If you’re an entrepreneur, you’ve probably heard somewhere that you need a non-disclosure agreement when you share your company’s “secret sauce” with prospective investors or contractors. Or that you need to make sure that your key employees are under a non-compete agreement (or at the very least, non-use/non-solicitation/no-hire agreements). Or that you need patents or trademarks for your company’s IP. So you spend the time and money to get these legal protections in place (you probably spend even more to get an attorney to do it). And once it’s done, you think you’re protected and covered.
But what happens if someone decides to break those covenants they’ve made with you? Simple, you say – take them to court. But do you know how expensive litigation can get? The answer is: very. And now that agreement you thought was protecting your business isn’t worth the paper it’s printed on if you can’t afford to enforce those protections. Of course, this isn’t to say that you shouldn’t make sure that you have protections like these in your agreements. Sometimes it is worth the cost of the fight to take someone to court enforce your rights. And if your business is successful enough you will actually have the resources to do so – and something worth protecting as well.
The point here is not to simply rely on your legal agreements to protect you if you don’t have the resources or willingness to enforce those agreements if someone wants to break them. Moreover, this is also a gentle reminder to vet who you’re dealing with more carefully, rather than relying on legal agreements to protect you from other parties who may be setting off red flags in the back of your mind. No legal agreement in the world is going to protect you from an unscrupulous party who will look to break your agreement at the first sign of an advantage because they know you can’t afford to fight them. Those are just people you don’t want to be doing business with in the first place, agreement or no. But if you take efforts to make sure you’re working with upright parties on the other side, then you’ll never need to worry about the cost of having to enforce the legal protections in your agreement.