Starting a business is exciting, but it also comes with a lot of logistical issues and hard work – but the one thing that’s often neglected is the host of legal decisions that need to be made regularly, decisions that have the potential shape your company’s future.
From drafting shareholder agreements to protecting your intellectual property, having the right legal partner is essential – someone you can trust, communicate with effectively and that you know will always be in your corner.
Hiring a startup lawyer isn’t just about finding someone with legal knowledge – that’s only half the battle. In fact, it’s about finding the right fit for your business journey. So, before you commit, there are key questions you should ask to ensure you’re making a wise choice.
Why Do You Need a Startup Lawyer?
Many founders try to cut costs in the early stages by handling legal matters themselves or downloading templates online, and it’s definitely a tempting options when money is tight. But, while this might save money upfront, it can lead to costly mistakes later.
Startup lawyers specialise in the unique challenges new businesses face – fundraising, equity distribution, compliance, contracts and scaling issues. A good lawyer doesn’t just keep you out of trouble, they help set the foundations for growth. Also, don’t forget that startup lawyers have experience dealing with other people just like you, so they’ll know how to communicate effectively in a way that gets through to you.
If you’re planning to raise capital, bring on co-founders or hire employees, you’ll quickly find that well-drafted agreements are essential. Investors also feel more confident when a company has proper legal representation, so the right lawyer can directly influence your fundraising prospects.
Key Considerations Before You Commit
Before you engage a lawyer, take time to interview them as you would any other important hire. In fact, in many ways, they may end up being even more important than most other people you hire for a long time to come. A good lawyer will keep your company in good standing and keep the ball rolling, but a bad lawyer could end up being your achielles heel if you stumble into any obstacles down the road
So, before you put anything in writing, here are some things you should consider during the process of hiring a startup lawyer.
Do You Specialise In Startups?
It goes without saying (although sometimes, it needs to be said) that not all lawyers are created equal – ever seen Better Call Saul? Corporate lawyers may understand large businesses, but startups face very different challenges.
So, ask if they have experience with early-stage companies, fundraising rounds and equity structuring. A lawyer who knows the startup world will anticipate issues you may not have considered and that’s an incredibly valuable person to have in your corner.
What Is Your Fee Structure?
Cash flow is always a concern in the early days, so it’s crucial to understand how your lawyer charges. Some work on hourly rates, while others offer fixed-fee packages for common startup needs like incorporation or shareholder agreements. A few even defer fees until after a funding round. So, just make sure the payment model suits your financial situation and avoids unpleasant surprises.
Can You Introduce Us To Investors Or Advisors?
A well-connected lawyer can offer far more than legal documents. Some startup lawyers regularly work with venture capital firms, angel investors and accelerators. If they can open doors to funding or partnerships, their value extends beyond the legal realm, so keep an eye out for these types of bonuses.
How Do You Handle Equity and Ownership Agreements?
Founders often underestimate how complex equity arrangements can be. Vesting schedules, share classes and voting rights all need to be carefully set out to avoid disputes.
Ask how the lawyer has handled these issues in the past and whether they can explain them clearly. If they can’t make complex matters easy to understand, that’s a red flag.
What Happens If Your Business Grows Quickly?
Your legal needs today may be basic, but as you scale, you’ll face more complicated contracts, employment issues and possibly international expansion. Check whether the lawyer or their firm can grow with you, or whether you’d need to find new representation later.
Building a Strong Working Relationship
Once you’ve chosen a lawyer, treat the relationship as a long-term partnership rather than a quick transaction. Keep them informed about your plans and challenges so they can advise proactively, not just react when something goes wrong – they need to be included.
The best startup lawyers act as trusted advisors who understand both your legal requirements and your vision for the business.
Also, don’t be afraid to ask for clarity. A lawyer who brushes off your questions or uses excessive jargon isn’t helping you make informed decisions. You want someone who empowers you, not someone who leaves you feeling in the dark.