Choosing a startup lawyer can be a daunting process for an early-stage startup with no prior experience working with legal professionals.
This decision impacts nearly every aspect of your startup, from incorporation to fundraising, intellectual property to team management. Yet, founders often make this crucial choice with limited knowledge and experience.
This article is designed to demystify the process of selecting a lawyer for startups and to help founders find the legal advisor best suited to their needs.
How Do I Choose the Best Startup Lawyer?
Finding the right startup lawyer is an investment in the future of your business. Take the time to find the person who will support you and your team every step of the way as you grow your startup.
The Most Important Factors to Consider When Searching for a Startup Lawyer
The first and most critical realization for founders is this: what truly matters is the lawyer you’ll work with, not the law firm.
Even within the same law firm, you may find lawyers who are perfectly suited to your needs—or others who may not be a good fit at all.
When searching for the lawyer to accompany you on your entrepreneurial journey, several factors should be taken into consideration. These factors are outlined below in order of importance:
Experience: Look for a lawyer with experience working with startups—someone who understands the unique challenges and legal complexities of building and scaling a business. Your lawyer is like a guide leading you through unfamiliar terrain, so you want someone who has seen and navigated enough to point you in the right direction.
Accessibility: Choose a startup lawyer who can keep up with the fast pace of an early-stage company. They should be quick to respond, available when you need them, and ready to listen to your concerns at a moment’s notice.
Fee Structure: Review the fee structure of the startup law firm you’re considering and ensure it aligns with your needs. While some lawyers charge hourly rates, others offer flat fees or alternative billing methods. A firm experienced in startup law should ideally provide fixed pricing for many of its services, giving you clarity and predictability.
Avoid hourly billing whenever possible, as it often leads to slower progress and unexpected invoices, creating unnecessary friction between you and your lawyer.
Compatibility: It’s crucial to work with a lawyer you feel comfortable with—someone who understands your values and shares your vision for your startup. This alignment will make the working relationship smoother and more productive.
Do I Need a Startup Lawyer?
When searching for the right lawyer for your startup, it’s natural to wonder whether you can work with someone who hasn’t built their career in this specific area. Of course, a lawyer who hasn’t specialized in startups can still provide you with assistance.
After all, lawyers are trained to offer counsel across various fields of law if they choose to. However, there are significant advantages to working with a lawyer who has experience in the startup ecosystem.
It’s not uncommon for founders to unknowingly work with lawyers who lack experience with venture-backed companies. While the advice these lawyers provide may not necessarily be wrong, they may struggle to fully grasp the unique dynamics and inner workings of the startup world.
When you work with a startup lawyer, you gain the advantage of their awareness and expertise within the entrepreneurial ecosystem. This is crucial because, throughout your journey, the question you’ll find yourself asking your lawyer the most is: “Is this normal?”
A lawyer who can quickly tell you whether that odd request from a potential investor is a standard practice or something out of the ordinary will make your life significantly easier.
In addition to their expertise and network within the ecosystem, startup lawyers are often more cost-effective than general practitioners. This is because they’re deeply familiar with the unique dynamics of entrepreneurship and can provide tailored legal advice without requiring extensive research or reinventing the wheel.
Lastly, working with a startup lawyer means establishing a relationship built on mutual understanding and trust from day one. As your startup grows, your lawyer will be by your side at every critical moment, whether it’s raising funds, navigating mergers and acquisitions, or managing complex investment processes.
The Best Way to Find a Good Startup Lawyer
Finding the right startup lawyer for your business is a critical decision that can directly impact your success. To ensure you make the best choice, schedule online consultations with potential candidates to discuss your legal needs in detail and get a sense of their working style.
By asking the right questions, you can form a reliable opinion about a lawyer in as little as 15 minutes.
Key Questions to Ask When Evaluating a Startup Lawyer
Before hiring a startup lawyer, it’s crucial to ask targeted questions to ensure they can meet your needs. Here are some essential questions that can guide your evaluation during consultations:
What is your experience working with startups? Ideally, you want to work with a lawyer who has built their career around advising entrepreneurs. A lawyer with startup experience will understand the unique legal challenges of turning a vision into reality, protecting it, and scaling it.
