I'd imagine a lot more time being spent on code quality.

Actually, where the consequences of bad code are known to be drastic, a lot more time is spent on code quality. I worked on factory software at AMD for a while in the late 90s and early 2000s. The adage around there was that if the fab was down, it cost us a million dollars an hour. So we had a ton of testing, red tape, bureaucracy, and so on as part of change management. We did major upgrades and such on the 4th of July or during Christmas week, because those were the only times when the fab was down for more than an hour at a time (the hour was once a week at the weekly shift meeting for fab workers, IIRC). In preparation for those upgrades, we had a system set up as a duplicate of the (very expensive) production hardware and we actually rounded up the whole team and did dress rehearsals of the upgrade process, with go/no-go decision times built into the schedule based on timing how long it would take us to roll back the whole massive database from backup in time to ensure there would be no unscheduled downtime.

We also had some folks who had come to the company from Lockheed. They helped upgrade our procedures, because as you might imagine, defense contractors are even more hardcore about all this than factory control systems. If you make a mistake in the embedded code inside a missile or airplane, things blow up (the wrong things!) and people die.

This is more or less the opposite of a typical startup, where velocity is normally far more important than creating sufficient failsafes against any possible error.

But lawyers working in private practice, or partners in firms with a lot of power, will presumably be willing to balance risk against reward, and try to optimize accordingly.

Lawyers: please correct me if I'm assuming incorrectly here.

I am not a lawyer, but you are certainly assuming incorrectly.

It is a lawyer's job to not only get you a good contract, but also to maximize their billable hours. They do not gouge too aggressively - after all they want future billable hours as well. But the risks and rewards that the lawyer is balancing are their risks and rewards, which are not the same as yours.

So what you have is a curve of diminishing returns. If you spend 2 hours on a legal problem, you might get an incomplete result. If you spend 10 hours, you might get something that meets the standards of good representation but still leave a few avenues unexplored. If you spend 20 hours, you might be able to explore those avenues and assure yourself that there are no risks lying there. If you spend 30 yours, you might just be gouging on tangentially related issues.

But you have a classic agency problem. It's in the lawyers interest to spend 20 hours, both because it increases hours and because that minimizes his chance of being wrong. It's probably in the client's interest to go for the 10 hour solution, because whatever risk is created by those unexplored avenues is likely outweighed by the extra time and cost.

Importantly, the threshold of risk is lower for the lawyer than for the client. Say one of those unexplored avenues requires delaying some deal by 2 days. That delay may be monetarily inconsequential to the client but is stinging for the lawyer because has advice has been found wanting, and that jeopardizes the client relationship.

The other problem is if your lawyer spends 20 hours, the many requested amendments are likely to prompt my lawyer to bill another 20 hours.

What happens then? Your lawyer has even more work to do.

The cycle can easily spiral.

Even for a 400k contract, it is not fun to feel nickeled and dimed with multiple 5k bills from my law firm before any work gets done.

I would rather work with someone willing to sign an imperfect contract. Unless you work very hard to tick me off, you have to do 50k worth of completely egregious stupidity before it is likely to be worthwhile to see the inside of a courtroom.

How likely is that? It is never going to happen. If I hate the work you are doing, I am going cancel the contract and never pay the final 100k or 200k you bill. Then you can effin' sue me. (More likely, we will end up negotiating a compromise...if we are not stupid buffoons.)

Absolutely. Doubly so because the lawyer is liable if their legal advice turned out to be bad, but the lawyer does not fully share in the upside if the negotiation goes perfectly.

"But the risks and rewards that the lawyer is balancing are their risks and rewards, which are not the same as yours."

Otoh if you take away that "pay for time" aspect you end up with someone who might be likely to cut corners because they are being compensated in a way in which they are disadvantaged if they spend more time than they need to.

After all you did also say: " They do not gouge too aggressively - after all they want future billable hours" so there is some "governor" on the process that prevents them from eating like a goldfish with unlimited food supply.

"They do not gouge too aggressively - after all they want future billable hours" so there is some "governor" on the process that prevents them from eating like a goldfish with unlimited food supply.

One of the things that you'll notice lawyers doing is throwing up a trial balloon by finding something to bill you for that you did not ask. If you don't push on that, you'll wind up on the "gouge" side of the equation. If you do push back on that, you've got better odds of winding up on the "maximize long-term returns" side instead.

Both ways the lawyer is doing their best to eat as much as they can get away with.

Totally excellent observation.

I will add to that thought something that I observed in a completely different business with respect to pricing.

Specifically pricing that is estimated and then needs to be revised when the job specs change. (Not programming by the way if it matters).

For certain customers when you give them the new price they go nuts and have a hard time accepting even though you are right to bill them additional charges (for things they asked you to do or material changes). What this does to the vendor is make them really cautious about trying to charge for things lest they get that anger unleashed again.

The "nice guy customers" on the other hand react like a gentleman and so you feel fairly confident in changing pricing liberally because they are so damn nice about accepting those pricing changes!

I should have been more clear: I meant that just as engineers are optimizing the risk/reward ratio for themselves and their interests, lawyers are likewise balancing risk and reward and optimizing for their interests. Often those interests overlap with those of their client/employer -- but at times they don't, as you underline.

My only point what that good lawyers probably use the same process. Good engineers aren't the only ones with strong logic skills.

While there is an agency problem and some lawyers take advantage, in general most lawyers are like most software contractors: basically honest, interested in their craft and keen to do a good job.

Lawyers are also held to a standard called "fiduciary duty". It's heavy ju-ju.

I've worked with several lawyers and had different experiences.

One of them basically just negotiated his own payment into contracts. He negotiated an extra $8,000 on a contract. His bill was $8,000. What a coincidence!

Another lawyer I had was so busy she just wanted to get in and get done (this was a more boilerplate contract as well). Her total was like $200 which was ridiculously cheap. But I don't think she did much other than make sure all the pages where there.

I'm sure most lawyers want to reach an appropriate balance. But that may not necessarily be appropriate amount of risk for you. It may be the appropriate amount of billable hours for them.

