Reading Your Legal Docs

Babak Nivi

Some docs are too long and boilerplate to read, so this is how I read financing docs: 1- Read and understand everything in the term sheet. 2- Get a good lawyer because you probably don’t have one. 3- You probably can’t tell the difference between good legal advice and bad legal advice.

 



Filed Under:
Collection: Operations
Category: Legal & Liability

Piercing The Corporate Veil

Fred Wilson 

Forming a company is the best way to "putting a buffer between you and the business." But you can't just pretend to be a business, you have to be a business. "Being a business" means separating your personal and business records, separating your personal and business bank accounts, treating the business as a real entity, having board meetings, taking board minutes, doing major activities via board resolutions, following "due process." If you don't behave as a real business, you could find yourself in a situation where someone, most commonly someone who is suing your business, can come after you (and your business partners) personally. And then you are going to say "but what about the liability limitation the business provides?" It may not be there for you.

 



Filed Under:
Collection: Operations
Category: Legal & Liability

Don’t Be Creative About The Wrong Things

Chris Dixon

When founding a tech startup, there are certain areas where you should spend time trying to be creative/innovative. Generally these should be:  product, recruiting, marketing etc. One slightly disturbing trend I’ve noticed is founders trying to creative about stuff like legal terms that really are better left in their “default” form.

 



Filed Under:
Collection: Operations
Category: Legal & Liability

How to Work with Lawyers at a Startup

Mark Suster 

I know that people have an allergy to lawyers out of fear of being screwed.  Much of this is unfounded – some is not.  If you’re a startup and you don’t have a close relationship with a few law firms you’re really missing one of the most important relationships that any entrepreneur can have. This all got me thinking about a post on how to best work with lawyers.  This is stuff I tell people verbally at least twice / month so I’m glad to finally get it into written format.

 



Filed Under:
Collection: Operations
Category: Legal & Liability

Lawyers Are Referees, Not Coaches

Babak Nivi

Lawyers teach you the rules of the game. But they usually can’t teach you how to play it. Lawyers say whether you can do something, within the confines of the law and your existing contracts. Lawyers will also write the contracts and do the filings. But they usually can’t tell you what to do—that’s what coaches do. A lawyer knows that you’re not breaking any laws or contracts if you give a common board seat to a new CEO. He also knows how to write the contract. But an advisor knows the possible outcomes of that decision.

 



Filed Under:
Collection: Operations
Category: Legal & Liability