Don’t sign anything you can’t understand

Dear new developer,

I want to preface this with the fact that I am not a lawyer, so please don’t take this as legal advice. This is my experience with employment contracts and other legal adventures as a software developer.

When you are starting a new job, you’ll be confronted with a big basket of paperwork to sign. Actually, nowadays it’ll probably be a pile of PDFs. When you leave a job, you may sign a termination agreement, which again will be a lot of legal documents.

Read all of them. If you don’t understand something, ask what it means.

These legal agreements can profoundly affect your career. (Here’s an example of a noncompete causing a fair bit of legal pain.) It also doesn’t really matter what someone like your boss says when you are hired or leave–it’s the legal documents everyone signed that will control. (Often the employee handbook is incorporated by reference into your starting docs. Ask to see that as well.)

So read them and understand them. If someone won’t answer what a phrase means, seek info from someone else at the company, perhaps HR. You should, in certain circumstances such as a layoff, make sure you get the document reviewed by a lawyer who is looking out for your interests.

I have only sought advice from a few lawyers in my life, but all of them I found through referral. I’d recommend finding your lawyer that way as well. Ask family members, other professional contacts, or even people you’ve interacted with online in your area for a recommendation. A good lawyer should:

  • cost a lot of money–my most recent lawyer charged $475/hour
  • be willing to listen
  • focus on understanding what you want from them (for example, “is this employment contract normal”)
  • stick to your budget; make sure you communicate that
  • be local–different laws apply in different countries, states and cities
  • have expertise in the area and be willing to refer you if they don’t

You’ll pay for the certainty of a lawyer’s review, which is why you should check out the documents and only ask about sections you don’t understand, rather than sending them the entire document.

Now, for higher risk/return situations, it may be worthwhile to have every document reviewed. When I joined a startup as a co-founder, I had the entire agreement reviewed. But I don’t do that for my normal employment agreements or any contracts I sign as a consultant.

There are three main benefits of reviewing these agreements. (I’ll focus on employment agreements as those are by far what I have the most experience with, but realize you should read and understand any legal document you sign.) The first is that often there is scope for you to protect previous projects, ideas or side businesses. This can be as simple as listing the project in broad terms. Should you have any desire to commercialize a project in the future, doing this ensures it is not entangled with your employer’s properties.

Another benefit is that you’ll know your rights. Even if the agreement is punitive, wouldn’t you rather know, rather that discover it after you’d violated the contract? Here are things I look for in an employment contract:

  • Who owns what I create while on the job? As an employee, it will almost always be the employer. If you are contracting, it can vary and I know people who’ve started businesses because they had the insight to ask for non-exclusive rights to the code they were creating.
  • Who owns what I create while not on the job? In most cases, you should own anything you build on your own time, but be wary if the company works in a similar area, and if you use company resources to do the building. Get clear on this. (Some states, such as California, have explicit laws explaining the boundaries.)
  • What limits are placed on me after I leave? Do I have a non-compete, and if so for how long? How broad is the non-compete–what areas of employment are now off limits? What about confidentiality agreements? Is there anything else I need to do? One company employment agreement dictated I let them know where I was working for three years in the future.
  • What am I getting paid? Any salary or bonuses that were mentioned verbally should be included in written form, either in the offer letter or employment agreements.

It’s worth noting again that the verbal promises of anyone at the company are typically worth far less than the written agreement. I’ve had some employers honor verbal agreements (and those are good employers to stick with!), but typically when the rubber meets the road, what is written down is what will be enforced. So if someone says “ah, don’t worry about that clause” then simply ask if you can strike it from the document. And if someone promises you something, ask for it in writing. No need to be arrogant, but realize that if anyone in a business setting won’t put a statement in writing, getting what was promised will probably be difficult.

The final benefit of reading what you’re signing is that now that you have protected some of your previous inventions (if any) and know what you are agreeing to, you can negotiate.

The amount of leverage you have to change any of these agreements depends on how big the company is and how much you are desired. If you’re a new developer and the company is large, they probably won’t budge. If you’re a senior engineer that the hiring manager really wants, clauses can be negotiable. It doesn’t hurt to ask.

I understand that you may not feel you have a lot of power. You may have gone through a grueling interview process and may not have many other options if you don’t take this job. In that case, you don’t have a lot of negotiating power, but at the least you can know what you’re agreeing to. The earlier you can see these agreements, the better. The best is if you can see them before you turn down any other job offers.

At the end of the day, these agreements can have a large future impact on your career. They can limit who you can work for, what you can do, and who owns what you have made. Understand what you are agreeing to.

Sincerely,

Dan