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Finding the Right Startup Attorney by Process of Elimination

Written By: Gary 29 November 2010 Other Posts By: Gary

This is a guest post by Roman R. Fichman, ESQ, who practices in the areas of business and technology law. Founders Block would like to thank Roman for sharing his perspective regarding the entrepreneurs search for the right startup attorney.

There is plenty of advice out there on how to find a startup attorney. Most such advice is pretty generic, for example: “ask other startups for a recommendation” or “interview several attorneys.” If an entrepreneur needs this type of advice then a bankruptcy attorney rather than a startup attorney would be a better recommendation.

I assume you, the entrepreneur, have amassed a list of potential names. Here are some ideas on how to eliminate the names and find the right fit for you.

Elimination Tip #1: I Just Called to Say Hi

As soon as you start putting together a team and/or have been building a product for some time call the attorneys on your list and tell them you are working on an idea, describe briefly what you have done to date, tell them that you don’t have the money to retain them just yet and just note that you wanted to say hi. Stop there and listen to their response. This is a good time to start gauging the attorney’s enthusiasm, general knowledge of the subject matter, curiosity and kindness. Start your elimination.

Elimination Tip #2: No Early Stage Equity
“I don’t have money to pay an attorney” Part I

Often times early stage entrepreneurs approach me, say the above and ask whether I would take equity as payment. I answer “no!” Here’s why: You really don’t want your legal adviser to have a decision making interest in your early stage company. I don’t believe an adviser can be independent when in the back of their mind they’re thinking about their piece of the pie. It has the potential to muddy things up. My rule of thumb: if there are less than a total of five founders/investors, I don’t even think about equity as compensation and neither should you. If an attorney agrees to equity at this early stage politely walk away. You will thank me later.

Elimination Tip #3: Business Advice
“I don’t have money to pay an attorney” Part II

Business law is about business as much as it is about law and your attorney should be able to give you some common sense business / real world advice in addition to their awesome legal pearls of wisdom. For example, to entrepreneurs who say that they don’t have money to pay the attorney, I reply that your job as an entrepreneur is not to build but to sell. Sell your idea, sell your product, sell yourself and ultimately sell your business. If you cannot initially sell the idea to get seed funding even to the three F’s (friends/family/fools), so you can pay the attorney and other early stage expenses, then you will likely fail. Of course, other attorneys may have a different point of view. The point is to listen to the attorney’s common sense business advice and cross their name off if it does not ring true to you.

Elimination tip #4: Knowing Startup Stuff

Obviously you want an attorney who knows the unique reality of startups. One way to gage that is by asking them as to their opinion about standard forms. The reality is that there is no such thing as a standard seed round, ‘A’ round or a standard founder agreement. Standard forms such as the ones from y-combinator have become prevalent, but they are to be used on a case by case basis. In reality, forms are just the starting point and if your attorney does not push back on this point, think about moving on. Please note that I’m not advocating whether a startup should accept or reject a standard form, rather the point I’m making is that the attorney should be able to tell you whether it’s a good/bad idea in your particular case.

Elimination tip #5: Cheaper is Sometimes Better

The more competent the attorney, the more efficient (and overall cheaper) they tend to be. An attorney who deals with startup stuff on a regular basis will be able to use their own cache of already written documents and rely on previous deals versus an attorney who has to spend hours doing the necessary research. This does not mean that such an attorney will necessarily be the least expensive, but it does mean that they will do their work in the most cost efficient manner. So do ask how much and how long. If the attorney is too expensive (more than 5-10k for early stage stuff), too cheap, takes too long (more than one week) or can do series ‘A’ funding docs by 5pm that day consider eliminating.

Elimination tip #6: Too Many Yes’s

Entrepreneurs are highly intelligent, competitive, well rounded and therefore tend to be very knowledgeable about a lot of stuff. A little knowledge, though, can be dangerous. Sometimes, at the shopping stage, an attorney may be a little too eager to take on a client by complementing and pleasing them against the client’s better interests. So, if the attorney says too many Yes’s and not enough No’s consider eliminating, as you will not know if once you retain them they will continue to please you or actually be ready to flag problematic issues despite your possible disapproval.

Roman Fichman is a startup attorney based in New York City. He represents New York, Connecticut and Delaware startups with all business, IP and funding issues. Roman can be reached at info@thelegalist.com as well as on Twitter @TheLegalist.

Disclaimer: This posting has been written for educational purposes only and was not meant to be legal advice and should not be construed as legal advice. You should always consult an attorney admitted to practice in your jurisdiction for specific advice.

Related posts:

  1. 25 Best Startup Failure Post-Mortems
  2. An Analysis on Seed Funding in 2010 (Part 2 of 2)
  3. The Co-Founder Myth: Why You Might Not Need One, Especially in NYC
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  • http://www.venufinder.com Kathy

    Funny thing is I went to Location Based Apps Meetup today and I met Roman without knowing he wrote this article until I added him on Twitter. He is an honest, well-rounded and knowledgeable person within his field and is very helpful in sharing some of his input on start-up law. *Thumbs up* on the article, thanks Roman!

  • Mariya

    Thanks for your input, Kathy. Glad you got to meet Roman in person!

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