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My partner and I are software developers. We have formed an LLC and are starting to take consulting gigs. We have spent most of our careers at larger companies and have never been involved with legal contracts. We plan to speak to a lawyer to help us craft a base contract but we also want to do our homework so that we may choose the right lawyer.

Our questions:

  • Is it possible to limit liability if we get sued?
  • We develop and sell software separately from our consulting and are concerned that we may be wrongly accused of stealing ideas. Is this a valid concern? If so, how should this be addressed?
  • Are there any other things that we should make sure to cover (besides our hourly rate) in the contract?

Thanks in advance for your help.

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1 Answer

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Limiting Liability - Yes. To what extent is a little trickier, but your attorney should be able to help you with that. You can also choose to have any suit handled in arbitration or the court of your choice (so that you don't have to travel if you do get sued and you can be sure of the law that will be used).

Stealing Ideas - You need to have contracts defining your rights and who owns what with this business as well as your side businesses. If you write software as an employee of another company, you will need to look at your employment/non-compete contracts.

Other Issues - There are quite a few issues that your attorney will alert you to, but an important issue that comes up when writing software is - who owns the copyright. Most developers have a common code base that they use to develop custom software for multiple clients. You need to make sure that you retain the rights to your code. Also, as a general rule, you will want to be as specific as possible when describing the requirements. This will make it easier for you and your client to know what is expected of you. Your attorney should include the requirements document as an exhibit to your contract, allowing you to keep the general contract while changing the exhibit to meet each customers requirements. Finally, there are many business issues that you want to take care of in the contract - things like late payment fees, payment times and payment methods.

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Thank you for your very insightful response! – Frank Dec 3 '11 at 3:11

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