"I think the problem with many corporate lawyers is the same as with many corporate programmers working at large, traditional corporations: risk takers are heavily penalized, and those who make traditional, low-risk decisions are rewarded. You know, the whole "nobody ever got fired for using Java" bit. "

Depends entirely on the corporate culture. Where I work, this would be very wrong. As for private lawyers, i think you have it very backwards in practice.

Corporate lawyers, in a culture where lawyers are doing what they should be (assessing risks and informing clients about them, in priority order and explaining tradeoffs and possible workarounds), are risk takers. They don't make business decisions, they essentially try to solve legal problems creatively. In these cultures, ineffective lawyers who don't understand what matters get fired.

Corporate lawyers, in a culture where lawyers have say over products or business decisions, go very badly, for the reasons you mentioned. It is seriously inept management that puts lawyers in a go/no-go position over business decisions (not "this is illegal we will get arrested decisions"), and even more inept when they don't hold them accountable for whatever time they waste.

Most private lawyers are not held accountable for wasting everyone's time. They are still paid. They still get used. People just suck it up. So they actually are almost exactly like what you have described to the corporate lawyers.

Very good private lawyers are more like the corporate lawyers in a good culture.

Told to me by one of my engineering mathematics professors: "Anyone can design a bridge that doesn't fall down. It takes an engineer to build one that only barely doesn't fall down."

Well, I mostly agree... but there are some very significant exceptions.

Notably, I've dealt with in-house counsel from a certain Fortune 500 as part of my research and let me tell you this: they don't have a fucking clue what is going on. They just want to flex muscles for the sake thereof (or they think everything is "intellectual property", which is asinine). So, in this circumstance, they are a barrier to progress rather than a "QA" mechanism.

I think in-house counsel is how things like "linked lists" and "document scanning" get patented. I hate them.

Specific to the OP: I've also been sued a couple times (always got dismissed). Usually, you can tell if the client is the kind that is going to sue you for sport... learn to avoid them, unless you're desperate.

Actually, especially if you're desperate. Asshole counter-parties can smell weakness and if you are, they'll exploit it.

True. I meant desperate as in "food on the table".

I grew up in the real estate industry. Software engineers don't experience anywhere near that amount of financial leverage. For most builders, every project is do or die; can't up and quit without it haunting your credit.

Yes - lawyers have just the downside. If something gets missed, blame the lawyer. As a result they get very aggressive on protection, and nitpicking. This behavior gets worse because they're incented on billable hours. They also don't share any upside. If a deal gets delayed by 2 months, they don't get hurt.

The willingness to skip the lawyer is a set of risk taking that separates entrepreneurs. If there's a 1 in 100 chance that there will be a problem, then it's better to worry about all the 1 in 3 problems that can bring down the company. Now if you have 1000 projects going on, then you have to worry about the 1 in 100s...

he explained to me very early on just what it means to be an engineer...

This is precisely why engineering can be so much fun! Working with constraints and limitations on every side makes things interesting.

I would say that is also produces the most beautiful results.

The best art (and engineering) is that which is constrained, which then makes the creator explore how the boundaries of the rules fit in with what they need to accomplish.

There's a simple reason why this works for small businesses: nobody sues a guy with no money.

So if you're a sole proprietor scraping by and you piss off a giant company with lawyers enough that they want to file a lawsuit against you, well, what's the upside for them if they win? Tens of thousands of dollars in expenses on their side, and roughly zero dollars in recovered costs from the business they destroyed or the guy they sent in to bankruptcy.

Unless their goal is simply revenge, there's really no reason for them to follow through with such a course of action.

Never underestimate the pettiness of executives in companies with a lot of money. I've been on the receiving end of a meritless revenge lawsuit.

The net result was that it shut our startup down and turned many of the employees against the founder on a personal level. I was lucky to be able to cut my legal fees with some of my coworkers by sharing a lawyer, but I still ended up being out a few thousand dollars prior to settling (the company had to shut down and disband). Had we fought it, it would have costed a lot more than that.

--edit-- Trivia: Since we're talking about Pud's post, I'm pretty sure the company that sued me was a company that had many employees bitch about it on f*ckedcompany.com, although it was never a company that got "featured" by Pud himself.

Agree 100%. I had the misfortune to run across someone who took great pleasure in bullying people with his lawyers, a profoundly dishonest and unpleasant person. It's hard to overstate how damaging these people can be. Ever since then, I've made a point of doing public record searches on people to check if they have a history of suing people, which has enabled me to dodge a couple bullets since then.

Spot on.

  "Unless their goal is simply revenge"
As they've implied in The Godfather, taking things personally is bad for business. Companies that make money do whatever is necessary to keep the flow going. Revenge is a detour to this process so unless they're trying to stifle competition or the like, destroying someone isn't worth it.

Revenge is bad for business.

People who are in revenge mode don't care what's good for business. It makes them feel better and that matters more. In the case of suing former employees, it also sends a clear message to existing employees.

>In the case of suing former employees, it also sends a clear message to existing employees.

Yes, but I'm not sure "run" is the message an you want to send to your employees.

More often than not, executives/companies think they're doing you a favor by giving you a job, even the ones who pretend to care about their employees.

This post puzzles me. How are companies not doing you a favor by GIVING you a job?

Your post puzzles me as well. Just because we use the word "giving" doesn't mean that any of the connotations of that word actually apply to the situation. Employment is an arrangement of mutual benefit. In some cases an employer might give a job to a friend as a favor, when the friend is not the most qualified for the job. In any case, if someone gives you a job as a favor, they are doing it wrong.

>> Employment is an arrangement of mutual benefit

That's how I look at it, but I've encountered way more employers (across multiple industries, in companies of all sizes) who have the mentality of "people should feel lucky that they have a job with us". This attitude is even worse during an economic downturn.

Generally true, but often the motivation is not revenge or recouping financial loss; it's deterrence.

Examples that come to mind are the MPAA/RIAA suing individuals for copyright infringement and developers for distributing P2P software, Sony suing individuals for modifying game consoles, and although not a civil suit, Goldman Sachs having Sergey Aleynikov criminally charged.

All quite depressing examples unfortunately.

