Neil Patel

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What is the average cost of startup lawyers?

There can be many legal costs associated with organizing, launching, growing, financing, and exiting a startup.

The cost of a startup lawyer will largely depend on the type of assistance you are looking for.

In this article, we discuss some important considerations for managing legal expenses.

You can use this info to help ensure that you get the most from the money you put toward your legal budget.

We also answer some common questions asked, and take a look at how much a startup lawyer costs.

First, let’s consider some top ways that can generally help you keep your legal fees down.

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Keeping Your Legal Costs To a Minimum

Legal fees can be expensive. Though there are some things you can do to help keep your attorney fees under control.

If you follow the following tips, you can save on your legal costs:

1. Pay attention to what your lawyer tells you

You hired a lawyer, probably because of their legal knowledge and experience.

It’s critical that you’re clear about your instructions and that you follow your lawyer’s advice on them.

If you have any questions about your lawyer’s advice, be sure to ask for clarification as soon as possible.

This will eliminate the need for recurrent discussions, therefore, assisting in reducing your hours used and resulting legal fees.

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2. Research

Do some research on the average cost of startup lawyers. Then tell your lawyer that you have a solid grasp of the fundamentals.

For the most common legal responsibilities that businesses face, there are several free high-quality templates and other tools available online.

For example, if you require new terms and conditions, carefully study the templates available. You’ll add comments where necessary, and send it to your lawyer for preparation.

This will demonstrate to the lawyer that you have a fundamental understanding of the job and help eliminate perceived information asymmetries.

Pro help is always best, but if your assistant or cofounder can do 90% of the work for a lot less than your attorney’s hourly rate.

Then, it may make sense when you are operating as a very lean, early-stage startup.

Be sure to see the library of document templates on for quick and easy-to-use fill-in-the-blank forms and instructions you can get started with fast.

3. Defer fees

Take into account deferred fee options. Generally, there are two basic forms of deferred fee structures:

For costs in the upper four-figure range, there was a lawyer who once accepted an antique acoustic guitar as full payment.

You should carefully analyze any deferred arrangements. That’s because they might generate a mismatch of incentives or an actual conflict of interest between you and your lawyer.

A deferred fee arrangement can be a feasible alternative for tolerant lawyers and businesses with low capital.

4. Respond to your lawyer as soon as possible

Delays in responding to your lawyer’s requests can result in higher legal expenses.

It is critical that you furnish your solicitor with everything they have asked, and do it as soon as possible to prevent the cost of additional requests.

It’s critical that you supply your lawyer with all of the paperwork he or she has asked for in a neat and readable manner.

If you only supply some of the documents or if the records are not organized, your attorney will need to seek missing documents.

As well as sort the documents you have provided, which will result in extra costs.

5. Ask for notifications

Ask for notifications when being invoiced or an informal update at the end of each month or week.

When you’re subject to being billed on an hourly basis, it’s a good idea to know exactly where you stand.

Detailed off-cycle billing might be a burden for lawyers, giving a client an informal billing update is generally not, and most lawyers will comply.

Also, before beginning an assignment, ask your lawyer for cost and time estimates.

You can ask the lawyer to notify you if they expect to exceed their estimate.

Even if only subconsciously, you will anchor the cost that the lawyer believes is appropriate to the bill.

It will also help your financial planning and preparing to fund a new retainer without any lapse in legal representation.

Having an estimate of the average cost of startup lawyers helps.

6. Hire a lawyer with experience in your niche

Find a lawyer that has done work similar to what you’re asking them to carry out.

Most lawyers have an area in which they specialize, making them a better fit for the job at hand.

You don’t want to pay for a lawyer to learn a new skill in a different area.

Lawyers’ websites usually indicate their primary practice areas, these are areas that they are most likely to excel.

Hiring a law firm to conduct work that isn’t expressly included on the website is a mistake.

If you’re thinking about hiring a generalist, you should have a good grip on the areas in which he or she most commonly provides advice.

You should make sure there’s a lot of overlap, such as experience working alongside startups.

Also, consider raising the minimum level of experience you want to around 6-9 years.

7. Prepare for discussions

Preparing for phone conversations and meetings with your lawyer will help you minimize billable hours.

It’s critical that you make a list of questions and concerns that you want to discuss with your lawyer.

This will ensure that you get answers to all of your inquiries as soon as possible and help lower extra hourly charges.

You should clarify all charges, expenses, and billing rates for legal assistants, administration, etc.

Working with a company that employs assistants, paralegals, and senior associates has one advantage.

Billable rates often vary from the lowest to the highest.

You can ask junior associates to handle the most mundane, but time-consuming tasks whenever possible, leaving essential negotiations to high-level senior associates.

Ensure that you know in advance what charges and expenditures the company will bill you for.

These can include things like couriers, photocopying, mailing, travel. Ask the lawyer whether these costs can be reduced or waived if possible.

Before we go on to talking about the estimated fee structures, check out this video. In it, I have outlined the nuance of how to launch a business. You’re sure to find the information helpful.

Fee Structures

There are three main types of legal fees: flat, hourly, and contingency.

In addition, lawyers that charge differently for consultations. They may or may not need a retainer payment before beginning work.

So may accept deferred compensation in the form of delayed payment or equity.

