I am preparing a list of my version of ‘the top ten mistakes entrepreneurs make’ for a later blog entry. The very first piece of advice is do not trust people who say you can trust me. In my experience, if someone says to you “You can trust me”, you should run away from them as fast as you can. Otherwise, you may end up with legal problems.
People who can really be trusted do not have to say “You can trust me.” They say “You can trust me, and I will prove it to you. You want me to put it in writing, sure. You want references, sure. You want to talk to your attorney first, sure. No problem. What else do you need? I have nothing to hide.”
But a person who is just saying “you can trust me” does not mean it. If they come up with an excuse not to put it in writing, there is a reason. They do not want you to know what they intend to do, or they want the option of changing the deal later, in their favor of course.
A variation on the same theme is the statement “We don’t need lawyers”, or “I hate lawyers, let’s not waste our money on them.” True, there are plenty of bad lawyers who will make deals far more complicated than they need to be or even kill a good deal over minor legal concerns. But a blanket refusal to use lawyers usually has a bad reason behind it. The person making the claim does not want his deal examined too closely. Again, they probably do not want you to know what they intend to do, or they want the option of changing the deal later, in their favor of course. And they know involving lawyers will force them to put their intentions in writing and have their intentions examined by a third party.
Another variation is “We don’t have time to put it in writing. You can trust me. Let’s just proceed.” It is rarely the case that this is true. Usually it is just a negotiating tactic. It is a way of putting pressure on you to not put the deal in writing. Insist that there is time. If the deal is worth doing, it is worth doing right. And it is worth putting in writing.
Once in a while, there is a valid reason to trust someone and not to put something in writing, but even then, it is not a good idea. I had a client who wrote a book with another person. The other person had agreed that he would write material that my client could use in her book and she would pay him half of the royalties. He was a very respected elder American Indian. He would not put their agreement in writing. He said that his word was his bond. This feeling came from a long tradition. So she agreed. He died before the book was published and his heirs, who then owned his property, including his writings, tried to stop the publication of the book, claiming there had been no deal. She had a major problem proving that he had wanted her to use his writings. Her problem could have been prevented if instead of trusting him, she had insisted on putting their deal in writing. Even if you really think you can trust the person, don’t. Get more information, put it in writing, and when it is about something that really matters, have your attorney look it over too.