Earlier quoted context omitted.
"Flying under the radar hoping we don't get caught and sued for something we know is wrong" should not be a part of any reasonable business plan.
But many startups do not have reasonable business plans. They have crazy business plans that everyone knows will fail, except sometimes they don't. Many startups have begun knowing they were going to be sued, knowing they were going to have legal and publicity problems. That's the nature of the disruptive business that everyone wants to be in these days.
Name one startup that began knowing they were going to be sued and went on to a successful exit.
Parenthetically, the original Napster, the one that began knowing it would be sued, was sold about 3 years after its founding for less than $2.5 million as part of bankruptcy proceedings -- and I doubt that the owners took any significant dividends out of its before its sale: http://en.wikipedia.org/wiki/Napster#Current_status