Comments on: read those contracts!

By: Marcio Rocha

Marcio Rocha — Tue, 23 Oct 2007 08:58:43 +0000

A lawyer is a person trained to convince people. I find it fairly biased that we have been convinced that lawyers are necessary…

By: Stuart Henshall

Stuart Henshall — Mon, 08 Oct 2007 11:30:35 +0000

Danah, Great post; we’ve all been there. For most of us… getting the lawyer involved would wipe out the profit in the job. I’m convinced that representing as a company – mutual NDA, is better than being the individual. Still these are “costs” they say of doing business. I don’t find the same issues when working with clients overseas. Best thing is not to sign them…

By: David R.

David R. — Sun, 07 Oct 2007 14:50:49 +0000

I’m a big corporate licensing lawyer – the boogyman of this post, if you will.

I write clauses like this all day long because I like to go to the club in the evenings and laugh about my treachery over fine Scotch and a cigar with the boys…

… or not … seriously, the reason that we “big corporate lawyers” write clauses like that is that we are asked for one size fits all agreements to cover limitless possible sets of factual circumstances. Do you think anybody tells me what the Board you are on will be discussing? Do they tell me if you will be consulting on some little side project or designing the technology at the heart of the companies’ next product line? Do they tell me if you have founded three start-ups in our area and are likely to go start a fourth, or if you are just a local friend of a friend? No, they don’t.

They come to see me before they even know who you are and ask me for a “quick and easy form of NDA/Consulting Agreement/Whatever.” In those circumstances, under the cannons of legal ethics (zealous advocacy), I have two choices: I can either (1) push back and say “There really is no such thing as a form – every circumstance is different and merits different levels of IP protection and aggressiveness on indemnity, etc. Come back and see me when you know the deal, and we will work up a draft” or (2) I can push a button and give them the most black-hearted one-size-takes-all form in the file and leave it up to the recipient to read it and push back. I’ll tell you, lawyers who live by number 1 don’t have many repeat clients, unfortunately.

So you are getting the crummy one-size-fits-all-over-agressive contract because it would take hours of work and expense for me to tailor an agreement to a situation where the non-compete and IP language are appropriate for you personally and yet still protect the company. If you, personally, merit that expense, then by all means, push back and the client will come tell me we need to revise the document and we will.

However in most circumstances it probably isn’t worth your time or my time to try and get to the “perfect” document. Instead, you can be comforted by knowing that it is going to cost my client six figures if they decide to try and sue you on this document – so short of some monumental disagreement you are pretty safe. These documents are meant to keep the clients safe from being sued by you (which also runs up a six figure legal fee at BigCo almost instantly), more than to exert any real control.

My $.02.

By: Christopher Herot

Christopher Herot — Sun, 07 Oct 2007 05:43:27 +0000

You were right to ask for clarification, but they did you a favor by refusing to answer. There’s probably another clause in that contract that says any other agreements, written or oral, do not apply. No matter how much you trust the people telling you what they consider “competitive,” it won’t matter what they say when they leave their jobs and the company sues you anyway.

I’ve found even the largest organizations will negotiate modifications to contracts if there is someone there who really wants your participation. If not, you are better off not dealing with them – they won’t follow your advice anyway.

By: David

David — Sat, 06 Oct 2007 18:59:45 +0000

Ed Foster’s “Gripelog” website has collected by both concerted effort and additions over time a great many of such contracts and terms, especially in computer, software, digital tech, Internet and other areas. Perhaps you can find in his archive an old thread about a hotel group that (but no longer) got your unread agreement that the hotel acquired copyright and another ownership interest in all communications transmitted by guests using its network.

By: Debbie

Debbie — Sat, 06 Oct 2007 13:46:10 +0000

It was interesting to read Bertil’s blog (see above link) discussing his logo in lieu of contract idea–essentially applying the Creative Commons principle to contract law.

(Bertil, check your stats. Someone has now read your blog.)

By: Liz

Liz — Fri, 05 Oct 2007 13:37:12 +0000

danah
a thoughtful post as always. i once had a contract put in front of me from a potential client that upon careful reading basically said they would own my thought process. they, too, said no one had ever complained about it before. i didn’t sign. i’m not working with them. my lawyer was happy and considers me well trained.

By: Joe Drumgoole

Joe Drumgoole — Fri, 05 Oct 2007 09:30:44 +0000

I love when they say “nobody ever complained/objected before”. my response to that is always “well you can never say that again, ever”.

By: zephoria

zephoria — Fri, 05 Oct 2007 04:00:15 +0000

I realize that this is normal for a corporate advisory board but this is not that role. Earlier in the contract, they define members of the advisory team as “Board Members.” Corporate Board Members are typically given stock, monetary compensation and other such benefits. The role of the product advisory team does not include that.

By: Barry

Barry — Wed, 03 Oct 2007 23:10:30 +0000

The particular extract you quote refers to the position of Board member – is this an indication that the particular position is on the Board of Directors of this particular un-named corporation? If so, it is ighly likely that attendance would go unremunerated. In addition, it is hardly a new proposition that a board member owes a duty of loyalty to the entity being served: it has been a principle of company law ever since there have been companies, borrowed from the trusts that preceded them, and in most jurisdictions (including US ones) enshrined in statute law. It is a perfectly understandable proposition that shareholders would want those who manage the company on their behalf do not go out and compete with the company.

On the other hand, if you are not a Board member and in fact just the advisor, then the clause quoted does not apply.