‘The waters of the internet are infested with sharks!’

By virtue of having a website, online solopreneurs are vulnerable to lawsuits and scammers. Many of us stick our heads in the sand and hope it will never happen to us, but there are a number of protections we can put in place to minimize the risk. Today’s guest is prepared to arm you with the information you need to navigate those shark-infested waters and understand the fundamental legal aspects of online business ownership.

Internet business lawyer Lin Eleoff is the founder of Cover Your Assets Online, a service that teaches solopreneurs to cover their ‘assets’ without having to spend an arm and a leg on legal fees. She offers a DIY Legal Toolkit that allows online entrepreneurs to prepare key documents themselves, as well as done-for-you services and consulting.

Lin never wanted to be one of those ‘billable hours’ attorneys in the corner office; she was looking for a new way to practice law. She saw a huge need in the area of internet law for entrepreneurs, so she became an entrepreneur herself and created an online coaching venture to empower business owners with crucial legal information. Today she shares the common mistakes made by online solopreneurs, the legal documents you can prepare on your own, and her best legal advice for online business owners. Listen and learn why scammers target small business owners and how to protect yourself from a lawsuit!

Key Takeaways

The legal fundamentals of online business ownership

  • Being sued is stressful, even if you win
  • Having a website automatically makes you vulnerable
  • Must protect yourself from liability and minimize risk

The common legal mistakes made by online business owners

  • Lack three key documents – privacy policy, terms and conditions, disclaimer
  • Use of unauthorized images

Legal documents you can prepare yourself

  • Privacy policy, terms and conditions, disclaimer
  • Copyright registration
  • Legwork for contracts and trademark prep (have lawyer finalize)

How much it might cost to put legal protections in place

  • Lin’s DIY Toolkit – $597
  • Attorney’s hourly fee between $400-$600
  • Much more expensive to secure lawyer for lawsuit

Why scammers target small business owners

  • Looking for people who are exposed, less informed
  • Online solopreneurs less likely to have lawyer

Lin’s best legal advice for online business owners

  • Establish an LLC or S corp
  • Separate your personal and business assets

How to approach legal aspects of online business ownership

  • Depends on personal preference
  • If comfortable, can do much yourself
  • Procure attorney for complex issues
  • Educate yourself to work with lawyer



DIY Legal Toolkit

Connect with Lin Eleoff

Lin Eleoff is an Internet business lawyer whose mission is to show business owners like us how to cover our “assets” online, without having to spend a lot of money on legal fees.

As the founder of CoverYourAssetsOnline.com, Lin created a Do-It-Yourself Legal Toolkit so that entrepreneurs could protect not only their business assets but their homes, cars, and investments. Lin says one of the worst things we tell ourselves is, “It’ll never happen to me.” Not true: The smaller the business, the bigger the risk. And, let’s face it, no one ever wants to hear the words, “You’ve been served.”


Full Transcript:

Laura Pennington (Host): Welcome back everybody to the Better Biz Academy Podcast. As always, I have a really interesting guest for you who’s going to highlight something that I don’t think enough people know about and many people are going on with their business without realizing that they’re exposing themselves to a whole lot of risk but my guest today can help you fix them. My guest today is Lin Eleoff and she’s an internet business lawyer whose mission is to show business owners like us how to cover our assets online without having to spend a lot of money on legal fees. She is the founder of coveryourassetsonline.com and she created a do-it-yourself legal toolkit so that entrepreneurs could protect not only their business assets but their homes, cars and investments. Lin says one of the worst things we tell ourselves is it will never happen to me. Not true, because the smaller the business the bigger the risk. And let’s face it, no one ever wants to hear the words “you’ve been served”. Welcome to the show, Lin.

Lin Eleoff (Guest): Thank you so much for having me, Laura.

Laura: I’m excited to talk to you because I think that this is an issue that’s not covered enough and if people know about it, it’s because they have been served or they know somebody who has had a negative experience. So, I’m curious to know, with your background, how did you decide to focus on this particular area of the law?

Lin: When I went into law, one of the things I knew wasn’t really going to work for me was to work in a law firm with the corner office and counting all those billable hours in a traditional sense of being a lawyer. I wanted to find a new way to be a lawyer. And when I started my online coaching business, I realized that there was this big gaping black hole in internet law. Like it’s not something that I was taught at law school, I’m sure it’s been taught today but back then, it wasn’t. So, I noticed that the laws were unclear, vague and contradicting information on the internet. So, I thought, this is an opportunity for me to really dig into this and understand the laws that govern the internet and in particular, entrepreneurs, and so that’s how my business was born. I found an area that was being under served and could fully embrace it because that meant that I was an entrepreneur and working for myself; I was my own boss. And plus, it was something that I was keenly interested in and so a business was born.

