Dave Winer at Scripting News has posted good news about his legal problems with his former lawyers and UserLand. If you've followed Dave as I have, you most likely know that he was sued for defamation by Jack Russo of Russo & Hale.
"Russo & Hale sued UserLand, Scripting News, and myself, in August 2006," he notes.
Interestingly, "Russo was UserLand's attorney, a board member, secretary and my personal attorney, from 1988 to 2005," which presented a conflict for the firm when it tried to represent minority shareholders against majority shareholder Winer, while at the same time suing the minority shareholder and Winer. Here's the legal opinion on it. Here's Russo & Hales' attorney Michael Risch's unsuccessful motion to reconsider and Winer's successful opposition to the motion to reconsider.
Fortunately, the case was settled through mediation before anymore expenses were incurred. On May 10, 2007, Winer wrote:
Amount spent so far defending against Russo & Hale lawsuit (my former lawyers): $115,000.
As for conclusion of the litigation, Winer wrote on May 25, 2007:
It was a marathon mediation, starting at 10 AM, finishing at 9 PM, but we reached a settlement, drafted an agreement, and signed it. Most of the terms are confidential, but the important point is that we executed mutual releases, so there won't be any lawsuits.
Here is more background on the case. Here's is Russo & Hale's case docket on it.
Unfortunately, prior to this experience, Dave was like many people who go into business and do things on solely on handshakes rather than contracts. This utopian approach suggest that cutting corners is costly, and that you will likely pay the lawyers and the accountants sooner or later. He wrote on March 31, 2007:
... if I want to clean up the mess that UserLand has become, now I have the ability to do so. It will still cost me personally many thousands of dollars, but it's a price I have to pay for having cut corners over the years. If I want my freedom, a bunch of lawyers and accountants and the government have to be paid. So be it.
So, what's the lesson that Dave has learned from all of this: "I learned a very important lesson here, one that my friend Jason Calacanis [link added] said at the OPML Road Show in NYC in 2005. If a deal is worth doing, it's worth documenting with a good agreement. Anyone who is doing business with me these days knows that I have embraced this ethos wholeheartedly! Wish I had been following it through the 80s and 90s. A word to the wise." See "An Untold Story of UserLand."
Editor's Note: According to Wikipedia, the photo used in this article was taken by Betsy Devine in Boston, Massachusetts, USA, on January 3, 2006. It "is licensed under the Creative Commons Attribution ShareAlike License v. 2.5: http://creativecommons.org/licenses/by-sa/2.5/."
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