Someone who advised our startup is now claiming to be a co-founder and a right to equity. What is the legal standard here?

I began receiving the advice and shared ideas of someone in the early days of my startup, pre-formation. There were some initial discussions about the advisor potentially joining the startup, perhaps as a co-founder, but we never conclusively agreed to anything and there are no written agreements of any sort. Eventually, another person joined my startup as a co-founder, and it was at that point that the advisor became irate and asserted that he was a co-founder and that he should be getting 50% equity. He is now threatening legal action to claim the equity he thinks we agreed to.

What is the legal standard in question here? Would the courts be willing to hold that an implied contract had been formed because the advisor gave plenty of general advice, strategic thoughts and such? Even if the advice and ideas were valuable, 50% seems WAY overboard. There was never any meeting of the minds regarding the exact form of compensation. What approach would the court take here?

  • The whole legal action threatening stuff is in 90% just hot air. I get people trying to do this to me at least twice per year. Best thing in this case just say … o.k. I will be waiting for your lawyer to contact me. I never got any letter from anyone. Even if you got a lawyer letter you are not yet at court and usually solutions are found outside court.

    You did not sign anything. You should not be afraid.

    These people dont want to spend any money on attorneys and then they quickly realize that they wont go any further.

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