The One Sentence Our Lawyers Forgot That Almost Cost Me My Company

Sean Weisbrot: A seven figure business hit with three lawsuits at the same time. Family betrayal, growing demands, pressure from every direction. In this episode, Derrick Gerard, owner of d Gerard Consulting and author of Put to the Test shares the raw truth about Leadership Under Fire, why People Management is harder than it looks, and how Self-awareness beats excuses every time you're building a business and feel like you're being tested. This conversation. We'll hit home. What is the hardest thing about running a company?

Derrick Girard: Man, there's so many different things that are challenging. Honestly, the hardest thing, in my opinion, in my experience, especially running a small company, is just people managing people, finding the right people, managing people. Um, everyone comes in with different backgrounds, different motivations, different aspirations. And you know, when you, the bigger your team gets, you have to manage all of that. And it, it's sort of like pinballs in a machine, right? They just sort of bounce or the, uh, what is that? Um, the lottery balls, right? They all sort of bounce off each other and you gotta get 'em all to work in the right direction and that, that's really, really difficult.

Sean Weisbrot: I never really considered people as bouncing lottery balls, but it makes sense. Yeah. Yeah. That's an interesting analogy. So how did you figure out. How to do that? Or do you still think you're figuring out how to make that happen?

Derrick Girard: I don't think you could ever solve that. I think if anybody ever says they've got that nailed, you know, they're just misguided. It all. The challenges you face are so different depending on the types of people you work with. Right. So from the beginning part of my career I worked with a lot of salespeople. And salespeople by and large are very similar in how they do things because they're motivated by growth, they're motivated by results. And you know, recognition when I built my tech company and now I'm dealing with. Engineers and engineers are very different people. I'm more of a sales guy. And so trying to figure that out, trying to understand how these people work and, and how you have conversations with them and what you can ask them to do is pretty interesting. And so it's, uh, it's definitely a learning, a constant learning opportunity for anybody.

Sean Weisbrot: Do you think AI could be put in place to try to solve these issues?

Derrick Girard: I think AI can help. Uh, you know, there's that old saying, knowledge is everywhere. Wisdom is hard to find. I think. AI is a great example of how that can be applied really at probably its greatest application, and that is, there's so much knowledge. At the end of the day, I still have to have the conversation. I still have to lead those people. I still have to, you know, mentor and manage and have all those different things myself. So AI can absolutely help in a lot of ways, but I think the application of it is still the challenge.

Sean Weisbrot: I've heard of companies firing their CEO and creating an ai CEO. Do you think that would solve the problem just having AI manage the people and, and lead the people, or do you think that's a really bad idea? That would scare me.

Derrick Girard: I mean, the, the biggest challenge is the linear, the way, the way people think these days a lot of times is very linear. Very linear, and it's very sort of internal. And so I think the bigger the team, the bigger the culture, and sometimes even the bigger, the challenge is trying to get people to realistically understand what's going on and what needs to be done. Sometimes that's not a straight line conversation that that conversation. Is a, is a winding road, and I'm just not sure AI can take that path. I'm just not sure it's there yet. And I think a lot of leaders struggle with that, right? Being able to understand how to ask the right questions to really find out what's going on, to really uncover why somebody is struggling or why they're, you know, not getting along with the team or whatever it might be. I, I just. I don't know. I don't know that AI can solve that when it comes to people leadership. So you talk about going through hell, what exactly was your hell? Well, when I built this tech company, I, I built it to solve a problem that I faced as an advisor. Um, and I knew the application was far beyond me. And when I started building this, I built this with my uncle, he was my computer programmer and. The first couple of years were very difficult, very tough, ask, you know, try to make a lot of sales, get told no a lot of times. Uh, and then a couple years in, things started going well and we really turned a corner. Things, things weren't just gonna go well. They were really gonna take off. And right when that happened, you know, I had a dispute with my uncle. Uh, there was an investor that. Started making demands, it didn't make sense. And then poof outta the blue, a competitor sues us for patent infringement. And so right when everything I felt like was gonna start going the way we wanted it to go, here I am. I wake up one morning in the beginning of 2020 with three lawsuits on my plate, and I gotta deal with all of 'em on my own, continue to run the company.

