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This looks great and I'd consider using it in the near future. However, with a service like this that drastically simplifies a legal process, I can't help but f

by kyro 14y ago

This looks great and I'd consider using it in the near future. However, with a service like this that drastically simplifies a legal process, I can't help but feel a bit wary. Are there any disadvantages to using Clerky over filing these forms through the conventional route of sitting down with a lawyer and going through it step-by-step? Highlighting your disadvantages may not be in any startup's best interests, especially immediately after launch, but it matters when it comes to legalese.

swampthing 14y ago
Totally understand the concern. We designed Clerky so that you can easily loop in your lawyer to review everything. So if you don't feel comfortable doing everything yourself, you can still have a lawyer review and save yourself time and money by having software take care of all the paperworky aspects (word processing, printing, scanning, collating, etc.). So you get the best of both worlds!
- Nrsolis 14y ago
  I LOL'ed. The number of lawyers who will review a corporate formation package you bought online is laughably small. Asymptotically zero in fact. A better idea would be to provide the option to connect with the lawyers who drafted these specific documents and have them tailored to meet your requirements. Having legal work done is not like getting a Wordpress theme. If you screw up, it costs real dollars and huge headaches in lost opportunities, liability, and lawsuits. For the love of god, if you are planning on taking a partner or outside investors, please use reputable counsel and get things done right. Once you signed the documents, filed the papers, and taken the money, it's WAY TOO LATE. Otherwise, you might find yourself in a nasty lawsuit arguing about the meaning of some obscure term of art that is only exposed by some recent case law generated by a finding having nothing to do with your industry. And for the privilege, you could find yourself paying not only your own legal fees but the other sides too. Caveat emptor.
  - swampthing 14y ago
    Hmm - well, let's just say that our experience differs from yours. A pretty significant number of our customers cc their attorneys and have them sign off everything before finalizing the documents. If your attorney won't do this, feel free to contact us and we'll send you to someone who will. Your lawyer should work for you, after all, not the other way around. I agree that a lot of online forms out there aren't great - it's why we built Clerky, to fill that need. Our forms are very well-vetted by some of the best startup attorneys in the industry (you can look at our About Us page to see our advisors).
    - Nrsolis 14y ago
      I'm willing to bet that attorneys on the west coast (I mean CA) are more liberal about this sort of thing. And I'm positive that your documents are great. No problems there. BUT, as I stated above, once you get into making adjustments, it's better to have the original attorney or one who is intimately familiar with the industry consulted early in the process or there could be trouble if someone feels like they got the shaft. See: http://en.wikipedia.org/wiki/Eduardo_Saverin http://en.wikipedia.org/wiki/Eduardo_Saverin
      - swampthing 14y ago
        If your lawyers refuse to review something you send them, you should really consider getting a different one. That's just unreasonable, no matter where your attorney is located. But yes, to your point - if you are doing anything custom, need tweaks to the forms, or anything else like that - by all means, get an attorney.
  - tptacek 14y ago
    This is a great way to spend $15,000 in your first year to end up in exactly the same place as a team that bought the one-click DE C-corp package off the first AdWord ad on the first "incorporate" SERP. Number of horror stories I've heard about people spending shitloads of money to get incorporation done badly by some random attorney: many. Number of horror stories I've heard about people putting off incorporation because they believed they needed to do it "right" expensively and having that decision later bite them in the ass: many. Number of horror stories I've heard about people going out of business because they started out with some cheap default incorporation plan: zero. There is an advantage to running with a simple, cookie-cutter corporate structure. That advantage is compounded when it's the structure that happens to be used by a whole bunch of YC companies, since YC has a lot of experience pounding corporations into a shape that is acceptable for next funding rounds. There is no advantage I know of to spinning a roulette wheel, picking the lawyer it lands on, and having them draft a bespoke operating agreement. Incidentally (having just read a bunch of your earlier comments): there are definitely LLCs that elect to file as S-Corporations. We're one of them. Filing as an S allows the principals to take W2 wages instead of distributions; the entirety of your distribution is, as I understand it, subject to self-employment tax, while an S-Corp W2 is FICA-taxed the same way a normal employee's is. We didn't freelance this decision; quite a lot of money flows through our company and we have good accountants.
jmharvey 14y ago
I've formed a business using Clerky, and I've formed one without using Clerky. The Clerky process went much smoother, and I didn't feel like I missed out on anything. Without clerky, I went through several lawyers who charged me hundreds or thousands of dollars to produce fairly boilerplate documents that were often riddled with all kinds of errors -- typographical, grammatical, logical, legal, you name it, I saw it. I soon realized that even if I had one lawyer draft the paperwork, I'd need an independent set of eyes to review it. And every error we found meant more time down the drain. With Clerky, I got well-written docs that were correctly pre-filled with our information. I reviewed them with a lawyer, found one minor issue which was easily fixed (and presumably was also fixed for everyone who used those docs after me), and then electronically signed everything and got electronic signatures from my cofounders. I suppose there's the risk that Clerky makes things so easy that people don't feel the need to read what they're signing or to run it by a lawyer. But if reading contracts and getting legal advice are important to you, it certainly won't hinder the process.

by kyro 14y ago

swampthing 14y ago

Totally understand the concern. We designed Clerky so that you can easily loop in your lawyer to review everything. So if you don't feel comfortable doing everything yourself, you can still have a lawyer review and save yourself time and money by having software take care of all the paperworky aspects (word processing, printing, scanning, collating, etc.). So you get the best of both worlds!

