Legal Hell for Stairway to Heaven

Led Zeppelin’s legendary song Stairway to Heaven has a lot of meaning for a lot of people. I’m sure you have a few memories or mental images tied to it, or at least visions of Robert Plant and Jimmy Page doing their thing on stage. That's why many were shocked at the recent news of an intellectual property lawsuit alleging that the song’s iconic opening chords were stolen. If successful, Stairway may henceforth evoke images of Plant and Page in a courtroom.

Legal challenges are an omnipresent concern for entrepreneurs. Fundamental Financial exists to help high-growth companies achieve sustainable success. So we’re taking Zeppelin’s unfortunate situation as an opportunity to look at some of the most common reasons small businesses end up in court. We’ll also review some basic ways you and your clients can take precautions to keep you out of the courtroom.

The #1 rule of legal preparedness applies to Zeppelin as well as to the rest of us: identify your most likely sources of legal problems and make contact with a lawyer you can call on short notice when you need one…because you never know when you will. In Zeppelin’s case, these allegations had been swirling for years, so we assume Plant and Page had put some thought into their defense. And musicians of their stature surely have a team of attorneys. And we assume they’re busy these days.

Zeppelin’s legal troubles stem from allegations by a trustee of the late Randy California (whose real name was Randy Wolfe), guitarist for the band Spirit. Zeppelin actually opened for Spirit early in their career and the bands toured together in the late 1960s. Before his death in a drowning accident in 1997, California accused Plant and Page of stealing Stairway’s opening chord progression from a song he wrote for Spirit called Taurus, according to the Guardian. Michael Skidmore, the trustee of the Wolfe estate apparently feels a bit more litigious and decided to file suit. He maintains that the crux of the suit involves getting credit for Wolfe and that any windfall from a court victory would benefit the Randy California Project, which funds music programs in disadvantaged California schools, the Guardian reported. In April, a US district judge said the songs were similar enough to let a jury decide whether Plant and Page were liable for copyright infringement and the trial is scheduled to begin May 10.

As Zeppelin heads into the courtroom, let’s look at some of the most common reasons entrepreneurs face lawsuits.  Contract disputes make up about 60% of the roughly 20 million civil cases filed every year, according to the legal site, Rocket Lawyer. Tort cases, which include slip and falls, employment discrimination, and wrongful death suits, make up around 11 percent of civil cases. According to courtstatistics.org, median costs for a business lawsuit start at $54,000 for a liability suit, and can reach around $91,000 for the median contract dispute.

If you own property or handle goods, you may be among the 40% of small businesses that will experience a property or general liability claim in the next ten years, according to an analysis of The Hartford’s small business claims by The Insurance Journal. Topping the list for the most common claim is burglary and theft. However, the most costly claim for a small business is reputational harm, which includes libel, slander, and violation of privacy. Burglary and theft affected 20% of small business owners in the past five years. However, burglary and theft ranked lowest out of the top ten most costly claims, averaging $8,000, compared to reputational harm claims, which cost $50,000 on average, according to The Insurance Journal.

To an entrepreneur heavily invested in growing a business, any legal costs are likely to cause a crisis. A five-figure judgment could be devastating. To ensure you’re fully prepared, Rocket Lawyer has three big recommendations:

1.         Incorporate your business (or form an LLC). Most businesses do this as a means of shielding the owner’s personal assets from fines and judgments. If you aren’t already incorporated, it’s a must.

2.         Consider alternate dispute resolution (ADR), such as mediation or arbitration. It’s common to write ADR provisions into your contracts to require disagreements to be solved through binding arbitration.

3.         Keep good records. Check in periodically to ensure your books are as clean and up to date as possible. Rocket Lawyer points out that beyond being necessary for litigation, solid records may help you avoid conflict altogether.

As crushing as it may seem to imagine paying out $50,000 for a lawsuit, Zeppelin may be on the hook for exponentially more. The Spirit suit goes after future profits from the use of Stairway as well as proceeds from a 2008 agreement that Page and Plant made with Warner/Chappell Music in which the two receive $60m over 10 years for the company’s right to the song, reports the Guardian. The plaintiff has requested at least two thirds of that amount for the infringing period, totaling $40m.

While you’re putting your legal house in order, you can be the judge of the Zeppelin case by listening to both songs in depth here.

How can Fundamental help you or your client become entrepreneurial rock stars with the right funding at the right time? Contact us today.