The Outlaw Chronicles

Issue #3 · May 2026 · 8 min read

Mission Brief

Two founders from opposite ends of the startup world built something real, signed a shareholders agreement they found on the internet, and spent three years believing they were protected. When one of them wanted out, they discovered the agreement covered everything that had never happened to them and nothing that had. By the time it was over, €80,000 in legal fees had been spent arguing about three clauses that take half a page to draft. This is how that happens.

The Odyssey

The clause everyone signs and nobody reads

Rig and Cassie at a laptop downloading a SHA template, Janis watching from the background

Departure

Rig met Cassie at a hackathon in 2020. The event was one of those chaotic forty-eight hour sprints where everyone is slightly too caffeinated and slightly too optimistic, and the electricity cuts out twice before the pitch round. They built something that worked. Found early customers. Decided to make it official.

They needed a shareholders agreement.

So they did what most first-time founders do. They searched for one.

The template they found was twelve pages. It covered shareholding percentages. Voting rights. What happens if someone wants to sell their shares. There was a confidentiality clause and a non-compete. It had section numbers and recitals and defined terms in bold. It looked exactly like what a shareholders agreement was supposed to look like.

Their lawyer reviewed it for two hours, charged them €800, and said it looked fine.

That assessment was not wrong. The document looked fine. The problem was not what was in it.

The problem was the three things that weren't.

Rig and Cassie signed. They celebrated. They got to work. The agreement sat in a folder in their Drive, last opened the day the lawyer returned it.

They did not think about it again for three years.

Layover

Here is what a shareholders agreement actually is, underneath all the recitals and defined terms.

Think of it less like a business contract and more like a pre-nuptial agreement. Two people, genuinely optimistic about their future together, sitting down to decide what happens if things go sideways before they have gone sideways, when everyone is still in love and the idea of needing these provisions feels theoretical. The clauses that feel unnecessary in the room where you sign them are the only clauses that matter in the room where things fall apart.

Rig and Cassie had signed the business equivalent of a pre-nup that covered who gets the apartment, but forgot to mention what happens if one of them had been building the apartment before the relationship started.

The first gap in their agreement was a deadlock resolution mechanism. They were fifty-fifty founders. Equal shares, equal votes. The document said so in clause three, very clearly. What it did not say was: if these two equal co-founders ever disagree on a major decision and cannot resolve it, here is what happens next.

The answer, in their agreement, was nothing. The agreement simply stopped. No casting vote assigned to either founder for specific decision types. No mediation process with defined timescales. No buy-sell mechanism. Just two people with exactly equal power and absolutely no tiebreaker.

I have a name for this. I call it a deadlock clause with no resolution clause. Which is the same thing as no deadlock clause at all.

The second gap was the leaver provision. The agreement said that if a founder left, their shares would be subject to a buyout. This sounds straightforward until you ask one follow-up question: what does "left" mean?

Does it mean someone who resigned because they found a better opportunity? Someone who was constructively dismissed because their co-founder made their working life impossible? Someone who stepped back for health reasons? Someone who went to work for a direct competitor the following Monday?

These are not the same scenario. They should not produce the same outcome. A well-drafted agreement defines them, names them, prices the buyout differently for each one, and specifies who decides which category a departing founder falls into.

Rig and Cassie's agreement had none of that. It had one word: "left." What it meant was anyone's interpretation.

The third gap was IP assignment. Rig had been writing code before the company was incorporated. Some of it came from a side project he had been building for two years. When they set up the company, the shareholders agreement said the company owned all its intellectual property.

Which it did. Except for the pre-existing code. Which nobody had formally assigned. Which meant it technically still belonged to Rig. Which nobody thought to ask about until it suddenly mattered enormously.

Three years in, it mattered enormously.

I was introduced to this situation through a mutual contact. The call was short. Rig explained what was happening. I remember asking him whether the pre-existing code had ever been formally assigned in writing, separate from the shareholders agreement.

There was a pause.

"I don't know," he said. "We just assumed the company owned it because we were building it for the company."

"Did you build it before you incorporated?"

Another pause. Longer this time.

"Some of it," he said. "Does that matter?"

It mattered. It mattered a great deal.

Arrival

€80,000 receipt between Rig and Cassie, the three missing clauses visible in ghost text

Cassie had decided to leave. She had found something else. She was tired. She and Rig had not been getting along for months. The departure was not a surprise. The problems it created were.

They could not agree on whether the code Rig had built before incorporation was company IP or Rig's personal IP. Without a formal IP assignment on record, both arguments had merit. This turned into a dispute about what the company owed Cassie for her shares, which turned into a dispute about the company's value, which turned into a dispute about the definition of "left."

Was this a good leaver scenario, because Cassie's departure was at least partly attributable to the breakdown of the working relationship? Or a bad leaver scenario, because she had technically resigned voluntarily?

The agreement did not say. Both lawyers said their client was right. Both clients believed their lawyer.

When they hit a deadlock on the IP question, they had no mechanism for resolving it. They tried mediation. Mediation required both parties to agree to a mediator. They could not agree on a mediator either.

