Do I need a lawyer to start a side (not work-related) project with a third party?

Question

I have a couple opportunities in the near future to do side projects. By that I mean that these projects are not work related; Other people will pay me to create something for them, in my "free" time.

One such opportunity includes a possible percentage of profits from the sale of certain items. In this case, the client has a lawyer (who happens to be the client's friend) that will be present at our first meeting.

Being a programmer, I pay a lot of attention to the details. Could this be enough (with a side of caution) to get me through such a meeting or should I also find a lawyer that can represent my side of this business relationship?

Or, would it be enough to take a proposed contract to a lawyer and simply have him/her review it?

If I should find a lawyer, how would I go about doing that? How much would I expect to pay for the service?

I don't suspect foul tactics on the client's part. I just want to make sure that I'm prepared for it.

Answer 1

Get a lawyer. A percentage of profits is always a bad idea, because anybody with three braincells can make the company have zero profit while lining the principal's pockets. What you usually want is a percentage of gross sales.

As for cost... my lawyer costs $300/hr. I talk to him as little as possible and go in with full notes and the questions I have written down.

Answer 2

While a lawyer certainly isn't necessary I would strongly recommend one, they are expensive but going to a lawyer first is a whole lot cheaper than a legal battle. Robert's advise is also very valuable, make sure you go in with a prepared list of questions you want answered to save time. I would also suggest that the first question be 'What is your rate and how is it billed (end of visit, end of month, etc.)?', and the last question you should ask is 'Is there anything else I should be aware of?'. Also if the lawyer seems incapable of giving a straight answer to any or all of your questions you might want to start looking for a new lawyer.

Answer 3

Also make sure your lawyer looks at a copy of your current employer's "employee agreement." Some of these can be very draconian when it comes to IP and could preclude you from doing this sort of work.

Answer 4

Some thoughts and it all depends on your local jurisdiction -

a. Does your current employer permit you to subcontract in your own time (depending on jurisdiction, preventing you doing this can be enforcible).

b. Does your current employer own all IP you create (even stuff you create in your own time). In some jurisdictions this is enforcible, others not so.

c. You're a programmer, not a lawyer, so I'd either take one along or sign/agree to nothing until you get one that can make head/tail of the paper work.

d. If you're working your own time and they're having a lawyer present then they sound pretty serious about the work. If they impose penalties for non-delivery, can you realistically in the time you have free meet your contractual obligations?

HTH
Kev

Answer 5

I wouldn't bother with a lawyer before the meeting. The other party (Company) is bringing a lawyer and that sounds real intimidating, until you read that it is his friend.

Take good notes. Write down how you understand everything in your own words. If the Company tells you something, write it down and tell them you expect it in any legal documents. If it's not on paper, it's no good. (Yeah, verbals are sometimes enforceable, but a true PIA to prove.)

After you receive the paperwork, take your plain English notes and the Companies paperwork to an attorney and see if they match up.

You could even start with taking a legal assistant to dinner and they can review it for obvious flaws while you eat. Your offer would be dinner + $50 or $100, or something like that. They can point you in the right direction and help catch some of the more time consuming, but trivial, problems up front. They can also give you advice on what to give an attorney and how to present it to save you money. Then take their comments, your paperwork and the Companies docs to a lawyer for review.

Take any changes needed back to the Company for review/compromise/modification.

Be upfront with the Company. Tell them you will be having an attorney look over any docs before you sign. Tell them why you need any changes. If they try telling you that "Well, yes. It does say 'that' but it really means 'this'", ask them to change it so you feel better about it. Don't ever let them tell you it's a standard form and/or there are things that they wouldn't enforce/hold against you.

I would try to impose, at least, a minimum guaranteed compensation. It sounds like you are trading your free time, for now, for compensation later. Just make sure you get something later, even if they never make a profit.

You could also specify that you own everything you provide them until X amount is paid in full to you. That allows you to take back your property at anytime if you aren't getting paid according to the terms you agree to. This additionally provides punishment if they continue to use your stuff after you take it back. They would be stealing at this point.

Sounds like this is your first time with something like this. Don't worry. You'll make plenty of mistakes to learn from so next time you'll do better. It's very hard to get into business relationships that actually work the way you expect.

You could also try to make the owner/founder/CEO/whoever sign any compensation deal personally. At least then if they try to pull any number of fast ones over on you, you can sue the individual and not worry about whether the company still exists. You, as an individual, are risking something, so should they.

Just watch your tail the best you can and you'll be fine.

• If an offer sounds too good to be true, it is. Always.
• If the Company balks at amending the agreement for your protection, watch out!
• If the Company is a start-up, be cautious.
• If you are donating anything (time/money/other) with the hopes of getting it back, prepare yourself to never get it back.
• If you won't do it without ever getting compensated, put in a payment schedule even if the Company never makes money. If you provide a service, but they can't and go broke, that's not your fault. But it becomes your problem if you never receive anything.
• If the Company has a lawyer and you don't, well... don't do that.

And finally... I'm not a lawyer. But I have been in business and these are just tips that you can ignore or accept.

Good luck to you!

Answer 6

I don't know where you are, but around here (Minnesota, USA) when I need a lawyer I call the local Bar Association and tell them my situation. They then set me up with a half-hour in-office consultation for a considerably reduced rate. Any further work the lawyer does is for his or her standard rates, which vary but are usually high.

If I were setting up a contract with a potential client I didn't already know well, I'd like to take the proposed contract, along with any notes I'd made, and a copy of everything I'd signed with my real employer. Even at a reduced rate I don't want to waste time; if things last more than half an hour, it gets expensive. This is especially true for you, since you seem to be new at this. Newbie mistakes with contracts can be expensive.

The usual things apply. Make sure the payment schedule is not extended to the point that you'd be too frustrated if the client didn't pay. (Even the best-intentioned clients can go bankrupt.) Don't do anything about your side work at your regular workplace, and try to avoid thinking about it there. Don't be shy about asking for the contract to be modified, if you don't like clauses or terms. (If you feel like you need an excuse, use your lawyer as a heavy by proxy - "My lawyer told me...." They're good for that.) Be aware of exactly what you're selling, and exactly what you'll own at the end. Have a way of bailing out if you find you just can't stand working with the client. If you're expecting some sort of support from the client, have it in the contract. If there's payment on satisfactory completion, nail that down as well as possible in the contract. Don't rely on anything actually said about the contract at any meeting; insist that the contract cover everything.

You want a contract to cover enough details so that, if you had a problem with the client, you would be confident of prevailing in court. The neat part of that is, if the contract does that, the client will usually not bother taking it to court. Conversely, if the contract is unclear, and a problem comes up, it's likely that you'll either have to make concessions you don't want, or go to court. Ideally, you want to live your entire life without being a party in a court case.

You don't want to be unfriendly, but an unsatisfactory contract and unexpected snag will do wonders to spoil the relationship between you and the client.

Answer 7

I'd suggest simple options for you/them. They can pick one.

1. percentage of revenue/sales
2. flat fee for work
3. smaller fat fee, and smaller share of revenue

If the contract is not easy to read, forget it.

Add in a clause that you license the code to them - it is not theirs. If they breach the contract the license is void.

EDIT definitely take it to a lawyer or at least take it home to read it and understand it.