Choosing a Lawyer for Your Startup


Under the circumstances, hiring a lawyer is often not very high on their priority list. It is often dismissed as an unnecessary and unaffordable expense, a mistake which can prove to be deadly in the long run, particularly as the startup grows. This article will explore why it's imperative to have sound legal counsel, and what to look for before you hire a lawyer.

Why do startups need lawyers?

  • Identifying and Managing Risks: The incorporation of a company might be simple enough, but what comes afterwards often isn't. For example, getting licenses and dealing with taxes can prove to be challenging to the ordinary businessman (who presumably does not have any legal background.) Getting legal help comes with the comfort of knowing that someone is proactively protecting your business from all foreseeable issues. Having been in the market, lawyers are able to pick up on even the subtlest of risks and can help entrepreneurs avert them. Risks are managed by analyzing the key agreements of the business and pointing out discrepancies that already exist, or offering preventative solutions to discrepancies that might arise later.
  • Raising Funds: Raising capital is one of the most important goals for a startup. A competent lawyer will be able give advice on the most efficient form of investment based on your business needs.
    Financing options can vary from personal savings to seed investment to crowd funding and beyond; having a lawyer on board might mean that you get the best possible terms when striking a deal. Investment agreements and their long-term ramifications can also be reflected upon and reviewed.
  • Navigating Regulations: Depending on what field your startup is operating in, you may be subject to a number of different regulations. An experienced lawyer should easily pinpoint which regulations apply to you and how you can avoid incurring unnecessary fines. For example, when issuing stock, it is imperative to comply with State and Federal Securities Regulations. Equity law is notoriously complicated, and you are likely to require the help of an expert in order to make sure that you are fulfilling all your obligations.
  • Drafting Contracts: From founders' agreements to shareholders' agreements to employment agreements, drafting contracts in the process of setting up a business is inevitable. This will obviously be familiar territory for a lawyer, and the founders can focus more on developing their product and brand, secure in the knowledge that the legalities are taken care of.
  • Intellectual Property: Many startups aim at introducing a unique and innovative idea to the market. They need to exercise caution so that their competitors don't steal and profit from their work. This might entail registering a trademark with the US Patent and Trademark Office. This is not as simple as it sounds- there is a chance that your application to register a trademark is rejected due to a conflict with another brand who beat you to registration, or because your own brand sounds too similar to another one. In such cases, its always best to consult with a lawver to make sure your registration goes through.
  • Data Privacy Issues: It is nearly impossible for businesses these days to survive without having some type of virtual presence. This comes with its own set of challenges, such as making sure personal data collection information is in order. Again, a lawyer is likely to be familiar with the kind of paperwork that goes into protecting your social media presence.

Choosing Your Startup Lawyer: Factors to Consider

  • Experience: Choosing a lawyer who specializes in assisting startups has a host of benefits. Firstly, startups come with their own set of problems. A lawyer who deals primarily with startups will be in a better position to understand and address these issues. For instance, most startups have a higher risk: profit ratio. In the same situation, the advice given to a large company will differ from the advice given to a relatively smaller startup. Moreover, startup lawyers are used to dealing with entrepreneurs rather than other lawyers. In practice, this results in them being able to decode legal linguistics and streamline communication to make it more efficient and effective. Lawyers working for larger companies are often used to communicating only with other lawyers and may not be able to simplify communication as much as required.
  • Thoroughness: Since startups will be unable to hire in-house counsel initially, they need to be vigilant about who they are hiring. The person should be thorough enough to completely understand the business inside and out. Talent alone is not enough- it should ideally be accompanied by curiosity and the ability to work hard and make your business succeed. Therefore, it is advisable to search for a lawyer who can go above and beyond legal advice, perhaps by offering valuable insights in other areas such as technology, finances etc. The best lawyers will be willing to engage their own personal network for the growth of your startup.
  • Breadth of Knowledge: Another thing to look for while hiring is your potential lawyer's breadth of knowledge and understanding. The goal should be to hire someone whose services you can continue to engage as your business grows. It is easy to find solo lawyers who are comfortable in assisting with the initial setup of the startup but fall out of their depth when it comes to the more specialized areas such as patents, litigation, and regulations. Although you can hire specialists as you go along, this is a dangerous approach since it is likely to break continuity and increase the margin of error. Thus, it is wise to pick someone who can grow as your business grows, even if it means paying more up front. That being said, however, there is a difference between accurate legal advice and precise legal advice. A startup only really requires accurate legal advice initially. The inability to access precise legal advice should not deter a startup from accessing accurate legal advice, which is definitely a better option than NO legal advice.
  • Flexibility: Finally, given the cost constraints that a startup has to face, it is helpful to find a lawyer who is flexible about payments. This does not mean hiring help will be cheap- good legal counsel rarely is. What is means is that as an entrepreneur, its wise to search for lawyers who are willing to me more flexible about renumeration- perhaps by accepting it in installments to make it more affordable for the startup.

In conclusion, the benefits of hiring a lawyer for your startup far outweigh any potential cost related concerns. If anything, they are likely to save businesses money in the long run. Don't be shortsighted - contact The South Texas Business Lawyers for all your legal needs!

Disclaimer: This article is made available for educational purposes only, to give you general information and a general understanding of the law, not to provide specific legal advice. By using this article, you understand and acknowledge that no attorney-client relationship is formed between you and The South Texas Business Lawyers, nor should any such relationship be implied. This article should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

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