By the time they settled, fifteen months had passed and €80,000 had been spent.

For context: a properly drafted shareholders agreement, reviewed by a lawyer who understood what was actually missing from the template, would have cost them approximately €3,000 more at signing. That is the difference between an €800 review and a €3,800 review.

They spent three thousand euros on the logo. The agreement that governed the entire ownership structure of the company got the template.

Here is the non-business version of what happened: imagine two musicians forming a band. They write a partnership agreement covering how to split revenue from gigs and what happens if they want to bring in a third member. But they forget to specify who owns the songs one of them wrote before the band existed, what happens if one of them wants to leave, and who gets to make the call if they can't agree on whether to take a particular booking. Three years of touring later, someone wants out. The songs become the lawsuit. The agreement, which covered all the things that never happened, is useless for the things that did.

This is not a story about bad lawyers. The lawyer who reviewed Rig and Cassie's agreement was working with a template that covered the standard scenarios. Standard templates cover standard scenarios. The problem was that nobody told them what the non-standard scenarios looked like, or that those were the ones worth paying for.

Go read your own shareholders agreement today. Not to review it. Just to see if you can find these three things: a deadlock resolution mechanism, a definition of good leaver versus bad leaver, and confirmation that any pre-existing IP was formally assigned. If one of them is missing, you have found the gap worth filling.

The Blueprint

SHA Clause Audit: 5 Steps

Janis, Pepe, and Kellen running the shareholders agreement clause checklist

⚡

Pull up your shareholders agreement and search for the word "deadlock." If it does not appear, or appears without a corresponding resolution process, your fifty-fifty structure has no tiebreaker. Done looks like: you can point to a specific clause that says what happens if both founders disagree on a reserved decision and cannot resolve it in fourteen days. That clause should include at least one of: a casting vote, a mediation process with a named procedure, or a buy-sell mechanism.

⚡

Find the leaver clause and write out in plain language what it says happens when a founder leaves. Then ask: does this distinguish between a founder who resigned, a founder who was pushed out, a founder who left for health reasons, and a founder who joined a competitor? If the answer is the same for all four scenarios, the clause is not doing its job. Done looks like: your agreement uses the words "good leaver" and "bad leaver," defines both, prices the buyout differently for each, and says who makes the categorisation.

⚡

Identify every piece of IP the company relies on and trace it back to when it was created. Anything created before incorporation, or created by a founder using personal resources or pre-existing work, is not automatically company property even if your shareholders agreement says the company owns all its IP. Done looks like: a signed IP assignment agreement, separate from the shareholders agreement, that formally transfers each piece of pre-existing IP to the company. If you incorporated through Stripe Atlas, Clerky, or similar, check whether this was included. It often is not.

⚡

Check who controls what happens when shareholders cannot agree on a sale. Find the drag-along clause. It should specify the threshold at which a majority of shareholders can require the rest to sell their shares in an exit. If that threshold is 50%, a minority shareholder can block a sale. Done looks like: your drag-along is set at a threshold that reflects how you actually want decisions made, and your lawyers have confirmed it works under the law of the jurisdiction where you are registered.

⚡

Book thirty minutes with a startup lawyer to review just these four points. Not to rewrite the agreement. Just to confirm whether the gaps exist and, if they do, what closing them would cost. Done looks like: a written summary from the lawyer of what is missing and a quote for fixing it. Get this done before the next time someone joins or leaves the cap table, not after.

The Docket

Things worth reading this week

⚡

Clerky's Founder Equity Guide . Clerky's equity guide walks through the standard US startup legal documents with plain-language explanations, including why IP assignment is filed as a separate document from the shareholders agreement. Directly relevant if you incorporated in the US and assumed your formation package covered everything.

⚡

NVCA Model Legal Documents. Investors' Rights Agreement . The NVCA's model documents are the closest thing to an accepted standard in US venture-backed companies. The drag-along, co-sale, and voting provisions sections are worth reading even if you are not raising US venture, because they show what sophisticated parties expect to see and why.

⚡

The Founder Institute's Shareholders Agreement Checklist . A practical checklist of provisions an early-stage shareholders agreement should contain. Not a substitute for legal advice, but a useful starting point for identifying what your current agreement is and is not covering. Read this list alongside your own document.

The Question

The moment your lawyer walked you through the leaver provisions, were you actually following the explanation?

Click the one that's you.

I was nodding along

Found out the hard way

Ours is actually solid

Haven't checked yet

⚡ Tell me what to write about next

Every click opens an email. Add your story or just send it blank. I read every one.

Writing this from Barcelona, where April has decided to perform as a credible summer understudy and I am doing my best impression of someone who does not check the cap table model at midnight. Next Monday: employee equity, and specifically the ways a well-intentioned option plan can be quietly unenforceable in three of the five countries where your team actually lives.

Have a great day ahead,

Pepe Carrillo

Founder, Mexzungu Group · Venture Architect

mexzungu.com · pepecarrillo.co · LinkedIn

Mexzungu Group · Outlaw Studio · Barcelona

The Outlaw Chronicles is for education only. Nothing here is legal advice. For the real thing, you know where to find me.

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