How to Choose a Startup Lawyer
A skilled startup lawyer or startup attorney is an essential partner for a new business. Especially as your startup continues to grow, having a lawyer who understands the needs of your business and your industry can help pave the way for your startup’s acceleration and prevent hurdles down the road.
Below are a few important considerations when selecting your company’s counsel:
Why do startups need a lawyer?
Startup lawyers become important as your business grows from the “idea on a napkin” stage to becoming a legitimate business dealing with the outside world, be it with the government, with third parties or amongst the founders themselves. You’ll likely need advice from your lawyer on any applicable laws, ensuring you are doing business in a way that doesn’t create unnecessary tax or other liabilities. Your startup lawyer can help you manage your relationships with employees, customers, suppliers, and potential investors. And, sometimes most importantly, your lawyer can help establish the roles and rights of the founders in order to prevent or help navigate disagreements down the line.
Whether you are thinking about forming your business, structural issues, issuing founders’ equity, hiring employees, negotiating contracts with suppliers or customers, protecting your intellectual property or raising capital from outside investors, an experienced startup lawyer can be helpful for your startup at every stage.
Are they really a “startup lawyer”?
Choose a lawyer whose focus and experience is working with your business. Meaning, if you are an early-stage technology company looking to ultimately raise outside venture capital, your lawyer should have that same expertise.
- Ask your lawyer how many startup clients they have.
- Ask what the lawyer or firm has done for these clients.
- Ask if they have a focus on a particular sector or industry.
- Ask for a list of deals the lawyer has closed in the last six months.
Do they have other specialists on their team?
As your business continues to grow, you will need the help of additional lawyers for specific purposes. For instance, you may need help in the areas of tax, employment, immigration, data privacy, capital markets, intellectual property, regulatory, litigation, and more. In addition, you may need assistance in various geographic regions (domestic and international). If your lawyer is part of a large firm that focuses on startups and has a “footprint” in the geographic regions that you are looking to expand to, you may have the benefit of having these additional specialists at your disposal.
- Ask if the firm is able to support your business throughout its life cycle.
- Ask if the firm has direct access to specialists relevant to your business (sector and geographical), and if so, how it will connect you with them.
What is their cost structure?
Experienced startup lawyers and firms understand that startups are cost-conscious and cash-constrained. Look for a startup lawyer who understands this and is able to offer flexible fee arrangements that make the most sense for your business.
- Ask what fee arrangements the lawyer offers when working with startup clients.
- Ask who the primary lawyers will be on the account. While the hourly billing rate of junior associates may seem attractive on the surface, the use of more senior attorneys in a less “leverage” staffing model may make more sense.
- Ask what efficiencies the firm has in place to reduce costs for startup clients.
Are they familiar with your likely investors?
A great startup lawyer will have the benefit of experience and relationships with the investors you are likely to raise money from. Your lawyer can help you focus on the negotiating points that matter the most to you and to your potential investors, and can negotiate on your behalf accordingly, without getting hung up on issues that ultimately don’t matter to your business or your deal.
In addition, if your lawyer is part of a venture capital practice that also represents investors in their funding and investment activities, your lawyer may have insight into which investors could potentially be interested in your company and may be willing to facilitate introductions with those investors.
- Ask whether the firm has a venture capital practice, and if so, what investors (venture funds, corporate strategics, family offices, angels, etc.) they represent.
- Ask whether the firm has a venture debt practice, and if so, what lenders the firm represents.
Does their culture fit?
Your lawyer will be there with your business during exciting and also during potentially difficult times. Choose a lawyer who is accessible, passionate about working with you and your business, and straightforward in their advice to you.
- Ask your lawyer to describe the firm’s culture and how this culture benefits their clients.
- Ask how your lawyer plans to communicate with you and what timelines they work on.
- Ask why your lawyer chose to work with startups and why this work is important to them.