Sean Weisbrot: I interviewed someone previously who went on Shark Tank. And she got sued by a viewer of Shark Tank who said that she had stolen his idea. He sued her for like a hundred thousand dollars, whatever it got thrown out. But she spent money on legal fees to fight it off. And then he appealed to, I guess a higher court for like a million dollars. Mm-hmm. And again, she had to fight him. Yep. For years. And she won again. And he appealed to a higher court for $5 million. Mm-hmm. And she had to fight him again. And I, I haven't spoken to her in a few years. I don't know what's happened, but it, it's been like 15 years of hell for her. Yeah. So I can only imagine what it's like to have to deal with not one lawsuit, but three, and still have to run the company. I, I don't know if I'd be able to handle that honestly. 'cause the company tried to break me as, as it is.

Derrick Girard: Yeah, it's, it's a difficult thing, especially for me. Um, and I think a lot of people like me, I'm a very black and white thinker, right? That's sort of the military background in me. It's, it's just black and white. I don't, I don't play a lot in the gray area. And I remember, I. One of the things that I did going through the lawsuits was I basically became a law student. Like I just studied, there's so many different facets to what I was dealing with and so many different, different types of cases that I just had to know as much as I could. And when you go through this, you just realize there's so much absurdity to this. And I remember saying to my one attorney, our justice system is really messed up. And he said, hang on a minute. We have a legal system, not a justice system, and that threw me for a loop, but it, it really has stuck with me because the process and the procedure is the hardest part of the entire thing. If it's just black and white, it's like, is it or is it not? That's how I think, but the whole process is drawn out. Takes years. Tons and tons and tons of money. Um, and when you're right, you still lose. And she's felt that and I felt that. So who actually sued you? So there was a competitor that, uh, sued us for patent infringement. That was the first lawsuit I woke up to receiving that notification. And then, um, the investor that I had piled on, he filed a state lawsuit and then my uncle, my uncle's attorneys, uh, filed a lawsuit on his behalf against me and the company claiming that he personally owned what we built as a company. And that was a federal lawsuit. So that, that ended up being, I had two intellectual property lawsuits and one state lawsuit. I.

Sean Weisbrot: Did you ever have an employment agreement with your uncle when you hired him?

Derrick Girard: Yeah, so we, the reality is I thought we had everything exactly the way it should be, and his attorney didn't apparently think that was the case and wanted to see some sentence and some document that didn't exist. And so his argument was because that sentence didn't exist. It doesn't matter what we said or what we did or how we behaved or who paid who. Because that sentence didn't exist. He owned everything and I owned, and the company owned nothing. That was his argument and it was just absurd. What was that sentence? Um, that the company owned everything that my uncle had assigned. Everything that he did as a computer coder and engineer to the company. So from that point forward, every other engineer we had had to sign that and we went back to our. We went back to our first attorneys and I said, this is what they're claiming. He said, no, we put an assignment in every document we do. And I said, great. Where's that assignment? Where's that? That sentence? And he said, oh, shoot, we forgot to put it in yours. Did you sue them? No, I'm not wasting my time. No. At that point, I'm not hiring

Sean Weisbrot: lawyers to go after lawyers. I mean, shouldn't they be the ones responsible for dealing with the legal fees for this lawsuit That because it's their fault they didn't do their job.

Derrick Girard: That's the black and white thinker in people like you and me. It would be great if that would be the case, but so yeah, because that sentence didn't exist, it, it sort of opened up the doors for them to make arguments of like, well, this is what we think and this is what we want. And they were absurd and they were ridiculous. And instead of my uncle and I fighting the patent lawsuit together on the same side, you know, we weren't speaking, he wasn't a part of the company, he was trying to destroy the company at the same time. The competitors were so I had to fight everybody at the exact same time. It doesn't

Sean Weisbrot: make sense for him to have done that because if he's hurting the company, he's hurting the benefit. He's

Derrick Girard: trying to reap it made. None of it made any sense. It it was to go back in time. As I think through what I went through it, none of it made any sense, and that was probably some of the most frustrating times that I had sitting up late at night, not sleeping. Trying to understand what in the world is going on. 'cause none of it made any sense. And it, it honestly felt for me, like it was just a maximum pressure attempt. Like, let's just put as much pressure on Derek as we can. Let's see if we can get him to crack, and then let's see what we can get out of it. And I think the reality is every one of these people that came after me, including their attorneys. Completely or underestimated who they were picking a fight with.

