Very surprising that well-designed contracts (with well-designed exit clauses among other issues) aren't at the top of the 'ten red flags' list. This isn't just a problem with tech startups - business partners down the ages have been burning each other with flimsy contractual agreements and 'trust me buddy' rationales when questioned about the contracts.
This is one of the best use cases for LLMs by the way - they can often explain contracts to you, or find flaws in contracts. Try pasting one of those long-winded click-through contracts from Apple etc. into any LLM and see if they can help you decipher the terms - then do this with your startup's hiring contract. Also, watch 'The Social Network' and pay attention to things like stock-split clauses and so on.
Some claim the world is split between those who understand compound interest and those who don't but I think it's understanding contract law that matters more.
> This is one of the best use cases for LLMs by the way - they can often explain contracts to you, or find flaws in contracts.
I respectfully disagree. Just hire a lawyer. You don’t want your understanding of your contract colored by the opinions of an LLM. The lawyer carries liability insurance if he gives you bad advice. If you don’t have a few hundred dollars to spend on independent legal advice, you might want to reconsider if you are in a position to be starting a business in the first place. The amount of money you could potentially save is nothing compared to what it could cost you in the future if something goes wrong.
Interestingly Ben Mezrich (author of The Social Network) said the Facebook partner who got hit by the stock-split clause terms had hired a team of lawyers - but he claimed they were really working for the Zuckerberg side, possibly in-house lawyers.
There might be great value in LLMs fine-tuned to deal with contractual law, regulatory law, and legislative interpretative dance. At present I'd be sure to run the legal contract through multiple different LLMS at the very least, and analyzing it paragraph by paragraph in debate club manner (LLM A: tell me why this is a good contract, LLM B: tell me why this is a bad contract, LLM C: analyze the flaws in the arguments of LLM A and LLM B, etc.) Doesn't replace a good contract law specialist human, certainly, but at least you can then talk to your lawyer in a semi-informed manner.
LLMs are like compilers in that unqualified faith in their initial output is never a good idea.
any extremely long contract with obtuse terms is designed to screw you in some way. you just wont know until you get there, unless you are willing to spend 10-20k on lawyers to argue the terms
This is not true. There's plenty super friendly contracts that just happened to be written by lawyers who are into legalese maximizing. I can imagine that someone trying to screw you over might use obtuse terms to hide that, but the reverse isn't always true. Sometimes things are just obtuse for stupid reasons.
Bingo. It's why using SeedLegals (boilerplate contracts with simple customisation) was such a breath of fresh air.
I've even worked at bigger places with very scummy equity contracts, like a lawyer drafted it specifically to obfuscate how badly it was screwing you over. Not there anymore lol.
This is one of the best use cases for LLMs by the way - they can often explain contracts to you, or find flaws in contracts. Try pasting one of those long-winded click-through contracts from Apple etc. into any LLM and see if they can help you decipher the terms - then do this with your startup's hiring contract. Also, watch 'The Social Network' and pay attention to things like stock-split clauses and so on.
Some claim the world is split between those who understand compound interest and those who don't but I think it's understanding contract law that matters more.