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Ask HN: Have you ever been sued by your startup?
So, I'm being sued by a startup that I used to work for. I don't want to go in to the details for obvious reasons, but it's been really stressful and difficult.
I was recruited to work as the first employee for this startup, spent a good deal of time and effort on it, and then had the founder turn around and sue me. They're demanding more money from me than I was ever paid to begin with, because of some vague damages that I (allegedly intentionally) caused.
All of his claims are patently false (and I have documentation to that point), and boils down to the founder trying to scapegoat me for his own mistakes. However, he's independently wealthy and knows that I don't have much money and likely won't be able to defend myself. So, in essence, it feels like an adult form of bullying.
I have no idea what to do. I can't afford an attorney. I'm also concerned that there's this public mark on my record (e.g., a future employer googles me and finds this lawsuit).
So, what do I do? Have any of you been in a similar place with an early-stage startup? How do it go? Why do people suck so much?
EDIT: I was apparently responding to too many questions, and am rate limited, so I can't respond anymore.
I am a student and I have called my student legal services. This case is too big for them to handle. In the words of one of the people I spoke with, "you would have been better off getting a DWI."
It is a lawsuit in federal court, not just a threatening letter. I have considered going pro se, but I'm too concerned about following proper procedure.
I was W2 not 1099. I've reviewed my employment agreements, and that's part of what makes this whole thing baseless. Without going into details, their allegations suggest that my employment agreements require me to do things that they don't actually specify. It's akin to firing a airline pilot because they didn't serve enough soda to the passengers.
Thanks specifically to the users that recommended Grellas. I'm speaking with him later today :)
- paulsutter 14y agoYou can't afford _not_ to have an attorney. Most give free 30-minute consultations, start there. Get the best attorney you can. Good lawyers cost much less than mediocre lawyers, even if they have a higher hourly rate. Good lawyers have plenty of clients and have more flexibility with how much they actually bill you. A letter or two from your lawyer may resolve the whole mess. Anything you write could easily make things worse. The legal system is a dangerous jungle you've never seen before. You need expert help to navigate it. EDIT: to find a lawyer, ask smart businesspeople for a referral
- throwaway10283 14y agoObviously I can't not defend myself, but it's difficult when I'm already living off a student's budget. Do you have any recommendations or ideas for good and reasonable-priced attorneys?
- jacquesm 14y agoYou really need a good lawyer. No other options there. I'm not sure if he's still active here but you could contact George Grellas (who is both nice, exceptionally knowledgeable and approachable) and ask him what to do, he was quite active here on HN for a while, 2 minutes of googling will locate him. 5 minutes of his time will be worth more than all the (well intentioned) advice you're going to get here. Without details nobody will be able to give you advice beyond 'get a lawyer' and I fully understand why you don't want to give out any more info here. The one bit of info I can give you, once you have a lawyer, give him all the information that you can find on this, don't leave anything that you feel is not relevant, a late surprise in a thing like this can be costly. Best of luck!
- throwaway10283 14y agoThanks for the name! I'll look him up. And, obviously I didn't expect people to provide specific legal advice, but just in general how to handle these situations, and if anybody has actually been through it before.
- jacquesm 14y agoHandling the situation is the easy part. Locate lawyer, give them all the relevant info, watch two lawyers exchange a bunch of letters and then hopefully it either goes away once the other party is convinced the case is baseless, or it will go to trial. Stop communicating directly with the plaintiff or their lawyers until you have a lawyer. The best defence is to make sure they realize that you can't pluck feathers from a frog. Any weaknesses you have should be offset by your contractual terms (assuming there was a contract). Since you say you were employed they would have to work very hard to prove malice on your part, especially since they decided to keep you on as long as they did. Any damage they claim you caused should be easy to prove for them, hard to defend against by you if it is to stick, but without more specifics that's unknown. For the record I have been the plaintiff in a case like this, where an employee decided to blackmail me and turn off a website overnight locking me out of the server. Needless to say that didn't end very well for said employee, not because I'm rich and he was weak but because he was a jerk that did something he never should have done: assume that blackmail is a viable option. In the end that one was resolved out-of-court by the time the defendants lawyer had a chance to talk some sense into the defendant.
- exim 14y agoDid you consider kicking his ass? Seriously.
- throwaway10283 14y agoI've had many thoughts. I mostly think about an attorney I once worked with who told me that no startup would ever sue their employee because they'd never get anybody to work for them ever again. And then I thought, "gee, I should make a website that's like glassdoor specifically for startups."
