Fistcuffery

Unwonk - Episode 5: Fistcuffery

We learn about breaking up the band (or not), street-side fistcuffery, and how to get it together in order to launch your wonderful app.

Listen with the player below, subscribe in iTunes or Stitcher (links above), or with your favorite podcast app.

Please enjoy the links to additional information relating to the questions on this episode:

“I would rather eat my own testicles than reform the Smiths, and that’s saying something for a vegetarian.” - Morrissey

“How much can you know about yourself if you've never been in a fight?” - Chuck Palahniuk, Fight Club

"Take Aviato. That's not a name that I found. It's a name that found me." - Erlich Bachman, Silicon Valley

[Episode keywords: music law, dram shop liability and bar fights, and limited liability company formation.]


Episode Transcript

UNWONK PODCAST - EPISODE 5: FISTCUFFERY

Hi, friend. This is a rough transcript of this episode of Unwonk. What's that mean? It means that we're just pasting the original script for the show plus unvetted transcripts of any interviews. So, you're likely to see content that maybe didn't make the final cut, maybe not see some content that was in the episode but not the original script, and run across a few typos. 

As with everything on Unwonk, the transcript below is for general informational purposes only - this is not legal advice - if you need to have a legal question answered, please seek legit legal representation. 

On this episode of Unwonk, we learn about:

  • Why, if a van is broken in to, it likely belongs to a touring rock band, 
  • How old timey vernacular to paint the town red, and 
  • How the polio vaccine led to your awsome idea for an app.

This is Unwonk. We respond to your questions with relevant and useful information. If you would like to submit a question, please visit our site at Unwonk.com

At the site, you can also find where to follow us on twitter, facebook, and all that social stuff. And make sure to tell your friends about us.

Even though the information on this podcast is provided by actual attorneys, you’d be an idiot to think it is actual legal advice, and you’d also be the type of person who regularly posts comments on local tv news websites with great sincerity.

And now, our first question.

My band mate quits right before our big gig in another state. He's the lead guitarist so we need really him. He bails because he says he’s "stressed out". I think he smokes too much weed. Anyway, we're out thousands of dollars. He screwed us all over. I want my money. I want to sue him.

Being in a band can put you through a lot of things, it can get emotional: I’ve been there - getting all your stuff stolen from a van (why do they never lock their vans?), not showering for days at a time, grapefruit juice cleanses, shameful sexual behavior with desperate fans. 

And that’s just my summer as a groupie with Rusted Root.

In the song Army, by Ben Folds Five, the songwriter describes being in a band that breaks up, only to re-form without him a month later with a different name. The ease of his former band’s transition doesn’t seem to surprise him.

I bring this up because it describes an early stage band breaking up. Which is very different from breakups of bands with more experience and history, from the Police to Smashing Pumpkins to the Beatles to… Ben Folds Five (who actually reunited). The difference is, all of these bads likely had a lot of contracts in place to protect the business of the band. 

And that’s often one big difference between a band just before its big break and a band after its big break - the legal pieces and understanding the business of making music. 

[SLOWLY FADE IN INSPIRATIONAL 80s ROCK MUSIC] Let’s put this in perspective first - which is more valuable to you, a few thousand dollars, or keeping the band together for your next big gig? If you guys were just about to get to your big  break, I have a feeling you know what it takes to be in it for the long haul.[fa Without or without this guitarist, you all need to push forward as team. The big show is only in a few days. You guys can hold together and DO IT. You’re fighters. You’re winners, and nobody can take that away. Even your so-called friend, the former guitarist. …. Sorry - i accidentally did another motivational 1980s movie montage. Quit doing that years ago. Need to call my sponsor. 

And, of course, it’s not as easy as that.

You’re pissed right now, as I’m sure your other bandmates are. But let’s be cold and clinical for a moment - because sometimes that’s what you need to do. Were you guys far enough along to have a contract with each other that addresses (i) money issues, (ii) how decisions are made, and (iii) who owns songs, recordings, and equipment? If so, you need to go along with what the contract says and see where it takes you. And it’s probably a pretty good idea for each person to consult with their own attorney.

If you don’t have a contract in place, this is a good opportunity to - as a group - decide whether the band can or should go forward without your ex-guitarist, and to put something in place to prevent this from happening again, or at least making it clear what will happen. Most important, you want an agreement in place to make it clear who has songwriting and recording credits, and who owns what on the intellectual property front. Bands can work so hard just to make it to their break, that they neglect to define things that will only become an issue after they make it big. So if you’ve already written a hit song now and don’t know it yet, but it’s not clear who gets credit and is an owner or co-owner of the rights, your ex-bandmate could come knocking later for cash and/or credit. 

