
What Start-ups Should Know About Hiring a Lawyer - nlow
http://www.thedailymuse.com/entrepreneurship/what-start-ups-should-know-about-hiring-a-lawyer/
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meriksson
TL;DR: Since dealing with high-end lawyers is often tough, contract someone to
do it for you.

At my company we went through a handful of lawyers, mostly from big firms. We
were extremely unhappy with the experience, especially since we did not seem
to get reasonable value for our money, ours being a very small account for any
established law firm.

Eventually we found a solution that was perfect for us. We now work with a
freelancing lawyer who caters to startups and is an absolute joy to work with.
He does all kinds of stuff on his own, kind of like our own part-time in-house
legal council, but the big thing for me is that he can decide when we need
some more muscle (i.e. big law firm, specialist in some type of law), and then
we pay him to find, subcontract and manage all contacts with other lawyers.

I can not extract anywhere near maximum value from an expensive lawyer - this
guy has a much better shot at it. As the CEO, I save a lot of time and anguish
by only ever speaking to one lawyer, and the most pleasant one I've met at
that.

If you want to get in touch with my legal guy - based in Stockholm, Sweden -
ping me and I'll send you his contact information.

~~~
veidr
This is such awesome advice. Find and hire one good lawyer, who the deals with
_all_ your other lawyers.

It might not apply if your investors have their own legal muscle that they can
introduce. But, if you are <10 employees, it is _insanely_ expensive
(manpower-wise) to deal with finding, retaining, and managing decent legal
counsel (to say nothing of replacing them due to a sudden conflict of
interest, when you unexpectedly find yourself facing a huge firm like
Apple/J&J/Halliburton/etc, who seemingly contract 99% of all law firms).

~~~
oregonspanish
Do you think that other startups would be interested in this type of in-house
counsel-as-a-service?

This would give teams the benefit of having single source that knows all your
issues and goals, but could also negotiate effective rates with specialists.

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jacques_chester
Here's what I learnt in law school:

Do you have a legal question? _See a lawyer._

A few hundred dollars now versus an uncapped downside later? You're basically
crazy if you don't.

Your lawyer and accountant are to your business what a doctor and a dentist
are to your body. You see them regularly, they give you specialist advice and
they can save you _serious_ trouble if you take their advice. These
individuals see more permutations of business in a week than you will see in a
year.

So stop double guessing whether your company will need a lawyer. You will. You
just might not understand it yet. Lawyers and accountants are part of the cost
of being in business. It's not their responsibility to be cheap. It's _your_
responsibility to produce enough value for _your_ customers that a profit gets
made somewhere in the mix.

Like the article says, shop around. I'm the middle of getting a patent
drafted. I picked my lawyer[1] based on the fact that he had a computer
science degree and industry experience. You can do the same. Ask. Inquire.

And remember, lawyers are like drug dealers: the first taste is usually free.
Go meet them. If you don't like them, see someone else. It's business, after
all, not your personal life.

[1] [http://www.ghfip.com.au/ws/principal-
attorneys/index.jsp#Tho...](http://www.ghfip.com.au/ws/principal-
attorneys/index.jsp#ThomasHaines)

~~~
atirip
In US certainly, but here's what I learnt living in Europe. You basically do
not need lawyer. Ever. You can live happy life and run happy business. Without
lawyers, without fear that somebody/anybody can/will sue you of anything.
Wthout fear of shady contracts, shady business practicies etc. And even in
very rare occasion when somebody decides to sue you and this case goes to
court, even then you do not always need a lawyer. In Europe you can go to
court without lawyer and win. I did, so can you.

~~~
kryptiskt
> Without lawyers, without fear that somebody/anybody can/will sue you of
> anything. Wthout fear of shady contracts, shady business practicies etc.

That is just not true. Nowhere can you be happy-go-lucky about the contracts
you sign. Even where there is a degree of protection for consumers like in
Sweden, and I wouldn't just assume that everything will work out fine even
then, b2b is very caveat emptor.

> In Europe you can go to court without lawyer and win.

What does "in Europe" even mean? There is nothing unified about the legal
systems here, even in basic principles. Navigating the UK legal system is
wholly unlike doing it in Italy.

> I did, so can you.

