Given the optimism in start-up circles these days, you don’t need much to start a new company – usually just a strong mission, an AWS account and some Diet Coke. However, one of the few essentials is a great lawyer – a great start-up lawyer.
Caring for the needs of big companies vs. caring for the needs of start-ups is a bit like caring for a teenager vs. caring for an infant. Founders (especially first-time founders) need someone who understands the common pitfalls and can prevent you from falling into them. You also want someone who respects the challenges of starting a new company. Finally, pick the lawyer (not the law firm) as your partner, and look for someone whom you can trust deeply.
A great start-up lawyer understands that the real benefit of this partnership comes as your business grows, and thus is willing to do a bit more for a bit less in compensation during the early stages. Just like angels or VCs who invest money, start-up lawyers have to choose their projects carefully: they’re making a bet on you and your business. This is why it can sometimes be difficult to get the attention of the best start-up lawyers. The best lawyers want to work with entrepreneurs who educate themselves to work efficiently with lawyers.
The biggest mistake you can make is picking a lawyer you know instead of a lawyer who specializes in start-ups. Think about it this way: if you were diagnosed with a serious illness, would your first visit be to a general practitioner or a specialist in the disease?
Keep in mind the following rules when picking a lawyer:
- Pick a lawyer who has successfully represented companies you respect. It’s the easiest and most effective filter.
- Show that you have done your homework and are serious about your business. Educate yourself on the basics of cap tables, governance and BOD work for start-ups. If you don’t know what pro rata means, you probably haven’t worked hard enough.
- Give the lawyer the opportunity to be an advisor. This means more than superficially asking for his or her advice. Make sure your lawyer is inspired by your mission and expected to tell you when you’re doing something wrong. And ALWAYS be up front about how you expect to engage with your lawyer. Good lawyers will want to know how and when they are going to be compensated before they will invest a bunch of time in you.
The good news: these lawyers (and many other professionals and organizations who help start-ups) are helping educate and empower entrepreneurs by providing templates for common deliverables – for example, freely available term sheets, company registration forms and cap tables (from Orrick and Fred Wilson). Firms like Clocktower Law disclose their rates online and make it exceptionally easy to get specialized work done.
My Short List of Great Start-up Lawyers
Here are my favorite start-up lawyers.
There are likely many other great start-up lawyers; however, these are the ones with whom I’ve worked with most closely and know to be solid. Good luck with your search.
Andy Palmer is a serial entrepreneur, investor, and advisor to startups in the Boston area. You can find this blog post, as well as additional content on the Koa Lab's blog. You can also follow Andy on Twitter (@andyhpalmer) by clicking here.