Legal
Legal frameworks for startup founders. Not legal advice — frameworks to understand what you need and when to get a real lawyer.
IMPORTANT DISCLAIMER: This skill provides general frameworks and checklists. It is NOT a substitute for qualified legal counsel. Always consult a lawyer for your specific situation.
Keywords
Legal, contracts, terms of service, privacy policy, entity structure, incorporation, IP, NDA, employment agreement, equity, vesting, GDPR, compliance, regulatory, licensing, LLC, C-corp, Delaware, trademark, patent, copyright, data protection, CCPA
Core Domains
1. Entity Structure
When to incorporate:
- Before accepting money from anyone
- Before hiring anyone (including contractors)
- Before launching commercially
Entity comparison:
| Factor |
LLC |
C-Corp (Delaware) |
S-Corp |
| Fundraising |
Hard (VCs don't invest in LLCs) |
Standard for VC |
Not VC-compatible |
| Taxes |
Pass-through |
Double taxation |
Pass-through |
| Equity |
Complex membership units |
Simple stock |
Limited shareholders |
| Best for |
Lifestyle business, consulting |
VC-backed startup |
Small profitable business |
Default recommendation for VC-track startups: Delaware C-Corp.
Why Delaware?
- Most VCs require it
- Well-established corporate law
- Chancery Court specializes in business disputes
- Standard templates (NVCA) assume Delaware
2. Contracts & Agreements
Essential contracts by stage:
| Stage |
Must Have |
Should Have |
| Pre-seed |
Co-founder agreement, IP assignment |
NDA template |
| Seed |
+ Employment agreements, contractor agreements |
+ Advisor agreements (FAST) |
| Revenue |
+ Terms of Service, Privacy Policy, DPA |
+ MSA, SLA |
| Series A+ |
+ Stock option plan, board consents |
+ ROFR, D&O insurance |
Co-founder agreement must include:
- Equity split and vesting schedule (4 years, 1 year cliff standard)
- Roles and responsibilities
- IP assignment to company
- What happens if someone leaves
- Decision-making process (voting, deadlocks)
- Non-compete and non-solicitation
Contractor vs Employee:
| Factor |
Employee |
Contractor |
| Control |
You control how/when they work |
They control how/when |
| Equipment |
You provide |
They provide |
| Exclusivity |
Usually exclusive |
Can work for others |
| Benefits |
Required |
Not required |
| Tax |
You withhold |
They pay self-employment |
| IP |
Usually work-for-hire |
Must have IP assignment |
| Risk |
Misclassification is expensive |
|
3. IP Protection
IP types for startups:
| Type |
What It Protects |
Cost |
Timeline |
| Trademark |
Brand name, logo |
$250-1500 |
6-12 months |
| Copyright |
Code, content, designs |
Free (automatic) |
Immediate |
| Patent |
Inventions, processes |
$5K-15K+ |
2-4 years |
| Trade secret |
Proprietary info, algorithms |
$0 (process cost) |
Ongoing |
IP assignment is critical:
- Every founder must assign IP to the company
- Every employee must sign an invention assignment agreement
- Every contractor must have an IP assignment clause
- If you skip this, you don't own your own product
4. Compliance & Data Protection
GDPR essentials (if you have EU users):
- Lawful basis for processing (consent, contract, legitimate interest)
- Privacy policy explaining what/why/how you process data
- Data processing agreements with all vendors
- Right to access, rectify, delete (user requests)
- Data breach notification (72 hours)
- Data Protection Officer (if processing at scale)
CCPA essentials (if you have California users):
- Right to know what data you collect
- Right to delete
- Right to opt out of sale
- Updated privacy policy with CCPA disclosures
General compliance checklist:
5. Equity & Compensation
Standard vesting:
- 4-year vesting, 1-year cliff
- Monthly vesting after cliff
- Single trigger acceleration (sometimes)
- Double trigger acceleration (sometimes for founders)
Option pool:
- Typical: 10-20% of fully diluted shares
- Created pre-money in fundraising (dilutes founders, not investors)
- 409A valuation needed for strike price
- ISO vs NSO: ISOs are tax-advantaged for employees
Advisor equity (FAST agreement):
| Involvement |
Standard |
Strategic |
Expert |
| Idea stage |
0.25% |
0.5% |
1.0% |
| Development |
0.15% |
0.35% |
0.6% |
| Revenue |
0.10% |
0.25% |
0.5% |
2-year vesting, no cliff is standard for advisors.
