Never violate an agreement -- verbal or otherwise -- on the basis that the other guy won't sue you because of the expense. Ever heard the term "ambulance chaser"? Well, they exist in civil litigation circles as well. My company is currently being sued by an attorney working on contingency, and it sucks hard. He's even gone so far as to name all of the shareholders personally in the suit. Here's the thing that sucks the most: any time you're sued, you must defend yourself, and that costs money. The guy suing us is doing so at no cost (contingency), but we're footing the bill to defend ourselves. Because of the state he's suing us in, we can't come back after them for legal fees. So, right now we're burning through $7k-$10k a month on a bullshit lawsuit.
NEVER assume someone won't sue you. In our case, the agreement in question was signed by one partner under the representation of a completely separate corporation, without the knowledge of any of the other shareholders. It doesn't get any more far fetched than that. If we don't defend ourselves, the judgement is awarded by default and the plaintiff gains all kinds of ability to levy liens, garnish wages, and a host of other bullshit. Basically, it's like running a marathon with a ball and chain strapped to both legs. It's the last thing you need as a startup. Find a way to reach an agreement and get past it.
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Never violate an agreement -- verbal or otherwise -- on the basis that the other guy won't sue you because of the expense. Ever heard the term "ambulance chaser"? Well, they exist in civil litigation circles as well. My company is currently being sued by an attorney working on contingency, and it sucks hard. He's even gone so far as to name all of the shareholders personally in the suit. Here's the thing that sucks the most: any time you're sued, you must defend yourself, and that costs money. The guy suing us is doing so at no cost (contingency), but we're footing the bill to defend ourselves. Because of the state he's suing us in, we can't come back after them for legal fees. So, right now we're burning through $7k-$10k a month on a bullshit lawsuit.
NEVER assume someone won't sue you. In our case, the agreement in question was signed by one partner under the representation of a completely separate corporation, without the knowledge of any of the other shareholders. It doesn't get any more far fetched than that. If we don't defend ourselves, the judgement is awarded by default and the plaintiff gains all kinds of ability to levy liens, garnish wages, and a host of other bullshit. Basically, it's like running a marathon with a ball and chain strapped to both legs. It's the last thing you need as a startup. Find a way to reach an agreement and get past it.