Laura: That’s awesome, and you know, it seems like that’s absolutely true that it’s a relatively new area of law as far as practicing it and awareness of it and you don’t come to realize it until somebody else who knows this law better than you comes down on you for something that you allegedly did wrong. So, I’m curious, I know some of these things but I’m curious what you think about how online entrepreneurs are at risk? I think there’s probably a lot of things that people overlook when they start their business. They assume they’re covered; they assume it’s not a big deal. But you would argue that even small businesses and especially small businesses are at risk. So, what are those risks that people face?

Lin: Well, the last thing that we ever want to hear are the words “you’ve been served”, right? There is – I shouldn’t say nothing but being sued or being served is one of the most stressful things that we could ever go through in life. Even if we’ve done nothing wrong, even if the lawsuit is frivolous because anybody can sue anybody for anything; put you through the ringer and even if you win, you’ve got the bruises and scars to prove it. So, one of the things we want to do is protect ourselves as best we can from liability. So, one of the things that that means is that when you have a website, just like when you open a bricks and mortar business, you’re automatically exposed to someone saying, “you caused harm”, right? That’s what people sue for damages for because they allege that you have done something that hurts them. So, you want to be able to minimize that risk. You can never wipe it out entirely but there’s so much that you can do to minimize your risk. And one of the things that I want to do for entrepreneurs is show them how they could do so much of this themselves because one of the things that keeps them from sort of taking their head out from under the sand and being curious about what they can do is there is this fear that is going to cost so much. And of course, traditional lawyers’ fees are very expensive. So, I think there’s so much that you can do yourself and if you are the do-it-yourself type, then I’ve created ways for you to get this information in a way that is not difficult to understand and then implement it. And then, I also tell people where they absolutely should seek out a lawyer. So, for example, one of those areas would be to trademark something, your company name or a tagline. But there’s so much of the leg work that you can do upfront that I show you how to do upfront so that when you go to a lawyer, a lot of that has been done already, and that saves you hundreds, if not thousands of dollars. 

Laura: And that’s really smart because it often means bigger things that are really complicated where we haven’t in a sense that I’m going to need a lawyer to help me with this but we know that the second we set foot in an attorney’s office, we’re talking hundreds if not thousands of dollars and so people just sort of put that off and get uncomfortable with it. So, what would you say are the two biggest mistakes or exposure risks that you see online entrepreneurs making? Is it documents that they’re missing? Is it terms and conditions on the website? I’m sort of curious from your perspective what those are.

Lin: First of all, at very basic level, you need three key documents on your website. You need a privacy policy, you need a terms and conditions, and you need a disclaimer. The privacy policy is there to protect visitors to your site and that’s required by law. Like we are required to protect someone’s personally identifiable information. So, that means even if you’re not selling anything, if you are collecting people’s emails, then you are required to tell them what you’re going to do with that email and how you’re going to store that information and whether you’re going to share it with anyone and how they can remove themselves from the list should they decide to do that. So, that’s what the privacy policy is there to give people notice on how you will and what you will do with their information. The disclaimer is there to disclaim liability. It’s saying that you will not be held responsible for the misuse of the information on your website. So, that’s like putting the responsibility back on the person or the people that visit your website. And then the terms and conditions is basically, when you go to a playground and you see what the rules are, that’s what this is. It’s your playground, your website is your playground and you have to post the rules. That puts people on notice that they can’t just take your copyrighted material, they can’t steal your trademark, they can’t share your stuff without permission. So, those three documents are key. And then another thing that I see people making a mistake so often is on the use of images online. They think that if it’s on Google then that means it’s free to use and public domain and those words are not clearly defined. And so, that’s where you really really have to be careful because I’m sure you’ve been hearing, Laura, that people are getting these notices in the mail that they owe tens of thousands of dollars for the unauthorized use of images when they had no idea they weren’t even allowed to use those images. So, you have to be so careful.

Laura: Yeah that happens a lot in the freelance writing or web design world. I’ve had a number of clients’ law firms, people that were outsourcing to contract writers and got these nasty letters from Getty Images, you know, you’ve been using our images without the rights to do so. You need to take it down immediately. This is the consequences if you don’t take action. And it doesn’t even matter if your intent was never to defraud somebody or to steal someone else’s work. They see it as, that belongs to them, you’ve posted it on your website; doesn’t matter if that blog has gotten zero views or if it’s not monetized in any way. It’s still their property that you’re using and I’ve known a number of people that have had to settle out of court much less than what their original take down notice said but it’s still been hundreds or thousands of dollars just for use of one image. So, that’s really really important, especially for you freelancers out there who are providing images to your clients. Always use stock photo services that are properly licensed. read the fine print, make sure it says it’s for commercial use, and keep records of all that with your account so you don’t make that mistake. So, my next question for you would be, I work with a lot of attorneys. That’s the majority of my clients and a lot of them are handling more complex issues where it completely makes sense to have a lawyer but there’s also this other side of the industry where online forms and TV ads are telling us that we can do it ourselves, right? We don’t need a lawyer. What are some of those things that you think somebody could handle doing themselves?

