who should the attorney represent in a startup organization

Attorneys representing startup companies should be prepared to field "quasi-legal" questions about the company's business model, roles of various co-founders, the appropriateness of company valuations, and other matters. Startup clients give their attorneys the opportunity to learn about cutting-edge technology.

Full Answer

What does a startup lawyer do?

Startup lawyers advise the most innovative, high-growth emerging companies and their venture capital investors on a wide range of legal and business issues. We spoke with several attorneys and legal recruiters in the space to learn why it’s such a desirable gig and asked them to share insights on how you can become a startup lawyer.

Should in-house lawyers be involved in venture-backed startups?

” In addition to equity incentives that could yield dynastic wealth if the company is a runaway success, venture-backed startups can provide an environment where the in-house lawyer isn’t just a risk mitigator or document processor, but a true strategic partner for the executive team and a wearer of many hats.

Do I need a lawyer to start a business?

The most common reasons for needing an attorney are: Navigating the many forms and requirements of legal documents, like incorporation documents, that are involved. Assurance the startup is being done right.

Should you become an M&A lawyer for startups?

It would definitely help to be a senior M&A attorney at a large law firm, but working with startup clients requires a different skill-set. ” Gray, who started his career as an M&A lawyer at Latham & Watkins, adds: “ Most of my job is actually like being a business psychologist, and sometimes it feels like only 5% of it is actually legal work.

Why do startups need lawyers?

A startup lawyer helps your business foresee legal issues and also advised on how to successfully avert them. It is the role of a lawyer to ensure that your business is protected from the beginning. He/She analyses your business, proffers preventive solutions and manages the business risks.

Why should an entrepreneur consult with an attorney?

The most common reasons for needing an attorney are: Navigating the many forms and requirements of legal documents, like incorporation documents, that are involved. Assurance the startup is being done right.

What role does an attorney play in helping to form businesses?

They can guide entrepreneurs through the process of sales or acquisitions, help draft letters of intent, draft contracts, verify trademarks, and review contracts and agreements with buyers and sellers. Small business lawyers can also help you settle litigations.

What is the advantage of hiring a local attorney for a startup?

Working locally—at home—is a big advantage for an attorney. When you describe your business's situation, a local attorney can see how all the pieces fit together before the process even starts. Local attorneys know the judges, the court clerks, and how litigation is generally conducted in that particular area.

Who do you talk to about starting a business?

4. A business coach or mentor. Getting a little advice from someone in the business world is also a good idea. Whether you're opening your first business or your fifth, talking with someone who can give you independent business advice will go a long way, Arney says.

What's the difference between attorney and lawyer?

Attorney vs Lawyer: Comparing Definitions Lawyers are people who have gone to law school and often may have taken and passed the bar exam. Attorney has French origins, and stems from a word meaning to act on the behalf of others. The term attorney is an abbreviated form of the formal title 'attorney at law'.

What is the highest paid lawyer?

Highest paid lawyers: salary by practice areaTax attorney (tax law): $122,000.Corporate lawyer: $115,000.Employment lawyer: $87,000.Real Estate attorney: $86,000.Divorce attorney: $84,000.Immigration attorney: $84,000.Estate attorney: $83,000.Public Defender: $63,000.More items...•

What types of business lawyers are there?

6 Types Of Lawyers For BusinessesGeneral Business Lawyer. As the name suggests, a general business lawyer can provide legal advice on a wide range of matters. ... Employment and Labor Lawyer. ... M&A (Mergers and Acquisitions) Lawyer. ... Tax Lawyer. ... Intellectual Property Lawyer. ... Contract Lawyer.

What is a business solicitor?

A solicitor will help in areas such as company formation, contracts or advice on employee disputes. Find out which laws affect your industry and whether you need specialist advice.

What are lawyers not allowed to do?

“An Advocate shall not solicit work or advertise, either directly or indirectly, whether by circulars, advertisements, touts, personal communications, interview not warranted by personal relations, furnishing or inspiring newspaper comments or procuring his photograph to be published in connection with cases in which ...

Is it better to hire a local attorney?

Local lawyers can more effectively judge the value of your case or the likelihood of success. A local attorney knows and can fairly judge the temperament in the community and the likelihood of a fair and reasonable verdict being returned in your particular matter.

Do LLCs need to register with the state?

Partnerships and LLCs must register with the state. Documents must be prepared, such as a partnership agreement or an LLC operating agreement. You might be able to register online with your state or use an online service to register your business, but it might be a good idea to use an attorney if your business is at all complicated.

Do S corporations have to register with the state?

