How not to get sued, iii of iv
1 min readNov 1, 2022
Ten reasons startups get sued, and one that never happens.
Out of hundreds of startup clients, here are the most common.
- Collections. Somebody owes someone some money, gotta pay. Includes debts and bankruptcy.
- Employment. Disgruntled employees claim mistreatment, maybe they have a point.
- Founder fallouts. A founder quits, leaves, or misbehaves. Litigation ensues.
- Stock ownership. Just how much stock does everyone own? Gotta be clear on this.
- Investigations and enforcement. Government regulators claim noncompliance.
- Customer complaints.
- Vendor disputes. Vendor didn’t perform, files claim when not paid.
- Trademark names. Somebody stole your name or claims you stole theirs.
- Patent trolls. If you get too big, somebody wants to claim you stole their technology. Trademark and copyright trolls too.
- Typical accidents and losses. Negligence and other torts. Something blows up, a toilet overflows, somebody got hurt.
You want a reason nobody ever gets sued in a startup? Letting investors down, and investor remorse. No matter how poorly the startup performs, professional investors realize that you win a few and you lose a few, and chalk it up to experience.
Even if they have a good and righteous case, if a startup screws up so badly that investors want to sue, there is nothing left to sue for.
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