Legal Advice: Start With a Plain English Agreement That Covers Key Deal Points

Written by Sean Murphy. Posted in Rules of Thumb

I am not an attorney. This is not legal advice.

Back when i had a real job at Cisco a few years ago I managed a webmaster who asked me to debug a problem with javascript embedded in the HTML for a page they had written. As we dug into about 30 lines of javascript it became clear that it was three sections from different programs with inconsistent variables names that had been glued together. The webmaster understood how to write good content and basic HTML and had viewed the javascript like a poem, assembling different stanzas from other pages in the hope they would form a coherent whole.

True story.

When I tell software engineers this story they often laugh. And then they realize that I am telling them the story because they have assembled a contract from different legalese they have found on the Internet in hopes of creating a legally binding and coherent whole.

I have seen firms give away the rights to their software because they didn’t understand the legal meaning of certain phrases they copied from a contract they found on the Internet.–this a true story that happened to a client a few years ago. The other side was happy to sign because they understood what “work for hire” meant, and happy to enforce it later.

Nobody likes spending money on attorneys, entrepreneurs are not alone in this regard. But you can always put a budget on their efforts (one rule of thumb is to spend 1% of the contract value on a legal review if you are bootstrapping) and ask an attorney to give you a prioritized list of risks. Many of the things that large firms pay attorneys to worry about are not worth spending attorney time on for an early stage startup.

Focus on key risks, not every risk. Also understand that to some attorneys ‘doing nothing’ can represent the least risk, but to a bootstrapper doing nothing means your runway keeps getting shorter. Doing nothing and taking no risks for long enough gives you the opportunity to ask for your old job back.

Find an attorney who is comfortable working with bootstrappers. Ask other bootstrappers who they use if need be.

Start with a plain English agreement that enables a meeting of the minds: it can just be a bulleted list of key points. If you are not an attorney do not attempt to write “legalese.” It just sets you up for signing a contract that you have drafted but don’t really understand.

A plain English document affords the layperson (non-attorney) substantially more protection and is always more useful as a starting point. Even if the other side starts with a contract take the time to reach agreement on key points in plain English so that you can tell whether you are negotiating substance or style when you involve your own attorney.

 

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