We’ve been both entrepreneurs who hire lawyers, and lawyers who counsel startups. Because we’ve played on both sides of the court, we have a solid understanding of reasonable expectations. When we were entrepreneurs trying to run lean startups, we not only had difficulty explaining the value of good quality legal services to my team, but we also had a hard time swallowing a bill at the end of the month. After all, that meant less money to spend on marketing or product development, and at the time, my team couldn’t see an ROI on good legal work. Therefore, we had to make sure each lawyer we worked with and the time spent was efficient. Below, we’ve outlined some questions you should ask any lawyer you’re contemplating working with:
- Will a partner, associate, or law clerk be completing most of our work?
- This is important for two reasons: (1) the level of sophistication of the work, and (2) what type of bill to expect. If an experienced partner is doing all of the work, you’ll have every “t” crossed and “I” dotted. However, not all work requires partner level experience. For example, independent contractor agreements or entity formation can be completed well by an associate. In terms of billing, a partner usually bills in the $300+ range, and while a partner may be more efficient, you’ll likely have a higher bill.
- Do you have any experience in my specific area?
- Law isn’t a one-size-fits-all kind of deal. If you’ve invented a new type of “internet of things” device, you need a lawyer that has worked with new hardware products. The lawyer should understand and foresee issues that may arise with manufacturing, resellers and distributors, licensing, and sales. If your product is going to have a delayed delivery, you want to make sure your lawyer included helpful provisions in the contract, which not every startup lawyer may know. Additionally, just because your potential lawyer has worked with apps, have they worked specifically with your type of app? There may be liability, insurance and payment issues unique to your type of app.
- How long has the lawyer been practicing?
- You want your lawyers to have experience. A lawyer that has only been practicing one to three years may be knowledgeable, but a seasoned lawyer who has been practicing for at least five years knows what to expect and has seen a lot more go wrong, and therefore knows how to prepare.
- How is payment structured? What type of retainer will be required?
- Make sure that the law firm will let you know when you’re approaching the retainer. In other words, if your lawyer wants you to put in a $3,500 retainer, depending on what you’re dealing with, that retainer may be empty by the end of the week. You don’t want to be caught by surprise with a bill at the end of the month for $15,000.
- Does the lawyer have experience with startup fundraising?
- A lawyer who has created the documents for a real estate developer’s fundraising efforts doesn’t automatically know how to handle a startup fundraise. Your lawyer has to be in your corner to represent you, and equity is one of a startup’s most valuable asset.
- Does the lawyer litigate, and if so, does he or she have experience litigating these types of issues?
- Litigation can be broken down by practice area. Real estate litigation is very different from intellectual property litigation. You don’t want to be the guinea pig, because the lawyer may not only be committing malpractice, but even if he or she charges lower rates, you’ll likely pay more to clean up the mess. The lawyer needs to have substantial experience in commercial litigation, mediation, arbitration, intellectual property litigation, and other areas relevant to startup issues.
- Has he or she ever been accused of misconduct, or does he or she have any pending malpractice issues?
- This is crucial. Be sure to look into the attorney’s background.
- How long does the lawyer estimate the work will take?
- You want your lawyer to manage your expectations and his or her own time. Sometimes the lawyer might offer a startup discount, but you want to be sure he or she isn’t tabling your legal work. If you have deadlines, make sure the lawyer can meet them.
- Who are the clients?
- Are clients typically startups that have raised a Series C? Are they strictly pre-revenue? These are great questions to ask because if the lawyer has only worked with pre-revenue startups but has been in practice for over 5 years, it’s a red flag that the lawyer hasn’t continued to represent the startups as they grow.
We wrote this because we couldn’t find an excellent resource guide on questions to ask a startup lawyer or an outline specifically for tech issues. There are other great places to see general or litigation focused questions, such as Hire A Lawyer’s question set, or Lawyers.com’s suggestions for questions to ask your lawyer.
Adam Yormack, Esq., is the principle attorney at Yormack where he focuses on corporate and commercial litigation, franchise, and real estate law. You can reach Adam directly at email@example.com.
The materials in this article are provided for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any potential questions or concerns, etc.