Don't waste your money on lawyers • Hacker News Board

Re: Don't waste your money on lawyers

#11

Post by crikli » Thu, Jun 02, 2011, 4:54 PM UTC

tptacek wrote: post #8

crikli wrote: post #7

Earlier quoted context omitted.

Maybe it is hyperbolic; it's probably obvious that the OP has me pretty agitated. I won't go into detail unless it's requested, but choosing the wrong corporate form cost my business a multiple of the $9K sum the OP mentions in taxes and legal fees arising from the lack of protection afforded by the right form (which was for us an S corp). If we'd done it right in the first place by shelling out the money to a good a…

Protection from what? Liability to customers, business partners, and people affected by your business? Or liability to company members with equity claims? I'd like to know more about what kind of legal threat an S corp is specifically better at protecting you against. Were you a C corp before, and had a company officer problem? You mentioned taxes. Taxes are a huge difference between company structures. But you don't…

What tptacek said: get everything you sign reviewed.

I re-read the OP; the overall point there was to be financially prudent, e.g. don't waste money. Don't pay an attorney for work he/she doesn't need to be doing.

The counterpoint is to pay them for the work that they _need_ to be doing; but without legal knowledge it's hard to know what that threshold is. I'd encourage people to err on the side of caution and if there's any doubt at all, engage legal counsel.

Re: Don't waste your money on lawyers

#12

Post by _delirium » Thu, Jun 02, 2011, 5:14 PM UTC

crikli wrote: post #2

I'm cringing in anticipation of the downvoting, but I can't help myself here: this is TERRIBLE advice. Absolutely egregiously awful. The consultation of a good (that qualifier is important) attorney is worth every single penny. He/she will save you from making terrible mistakes like adopting the wrong corporate form, creating contracts that don't protect you and expose you to liability, signing off on contracts that…

Aren't you assuming that the average lawyer will, in fact, give better advice than can be gleaned through self-research? It's not inconceivable that for a number of routine things, the average advice is not likely to be any better (and possibly worse) than you'd get by reading a standard introductory text on the subject, and using one of the standard boilerplate contracts, after having read and understood standard advice written by a respected authority in the area, on what they each do and how to choose between them. This is particularly the case because the average lawyer is not grellas. =]

(As the other branch of this thread discusses, I agree that contract review is a different matter; in that case, you want someone who's familiar enough at pattern-matching to spot unusual things or possible pitfalls. But reviewing contracts proposed by other people is one specific kind of lawyer-consultation.)

Re: Don't waste your money on lawyers

#13

Post by pauldisneyiv » Thu, Jun 02, 2011, 5:17 PM UTC

crikli wrote: post #11

tptacek wrote: post #8

Earlier quoted context omitted.

Protection from what? Liability to customers, business partners, and people affected by your business? Or liability to company members with equity claims? I'd like to know more about what kind of legal threat an S corp is specifically better at protecting you against. Were you a C corp before, and had a company officer problem? You mentioned taxes. Taxes are a huge difference between company structures. But you don't…

What tptacek said: get everything you sign reviewed. I re-read the OP; the overall point there was to be financially prudent, e.g. don't waste money. Don't pay an attorney for work he/she doesn't need to be doing. The counterpoint is to pay them for the work that they _need_ to be doing; but without legal knowledge it's hard to know what that threshold is. I'd encourage people to err on the side of caution and if the…

So again....how was your business hit financially by filing incorrectly?

Glad you have an opinion on erring on the side of caution- you've stated it - perhaps now you can answer our questions and share your story.

Re: Don't waste your money on lawyers

#14

Post by larrys » Thu, Jun 02, 2011, 5:18 PM UTC

For reference, see:

http://en.wikipedia.org/wiki/Sosumi

Agree. In business you will never have enough money or time to do everything right. There are risks in business and managing those risks is a skill that is learned over time. And decisions that need to be made are not digital they are analog in nature. They depend on many factors and different circumstances. Lawyers don't give business advice and everything they do is colored by the bias and fears they have.

In general lawyers are going to be CYA about everything like you mother and father.

Many successful business people and companies play loose and fast and, after making enough money, are able to dig themselves out of any mess they have made or risk they have taken (BP and Exxon are just two examples. And Apple). It all depends.

Re: Don't waste your money on lawyers

#15

Post by alain94040 » Thu, Jun 02, 2011, 5:22 PM UTC

crikli wrote: post #2

I'm cringing in anticipation of the downvoting, but I can't help myself here: this is TERRIBLE advice. Absolutely egregiously awful. The consultation of a good (that qualifier is important) attorney is worth every single penny. He/she will save you from making terrible mistakes like adopting the wrong corporate form, creating contracts that don't protect you and expose you to liability, signing off on contracts that…

I'm always amazed by the number of new entrepreneurs who have no understanding of the legal risks when they start their company, especially with co-founders. You need an enforceable agreement in place, and yes, it should not cost $9,000.

Those who know me know that I started offering an equivalent online agreement (the fancy term is "virtual incorporation"), which you can check out at http://foundrs.com

I continue to recommend it to all new developers who can't go straight to a Delaware C Corp.

Re: Don't waste your money on lawyers

#16

Post by tptacek » Thu, Jun 02, 2011, 5:25 PM UTC

pauldisneyiv wrote: post #13

crikli wrote: post #11

Earlier quoted context omitted.

What tptacek said: get everything you sign reviewed. I re-read the OP; the overall point there was to be financially prudent, e.g. don't waste money. Don't pay an attorney for work he/she doesn't need to be doing. The counterpoint is to pay them for the work that they _need_ to be doing; but without legal knowledge it's hard to know what that threshold is. I'd encourage people to err on the side of caution and if the…

So again....how was your business hit financially by filing incorrectly? Glad you have an opinion on erring on the side of caution- you've stated it - perhaps now you can answer our questions and share your story.

His story involves contract review. You should get contracts reviewed.

Re: Don't waste your money on lawyers

#17

Post by ronp » Thu, Jun 02, 2011, 5:42 PM UTC

rdin wrote: post #6

crikli wrote: post #2

I'm cringing in anticipation of the downvoting, but I can't help myself here: this is TERRIBLE advice. Absolutely egregiously awful. The consultation of a good (that qualifier is important) attorney is worth every single penny. He/she will save you from making terrible mistakes like adopting the wrong corporate form, creating contracts that don't protect you and expose you to liability, signing off on contracts that…

I think the point of the article is "In order to use your financial and legal counsel less, you're going to have to self-educate." Note that the author says to use professional services less, but does not say to completely eliminate them. The more you can learn yourself, the less "research" your lawyer has to do, saving you money.

Definitely educate yourself, but don't forget what your core business and get distracted trying to do everything yourself. The services you hire - whether legal, artistic, development, accounting - can be force multipliers for you. Believe it or not there are attorneys out there who have experience as technologists and entrepreneurs that can keep you out of hot water. Find one that you can develop a good working relationship with and you won't get nickeled and dimed for every phone call (I take a lot of questions over the phone or email, many I can answer in a couple of minutes and don't charge for).

Just like any other business, there are those out there that want to drain the entire LVA in the first month. The good ones will help you develop that relationship that helps you maximize the value you get from your attorney.

Make sure you understand how the attorney bills for services. If you're not sure, ask - "do you charge for phone calls" - "do you bill actual time or six minute increments" - "will you discount your rate if I pay early?" Get those in writing in the retainer agreement.

Re: Don't waste your money on lawyers

#18

Post by tptacek » Thu, Jun 02, 2011, 5:59 PM UTC

_delirium wrote: post #12

crikli wrote: post #2

I'm cringing in anticipation of the downvoting, but I can't help myself here: this is TERRIBLE advice. Absolutely egregiously awful. The consultation of a good (that qualifier is important) attorney is worth every single penny. He/she will save you from making terrible mistakes like adopting the wrong corporate form, creating contracts that don't protect you and expose you to liability, signing off on contracts that…

Aren't you assuming that the average lawyer will, in fact, give better advice than can be gleaned through self-research? It's not inconceivable that for a number of routine things, the average advice is not likely to be any better (and possibly worse) than you'd get by reading a standard introductory text on the subject, and using one of the standard boilerplate contracts, after having read and understood standard ad…

You should have your own boilerplate contracts reviewed too. This will not cost $9000.

Re: Don't waste your money on lawyers

#19

Post by tptacek » Thu, Jun 02, 2011, 6:01 PM UTC

alain94040 wrote: post #15

crikli wrote: post #2

I'm cringing in anticipation of the downvoting, but I can't help myself here: this is TERRIBLE advice. Absolutely egregiously awful. The consultation of a good (that qualifier is important) attorney is worth every single penny. He/she will save you from making terrible mistakes like adopting the wrong corporate form, creating contracts that don't protect you and expose you to liability, signing off on contracts that…

I'm always amazed by the number of new entrepreneurs who have no understanding of the legal risks when they start their company, especially with co-founders. You need an enforceable agreement in place, and yes, it should not cost $9,000. Those who know me know that I started offering an equivalent online agreement (the fancy term is "virtual incorporation"), which you can check out at http://foundrs.com I continue to…

It is just about the sketchiest thing ever to respond to a discussion of how much legal help you need to set up a legally sound corporation with a plea to instead get a "certificate of virtual incorporation".

Re: Don't waste your money on lawyers

#20

Post by 3am » Thu, Jun 02, 2011, 6:01 PM UTC

_delirium wrote: post #12

crikli wrote: post #2

I'm cringing in anticipation of the downvoting, but I can't help myself here: this is TERRIBLE advice. Absolutely egregiously awful. The consultation of a good (that qualifier is important) attorney is worth every single penny. He/she will save you from making terrible mistakes like adopting the wrong corporate form, creating contracts that don't protect you and expose you to liability, signing off on contracts that…

Aren't you assuming that the average lawyer will, in fact, give better advice than can be gleaned through self-research? It's not inconceivable that for a number of routine things, the average advice is not likely to be any better (and possibly worse) than you'd get by reading a standard introductory text on the subject, and using one of the standard boilerplate contracts, after having read and understood standard ad…

He said a good lawyer, not an average one. If one cannot tell the difference when choosing between a good and an average (or worse) attorney, then there is very little chance that they will do an adequate job with self-research, either.