If you wanted to sue the guy for a few thousand bucks, you could try to make a case in small claims court, but I wouldn’t recommend it. That’s a lot of cash, yes, but unless you have a super strong case, it might be better to focus on the future of your band. Of course, if he comes crawling back, you’ll have a lot of leverage to apply to him. 

In the end, contracts and business understandings aren’t going to save the day if the chemistry and working relationships aren’t there, with or without your current ex-guitarist. And you can always work on a subpar solo album exploring your feelings about the the whole situation before moving on. As I always say, there’s nothing better than brooding, self-reflective musical side projects. And now, I send you on your way.

Leaving a club last summer, I was provoked into a street fight. The kind of fight where everybody stands around and cheers you on like UFC match. The guy really provoked me. Much of it is caught on phone video. Turns out he was pretty drunk, and I kicked his ass. Broke his ribs, broke his nose. Now this guy wants to sue me. I got a letter from his lawyer. What can I do? (cops were never involved, never showed up to the scene, no one got arrested)

Close your eyes, and picture a cold day somewhere in the rural midwest. It’s the kind of winter morning where the silence provided by the sound absorbing snow already blanketing the groundr is interrupted only by the flurries landing with a collective hiss, contributing to what will eventually be peaked snowbanks. This is not a school snow day, as we had all hoped. Looking out the window that morning, it was supposed to be a day of the Price is Right theme song and playing ColecoVision before going outside to build a snowman and then realizing how much effort goes into building a real snowman and going back inside again. 

BUT, the overseers of the school district felt that enough plows were on the road to let a giant yellow bus with no seatbelts, a bunch of screaming children, and a questionable amount of tire tread, to get through to school, including me to fifth grade. The overseers, in hindsight, were tough love people, creators of rugged adults.

I was standing at the bus stop. And by “bus stop” I mean the unmarked street corner where kids from elementary school, middle school and high school gathered to wait either talking with each other or just staring off somewhere, stupidly ignorant of the the smartphones and game devices the future would bring to disrupt every reflective moment. I had my trombone in its case. For a fleeting unspecified duration in elementary school, I played trombone. I picked the trombone because I thought it was cool how there were no buttons, keys or other specifics. After a few weeks, I found that the downside was that there were no buttons, keys or other specifics. Just a lot of sliding around.

As with a lot of memories, I don’t remember what triggered the fight, but I remember who it was. A 9th grader - so tough or poor that he was only wearing a flannel shirt in the snowfall. I can only assume that it was my early development of sarcasm that found me in a headlock. I was also way taller than the average 5th grader - so I’ll give him the benefit of the doubt that he wouldn’t have picked on someone four years his junior. We tousled for a bit in the snow banks, ice crystals scraping against any exposed skin - and he clearly had more experience being angry and physical. The one thing that I was trying to protect for some reason was my trombone. I knew at that point that I hated the thing. It couldn’t make a single nice noise - even with a real musician playing it - and came with a creepy trap door valve for spit. I’m sure other brass instruments have the same thing, but still, kind of nasty. But I knew it was expensive, so that was the priority.

There was no actual fisticuffs - just wanted to use that word, fisticuffs - just a lot of angry and/or panicked wrangling. After losing any strength in my legs and arms, I said, OK, enough. It ended suddenly, and everyone turned away as if it never happened, and I lay partially buried in a pile of snow. As i pulled the trombone case up, I saw that it had opened during the fight and the trombone had tumbled out, gaining a sizable dent on the big end piece. Given my musical skill level, this had no impact on the quality of the horn’s sound. But as the bus rolled up, and I was packing away my sad trombone - as literal a sad trombone as you can get - I remember thinking, that wasn’t so bad for my first fight. And I will probably never remember what it was about. By the way, I blame my music teacher for encouraging me to play the trombone solely on my prodigy like success rocking the recorder in 4th grade - these were - it turned out -  totally different worlds.

And that, guy to whom I’m responding to, that was my only fight. Ever. So, I’m always amazed at the ease people have to slip into fight mode. And this is after having lived in Boston for a few years, where bar fights are the equivalent to shaking hands good night in a very spirited way.