He did, maybe you won't be so lucky, get a local lawyer.

~~~
arethuza
"Navigating the UK legal system is wholly unlike doing it in Italy"

Especially as there isn't really a single UK legal system.

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splittist
For a non-Valley, non-VC, non-swing-for-the-fences (Sand Hill Road cookie
cutter) startup, think about where your risks really lie (who is going to sue
you; when; why; and for how much). If you have partners, then having someone
walk you through all the 'what if things go wrong' stuff may be useful. If
it's just you, then you can even postpone incorporation. As for tax - that's a
nice problem to have, but it's not one that's going to loom large on day one
(or even year one). I would be amazed if it made sense for the median startup
to register any trademarks. And if you "need" patents, really drill down on
what that "need" is (if it's just a tick-the-box exercise for eventual VC's,
then one jurisdiction might be enough; if you need a global patent protection
strategy to secure your fundamental business value, you're doing it wrong).

When you do hire a lawyer, get an estimate up front, make clear that you want
to know in advance if the bill is getting anywhere near the estimate, and
require monthly interim billing if there is something ongoing. If you can fit
in some scornful laughter at the idea of billing for photocopying and phone
calls, that would be good, too. Many lawyers pay lip-service to the idea of
fixed fees for defined projects: think about calling their bluff. And ask
about other value-added services they might provide, such as introductions to
other clients who might be interesting to know. This will be like pulling
teeth, because lawyers are pretty terrible at everything in business except
(if you are lucky) the legal stuff.

But they probably do know the legal stuff better than you, so don't try to
impose irrelevant constraints, like "I want a one-pager for this".

~~~
bigiain
I'm not so sure about the trademark thing. I've just started that process with
my partners non-tech new business. Here (in Australia) you can do a bunch of
searches online, and enter a trademark application on a government website for
$120, and if it;s approved you pay $300 for 10 years trademark protection.
Once you've got all your domain name / twitter handle / social media accounts
and pages lined up, a few hundred bucks for trademark protection in your area
of business seems like money well spent to me, even if all it does is
discourage someone from making a claim they've got more rights to a domain
name or social media account name than you.

Of course that adice mostly applies to trademarking names which clearly have
no existing claimants (or at least none in your area of business) which would
complicate things enough to require law firm time to resolve...

~~~
jacques_chester
Yep, trademarks are fairly self-service in Australia. Generally you can leave
the lawyer out of it unless and until a dispute arises.

That being said, some lawyers only charge a pretty minimal amount over and
above the underlying IP Australia fee and it can nice to delegate the
paperwork to them.

It really depends on what your time is worth.

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t413
That's incredible how much a lawyer's hourly rate is. A senior partner
>$1000/hour? It's amazing how expensive risk reduction services are that, in
my mind, equate to a blame shifting strategy.

~~~
yen223
Somewhere, some lawyer is probably wondering why it costs $1000/hour to
develop what she believes is just a simple website.

~~~
cookiecaper
Do you actually know a web firm anywhere that will charge $1000/hour? Such a
rate is unheard of in software consulting as far as I know. Maybe someone like
EDS who has huge public companies in their pockets will charge these rates,
but I personally have never encountered it and I don't know anyone who charges
it.

The most expensive software consulting I've seen in the wild is $350/hr, and
that was for a very specific niche. I know other very specific niche service
providers who charge $200/hr.

As I've said previously, I think the fact that most other professionals max
out around the rate that the cheapest and least experienced lawyers start
shows there's something perverse with the law industry.

~~~
mbesto
> _Such a rate is unheard of in software consulting as far as I know._

$1000 is not unheard of at all. Yes, you're right, the likes of EDS, IBM,
Accenture, etc. are easily charging the upwards of $1k/day. But any decently
sized firm (50+ employees) is going to charge roughly that amount. You'd be
shocked to hear some of the price tags on corporate website development...

I think this is the overall point. Go for a small specialist who will treat
you like a king/queen. You don't need a corporate law firm. There are too many
transaction costs that you simply don't need (assuming you're small) or can
risk accept not having.

~~~
cookiecaper
>Yes, you're right, the likes of EDS, IBM, Accenture, etc. are easily charging
the upwards of $1k/day.

I said $1k PER HOUR, not per day.

I'd like to know of software consultancies that charge that much money per
hour, excepting the typical fleecing when your deals are built on backroom
backscratches like you'd find with the public companies served by EDS et al.

Percona has over fifty employees and they charge $350/hr for standard services
and $450/hr for premium service. You only go to Percona if you have a very,
very specific MySQL problem that needs to be resolved, and the staff at
Percona is populated with as many major MySQL players as are willing. They
definitely represent the big guns, when you really, really need your MySQL
stuff fixed ASAP and can't fiddle around with people who aren't core MySQL
developers, the people who invented the system. They are the top of the line
in their niche, and they charge as much as a fresh-from-college lawyer.

A normal, generic consultancy will charge between $100/hr-$200/hr and often
their employees aren't anything to sneeze at either, they're just less
specialized and therefore have a less compelling case for such high rates. I
know of no one in the realm of standard or even most niche commercial software
consultancy that rakes in $1000/hr+.

If you know such a company, I'd like to learn their strategy so that I can
start charging that much.

