When considering which law firm can best serve the legal needs of your start-up, remember that there is no “one size fits all”.
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When researching law firms, look out for those who have experience advising start-ups as part of their practice. Those with the industry knowledge probably already have a set of standard documents which can be leveraged and customized, addressing your legal needs in a streamlined manner.
It is crucial that the adviser you pick understands the needs and constraints of your start-up, instead of learning the ropes at your expense. It would be ideal if they are familiar with your sector. They can then advise on the legal pitfalls specific to your industry or might even provide the connections you need to get funding, mentorship or inspiration.
Opt for pricing models that enhance transparency and certainty
Most law firms charge their clients based on the “billable hours” model. Under this traditional model, your legal fee is basically the hourly rate of your lawyer multiplied by the amount of time he or she spends working on your matter. The more time your lawyer uses (and the more lawyers on the team), the more you will have to pay. You will know the hourly rates of your legal team from day one, but you will have no way to track how the chargeable hours build up over time. The latter will only be revealed when you receive your invoice – this creates an element of (sometimes unpleasant) surprise.
If a law firm has sufficient experience advising start-ups, it will have the requisite knowledge to develop alternative pricing models that are more suited to budget-conscious start-ups.
Some firms offer fixed or flat fee packages for a defined scope of service, such as drafting a suite of incorporation and compliance documents. Such arrangements keep your legal bills predictable and help you better forecast your business expenses.
Understandably, if you are a younger startup, you may find yourself always struggling to decide whether certain issues warrant seeking legal advice or whether the legal costs saved can justify taking the risk of getting into trouble down the road. If so, you should consider law firms that offer “external general counsel” services, which allow you to have legal support on-demand at a fixed monthly fee. You can then discuss your concerns with your lawyer without the anxiety of being charged for every minute of the consultation and without the high cost of hiring a full-time in-house counsel.
Look out for the firm culture that resonates with you
You want to find an adviser who speaks your language and shares the same outlook as you. One who has an entrepreneurial spirit is likely to be a good fit for a start-up. Like you, such advisers focus on growth and opportunity. They think outside the box and will not shy away from applying novel solutions to existing problems, whether through using new technology, designing new user experiences or adopting new processes.
Check if the law firm you wish to hire is innovative and tech-savvy. Utilizing technology facilitates the provision of affordable and efficient legal services, which translates into a smaller legal bill for you. If you are riding the waves of innovation, it makes sense to surround yourself with partners—including your trusted advisers – who also embrace change and creativity.
The price of not taking the necessary legal advice can be high enough to kill the business that you have spent years building. If seeking legal advice is inevitable, get the most value out of it by picking the right law firm – one that is experienced, transparent and on the same wavelength as you.
Header image courtesy of Capital+