Patent trolls also often have a modus operandi where they will sue a small company that they know doesn't have money to defend themselves, soak it for everything it's worth, and then use the money from that to launch a lawsuit against a much bigger company like Google, Microsoft, or Apple.

Someone with 500k and a few employed certainly has money. This story was sheer luck and is only showing off that.

> "I'm not sure what the lesson is here."

At least the author's frank about it.

500 k is nothing for a Fortune 500 company. When they work with a small company they know it might be write off (ie the small company cannot deliver and the money spent is wasted).

So they won't sue but they have internal processes that say everybody must sign "The Contract".

According to the linked story at the time he said "so sue me" he had made ~$32k gross revenue and had no employees.

He made his $400k and hired the employee much later.

He never actually said "so sue me", though. He was told, probably correctly, that at his size, there's no point in getting a perfect contract that precisely covers what happens in every one in a million possibility to the satisfaction of every party. Ignore the rare possibilities of the contract and just do the work, knowing that if you hit one of those rare possibilities and violate it, then their only real recourse is to sue you, which probably costs more than it's worth. It's about being aware that you can say "so sue me" instead of worrying about covering every risk in the contract.

Right. An honest, competent, and communicative contractor will not prompt a revenge lawsuit, because even if things go wrong, they will not blow up into 100k+ problems without the client knowing the risks of continuing down that road.

Unless you cause an egregious 50k+ of damage, suing is probably idiotic. And how can that even happen? The client would/should refuse to make the last payment if the work sucks. ("So sue me" works in both directions.) So it has to be a nearly complete fail for suing to make much sense.

It could be possible to run across a very incompetent executive who is desperate for a scapegoat...but that is probably rare. Such a suit is unlikely to see the inside of a courtroom, because it is a delaying tactic of an executive whose career is probably already circling the drain.

I disagree he got lucky. "Pud" is brilliant. Isn't this the guy that created TinyLetter, Adbrite, F-company? This stuff is legendary.

I don't think you fully appreciate how expensive it is to go to court.

A big part of the game is played before the matter is even played out in the court system. This part is much less expensive.

It's one thing to be threatened with a lawsuit, but it's another matter once the paperwork is filed.

When I was hit with a revenge suit during the first bubble, the single, asset-free me had a different reaction than some of my peers who had families and much more to lose.

There's a lot of psychological warfare going on. When a process server shows up at your doorstep and serves papers to your spouse at your partially-paid-for house, things take a turn. Any sense of righteous defiance you might have starts to waver at this point.

The plaintiff in my situation got a lot for the 20-30K they probably spent on suing us. Without going to court, they shut down an entire company and made over a half-dozen people unemployed -- edit: while making them pay for their own legal fees too --. And they got the satisfaction of a "moral" victory for chump change. Never mind that most of their claims were bunk.

So, in a nutshell, it's not always about going to court.

He knows more about court expenses, than you know about what he knows. Just say "It's expensive to go to court", or better, just don't comment.

Completely off-topic, but your comment made me wonder:

Is there any way to formalize expressions like "he knows more about X than you know about Y", where X and Y are different domains? Is there a way to quantify it, to answer questions like "how much more"? Do we have any kind of well-defined "unit of knowledge"?

Does anyone here knows of relevant math branch that talks about these questions?


A measure is a function on the subsets of a space which yields a non-negative real number. For example, a measure of the triangle with vertices (0,0), (2,0), and (6,0), is 6, the area of that triangle. Measure satisfies certain nice properties, such as if A is a subset of B, then the measure of A is no more than the measure of B.

So, I guess if you can define a reasonable measure on the spaces X and Y, you can measure collections of X and collections of Y, and use the real numbers to determine which is "more".

But this doesn't strike me as useful in any way other than the fun of abstract mathematics. :-)

It's why big companies often prefer to spend more money with big suppliers. It often gets mistaken as them being ripped off when in fact they have their eyes wide open.

Yes, big suppliers do have "skin in the game" and also big companies have long relationships with big suppliers. Many have Approved Vendor Lists and to do business with them you have to be approved first.

An additional upside for them is, it sets an example. If MegaCorp gains a reputation for being revenge-driven life ruiners, then future contractors will know the stakes are serious, and they'll be less likely to violate their contracts.

Not that I consider that strategy cost-effective in general. For one thing, it's bad PR. (Unless you're some kind of wizard that can spin it like, "we're principled and don't let bullies walk all over us. That's why we hold people to their promises")

They will also be less likely to attract future contractors.

Playing the devil's advocate here: if contractors self-select themselves out of being hired because they're not sure they can get the job done, then all the better! The remaining applicant pool will be stronger on average.

No the applicant pool will be more bullish. In many cases that might mean weaker (i.e., unable to estimate work effort properly).

They may be stronger, or maybe not. They certainly will learn to inflate the price to include lawyers fees.

Are you hiring a contractor to get work done? Or are you allowing the head of your legal department to pad his resume, while your department is paying for many in house lawyer hours plus (via the contract) many out of house lawyer hours?

seconded. I wouldn't even have to quote Machiavelli to say that it's important to show your future contractors(or your peers) what you are capable of, to force them to think twice before arranging anything with you.

Will it reduce the number of incoming contractors? Probably. Will the contractors who'll still chime in be more likely reliable, after considering what they're agreeing with? Very likely.

Probably. Will the contractors who'll still chime in be more likely reliable, after considering what they're agreeing with?

I doubt it. They're just as likely to be selecting for future contractors who are overly confident / cocky by nature, and/or ones who don't understand how to estimate software projects, and who don't have a good feel/understanding for the risks involved.

> Will it reduce the number of incoming contractors? Probably. Will the contractors who'll still chime in be more likely reliable, after considering what they're agreeing with? Very likely.

Wouldn't it more likely select contractors that have good liability shields and get to charge a premium for working for an asshole company because there are less people willing to do the work? This is how patent trolls are set up with no assets to lose.

This is only true if the job market is a seller's market. If it's a buyer's market, it only prevents the smarter ones from wanting to work with that type of company.

Q: Does LLC or Inc. allow the organization to take the hit (or fold) while leaving the founders relatively safe?

