When selecting corporate counsel for your business, experience and knowledge are only part of the big picture. Ensuring that you and your new counsel agree on approach and share the same goals are just as important. The insights and advice an experienced attorney offers can be crucial to the success of your business and will pay dividends down the road -- especially if you hope to expand. Before bringing on new legal counsel, here are a few things every founder should consider.
1. What do clients say?
First and foremost, talk with some of your legal advisor’s current and past clients. This will help you gauge their legal abilities, including knowledge of contract writing and negotiation, as well as their strategic and interpersonal aptitude before making a decision. Also, ask about their legal network and see if they will be able to connect you with the right attorneys in case a legal matter comes up that is outside their specialty.
Related: 7 Qualities to Look For in a Lawyer
2. Will they wait to get paid?
Once you’ve made a decision, have your attorney work on contingency, meaning you don’t pay them until you’re funded. Yes, you’ll be racking up a bill (about $700/hour), but the net is, you don’t have to pay them until you’ve got money in the bank…usually after a series A (not your seed funding). If you’re successful, you’ll drive them millions of dollars.
On contingency, they won’t file your patents, but they will help incorporate the company, draft the founder agreement (RSPAs) as well as the employment and consulting agreements. When starting a company, you want to spend every dollar you get on engineering and marketing, not legal fees. The majority of large firms will work on contingency upfront.
If they ask for equity, say No. Tell them to invest instead. Most law firms have an investment fund they can pull from.
3. Are they board savvy?
Attorneys attend more board meetings than anyone. A very strategic one can assist you in managing your board. He or she can also offer observations about how other board members are feeling and share useful strategies.
Related: When Investors Join Your Board
If the board is unhappy, they should be giving you a heads-ups. When you have issues with your board or investors, a great attorney can be a mediator, and what you want is an unbiased mediator. You’re going to have challenges, and you’ll look to your attorney for counsel.
4. Who else do they represent?
Be cautious. Many larger firms also represent investors, creating a conflict of interest. This is critical to note. If your firm represents one of your investors, they are helping bring other companies in your investor’s portfolio public and likely making hundreds of thousands of dollars in billable hours from your investor in the process. In such a situation, who do you think they’re more beholden to? You want an attorney with no conflicts of interest -- one who's on your side.
Lastly, if you don’t like your attorney, simply cut them loose. Their services are standardized and commoditized, and there are many in the Valley. You can easily find another.