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I'm the author; thanks for reading and let me address it "go[ing] a bit far." In the context of Hacker News readers (presumably startups looking for funding an

I'm the author; thanks for reading and let me address it "go[ing] a bit far." In the context of Hacker News readers (presumably startups looking for funding and with employees) there are many good reasons for setting up an LLC, including limiting liability if one of those employees gets sued, and limited contractual liability. However, the point I was getting at is that the LLC doesn't totally shield you from liability, a misconception that has brought a lot of trouble to people who played fast and loose with their conduct and ended up staring down the barrel of potential personal liability. The core point is: don't try to "dodge" liability. Instead, take steps to reduce the likelihood of causing harm and get a good insurance policy.

mattmaroon 17y ago
That article was very useful. I wish we had more attorneys writing such entries for the rest of us. There are a striking number of legal misperceptions out there among businesspeople.
- micks56 17y ago
  Do you have any specific topics in mind?
  - bwd 17y ago
    How about asset protection strategies?
    - micks56 17y ago
      Are you looking to protect business versus personal assets, or protecting assets via risk management, or other?
      - bwd 17y ago
        Mostly looking to protect personal assets.
sports_guy 17y ago
Thanks for the article. Do you have any insight on the best way to protect yourself from what seem like mostly frivolous suits that can come out of no where. For a contrived example say Valleywag which is banned from HN decided to sue PG for defamation or something similar and won a large verdict. Whats the best insurance to hold against HN/PG going bankrupt?
- MaxwellKennerly 17y ago
  There's defamation-specific insurance out there, typically called "media liability insurance," which fills that need. I believe Chubb Insurance just released a new "MediaGuard" policy that's supposed to have pretty broad coverage in that area. For reference, there are two main risks covered by liability insurance: "defense" and "indemnity." The former pays the costs of a legal defense, the latter pays a settlement / verdict. Most media liability insurance policies cover both, but can charge different premiums based on the "retention" for defense and/or indemnity, i.e. how much you have to spend before the insurance kicks in. If the big worry is paying lawyers to defend a "frivolous" suit, then focus on the former; if the big worry is a "large verdict," then focus on the latter. A common way to save on the premium is to have a sizable retention -- like $20,000 or more -- but then have good coverage after that. If you get sued, you might have to eat the first $20k in legal fees, but won't get bankrupted by the legal fees or the verdict.
sown 17y ago
Does this include anonymity? I am not trying to dodge the law or liability but I am wondering if using such a thing like LLC or s-corp would?
tectonic 17y ago
Does an umbrella insurance policy cover if a web property owned by an LLC is sued for copyright infringemet?
MaxwellKennerly 17y ago
To answer two questions in this thread: a number of the media liability policies include copyright infringement, though typically only of text (and sometimes images), with specific exclusion of hosting media like MP3s or DVDs, and an exclusion for intentional copyright infringement. That is to say, they're geared more for someone who exceeds the bounds of fair use than for The Pirate Bay. As for anonymity, though the LLC is an independent entity which can conduct its own business and enter into its own contracts, and thus can keep a name out of its general business, in the event of a lawsuit most courts will permit discovery into the operations / management of the LLC, and sometimes even into the ownership. There's no specific legal protection for anonymity for incorporated businesses; the only concrete anonymity protection comes from various First Amendment doctrines, which usually don't apply to commercial activities.
mattmcknight 17y ago
Well, the general liability is the financial liability. So, if the LLC borrows money, the lender cannot come after the assets of the individuals (unless they give a personal guaranty). This also applies if the LLC is sued. I suppose the point here is that a smart person will sue the individual in addition to the LLC. Even if you are sued only as an individual, your ownership stake in the LLC is at risk.

mattmaroon 17y ago

That article was very useful. I wish we had more attorneys writing such entries for the rest of us. There are a striking number of legal misperceptions out there among businesspeople.

micks56 17y ago
Do you have any specific topics in mind?
- bwd 17y ago
  How about asset protection strategies?
  - micks56 17y ago
    Are you looking to protect business versus personal assets, or protecting assets via risk management, or other?
    - bwd 17y ago
      Mostly looking to protect personal assets.

sports_guy 17y ago

Thanks for the article. Do you have any insight on the best way to protect yourself from what seem like mostly frivolous suits that can come out of no where. For a contrived example say Valleywag which is banned from HN decided to sue PG for defamation or something similar and won a large verdict. Whats the best insurance to hold against HN/PG going bankrupt?

MaxwellKennerly 17y ago
There's defamation-specific insurance out there, typically called "media liability insurance," which fills that need. I believe Chubb Insurance just released a new "MediaGuard" policy that's supposed to have pretty broad coverage in that area. For reference, there are two main risks covered by liability insurance: "defense" and "indemnity." The former pays the costs of a legal defense, the latter pays a settlement / verdict. Most media liability insurance policies cover both, but can charge different premiums based on the "retention" for defense and/or indemnity, i.e. how much you have to spend before the insurance kicks in. If the big worry is paying lawyers to defend a "frivolous" suit, then focus on the former; if the big worry is a "large verdict," then focus on the latter. A common way to save on the premium is to have a sizable retention -- like $20,000 or more -- but then have good coverage after that. If you get sued, you might have to eat the first $20k in legal fees, but won't get bankrupted by the legal fees or the verdict.

sown 17y ago

Does this include anonymity? I am not trying to dodge the law or liability but I am wondering if using such a thing like LLC or s-corp would?

tectonic 17y ago

Does an umbrella insurance policy cover if a web property owned by an LLC is sued for copyright infringemet?

MaxwellKennerly 17y ago

To answer two questions in this thread: a number of the media liability policies include copyright infringement, though typically only of text (and sometimes images), with specific exclusion of hosting media like MP3s or DVDs, and an exclusion for intentional copyright infringement. That is to say, they're geared more for someone who exceeds the bounds of fair use than for The Pirate Bay. As for anonymity, though the LLC is an independent entity which can conduct its own business and enter into its own contracts, and thus can keep a name out of its general business, in the event of a lawsuit most courts will permit discovery into the operations / management of the LLC, and sometimes even into the ownership. There's no specific legal protection for anonymity for incorporated businesses; the only concrete anonymity protection comes from various First Amendment doctrines, which usually don't apply to commercial activities.

mattmcknight 17y ago

Well, the general liability is the financial liability. So, if the LLC borrows money, the lender cannot come after the assets of the individuals (unless they give a personal guaranty). This also applies if the LLC is sued. I suppose the point here is that a smart person will sue the individual in addition to the LLC. Even if you are sued only as an individual, your ownership stake in the LLC is at risk.