Lin: That’s a great question. Before I answer it, Laura, I’d just like to clarify something with regards to images. If you should ever receive one of those letters in the mail that says you owe money, don’t automatically assume that you do. You want to make sure that whoever is sending you that letter is actually the owner of those images because there are people who are just going around saying, you owe me money because you used my image and/or our images and it’s not true. They don’t even own it. They are infringing on someone else’s copyright and saying that you owe them money. Does that make sense? So, you always want to be clear and make sure. Don’t just pay it just because you got a letter in the mail. There’s a lot of scams going on in that regard. Now to answer your question about what you can do yourself; well, those three documents that I talked about, I have a product. It’s called a DIY legal toolkit and in that, I walk you through how to set it up. So, I have templates and checklists. You can do that yourself, you can copyright, you can register a copyright yourself. I give you instructions for that. I give you the background on what to do when it comes to trademark and what homework you can do upfront. So, it’s hard for so many people to hear but it doesn’t matter how close a friendship you have or if you think it’ll never happen to you, those are famous last words and so many people regret that they ever uttered those words. So, there is, I would say, 80% of these little things that you can do on your own. And then, when you are ready, or you feel comfortable or you’re making enough money, then you can seek up the advice of an attorney. As your business grows and things get more complicated, then you want to talk to an attorney.  

Laura: Yeah, that makes a lot of sense and I love that you talked about contracts because that’s something that a lot of new freelancers especially don’t realize that they need to have and don’t understand the benefits of getting one that really comprehensively covers their needs and protects them in those particular situations. I think a lot of people are so excited to get the business and they assume, you know, we’ve chatted on the phone for five minutes, or we had an email exchange back and forth, we’re on the same page, we’re good to go; and then come to find out that you don’t have any protections at all. So, that’s something that’s very important for people to remember. So, if we’re talking about protecting yourself whether it’s doing some of the work yourself then taking it to an attorney or doing it all on your own, how much does it really cost to protect yourself. I know it’s a difficult question to answer but I’m sure there’s some basic information behind that.

Lin: So, let’s put it this way. If you were to – and I’ve wanted to shamelessly plug what I’m offering – but if we were to just compare that. The cost of my do-it-yourself toolkit is $597 and you were to go to a lawyer, that would cost you thousands – thousands of dollars, without exaggeration, to get all the information that’s in the toolkit and then to have that lawyer who is probably charging close to $597 an hour – I mean the really good lawyers are anywhere between $400 to $600 and up per hour. So, if that hopefully gives you some idea – and imagine if you were to just spend a few hundred dollars on having that resource there and then you go to a lawyer where you’ve kind of drawn up a contract and now you just have the lawyer look at it and maybe it only takes an hour as opposed to 3 or 4 hours. So, it can get very expensive, not to mention, Laura, should you ever really need to hire a lawyer because you are being sued or you are being charged with something that you don’t know how to defend. You don’t even know what you’ve done wrong and so that’s why you really – you are armed when you have information. The information is so important. And the more informed you are the less exposed you are. People think I’ll do this when my business gets bigger and I start making money. I’m just a small fish in a big pond. But the problem is that the bad guys who are on the internet aren’t looking to go after the big guys because they know the big guys have attorneys. They can fight them. They are looking for people who are exposed, that don’t know any better, that haven’t protected themselves and who are wide open to lawsuits. So be careful; arm yourself upfront; make sure that you are protected because the waters of the internet are infested with sharks.

Laura: Yeah absolutely. And we all have this false sense of security because you’re thinking, “well, I run a small business so that means people must realize that I don’t have a ton of assets tied up in it in comparison with the bigger company.” But it actually makes you the ideal target for all these problems both legally and even things like hacking and cyber security threats because those people who are preying on smaller businesses know that you’re least likely to call an attorney. You’re least likely to have these protocols in place and they know a lot of times that they can get in and make a little money out of it quickly before you realize what has happened. So, that’s absolutely fascinating and scary at the same time.

Lin: Some people say to me, “oh Lin, you’re just trying to scare me” or “you’re just trying to get things going here” and I’m like, “you know what? I absolutely am”. I want to scare you because like you said, Laura, it is scary out there, what can happen to you. You could, for just having not understood where you can protect yourself – let’s say that you inadvertently used someone’s content or images or whatever it might be – they can, if you haven’t set yourself up correctly, come after your personal assets. That means they can come after your home and your investments, your kids’ college fund, if you have left yourself exposed even unwillingly, then it’s there to be taken from you. And I know how scary that sounds, but it’s real and it happens and so I want people to beware. If we’re in business, and we want to be taken seriously, we need to take this seriously too. So, cover up.

