Your Business Should Have a Lawyer (or two).
Whether you are a startup, small business or independent contractor you should have a lawyer. No matter how much information or any number of legal documents you can get online, you still need a lawyer or have a lawyer friend to field questions. I am convinced that some friends from Silicon Valley only keep in contact with me because they can ask me hypothetical legal questions from time to time over drinks.
While an expensive soundboard, I promise you that at some point in your career a $200/hr or $400/hr phone call to a lawyer will save you a lot of money. I think startup attorney Ryan Robert from Dallas sums it up best. In short, if you are hesitating regarding a decision with legal ramifications, then you should give your lawyer or an experienced lawyer friend a quick call. Furthermore, lawyers are great escorts to introductions within an industry. Great lawyers pride themselves on being connectors and usually have large rolodexes.
This does not mean that every question or task requires a lawyer. I would gladly save $1000 at this stage if it meant I had to do a little online research or file something with the government myself.
Finding the right lawyer, however, is not always easy and can take several tries before you find the right one. One thing I took away from Mark Suster’s article, when he writes about using an attorney at a startup, is that he has worked with a number of attorneys and thus has been able to find some great ones.
As a young business owner or entrepreneur this can be a tough feat since you probably have not interacted with many attorneys in your life. Yes, attorneys can be intimidating and they are expensive, but that is no reason to ignore them for the important questions. As someone who has sat on the other side of the table I think the following is a useful set of criteria for finding a good business attorney on your first try.
Criteria For Choosing Your Attorney
1. Get a referral if you can. No matter how tech savvy we get (and I may someday eat my words here), referrals will remain the #1 source of business development for startup and business attorneys. The close personal nature and confidentiality of the relationship requires that we have some level of initial trust with an individual attorney or firm. Most people often derive this trust through a referral from a credible business connection. Referrals help to reduce the risk of missing #2 and #4 below. So ask a mentor, a colleague, or your investors for a reference.
2. Does the lawyer have industry experience? The biggest time and money sucks occur when an attorney does not understand a business’s industry. Even if you are having an attorney review a contract, make sure they understand the industry, otherwise they will voice unnecessary concerns because they are unfamiliar with the language of the contract – waisting your time and your money, and potentially leading you down the wrong path.
3. Does your lawyer meet your needs? Simply put, if you are looking to form your company, make sure your attorney has adequate formation experience. If your company has more complex intellectual property concerns then make sure your attorney (or their firm) can handle this. If you need introductions in a certain industry, make sure the lawyer or law firm has the connections to make those introductions and is know for making those connections. I always think having an attorney or law firm with tax expertise is a necessity as tax issues pop up in a great number of situations.
That being said, if you have a simple business or are an independent contractor, you probably do not need the likes of a big, expensive international law firm – a local business attorney who understands your industry should suffice.
4. Do you get along with the lawyer or legal team? This goes without saying, but can be tough to determine upfront. Trust your instinct and hire your lawyer like you would any other member of your team.
5. Is the lawyer local? To the extent you can, try to have your lawyer be local. Nothing beats the ability to meet with your lawyer face to face, plus they will understand the best practices for your state and local industry. This is not a rule of thumb, however, as many people must seek out attorneys in other locations for more industry expertise. For this reason many startups in Los Angeles or New York traditionally have turned to lawyers and law firms in Silicon Valley and Boston, respectively, who have more startup experience (although this trend is changing with great startup shops in New York and Los Angeles quickly popping up).
6. Is the lawyer transparent about their fees? Understand from the very outset of the relationship with your lawyer how and what you are being charged. Remember, everything is negotiable, so try to get set fee arrangements for certain items like forming your company, financings, and other well paved transactions. If a lawyer is dodgy about discussing any fee arrangements then walk out the door right then and there. We should demand this information as consumers, and any good praticioner should have no problem giving you this information.
You Can Always Find A New Lawyer
At the end of the day, a lawyer is a service provider. You are free to choose another service provider if you are unsatisfied. Especially in metropolitan areas, there is a wide range of lawyers who offer similar services, so be as picky as you like keeping in mind the above factors. One word of advice which will make your ability to switch attorneys much easier – stay mobile by having access to all of your legal records. If you can get your lawyer to use a file sharing service like Dropbox then do it. This way, switching lawyers becomes as easy as sharing the Dropbox folder with another attorney and alleviates the medieval nature of transferring legal records from one attorney to another – similar to changing doctors and not having electronic medical records on hand.
Good luck, and always remember, you are in the buyers seat when it comes to choosing your attorney.