Selecting legal counsel can be intimidating for early-stage startup founders, especially if they lack experience working with lawyers. It’s an important decision because this one choice will impact every aspect of the company, from structuring to funding, intellectual property and human capital. Founders too often make this important decision with limited information.
This article seeks to demystify the legal procurement process and help founders find legal counsel that’s right for them.
How Do I Choose the Best Lawyer for My Startup?
Finding the right startup attorney is an investment in the future of your business. Take the time to find someone who will be an asset to you and your team as you scale your startup.
Important Factors to Consider When Searching for a Startup Attorney
First of all, it’s important for founders to understand that the most important factor is not the firm but the attorney you’ll be working closely with. Even within the same firm, you may find attorneys who are perfect for your needs and others who are a poor fit.
When searching for an attorney to represent your startup, there are several factors to consider. These factors are ranked below in order of importance:
- Experience: Look for an attorney with experience working with startups who understands the unique challenges and legal considerations of starting and growing a new business. In many ways, your lawyer is your guide through unfamiliar territory, so you want a guide who has seen enough to point you in the right direction.
- Availability: Choose an attorney who is responsive and able to work at the pace of an early-stage startup.
- Fee Structure: Consider the attorney’s fee structure, and find someone whose fees align with your budget and needs. Some attorneys charge hourly rates, while others may offer flat fees or alternative billing arrangements. For most startup legal work, an experienced startup firm should be able to offer flat fees. Avoid the billable hour where possible, as it generally misaligns the attorney and founder’s incentives. The net result is often a slow pace and surprise bills that are way too high. At Westaway, everything we do is on transparent flat fees.
- Compatibility: It’s crucial to find an attorney who you feel comfortable working with and who shares your values and vision for your startup. You’ll be working together closely in the months and years ahead, so a strong working relationship is important. Is this attorney the right fit for your startup?
Benefits of a Specialized Startup Attorney Versus a General Practice Attorney
When hiring an attorney for your startup, you may wonder whether to choose a general practice attorney or one who specializes in working with startups. Although both types of attorneys can provide legal guidance, choosing someone with startup expertise offers several key benefits.
It is common for startups to unknowingly work with business lawyers who lack extensive experience working with venture-backed companies. The advice they provide may not be terrible, but they may not understand the specific way things are done in the startup world.
When you work with a specialized startup attorney, you are purchasing their familiarity with the startup ecosystem. Most of the questions you’ll be asking your attorney are some version of: “Is this normal?” You want an attorney that has deep experience in the startup scene to easily answer whether that request from an investor is market or a complete overreach.
In addition to their expertise and industry connections, specialized startup attorneys are often more cost-effective than general practice attorneys. This is because they have experience working specifically with startups and can provide tailored legal advice without needing to conduct extensive research on your business model.
Finally, working with a specialized startup attorney establishes a relationship built on trust and mutual understanding from day one. As your business grows and evolves, your lawyer will be there every step of the way to provide guidance on critical decisions such as fundraising, mergers, acquisitions or initial public offerings.
While general practice attorneys can provide legal guidance for startups, choosing someone with specific startup experience offers several key benefits that can greatly impact the success of your business. When considering potential attorneys for your startup, take into account their level of expertise in working specifically with startups before making your final decision.
Tips for Finding a Good Startup Attorney
Finding the right startup attorney can be challenging, but it’s an important decision that can greatly impact the success of your business. Here are some tips:
- Ask for Referrals: By far the best data point you can get is that another similarly situated founder has worked with an attorney and really loved the experience. Reach out to other entrepreneurs in your network, and ask for recommendations. They may have worked with attorneys who specialize in startups and can provide valuable insights.
- Do Your Research: Research the background and experience of potential attorneys. Look at their website, read reviews and check out their social media profiles to get a better sense of who they are. If you’re interested, check out our client testimonials, as well as our Google verified reviews.
- Cultural Fit: Consider factors such as personality, communication style and overall chemistry when making your decision.
- Schedule Consultations: Meet with potential attorneys to discuss your business needs, and get a feel for how they work. In general, these introductory calls should be free and they should be short—15-30 minutes. See questions to ask in this consultation below.