Yes, that's the entire point, it shields you from all liability. If you perjure yourself, you're still personally liable, but for things such as money owed by the business, you're not personally liable unless if you personally guarantee something (i.e. a company credit card that you guarantee with your social).

Yes, that is the point of them.

If you are planning on creating one you should speak with an accountant and attorney to make sure you know the rules. If a corp or LLC is being used simply as a front a suing party can "pierce the corporate veil" and come after you personally.

That only works if the company signs a contract, if you sign so pretending that says you can be held accountable then you can be held accountable. Most often seen with loans.

This doesn't seem to deter patent trolls going after no-name startups and individual App Store apps.

Well this just makes you sound reckless and ignorant. I don't think you are. The conclusion might be valuable; that taking risks is a necessary part of business. But the way you get there is not by ignoring the risks, but by fully understanding them and being prepared and willing to deal with the consequences.

This is why you read the contract, understood it, and decided to sign it. It was because you understood all the bad stuff that could happen, but you decided to make it not happen or deal with the consequences. It was sort of a dare in your agreement, a recognition that the agreement you were signing was important but also impossibly complex (they always are), and that the larger picture was more important.

Understanding that and making your decision is not the same as being lazy and irresponsible, and I really don't think that's what you are if you've made it any distance in business. Maybe some people are, I don't know. Cool story though.

This is from 1998 (written up in 2011), and was written by pud of f*ckedcompany fame, I think. He probably doesn't read hackernews.

He very much does. https://news.ycombinator.com/user?id=pud (last comment was a month ago).

So he very much does, but doesn't very much?

That doesn't follow. Some people may read every day, but not have a lot to say.


Well, I was wrong, please forgive me. Big fan of your f*ckedcompany website back in the day, wish it was still going!

Pedantic pants now come in all sizes and colors!

Well, I honestly don't think of hackernews comments as a direct communication method. Think of it as a commentary.

Had to laugh... in my one-man business (20 years and still going) I have almost no "Standard Policies". Almost.

But one ironclad rule I do have is, "If a the CEO is a lawyer, run away. Away is where you must run." Every time I've dealt with client companies run by a lawyer it has been horrible. They seem incapable of signing a reasonable deal and getting on with the business at hand, but insist on crossing every t and dotting every i to the death. All the juice is sucked out of the deal before it even begins.

Oh, and the only client I have ever had to see a lawyer over (to collect outstanding invoices) was a law firm that had hired me to help them design a software system for... Debt Collection. (I kid you not.)

I think there are two kinds of lawyers: the kind who want to utilize their law school education to the fullest and the kind who have done that and realized the cost-benefit to over-lawyering is negative. The second kind has reasonable standard contracts and pretty much just refuses to spend more than a few minutes changing them. The first kind has completely unreasonable contracts and expects a long adversarial process to reach a reasonable contract.

But I agree with you because most lawyers are the first type.

I downvoted your post because it only contained a link to a web comic. If you had provided some of your own opinions on the blog post or why the comic was relevant to the blog post, I would have refrained.

I like to explain my downvotes when the downvoted post is not an obvious troll.

I don't see how adding commentary to the comic would have added anything.

'Relevant' linking is an art and in this case it was artfully done. You don't want to ruin the punchline, if any, as if done correctly the juxtaposition of the thread you go from to the relevant new thread should hopefully create something tangential, underlined or poignant.

This link was relevant, funny & poignant. Adding a small commentary would have removed from the latter two. It also has something significant to say about startups.

A link like this would never have made the front page even though it tangentially says something important about entrepreneurial success (something that successful entrepreneurs too-often choose to forget).

Startups should print this out and stick it on their wall.

I canceled out your downvote because I like Hark! A Vagrant.

You'd probably like SMBC too (if you don't already read it).

Do you also like to deliberately explain (at least to yourself) your upvotes and all the cases when you didn't make your mind or mindfully decided not to upvote or downvote? Not trolling you, I just have really hard time trying to give my vote either way, and usually just move on to next comment or submission.

I upvote posts that either I find to be consistent with my appraisals of the subject in question (these are rare in terms of my total upvotes), posts that contain well-reasoned opinions contrary to mine, or (the bulk of my upvotes) posts that force me to consider aspects or perspectives I failed to consider previous to reading.

It is the posts that cause me to redefine my understanding of subjects that primarily receive my upvotes.

Although I plan to upvote your comment I'm waiting to hear back from my attorney first.

I think you're being silly. And I don't think that's what downvotes are for (not that I have a say in the matter, because I don't have the button). Explaining why the comic is relevant would be like explaining the joke itself. That hardly every works.

Would you downvote a comment with just a link to a paper about the technology being discussed in the article?

I have the downvote button :) while I wouldn't have downvited the parent comment, I understood why he was. The comments are what separates HN from other sites in my opinion. A "relevant:" comic comment doesn't do much to advance the discussion, its just noise in the thread -- this is of course simply my opinion.

Linking a comment, and linking a journal article are two very different actions. I wouldn't downvote someone who linked to a journal article, but that's still kind of a crappy comment. Give a summary of why you're linking to the article, not a chore for us to try and figure out what kind of point the commenter is attempting to make.

The fear is that without moderation, the reddit-ification of the comments will continue its steady march forward. Hence, down voting comments which don't add much

>Give a summary of why you're linking to the article,

To me, one of the great things about HN is that someone can post a link without comment, and I can click that link without too much fear of being rickrolled, goatse'd, or some other mental equivalent. In this case, if I wasn't interested in looking at a cartoon, I could decide to close the tab in about the time it takes to read the poster's summary.

Have you considered a law career?

I downvoted you for being so thick that you can't figure out how the comic was relevant to the discussion and also because you took the time to explain your downvote, like it actually matters.

I certainly enjoyed the comic, but I felt it necessary to explain why I was downvoting the comment. I primarily upvote and rarely downvote and I hate when my seemingly appropriate posts are downvoted with no apparent rationale.

I certainly anticipated responses like yours and proceeded anyways, thanks for your thoughts, like it actually matters ;)

Like with a lot of advice on HN, take this article with a grain of salt and pursue a balance while trying to understand the competing forces at work.

