Forgetting Who the Client Is
We touched on this scenario in Chapter 1, but let's dig in deeper. This is the case where you represent an entity by law but take direction from a human whose interests are misaligned with the entity.
For instance, you represent Swearjar.com, a company that created a smartphone application that listens to everything you say and every time you swear debits your bank account and gives the money to charity. The CEO is your main contact who gives you direction, as any good CEO would.Note, however, that the client is the company, not the CEO. After a successful few months of business, an investor and the CEO come to an agreement on investment terms for the investor to buy stock in the company. As part of this, the CEO wants an employment agreement. She asks you to draft it. She tells you she wants certain terms that heavily favor her. Should you do it?
The answer is no. It's in the company's best interests for either standard terms or no employment agreement at all. It's hard to argue that a biased employment agreement for the CEO is in the best interests of the company, but it is in the best interests of the CEO. You really should advise the CEO to seek outside employment law counsel.
You might get away with this if the CEO is the sole employee and founder of the company. It's hard to justify when there are a dozen employees and an outside investor. In fact, as a venture capitalist, Jason saw this many times where company counsel would suddenly turn course and represent the CEO over the interests of the company. Typically when this would happen, Jason would make sure that new company counsel would soon be hired. Oooops.
Note: Swearjar.com is a fictitious company that someone should start. The authors would be great early adopters.