Software Startup Lawyer NYC – Peter Tucker

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Law Firm for Software Startups, Law Offices of Peter Tucker, in Manhattan, NY

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Contact Software Startup Lawyer, Peter Tucker, for a Free Legal Consultation

Approximately 50 million startups launch each year, many of them software-related.  Founding a software startup can be overwhelming, with a dizzying array of non-software tasks filling up a software startup founder’s To-Do List.  Sadly, many very bright software startup founders fail with their startup, not because of a lack of a good product or initial customers, but as a result of any number of legal hurdles that caught them by surprise.  Protecting intellectual property and overcoming these legal hurdles is an exercise that separates the great from the good.

Legal Requirements for Software Startups
The excitement of starting a new software startup, getting a minimum viable product (MVP) in place, and getting traction with a nascent customer base can distract software startup founders from very important legal considerations that are time-sensitive in nature. Software startups fail all the time as a result of ownership issues, contractual issues, trademark issues, and other intellectual property issues. Consulting with a software startup lawyer before the business begins will allow the software startup founder(s) to build a house of bricks rather than straw, if you will.

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Examples of legal matters of paramount importance early on include:

  1. If the software startup should be established as an LLC, C-corporation, or S-corporation
  2. The name and branding of the business and its product
  3. The roles of each person involved in the software startup and the equity allocated to them
  4. Whether the software startup will need employees vs. contractors
  5. How to deal with a variety of ownership situations, such as the consequences of a cofounder abandoning the software startup
  6. How the software startup will be funded initially and subsequently, by whom, and for what
  7. How to craft an image of “sophistication” that projects “I know what I am doing” to investors and prospective customers (yes, this is partially a legal thing)

Software startup founders have to focus on protecting intellectual property right away. This includes ensuring a legal entity is created and what’s called “title” to the MVP is transferred to the legal entity. It’s also important to address copyright considerations in your code so that down the line if someone steals your ideas, design, or product, you have legal redress. Getting these steps right has to be done right away, and many software startup founders don’t understand this. They find out too late, perhaps at their first investor pitch. You don’t get a “do-over” when it comes to some of these legal considerations.

Business Contracts Needed

Software startups also need to think about the contracts they will use and how those contracts will protect them once they start selling to customers. Having the right legal documents can prevent unnecessary lawsuits and a host of other issues. Software startup founders that retain a software startup lawyer on an ongoing basis will fare better, and be less stressed, than software startup founders that fail to get help from a software startup lawyer.

There are many, many different types of contracts that a software startup founder will eventually need (or be presented with by customers or investors). The below is a short list of some of the most common types of contracts that play a role early on in the life of a software startup.

Terms of Service
Terms of service (ToS) are the online equivalent of an end user license agreement (EULA) for SaaS companies, the most common type of software startup nowadays. The terms of service define the rights and obligations of the software startup vis-à-vis its customers.  It will address business issues such as how long the subscribers’ license to the SaaS will last and how much they will pay for it. The terms of service also address a whole host of legal issues such as intellectual property (including trademark and copyright), export control law, confidentiality, arbitration, legal risk if something goes wrong, and technical support.  Here you can read more about the importance of Terms of Service to SaaS companies.

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Nondisclosure Agreements (NDAs) or Confidentiality Agreements
Nondisclosure agreements, or confidentiality agreements as they’re sometimes called, are very common in the software startup space. Many times a prospective customer will ask a software startup founder to sign an NDA before they will even talk to the software startup. In a nutshell nondisclosure agreements protect the secret information of both the software startup and the prospective customer to whom they might be pitching their software or SaaS. It’s also important to use nondisclosure agreements when talking to prospective cofounders. Sometimes one or two software startup founders will decide that they want to bring on a third or fourth person who fills certain gaps in their knowledge or skill set and when they’re having initial conversations with that person, that person might eventually not work out and might not want to come on board however they now know all about your software startup, all about your ideas, all about your market, all about your intellectual property, all about your tech stack, and they’re also highly skilled – well, guess what? That can create a situation where they can steal your ideas or your intellectual property and a nondisclosure agreement is used to legally prevent them from doing so and to provide you recourse or remedy in the courts if they choose to do so nonetheless.

Service level agreements (SLAs)
Service level agreement is a fancy name for a contract or a part of a contract that describes the technical support that the software startup is going to provide to its customers. This technical support obligation typically runs the entire length of the contract and it gets into the nitty gritty of how technical support will be provided such as via telephone, via e-mail, via a ticketing system such as an ITSM, and it also defines things like how quickly the software startup will respond to issues that are raised by the customers

Independent Contractor Agreements or Contractor Agreements
Independent Contractor Agreements or Contractor Agreements are a very important facet of the early life of a software startup. Many times a software startup will need expertise on the development side or on the sales side that is ongoing and that is not enough work to justify bringing the professional on as an actual employee. The Independent Contractor Agreement contains many, many traps for the unwary that should be avoided and addressed by a software startup lawyer, such as Peter Tucker. These include things like defining very specifically what it is the contractor is going to do and how much they are going to get paid which sounds very simple but, when you get into the details, it gets quite complicated quite quickly and avoiding a lot of heartache is something that can be facilitated by a software startup lawyer.

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Software Development Agreements
Software Development Agreements can be thought of as a subset of a Contractor Agreement or an Independent Contractor Agreement. These are agreements that facilitate basically outsourcing the development of certain aspects of the software or SaaS. Oftentimes software startup founders will have expertise in certain aspects of the tech stack or perhaps they will even be a full-stack developer but the depth of their knowledge with respect to a given aspect of the tech stack is not sufficient to accomplish their software development goals and that’s where they will reach out to a third party – it might be a company or it might be an individual and they will essentially hire them to build a component of the software or SaaS. Not unlike Independent Contractor Agreements, these agreements are very fertile ground for problems and for litigation down the line. It is extremely important that a lawyer who specializes in advising software startup founders is consulted and assists in drafting or reviewing these types of agreements.

Contact Software Startup Lawyer, Peter Tucker, for a Free Legal Consultation
portraitFounding a software startup is and should be hard work but also fun. Software startup founders should do everything possible to protect their dream and their hard work. Contact a software startup lawyer as soon as possible to learn more about the types of contracts and other legal documents needed to keep both personal and business assets safe and sound. Already-founded and growing companies can also benefit from contacting a software startup lawyer as some early omissions or missteps can and should be addressed by an experiences software startup lawyer.

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