@ Mike C, Here's a related FD thread that might be of interest: http://members.founderdating.com/discuss/6288/How-do-you-know-if-your-startup-lawyer-sucks
1. Experienced: This example is a legal and practical issue (as most 'legal' issues are): not having a proper IP assignment provision/agreement in place before paying for SW development - i should have known better, but then again, if i had one in place, so what? Would the results have been any different? I started a venture as more of a passion project/side project and therefor took some shortcuts in the upfront paperwork... as in there wasn't any. A software developer (a complete stranger) overheard me talking about what, at the time, was little more than an idea and asked if he could join me and do the dev work. How could i say no? I soon found out he could only work part time as he needed to continue other paying work. We agreed that i would pay him at 50% of his 'normal' rate if he would work full time - the other 1/2 was his sweat equity. we agreed. i paid him. I had an email trail of our conversations and agreement. What i didn't get was an explicit IP assignment agreement and daily commits of source code. After a few months it became clear we couldn't work well together. He held the source code ransom for 'back pay' - the other 1/2 of his 'normal' rate. One option would have been to take him to court to get an order to turn over the product i had paid him to build. That, of course, would take months or years and tens of thousands in legal fees. As it was, it took 5 months to negotiate an agreement that included an IP assignment and a large check. I think it's common to believe that you should own what you pay someone to produce - good assumption except when it comes to software development. The larger lesson learned was, even with a seemingly inconsequential project it is best to have ALL assumptions and agreements in writing. The larger mistake was more opperational than legal - not having control over current source.
2. Observed: not managing lawyers properly: This is a general observation gathered over working with many startups. From paying for services they just don't need to drafting agreements with terms that are far too draconian given the startup's 'clout' (or lack thereof) with the other party, to simply bad/wrong advice. Bad advice, of course, is not unique to lawyers, but it is often the most expensive bad advice you can get... which leads to questions like this: http://members.founderdating.com/discuss/6288/How-do-you-know-if-your-startup-lawyer-sucks