Corporations or S corporations must register with the state as well. They must prepare bylaws and other documents, and they have a far more complicated ownership structure. You'll almost certainly need an attorney to help you start any type of corporation, An S-corp starts as a corporation then elects S corporation status with the Internal Revenue Service. If it sounds complicated, it is. You might need help.

Does the Balance provide tax advice?

BizFilings and LegalZoom offer most documents, which might serve you well if your business is not particularly unique. The Balance does not provide tax, investment, or financial services and advice.

Who is Jean Murray?

Jean Murray, MBA, Ph.D., is an experienced business writer and teacher. She has taught at business and professional schools for over 35 years and written for The Balance SMB on U.S. business law and taxes since 2008.

Can you save money by doing things yourself?

You can save a lot of money, and you'll learn a lot from the process of doing things yourself.

What is a law firm?

Law firms are made up of attorneys with various levels of experience and billable rates – from partners to junior associate lawyers. You should know what the day to day (or month to month) communication with the legal team will look and feel like.

What is a law firm culture?

Law firm culture. A law firm’s culture can be very relevant to its clients. In firms with a collaborative or ‘team’ culture, your lawyer is better able to leverage the collective knowledge of his or her colleagues to offer more effective and efficient legal counsel, quicker responses and business-friendly answers.

Why is it important to have a legal advisor?

A great legal advisor is important as you launch and grow your company. Choose a lawyer who is smart, accessible, interested in you and your company, easy to talk to, and is someone you can count on to be available and honest with you. You’ll be working with your lawyer through exciting and occasionally difficult times – choose wisely!

What to do if you already have a list of investors?

If you already have a list of investors you are interested in approaching, share these with the lawyer. Does the lawyer/firm know them? Can they recommend others you haven’t thought of?

What to think about when selecting legal counsel?

As you select legal counsel, think about: (1) experience with startups, (2) what your day-to-day experience will be, (3) the law firm’s culture, (4) connections to capital, (5) cost and (6) chemistry.

Can a lawyer represent a startup?

Don’t underestimate the ‘non-legal’ services that your lawyer can provide. In addition to representing startups, some firms also have a venture capital practice where they represent VCs in their fund formation and investment activities. A firm with a strong VC practice has deep relationships with investors that can be helpful to startup founders as they fundraise, and your lawyer should be willing to introduce your company to investors when the time is right. Investors may include individuals ( angels ), VC firms, and corporate/strategic partners.

How much does a lawyer charge per hour?

The lawyers most start-ups will deal with are likely in the $350-$800 an hour range, but this varies from firm to firm, obviously. Most big firms bill in increments of six minutes (i.e., 0.1 of an hour), but some charge in 0.25 hour increments. The range for hourly rates is huge. A junior lawyer at a small firm in a smaller city may charge $150 an hour, while senior partners in big firms in major cities have been known to charge over $1,000 an hour.

Why do start ups need lawyers?

At the most basic level, start-ups need lawyers to help them deal with three groups: The government. You don’t want to violate laws. You also need to be sure you are doing business in a way that doesn’t create unnecessary tax liability and that you pay the taxes you owe. Third parties and the public.

What happens if a lawyer doesn't speak the language?

First, a lawyer who doesn’t seem to speak the language of your business. If someone doesn’t understand the world in which you are operating, it’s harder for him to adequately represent you.

How much does a lawyer cost?

If you work with a lawyer, you can probably expect to pay between $2,000 and $5,000, though some firms will give discounts that get the cost below that. This can vary depending on complexity: how many founders, what “bells and whistles” will be included, whether you are doing an LLC or a corporation, and how you handle certain items, such as stock option plans, and so on.

What is an LLC?

Establishing a business entity of some sort ( LLC or corporation) to protect you personally from business liabilities

What is fit in a job?

First and foremost, look for “fit” (i.e., someone you trust, get along with, enjoy working with, feel has an interest in you and what you’re working on, and can relate to you). Referrals are often the best place to start.

Where is Rebecca Thorman?

Her blog Kontrary offers career, business, and life advice that works. She writes from Washington, D.C.

What are startup lawyers responsible for?

Startups are responsible for drafting many of the legal agreements that go into keeping them in business, but external contracts are also required to sign at times. For example, if you need to license a certain piece of technology for your product to run successfully, you may be asked to sign a software license . Startup lawyers know how to read these contracts and which terms are mutually beneficial for their clients and which aren’t.

What Does a Lawyer for Startups Do?

A lawyer for a startup helps entrepreneurs through the early legal processes involved in creating and scaling a startup. Some of these items might include getting the startup set up as a legal entity in their state, assisting with securing funding through negotiating, creating, and modifying investment contracts, and drafting the initial set of documents the company may use with its customers and employees.

How Much Does a Startup Lawyer Cost?

