If you’re a startup founder or thinking about starting up, one of the must hire professionals is a business lawyer. A good business lawyer provides vital assistance in various analytical and legal aspect of your business and builds a long-term value proposition focused on strategic growth & risk-management. While It’s true that startups struggle to decide whether and when to involve a lawyer into business, It’s also true that most of the founders make a big mistake by thinking that spending money on a lawyer during early days is a waste. The worst thing you can do to your business is to hire a lawyer when it’s too late to make a difference.
Business organization : When you startup, its highly recommended that you start in a lawful manner. Before registering your venture, you must consult a lawyer regarding the feasibility of your business idea. The most common question that surrounds entrepreneurs is the difference between private limited, limited liability & a one-person company. Consulting a lawyer at such an early stage helps you decide on how to structure your organization.
A business lawyer helps you build key relation with your customers, partners, clients, suppliers; and also helps you respond to other people’s contracts that they would want you to sign. Having a standard contract makes it easy to hire, fire and compensate employees, recruit board members & advisors.
Regulatory Taxes & Licenses
For certain businesses, a license from authorised government regulatory body is required to initiate operations. A business lawyer guides you on how to prepare your tax structure. Another important role of business lawyers is to help in identifying tax related consequences of various transactions in which your business will engage.
Your creation holds a lot of opportunity to make money. If you are in media, design or other creative fields, having a dedicated intellectual property specialist is a must. Whereas, for hardware and technology enabled companies, check if your business lawyer can help you register your product and services. If not, look for specialists who can file your patents, trademarks and trade secrets.
Most founder think that they don’t need a lawyer in the initial stages. It’s one of the biggest mistake made as an entrepreneur. During early days of venture, desperate founders take on unusual liabilities and dilute too much equity. For the same reason, It’s highly recommended that you discuss the terms of investment with a lawyer before you sign your terms sheet.
Once you go through your first transaction, it’s almost impossible for a lawyer to change how the founders negotiate their rights. In most of the cases, investors take a cue from the previous rounds and negotiate deals that create a trap for founders and early stakeholder. Based on your term sheet, a transaction lawyer helps you understand the liabilities that you would take up after raising funds and helps in negotiating key decision-making rights.
Lawyer OR Law Firm ?
Firms have a lot of advantage over an individual lawyer, but at the same time they are quite expensive for an early stage startup. The most significant advantage of dealing with a firm is that they have everything under one roof. In addition to that, large firms have a lot of credibility in the local as well as national legal community, which may have intangible benefits for your business.
However, hiring a solo practitioner has it’s own advantages. Independent lawyers are more practical for an early stage startup. Depending on the stage, founders can hire lawyers who are expert in a various services that your business would require.
Ask for background of your Lawyer
Hire a lawyer who is familiar to your industry and its legal environment. Ask your Lawyer if he/she represents businesses/competitors in your industry, and if yes, make sure that everything you discuss with your lawyer is strictly confidential.
Last thing you would want is a leak of sensitive information to your competitors. Ask him if there is a conflict of interest, and make sure you don’t put yourself in that situation.
Most lawyers will charge a one time flat fee for specific services like incorporation or standard agreements, but it’s true that lawyers are in a position to negotiate their fees depending on the requirements.
To be on the safe side, you must ask your lawyer to estimate the cost in written, so that you can decide if it’s feasible for your pocket or not. You can also request for a discounts and free services. Avoid paying hourly, unless you are consulting a lawyer for specific legal advice.
Look for your comfort
When hiring a lawyer, don’t forget to follow your instincts. In order to find the best match, it's important for you to have an open and free communication with your lawyer. Look out for lawyers who understands your vision and are ready to make it happen. You might as well have to visit your lawyer more than once, so look for lawyers who are located in your city and close to your workplace/home.
For most entrepreneurs, the idea of working with a lawyer is similar to a scary dream of never ending bills. Cost is a major factor for all early stage startups and for the same reason, many founders use standard service provided by various online platforms and regret it during later phase of their business.
It’s true that lawyers are expensive, however, there are many ways that can helps you reduce your legal costs. One of the best way is to focus on building a long term relation with your lawyer. Good business lawyers are comfortable in helping founders during early stage of their venture.
Remember that your business needs a lawyer the most when you can’t pay his bills and the least when you can. Saving few pennies by not hiring a professional lawyer may not be a good choice for your future business growth.