Comments on: Startup company uses flawed software-development contract with outside consultant, ends up having to go to court to stay alive

By: DCT

DCT — Fri, 31 Jul 2009 01:36:20 +0000

@RG, you’re assuming facts not in evidence when you say that the company had the consultant perform work it had no intention of paying for, and that there was “clear intent to defraud the consultant.”

It’s very easy for people who suffer harm as a result of bad decisionmaking to jump to the conclusion that the decisionmakers were evil and intended it thusly.

But it’s totally plausible (absent more facts) that the company’s management didn’t intend to stiff the outside consultant, they just [fouled] up — quite likely as a result (in part) of the congenital management disease of overoptimism, in this case about its prospects for raising more money and/or generating revenue.

The law recognizes this all-too-human tendency to hurl accusations of fraud. It’s not a coincidence that such accusations must be proved not just by a preponderance of the evidence, but by clear and convincing evidence, which is the highest standard of proof in civil cases.

I’m starting to understand the perspective of a lot of the developer community that has commented here and at Hacker News. It’s different than the way many founders would view the matter, I think.

Thanks for visiting.

By: RG

RG — Thu, 30 Jul 2009 20:20:19 +0000

Wouldn’t a better approach still have simply been for the startup to not have the consultant perform work it had no intention of paying for? Let’s face it, if there were multiple invoices that didn’t get paid, some portion of the work was ordered with the clear intent to defraud the consultant.

Without knowing all the details, we have to assume the startup meanwhile managed to keep its office space and keep its other employees paid. It sounds like they tried to take advantage of a small vendor and it cost them. (Certainly, they would not have tried this if the consultant had been with IBM or Accenture, who have more frightening legal teams.)

I only wish shady operators like this got their comeuppance more often!

By: DCT

DCT — Thu, 30 Jul 2009 11:37:50 +0000

@chrisco – thanks. FYI, I used to follow people on the OnTechnologyContracts Twitter account, but then decided to consolidate all my follows on my personal Twitter account.

By: chrisco

chrisco — Thu, 30 Jul 2009 11:32:37 +0000

Good post. BTW, I didn’t notice a contact form or email address on your website. Also doesn’t look like you follow people back on Twitter when they follow you (since you follow zero people). Might want to fix both of those things. Not saying you should follow everyone who follows you (you shouldn’t), but probably that number/ratio should be more than zero. Cheers!

By: Fernando Martins

Fernando Martins — Wed, 29 Jul 2009 14:29:25 +0000

That’s a mess…

But I don’t really think the consultant has shot himself in the foot.
Maybe he’s trying to cut a better deal for himself, like having a piece of the cake, i.e. the startup company.

In such case, this would allow him to improved the odds of getting paid, plus an extra bonus for the inconvenience of not being paid on time.

I believe the risk and money involved on both scenarios, not getting paid or getting paid much latter, does compensate the try to get a piece of the company.
That’s an neutral or win situation for the consultant. If he looses, than he would be at the starting point, nothing changes so that’s neutral. If he wins, he can win a lot more that the money he’s asking.