Ways to deal with litigious people

Recently I just got out of a contract in the beginning of June, that unfortunately I stayed at way too long in. That is another story.  But, I have nothing bad to say about the company because the work was interesting, just management at the company had different views of the contract between the two of us. The management wanted an employee and I always maintained that I wanted to stay an independent contractor.

When I left the job on Thursday, June 2nd, I received a handshake on the way out and thought everything was going to end like every other job I have left. In that we maintain a friendly but separate relationship and I secretly root in the background for the companies success moving forward.  Same way I did when I was a contractor for the company.

I continue to this day to do this for a couple companies that I loved working at and that I have stayed in constant contact with. One company that comes to mind and that I loved work for is Voveo.

However I am getting off point from this article, and by the title of this article you can pretty much guess what happened after I left.

But before I go into the meat of this article, I want to say that I have nothing bad to say about SocketLabs, they have a great product, and I enjoyed working there. I even received contacts from a couple of the employees stating how good of a job I did, and that the system as it stands now wouldn’t be of the same high quality if I hadn’t worked on it for the prior 2 years.

How it all started...

About a week after submitting my final invoice, and I hadn't had any contact with the companies management in the mean time. It all started when I received the following letter from their (SocketLabs) lawyer.

pdf The PDF I was sent by the lawyer.

Review at your leisure, see if you come to the same conclusions I laid out below.

My conclusions about the agreement

After reviewing this letter I came to the following conclusions:

  • The original contract was between SocketLabs, Inc and ManagedFusion, LLC (my company I use for consulting), not me (Nick Berard) personally. I do not sign anything with my name personally because I will not open my family up to lawsuits, which is the main reason I do business behind a corporation.
  • Since, the first contact I receive from the company is a letter from their lawyer, I decided if I was to so sign this contract, I would require the full payment up front and require that the contract not go into effect until the last penny of the payment for this agreement was received.
  • If anybody is familiar with the job reference system in the United States, you know that Section 6 is pretty much a slap in the face if nothing more is said about my time at SocketLabs, and it is understood industry wide that stating dates and supervisor and nothing else when ask for a reference is tantamount to a negative reference and thus violates section 8(a). I know this was all the lawyers doing and not the management at SocketLabs, but still those two sections are in total contradiction of each other.
  • Also you need to be familiar with the rules from the United States’ IRS (Internal Revenue Service) of what constitutes the differences between a independent contractor and an employee to see that Section 7 is an abomination of legal jargon basically saying I was an employee of SocketLabs, which is so far from the truth, that if I were to sign this agreement both I and SocketLabs would be required to pay back taxes to the IRS and face a potential audits and fines.

Dealing with the agreement

I have posted the agreement so that you can use it as a reference for when you are in the same situation.  Just to be clear I don’t plan on signing the document, because it offers no protection for me or my family, and it only offers a small monetary gain up front, hardly worth opening my family up to lawsuits from company management that already seems to be very litigious.

So when you are in the same situation, you have the following ways to deal with it:

  1. Sign the document and hope for the best.
  2. Negotiate for terms that work for both parties.
  3. Tell them you would rather move on and not sign an more agreements.
  4. Just ignore the problem, which is essentially the same as #3 except you don’t engage in any form of contact.
  5. Or hire a lawyer and let the lawyers has everything out.

Just to be clear I am not a lawyer and don’t play on in real life or on TV, so take what I say with a  grain of salt and contact a lawyer who will have your best interests in mind given your circumstances.

I opted for option #3, since there is never a reason to sign a document after the fact unless there is a huge upside for you. And no such upside was presented to me.

Have you ever dealt with a similar situation? What methods have you used to deal with the problem?

There is nothing confidential in this agreement, and this has been posted to my blog because I enjoy having full disclosure with my blog readers. It is not meant to embarrass anybody, because if they were embarrassed about sending this letter through their lawyer they probably shouldn’t have set it. That is my take on this.

Nick Berardi

Entrepreneur, Microsoft MVP, ASPInsider, co-founder and CTO of @CaddioApp, Father, and @SeriouslyOpen host