One Inviolable Rule
For those who don’t know, I read a site called Hacker News fairly frequently. It’s usually the 2nd thing I check each day, after my RSS feeds. It’s a computer-focused site where people post interesting stories and the readers vote them up. It is, I hear, a lot like Reddit was in the early days.
Anyway, I’ve seen a disturbing trend there over the last few weeks, and it mirrors one I’ve seen a few times in the world at large (which is why I’m posting this here rather than there) and I thought I’d address it because maybe, just maybe, I can save someone from making a big mistake. So I’m going to tell you the one concrete, inviolable rule that I’ve discovered in my few years of being an entrepreneur.
I don’t say this lightly. While I might be a spewing fountain of opinion, I generally tend to take Paul Buchheit’s view of advice (which he defined as “Limited Life Experiences + Overgeneralization”) and therefore don’t think there are many absolute rules, at least that I’ve proven conclusively enough to preach as gospel. And even when I do give advice, such as how to get accepted to Y Combinator, I always do so assuming it will be received as just helpful hints from someone who has been there, rather than a one size fits all generalization.
But there are exactly three things I am sure of, and the first two you probably already knew. Number 1 is that evolution as a concept is ideologically correct (even though clearly much of its history on this planet and its mechanisms are as yet unknown) and that anyone who thinks otherwise has a flawed decision making process. Number 2 is that Michael Bay’s career is the greatest atrocity of the last two decades. And the third, and the one that inspired this post, is that if you have a legal question, you should ask a lawyer, and only a lawyer.
The law is a lot like football, where every casual observer thinks he knows way more than he does. And just like every douche bag who ever played three downs of peewee thinks he’d do a better job coaching his favorite NFL team than the guy who gets paid 50 times more than he makes at his lousy middle management job to do so, every person who ever read a blog entry about YouTube thinks he knows something about copyright law. He doesn’t.
This is dangerous to you, seeker of legal advice, because you’ll be fooled into thinking maybe, just maybe, you can save yourself the retainer. The guy telling you “oh don’t bother to form an LLC, you’re not making a profit yet so you can’t be sued” sounds so confident, surely he must know what he’s talking about. He doesn’t, and you really don’t want to find that out the hard way.
When I first started playing poker, I fell into a similar mind trap. I was routinely calling people down because I felt, no, I knew, from their mannerisms that they had a weak hand. So I’d call with middle pair and then they’d roll over a straight. And it wasn’t that they were brilliant sharks, in control of their own tells and tricking me into donating to their kid’s college fund. It was that they saw a runner-runner flush come up and were so afraid of the long shot bad beat that they actually did think they had a weak hand.
And that’s when I realized that, in both poker and life, you can’t read people any better than they can read themselves. You can, if you’re good, very accurately determine if they think their hand is good, or if they think they know the answer to your legal question. But you can’t be sure if reality differs from their perception.
So I see people post these legal questions on HN (or ask them in real life) to largely programmers, and it saddens me because none of the answers (other than mine) are the only valid one, which is “ask a lawyer”. And someone somewhere is misguidedly trying to save a few legal dollars, and in the end are exposing themselves to all sorts of things going wrong because instead of seeking advice from a trained professional, they got 100 opinions from computer science experts, many of which are somewhat informed due to somewhat similar past experiences and many of which are third-hand information whose original source was a blog post by an intern at TechCrunch.
The law is a very vast, complex thing, and your situation is unique. A lot of factors are involved in questions that logically seem as if they should be simple. Lawyers go through a lot of schooling to learn how to examine your situation and come up with the right answer. Their schooling isn’t easy (at least according to the many smart people I’ve met who went through it) and neither is the comprehensive test they take at the end. That stuff isn’t for show.
This is especially rough for programmers who are logical people used to dealing with logical systems because the law is basically the opposite. It may help to think of your legal situation as an equation with ten variables. Changing one of them could easily change the result. So even if the person answering your legal question has been in a situation with nine of the same variables, there’s still a good chance that the answer he’ll give you (which is informed by his past experience, where it probably came from an attorney, then added to overgeneralization to become advice) will be wrong for you. He means well, and you mean well, but the end result is a disaster waiting to happen.
Even worse is the fact that some of those variables are ridiculous things that, logically speaking, shouldn’t even be variables, such as what state/city you’re in, the net worth of some third party, or whether you dress left or right. The law is one ages old hack on top of a kludge.
The worst part is, a lot of the advice could be gotten for free. Someone recently wanted to know if he should form a business entity. A lawyer probably would have given him an informal opinion in a free consultation.
In fact, you can educate yourself far more about anything by just picking up the Yellow Pages (or going to their website) looking under “attorneys” for the category that seems nearest to what you’re after, and calling one. If they’re not in the right specialty, they’ll refer you to someone who is. I’ve met with lawyers of almost every specialty except for injury and divorce (two I hope to avoid forever) and each time learned quite a bit before I ever plunked down a retainer.
So that’s it. If you need programming advice, you don’t ask a lawyer, and if you need legal advice, you don’t ask a programmer. (The former would actually be much better for you because the lawyer would most likely say “I don’t know”.) If you want legal help, ask a lawyer. Case closed.
August 27, 2008 at 3:58 am
If you want litigation ask a lawyer.