My experience with entrepreneurial legal paperwork was that I ignored it too much in my early days and it bit me in the ass. When the money starts coming in and egos grow large, people reach for their lawyers when there's too much ambiguity in business relationships.

You don't want to kill opportunities with too much negotiation, but then again you don't want to leave yourself too open to misunderstandings that could have been avoided with a line or two in a contract.

Very well said. Everything went well for him in the deal and all was fine, but what if it hadn't? I know a few people who have had serious problems because of a lack of attention to detail with their legals (or just not caring) and one of them was put out of business by it. I also know another guy who is ruthless and enjoys the thrust and parry of suing people when they try to get our of his 12-month contracts. I personally would rather take a more cautious approach than rush into something. I sleep at night knowing that I have covered myself and my family as best as I can

Isn't this a classic example of Survivorship Bias? i.e. you know who probably doesn't write a lot of popular blog posts? Unsuccessful entrepreneurs who's companies failed because of something in their contract that they didn't read.

But as with many things, the smart path is probably somewhere in between the two extremes...


"Everyone says to wear seatbelts and buy homeowners insurance, but I never have and I turned out fine! I'm not sure what the lesson is here."

My risk-averse nature has been the #1 challenge in my startup life of the last 11 months.

I was worried about taking on a partner for 3 months. Finally I just decided to skip that - it meant I'll grow slower.

I was worried about sending sales and marketing emails for 4 months. Finally, I decided to announce my beta launch and offer discounts for anyone who signs up. One customer signed up and paid for a year's subscription.

Because I had a customer, it forced me to stop dreaming about the perfect product launch and just do my beta launch. Which happened 3 weeks ago.

Now I worry about losing that one customer because my beta product is not perfect. Im also struggling with getting more customers. Why? Because I want to create the most perfect email marketing funnel. I've been procrastinating on this for a month now.

If I worried a lot less, things would happen so much faster.

That's not risk aversion, risk aversion is picking the safe way/minimizing risk. What you're doing is actually increasing risk because you're too afraid to handle things. There's no upside to that.

My point is that risk is often perceived to be greater than it actually is. So taking action in spite of the risk has two benefits - the real risk is exposed and often less than what we imagined and progress is made from taking action. True, this can lead to a stressful experience and perhaps recklessness.

As much as I admire the candor & spirit of this, at the same time, I'd hate to have the chance of being completely destroyed by the lawyers. Dodged a bullet in this case, but to me, the downside is not even close to worth the upside. $400k contract, but if things go horribly awry, their lawyers are coming after you for millions, and drag you through the mud. Not worth it, in my opinion.

But from the other side, the perspective is probably:

- legal fees are going to be in the $100k's

- he clearly has little money, so even if we win, we'll end up garnishing his wages for 40 years to get a fraction of what we sued for.

- we might not win, then we're further in the hole

So take the loss and move on. Thus from pud's side it's not an insane risk, but a calculated one.

That assumes the other side is rational and motivated only by profit. Which is not always a given (or possible to tell in advance).

I imagine there are cases where companies have to go after bad contracts even when they know they won't get their money. Whether it's a duty to their shareholders, sending a message to future contractors, what-have-you. And depending on the size of the company, their lawyers may be getting paid regardless of whether they are doing this case or not (not really sure how legal departments work).

I interpreted Pud's dad like this:

"Fucking sue me" == "I'm 22, have no assets to speak of, and you're going to try and collect millions on me? Good luck."

In Pud's particular case, it's easier to say this. If you're an established firm with hundreds of employees and millions in cashflow, not so much.

Exactly. When I was about 20, one of my partners emptied the bank account leaving us unable to make payroll/rent and finish some client jobs. Had several clients come angry demanding we finish or they'd sue us. My dad gave me the exact same advice. We'd try to find some way of finishing the job over a longer period of time, otherwise, hey, lose your deposit, and good luck suing me or my company that have zero assets. It worked fine.

Years later at a more successful startup, the "sue me" thing doesn't work so well, and a pretty major win depended on a simple "and/or" clause written with inverse logic.

It is human nature to be more motivated by the threat of loss than the possibility of gaining something of equal value.

Regardless of our predilection, neither is wrong, nor right. It simply is. Being aware of it however, gives us choice.

"I'm not sure what the lesson is here."

I'm not sure, and furthermore, I'm not sure I agree with being overly 'fuck-it' about legal matters. But I can tell you what it's like having been where you were with the "endless lawyering," and why it sucked so badly.

I worked for a startup once in which our CEO was a really smart guy, but the kind of smart guy that got overly worked up over tiny details and edge cases. We'd spend months working through "what-ifs" in Powerpoint, Excel, or Visio, instead of building and testing features. Anytime we wanted to make a strategic decision, we'd need to run it by our extremely expensive law firm. Picking the name (!) for our company took over $50,000 in legal bills and at least 3 weeks of everyone's time. In retrospect, I'm amazed anything got built at all.

The lesson I personally took from that experience was that entrepreneurs need to make decisions, and often, they need to make them more quickly than they feel comfortable doing. They might fuck up here or there. And one day, when they're successful enough actually to need to run everything by lawyers, they can afford to do so. The ROI on legal fees and time is much more positive when the nature of the threat is being measured in the millions or billions of dollars. In the beginning, though, the biggest threat isn't a lawsuit; it's running out of time and cash.

Lawyers still have their place, though. You need them in certain situations. But they can't wear your balls for you. When you feel the need to run every key decision through a third party, you're basically stripping the "E" out of your "CEO" title.

Here's where I'll risk sounding contradictory: contracts are a crazy beast. Given your circumstances, the "fucking sue me" approach probably made sense. But you also got really lucky.

It's not a terrible idea to consult a lawyer if you're entering into an agreement of a nature you've never taken on before (i.e., with a Fortune 500, with a scope of work you're not used to handling, etc.). I say "consult with," though, not "tie up." Most Fortune 500s have a take-it-or-leave-it policy w/r/t their contractors and their RFPs. They know they've got the bigger guns, so you're kind of playing on their terms. No amount of lawyering on your end is ever truly going to overcome that home-court advantage of theirs. So it's often a wasted and self-defeating effort to fight too hard on any terms -- with the possible exceptions of payment structure and timing (the ones that affect your ability to keep the lights on), provided they seem overly wonky as written. Fight to get paid on time, to get paid fairly, and so forth. Don't fight over nice-to-haves, because you won't get them.