- ceejayoz 14y ago> And then I thought, "gee, I should make a website that's like glassdoor specifically for startups." Which would promptly be subject to defamation lawsuits. Heh.
- throwaway10283 14y agoWe like to call those SLAPP suits... California has some pretty awesome tools for disposing of those promptly.
- deleted 14y ago[deleted]
- rhizome 14y agoTruth is a defense to libel.
- bzalasky 14y agoTalk to a lawyer with enough experience in this area to make a judgment call on your case. Then you'll have a better idea of how to move forward. It could be saber rattling, or it could be more. Note, I am not a lawyer.
- jd 14y agoI don't think you have to worry much about this being a public mark on your record. Bogus lawsuits happen all the time, and especially if the lawsuit is dismissed or if you win it nobody will care a few years from now. So I would focus instead on surviving this lawsuit while taking as little damage as possible. So lawyer up.
- throwaway10283 14y agoThanks! Another thought I had was to countersue with equally as damning comments. If there's going to be a public document with really bad allegations against me out there, then there should be an equally bad (yet more true) public document with allegations against the company and founder.
- jd 14y agoAdditionally, if you're willing to go to the dark side... If he's independently wealthy he probably has a lot more to lose than you do. You can use this as leverage. If you can get him in a position where he may lose a lot then you can probably get him to back off and drop the lawsuit. So be willing and prepared to fight dirty (but still get a lawyer). He's bullying you, and against bullies it's often a good strategy to escalate beyond the comfort zone of the bully. He can afford to sue you because he doesn't feel vulnerable; losing the lawsuit isn't the end of the world to him. This is what you must change. Find a way towards mutually assured destruction. If he's just a bully he's very likely to back off if you put up a fight.
- SoftwareMaven 14y agoI wouldn't consider counter-suing in this case to be the dark side. In fact, it may be the best way to get legal representation with little out-of-pocket spend, since the lawyer could work off a percentage of the potential damages.
- damm 14y agoI would suggest to not do anything that would make yourself look worse in the end. I would avoid saying things negative that he will then turn around and try and sue you (again!) for, such as leaving damning comments in the counter-suit. However there is nothing wrong with counter-sue(ing) for the cost of your lawyer and the cost of the trial. Find a good lawyer and defend yourself.
- mortov 14y agoFirst, you do need a lawyer. Do not write or say anything directly as that will bite you in the ass. Hard. If there are scheduled court dates already, make sure you turn up and tell the judge you are seeking time to gain advice and representation and have limited funds. They will generally be sympathetic to that - they won't be sympathetic to a no-show. If you have no money and no assets (you've just commented you are a student), there is not much to be got from suing you so it's not such a hot strategy on his part. Depending on where you are (you don't say), there can be legal clinics or even unions/professional bodies who can help out or have on-call lawyers for basic advice and to point you in the right direction. Perhaps the instutution you are studying with may have something to go to first. I suspect a sensible lawyer would start with a counter suit and some publicity. The fresh oxygen of publicity often curbs bad and bullying behavior - just look at last week's HN for an example of that.
- deleted 14y ago[deleted]
- atirip 14y agoWhats wrong going to court in civil case without an attorney? If you have strong case, do not be afraid. I have done it and won, but not in the United State of Attorneys, but in Europe. Act well, judge is gonna even help you to.
- throwaway10283 14y agoIf it were state court, I'd be more inclined to go it alone, but it's federal court. I wouldn't be worried about making my case, but would be more worried about not following the proper rules of civil procedure.
- atirip 14y agoYes, this is valid concern. It has happened here that you just ask to the judge, that could he/she help you to go through the case. So judge actually did help, stepped in when something needed to say or similar. If you behave well, judge has no reason to dismiss or belittle you. Actually, if this is clearly a bully case, it is easy to win judge to your side. I did exactly that.
- atirip 14y agoThere's more i wanted to say. Make your case and stick to the strongest point and strongest point only. Do not answer to any question momentarily, even to the easiest ones - make pause, thnk 5..10 seconds, then answer. Stick to that pause. Never lie. Answer only yes or no answers - yes i did, no i did not. Never ever ever, under any circumstances answer yes, but or no, but. Never. Again, never hurry. Do not settle. Those kind of cases are built to bully you to settle. Even judge will press you to settle at some point. Do not settle, see it through. Keep your plan. Write it down. Stick to it. And you will be fine.