Questions to Ask a Potential Startup Attorney
When considering hiring a potential startup attorney, it is important to ask direct questions to ensure they are a good fit for your business needs. Here are some key questions to ask during your consultations:
- What Is Your Experience Working With Startups? There are many business lawyers available, but if possible, you should hire an attorney who exclusively works with startups. By hiring a lawyer with startup experience, you can have confidence that they understand the unique legal considerations involved in starting and growing a new business.
- How Do You Bill for Your Services? Find out how your attorney bills for their services so you can budget accordingly. Attorneys may charge by the hour, offer flat fees or alternative billing arrangements. As noted above, you should push for flat fees wherever possible. If an attorney is not willing to work on flat fees for the standard startup work, I would question whether they are an experienced startup attorney.
- Who Will I Be Working With Day-To-Day? The attorney you’re working with day-to-day is the most important relationship you’ll have, not that partner you have two phone calls with. So, when you’re on the introductory call, ask: “Who will I be working with day-to-day?” If they aren’t on the call, consider setting up a quick call to meet them as well.
- How Do You Handle Communication? Effective communication is crucial when working with an attorney, especially during the launch phase. Be sure to ask how often you can expect updates and what methods of communication they prefer. Do they require a phone call to exchange information and provide updates? Is email the preferred method of communication? Do they use any other asynchronous forms of communication?
- Knowing What You Know About My Company, What’s in Your Wheelhouse and What’s Not? Though experienced startup attorneys can probably handle more than 80% of your legal needs, no one lawyer can do it all. For instance, they may be a genius at funding and contract review but know nothing about patents. It’s really helpful to know from the outset what areas of law they are competent in and what they aren’t.
- Can You Walk Me Through the Process of This Engagement Step By Step? Asking the following question serves two functions. First, it helps you determine if the candidate is actually experienced in this type of work or just pretending. If attorneys have done something three or more times, they should be able to explain the process fairly easily. Secondly, it gives you insight into the attorney’s clarity of communication and ability to set realistic expectations. There are many great lawyers who are not particularly good project managers. You want a lawyer who is skilled at both.
The Importance of Having a Startup Attorney from the Beginning
Hiring a startup attorney at the inception of your business may seem like an unnecessary expense, but it can save you significant time and money down the road. A startup attorney can help you navigate complex legal issues and avoid costly mistakes that could hinder your business’s growth. Here are some ways a startup attorney can immediately help you:
- Intellectual Property. When you have an idea, you may have intellectual property to protect. A startup lawyer can help you identify and protect what makes your company special with patents, trademarks or copyrights before sharing details with potential hires or investors.
- Structure. Your legal structure matters, as it can impact the trajectory of your company. Your attorney should help you choose the appropriate legal structure for your business. For example, they can advise you on whether to incorporate as a C corporation, S corporation or limited liability company (LLC).
- Equity. Splitting founder equity is a crucial decision. The decision is often made when the company is just a pitch deck and a dream, but the legacy of that decision lasts the lifetime of the company. Silicon Valley is littered with founders who did this wrong—Facebook and Snapchat to name two. Hire counsel so you don’t make those mistakes.
- Team. Many startups launch with a small and scrappy team comprised of founders and independent contractors. It’s essential that all of those contributors have a clear agreement in place.
Many founders skip legal help during launch due to the high cost. That’s why we created General Counsel—Launch. It provides all the legal support you need to go from concept to Series Seed, for a flat monthly fee.
Tips for Working Effectively with Your Startup Attorney
To ensure a productive working relationship with your startup attorney, follow these straightforward tips:
- Be Clear About Your Goals: Let your attorney know your business goals from the start. This way, they can give you tailored legal advice that aligns with your objectives.
- Communicate Regularly: Regular communication is key when working with an attorney. Schedule check-ins to discuss ongoing legal matters and ensure you’re on the same page.
- Provide Timely Feedback: If your attorney sends you a contract or other document for review, give feedback promptly so they can address any concerns or questions.
- Stay Organized: Keep all important documents and information organized and easily accessible. This way, you can quickly provide them to your attorney when needed.
- Trust Their Expertise: Your startup attorney has experience working with businesses like yours and understands the legal landscape of entrepreneurship. Rely on them for guidance when making critical decisions.
Following these tips will help establish a strong working relationship with your startup attorney, supporting the growth and success of your startup.
If you’re an early-stage startup founder, we’d love to chat with you to see if you’re a good fit for our firm. Click here to set up a free consultation. Additionally, you may want to also check out our:
