Why Paying Attention to The Legal Stuff Matters
Clip from the HBO series, Silicon Valley, Season 2
Sales People ‘Crush It’
The single most important goal of any sales team is to generate revenue. This is often referred to in The Valley as ‘Crushing It’. So, in case you wanted to see a ‘bro-like’ exaggeration of what I’m talking about, click on the link above.
Most startups don’t have the benefit of in-house legal counsel. At the same time, they also don’t want to get carried away with the legal fees. This puts a ton of pressure on the sales team. None of my clients do this but I have heard other sales teams negotiate or ‘red line’ client contracts. That would be totally fine if they went to law school.
Welcome to the Big Leagues
There is not much I’d tell your team to pump the breaks on when it comes to landing a huge contract. But some industries are notorious for complex contract language and insurance requirements. Construction, for example, can have very burdensome language and specific forms. The other consideration is what it would take to get your startup in compliance with specific requirements or higher limits. In general, the larger the client contract, the more legal traps you will have to be aware of in the contract.
View Each Opportunity as A Business Decision
Sometimes a provision might ask for an increased limit or a line of coverage you don’t have in place yet. This could be a $250 decision for a simple endorsement or a $30K (or more) decision if asking for a $20M E&O or cyber limit. Does it makes sense to spend dollars getting into compliance with this contract? Will this open up long term opportunities or with other prospects? Often times you will need to turn to your commercial agent for this.
- Review client contracts with your legal team!
- Review new insurance and indemnity requests with your insurance broker
- Get the info you need to make a good ‘long term’ business decision
- Resume ‘Crushing It’ full time!
Feel free to read our other blog posts related to commercial insurance, D&O coverage, and other topics that relate to tech startups here