Key Takeaways:

  • Hiring a Startup Lawyer: Startups should seek lawyers with industry experience, strong communication skills, and a track record of working with early-stage businesses.
  • Legal Needs of Startups: Startups need legal assistance with incorporation, compliance, contracts, employment law, and intellectual property protection.
  • Costs of Legal Assistance: Costs can range from hourly rates ($350–$800) to flat fees for specific services like incorporation ($2,000–$5,000).
  • Low-Cost Legal Options: Alternatives include online legal services, startup incubators, law school clinics, and government resources.
  • Additional Legal Considerations: Compliance with employment laws, contract essentials, data privacy regulations, and potential investor negotiations.
  • Where to Find Legal Help: Entrepreneurs can use legal marketplaces, professional networks, and startup-focused law firms.
  • UpCounsel’s Role: UpCounsel connects startups with vetted attorneys to help with their specific legal needs.

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.

How to Choose the Right Startup Lawyer

Choosing the right lawyer is critical for your startup's success. Consider the following factors:

  1. Startup Experience – Ensure the lawyer has experience working with startups, as they have unique legal needs compared to established businesses.
  2. Industry Knowledge – A lawyer with knowledge of your industry can provide insights into regulatory and compliance issues specific to your sector.
  3. Fee Structure – Understand whether the lawyer charges hourly, offers flat fees, or provides alternative billing arrangements.
  4. Accessibility and Communication – Look for a lawyer who is responsive, easy to reach, and communicates complex legal matters in a way you understand.
  5. Network and Resources – A well-connected lawyer can introduce you to investors, accountants, and other professionals valuable to your startup.
  6. Proactive Approach – A good startup lawyer will not only handle legal issues as they arise but also anticipate potential risks and guide you in mitigating them.

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.

Common Legal Issues Startups Face

Startups often encounter the following legal challenges:

  • Business Structure & Incorporation – Choosing between an LLC, S-Corp, or C-Corp impacts taxation, liability, and funding opportunities.
  • Contract Law – Startups must create legally sound contracts for employees, vendors, clients, and investors.
  • Intellectual Property Protection – Trademarking your business name, registering copyrights, and filing patents help safeguard your brand and innovations.
  • Employment Law Compliance – Ensuring compliance with wage laws, worker classification, and anti-discrimination regulations is essential.
  • Regulatory Compliance – Adhering to industry-specific regulations, tax laws, and privacy laws prevents costly legal disputes.
  • Funding and Investment – Legal guidance is essential for structuring funding rounds, equity distribution, and investor agreements.

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.

How Startups Can Reduce Legal Costs

Legal fees can add up, but startups can manage expenses by:

  • Using Online Legal Services – Platforms like UpCounsel, Rocket Lawyer, and LegalZoom offer affordable legal documents and consultations.
  • Leveraging Startup Incubators & Accelerators – Many incubators provide access to discounted legal services.
  • Seeking Law School Clinics – Some law schools offer free or low-cost legal assistance through their clinics.
  • Bundling Services – Some law firms offer flat-fee packages for incorporation, contract drafting, and compliance needs.
  • Negotiating Alternative Fee Arrangements – Some lawyers may agree to equity-based compensation or milestone-based billing.

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.

Key Contracts Every Startup Needs

Contracts are the backbone of a legally sound business. Startups should ensure they have the following agreements in place:

  1. Founders' Agreement – Defines roles, equity distribution, and decision-making among founders.
  2. Employment & Independent Contractor Agreements – Protects the business and ensures clarity in work arrangements.
  3. Non-Disclosure Agreements (NDAs) – Safeguards sensitive business information from unauthorized sharing.
  4. Terms of Service & Privacy Policy – Essential for startups with an online presence to comply with data privacy laws.
  5. Partnership or Investor Agreements – Outlines funding terms, equity, and responsibilities of stakeholders.

Where Can a Business Get Low-Cost Legal Advice?

  • 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.

How to Find the Best Legal Help for Your Startup

Finding reliable legal support is crucial for your startup’s success. Consider these options:

  • Legal Marketplaces – Platforms like UpCounsel connect startups with experienced attorneys for flexible legal assistance.
  • Professional Networks – Seek recommendations from fellow entrepreneurs, investors, or mentors in your industry.
  • Startup-Focused Law Firms – Some law firms specialize in working with early-stage businesses and offer competitive pricing.
  • Government Resources – The Small Business Administration (SBA) and local economic development centers provide free legal guidance.

If you need legal advice for startups, UpCounsel can connect you with top attorneys tailored to your business needs.

Frequently Asked Questions

1. What kind of lawyer does a startup need? A startup needs a business lawyer experienced in corporate law, intellectual property, employment law, and regulatory compliance.

2. When should a startup hire a lawyer? Startups should hire a lawyer as early as possible—ideally before incorporation—to ensure proper structuring and legal compliance.

3. Can a startup get legal help without spending a fortune? Yes, startups can access affordable legal services through online platforms, law school clinics, startup incubators, and legal marketplaces.

4. What happens if a startup ignores legal advice? Failing to get legal advice can lead to compliance issues, costly lawsuits, intellectual property theft, and difficulties securing funding.

5. How does UpCounsel help startups find legal assistance? UpCounsel connects startups with vetted attorneys who provide specialized legal services, ensuring compliance and protection at competitive rates.

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.