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If someone wants to sue you for something connected with your website they ordinarily must do it in the state you are located in. (This is called "personal jurisdiction".)
If you operate an interactive site, they can sue you in any state. (Go to [profs.lp.findlaw.com...] for an excellent article on this.)
We like to concentrate on our efforts at SEO, but don't ignore legal issues. Everyone with a website should be incorporated, as it affords some protection against lawsuits, and believe me, the shysters are out there prowling the web looking for hapless website operators to sue for anything.
How important? I've just been telling Marcia about a site I bought last year and the only real content was a very active set of military-related forums. The first thing I did was shut those down.
This week marks the anniversary of these forums, about a year ago those of us involved behind the scenes were spending hours and hours of "quality time" researching and discussing this very topic and how it impacted WmW. Unless you're judgement-proof (broke, bankrupt), it needs to be on your A#1 priority list when planning an interactive site.