I was talking to an SBA advisor yesterday (great resource for entrepreneurs; look up the SCORE program) and he mentioned that our local law university will do contract review/editing for free (apparently they give the contract to their students as homework, and then the professor firms it up when it's returned to you.) So if it's not time sensitive (and overly confidential) it may well be worth your time finding your nearest law professor.

Jesus Christ, $50k to pick the company name?? You could launch a whole new product for that much.

No kidding. Someone actually inserted "Facepalm" into the running at one point, no doubt in the belief (proven correct) that the CEO woulnd't be familiar with the term. I had to stop him from submitting it to the lawyers for serious consideration.

Sure, but what will you call it?

"I just saved $50k"

I can tell you with a modest $10K fee.


"Not More Goddamn Cat Photos"


University of Phoenix

The Gruntmaster 3000


Product A

How about Google? Or maybe Apple?

Wish I could upvote that twice!

You think that's bad? Read this: http://www.salon.com/1999/11/30/naming/

Written at the height of the dot-com craziness, so the figures have probably come down to earth a little since, but still hilarious-slash-sad.

Maybe it was worth it. I once worked for a company that wanted to launch a new product called whose initials were A.I.D.S.

I was lead dev of the Technical Information Team System too.

A lawyer friend of mine worked with a French firm that imported a lot of chicken (in culinary usage, commonly known as "coq" in France, translating accordingly as "cock" in English). She swears she got an email once with the subject "Concerned about Chinese cock."

(Note, as well, that one of the French words for hen is "poule," which is also an old slang term for "slut." The French just can't catch a break in the chicken business).

Just a quibble: chicken ("poulet" in French) that you buy in the supermarket is the female chicken, the hen. The male chicken, the cock ("coq" in French) is generally not eaten as the meat is leaner and tougher. The French, however, do eat them sometimes. The famous French recipe "Coq au vin" is for cooking cock for a long time in wine to break down the tough meat.

The French word for slut is "salope" and is also synonymous with the english word "bitch". The french word "poule" does mean hen, but is used more like the American slang word for a single woman: "chick".

$50k to pick a company name sounds pretty low for most companies. Names are important. Granted I reject the idea that you need to pay some high-falutin' corporation to name it ("Agilent", anyone?), but $50k to do some background searches, patent searches, general lawyer review? Doesn't seem too bad to me.

For a company that doesn't have a market presence or a product yet? If this was Bell Atlantic rebranding as Verizon or similar, $50k does seem quite cheap. I doubt many (any?) startups have paid $50k to come up with a company name since the money is just better spent elsewhere as your name as no meaning yet.

To clarify: this was $50k prior to the trademark filing process.

If it means that trademark filing goes ahead smoothly without the trademark being contested I guess some people would see that as useful spend of money.

It really depends on the stage of the company, IMO. The cost of switching out the name of a company with no in-market traction is pretty minimal, when you think about it. In our case, we went through this whole naming process on Day 1, with all hands allocated to the task. Product development was, if not entirely halted during this process, than certainly placed on the backburner.

If we'd had an MVP out in testing, people were loving it, and we'd been preparing to go big with a launch of some sort, sure, $50k in exploration toward securing an awesome name would have made a lot more sense. But $50k, right off the bat, felt pretty absurd at the time.

And to reiterate, this was just one symptom of a much more insidious disease: the need to consult lawyers about everything. I'm using only the mildest of hyperbole here. We did not make a single decision without a legal weigh-in. Eventually we were able to convince the CEO of our financial and strategic inability to sustain this approach. But a lot of damage had been done before we got to that point. It was a very expensive lesson.

pud<insert number here>.com?

Maybe some more in-depth advice while not missing out on the profanity:

Fuck You Pay Me by Mike Monteiro[0]

(for the few who haven't seen it yet)

[0] http://vimeo.com/22053820

I'm not sure what the lesson is here.

If a lesson would be considered an informative or useful conclusion based on the circumstances and results described, I'd say the only lesson here is that the author was very lucky despite what seems -- at least as described -- like very risky behavior.

This definitely is not the way to run a business, particularly when there are people depending on you. It's great that it went well, but "just sign it" is very reckless, and "fucking sue me" is, quite literally, asking for it. If you're not prepared for the eventuality of being sued this is just an unconscionable stance to take.

Yes, business almost always involves risk, but it's almost always possible to take calculated risks rather than throwing up your hands, signing whatever's put in front of you, and hoping for the best.

> calculated risks

Yes, you shouldn't agree to every crazy clause that is in a contract someone sends you. But you also shouldn't get sucked into lawyering. Your lawyer is paid to say "What about .." but it is kind of a YAGNI thing: the lawyer meeting is a part of getting work done but don't let it be too big a part.

That's the calculated part of your comment and personally, reading this post in the past helped me to see that.

There are a few lessons

1) redlining a contract too much can destroy deals. Some lawyers do this instinctively but you should talk to your lawyer and review the changes and make sure all are important to you.

2) when you are starting off in business you can take more risks. but, i think that when you are established, it pays to be more cautious.

End of the day, this is risk management. The risk of getting sued over a deal that doesn't happen is zero. The risk of getting sued for deal that goes through is non-zero.

Here's a great example. If you want to do business with the State of New York, there's a list of non-negotiable clauses that you need to agree to. ( http://www.ogs.ny.gov/about/Docs/AppendixA.pdf )Several are onerous... you need to provide periodic reports about whether you discriminate against your employees in Northern Ireland (whether you have them or not).

As a smallish enterprise, you do not have the ability to negotiate with a big org. So you need to decide: Do you want risk and a bag of money? Or no risk and no money?

Bad idea. Anyone who is offering hostile contract terms is very likely to use them. Many of these terms are extremely expensive - such as non-compete or excessive confidentiality, forcing you to put your name and reputation on the line for shady business practices or excessive liability.

