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There's a simple reason why this works for small businesses: nobody sues a guy with no money. So if you're a sole proprietor scraping by and you piss off a gi

There's a simple reason why this works for small businesses: nobody sues a guy with no money. So if you're a sole proprietor scraping by and you piss off a giant company with lawyers enough that they want to file a lawsuit against you, well, what's the upside for them if they win? Tens of thousands of dollars in expenses on their side, and roughly zero dollars in recovered costs from the business they destroyed or the guy they sent in to bankruptcy. Unless their goal is simply revenge, there's really no reason for them to follow through with such a course of action.

libria 13y ago
Q: Does LLC or Inc. allow the organization to take the hit (or fold) while leaving the founders relatively safe?
- aioprisan 13y ago
  Yes, that's the entire point, it shields you from all liability. If you perjure yourself, you're still personally liable, but for things such as money owed by the business, you're not personally liable unless if you personally guarantee something (i.e. a company credit card that you guarantee with your social).
- tehwebguy 13y ago
  Yes, that is the point of them. If you are planning on creating one you should speak with an accountant and attorney to make sure you know the rules. If a corp or LLC is being used simply as a front a suing party can "pierce the corporate veil" and come after you personally.
- Retric 13y ago
  That only works if the company signs a contract, if you sign so pretending that says you can be held accountable then you can be held accountable. Most often seen with loans.
pearjuice 13y ago
Someone with 500k and a few employed certainly has money. This story was sheer luck and is only showing off that.
- benihana 13y ago
  I don't think you fully appreciate how expensive it is to go to court.
  - EarthLaunch 13y ago
    He knows more about court expenses, than you know about what he knows. Just say "It's expensive to go to court", or better, just don't comment.
    - TeMPOraL 13y ago
      Completely off-topic, but your comment made me wonder: Is there any way to formalize expressions like "he knows more about X than you know about Y", where X and Y are different domains? Is there a way to quantify it, to answer questions like "how much more"? Do we have any kind of well-defined "unit of knowledge"? Does anyone here knows of relevant math branch that talks about these questions?
      - StevenXC 13y ago
        http://en.wikipedia.org/wiki/Measure_(mathematics) http://en.wikipedia.org/wiki/Measure_(mathematics) A measure is a function on the subsets of a space which yields a non-negative real number. For example, a measure of the triangle with vertices (0,0), (2,0), and (6,0), is 6, the area of that triangle. Measure satisfies certain nice properties, such as if A is a subset of B, then the measure of A is no more than the measure of B. So, I guess if you can define a reasonable measure on the spaces X and Y, you can measure collections of X and collections of Y, and use the real numbers to determine which is "more". But this doesn't strike me as useful in any way other than the fun of abstract mathematics. :-)
    - smalltalk 13y ago
eksith 13y ago
Spot on. "Unless their goal is simply revenge" As they've implied in The Godfather, taking things personally is bad for business. Companies that make money do whatever is necessary to keep the flow going. Revenge is a detour to this process so unless they're trying to stifle competition or the like, destroying someone isn't worth it. Revenge is bad for business.
- slantyyz 13y ago
  People who are in revenge mode don't care what's good for business. It makes them feel better and that matters more. In the case of suing former employees, it also sends a clear message to existing employees.
  - mistercow 13y ago
    >In the case of suing former employees, it also sends a clear message to existing employees. Yes, but I'm not sure "run" is the message an you want to send to your employees.
    - slantyyz 13y ago
      More often than not, executives/companies think they're doing you a favor by giving you a job, even the ones who pretend to care about their employees.
      - DigitalJack 13y ago
        This post puzzles me. How are companies not doing you a favor by GIVING you a job?
        mistercow 13y ago
        Your post puzzles me as well. Just because we use the word "giving" doesn't mean that any of the connotations of that word actually apply to the situation. Employment is an arrangement of mutual benefit. In some cases an employer might give a job to a friend as a favor, when the friend is not the most qualified for the job. In any case, if someone gives you a job as a favor, they are doing it wrong.
ksmiley 13y ago
An additional upside for them is, it sets an example. If MegaCorp gains a reputation for being revenge-driven life ruiners, then future contractors will know the stakes are serious, and they'll be less likely to violate their contracts. Not that I consider that strategy cost-effective in general. For one thing, it's bad PR. (Unless you're some kind of wizard that can spin it like, "we're principled and don't let bullies walk all over us. That's why we hold people to their promises")
- yackob03 13y ago
  They will also be less likely to attract future contractors.
  - slantyyz 13y ago
    This is only true if the job market is a seller's market. If it's a buyer's market, it only prevents the smarter ones from wanting to work with that type of company.
  - ksmiley 13y ago
    Playing the devil's advocate here: if contractors self-select themselves out of being hired because they're not sure they can get the job done, then all the better! The remaining applicant pool will be stronger on average.
    - r00fus 13y ago
      No the applicant pool will be more bullish. In many cases that might mean weaker (i.e., unable to estimate work effort properly).
    - niuzeta 13y ago
      seconded. I wouldn't even have to quote Machiavelli to say that it's important to show your future contractors(or your peers) what you are capable of, to force them to think twice before arranging anything with you. Will it reduce the number of incoming contractors? Probably. Will the contractors who'll still chime in be more likely reliable, after considering what they're agreeing with? Very likely.
ddeck 13y ago
Generally true, but often the motivation is not revenge or recouping financial loss; it's deterrence. Examples that come to mind are the MPAA/RIAA suing individuals for copyright infringement and developers for distributing P2P software, Sony suing individuals for modifying game consoles, and although not a civil suit, Goldman Sachs having Sergey Aleynikov criminally charged. All quite depressing examples unfortunately.
- nostrademons 13y ago
  Patent trolls also often have a modus operandi where they will sue a small company that they know doesn't have money to defend themselves, soak it for everything it's worth, and then use the money from that to launch a lawsuit against a much bigger company like Google, Microsoft, or Apple.
dreamfactory 13y ago
It's why big companies often prefer to spend more money with big suppliers. It often gets mistaken as them being ripped off when in fact they have their eyes wide open.
- muzz 13y ago
  Yes, big suppliers do have "skin in the game" and also big companies have long relationships with big suppliers. Many have Approved Vendor Lists and to do business with them you have to be approved first.
slantyyz 13y ago
Never underestimate the pettiness of executives in companies with a lot of money. I've been on the receiving end of a meritless revenge lawsuit. The net result was that it shut our startup down and turned many of the employees against the founder on a personal level. I was lucky to be able to cut my legal fees with some of my coworkers by sharing a lawyer, but I still ended up being out a few thousand dollars prior to settling (the company had to shut down and disband). Had we fought it, it would have costed a lot more than that. --edit-- Trivia: Since we're talking about Pud's post, I'm pretty sure the company that sued me was a company that had many employees bitch about it on f*ckedcompany.com, although it was never a company that got "featured" by Pud himself.
- brianmcconnell 13y ago
  Agree 100%. I had the misfortune to run across someone who took great pleasure in bullying people with his lawyers, a profoundly dishonest and unpleasant person. It's hard to overstate how damaging these people can be. Ever since then, I've made a point of doing public record searches on people to check if they have a history of suing people, which has enabled me to dodge a couple bullets since then.
superuser2 13y ago
This doesn't seem to deter patent trolls going after no-name startups and individual App Store apps.

