
Hiring a Startup Lawyer - teachingaway
http://adlervermillion.com/tech-law-link-list-hiring-lawyers/
======
jacquesm
I'd like to plug George Grellas (
[https://news.ycombinator.com/user?id=grellas](https://news.ycombinator.com/user?id=grellas)
) in case you're not aware of him, just reading his comment history should
give you a lot of food for thought. He's one of HN's secret assets.

See also:
[http://www.grellas.com/faq_business_startup.html](http://www.grellas.com/faq_business_startup.html)

~~~
digitallawyer
+1 one that one. Protip: If you get a chance to meet George, make sure to ask
him about 83(b) elections.

~~~
brandnewlow
George represented me personally on the Perfect Audience acquisition deal and
was immensely helpful and responsive.

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crb002
I've seen [http://www.ofenbakhlaw.com](http://www.ofenbakhlaw.com) have a lot
of happy clients. A good business attorney does more than just help you draft
the contracts that your company will run on. They are active in helping you
get your business out there.

Find an attorney that started their own law practice. They built their
business from the ground up and have personally dealt with many of the
problems you will face.

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briandoll
If anyone is looking for a lawyer, I'd highly recommend Gabe Levine:
[http://levinebakerlaw.com/attorneys/gabriel-
levine/](http://levinebakerlaw.com/attorneys/gabriel-levine/)

He's shares some advice on his blog
([http://mylawyergabe.com/](http://mylawyergabe.com/)) and gave a great
presentation with Mike Monteiro called "F*ck you, pay me!":
[http://vimeo.com/22053820](http://vimeo.com/22053820)

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joshmlewis
I would like to know what most startups experiences are with filing with the
SEC for SAFE notes and what is a reasonable cost for a very early stage round
and seed round.

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teachingaway
What are the other good posts I should add to the collection? Who else writes
about hiring startup lawyers?

~~~
hkmurakami
There's a post by Sam Altman which argues that founders should negotiate for a
30-40k cap for processing Series A paperwork.

~~~
nwenzel
You can use your term sheet to talk to your firm about fees. Your VC will have
a number in the term sheet to address their legal fees. Your should be
somewhere in the 1.25-1.5x neighborhood of that number. More if your books
aren't organized and your records are all over the place.

$30-$40k is probably right in a lot of cases (if you touch HIPAA,
Crowdfunding, Bitcoin, issues you'll need to bump those numbers up).

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ptype
Any recommendations for London/UK based startup lawyer? (Incorporation,
shareholder agreement etc)

~~~
reinhardt
[https://www.lexoo.co.uk/](https://www.lexoo.co.uk/)

~~~
thechrisoshow_
Chris here, the CTO of Lexoo.

Thanks for the recommendation! Just out of curiosity - how did you hear about
us? (Feel free to email me at chris@lexoo.co.uk)

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larrys
The list is helpful but the truth is it's hard to believe that someone who
says:

"There’s lots of advice on the internet, mostly bad. Our new series, “Tech Law
Link Lists” picks out the more useful guidance for startups."

...would agree with everything that is being said in all of those links. And
to me that's an irony worth explaining.

Further it says "This first installment is about finding the right lawyer for
your startup. "

Installment of what? Curated set of links? Why not, if you are so good, take
the time to pick apart and specifically discus what is right and what might be
wrong and how your opinion differs. You certainly can't agree with everything
that others say, right?

------
digitallawyer
Upfront disclosure: I am one of the founders of LawGives, an online legal
marketplace focussed on fixed fee services. I used to work at DLA Piper as a
tech / IP lawyer. Opinions are my own.

As part of our work with LawGives we've helped hundreds of entrepreneurs find
legal help with business and immigration matters. In my experience, there are
basically three ways in which companies go about dealing with their legal work
at the startup stage:

1\. Do it yourself

Many founders start out using a service like LegalZoom to take care of basic
legal needs. The price point is attractive but the process is completely
automated.

While DIY solutions may be a good option for some people, there are a couple
of caveats to be aware of:

\- The actual cost, once you finish going through the automated process, is
typically higher than advertised. (For example, a LegalZoom incorporation is
marketed at $99, but the actual cost once you are done is usually much
higher.)

\- Many of the documents are not tailored to the typical startup situation.
(For example, typically the number of units / shares authorized in the
corporate formation documents is by default set to a low number, which becomes
a problem when the company raises money.) This leads to problems down the
road, often forcing companies to redo (part of) the incorporation work, at
significant cost and at an inconvenient time (when fundraising).

\- No lawyer is involved throughout the document automation process. As a
result, the founders remain unaware of key risks (often depending on the
specific activity the company is engaging in) which would have been easily
picked up by a lawyer. Examples include picking a corporate name that is
already trademarked, pursuing a business model that has significant
implications from a regulatory perspective, and choosing the wrong kind of
legal entity type.

