Updated June 26, 2020:

Obtaining legal assistance for startups can be confusing and scary especially when it's your first time hiring an attorney. If you want to start a business it's important as you'll feel confident in having the right legal support.

What Start-Ups Should Know About Hiring a Lawyer

First, you want to find someone you can trust and enjoy working with who can relate to you. If you can get referrals from people it would be best.

You also want to hire someone who knows what they're doing, is experienced with the legal issues that matter to you, and answers you promptly. It's important to hire someone who specifically knows what to do in your particular startup situation. For this reason, you should be willing to spend a bit more for a specialist lawyer who will know your situation best.

Why Do Start-Ups Need a Lawyer?

Start-ups need lawyers for the following reasons:

  • Government - You shouldn't violate laws and you need to know you're doing business the correct way so you won't have unnecessary taxes and you pay the taxes you owe.
  • Public and third parties - It's important to know the steps you need to take in order to control the interactions with clients, employees, suppliers, and the public.
  • Each other - when many people form a company, it's best to understand the expectations of the founders to avoid disagreements in the future.

How Much Does it Cost to Hire a Lawyer?

The kind of lawyers that work with start-ups charge a range from $350 to $800 an hour, but this varies for each situation.

If you decide to work with a lawyer through the incorporation phase, you can expect to pay around $2,000 to $5,000, while some firms can give discounts where the cost is lower. The price varies on the complexity, whether you're forming a corporation or LLC, how many founders, and stock option plans.

Priorities When Hiring a Lawyer

  • Establish a business entity, LLC or corporation, to protect you from business liabilities.
  • Establish the equity rights and ownership of the start-up if there are multiple founders.
  • Make sure the intellectual property is owned and protected by the start-up (especially if this is being developed by independent contractors).
  • Understand the tax consequences in everything you do in the business, such as giving people equity.
  • Small Business Forums - Online forums can be filled with questionable advice since the people there are not lawyers. Sometimes you can find people who have experienced what you're going through and you can read or ask how they were able to resolve their situation. You can then ask a lawyer if this would work in your case. You can do a Google search "forum + industry" to find specific forums for small business owners.
  • Federal Trade Commission - If your competitors are using unfair prices according to you, you can look through the FTC's Antitrust Laws. It offers information on reporting an antitrust violation and who to turn to for enforcement. This will offer the needed information to avoid hiring a lawyer or be better prepared if you do hire one.
  • Small Business Administration - The administration's website has a page which links to useful information. You can use the search box for advice on specifics. For instance, if you search "sued by employee," this will turn up many articles that can help you understand what to do.
  • Internal Revenue Service - If you have legal problems that pertain to taxes, you can find information in the Self-Employed Tax Center and Small Business where the IRS has information available in Spanish also.
  • U.S. Department of Justice - The website has a list of free lawyers where you can choose the state and click on the lawyers close to you. Most are for individuals but it won't hurt to check for your small business.
  • Civil Rights Division of the Justice Department - For any questions concerning the Americans with Disabilities Act, you can visit the ADA Business Connection page website. The Department of Justice Civil Rights Division has information on how your business can be ADA compliant for clients and employees, as well as guidelines for particular business types.

If you need help with legal assistance for startups, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.