I do have documentation regarding the 20%. The one attorney I have spoken to says, for reasons I still don't entirely understand, that I have a better shot at trying to sue them for using my intellectual property without permission, since it is quite clear that I wasn't compensated as agreed for the license to use the technology.
They also say that a civil extortion claim is the low-hanging fruit in this situation, but this particular attorney was unwilling to take it on contingency.
The one attorney I have spoken to says, for reasons I still don't entirely understand, that I have a better shot at trying to sue them for using my intellectual property without permission
If I had to guess from your wording and this response, the "company" wasn't incorporated while you were involved with it? If it were, you'd have some sort of share certificate and the sale of the company may have been fraudulent. If you're a shareholder, someone else can't easily just "assume [your] ownership".
I'm guessing you never got an official 20% share of the corporation that was eventually sold, so your attorney may be thinking your beef is with the guy who "stole" your share and that could be a more complicated/less lucrative case.
Well, there were several corporate machinations. Initially, the company was an LLC, and I was given a 20% interest in it in writing. At some point after I left, during one of the financing rounds, it became a corporation. The corporation was sold.
> At some point after I left, during one of the financing rounds, it became a corporation. The corporation was sold.
At what happened to your shares at that point?
If I'm reading between the lines of your lawyer, your shares were wiped out at the time of sale? I've heard of this happening often (dilution of the common happens frequently before an IPO, for example. You can see it in the S-1s.)
Sounds like they haven't really communicated anything to him about what happened after he left, which means that that would be the place where HN leaves off and a lawyer takes over.
Sounds like the transition to the corp is the root of the problem. Realistically there are very few restrictions on how to do this and it's SOP for non-contributing minority owners to get seriously diluted.
Harsh but fair: this is as it should be. Ownership based on work/effort/invention rather than invested capital is contingent on that work continuing for a LONG period. Generally these arrangements have a cliff also - so if you leave in less than 12 months your ownership is drumrole nothing. This isn't true only with startups - look at inventors in other businesses... in exchange for an idea and sample they get 1% of the royalties, it's small because sales & marketing & production are more important than the invention
It's entirely possible you have a case, but your description sounds like the prototypical ex-founder nightmare. Based on pattern-matching, you may get some cash, but nowhere near what you're saying you're entitled to have.
There's a risk though, if you have any entrepreneurial aspirations you'll burn all your future potential with the lawsuit. VCs and potential co-founders will be very wary of dealing with someone who has taken this route.
Well, for that much money - even a shot at it - you ought to be out there making your case to attorneys who might take the case on contingency. Put together a nice presentation of 'the facts' and 'the evidence', and get out there.
Inferring from very little information you've provided this sounds as if the Corporation did a licensing deal with the LLC to acquire the technology. This would be one way for your former partner to cut out out of any equity up-side for the going-forward business. Scary stuff. You need a lawyer.
2) Sounds like you should seek an attorney who would be willing to take a cut if they win the case.