You're a Startup, Do you need to hire a lawyer now?

When you are starting your own company, or have a company that is bootstrapped, the role of lawyers is confusing. There is no clear understanding on the benefits a lawyer will have on your cash tight company. Should I spend an insane amount an hour for a lawyer? Do I really need one? Is there a benefit to having one?

The answer is: It Depends.

The nature of the business plays a big part on the level of involvement of lawyers. We work with many start-ups in varying industries ranging from Chemicals, Restaurants, Construction, Service, Consumer Products and Software. Our level of involvement also varies depending on the industry and client needs.

When clients come in for a consultation, we spend as much time as necessary to understand them, their business and vision; their future plans. We ask many questions related to their business, business methods, and the legal steps they have taken thus far. We do this for free because this gives us an idea of the level of involvement and commitment required on our part to ensure their success. It also allows us to determine whether we are a good fit for your needs. We do not take on every client that comes our way, only the ones where we see a need and can successfully fill the gap.

THE REASONS WHY YOUR COMPANY SHOULD HAVE ITS OWN LAWYER

1)     Ensuring your risks are well managed: When you are starting a company, there are certain things that need to happen before you are ready to transact or do business.

A.     Do you have the right legal structure for your business? This is very important for businesses that want to attract investment money.

B.     Do you have all the necessary contracts in place to attract the right people? Start-up Contracts are interesting because they are often creative. Most form of expected compensation is in the form of stock. But there are pitfalls that you must avoid to ensure that such contracts do not become encumbering when it’s time to restructure.

C.     Negotiating Contracts and Deals? We are often brought in to negotiate contracts and structure deals. I admit most startups do handle this fairly well in the beginning, but as your company grows, the founders and other key employees are involved in other complicated matters and do not have the time to handle this. Regardless, having an attorney on your side during negotiations is always beneficial-they provide you with perspective(s) and prevent you from making emotion based decisions.

D.    Risk aversion? Whether you are a company (startup or established), it is always a good idea to have an attorney who understands your industry and can help you manage the risk in your business. They can help you by providing proper guidance on your business practices, employee related issues, and prevent you from taking costly missteps. We have clients who call us just to run various scenarios by us to see what we think. This is valuable if you want to really manage your risk.

E.     Obtaining Patents (This applies to some companies)

F.     Raising Capital: Having your own counsel when you wish to raise capital is paramount; they will structure your business plan, organize it for you, and ensure that your company is properly positioned to raise capital. Attorneys are not the only people involved in this stage; you have other members such as VCs and Evangelists as well.

WHY HAVING A LAWYER DURING THE ESTABLISHMENT OF THE BUSINESS IS IMPORTANT?

We have worked with many startups that went the LegalZoom route when starting, and now realize that it is not meeting their expectations. Within a period of 6 months, things have changed and now they really want a lawyer to step in. This, in my opinion is far more expensive. Because now you are paying for a lawyer to figure out and determine what you did, and then have them make changes and amendments. We have dealt with this and it is expensive.

The real value of us coming in early is not just to help you incorporate. It is to help you plan your business structure, stocks, vesting schedule, stock awards, how to attract employees, and common pitfalls to look out for; Equity and ownership rights in the company and founders agreement, if there are multiple founders. Having lawyers can help account for various tax situations. This truly does vary based on each business’ particular situation.

HOW CAN BUSINESS LAWYERS OF DRASON LAW GROUP HELP?

Our Fees:

Most firms have hourly billable ranging from $300-1000 an hour.  For our startup clients we shy away from this practice. We in most cases provide flat fee services for many of the matters listed above. We understand the burden a new company faces when getting off the ground and our rates reflect our commitment in ensuring that your legal costs remain low.

We have successfully applied our flat fee model and startups working with us have benefited from this practice.

Our Approach:

We spend the necessary time to understand you, your business and the industry in which you are operating within. We do not charge our clients for this. We think in order to adequately represent you we need to familiarize ourselves with the industry you operate within. We will ask you the questions-the good, bad and the ugly. We want to know how you think, your approach and how you would handle various scenarios. We not only focus at the matter currently in front of us, but focus on the bigger picture.