What to Look for When Hiring Legal Counsel for Your Startup
#Founders, do you know what to look for when hiring legal counsel for your #startup?
I reached out to Jason Putnam Gordon, a highly experienced and respected attorney in Polsinelli's Venture Capital & Emerging Growth Company legal practice for tips on how to hire startup legal counsel.
Jason provided the following 5 valuable tips:
1. Hire a venture capital and emerging growth company attorney.
Not all attorneys who work with new businesses are highly experienced with venture-backed startups.
Hire an attorney who is highly experienced in this area to potentially avoid costly or company-killing mistakes.
2. Don’t hire or believe prospective counsel if that person tells you that hiring him or her will guarantee investment in your startup.
At least in the Bay Area, it’s a competitive legal market. Some attorneys, even at established firms, may make promises they will not keep.
An attorney’s job is to provide legal counsel to your startup.
If it looks like there is a match between your startup and an investor the attorney knows, that attorney will likely introduce you. But, an attorney promising capital is a red flag.
3. Don’t wait until you get a term sheet to hire counsel:
Identify and stay connected with legal counsel early. For startups, there are more ways for things to go wrong than right.
By the time you have a term sheet, deal- or company-killing mistakes pertaining to the company’s cap table, employee agreements, IP ownership, and business model may be irreparable.
Hiring legal counsel and obtaining advice from him or her early, can help your startup avoid those mistakes.
4. Make sure you will have sufficient access to partner-level counsel.
Because it’s a competitive legal market place, most firms in this space rely on leveraging non-partner time to better match the value of the services provided against their cost.
Unfortunately, at some firms, that can result in startups working with inexperienced attorneys.
With that in mind, it’s crucial that your startup have a partner-level team member who can provide important strategic advice and counsel.
5. Treat your legal counsel like a trusted partner.
After you have found and engaged the right counsel for your startup, treat your counsel like a trusted partner—as opposed to a cost center to be minimized.
Open and continuing conversation with your attorney is an investment for the long run.
By being kept up to speed on the company’s initiatives, counsel can identify and help you avoid costly or company-killing mistakes.
Further, venture capital and emerging growth company attorneys are highly connected. They may have people in their networks who can help your company grow.