August 27, 2008 at 4:28 am
“evolution as a concept is ideologically correct”
That sounds meaningless
August 27, 2008 at 6:57 am
On the other hand, as far as I know, you're not a lawyer, so are you really qualified to be giving us this advice?
August 27, 2008 at 7:27 am
Well all he's saying is to *go* to a lawyer in any case.
August 27, 2008 at 8:27 am
I think Uwe Boll gives Michael Bay a run for his terrible, terrible, title.
August 27, 2008 at 8:29 am
I find a few problems with this. One, you really ignore costs. Sure, you can get a few hours with a lawyer for free, but you can't keep going back and asking them questions. Nor will they probably write up your LLC documents for you for free, or research a really in-depth legal question for you for free. And the really good lawyers aren't just sitting around waiting for 20 year old kids who know nothing to come walking in expecting to get all their answers for free. I'm sorry, but good legal advice costs money.
And I think you'll agree that a lot of people at Hacker News don't have money. They're bootstrappers, get a prototype out then worry about it later types who don't have the capital for good legal advice. So what is your advice for them? Don't start until you can afford a lawyer? Go with a crappy cheap lawyer? I think the philosophy of Hacker News is “don't wait, do your start-up now.” If everyone waited until they could afford a good lawyer to answer every legal worry they had, then we would have a lot less companies out there.
I'm certain we both agree that legalities are a huge deal, and doing it wrong can turn into huge problems. But I think you're ignoring the fact that some people who aren't you might be fine with that risk. You're assuming everyone wants to mitigate risk as much as possible. But what if people are perfectly fine with a huge amount of risk if it means they get their company up and running? For those people, the advice they get on Hacker News is good enough. They don't have the capital for real legal advice and they don't care. If they get sued and it all falls apart, well, thats just what happens. They want a quick and dirty answer that might be right and they move on, using their available capital for something else. Others have done it that way and so will they.
Your article makes the assumption that having your affairs in good legal order is a necessity for starting a successful company. Its not. You can have a successful company with completely messed up legal affairs and a substandard or even false knowledge of what the law really is. Will it be risky? Sure. Can it fall apart at any time and go from successful to huge crash in a moment? Yes. But for the time being, it will be a successful company, and at any time they can change things around and pay for legal advice.
August 27, 2008 at 9:59 am
Matt, thanks for your feedback for what was almost definitely my legal post on HN.
While I see your point, I fall perfectly into the category that
Tom describes: I want to launch something eventually and don't have the bankroll to pay for the good legal advice that I probably need. (By the way, hu4rollz one day…)
How does Y Combinator do it? If you're accepted to their program and have issues, do you have to settle them before demo day?
August 27, 2008 at 10:01 am
My article makes no such assumption. I'm simply stating that no legal advice at all is better than advice from a non-attorney.
August 27, 2008 at 10:04 am
Y Combinator saves you quite a bit of money by having you incorporate using some paperwork drafted by WSGR. I cannot fathom how much it would cost to pay them to do that.
I was not trying to suggest that you should incorporate before you start writing code, but my personal assets are worth protection, so I wouldn't launmch without forming an llc. Luckily their are sites that do this for you very cheaply.
August 27, 2008 at 10:05 am
I just meant creationism is bunk, and that species are a product of change over time.
August 27, 2008 at 10:06 am
Uwe Boll at least fails in near anonymity.
August 27, 2008 at 10:21 am
Yeah, I think YC pays some of your legal fees, because they have a vested interest in making sure your ducks are in a row to protect their own investment as well.
August 27, 2008 at 10:25 am
For sure. No intelligent investor would put money into a company that hasn't done it's legal due diligence (excepting, of course, companies that aren't formed yet and will be doing their diligence).
August 27, 2008 at 2:35 pm
I'm going to disagree here. I think the absolutely critical thing is that you don't consider free advice as a replacement for a lawyer. It's usually not. I usually use the web (search) or the lazyweb (ask) for most legal issues. My goal is to get as smart about the issue as possible BEFORE I talk to my lawyer which saves costs and helps me get get a bunch of alternate viewpoints. I'll generally trust my lawyer UNLESS I hear a lot of credible sources suggesting a different path. But either way, the act of discussing legal issues online builds a better foundation for me to efficiently discuss them with my lawyer… And sometimes gives me clever ideas that neither of us would've brought to the table.
It also helps as a gut check. Many lawyers care more about billing lots of hours and covering their own ass than saving you a few bucks. If 5 experienced entrepreneurs say, “in my experience, this is a waste of money” and my lawyer says it's an important thing to do, I might grill him a bit and find that, under pressure, he says “Yeah, I guess you can probably do without that for a while.”
The key here is (like everywhere else) to really consider the source of any advice If I hear someone say, “When I ran into this with my company, we did X on the advice of our lawyer (who was a big gun at WSGR),” I'll consider it pretty seriously. If I hear someone say, “I read somewhere that you should do X, but I've never been in this situation before. And I'm 12.” I'll probably blow it off.
August 27, 2008 at 2:57 pm
Both the questions and answers I've seen seem to be coming from a different mindset, more along the lines of wanting to save a few bucks. I didn't mean to suggest that it wasn't worth discussing legal issues at all. Just that when you need to know (or if you need to know if you need to know) ask a qualified professional.
I think the rule applies to most professions, but other than health and law, mistakes are usually not that costly.