Scottsdale Startup Lawyers
Legal Tips and Information
Qualities to Look for in a Startup Attorney
If you do not have experience working with an attorney in a professional environment, securing the right startup attorney for your business can seem like quite a difficult feat. On UpCounsel, you’ll be given the opportunity to browse through hundreds of startup attorney listings in the Scottsdale area alone – in other words, you’ll have more-than-enough choice – but how do you separate the best startup attorneys in Scottsdale from those who provide merely average or mediocre services?
Knowledgeable About Changing Regulation
Skilled startup lawyers should not only have a precise understanding of currently applicable laws and regulation affecting your industry, but should also be aware of changing regulation in the space. Interim rulemaking, draft regulation, and other matters involving administrative action and legislation have the potential to significantly influence the day-to-day operation of your business. It’s therefore necessary that your attorney keeps himself or herself apprised of prospective regulatory shifts.
Willingness to Invest in the Client Relationship
It’s important that your startup attorney invests reasonable time and effort into the attorney-client relationship. Try to avoid attorneys that treat engagement purely as a transaction. Initially, your startup legal concerns may seem to require only “one-off” services – like drafting a single contract – but in many cases, your startup will benefit by expanding the scope of the working relationship over time. As you may end up working with an attorney over a longer period of time than initially anticipated, look for an attorney who is friendly, engaged, and willing to advise on relevant strategic issues.
Open, Honest, and Transparent
Too many attorneys – especially those working in startup world – operate in a manner that is unfriendly to client interests. Specifically, attorneys often pad their hours and fail to explain their work-product to the client. When there is a lack of transparency, clients are expected to simply trust that the attorney has provided adequate services at a reasonable price. Fortunately, the UpCounsel platform provides a level of forced transparency and empowers users to better assess the quality of services provided by a particular attorney. Before you speak with an attorney, make sure to check their ratings and reviews on UpCounsel.
Important Contract Considerations
At every stage, your startup will almost certainly have to execute a variety of contracts – employment agreements, sale of goods contracts, service provision contracts, confidentiality agreements, and many, many others. Your Scottsdale startup attorney must therefore be skilled and experienced at drafting contracts and explaining complicated/confusing provisions to you and your team.
Encourage your attorney to advise you on strategic issues, but do not rely solely on his or her assessment. Make sure that you and your team fully understand the contracts you enter so that informed, open strategic decisions can be made.
As you begin drafting and executing contracts with your startup attorney, be aware of the possibility of including the following provisions – and don’t be shy about requesting further clarification, if necessary.
Alternative Dispute Resolution
As a startup – particularly if you are in the earliest stages – it is generally a good idea to avoid lengthy, expensive litigation. By drafting a contract that requires each party to accept alternative dispute resolution, you can avoid the costs (and potential damage to your brand) associated with traditional litigation.
The most common form of alternative dispute resolution is mandatory arbitration. Arbitrations are private, and parties can be forced to sign confidentiality agreements regarding the content of an arbitration. In a mandatory arbitration, a neutral arbitrator makes a judgment about the dispute. The judgment is then confirmed by a court and applies with the full force of law.
Choice of Law
A choice of law provision can have a significant impact on the validity and interpretation of your contract. Depending on what state law you select to govern the terms of the contract, portions of your contract may be deemed invalid. Similarly, some states have statutory or case law that will lead to an alternative interpretation of certain provisions of your contract. Make sure to consult with your startup attorney to ensure that the choice of law embedded in the contract is favorable to you.
You may want to include confidentiality provisions preventing other parties from revealing the content of the contract to others. The inclusion of a confidentiality provision is particularly useful if the content of the contract reveals information or processes that are unique to your startup.
Liquidated Damages Clause
In some cases, breach is a necessary strategic decision. You (or another contracting party) may be stuck in a damaging contract. Breach is perfectly reasonable in some circumstances, but the problem with breach is that costly litigation may follow (to determine the damages suffered). To make breach more predictable, considering including a liquidated damages clause. A liquidated damage clause essentially sets a fixed damage amount to be paid to the non-breaching parties by the breaching parties.
Preparing for the Risks of Litigation
Litigation is often unavoidable. At some point, your startup is likely to handle a dispute wherein litigation is perceived as necessary for the resolution of the dispute. Though litigation is very often a net negative for a growing startup, there are several ways to minimize the damage wrought by costly litigation – and sometimes, to avoid it outright.
It’s important that you prepare for the inevitability of litigation, even if the risk is quite low. Your startup attorney will be fundamental to these efforts.
First, make sure you restructure your startup in a form that limits the personal liability of you and your team. By default, a business is structured as a sole proprietorship, and all owners are vulnerable to having their personal assets exposed to liability in the event of litigation.
Second, regularly assess areas of your growing business so that you are aware of certain aspects vulnerable to legal dispute. For example, if you identify that one particular revenue channel of the business straddles the line of legality (under current regulations), you may want to resolve the issue before it becomes a problem.
Work closely with your attorney to strategize methods to minimize the risk of later dispute.
Outlet for Amicable Resolution
Internally, try to provide informal outlets for amicable resolution. Too much employee agitation can lead to later, ugly litigation, which can cripple a startup before it gets off the ground. As you grow your workforce, make sure to grow n adequate human resources department. Your employees should feel comfortable knowing that they have internal advocates for their issues and concerns.
Negotiation vs. Aggressive Pursuit of Civil Action
Generally speaking, the attorney you use for litigation (whether it is the same startup attorney you hire for transactional work such as contract drafting, or a different attorney) should be comfortable with both soft negotiation tactics and more aggressive tactics.
Ideally, you can amicably resolve your legal disputes through negotiation, compromise, and settlement, but in the event that negotiation fails, your litigation attorney should be skilled and experienced in taking your dispute to the courtroom
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