We regularly read or get told stories of how start-up and emerging growth technology companies have found it difficult to deal with their lawyers. We hear how lawyers are un-commercial, hard to understand, just lining their own pockets or treating them as though they were a Fortune 500 company and charging accordingly.
We also regularly hear from VCs and entrepreneurs who have experienced success, how important selecting the right advisors can be. Getting someone who understands start-ups and emerging growth companies and the well-worn path they are treading is an imperative they often say.
Hearing all of this has inspired us to set out, from a lawyers perspective, the key tips for working with a lawyer which we think are essential to ensure start up and emerging growth technology companies have a positive experience that will leave them singing praises to others. What we have set out is by no means rocket science, but hopefully it will help to steer a few people in the right direction.
Our tips are as follows:
1. Only appoint someone who has done it before. In hiring a lawyer you are paying someone to guide you down the right path and in your best interests. You hire them to manage a process like a fundraising, an entry to a new market or a merger that has significant uncertainty and strategic risk for you and because the lawyer will be best placed to limit that risk as quickly and painfully as possible. In our experience a lawyer can only efficiently add value if they have walked the path before – and ideally many times before.
2. Meetings on the telephone rather than letters, emails or formal advices should be preferred. Meetings, skype video conferences or the telephone are the most efficient means to communicate with a lawyer in our experience. A written advice in comparison takes time for your lawyer to prepare and then for you to read and decipher and often it still needs a follow up meeting afterwards.
3. You can do many tasks yourself. As a founder or entrepreneurial operator you are likely to be lean in your approach to business and a good lawyer will acknowledge that and tell you what you can do yourself. For start-ups in particular where you do not have the luxury to afford legal fees, this will mean almost everything. Your legal counsel will often act more like a business mentor in that scenario. As you approach a Series A fundraising round, compliance is likely to be more strategically important (particularly if your investors are in the US) and your time more sparse. That is when you can benefit from outsourcing more of the legal function.
4. Quick growing businesses need someone who can see the wood for the trees. Attention to detail is important from a lawyer – and most lawyers will excel at it – but strategic guidance which ensures you place emphasis on the right priorities and most efficiently limit your material risks, is where lawyers can offer the best value. Whether you get this partly comes down to the lawyer you select, but it is also about how you lead the relationship, how you give instructions and what you demand. You and your lawyer should both keep a strategic focus at front of mind.
5. Your relationship must be a win/win. Lawyers need to get paid and while they will do some work as a loss leader for the right motives or as a contribution to the start up space, it usually does have to be limited. Ultimately, what they do as a loss leader or what priority they place on you as a client depends on their other priorities and so you should understand their practice generally and whether you can legitimately fit in as someone who will get attention. You should also clearly understand the likely costs of any services from the outset.
6. Your lawyer should be a referee. Your lawyer is one of the best placed persons to comment on your business and the risks associated with it, as well as your approach to doing business and their comment will often be valued by third parties looking to invest or partner with you. Use them as a key member of your network and to facilitate introductions of all types.
This is a guest post by Joel Cox who is a senior associate at global business law firm, DLA Piper, and specialises in all aspects of fundraising law and M&A transactions for technology companies and investors.