Nrsolis 14y ago
I LOL'ed. The number of lawyers who will review a corporate formation package you bought online is laughably small. Asymptotically zero in fact. A better idea would be to provide the option to connect with the lawyers who drafted these specific documents and have them tailored to meet your requirements. Having legal work done is not like getting a Wordpress theme. If you screw up, it costs real dollars and huge headaches in lost opportunities, liability, and lawsuits. For the love of god, if you are planning on taking a partner or outside investors, please use reputable counsel and get things done right. Once you signed the documents, filed the papers, and taken the money, it's WAY TOO LATE. Otherwise, you might find yourself in a nasty lawsuit arguing about the meaning of some obscure term of art that is only exposed by some recent case law generated by a finding having nothing to do with your industry. And for the privilege, you could find yourself paying not only your own legal fees but the other sides too. Caveat emptor.
- swampthing 14y ago
  Hmm - well, let's just say that our experience differs from yours. A pretty significant number of our customers cc their attorneys and have them sign off everything before finalizing the documents. If your attorney won't do this, feel free to contact us and we'll send you to someone who will. Your lawyer should work for you, after all, not the other way around. I agree that a lot of online forms out there aren't great - it's why we built Clerky, to fill that need. Our forms are very well-vetted by some of the best startup attorneys in the industry (you can look at our About Us page to see our advisors).
  - Nrsolis 14y ago
    I'm willing to bet that attorneys on the west coast (I mean CA) are more liberal about this sort of thing. And I'm positive that your documents are great. No problems there. BUT, as I stated above, once you get into making adjustments, it's better to have the original attorney or one who is intimately familiar with the industry consulted early in the process or there could be trouble if someone feels like they got the shaft. See: http://en.wikipedia.org/wiki/Eduardo_Saverin http://en.wikipedia.org/wiki/Eduardo_Saverin
    - swampthing 14y ago
      If your lawyers refuse to review something you send them, you should really consider getting a different one. That's just unreasonable, no matter where your attorney is located. But yes, to your point - if you are doing anything custom, need tweaks to the forms, or anything else like that - by all means, get an attorney.
- tptacek 14y ago
  This is a great way to spend $15,000 in your first year to end up in exactly the same place as a team that bought the one-click DE C-corp package off the first AdWord ad on the first "incorporate" SERP. Number of horror stories I've heard about people spending shitloads of money to get incorporation done badly by some random attorney: many. Number of horror stories I've heard about people putting off incorporation because they believed they needed to do it "right" expensively and having that decision later bite them in the ass: many. Number of horror stories I've heard about people going out of business because they started out with some cheap default incorporation plan: zero. There is an advantage to running with a simple, cookie-cutter corporate structure. That advantage is compounded when it's the structure that happens to be used by a whole bunch of YC companies, since YC has a lot of experience pounding corporations into a shape that is acceptable for next funding rounds. There is no advantage I know of to spinning a roulette wheel, picking the lawyer it lands on, and having them draft a bespoke operating agreement. Incidentally (having just read a bunch of your earlier comments): there are definitely LLCs that elect to file as S-Corporations. We're one of them. Filing as an S allows the principals to take W2 wages instead of distributions; the entirety of your distribution is, as I understand it, subject to self-employment tax, while an S-Corp W2 is FICA-taxed the same way a normal employee's is. We didn't freelance this decision; quite a lot of money flows through our company and we have good accountants.

jmharvey 14y ago

I've formed a business using Clerky, and I've formed one without using Clerky. The Clerky process went much smoother, and I didn't feel like I missed out on anything. Without clerky, I went through several lawyers who charged me hundreds or thousands of dollars to produce fairly boilerplate documents that were often riddled with all kinds of errors -- typographical, grammatical, logical, legal, you name it, I saw it. I soon realized that even if I had one lawyer draft the paperwork, I'd need an independent set of eyes to review it. And every error we found meant more time down the drain. With Clerky, I got well-written docs that were correctly pre-filled with our information. I reviewed them with a lawyer, found one minor issue which was easily fixed (and presumably was also fixed for everyone who used those docs after me), and then electronically signed everything and got electronic signatures from my cofounders. I suppose there's the risk that Clerky makes things so easy that people don't feel the need to read what they're signing or to run it by a lawyer. But if reading contracts and getting legal advice are important to you, it certainly won't hinder the process.