Alexandria Startup Attorneys & Lawyers

Legal Tips and Information

What Qualities Make for a Good Startup Attorney?

If you’re looking for an Alexandria, VA startup attorney, you may find yourself overwhelmed by choice.  If you lack experience working with startup attorneys in a fast-paced environment, it can be difficult to understand what qualities are shared by the best startup attorneys – and the unique value-add that they represent for your business.  The following is a non-exhaustive list of positive qualities that characterize the most successful startup attorneys.

Client-Focused Engagement

When you begin to search for a startup attorney to assist your business, be wary of attorneys that single-mindedly pursue profit and cost efficiency over the provision of quality services to their client(s).  It’s important that you find a startup attorney who is willing to invest a fair amount of energy into developing the attorney-client relationship.

Navigating the law – especially for a startup potentially disrupting a stagnant industry – can be a confusing, sometimes frightening prospect.  If you have questions and concerns, your attorney should be willing to engage such concerns within a reasonable timeframe.  To determine whether an attorney you find on the UpCounsel platform is truly client-focused, check out their ratings and reviews.  If an attorney has strong reviews (as well as repeat clients), then it can be reasonably inferred that the attorney values their client relationships highly.

Apprised of Regulatory Landscape

Startups are often disruptive to a given industry, and may therefore run into regulatory concerns early on.  It is key that you work with an attorney who is at least somewhat familiar with your industry and the regulatory landscape influencing it.  The best startup attorneys keep up-to-date with regulatory developments – not only those currently in the pipeline, but also those being debated and considered for future implementation – and can help your startup properly navigate the law.

Willingness to Advise

Your startup attorney should provide advisory services when appropriate for a given context, without having to be specifically requested.  For example, if you ask your attorney to draft a sale of goods contract, your attorney should not only draft the contract, but should work with you to ensure that you fully understand the terms of the contract and are incorporating advantageous provisions.  If there are any strategically unsound aspects to the contract, your attorney should make you aware of them.

To put it simply: your startup team will not always know what questions to ask.  You should hire an attorney who recognizes this and asks such questions for your benefit.

Preventing Litigation through Arbitration

It is almost an inevitability – businesses occasionally find themselves embroiled in legal disputes.  Without provisions in place to prevent it, a dispute can lead to protracted litigation.

Most businesses and attorneys agree: litigation is best avoided, when possible.  Though – rarely – some disputes may require court intervention for the provision of justice, litigation generally wastes the time, energy, and money of all involved parties, resources that startups typically lack in their growth stage.

Traditional litigation is uniquely damaging to startups because court matters are open to the public.  Brand is important, and litigation can be harmful to your brand.  Media may expose certain details about your business (revealed during litigation).  Investors may be put off by news of extended legal conflict, as it can indicate instability and weakness.

Of course, some disputes need resolution.  To resolve a contract dispute without having to resort to traditional litigation, talk to your startup attorney about drafting contracts that include alternative dispute resolution (ADR) provisions, such as arbitration.

What is Arbitration?

Arbitration is a form of alternative dispute resolution, wherein the parties select a neutral arbitrator (typically an attorney, judge, or former judge) to preside privately over the dispute.  Each side presents their arguments, and the arbitrator makes a judgment based off such collective argument.

Arbitration is less formalized than litigation and occurs over a much shorter period of time, which results in a leaner process overall.  Some parties find that arbitration is more protective of smaller parties than litigation, as it is more difficult for wealthier parties to “outspend” and “outlast” their opponents.

Once the judgment of the arbitrator has been made, a court will confirm it and the judgment will apply with the full force of law.  It is worth reiterating: the confirmed judgment of an arbitrator must be adhered to.  The judgment is not weakened in any way by virtue of its alternative process.

Arbitration typically includes the signing of confidentiality agreements (to prevent either party from disclosing facts revealed during the process), which can be crucial for managing potential damage to your brand from the dispute.

If you are interested in avoiding the traditional litigation process via arbitration or some other ADR process, speak with your startup attorney about the possibility of drafting your contracts to include such provisions.

Business Formation, Registration, and Maintenance

Most startups quickly move away from sole proprietorship organization and register in the corporation form (or as a partnership).

Corporate and partnership forms benefit startup founders because these forms tend to limit personal legal liability.  For example, suppose you and two other founders are the sole employees of your startup.  Normally, if a person were to sue your company over some legal dispute, you and your team might be found personally liable for damages caused.  Now, if you restructure the startup as a corporation, only the corporation as a whole can be held liable.  A damages award can only be drawn from the assets owned by the corporation itself.

Restructuring your business as a corporation, limited liability corporation, etc. typically involves more than a simple registration form.  You may need to draft and execute Articles of Incorporation, a Founders’ Agreement, Stock Agreements, and other necessary agreements for distributing shares and allocating responsibility.

Skilled startup attorneys are equipped with the tools and experience necessary to not only draft airtight agreements to ensure a smooth restructuring of your startup, but will also advise you and your team on the benefits of a given structure for the future of your business.  Your attorney will also help you understand industry standards with regard to stock option provisions and other contract concerns.

Maintenance

Startup teams are notoriously busy, which can make it quite difficult to satisfy the legal requirements for maintenance of the corporation and partnership forms.

For example, if you have restructured your startup as a c-corporation, then you will have to appoint Board members and keep detailed minutes of Board meetings.  If you fail to do so, then your startup may no longer qualify as a c-corporation, and you may lose the liability shield associated with the corporate form.

As such, it’s helpful to hire a startup attorney who will help you understand the rules surrounding the corporate/partnership form.   Your attorney will essentially help you and your team sustainably operate your business in accordance with applicable corporate/partnership regulation.