libria 13y ago

Q: Does LLC or Inc. allow the organization to take the hit (or fold) while leaving the founders relatively safe?

aioprisan 13y ago
Yes, that's the entire point, it shields you from all liability. If you perjure yourself, you're still personally liable, but for things such as money owed by the business, you're not personally liable unless if you personally guarantee something (i.e. a company credit card that you guarantee with your social).
tehwebguy 13y ago
Yes, that is the point of them. If you are planning on creating one you should speak with an accountant and attorney to make sure you know the rules. If a corp or LLC is being used simply as a front a suing party can "pierce the corporate veil" and come after you personally.
Retric 13y ago
That only works if the company signs a contract, if you sign so pretending that says you can be held accountable then you can be held accountable. Most often seen with loans.

pearjuice 13y ago

Someone with 500k and a few employed certainly has money. This story was sheer luck and is only showing off that.

benihana 13y ago
I don't think you fully appreciate how expensive it is to go to court.
- EarthLaunch 13y ago
  He knows more about court expenses, than you know about what he knows. Just say "It's expensive to go to court", or better, just don't comment.
  - TeMPOraL 13y ago
    Completely off-topic, but your comment made me wonder: Is there any way to formalize expressions like "he knows more about X than you know about Y", where X and Y are different domains? Is there a way to quantify it, to answer questions like "how much more"? Do we have any kind of well-defined "unit of knowledge"? Does anyone here knows of relevant math branch that talks about these questions?
    - StevenXC 13y ago
      http://en.wikipedia.org/wiki/Measure_(mathematics) http://en.wikipedia.org/wiki/Measure_(mathematics) A measure is a function on the subsets of a space which yields a non-negative real number. For example, a measure of the triangle with vertices (0,0), (2,0), and (6,0), is 6, the area of that triangle. Measure satisfies certain nice properties, such as if A is a subset of B, then the measure of A is no more than the measure of B. So, I guess if you can define a reasonable measure on the spaces X and Y, you can measure collections of X and collections of Y, and use the real numbers to determine which is "more". But this doesn't strike me as useful in any way other than the fun of abstract mathematics. :-)
  - smalltalk 13y ago

eksith 13y ago

Spot on. "Unless their goal is simply revenge" As they've implied in The Godfather, taking things personally is bad for business. Companies that make money do whatever is necessary to keep the flow going. Revenge is a detour to this process so unless they're trying to stifle competition or the like, destroying someone isn't worth it. Revenge is bad for business.