When to Get a Lawyer
- Always: Fundraising (term sheet review, closing docs)
- Always: Hiring first employees (employment law varies by state/country)
- Always: If someone threatens legal action
- Probably: Before launching (ToS, Privacy Policy review)
- Probably: International expansion (local law varies significantly)
- Maybe: Standard contractor agreements (templates often sufficient)
Reference Files
references/contracts.md — Contract templates, negotiation frameworks, red flagsreferences/entity-structure.md — Incorporation guides, entity comparison, Delaware processreferences/compliance.md — GDPR, CCPA, data protection, security compliance
1---2name: legal3description: Startup legal guidance and compliance frameworks. Use when the user mentions contracts, terms of service, privacy policy, entity structure, incorporation, IP protection, NDAs, employment agreements, equity, vesting, GDPR, compliance, regulatory, legal risk, licensing, or any legal topic for startups. Also triggers on: legal, lawyer, law, LLC, C-corp, Delaware, trademark, patent, copyright, data protection, CCPA, terms, agreement, contract review.4---56# Legal78Legal frameworks for startup founders. Not legal advice — frameworks to understand what you need and when to get a real lawyer.910**IMPORTANT DISCLAIMER:** This skill provides general frameworks and checklists. It is NOT a substitute for qualified legal counsel. Always consult a lawyer for your specific situation.1112## Keywords1314Legal, contracts, terms of service, privacy policy, entity structure, incorporation, IP, NDA, employment agreement, equity, vesting, GDPR, compliance, regulatory, licensing, LLC, C-corp, Delaware, trademark, patent, copyright, data protection, CCPA1516## Core Domains1718### 1. Entity Structure1920**When to incorporate:**21- Before accepting money from anyone22- Before hiring anyone (including contractors)23- Before launching commercially2425**Entity comparison:**2627| Factor | LLC | C-Corp (Delaware) | S-Corp |28|--------|-----|-------------------|--------|29| Fundraising | Hard (VCs don't invest in LLCs) | Standard for VC | Not VC-compatible |30| Taxes | Pass-through | Double taxation | Pass-through |31| Equity | Complex membership units | Simple stock | Limited shareholders |32| Best for | Lifestyle business, consulting | VC-backed startup | Small profitable business |3334**Default recommendation for VC-track startups:** Delaware C-Corp.3536**Why Delaware?**37- Most VCs require it38- Well-established corporate law39- Chancery Court specializes in business disputes40- Standard templates (NVCA) assume Delaware4142### 2. Contracts & Agreements4344**Essential contracts by stage:**4546| Stage | Must Have | Should Have |47|-------|----------|-------------|48| Pre-seed | Co-founder agreement, IP assignment | NDA template |49| Seed | + Employment agreements, contractor agreements | + Advisor agreements (FAST) |50| Revenue | + Terms of Service, Privacy Policy, DPA | + MSA, SLA |51| Series A+ | + Stock option plan, board consents | + ROFR, D&O insurance |5253**Co-founder agreement must include:**54- Equity split and vesting schedule (4 years, 1 year cliff standard)55- Roles and responsibilities56- IP assignment to company57- What happens if someone leaves58- Decision-making process (voting, deadlocks)59- Non-compete and non-solicitation6061**Contractor vs Employee:**6263| Factor | Employee | Contractor |64|--------|----------|------------|65| Control | You control how/when they work | They control how/when |66| Equipment | You provide | They provide |67| Exclusivity | Usually exclusive | Can work for others |68| Benefits | Required | Not required |69| Tax | You withhold | They pay self-employment |70| IP | Usually work-for-hire | Must have IP assignment |71| Risk | Misclassification is expensive | |7273### 3. IP Protection7475**IP types for startups:**7677| Type | What It Protects | Cost | Timeline |78|------|-----------------|------|----------|79| Trademark | Brand name, logo | $250-1500 | 6-12 months |80| Copyright | Code, content, designs | Free (automatic) | Immediate |81| Patent | Inventions, processes | $5K-15K+ | 2-4 years |82| Trade secret | Proprietary info, algorithms | $0 (process cost) | Ongoing |8384**IP assignment is critical:**85- Every founder must assign IP to the company86- Every employee must sign an invention assignment agreement87- Every contractor must have an IP assignment clause88- If you skip this, you don't own your own product8990### 4. Compliance & Data Protection9192**GDPR essentials (if you have EU users):**93- Lawful basis for processing (consent, contract, legitimate interest)94- Privacy policy explaining what/why/how you process data95- Data processing agreements with all vendors96- Right to access, rectify, delete (user requests)97- Data breach notification (72 hours)98- Data Protection Officer (if processing at scale)99100**CCPA essentials (if you have California users):**101- Right to know what data you collect102- Right to delete103- Right to opt out of sale104- Updated privacy policy with CCPA disclosures105106**General compliance checklist:**107- [ ] Privacy policy published and current108- [ ] Terms of service published and current109- [ ] Cookie consent mechanism (EU)110- [ ] Data processing agreements with vendors111- [ ] Data retention policy defined112- [ ] Security incident response plan113- [ ] Regular security reviews114115### 5. Equity & Compensation116117**Standard vesting:**118- 4-year vesting, 1-year cliff119- Monthly vesting after cliff120- Single trigger acceleration (sometimes)121- Double trigger acceleration (sometimes for founders)122123**Option pool:**124- Typical: 10-20% of fully diluted shares125- Created pre-money in fundraising (dilutes founders, not investors)126- 409A valuation needed for strike price127- ISO vs NSO: ISOs are tax-advantaged for employees128129**Advisor equity (FAST agreement):**130| Involvement | Standard | Strategic | Expert |131|-------------|----------|-----------|--------|132| Idea stage | 0.25% | 0.5% | 1.0% |133| Development | 0.15% | 0.35% | 0.6% |134| Revenue | 0.10% | 0.25% | 0.5% |1351362-year vesting, no cliff is standard for advisors.137138## When to Get a Lawyer139140- **Always:** Fundraising (term sheet review, closing docs)141- **Always:** Hiring first employees (employment law varies by state/country)142- **Always:** If someone threatens legal action143- **Probably:** Before launching (ToS, Privacy Policy review)144- **Probably:** International expansion (local law varies significantly)145- **Maybe:** Standard contractor agreements (templates often sufficient)146147## Reference Files148149- `references/contracts.md` — Contract templates, negotiation frameworks, red flags150- `references/entity-structure.md` — Incorporation guides, entity comparison, Delaware process151- `references/compliance.md` — GDPR, CCPA, data protection, security compliance
ceoimperiumprojects