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For startup founders, selecting the right lawyer might be as vital as selecting the right investors. Startup lawyers act as advisors when startups invariably encounter issues akin to copyright and mental property issues. They will even guide clients through any mergers and acquisitions, which makes the right lawyer very vital to your bottom line. You’ll need a lawyer who is well-versed in the law and has a thorough understanding of the intricacies of the startup landscape.
Before hiring a startup lawyer, there are some vital questions to ask:
- What percentage of your clients are startups?
- What percentage of your clients are enterprise capitalists or other investors?
- What areas of practice can you help with?
- How will you cope if I need help in an area you don’t practice in?
- How long has your organization been in existence?
- What is the typical size of your clients?
Here’s what answers you can expect and why you should ask questions.
1. What percentage of your clients are startups?
Many lawyers try to serve the startup space, but they are just having fun in it. (*6*) need lawyers who know the law, know the market, know the players and can sustain with changes. A primary care doctor does not have such deep knowledge.
Especially when dealing with investors, startup lawyers can advise on the investment conditions presented by VCs. VCs are skilled negotiators. You need someone on your side who has similar experience in negotiating contract terms.
2. What percentage of your clients are VC or other investors?
VCs/investors are regular clients of startup lawyers. (*6*) are often not like this. If it’s a selection between taking a stance that will discourage VC clients or startup clients, the financial incentives are not on the startups’ side. As a startup founder, you need a lawyer who will vigorously defend your interests, negotiate assertively, and prioritize your needs, even if it means ruffling VC feathers.
We have seen many in-demand startups and founders hand over their negotiating position because their legal advisor advised them to accept “arm’s length” terms. While you need a lawyer who knows what “the market” is, you also need one who recognizes your position and gets you the very best terms inside your negotiating leverage.
3. What areas of practice can you help with?
Know what you’re getting into. No lawyer can do every thing for a startup. You will likely need help with general corporate work, finance, industrial contracts, employment and some forms of mental property work. Before you hire a startup lawyer, ask if these areas of experience are inside their wheelhouse.
4. How will you cope if I need help in an area you don’t practice in?
You need a lawyer who can be honest enough to tell you when something is outside of his or her area of expertise; the lawyer also needs to go a step further and tell you when it could be more profitable to seek the advice of a specialist.
For example, many startups have to deal with regulatory issues akin to compliance, business structure, taxes, and privacy, to name a few. Be sure to find someone who has relationships with professionals and can provide them with warm support.
5. How long has your organization been in existence?
Many lawyers have challenged themselves to focus on the growing startup market. However, they disappear just as quickly. Many clients have come to us after learning that their start-up lawyer is taking a sabbatical or transitioning to consulting. If you’re looking for someone you can trust to be there for the long haul and who will provide continuity, look for a company that has a long history and has established a place and status in the startup space.
6. What is the typical size of your clients?
There is a big difference between representing founders at the registration stage and representing a mature startup at the threshold of an initial public offering. Some lawyers are more proficient at providing guidance at specific stages, so select one who has extensive experience with startups at your stage of development.
Additionally, if you are in the founding stage and your lawyer primarily represents startups and late-stage public firms, be certain to ask how much of your lawyer’s time and attention you can expect.
The most significant thing
To ensure a successful working relationship with a startup lawyer, ask him questions to assess whether he has the crucial expertise. If so, you will work with someone who will defend you and the interests of your startup.