slantyyz 13y ago
People who are in revenge mode don't care what's good for business. It makes them feel better and that matters more. In the case of suing former employees, it also sends a clear message to existing employees.
- mistercow 13y ago
  >In the case of suing former employees, it also sends a clear message to existing employees. Yes, but I'm not sure "run" is the message an you want to send to your employees.
  - slantyyz 13y ago
    More often than not, executives/companies think they're doing you a favor by giving you a job, even the ones who pretend to care about their employees.
    - DigitalJack 13y ago
      This post puzzles me. How are companies not doing you a favor by GIVING you a job?
      - mistercow 13y ago
        Your post puzzles me as well. Just because we use the word "giving" doesn't mean that any of the connotations of that word actually apply to the situation. Employment is an arrangement of mutual benefit. In some cases an employer might give a job to a friend as a favor, when the friend is not the most qualified for the job. In any case, if someone gives you a job as a favor, they are doing it wrong.

ksmiley 13y ago

An additional upside for them is, it sets an example. If MegaCorp gains a reputation for being revenge-driven life ruiners, then future contractors will know the stakes are serious, and they'll be less likely to violate their contracts. Not that I consider that strategy cost-effective in general. For one thing, it's bad PR. (Unless you're some kind of wizard that can spin it like, "we're principled and don't let bullies walk all over us. That's why we hold people to their promises")

yackob03 13y ago
They will also be less likely to attract future contractors.
- slantyyz 13y ago
  This is only true if the job market is a seller's market. If it's a buyer's market, it only prevents the smarter ones from wanting to work with that type of company.
- ksmiley 13y ago
  Playing the devil's advocate here: if contractors self-select themselves out of being hired because they're not sure they can get the job done, then all the better! The remaining applicant pool will be stronger on average.
  - r00fus 13y ago
    No the applicant pool will be more bullish. In many cases that might mean weaker (i.e., unable to estimate work effort properly).
  - niuzeta 13y ago
    seconded. I wouldn't even have to quote Machiavelli to say that it's important to show your future contractors(or your peers) what you are capable of, to force them to think twice before arranging anything with you. Will it reduce the number of incoming contractors? Probably. Will the contractors who'll still chime in be more likely reliable, after considering what they're agreeing with? Very likely.

ddeck 13y ago

Generally true, but often the motivation is not revenge or recouping financial loss; it's deterrence. Examples that come to mind are the MPAA/RIAA suing individuals for copyright infringement and developers for distributing P2P software, Sony suing individuals for modifying game consoles, and although not a civil suit, Goldman Sachs having Sergey Aleynikov criminally charged. All quite depressing examples unfortunately.

nostrademons 13y ago
Patent trolls also often have a modus operandi where they will sue a small company that they know doesn't have money to defend themselves, soak it for everything it's worth, and then use the money from that to launch a lawsuit against a much bigger company like Google, Microsoft, or Apple.

dreamfactory 13y ago

It's why big companies often prefer to spend more money with big suppliers. It often gets mistaken as them being ripped off when in fact they have their eyes wide open.

muzz 13y ago
Yes, big suppliers do have "skin in the game" and also big companies have long relationships with big suppliers. Many have Approved Vendor Lists and to do business with them you have to be approved first.

slantyyz 13y ago

Never underestimate the pettiness of executives in companies with a lot of money. I've been on the receiving end of a meritless revenge lawsuit. The net result was that it shut our startup down and turned many of the employees against the founder on a personal level. I was lucky to be able to cut my legal fees with some of my coworkers by sharing a lawyer, but I still ended up being out a few thousand dollars prior to settling (the company had to shut down and disband). Had we fought it, it would have costed a lot more than that. --edit-- Trivia: Since we're talking about Pud's post, I'm pretty sure the company that sued me was a company that had many employees bitch about it on f*ckedcompany.com, although it was never a company that got "featured" by Pud himself.

brianmcconnell 13y ago
Agree 100%. I had the misfortune to run across someone who took great pleasure in bullying people with his lawyers, a profoundly dishonest and unpleasant person. It's hard to overstate how damaging these people can be. Ever since then, I've made a point of doing public record searches on people to check if they have a history of suing people, which has enabled me to dodge a couple bullets since then.

superuser2 13y ago

This doesn't seem to deter patent trolls going after no-name startups and individual App Store apps.