Sean Weisbrot: So I believe you won all three of the lawsuits.

Derrick Girard: Yeah, the two, uh, my uncle and the investor never went to trial. Clearly they were never gonna go to trial. But the, the settlement that was reached. Was exactly what I had, you know, essentially gone for anyway, so we didn't lose, other than the legal fees. And the other one, the patent case after three and a half years ended up going to trial for eight days in federal court. And at the end of it, the jury agreed that we don't infringe on their patents. And conversely, they agreed with our counterclaims that their patents, uh, should never have been issued and, and are invalid. And similar to that story you told just a minute ago about that, that woman, these guys have appealed it and at some point. This year or next year, I will get the privilege of going to the United States Federal Court of Appeals and watch, you know, when they appeal it, it doesn't make sense

Sean Weisbrot: that they should have the right to appeal when, as part of the last, uh, lawsuit, they should have been forced to sign something that said, and I'm not gonna go after you again. You're gonna sign this, you're gonna take this, and you're gonna go away. You're gonna limp off, you're gonna. Go into your little corner of the world and just

Derrick Girard: shut up. No, it doesn't work that way. And you know, I've had a lot of people ask me too, one of the things that's been interesting to learn about is I was the defendant, and not only did we win and what they sued us for, we won on our counterclaim. So people have said to me, well, did they pay your legal fees? It seems logical that they would have to reimburse you. Well, we asked the court and the court said no. And what I've come to learn is in Europe, for instance, if you filed a lawsuit, and I, I'm not an attorney and I could be misstating this, but I, I believe this is still true. If you're the plaintiff and you lose, you automatically owe the legal fees back to the defendant. And so that right there is a pretty significant deterrent. But in the States, it's almost sort of permission for companies with big pockets to go after small companies and just crush 'em because most companies can't afford to fight this thing.

Sean Weisbrot: There's a country called Nevis, and it's in the Caribbean, and they have a law. That if you want to file a lawsuit against one of the companies, you have to put a $30,000 bond that you can never get back. So you have to really, really wanna sue these people to be willing to pay 30 grand that you're never gonna get back just to start to fight them.

Derrick Girard: Yeah, yeah. It, it's here. There's really no deterrent, right? These companies with big pockets, and this, this woman is, you know, uh, this other woman is an example of that. If they got deeper pockets, they got access to capital, they can just wait you out. They can just drag this thing on and, and just try to crush it with the expense. 'cause it's, you know, three different lawsuits For me, over three and a half years, it was millions of dollars that frankly, the company didn't have. And so. Trying to find a way to do that while growing a company that was growing an insane amount. You know, we couldn't hire the staff. We needed, uh, we, we stopped marketing everything you needed to do, and, and lucky for us, the company kept growing. But all those things that are necessary for a business, we basically had to shut off because we had to pay the fees.

Sean Weisbrot: Hey, just gimme 10 seconds of your time. I really appreciate you listening to the episode so far, and I hope you're loving it. And if you are, I would love to ask you to subscribe to the channel because what we do is a lot of work and every week we bring you a new guest and a new story, and what we do requires so much love. So that we can bring you something amazing and every week we're trying really hard to get better guests that have better stories and improve our ability to tell their stories. So your subscription lets the algorithm know that what we're doing is fantastic and no commitment. It's free to do. And if you don't like what we're doing later on, you can always unsubscribe. And either way, we would love a, like if you don't feel like subscribing at. This time, so let, let's say for example, you spent three and a half years not spending money to grow, you know, what were your projections like? Would you have been at $10 million a year by the end of those three years if you didn't have. The lawsuits and now it took you six years to get there. Like what, what do you have any idea about that?

Derrick Girard: Where we ended up after the lawsuits were over after six years of, of the company being in existence, we would've been there in three years because the trajectory we were on and what we were gonna do next, the roadmap that I had built out. Everything was honestly going exactly how I expected it to go. It was, I expected the companies, the big companies to tell us, no, I knew this was gonna happen. I expected the competitors to come out of the woodwork and they did, and I expected their product to be inferior to ours. And it was. And so everything that was happening was happening exactly like I expected it to happen. The difference is the growth and all the different things we could have done was slowed way down. So we eventually got there. It just took a lot longer. And I, the reality is, you know, when we, when we were done with the lawsuits, and this is, I get asked this question every once in a while 'cause I sold the company, um, about six months after the lawsuits were over. And, and you know, everything worked out really well there. But the reason I sold it was because I spent three and a half years fighting the lawsuits. My competitors spent three and a half years catching up, so they didn't fight these lawsuits like I did. They all just kept copying what we were doing, and by the time they were done, when I was ready to say, now let's really start growing this thing, we no longer had the competitive advantage. We were basically even and equal to everybody else, and that was frustrating that I had to do that.