Laura: Such excellent advice. And now I know you mentioned that a lot of people choose not to go forward with these important planning strategies and documents because they think that they don’t need it because they’re not liable or they’re not at risk or exposed. Are there any other reasons where you see people typically overlooking these important steps?

Lin: So, when you first go into business, and you’re maybe just trying things out and you don’t have everything in place, you want to be sure that you have taken the minimum steps. So, for example, like I mentioned the documents on your website. Most people start off as solopreneurs but if you realize that you’re going to be in business over the long haul, then at some point you want to decide on whether you want to establish an LLC or an S Corp because those will give you protection from – be separate your personal assets from your business assets. You have sort of a brick wall that is now between the two. The thing is, and this is where a lot of entrepreneurs make mistakes is – they have an LLC and they think that automatically protects them. However, if you’re comingling funds and if you aren’t doing everything you’re supposed to do to make sure that your personal assets stay on this side of the wall and your business assets stay on the other side, once you start to comingle, now that wall that you call the LLC or an S Corp goes away, and then you are exposed. Your personal assets are exposed. So, I think it’s really important that at some point you break up with your sole proprietorship and either form an LLC or an S Corp. And also, that you do not comingle your funds. That is even doubly hard to do when you’re a sole proprietorship but it can be done. If you keep close documentation of all your, you know, your record keeping is meticulous and you don’t sort of borrow from – what is that borrow from Peter to PayPal and vice versa – if you don’t do that, if you’re careful not to do that, then the more protected you are.

Laura: So, what would you say to someone who is listening and is thinking, “oh my gosh I’ve done that” or “oh my goodness, I don’t have those documents” or “I’ve already realized that somebody has stolen the content from my website.” Should the next step be to contact an attorney to kind of get that situated and get things straight?

Lin: Well, that’s always an option, right? If you feel that – there are two types of people; there are the people who’d like to do it themselves and they are not afraid to do that and for whatever reason they’re comfortable in a do-it-yourself type of situation. And then there are other people, clients of mine, that are like “do it for me, I don’t want to know, I don’t want to worry about it, I just want it done right.” So, whatever your level of risk aversion is or however comfortable you are, there’s an option to do it either way. So, as I say, my thing is to empower entrepreneurs to do a lot of it themselves and that’s why I created the toolkit. It’s like a little encyclopedia of everything you need to know as an entrepreneur. And it’s kind of their resource again, with templates and checklists for those of you who wanted to do it yourself. But also, even if you want to hire a lawyer, the more you know going in, the more information you have – and you have a responsibility to have that information so that you’re not feeling like the lawyer is just there to tell you what to do. You want to be able to have a conversation with a lawyer and ask questions that I have a whole list of questions that you should ask your lawyer as well as your accountant. So, I don’t know if I answered your question Laura, but it really is a personal preference.

Laura: No, you completely did and what I’m taking away from this is that it’s helpful to have an attorney that you can reach out to if you need one for these more complex issues or if you’re just the type of person who is comfortable with saying, “hey, I really don’t want to be person responsible for this. Can you just help me get it done and get it done correctly?” But that there is always an element in this that involves the entrepreneur educating themselves about these things, not just for the purpose of knowing but also because you can do some of the leg work in advance and still make use of the attorney when you need him or her, but without all of the expenses that you’d otherwise end up paying for if you knew absolutely nothing about.

Lin: That’s exactly right. Again, it’s up to you to at least think about what your options are and then what you’re willing to commit to. But the worst thing you can do is stick your head in the sand and then cross your fingers and hope nothing bad ever happens. Find out what you’re up against and then make a decision one way or the other about how you want to handle it.

Laura: Yeah that’s great advice and it’s so important to address these issues even when we are uncomfortable with them or when it maybe involves you saying, “hey, I haven’t been the best at this but I’m going to take the time to step up now and correct it.” So, I know you had talked about some of the resources you have available. Where can we go to get access to the materials that you have to help entrepreneurs plan for their business?

Lin: My website is called coveryourassetsonline.com. The toolkit – and on there you’ll find both options; the do-it-yourself or the done-for-you options. And I do work on documents for entrepreneurs so I create those documents for your website, I can also create client services agreement for you that you can have checked by a lawyer in your state. So, those are done-for-you options but also the do-it-yourself toolkit is at diylegaltoolkit.com and you’ll find everything in there that explains what it does. I’m always adding documents and information to that so once you’re in you don’t have to upgrade or pay more; that information just goes in and you’ve got it for life.

Laura: Wow! Perfect. Thank you so much for sharing all of your advice and for having a place where people can go online to learn more about these important issues. Thank you so much for being on the show.

Lin: You’re so welcome. Thank you for having me, Laura. I really appreciate it.       

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