Even if they don't sue you, they may publicly call you unethical for signing terms and then breaking them, turining the tables on you to sue them. It is considered excusable if you are a very small guy who simply doesn't have any other choice, but if you are a bigger company building on reputation you will suffer from it.

I think that there is inherently some risk taken in any endeavour. I think the biggest risk is not doing anything. I agree on that.

Signing contracts without legal counsel might turn out okay, but legal counsel is like insurance or a seat belt: You don't need it until you have an accident.

It is dissuasive, and it is mitigating. i.e: Those who want to screw you will think twice when you have an attorney, and if they wish to screw you, you have a better chance to get screwed less if you have an attorney than if you haven't.

On the other hand, it depends. Just as some seat belts and air-bags were actually the cause of death of the car driver, it depends on your lawyers. It's not a generic term. One needs to find people who are well versed in the matters, and the body of law is large, so one needs specialists in a field. You can't get the best advice on start-ups from a lawyer who specializes in divorces.

Again, on the other hand, Elon Musk once affirmed that they didn't have lawyers because things were too complicated and it wouldn't make any sense to them. That was back in 2003, I doubt things stayed the same. The stakes are high, and a company like SpaceX ? I don't think they don't have lawyers.

As a lawyer, that is a stupid attitude to have.

Having legal shit done correctly for start-up businesses is a lot like having insurance. You'd prefer not to have to pay for insurance and you'll likely never need it. But when you need insurance, you're glad you have it.

Same thing is true for having your legal ducks in a row. You hope you never get sued or embroiled in a lawsuit, but if you do, you'll be glad you had lawyers involved at the beginning.

So I've skimmed maybe the top 10 comments on this thread and it seems everyone has gone off on a complete tangent. I'm seeing this more and more on HN. Maybe someone further down has covered the point but I'll say it anyway. The lesson has nothing to do with a lawyer or hiring people. It's to do with embracing uncertainty. That's the key take away here.

Years ago, I participated in a mutually beneficial potential partnership being lawyered to death, and missed out on a great win. As a small business that was approached by a large organization with potential to drive us a ton of new customers, I had a great opportunity. But, I also saw some risk, due to the sheer size. So, I let my lawyer review it, which initiated a death spiral.

In retrospect, there was nothing onerous in the initial proposal. My attorney just wanted to cover all bases. That's how they envision their jobs: If a client ends up in a bad situation that could have remotely been avoided, then they have failed (in their eyes). But, there is sometimes no scale brought to bear. Any degree of risk--no matter how small--becomes a point of contention.

The funny part is that I and the biz dev guy on the other side just wanted to get it done. But, we became unwilling conduits for lawyers who tried to eliminate all risk from their respective sides and we just wound up passing marked-up agreements back and forth until we (and the deal) were exhausted.

So, I learned that all of this legal "protection" must be taken with a grain of salt for the small business owner in particular. The upside is generally so much greater than the risk for us, and in the off chance that the risk becomes a reality, it can generally be mitigated then.

There is risk to simply being in business, especially in this litigious society. So, you cannot deny yourself an opportunity simply because your lawyer couldn't wrangle every last bit of risk out for you. And, when you assume that posture of trying to eliminate risk completely from your side, then you have to know that the legal folks on the other side will follow suit. That's when the show stops.

The advice given to the author by his dad is exactly what I'd give to my kids, minus the expletives.

I think the larger (and IMHO better) lesson is that it's really important to trust your clients and for them to trust you. That understanding is often more important than the legally-binding fine print that you two have signed.

For example, if the client doesn't agree with the bill you presented them, you're gonna have a problem regardless of what the contract says.

After handling lots of contracts back and forth, my experience is that you avoid adding new conditions to a contract for a large company if you can, but you had better remove anything that you don't intend to actually comply with. As an independent contractor, I've had companies remove the insurance requirement, non-solicitation, any unusual IP ownership clauses, etc. and never lost a contract yet. I especially watch for clauses that affect my ability to do my normal business with other companies after this work is complete and anything that puts a weird reporting burden on myself. You'd be surprised what's hidden in the company's contract boilerplate text that even the company lawyers forgot about.

My overall goal when doing this is to ensure that when the work is done, the customer signs off and the checks stop coming, that I don't owe them anything more.

Forget the legal stuff, the lesson here is to just get on with stuff and gather up and loose ends later. That's it.

"Worry about that in 2 months,"

I can't help but cringe. I quit my former job at a startup because they owed me 7 months salary. I really believed in the projects and in the CEO but, in the end, he couldn't walk the talk.

It's a real shame because the company had - and still has - TONS of potential, but management is appalling.

I cringed reading your post, how on earth does someone get themselves into a position where they are owed 7 months salary? What happened there? I hope you managed to collect in the end

> I’m not sure what the lesson is here.

Me either, but it was a good read.

Good read. I get the message: done is better than perfect. However, in this specific example, it's pretty terrible advice to sign a contract that leaves you in a compromising position just to get a job. You'd probably be better off signing no contract at all.

The lesson here is the same drawn from pg's essay on doing things that don't scale - http://paulgraham.com/ds.html.

If you were a multibillion dollar company acting at scale, it would make sense to spend time perfecting the contract. But because you could assess the risk of failure for all elements of the project and felt comfortable with them, there's little need to do the extra due diligence required by a company acting on a larger scale.

The majority of a founder's job is making decisions. But the point at which a decision needs to be made to be effective is the point where the founder often has only 10% of the information needed to feel comfortable making it.

The 20-something young hipsters in startups now, reading HN during compiles, mostly think the sky is the limit. Salad days, nothing but good times ahead. But we've seen this movie before, and it didn't end well the last time. The whole frenetic startup scene will eventually blow up again. IMO.

Archive.org has quite a few captures of fuckedcompany.com, Pud's great site chronicling the (previous) dot com bust. I don't know if they archived everything; companies were blowing up on a daily basis, laying off people, missing payroll, closing doors without notice. https://en.wikipedia.org/wiki/Fucked_Company

I've been trying to find a post by either Derek Sivers or Tim Ferriss along these lines. It was about basically ignoring annoying rules and regulations if the potential penalty was either small or unlikely to be incurred. Anyone remember it?

