Legal Consequences of Co-Blogging, Part 2
- Private Arrangements
- Education About Blogging
- Judicial Restraint
- Conclusion
- References
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Part 1 of this series discusses the law applicable to co-blogging and identifies a number of areas where default rules are unclear or may lead to unexpected results. This article discusses some possible ways to avoid those situations.
Private Arrangements
Co-bloggers may be able to avoid the undesirable or unclear legal consequences discussed in part 1 of this series by structuring a private arrangement. Co-bloggers have two principal choices for their private arrangements: form a limited liability entity, or enter into a co-blogger agreement.
Co-Blogging as a Limited Liability Entity
Co-bloggers can operate the blog via a limited liability entity, such as a corporation, limited liability company, or limited partnership. [1] In this case, the entity would own all of the blog's copyrights and trademarks, unless the parties agreed otherwise. [2] Also, the limited liability provided by the entity may protect the bloggers from personal liability for co-bloggers' blog-related activities. [3]
However, these benefits come at some cost, including upfront costs to form the entity and ongoing costs to comply with tax and reporting obligations. The entity also must comply with certain types of formalities to maintain its limited liability status, and these formalities can be a hassle and potentially costly as well. It may be difficult to justify these costs when they exceed the revenue generated by the blog.
Also, to the extent that the entity's equity is tied to blog participation, additional complications can arise with the addition of new bloggers or the departure of existing bloggers. These situations may trigger a reallocation of equity, which may lead to thorny emotional discussions about the fairness of existing equity or governance allocations, and there may also be out-of-pocket costs to document any ownership changes. These transactions may even require real cash to move between the bloggers (payments from incoming bloggers to buy equity, or payments to departing bloggers to buy their equity), even though there may not be any clear exit strategy or other way to recoup these cash payments.
Co-Blogging with a Co-Blogger Agreement
Instead of forming a limited liability entity, bloggers can enter into a co-blogger agreement. From a legal standpoint, this agreement will act as a partnership agreement if the bloggers intend (or are deemed) to be in a partnership. Otherwise, the agreement governs the rights and responsibilities of independent contractors.
A co-blogger agreement offers some benefits over the formation of a limited liability entity:
- The agreement easily can be customized, within broad public policy limits, to fit the blogger's particular situation and preferences.
- A private agreement has low transaction costs. The parties will incur few, if any, upfront out-of-pocket costs to create the agreement; the agreement may not require the parties to maintain any formalities; and the parties can easily and cheaply modify the agreement to reflect changed circumstances.
However, private agreements may not completely address bloggers' needs. Most obviously, the agreement can allocate or eliminate liability among its signatories, but it cannot limit the signatories' liability to third-party non-signatories. Also, although the agreement may expressly disclaim a partnership or employment arrangement, such contractual disclaimers don't necessarily have a relationship to the actual disposition; the arrangement could be characterized as a partnership or employment arrangement despite the parties' preferences.
Conclusion About Private Arrangements
Whether a limited liability entity or a private agreement is the better choice depends on the bloggers' specific circumstances and goals. [4] However, either choice is preferable to co-bloggers doing nothing proactive to override the default rules. With a non-choice, bloggers potentially bet their houses with every blog post they and their co-bloggers make, and remain at risk of being blindsided by unexpected legal rules.