No, I'm not a lawyer, but I think knowing the law and how it works is a good idea for anyone who wants to be successful. I also think staying out of court is a key ingredient to a happy life.
Since legalese can be intimidating, here's a plain-English list of legal myths you should know about because they may save your butt somewhere along the line. Keep in mind that state laws may vary.
- Incorporating or forming an LLC will protect your personal assets. While it does provide some limited protection, from a practical standpoint, it really doesn't. If you do something illegal that results in considerable damages, you can definitely expect the damaged party to go after your personal assets and potentially win.
- Attorney-client privilege is absolute. There are all kinds of requirements for the privilege to apply, exceptions to the rule, situations where the privilege is at some point extinguished, and cases where courts have ruled to pierce the privilege.
- CEOs and CFOs are not civilly or criminally liable for misleading or untrue statements in SEC documents. The Sarbanes-Oxley Act changed all that. Not only are they civilly liable, but they can and have been criminally prosecuted for knowingly providing false information to investors. How about that?
- Bloggers and commentors are protected by the first amendment against libel claims. Nope. According to the U.S. Supreme Court, we all have the same rights and responsibilities under defamation law. Libel, or written defamation, means publishing a false statement of fact that harms someone's reputation. If the plaintiff is a "public figure," he must prove actual malice - a higher standard.
- If someone is injured in your place of business or on your property, you're liable for damages. You're not responsible for the criminal acts of others, i.e. if someone commits a crime on your property and someone else is injured; nor are you responsible for other's negligence, clumsiness, stupidity, etc. If someone is injured in your place of business, they have to show you were at fault.
- Saying, "in my opinion" is a defense against defamation. Truth is the best defense against libel. An opinion is also a defense against libel. But, depending on the context, the difference between an opinion and a statement of fact can be remarkably gray. Context is a big deal in determining defamation. Simply inserting the words "in my opinion" in front of a statement of fact doesn't magically make it an opinion.
- Patents and NDAs will keep others from stealing your ideas. They're a good idea in most cases, but won't stop anyone from stealing your ideas. It happens all the time and not just by shady figures, but by big, reputable companies, as well. Ironically, filing for a patent actually discloses the idea to everyone, which is why it's called a patent disclosure.
- You can't be sued civilly for a crime you didn't commit. Remember O.J. Simpson? Won the criminal case but lost the civil suit. And there is no such thing as "a crime you didn't commit," only a crime you were found innocent of committing. Also, anybody can sue you for pretty much anything, these days. They may lose, but it'll still cost you tens of thousands of dollars to defend.
- You can't get be charged with DUI or public intoxication on private property. I don't know why anyone would think this is true, but it's a widely held misconception. I even heard a third-year law student swear up and down that it's true on a radio talk show. It isn't.
- You need a lawyer to negotiate and draft a legal agreement. Not at all. Moreover, I think business leaders and executives, not their attorneys, should define and propose agreement terms and lead negotiations. The attorneys should play a secondary role as a second set of eyes, reviewing documents for issues, adding boilerplate clauses, etc.
- Liability insurance covers all injuries on your property. It doesn't cover intentional harm. For example, if somebody slips and falls and suffers damages on your property, you're covered, but if he slips and falls while running from you because you threatened to beat him up, all bets are off.
If you've come across some surprising legal myths or issues or you're a legal professional with more informed commentary, please chime in.
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