Start-up companies are about risk. Risk to the entrepreneur's time and money. Risk to those doing business with the start-up. And risk that lawsuits will happen, whether or not the business succeeds. Ideally, the risks are outweighed by the potential reward.
We recently represented a Kansas City woman who worked for Hallmark for 30 years and then retired to start her own business. Timing was bad. Just as she and her business partner began raising money, the recession struck and funds dried up. The companies they hired to work on the project were not paid for all of their work. They chose to sue our client personally. We defended her, arguing that individuals are not liable for the debts of a corporation they represent in business dealings. A Jackson County, Missouri jury agreed and found that our client didn't owe the companies anything.
Companies are sued all the time. It's the cost of doing business. But when an individual is sued by multiple companies, the results can be catastrophic. Our client could have lost any savings she had and even her home. A win for her means that she's not punished for doing what we want people to do - taking a risk and starting a small business. It's the American Dream. Her dream wasn't realized this time, but that's the nature of risk. Next time may be a different story.