In a perfect scenario, you’re paying your lawyer to perform something they’ve done a hundred times before, with just small changes along the way.

That’s predictable work with predictable costs.

So, how much should be the average cost of startup lawyers? The most accurate answer is, obviously, “it varies.”

It depends on factors including the lawyer’s experience, the complexity of the legal issue at hand, your unique business circumstances, and so on.

Hourly fees are based on the hour. Most lawyers prefer this approach of billing.

That’s because it gives them some confidence that they will not end up working for free if the client has further questions.

Or, makes unexpected changes, or needs advice on other matters.

The hourly rate you pay is largely determined by the lawyer’s experience. It’s usually measured in years, with the recommendation of three years at a minimum.

Many solo lawyers to medium-sized firms can charge around $360 to $550 per hour. While large firms (with more experienced partners) charge between $450 to over $1,000 per hour.

Contingency costs can run up to 40% of the amount possibly awarded in legal proceedings.

They are not generally recommended for early-stage businesses, whose objective is to avoid litigation.

For the most part, many can use the above pointers to help reduce their legal expenses.

However, there are times when you might consider spending more rather than less.

Times To Spend More On Legal Fees

  • Raising Capital: If you want to raise funds from a third party it can be worth getting the best possible help.
  • M&A: There is so much on the line and plenty of risk in M&A deals, it is worth paying every penny you can for the best lawyer.

Guy Kawasaki’s example of how much legal fees for a business may cost when he first started Truemors, is that he had to pay $4,824.13 in legal expenses. His legal costs included:

  • Stock purchase agreements
  • Drafting a Terms of Use
  • Trademarking Truemors
  • Organizational resolutions and bylaws
  • Discussion of liability, copyright, insurance issues, and infringement

When you’re trying to raise funding for your company, add details about the sources where you’re getting competent legal advice.

Keep in mind that in fundraising, storytelling is everything. In this regard for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.

Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.

What Will Be The Cost Of Incorporating Your Startup?

When compared to the effort required to start a business, forming a legal company is surprisingly quick and easy.

In fact, depending on which route you take, you can establish a limited liability company in as little as 24 hours.

A limited company can be formed by yourself or by hiring a third-party agent or lawyer to handle it for you.

These costs can range from a couple hundred to several thousand dollars.

When To Get A Lawyer

At the most basic level, startups require the help of a lawyer to deal with three groups:

  • Third parties and the public. In your contacts with customers, suppliers, users, workers, and the general public, you must take reasonable precautions to control risk.
  • The government. You don’t want to break any laws. You must also ensure that you are conducting business in a way that avoids unnecessary tax liabilities and that you are paying the taxes you owe.
  • Each other. When a group of people forms a company together, it’s crucial to define the founders’ rights and expectations upfront, in case there are any problems later.

Common Situations In Which You May Want To Get A Lawyer Involved

  • Negotiating contracts with customers and suppliers
  • Establishing terms of service for websites and license agreements
  • Establishing terms of service for licensing agreements
  • Recruiting employees
  • Raising funds
  • Hiring employees
  • Getting a patent
  • Forming and incorporating a new business
  • Selling your business 

Legal Items That You Should Address:

  • Assure that the company’s intellectual property is safeguarded and owned by the company.
  • Make sure you’re aware of the tax implications of your activities.
  • If there are multiple founders, determine the company’s ownership, voting, and equity rights.
  • Protect yourself from business liabilities.

What To Look Out For When Hiring A Startup Lawyer

First and foremost, look for the ideal match.

Someone you can trust and get along with, like working with, and feel they have a genuine interest in you and your business.

You also want someone who is skilled, responsive, and knowledgeable about the kind of legal difficulties you’ll be dealing with.

Considerations for incorporating a restaurant, for example, may dramatically differ from those forming a software firm.

For each project, you’ll also require the appropriate level of seniority.

You don’t want a third-year lawyer negotiating with an investor or venture capitalist on your behalf.

Neither do you need a senior partner completing paperwork for incorporation. Sid by side, get an overview of the average cost of startup lawyers.

Red Flags To Look Out For

First, there’s the lawyer who doesn’t appear to understand your industry or task.

It’s much more difficult for someone to adequately represent you if he does not understand the world in which you operate.

Then there’s the lawyer who appears to be learning something at your expense.

It’s doubtful that your lawyer will be capable of accomplishing it correctly or efficiently.

That is if you feel like you’re doing something entirely new to him.

Also, a lawyer who charges you additional, and unexpected fees early on can be a warning sign.

All clients want cost-effective solutions, so knowing what something will cost and keeping surprises to a minimum is key.

Especially, watch out for lawyers who seem to make things far more complicated and lengthy than they need to be, just to bill more.


Spiraling expenses are an entrepreneur’s worst enemy. Receiving the right legal advice is critical to your success.

But for many startup founders, the cost of getting the right advice can seem complex and confusing.

The amount you pay will ultimately be determined by the legal issue you’re dealing with and the lawyer you hire.

Although lawyers are notoriously expensive, there are methods to save costs and ensure you get the most bang for your buck.

A good first step is figuring out the average cost of startup lawyers.

You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.

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Neil Patel

I hope you enjoy reading this blog post.

If you want help with your fundraising or acquisition, just book a call

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