An article we liked from Thought Leader Ilya Kukuyeva from Kukuyeva Consulting.

Please raise your hand if you run your own business or have your own start-up.

• Please keep it raised… if you understood every single word in the last contract you signed.

• You no longer have your hand raised?!… Then this blog post is for you :) 

While I’m not a lawyer – but a consultant who runs her own business – I do spend about a third of my time navigating and negotiating these contracts, with the help of a lawyer. 

For start-ups (and small businesses) that are starting out, or who are trying to make their runway last as long as possible, legal advice seems like a luxury that can be cut. I’m here to tell you otherwise – along with what else to watch out for, when drafting/evaluating contracts, so that we all spend less time on legal fees and more time collaborating.

Disclaimers

• None of this is legal advice. This post was not sponsored or affiliated with my lawyer (or any lawyer). Please consult your own attorney for help with contracts that are specific to your needs.

• These are my lessons learned, which are specific to the nature of my business. This advice may not work for you.

Why do we need contracts?

• Contracts outline terms and conditions around what the relationship is, to help each side manage expectations. I’ll go a step further and say that they outline edge cases – along with who will be responsible for what (e.g. indemnified) and the consequences for what happens in the case of things going south. Essentially contracts are used to de-risk the collaboration.

DOs

• DO get a lawyer ASAP – like yesterday! Ask your network for a recommendation. You’re looking for someone that not only:

  • understands the nuances of the law around: contracts, employment, equity and stock guidelines, issue and sale (including Rule 701)  – but who also 

    1. has attention to detail, and 

    2. is licensed to practice in the state that the governing law of your contracts will be, 

    3. (promptly) replies to your requests, and

    4. can help you navigate incorporating in Delaware for your start-up (where applicable) and VC term sheets, and

    5. understands your (low/medium/high) risk tolerance.

• DO use your lawyer to help you understand all the terms of the contract you’re signing, along with what risk remains, and how you define what it means that “something goes wrong” – and what happens then.

  • I’ve found that even one missing word will change…

    Read the rest of this article at Kukuyeva Consulting.

    
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