Lawyer Advice

[PrettyBoyAJ]

Been a long time since I've been here. I've got a lot of stories to tell in my journal the next couple weeks. Been handling business with finances as well as getting back in my groove wit da ladies.

I have a situation and wanted to see what you guys think about it and what my course of action is.

I partnered up with one of colleagues on a business. The business was pretty much a healthcare consulting news/jobs website. Me and him both had 50% stake in the company and we've been running the business since October.

So for weeks now he has been trying to get me to join a multi level marketing company he is joining and I've been telling him no. After that he tells me he wants to sell me his 50% stake in the company for 2,000$. I tell him no I do not want to pay that much. So finally after a week of him asking me to buy his share he just outright sends me a termination letter and says he owns 100% of the company now.

He is now dissolving the company.

What are my options here? He just changed all the passwords and domain logins so I can't access anything anymore. This side business has been bringing me around 1k a month on the side from my main gig.

Thanks for the help and will post in my journ in the following weeks.

 

[backseatjuan]

1k a month, and 1k a month for him, since it is a 50/50. You woudn't buy it for 2k? WoW! World of Warcraft! I don't know, maybe call him and have a chat, see if you can buy the company, even for 4k still a good deal. Lawyers would want money and it would take time and result is not guaranteed.

 

[Stagger Lee]

I don't know much about how to deal with the matter. You could file a restraining/protection order against him. They are usually quick and easy to get and you don't need a lawyer. I think you would need to claim his actions are an intentional pattern that are causing you emotional distress though, not sure it depends on your local laws. The order could prevent him from contacting you or taking your property, or else he could face arrest. I don't know if it will be able to get your passwords and logins back right away though.

Otherwise I think you would need to file an injuction and might need a lawyer and that would cost some money. If the business is worth $1k/month per partner, why wouldn't you want to pay him $2k to get rid of him? You'll make the money back in no time?

 

[PrettyBoyAJ]

Because I don't want to pay him a dime. He doesn't want any part of it. I figure he'd give it away for dirt cheap to me. The 1k is an estimate. More in the tune of 700 a month.

He changed all the passwords and everything so I don't have access to **** and even wrote me a letter saying I've been terminated and have no stake.

 

[backseatjuan]

Well he fired you, and by the tune of it, he is the programmer, and you were along for the ride. It would be stupid for someone to sell a business for 2k if it is bringing 700 bucks per month per partner, that's 1400 bucks per month. He knew you'd decline his 2k offer, and I bet he got good legal advice on how to proceed to get rid of you. Then bam, you're fired! You want it back? Spend the cash for legal advice, get your sh1t together, go to court, and in about half a year or so you'll get the judge's decision, which will not grant you 100% of the company, that's for sure. You can get you 50% share at the maximum. You better talk to him and come up with a consensus. Another option is to fvck his mom and talk her into stealing his notebook, get them passwords!

 

[Bible_Belt]

Next time you do this, write up a partnership agreement first. It's a contract you both sign that spells out what happens in situations like this. Without it, you're fvcked. Everything is your word against his.

 

[speed dawg]

Been a long time since I've been here. I've got a lot of stories to tell in my journal the next couple weeks. Been handling business with finances as well as getting back in my groove wit da ladies.

I have a situation and wanted to see what you guys think about it and what my course of action is.

I partnered up with one of colleagues on a business. The business was pretty much a healthcare consulting news/jobs website. Me and him both had 50% stake in the company and we've been running the business since October.

So for weeks now he has been trying to get me to join a multi level marketing company he is joining and I've been telling him no. After that he tells me he wants to sell me his 50% stake in the company for 2,000$. I tell him no I do not want to pay that much. So finally after a week of him asking me to buy his share he just outright sends me a termination letter and says he owns 100% of the company now.

He is now dissolving the company.

What are my options here? He just changed all the passwords and domain logins so I can't access anything anymore. This side business has been bringing me around 1k a month on the side from my main gig.

Thanks for the help and will post in my journ in the following weeks.

I can't tell you how to handle this situation but I can tell you where you went wrong.

You might try just giving him the $2,000 if he will do it (not sure what it's worth obviously), just to avoid the hassle. Chalk it up to a learning experience. Good luck.

 

[Bible_Belt]

Not correct in the US, partnerships do not require written agreements in many states. You could sue him and be entitled to 50% of the assets.

Isn't the burden of proof being entirely on him going to make it too difficult, though? He'd have to prove a contract existed, as well as its terms. It seems like that would be cost prohibitive to hire an attorney to do, and yet too difficult and complex for someone representing themselves.

 

[PrettyBoyAJ]

I figured he would lower the price because he wanted out so bad. There was a signed agreement. The revenue we were getting were from autorenewals. In the next following months we have few auto renewals.

On the agreement it does say he can dissolve the company if he chooses. He hasn't dissolved the company yet so I'll probably file suit if he doesn't dissolve.

 

[backseatjuan]

Listen to me guy. He can dissolve the company anytime he wishes to, all he has to do is delete the site. Avoid the hastle and find common ground with him. Talk to him, arrenge a meet, and talk. Listen to your elder brothers. That company is worth the money he wants for it. If you don't want to talk to him, send someone else to talk to him, a 3rd person that is not connected with you, and buy it out. The more you wait the less chance he sell it, he might realize it is profitable for him.