- _delirium 14y agoIt's not impossible to be successful as a defendant in a civil suit representing yourself in the US, but I'm not sure the odds are good. The best case is if the judge immediately recognizes it as a specific kind of nuisance case that they've seen before, and is sympathetic to dismissing it as quickly as possible. In that case they might pretty strongly hint to you exactly what motions you need to file so they can get rid of the case. But it's also quite possible for a groundless case to not look obviously groundless if the defendant doesn't explain why well. Were you by any chance in a civil-law country (most of Europe outside the UK)? The judges in civil-law systems take on more of a hybrid judge/investigator role, which makes it easier for them to play the role of helping out a defendant, if their investigation finds the facts warrant doing so. It's also more common for them to make decisions of their own accord, while the US norm is that the judges only rule on motions from the parties, rarely sua sponte. That makes it particularly important to file the right motions at the right times, to even give the judge a chance to rule in your favor.
- dreamdu5t 14y agoI once paid for lawyer services by building them a website. Just find a lawyer and deal with payment later.
- gknoy 14y agoGreat suggestion for a possible way for someone on a shoestring budget to compensate a lawyer for their time. Thanks for the reminder that negotiation has power nearly everywhere.
- lgleason 14y agoYou can't get blood from a stone. Sounds like he is trying to bully you. Try rational means and as necessary it might make sense to take it public if you have enough of a chorus of people saying this is not warranted and have exhausted all other means. Try to get some pro-bono help first.
- eropple 14y agoDo not heed this post. Under no circumstances should you take it public before it's seen a courtroom unless you have been advised to do so by a competent lawyer. (It is no-true-Scotsman territory to note that no competent lawyer would ever do this. It is also accurate.)
- nlh 14y agoIt is absolutely an adult form of bullying. Filing a lawsuit, though many will trivialize it, is anything but trivial. It requires time, energy, and most importantly, $$ to be spent on a lawyer. I'm still amazed that so many people go through with it for petty matters or fights. I've had customers rent a car from my company, damage it, and then sue us to try and recover the damages after we bill them for it. They spend double the cost of the damages to have their lawyer file the lawsuit, and every one has lost the lawsuit so far. So why do they even bother? Because it gives people in a less-powerful position some semblance of control/power (which, by no coincidence, is where bullying often comes from.) - "This car was damaged under my watch, they used my deposit to bill me, I signed a contract agreeing to this scenario, but I'm not happy about any of this and I'm used to getting my way, so I'm going to sue." Anyway - that's not advice, just background. My advice - if the situation is indeed as you present, is that as painful as it is, you need to defend yourself. If you don't, you risk the court entering what's called a 'default judgment', which is basically a loss on your part. I'm not sure what the amount is (you said it's more than you were paid, but I don't know what order of magnitude that is) - if it's small-claims-scale, you do not need a lawyer and you can defend yourself in person in court. If it's above the small-claims threshold, you'll need to take it a step further. In either case, I suggest you at least speak to a lawyer first. It will cost something, but it won't cost thousands to have a conversation, and it may not even cost that much to respond. One thing that's important to remember: It gets VERY VERY VERY expensive to take a lawsuit beyond the initial filing and angry-letter-exchanging phase. Nobody wants to go there - not the plaintiff, and not the defendant. Filing a response costs time and money, but after that, a world of pain gets opened up with discovery, etc. etc. And that's on both sides -- to the tune of tens to hundreds of thousands of dollars. So honestly, very few people actually want to go that far unless there is a lot of money at stake. So likely, you'll want to at least make contact with the plaintiff and figure out what they really want (it might be nothing more than making you pay for a lawyer to respond), but either way - get a lawyer and at least have a conversation.
- rayiner 14y ago(None of this should be construed to be legal advice...) If it's in federal court on what seems like a breach of contract claim, then it's probably there on diversity jurisdiction and thus the amount of claimed damages is over $75,000. So probably not something he can take to small claims, unfortunately. The real question is, who sues a student for > $75,000 for breaching an employment agreement?
- rhizome 14y agoBy "I'm being sued," are you saying that a suit has been filed and you have been served with papers? Do you have a court date?
- nlh 14y agoExcellent point. OP - have you actually been sued / physically served? Or did you just receive a letter threatening you with a suit? Huge difference. Both require lawyers, but the former will cost more to respond to. The latter typically requires nothing more than an equally-strongly-worded letter right back at them to let them know you're not a pushover. Remember - from the plaintiff's side - a letter costs a few $hundred. A filed suit costs a few $thousand. A fought suit costs $tens of thousands. A long-fought suit can costs $hundreds of thousands.
