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Legal Services

Disclaimer -- this section contains a variety of views on legal service requirements for a technology company. The views should not be considered professional legal advice. The reader is encouraged to seek professional legal advice as appropriate and only use the views contained below as guidelines in the context of operating a technology business.

The need to engage legal services in the operation of a technology business tends to be seen by inexperienced CEOs as an impediment to the operation of the business. It is often called a drag on sales momentum and an unwanted cost often charged against sales profits. Nonetheless, prudence does require an experienced and qualified review of relevant business documents, often a process that is managed within the Finance department. Small companies tend to outsource most legal functions as it's uncommon to be able to justify a permanent full-time legal staff member qualified to do contract, corporate, tax and employment law all in one individual. Occasionally the founding CEO handles all legal services to reduce the cost and business impediment, but the risks this approach carries can be very detrimental to the business long term if errors are made in relevant contracts.

Keep in the mind that the job of most lawyers is to help you manage risk and therefore their recommendations are often designed to fall on a very conservative framework -- it's up to you to decide how to handle the advice given and make sure you are keeping the Board and other relevant parties informed if you stray away from that advice. Establishing some risk guidelines jointly with the Board is a good way to approach this. In this section we'll look at a variety of legal services typically required in a technology business and some of the methods you may want to use to handle managing them so that it represents as small a business impediment as possible.

NDA (Non-Disclosure Agreement - Confidentiality Documents)

The NDA document tends to be on of the most frequent documents used in any technology business, especially at the start of any new business discussion with a prospective customer or partner. The operational diligence to actually get one signed as a precursor to a confidential business discussion is not easy to instill in corporate culture. It can be viewed as a business impediment. The team too easily dismisses the importance of formalities like signing NDAs, especially inexperienced team members, the excitement of having the attention of the prospect wins their thinking. The CEO has to espouse the view that many things about a business are confidential, especially if competitors are involved in the market - obtaining signed NDAs is critical to protecting innovation against unwanted disclosures (it's also important a pile of signed NDA's exist during acquisition due diligence).

The most significant impediment to getting an NDA signed is the length and complexity of the document itself. The more the document reflects fairness, simplicity and a 2-way business relationship, the more likely it is to be signed without much delay by the other party.

Some simple guidelines include:

The following is an example NDA. If you intend to use this document, please have it reviewed by proper legal council to make sure it suits the needs of your business. Sample NDA

Stock Option Plans

Reseller Agreements

Distributor Agreements

Enterprise Licenses

Employment Agreements

Service Agreements

3rd party Inbound Licenses

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