Beginning a relationship with a lawyer is an important step for any startup. The insights and advice an experienced attorney offers can be crucial to the success of your new business and will pay dividends down the road – especially if you hope to expand. Before bringing on new legal counsel, here are a few things every startup should consider.
Startups offer unique challenges compared to other larger corporate clients, making it imperative that the lawyer you choose has experience in the startup space. Even though the law applies to all companies, large and small, the nature of startup culture requires a much faster pace of work and very different cost and risk appetites than many larger and more established companies.
Additionally, creating a legal structure from scratch can be tricky, so you need to find someone who knows the ins and outs and will ensure nothing is omitted that could come back to threaten your company as it grows. Experience in not only creating origination documents but also drafting and vetting documents used to secure funding, such as a private placement memorandum or business plan, will add tremendous value to the health and sustainability of your new business.
2. Proper Fit
It’s not uncommon for law firms to pitch you with one team, and then assign a different team to handle your affairs on a daily basis. Given the size of your startup, it’s probable that whomever you select as your attorney will end up working more as part of your management team than simply a legal department. So it’s important to know exactly who you will be working with to determine if you will enjoy interacting on a regular basis as well as if that person will be able to contribute effectively.
It’s important that your legal team understand your particular industry. Tech companies and manufacturers can have very different legal needs across areas such as vendor contracts and intellectual property. While many law firms may be able to help you negotiate the terms of contracts and prepare documents, such as service agreements, employment contracts, and consulting agreements, it’s important to find one that can also advise you on any potential regulatory landmines that may be exclusive to your industry.
And, since you will likely consult your attorney on matters that drive your business decision-making, an understanding of your business landscape is important so you’re your lawyer can provide meaningful counsel.
Knowing the cost breakdown of your legal team is important to help avoid any surprises. Find out how they budget their time as well as if their bill will include any surcharges for paralegal work or research. Then, if the sticker price is too high, ask if there is any flexibility in that billing structure to help reduce your legal costs. Employing the best legal team in the world won’t do much good if they bankrupt you, so if they’re not willing to work with you to lower or defer costs then they probably aren’t right for you.
Before signing on with any legal team, be sure to talk with current and past clients and check for any available information online, such as Martindale Peer Review Ratings. This will help you gauge the legal abilities, including knowledge of commercial contract writing and negotiation, as well as strategic and interpersonal aptitude of any prospective lawyer before making a decision. Additionally, ask about their legal network and see if they will be able to connect you with the right attorneys in case a legal matter comes up that’s outside of their specialty.