As an active angel investor and co-founder of the MergeLane accelerator, I am asked to recommend startup lawyers almost once a week. Many of these requests come from companies that have been working with a friend or family friend, or a reduced cost attorney. Those lawyers may not have specific experience counseling startups. This doesn’t always go well.
There can be huge intellectual property, tax and financial implications for failing to set things up right from the startup start. Although most mistakes can be cleaned up later, it can be a huge hassle and a significant expense.
Before going any farther down the path, I would highly recommend finding a lawyer who:
- Has done a ton of startup financing deals. There are nuances and market norms that can make or break financing deals, for example. Lawyers without startup experience often miss these. If you are applying to an accelerator, it is especially helpful if your lawyer has represented other accelerator participants.
- Is well-known and respected in the investor community. This is important because if your investors know the lawyer or the firm you work with, they won’t feel like they have to double check every word in your documents. Respected lawyers also tend to produce high-quality work.
- You like and enjoy spending time with
- Is responsive (within 48 hours) to your requests
- Can grow with you. Personally, I prefer to work with a firm rather than an individual because they can better manage spontaneous requests and absorb needs as you grow. As an entrepreneur and investor, I’ve found that you can never predict what startup life will throw at you. The law firm we’ve worked with has helped us with everything from IP to Hungarian immigration law.
Unfortunately, most of the lawyers that fit this bill are expensive on an hourly basis (i.e., $450 per hour or more). I think this is worth every penny. From my experience, choosing a good lawyer will cost much less in the long run and often in the short run as well. Good startup lawyers are far more efficient with their time. They have already done most everything you’ll need them to do (save perhaps the Hungarian immigration questions), ensuring you won’t pay for a learning curve.
Good luck finding a great legal fit.