But, without judgment, first thing: If you get a letter from a lawyer regarding a situation like this, don’t respond yourself, don’t get in touch with the person you got in a fight with, and absolutely don’t get on social media and tweet, blog or whatever about it. Go immediately to a lawyer. Anything you do or say could have massive negative consequences going forward. You need to have a lawyer help navigate the way at this point.

That aside, here are some thoughts. There are few things I don’t know about your story: whether you were intoxicated, whether you were already outside the club when this happened, and what the provocation was. I also don’t know what state you’re in.

Many states have something call dram shop liability laws or dram acts. Dram shop is an old timey name for a bar or someplace that sells alcohol. As in this text you send to a friend: Hey man, gonna head down to the dram shop and gauge the hoops on some petticoats, and then maybe do some chimney sweeping later. These laws have been around since the 1800s and are designed to prevent the sale of alcohol to minors and those are are already intoxicated. These aren’t necessarily meant to protect the drunk person. Rather, they are meant to protect those affected by a bar’s over-serving a drunk person.

In most cases, it would be absurd to immediately cut someone off when they’re intoxicated. If that were the case, we’d live in a world where we catch up with a friend over a couple of drinks and then switch to water as soon as a buzz starts. This would also likely prevent an extraordinary amount of second dates from happening. Or, at least, first dates with an associated walk of shame.

I bring this up because if you were intoxicated at the time, and it was the result of the club you just walked out of, the club may have some dram liability, and the subject of your pummeling may very well do better to drop his bruised ego and point his lawyer in the direction of the bar. Frankly, if you’re not asset-rich, there’s not much a civil suit is going to accomplish here. You didn’t indicate that he was going to press charges, so a criminal action is not on the horizon for you.

Now, if you WEREN’T intoxicated, that changes things. If that’s the case, there’s no dram liability on the part of the club, so that put’s you in the driver’s seat, so to speak. Not clear what provoked you, but your terminology - referring to it as not just a fight - but a street fight, the UFC reference, people cheering. In my experience, a sober person doesn’t just get provoked into this mindset - unless, of course, you’re questioning either (i) Hawaiian Pizza as the best pizza or (ii)  Season 5 of Mad Men as the best written Season (especially the episode titled Signal 30, where Pete goes to driving school - it’s like John Cheever rose from the grave to write that one). I don’t know you, but it almost sounds like you were looking for trouble, or at least kind of pre-disposed to go that way. Of course, if this was self-defense - if the provocation was physical - that moves things more in your favor.

Also, the fact that there’s a video of you taking this guy down like Bruce Lee handing it to Andy Capp isn’t going to help your situation assuming no physical provocation. 

So, the one thing you should be doing right now is to get off the internet rand go talk to a lawyer. Once you get all the facts out to your counsel, you’ll know whether you’re going to be able to put this behind you, or if you’re going to be playing a sad trombone in court.

I'm a 20something co-founding a startup with some friends to launch what we think is a revolutionary app. We don’t have a lot of experience or cash so are planning on heading to the internet to search for an LLC certificate of formation and operating agreement and seeing which one fits best. Can you point to a good place to start? 

First, congratulations on deciding to make a new app. When someone says they’re launching an app, I think that the phrase “making an app” is the new “writing a screenplay,” which, when it started, was the new “I’m writing the great american novel.” That, of course, replaced the aspirational pre-vaccine era “I’m avoiding polio and other crippling diseases.” Priorities have shifted over the years. Although, watch out for those measles.

But you’ve taken it beyond aspiration - you’re moving forward with forming a business. I totally appreciate that you and your friends have an idea and are pursuing it, but you need to stop for a second and consider some critical first steps in forming an LLC.

Avoiding the chicken-and-egg problems of forming a business versus actually having a business plan, let’s talk about what goes into the nuts-and-bolts of starting a business.

By the way, science has let us know that the egg likely comes before the chicken. Just keep that in your pocket for future debates about uncertainty. Or if you want to stop conversation in an awkward know-it-all way.

The main documents of a basic LLC are (i) the certificate of formation and (ii) the operating agreement. If you’re forming a corporation, the analog documents are (i) the certificate or articles of incorporation and (ii) the bylaws. But determining LLC v corporation is largely - in my opinion - a tax-driven decision that should be discussed with your group’s financial advisor. 

