How can startup founders pick the right lawyer to launch, protect and grow their ventures?
Having a great lawyer is vital as the founder of a startup venture. That doesn’t make finding the right fit easy or fun. Yet, it is a necessity. I’ve seen the devastation left in the wake of startups and entrepreneurs failing to have good legal counsel and representation. I’ve interviewed some of the most successful serial entrepreneurs and angel investors on the DealMakers Podcast, who certainly wouldn’t have survived if it wasn’t for an effective legal team.
Being a former attorney myself I’ve been involved in many scenarios on the other side of the table, including a $113 billion arbitration case.
The bottom line is that if you are going to make this venture work, get it funded, scale it, and perhaps even close on a profitable exit, you need legal support and protection. Your incorporation docs have to be structured to protect you. You need to be protected at each round of capital raising. If you gain any real traction, sooner or later someone is going to try to sue you.
Finding a Specialist
Just as you believe you are the one to make this venture happen as a specialist, and you hire experts to help you scale, you need a legal expert who is a specialist too. The law is complicated. It’s frequently changing, and so are the players and environment you’ll be up against. It’s extremely unlikely you’d hire your hairdresser to handle your SEO. You wouldn’t hire the line cook from your favorite restaurant to be your chief technical officer. So, make sure the lawyer you hire is a professional in the area you need too. They should not only be experienced, but be respected, if not feared in this legal field too.
On this journey you may need someone specializing in corporate law, fundraising, intellectual property, and when you make it big, family law and asset protection too.
How Much Can You Afford?
When it comes to lawyers you typically get what you pay for. Just ask 99% of the people who have chosen a free public defender, and got hit with a charge for something they didn’t do. Just as we’ve all seen people and corporations in the media and court who appear very guilty, but have such a great legal team they still manage to walk free or with no meaningful penalties.
Hire the best you can afford. Just make sure the value is there. Those that are truly great can often squash any legal threats just by having them on retainer. They are lawyers that others won’t dare go up against. Some can solve what could have been months of legal battles with just a note on their letterhead. The better ones are just more cost effective and efficient.
Who Will Tell You How it is?
Be wary of those how just seem to tell you what you would like to hear and make you feel good. The truth about the risk typically isn’t comfortable. It’s nice if they convey this in a way you can digest, instead of making you feel foolish or like a school child shuffling into the principal’s office. Though it’s most important they tell you how it really is. Whether you like it or not.
What Else Can They Do for You?
Being your legal protection and representative is their most important role. Put that ability first. Yet, just like seeking and evaluating investors for your startup fundraising rounds, some law firms may offer more added value than others.
It can be a big bonus if they have connections to family offices, VCs, angel investors, or if they even invest in startups themselves. Some may even own commercial properties where you can find discounted office space for your startup.
Having to resort to billboards, Alexa or Google for choosing a lawyer isn’t a scenario with great odds of picking the best for your unique needs. It is always far better if you can get referrals to reputable legal counsel. If that’s taking too long, consider looking up who other startups have used and succeeded with.
If you are effectively picking names out of the phone book, go beyond online reviews and try to find out their stats and how they have really performed for others. How many of their past clients feel they were sold out and sacrificed versus seeing the case all the way through? Are they the type of firm that thrives on generating lots of extra billable hours to feed their own revenues? Or do they have a reputation for putting clients’ interests first, even when that means solving it in the fastest and cheapest way possible?
Test Them Out
As a founder and early stage startup you’ll have lots of basic legal needs. Test out your short list or top pick on something smaller and simpler, before you get to a really make or break situation. See how you like their performance.
Just as with investors and partners as VC firms, look for a lawyer who shares some of your world view. Do they believe in what you are doing? Can they defend your strategy? Think about the teams startups like Uber or Airbnb had to have when they were essentially going out to disrupt the law.
You’re going to need a lawyer. Just as with choosing a Realtor or investor, it can appear tough to pinpoint the really good ones on the surface. Use this checklist and ask for qualified referrals to choose the right lawyer for you and your unique startup. Everything relies on it.