- isalmon 14y ago>> Have you ever been sued by your startup? Yes I have been in exactly the same situation. Went all the way, they filed every possible paper they could file, but they did not succeed. Based on your description, I don't think that in your case it was actually filed yet (correct me if I'm wrong). In some cases they will just try to scary you, but if you don't break - they won't file. If they do - well, find a good lawyer (somebody already mentioned Grellas here). Right now the first thing that you should do is go and talk to SEVERAL lawyers. Find the ones that have free initial consultation, spend 30 minutes with them, they will tell you what your options are. If there's a possibility for a counter suit - you should probably do that. Also, read your employment agreement several times. In a lot of cases there's a statement that the defeated party will pay attorney's fees. In a lot of cases there is a statement that the company will pay all the fees except first $100-$500. And in a lot of cases the case must be filed with the arbitration, which is much cheaper and if you don't have money to pay for your lawyer - you might have a better chance there.
- Mahn 14y agoTalking to several lawyers is indeed important; personally I had once a crappy lawyer telling me my case was hopeless, when it couldn't have been farther from the truth; it's best to have several opinions to understand where does one stand.
- georgespencer 14y agoI'd like to help out with the costs. My email address is in my profile.
- deleted 14y ago[deleted]
- thinkcomp 14y agoI'd recommend using PlainSite http://www.plainsite.org http://www.plainsite.org to see A) which lawyers and firms have represented your former employer, so you know who not to call, B) cases based on the same statute as yours, so you can find lawyers who are experienced in that particular domain, C) information about the judge in your case, and D) what similar case dockets tend to look like.
- neurotech1 14y agoGood advice, however its good practice to disclose that plainsite.org is your company/organization, when you post.
- thinkcomp 14y agoEverything I suggested doing is free, so I have nothing to gain. Also, there's no other site that allows you to do what I suggested for free. But yes, it is my site.
- alekseyk 14y agoTalk to his investors, believe it or not they will be very interested if you do not go public with this.
- strlen 14y ago0) LAWYER. Get one. Do whatever she says, including ignore this comment (except for this line). 1) Do not "meet" with the the party suing you or the lawfirm representing them on your own. Do not sign anything they extend to you to "make it go away." Send all communications from them to your LAWYER first, never respond on your own. 2) LAWYER Now, it seems that the party suing you is not in it for your money as they know you can't pay; besides, the lawsuit itself costs money, possibly more money than any judge or jury would reasonably award. Instead they're probably looking to: I) Hurt you II) Sue your current, previous, future, etc... employers who might actually have money. III) Both If you sign something admitting guilt (even if you don't realize it), there is a chance (depending on what they've accused you of, probably not the case for breach of contract but I am not a lawyer) they might use it to start a criminal trial against you (which meets goal I). It is highly unlikely that this trial will happen or that you'll serve any jail time if it does, but it will be absolutely painful. You've now also opened up the potential for your current employer to be sued (meeting goal II). In turn, your current employer, has the right to sue you (again, helping meet I) and in this case probably for good reason: either you're honest in having caused damage or you've given false testimony. What the party suing you is counting on is for you to NOT get a LAWYER and to prevail against you in a system that is adversarial. I'm a big fan of the adversarial legal system: it works great for criminal cases where you're guaranteed many rights, most important presumption of evidence, and a defender. However the way it's currently practiced in civil cases is flawed: the goal is for attorney on the either side to win, rather than for both parties to work diligent towards uncovering the truth, but most people don't realize it. On the other hand, if you do get a LAWYER and are found innocent, the other party will cover your legal fees. If you and your LAWYER settle without going to trial, the legal fees will also be much lower (and you will not have to pay damages). If you lose, the lawyer can make the loss hurt less: e.g., lessen the damages, avoid a situation that opens you to a criminal trial, etc... So: LAWYER. Disclaimer: have never been sued personally, know entrepreneurs who have. Not a lawyer but curious about law. Everyone should also read every comment by grellas and rayiner. If anything said in this comment contradicts the advice of a reputable lawyer you've hired, follow her advice instead.
- mratzloff 14y ago"On the other hand, if you do get a LAWYER and are found innocent, the other party will cover your legal fees." Please don't make a blanket statement like this. It's true in some countries, but not everywhere in all situations.