It's certainly in the 4HWW book. Probably in the context of ignoring emails.

Lawyers can either be your best friend or your worst enemy in getting a contract worked out. If they're just posting letters back and forth at each other, I'd try and find a different lawyer fast.

A conversation needs to take place with the interested parties so that people know what they can compromise on and what they can't - see how much leeway they're prepared to give each other. Marked up contracts, after the initial exchange arguing about things that the client perhaps doesn't even care that much about, is not such a conversation.

> This lesson in total disregard for risk served me well. They say entrepreneurs are risk takers. I think of myself as too lazy and irresponsible to fully understand the risk.

I recall a study somewhere (can't find it now, unfortunately) that concluded: it's not actually that entrepreneurs are people who intentionally take bigger risks than others. It's that they have so much self-confidence that they believe things are less risky than they really are -- somewhat self-delusional, perhaps? But hey, that's how things get done.

Relevant: The funniest lawyer cartoon ever, at http://dilbert.com/strips/comic/2008-08-28/

The fact that he closed with

"It works for me.

I’m not sure what the lesson is here."

Takes it from another 'oh this entrepreneur has a few specific experiences and things he has business wisdom' to just funny and awesome.

It turned from "I'm not a laywer, but.." to something that was unexpectedly deep and thought provoking.

Perhaps the lesson is that getting sued is an occupational hazard.

I don't think entrepreneurs should be lazy or blind to risk; rather, they should use strategy, options and flexible arrangements to eliminate, minimize, or transfer risk. Big companies didn't want to handle fraud for online payments - Paypal founders figured it out. The OP could have brought the employee on as an independent contractor. Moreover, forming a corporation would help to limit the risk of non-delivery with the $400k contract.

Although I think you should always have a lawyer around to highlight and explain the risks, business is not always cut and dry and contracts disputes sometimes require you go to court. After all, you just need an impartial party to make a determination. It's part of business and entrepreneurs should get used to it. Especially in our field where people throw around Intellectual Property wants/demands so easily.

While I definately believe in taking risks, be sure to protect yourself. If you are doing anything unique for a client protect your IP and have a non-compete.

Take the risk, but try to protect youself--become judgement proof if you can? I sometimes think if you're doing something risky, with the real possibility of getting sued it's not unreasonable to hide money in a tin can. Ha--Ha. Yes, it's not conventional advice, but it might keep you from being homeless, or despising all lawyers.

The lesson from this isn't that you shouldn't get a lawyer to review your 400k business critical contracts, it's that you should pick a lawyer who knows what's important to fight about and what's not, and understands the objectives of the business. The "Sue me!" attitude is pretty shortsighted thinking.

Disclaimer: lawyer here.

You should not engage in contracts as an individual person. Form a corporation (a sub-chapter S if you're a very small team or an individual). As owner of the corporation, you can legally indemnify yourself. The company acts as a shield to protect the assets of the owners/stakeholders.

This lesson in total disregard for risk served me well. They say entrepreneurs are risk takers. I think of myself as too lazy and irresponsible to fully understand the risk.

This attitude works very well - right until everything goes horribly wrong and you wished you had tried to minimize risks.

No kidding! Can you say, "survivor bias"?

It is a truth of business that contracts are mostly for defining expectations and escape routes, but as long as the client is satisfied none of those clauses will be enacted, especially because most businesses have more important things to do then go to court.

Just signing anything is great until they do sue you and you're fucking screwed.

Tenancy agreements is one thing where it pays to look through and say "come on, you didn't get a lawyer to draft this, let's cross these bits out."

Reminded me of "Screw you. Pay me.", a video that advices to get a lawyer before you sign anything.


Note that the original video was titled "F*ck you. Pay me.". The linked venturebeat article decided to use a synonym for some reason.

The title remembers me of the Sosumi sound that came with Mac System 7 onwards: https://en.wikipedia.org/wiki/Sosumi

By following the advice in this blog, aren't we letting the big corporations hold all the legal cards and potentially put smaller operations in very uncomfortable positions? That isn't right.

How did this make it to the front page of hacker news for a second time?


The lesson here is that you couldn't resist bragging about the fact that you briefly made an exorbitant amount of cash during the DotCom bubble ... and that your dad is a bad-ass.

As a newish freelance/contractor, what stood out to me is that's a shit tonne of money made there. I wonder if there's contracts close to that floating around still.

I never heard Robert Young say "fucking sue me" in Father Knows Best. But then fathers don't wear fucking fedoras these days either.

Previous discussion, posted by the OP.


$400,000 for an e-commerce site? Can't believe that happened. Anyone can point me or tips as to how to get those 6figure plus contracts now days?

The only downside to this article is the URL with profanity in it...apparently it can't make it through my corporate firewall!

In this case you should have gone to a lawyer who knows this type of biz. not some random or general lawyer lol

I have seen many deals die with the lawyering back and forth, even if both parties agreed on the essentials.

Not getting a good contractual arrangement is all fun and games until you're the Winklevoss twins.

this is an attitude that you need to earn, not the kind of attitude that you should start out with...

the reality is bad things happen sooner or later and this attitude banks entirely on linear growth. the bigger you are the harder you fall, so if you're hiring employees without knowing whether you can afford them or not, then that's just wreckless and shouldn't be praised or encouraged.

it's almost an 'all or nothing' approach where you reinvest everything you earn indefinitely because you want the snowball to keep growing. sooner or later, the snowball will start melting or you'll have to push it uphill and this philosophy will have to be 'put right' by sensible people who only spend what they know they can afford.

it's a bit like playing the lottery and the guy that wins is giving advice to those who want to win - "play every week, buy as much as you can, that was my secret"... yeah, well that will work for some people, but for most people it won't work.

This ideology works wonders within the United States government's war on terror especially.

The obvious lesson here is: listen to dad. If you are starting out, have a mentor.

"It works for me.

I’m not sure what the lesson is here."

The lesson is: he needs to get sued. :-)

Well put.

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