Sean Weisbrot: So why would someone buy you if you were the same as everyone else? Was it because you maybe didn't have as much revenue, so they saw this as an opportunity to kind of blow past everyone else?

Derrick Girard: No, we were still the number one, like we had more revenue and we were the biggest still in the industry. Um, but we also had all the largest. Financial services firms in the industry as our clients, right? So we had the business, everybody else was still fighting for it. Everybody else was still chasing it. And I just, I knew at that point I needed a significant team of people to be able to keep up and, and really take this thing where I wanted to go years prior. And the best thing for me at that point was to, to find the right partner and sell it. So

Sean Weisbrot: during the lawsuits, did you have potential clients find out about the lawsuit and go, yeah, you know, I think I'm gonna just stay away from this.

Derrick Girard: Yeah, that was the great thing about this was, yeah, a lot of people found out about it. Our biggest clients found out about it. Prospective clients found out about it, and every single time they would have their legal team review the case against us, the patent case. 'cause that was the really the only one that mattered. And every time they just went, this is a joke of a lawsuit. This patent is a joke. This never should have been issued. We're not concerned about this at all. And so it was, it's sort of validating when you hear that from these people with law, you know, with their own legal team to look at and go, this is a joke. And then of course you gotta sit back and remind yourself, but I still have to fight it, whether it's a joke or not, I still have to do this. Yeah.

Sean Weisbrot: Did it cause issues with your team? Did you have people that left because they just didn't wanna deal with it because they could feel that you were struggling to focus on the business and the lawsuits or?

Derrick Girard: No, honestly, the, the team, you know, obviously my uncle didn't stick around. Uh, his daughter worked here. She didn't stick around, so we had a little bit of turnover there. But the reality was the people we, I was able to bring in, they were phenomenal. They understood what was going on. I think I did. One of the things that I think is really important when, when somebody's going through something like this is. I was able to compartmentalize a lot of things, and so when I was focused on the business, I was focused on the business. When I was focused on sales, I was focused on sales, and so I, I really tried to do the best I possibly could to, you know, spend the time I needed on the lawsuits and studying and dealing with lawyers and depositions and all those things. Then when I was in the business mode, I was, I did my absolute best to stay in business mode 'cause that's what my team and the customers needed. So

Sean Weisbrot: it seems like everyone was pretty supportive

Derrick Girard: of you through all of this. That's great.

Sean Weisbrot: Yeah. Yeah. I feel like that wouldn't have happened. I feel like a lot of people are very quick to go, ah, you know, nah, I don't wanna touch that. Like, if someone's accused of a crime. The first reaction of the mass. Majority of people, I imagine, would be like, well, I don't know if you did it or not, so I'm just gonna stay away from you because I don't wanna be associated with

Derrick Girard: that.

Sean Weisbrot: Yeah. The only people

Derrick Girard: that really did that to me were. Investors, you know, when you're going through this. We had never really raised capital. The investor that I dealt with was a loan. It was a short term loan. And so when it came time to, how do you pay for all this stuff, trying to find somebody, and when you look at our growth, it was just a straight up line. People would look at the company and they went, oh my goodness, this is unbelievable. And then you mention the lawsuits and they go, gosh, those kind of seem like a joke, but when the lawsuits are over with, come back and we'll talk. So the people that basically said, no thank you, were those that you know. We were hoping to, to help us fund what we were dealing with.