The certificate of formation is easy. This is something I would wholeheartedly approve of going to one of those don’t-get-a-lawyer-and-save-money-by-using-our-generic-form websites. For a startup, the certificate of formation should be the bare minimum required by state law - companies are formed under state, and not federal, law, by the way. The certificate is filed with the secretary of state and is public record. 99.99% of all legal entities are formed in Delaware. This is not a fact feels truthy enough. You don’t have to form there, but be aware that if you get funding or acquired, you’ll most likely end up there as a legal entity. Don’t worry - you don’t have to physically go there - it’s just a piece of paper. Based on my research, only four people have physically been to Delaware - two of whom are Joe Biden and his dentures - the rest of the state is just business entities and used syringes.

The important document - the money shot of LLC legal porn - is the operating agreement. It not only covers how the LLC is managed, but how profits and losses are handles, tax stuff, and anything else you could imagine. In the case of the operating agreement, I’d suggest you and your friends sacrifice some of your allowance money (or jellybeans or whatever your parents give you) and hire a business lawyer to sit down with you and discuss. For this, you should stay as far as you can from those don’t-get-a-lawyer-and-save-money-by-using-our-generic-form sites, because doing so could cost you more in legal fees and potential loss of your share in the business.

There are a couple important reasons for this.

First, those generic forms don’t know anything about you or your business, how experienced you are as individuals or a team, what your contributions are as an initial investment, whether there’s going to be an equity incentive plan and how that’s going to be administered, and how you plan on managing the LLC.

Second, business entity structure (and I know at this point I’ve either turned on or put each listener out with that phrase - I’ll say it again “business entity structure”) is heavily tax driven. And I can think of no other area of law that changes more due to the purchase of legislation and regulation by the corporate citizens of the United States than tax law. This means that a form you get might be ever so slightly out of date. It also means that a generic form won’t know if you’re dealing with a specific industry that might have special tax considerations that not only hit the LLC but flow through you each of the members individually. 

Any good business attorney already has a form of operating agreement that can be customized to suit your needs. Or it may not need to be customized at all. The point is (i) you need an operating agreement that works for you and (ii) it needs to be up to date. Just buy one less ping-pong table for your work/live space that has free kombucha and a flip-flop sandal dress code, and you can easily afford the legal fees.

I’ve seen a fair number of businesses fall apart - or co-founders screwed over - because of off-the-shelf agreements with ambiguous language or unreasonable language. A lot of the generic forms I’ve seen take an overly cumbayah approach and require unanimous or approval as high as 80% in order to do a lot of run-of-the-mill things. While this may sound appealing when you’re all doe eyed and optimistic - the dew of budding capitalism still fresh on your baby-soft skin - and when everyone’s getting along, you’ll find that running a successful business often depends on not having everyone on board, and that by requiring everyone to be on board, you’re going to stall, choke and sink. 

And that’s just a small example.
 
Going back to the chicken and the egg, you really should have a realistic business plan drafted and ready, as well has having taken on a mentor or business advisor who can help you navigate a lot of the gray area - and there’s more gray area in a startup than in the intentionally unfinished concrete floor of a SOMA tech company on it’s B Round. (That joke would kill on Sand Hill road, by the way.)

Going back googling around for forms - just don’t even do that. If a generic form can be dangerous, using a form from a company that you’ve dug up online could be lethal. Not only is it not a generic form, but it’s likely customized for an entirely separate company.

If you do go for the generic form approach, please, please avoid using off-the-shelf books that claim to be one-stop shops for starting a business. The agreements I’ve seen in those are terrible, complete with typos, erroneous statutory references, and major ambiguities - you can almost see the crayon-filled pages of construction paper that the author submitted for publication.

So, don’t mess around when it comes to the operating agreement. It’s the thing that’s going to affect how everything at your startup works, from finance, to management, to ownership, to intellectual property rights, and so on. And please let me know when your app comes out, whether it’s Uber for cats, Facebook meets Canadian Ebay, or on-call home delivery of dryer lint, I’m sure it’s going to change the world. 

Thanks for listening to this episode of Unwonk. 

Please visit our site at Unwonk.com to submit your questions, to access bonus material about the topics discussed on today’s episode, and to learn where to follow us online. Please also make sure to subscribe in itunes or your preferred podcast thingy.

On the next episode, we learn about:

  • The secret ingredient in marshmallow peeps that allegedly transformed the marshmallow industry
  • What kind of drugs were consumed at the first ever iowa caucus, and
  • The surprising reason why the sport of artillery shell dodging was banned in the state of washington.