~~~
yen223
First of all, that $1k per hour was pulled out of my ass. That was my piss-
poor attempt at using humour to point out that people tend to underestimate
someone else's value just because we don't understand their profession. I'm
pretty sure a lawyer's work involves more than "blame-shifting".

Secondly, $1000/hour works out to about $240,000 per month. It's a high
figure, but I have worked on a 3-month project that cost the client $1,000,000
before. Granted it wasn't a 1-man job, and God only knows I didn't get to see
much of that money, but still, that was how much the client was billed for.

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grabeh
I think they chose the wrong lawyer to speak with. From what I can tell, he's
a lawyer more versed in dealing with much larger companies and venture capital
transactions as opposed to the typical start-up (if such a thing exists).

Particularly in the field of web (contrasted with physical products/live
events for example), the need to consider compliance is reduced. If you are
providing a good service to users, it is unlikely you will run into issues in
terms of consumer complaints.

I would caveat it by suggesting that intellectual property is (obviously) an
important area to consider. However, there are online tools for patent
searching which will be able to give you an idea of whether your product could
be patentable (no patent search even done by a lawyer or patent attorney would
be exhaustive in any event).

As to brand protection, trade mark registration in the territory where you are
based will be relatively cheap and will give you a degree of leverage if
someone else starts up a similarly named service. Although it must be said
that the main reason people will copy a name is to piggyback on goodwill which
will not be a relevant consideration for most start-ups.

Many actual start-up lawyers will be willing to give a few hours of their time
for free or at least should be, to talk with you about your business and
highlight any initial concerns and make recommendations to help your business.

If they do provide recommendations, I suggest that if they haven't done
already you request a fixed rate for any one particular piece of work. If they
can't provide a fixed rate, I suggest you look elsewhere. There are sufficient
good lawyers out there to enable you to find one who will be willing to be
more flexible on fees than rigidly sticking to an hourly rate.

In terms of tax, I would suggest the above but in relation to an accountant,
the basics of corporate taxation are relatively simple and you should be able
to find an accountant willing to give you time for free.

On a side note, although it is easy to bash lawyers' fees, if you are a large
corporate operating in an area where legal compliance is crucial, an hourly
rate of $1000 per hour is a drop in the ocean if it saves you many multiples
of that in avoiding costs. Blame shifting in ensuring you have someone that
you can sue if they make a mistake can be priceless. But that doesn't mean
it's appropriate for start-ups particularly considering monies could be spent
better elsewhere.

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nirrrrrr
the most important skill is DEAL MAKER. A lawyer that will guard your
interests while aware of the other side needs. There are so many lawyers that
guard their client while totally alienating the other side.

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DoubleMalt
Interestingly the red flags section would apply to programmers with only minor
changes.

Probably to any profession, but programming is the one I know about ;)

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carbocation
Not sure how George Grellas hasn't been mentioned yet (HN's "grellas"), but if
you're a US startup, I recommend his firm.

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mitchi
Better call Saul

~~~
rdl
IMO, this is true.

1) Saul: "sometimes you need a _criminal_ lawyer". 2) Startups: "sometimes you
need an _entrepreneur_ lawyer". I've always heard that the difference between
competent and great lawyers is that competent lawyers will tell you what you
can do within the law (i.e. how you can handle a financing round, etc.), and
great lawyers will help you figure out how to do the best thing for yourself
and your business while remaining within the law.

~~~
swampthing
It's true, but it's also pretty hard to figure out whether you're actually
remaining within the law since things are so rarely tested (at least in the
startup world).

~~~
rdl
For really crazy stuff people get no-action letters from SEC in advance of
doing crazy things ("private letter rulings").

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sixQuarks
What kind of startup can afford $350-$800/hour lawyers?

~~~
rayiner
When you're a really tiny startup, you don't really have any legal needs that
take a lawyer more than a couple of hours to do. When you're bigger, you still
don't have a ton of work in terms of hours.

The startup I worked at had a quarter-million in legal fees one year. That was
about as much as just one of our hired-gun contractors.