- michaelochurch 14y agoThis sounds more like extortion than a legitimate lawsuit. He's suing you for breach of contract when the breached clauses don't exist, and based on false pretenses, while exploiting an asymmetry in financial resources. I wouldn't be surprised if a good lawyer would find cause for you to turn around and sue him. Lawyer up. Lawyer up. Lawyer up. Do not pass Go, do not collect $200 until you lawyer up.
- rdl 14y agoHas the startup taken any money? I'd go through a lawyer, but probably a good way to convince the entrepreneur to be sane is through his investors.
- wildlogic 14y agoHello. I have both been sued by a startup and defended myself pro-se (in a different criminal case). I was paid a small sum to do some work, which I did. I delivered the work to contract, but when I did not want to do the additional work involved with actually setting all their stuff up and getting everything deployed, they sued. I didn't have the time or money to deal with it, so I ignored it all, they ended up getting a default judgement against me for double what I was originally paid. I just figured I wouldn't pay them, but they were lawyers so they got my wages garnished (25% of each paycheck). Paid my last part of the garnishment last week. Don't worry about going pro se from a procedural standpoint - judges are quite accommodating (and frankly, amused) by those of us who choose to represent themselves. I did an exhaustive amount of research prior to trial, and the district attorneys were grossly under-prepared for the case, so I was able to easily put them to shame. Put time into your opening, closing, and preparing your witnesses (including yourself). Watch a few episodes of Law and Order. It actually ends up being a pretty awesome story, whichever way it turns out. The whole situation is terrible, I've been there. Whatever happens, just know that it's all not a huge deal however it turns out. My current employer didn't have any issues with the suit or with the garnishment, it was fortunate that they gave me the chance to explain myself. Let me know if you have any questions about anything, b@pan.sx, happy to discuss.
- mlent 14y agoThe vast majority of people who represent themselves pro se lose. Lawyers are sneaky and will use your lack of domain knowledge to hurt you unfairly. You need to get a lawyer to balance it out. The judge is not there to be your advocate.
- beakel 14y agoIt happened to me, and I understand the panic it causes. I joined a startup after college, got paid less than the minimum wage (no kind of equity in the company either) because I found out the financial situation of the company had been misrepresented to me by the co-founder, and I left with the work I hadn't been paid for as collateral (knowing they were going to let me work the month out and were unable and unwilling to pay me). I had my suspicions and I found this out by looking at their conversations on a forum on the server (which I had the root password to). First thing they did was call the cops for "computer hacking". Cops laughed it off obviously. Then they went to their lawyer. They were desperate for money and thought they could exact revenge. Lawyers really know how to write scary letters and make it seem that you're in a world of trouble, I hope you're aware of that. Really what they're doing is trying to get you to reply to everything they throw at you, so that something can be used against you. They want an admission of guilt, and then they can force you to settle. I sought free legal advice from a local charity, but they only operate once a month so I had to write back before then. I defended my actions and made allegations against them. Their response was always short, they would never address what I said to them, and they would always try to trip me up on what I said (poorly might I add, based on their poor understanding of technology). One lesson I learned from this is that nothing you say in those letters in your defence goes in your favour, it is only fodder that can be used against you. The lawyer told me that when writing back to them I should put "without prejudice" on the letters, meaning the letter can't be used as evidence (this was not in the USA however!). Eventually I threw enough stuff at them about wages, their taxes and their activities, threatening to take them to the labour court, that I just stopped hearing from them. In the end they walked away with probably a $1500 bill from their lawyers and nothing to show for it. (good enough for them!) In summary, don't panic, the lawyers are relying on you panicking. Get a lawyer. If you live in a sane country you can find a free one.
- vt3 14y agoCongratulations! He has done you a favor by suing you. Just think of it as a rite of passage. Take the opportunity and learn from it. In five years time you'll be laughing about it and grateful for the experience.
- dashr 14y agoAre you in the US? Try looking for a local Legal Clinic or Community Law center that helps employees, via http://www.probono.net http://www.probono.net
- deleted 14y ago[deleted]
- temphumanoid 14y agoGoing through a similar thing (except I was a former founder of the startup). Grellas is my lawyer, highly recommend him as a thoughtful attorney who is not just a rubber stamp. You can email me at mraiqensame@dunflimblag.mailexpire.com which is a temporary address that expires in 24 hours.
- deleted 14y ago[deleted]