 

[PrettyBoyAJ]

Juan, I'm not going to put money in someones pocket who tried to screw me over. I don't negotiate with terrorists.

He tried to offer me it for $1500 and gave me another offer of just giving it to me for free with a 30% Royalty. To be honest if he came at me a little bit better we could negotiate but this is the type of situation where I'm not going to be forced to do something I don't want to do.

I rather either drop it completely, get lawyers involved, or him give me better deals.

The revenue from the site came from memberships and auto renewals. To my last knowledge there were only 12 elite members at 149$ a quarter. Meaning they pay every quarter. We had up to 27 or so elite members but the majority cancelled memberships.

It was a good deal he offered me but would you want to do business with someone who initially tries to screw you over after you decline?

 

[Fatal Jay]

Most people don't know that they could hire a paralegal instead of a lawyer and count down their lawyers fees in half.

Just a fun fact for people who don't know and most of the time the paralegal knows the same as a lawyer.

 

[dasein]

Most people don't know that they could hire a paralegal instead of a lawyer and count down their lawyers fees in half.

Just a fun fact for people who don't know and most of the time the paralegal knows the same as a lawyer.

Logic like the above and business formation via websites/office supply chain forms is exactly how people get into messes like this in the first place. Hiring a lawyer who specializes in business on the front end to iron out and foresee these things is cheap, now OP is in for some serious legal fees.

OP, you need to consult licensed counsel in your jurisdiction to explore your options. Expect to pay far more than $2000 in legal fees before this is done. Or you can go back and try to make nice with the guy and see if he will still sell you his half for $2000.

In the future, vet people you are considering going into business with for things like propensity to go off on a MLM tangent. Due diligence, due diligence, due diligence.

 

[PrettyBoyAJ]

Here is an excerpt of the contract that I signed. I was not thinking at all.

(ii) With the exception of a transfer of interest governed by Article 7 of this Agreement, Dominic Pratt has the ability and authority to allow the admission of a new Member or a change in any Member’s Membership Interest, Ownership Interest, Percentage Interest, or Voting Interest in any manner other than in accordance with this Agreement;

The LLC is in Delaware but I live in GA and he lives in RI. I think I may be screwed because I signed a dumb contract.

 

[dasein]

Regardless, he can't just "take" your equity and may even be in violation of federal law depending on what he did specifically. There are well-established corporate statutes/cases protecting minority interests, and criminal statutes in Delaware, that may provide a remedy in your case. Consult business counsel. Ideally it would be a Delaware lawyer, but since so many entities are formed in Delaware, many business lawyers have familiarity with Delaware law and would be able to offer competent counsel. Whatever you do don't go to some paralegal, law student, general practice, plaintiff's lawyer or litigator. Find someone who does business law, there are plenty out there. Also, seeking legal advice on the net is not a good practice generally.

That said, the provision looks vague and unenforceable if not outright void, and must be read in the context of the whole agreement. Seek legal counsel or make nice with this guy. A somewhat threatening letter from counsel citing to fraud and/or corporate statutes may be all it takes to let this guy know you are serious and get him back to the table. Or you can just walk away and start anew, save what will likely be significant expenses. Good luck.

 

[PrettyBoyAJ]

Contacted a lawyer yesterday. I do have a case but it's going to cost more to sue him as opposed to just pay him the $ he wants. I refuse to pay someone that screwed me over. So I'll just charge this dude to the game. On to my next venture.

 

[Bible_Belt]

Something like 90% of people who have legal issues cannot afford to hire an attorney. The profession is headed for reform, but it is a slow-moving beast. Any reform that passes will have to promise the current attorneys of the world that they won't lose money from it. There will likely be a created profession of something like "law tech" who gets a license to handle all the low-paying cases that the real lawyers don't take anyway.

 

[dasein]

Something like 90% of people who have legal issues cannot afford to hire an attorney. The profession is headed for reform, but it is a slow-moving beast. Any reform that passes will have to promise the current attorneys of the world that they won't lose money from it. There will likely be a created profession of something like "law tech" who gets a license to handle all the low-paying cases that the real lawyers don't take anyway.

This is a chicken and egg thing where businesses are concerned. If someone has enough capital to start a business, they have enough to consult an accountant and an attorney before doing so, else they are undercapitalized and not ready to go into business. Having another set of experienced eyes on a startup is almost worth the small fee itself. The mistakes people make are mostly scrimping on early setup and going to general practitioners or litigators when they do need business help. If it's just sole member or shareholder, sure, some corners can be cut, but if there are any others involved, not consulting a lawyer on the front end is the height of personal negligence.

If startups come to me, I go easy on them, and many lawyers do. I will file their certificates/articles for free, all they have to do is pay the state fees. I will spend an hour or so profiling them to draft a workable member/shareholder agreement and an operating agreement/bylaws.

It's when they -don't- do these things and spend a little money on the front end that subsequent problems lead to the really nasty expenses of the law. Legal techs or whatever industry transformation won't address these expenses. Speaking about business, but the same thing applies to domestic relations and pretty much any area of law that requires counsel in life. Lawyers are responsible for lots of ills, but the negligence of not consulting lawyers early on when expenses are low are the cause of far more expenses than lawyer chicanery IME.