Avoiding The Pitfalls of Old School Template Legal Agreements (Or No Agreements At All)…
If you are serious about your new paradigm business, please do not think that template agreements (or no agreements) are the way to go.
Too many of us have learned this mistake the hard way.
For most people, this piece ends up costing tens (if not hundreds) of thousands of dollars in wasted legal fees and co-founder dispute settlements;
But worst of all, it all too often also costs the relationships we care about;
Because being in a legal dispute with someone you love(d), were co-creating with or that you really care(d) about — especially where all or most of your money is involved — is one of the most agonizingly painful and heartbreaking things you can go through;
Just ask any of the people currently going through a divorce.
So if you’ve had an inspired new paradigm idea;
You’ve attracted a handful of people who resonate deeply with it;
You have a enough resources to embark on the co-creative journey together;
And you know you need some kind of formal agreement now, because it’s time to get clear on who owns what, how resources get distributed, and how decisions get made;
Then while I understand the temptation to either:
(1) Not sign any agreement — because you “love and trust each other soooooo much” and you don’t believe in or want to spend the time on the legal agreement now; OR
(2) Go straight to Legal Zoom to get a GENERIC TEMPLATE and fill it out yourself because you don’t want to spend your time, attention and resource on the boring legal part (and you figure, it’ll be “good enough” to do the job);
Know that by signing NO AGREEMENT you risk everything you’ve created being the subject of dispute that you have little to no control over later down the line; OR
By signing an old school agreement, you run the risk that you’re signing into a whole host of invisible energetic dynamics that will affect your business AND impact your co-founder relationships.
Because template operating agreement clauses were developed for the old paradigm industrial ways of doing things.
By way of example:
(1) Old school agreements 𝙚𝙣𝙜𝙚𝙣𝙙𝙚𝙧 𝙘𝙤𝙢𝙥𝙡𝙞𝙖𝙣𝙘𝙚 𝙤𝙫𝙚𝙧 𝙩𝙧𝙪𝙨𝙩 — meaning that they were designed to ensure that people “keep their word” and stay accountable 𝙛𝙤𝙧 𝙛𝙚𝙖𝙧 𝙤𝙛 𝙘𝙤𝙣𝙨𝙚𝙦𝙪𝙚𝙣𝙘𝙚;
While I get the tendency to want to enter the agreement early on in the relationship in the hopes of securing your position, so you don’t end up getting screwed over, in reality, it’s not THE WORDS on paper (which represent the stick rather than the carrot) in a template agreement that WILL FORCE people to be accountable……
…..but rather (i) developing a level of trust and strength within the relationships; and (ii) the depth of devotion to the vision, that TRULY INSPIRED ACTION AND ACCOUNTABILITY WILL ARISE FROM.
(2) Old school agreements tend to be 𝙧𝙞𝙜𝙞𝙙 𝙧𝙖𝙩𝙝𝙚𝙧 𝙩𝙝𝙖𝙣 𝙙𝙮𝙣𝙖𝙢𝙞𝙘 — meaning that they set and calcify the terms of agreement and expectations at the point that the agreement is created and signed;
Since new paradigm businesses are typically less about the destination and more about the journey, your success will be a function of how well you navigate that journey individually and collectively. Naturally, over the course of that journey, you will be learning and growing, and your devotion to the cause and your own integrity will inevitably fluctuate as it gets tested along the way.
As such there needs to be room for that growth journey to be built into the agreement process so that your relationships can be adaptable as you’re individually and collectively withstanding the inevitable startup pressures, rather than your relationships risking breaking up against a rigid agreement that prioritizes compliance over growth/adaptability and elevates extracting compensation over addressing what’s affecting the underlying trust between you.
(3) In old school agreements, 𝙘𝙤𝙣𝙛𝙡𝙞𝙘𝙩 𝙙𝙚𝙛𝙚𝙧𝙨 𝙩𝙤 𝙖 𝙩𝙧𝙖𝙙𝙞𝙩𝙞𝙤𝙣𝙖𝙡 𝙘𝙤𝙪𝙧𝙩 𝙤𝙧 𝙤𝙪𝙩𝙨𝙞𝙙𝙚 𝙖𝙪𝙩𝙝𝙤𝙧𝙞𝙩𝙮 to deal with it (who doesn’t know any of the parties or the nature of your relationships);
In the event that the agreement is broken, the agreement creates a dynamic that immediately pits the parties against one another, and power is sought to be wielded over the other in the relationship. It doesn’t take much to imagine the impact that this power dynamic has on the trust in the relationship.
If the conflict escalates, then deferral to an outside authority, like a mediator or court, means we’re giving our power away to that outside authority to sort out our tensions.
Contrast, a culture where the agreement serves to redirect the focus back to the relationship to address the issue, rather than relying on the words on the paper. Because it’s most likely an emotional or relational block (based in past trauma, conditioning, unhelpful belief system etc) that is far more easily and usefully addressed and navigated through in connection, than deferred to an agreement to arbitrate blame and or accountability.
In short, if you’re creating something new then using a template agreement is like trying to communicate multi-dimensionally, or cosmically, using a typewriter or fax machine.
Bottom line: you don’t have to do legal agreements the old way, but you do need to do them, if you are serious about your business and don’t want Life to force you into seeing where you can be even more in alignment.
Pain doesn’t have to be a rite of passage into a new paradigm business anymore;
Get proactive about it.
Reach out to explore how I can support you.