Sean Weisbrot: That was an issue I went through when I was running my last tech company because I was trying to raise money and we had had an investor fall through, we had four, uh, five investors. Four of them paid. The other one paid a little bit, but he was the largest investor. And one of the big reasons the company failed was because we had budgeted for receiving that money and never got it. And I tried to go to new investors to raise more money to fill that gap because we were already hiring people and ramping up operations. And nobody wanted to touch it because we hadn't launched yet. We hadn't served customers yet, and we didn't have revenue. And they're like, we'll fix those things and then come back to us like, yeah, well, you know, if I had gotten all of the money from that f, you know, fifth investor, then I wouldn't need to be talking to you because I could have done those things with the money I had budgeted for. But now that I've got a nearly half a million dollar hole in my budget. I can't make that happen, so I'm talking to you because I know I can make it happen. I have the team, I have the waiting list of several hundred companies with thousands of employees ready to try this thing, but I don't have enough money to launch and serve them. And take their feedback and make it something that they wanna pay for. So I need you. And they're like, yeah, not our problem. Come back to us and you have revenue.

Derrick Girard: Yeah. And that's the thing that's great for me now, is going through that, bootstrapping it basically from the ground up is, um, you know, I, I do consulting and, and work with a lot of organizations that are trying to figure out, do we. Do we go down the path of raising capital? Do we go private equity or vc or what do we do for this? And the bootstrapping concept is not easy, but it can work and it can work really well if you understand how to build the business and how to, how to manage growth and all these different things. And again, that's how we did it and sprinkle in a few million dollars in legal fees and we still did it. So it can work. You just have to have the right mindset.

Sean Weisbrot: Yeah. I will never raise from investors again. And I think that what I'm, I know this is kind of off. On a little of a tangent, but the rise of AI based no-Code Solutions has made it possible for people like me who have business experience to develop and launch a software that can provide a service to businesses without having a single developer ever look at the code. So I, I think what this, these tools have effectively done is if you have the business experience, you don't need an angel round, you don't need a family and friends round, you don't need a pre-seed round. You can go straight to building your product for like a hundred dollars. Or $200 over like a month or two. Get your customers and you're at revenue and why do you need investors anymore? So I think bootstrapping become much more commonplace now as a result of the ai. So what else haven't we talked about related to the struggles that you feel are important

Derrick Girard: to share? Well, I think, and this is one of the things that I talk about in the book, it's people wanna know how in the world I did that, right? And again, I. The business, the lawsuits, oh, by the way, I'm married with kids. Right? That's, that's a, uh, another twist that's important, um, but also demanding emotionally and physically. And so one of the things that I talk about is this, this mindset of trying to understand how in the world you go through all of this and how do you manage this stuff? And I think that level of self-awareness is really important. And I think that's where a lot of people struggle. And I think for me that was the, the one. Sort of epiphany that helped me through most of it was being able to sit back and go, all right, self-confidence is a terrible substitution for self-awareness. I'm confident in myself. I'm confident I can build anything. I'm confident I can take this wall down and win every one of these lawsuits, but then self-awareness kicks in and goes, holy cow. The list of things I don't know is 10 times longer than the list of things I do. I have to learn. I have to teach, I have to educate. And so that I think is really important. When anybody is facing a challenge, I don't care if it's personal or professional, start being self-aware. Start being honest and realize right away it's gonna suck and it's gonna hurt. And you might find out some things about you you want to ignore or pretend don't exist, but that's the only way you're gonna get through it. Someone I had interviewed

Sean Weisbrot: previously, I don't remember who it was, had said the A business is a reflection of your inner self and doing the business is gonna force you to understand yourself at a very deep level. And if you refuse to look at those demons, you'll never have a business that succeeds. So it's it on you. To recognize your, uh, weaknesses so that you can get through them in order to have your business grow. Otherwise, your business fails or you have to step outta your business to let someone else run it in order for it to grow.

Derrick Girard: Yeah. And at the end of the day, it's all on you, right? I mean, you can point the finger at everybody else. You can blame everybody else, and that's sort of that self-awareness moment is to realize, again, going back to the first question. You know, leading people. If the people keep failing and I can't keep people and I can't hire people and I can't, you know, get the results I want, at the end of the day, I gotta look in the mirror and realize it might be that guy's problem. And so that self-awareness, again, can hurt a lot of times, but it's really, really important.

Sean Weisbrot: What's the most important thing you've learned in life so far?

Derrick Girard: Excuses don't solve problems. I learned that as a kid growing up in the military. I learned that in the military myself. There's not a problem in life you're gonna encounter where an excuse is a solution. I promise you that. And so at the end of the day, so what now? What? Figure it out, move forward. Don't make excuses and solve it. And that's probably the most important thing for me.