2\. Use a big law firm

At the other end of the spectrum, there is the option of going with a big law
firm. Many of the companies that we have interacted with end up going this
route:

\- You are dealing with well-trained lawyers who have deep expertise in their
practice area. These lawyers will be able to identify key risks easily, and
will typically flag them early. We've interacted with lawyers at DLA Piper,
Cooley, Fenwick, Wilmer Hale, Dorsey and several of the other big firms out
here, and quality is generally high.

\- These firms will often offer deferred fees. This means that you do not pay
your legal bill until a certain trigger happens, usually raising a certain
amount or doing a priced round. This option is attractive for clients who have
yet to raise money.

\- However, deferment comes at a cost: we've seen big firm legal bills for
incorporation and basic documents that range in the 10 to 20k dollar range.
This may not matter for companies that raise significant amounts of money
following a deferment. Other companies prefer to pay upfront, and often end up
paying less than a quarter of the aforementioned price.

\- Big law firms will often ask for equity in the company. We’re not fans of
this model, as it may affect (or seem to affect) the independence of the firm
in relation to the client. In addition, it is costly to give up equity, and
there are enough big law firms out there who will proceed (and offer a
deferment) without requesting equity. However, it is fairly typical for big
law firms to ask for this, so it’s good to be aware of it. You should feel
free to push back, if asked.

3\. Use a solo attorney / small law firm

A middle ground between the do it yourself approach and going with a big law
firm is to look for a good solo attorney:

\- Many big law firm attorneys leave their firms for one reason or another,
and start offering their services to clients directly, at rates that are
significantly lower then the big law firm rates.

\- The client still gets the benefit of big law firm expertise, given that the
lawyer was trained there and saw a wide range of legal issues, from the
complex to the mundane.

\- Solos usually do not have the financial capacity to offer deferred fees,
which means that the client pays immediately. This may be a showstopper for
some companies. If the company has the capacity to pay, it is generally much
cheaper to pay upfront (in our experience, often 25% of the big law firm
rate).

\- Solos are more amenable to alternative billing models: flat fee services
gives a high degree of price certainty, which many clients prefer over the
more uncertain hourly billing model. Not all services can be priced like this,
but many of the services that you are likely to need at this point can be.

\- Solos can also - in a later stage of the business - act as an interface
with a big law firm. For example, we've seen many companies work with solos,
and engage a big law firm at Series A. At this point, the solo acts almost as
an in-house counsel, making sure everything goes smoothly and keeping an eye
on the bill.

\--

Recap:

\- Doing it yourself is tricky; thread carefully. \- Big law is attractive if
you can get a deferred fees, but you will end up paying more. Avoid giving up
equity. \- A solo or small firm with startup experience is a great way to
start building your legal team and keeping cost down.

These are some quick thoughts which I hope are helpful. In case it's useful:

LawGives: [https://www.lawgives.com/l/5p](https://www.lawgives.com/l/5p)
LawGives startup packages:
[https://www.lawgives.com/l/5q](https://www.lawgives.com/l/5q) LawGives guide
on starting a business:
[https://www.lawgives.com/l/36](https://www.lawgives.com/l/36) My twitter:
@digitallawyer

~~~
jacquesm
> Big law firms will often ask for equity in the company.

If that should happen to you, simply refuse. That's not worth it no matter
what. You're basically asking for having a conflict of interest just when you
need your lawyers most, which means you'll have to bring another set of
lawyers in.

And nothing will increase the bills faster than two sets of lawyers haggling
over different ways to split the same hair.

I agree with all your advice, this is one of those comments that you should
print out and nail to the wall over your desk if you plan on incorporating in
the near future.

~~~
digitallawyer
I appreciate it! We're on the same page regarding the equity, but it's fairly
common practice in the valley, so this is a good one to emphasize.

------
employeethrwy
Does anyone have any recommendations for legal advice for startup employees?
Specifically, I've been offered equity in the startup I work for and would
like a professional opinion on the stock grant contract they're offering etc.

Any links to blog posts, recommended lawyers, or fixed fee services would be
appreciated!

(Throwaway account as my colleagues know my real one)

~~~
digitallawyer
Check out:

\- [https://angel.co/salaries](https://angel.co/salaries). It includes equity
and salary info.

\- [http://avc.com/2010/11/employee-equity-how-
much/](http://avc.com/2010/11/employee-equity-how-much/)

~~~
employeethrwy
Thanks for the links! I was meaning more to check over the draft of the
contract they've prepared (type of stock units, terms and conditions related
to vesting, etc) rather than what's a reasonable equity expectation.

In any case, I just created an account and sent a message through LawGives. If
anyone else has any other links they'd be much appreciated.