How do you structure your fees? Ask your lawyer how they charge for their services so you can plan your budget accordingly. Lawyers typically use either hourly billing or fixed fee structures. As mentioned earlier, it’s recommended to prioritize fixed fees whenever possible to avoid unexpected costs.
Who will I work with day-to-day? The lawyer you interact with regularly will define the quality of the service you receive—not the senior partner you speak with once a year. During your consultation, ask, “Who will handle my day-to-day work?” If the name(s) mentioned aren’t present during the meeting, consider scheduling a follow-up to meet with them as well.
How will we communicate? Effective communication is the foundation of a productive relationship with your lawyer, especially during the early stages of your startup. Be sure to ask how often you’ll communicate and which methods they prefer. Do they offer quick phone calls for updates? Is email their preferred method? Do they use other asynchronous communication tools?
Based on what you know about my startup, what are my legal needs within and outside your expertise? While an experienced startup lawyer can handle the vast majority of your legal needs, no lawyer is an expert in every area. For example, they might excel in investment processes and contract reviews but have little knowledge of patents. It’s helpful to know upfront which areas fall within your lawyer’s expertise and which don’t.
Can you walk me through this collaboration step by step? This question serves two important purposes. First, it helps you determine whether the lawyer truly has experience with startups. Lawyers who have handled similar cases multiple times should be able to explain the process clearly. Second, it gives you insight into the lawyer’s communication skills and project management abilities. While there are many skilled lawyers who lack strong project management skills, you ideally want someone who excels at both.
The Importance of Having a Startup Lawyer from Day One
Working with a startup lawyer early on might seem like an additional expense. However, this decision will save you far more time and resources than you might imagine.
A startup lawyer helps you navigate complex legal issues and avoid costly mistakes that could hinder your company’s growth. Here are some key areas where having a startup lawyer from day one can make all the difference:
Intellectual Property. When embarking on your startup journey, there will be intellectual property and industrial property elements that need protection. Before sharing your ideas with internal or external stakeholders, a lawyer can help you identify and safeguard trademarks, copyrights, patents, and trade secrets that set your business apart.
Legal Structure. The legal framework you establish is critical because it shapes the trajectory of your startup. Your lawyer can guide you in choosing the right legal structure for your business—whether it’s a joint-stock company, limited liability company, or a hybrid social enterprise supported by a foundation.
Equity. Properly allocating founder shares is crucial. These decisions are often made when your startup is little more than an idea and a few pitch decks. Yet, the choices you make at this stage will follow you throughout your company’s life. Silicon Valley is full of founders who learned this the hard way—just ask Facebook and Snapchat. Avoiding these pitfalls alone is reason enough to work with a startup lawyer.
Team. Most startups begin with small teams made up of founders and freelancers. Ensuring that all team members operate under the right agreements is vital to your startup’s success. A lawyer will help you establish clear, legally sound contracts that protect your company’s interests.
Tips for Working Effectively with Your Startup Lawyer
To build a productive and efficient working relationship with your startup lawyer, follow these simple tips:
Be Clear About Your Goals: From the very beginning, make sure your lawyer understands your goals for the startup. This will enable them to provide legal advice that aligns with your vision.
Maintain Regular Communication: Regular communication is key when working with a lawyer. Schedule periodic check-ins to discuss ongoing legal matters and ensure you’re on the same page.
Provide Timely Feedback: If your lawyer sends you a contract or document to review, respond as quickly as possible. Prompt feedback allows them to address your concerns or questions without delays.
Stay Organized: Keep all important contracts and documents well-organized and easily accessible. This ensures you can provide them to your lawyer quickly when needed.
Trust Their Expertise: A well-chosen startup lawyer brings deep experience in working with entrepreneurs and understands the legal needs unique to startups. Trust their guidance, especially when making critical decisions.
By following these tips, you’ll establish a strong working relationship with your startup lawyer, laying the foundation for a legally sound and successful business.
21/12/24
Disclaimer: The content provided on this page is for informational purposes only and cannot be construed as advertising, promotion, or any similar intent. It should not be interpreted as legal advice or used without authorization. Reading this article does not establish an attorney-client relationship with our firm.