The hourly rate of this specialized lawyer can run anywhere from $250 to $400 an hour and up. Many early tasks can be handled on a flat fee early, like business formation and contract drafting.

How Do I Choose a Startup Lawyer?

Choosing a startup lawyer is an important step in the timeline of your new startup. Here are a few questions you can ask to determine which startup lawyer is right for you:

What is the most important job for a startup lawyer?

Legal drafting is one of the most important jobs of a startup lawyer. Since legal compliance is essential to legitimate companies, startups hire startup lawyers to draft their foundational legal agreements that comply with the regulations of their industries.

Why do startups need a lawyer?

Working with a lawyer for startups is helpful because many startup founders are hesitant to advocate for themselves with investors since they are often eager to receive capital to fund their ideas. Investors are also savvy and may take advantages of a naive founder to get a good deal with their investment.

What is a startup lawyer?

Startup lawyers are attorneys that specialize in helping startups with legal issues early on. They can seem to be expensive early on but getting in touch with a good startup lawyer as early as possible is the best way startups can protect themselves from legal trouble.

What do I need to be a startup lawyer?

While there are aspects of the practice that are highly specialized (such as understanding VC deal terms and startup market conventions), being a startup lawyer requires at least some working knowledge across a broad array of legal domains, including tax, employment law, compensation, intellectual property, commercial law, corporate law and securities regulation. As Gandhi puts it, “ In many ways, to succeed as a startup lawyer, you need to be a mile wide and an inch deep — a real generalist. ”

Why do people move to a startup law firm?

One of the main attractions of moving to a startup law practice is the prospect of building the skills and network that can enable transitioning to an in-house role at an up-and-coming startup . Firms in the space recognize this reality, as Gandhi notes: “ Most laterals who come to startup law firms don’t want to be firm lawyers forever. For most, it’s a stepping stone, and we’re conscious of that. ” In addition to equity incentives that could yield dynastic wealth if the company is a runaway success, venture-backed startups can provide an environment where the in-house lawyer isn’t just a risk mitigator or document processor, but a true strategic partner for the executive team and a wearer of many hats.

What does Beser say about career path?

Beser agrees that these jobs come with a lot of ambiguity. “ Don’t ask me what your career path will look like, ” he says. “Growth opportunities for our team come from the objectives of the business – our team will grow professionally by helping the business succeed.” Beser also warns that “ when you’re at a firm, and think you’d like to work at a startup, you need to take stock in your personal comfort with risk. A high risk tolerance is a prerequisite for anyone entering this environment as young companies evolve quickly, every decision has a myriad of impacts, and your career trajectory may not be as linear as expected.”

Who is Len Gray?

Len Gray, who founded a boutique firm specializing in representing startup companies, agrees: “ You have to be really well balanced across a wide range of areas to succeed in this practice, and you also have to be very good at client care. It would definitely help to be a senior M&A attorney at a large law firm, but working with startup clients requires a different skill-set. ” Gray, who started his career as an M&A lawyer at Latham & Watkins, adds: “ Most of my job is actually like being a business psychologist, and sometimes it feels like only 5% of it is actually legal work. The breadth and depth of advice you're asked to give is just so different than what's expected by institutional clients at a big firm. ”

Who is Josh Beser?

Josh Beser is General Counsel of Away, a high-flying venture-backed travel brand. He was the first lawyer at the company and tells us, “ at various points in my tenure, I’ve helped to build the HR function, manage real estate, IT and information security teams, and we’re currently building a trade compliance function as well. In addition to starting and scaling legal, part of the role as GC has been to build multiple arms of the company from zero to something that can be handed off to an expert. These dynamic responsibilities require in-house legal to be agile and proactive. ”

Who is Tad Gruman?

Tad Gruman, a managing director at Whistler, bemoans how many law firm associates effectively foreclose becoming a startup GC as a possible career path because of their attitudes toward lateral moves: “ Too often we hear from associates that they’ll never lateral to another firm, they’ll only consider in-house positions, without actually realizing the possibilities lateral moves can set up or open up for them later in their careers. ”

Do corporate lawyers prefer business?

It is a truth universally acknowledged, that a corporate lawyer secretly—or, in many cases, not so secretly—would prefer a career in business. Any recruiter who speaks regularly with corporate/transactional associates at big law firms invariably hears that their eventual goal is to move over to the business side, or at least to get closer to the business. But what many of these attorneys fail to realize is that there are ways to continue practicing law while still getting to flex those business muscles as a key member of the top-level strategic team at fast-paced, growing companies. Now, does that sound like something you might be interested in?

How long do you have to give a notice of your intention to start a business?

In addition, you may need to provide public notice of the intention of starting a business entity, which could involve publishing that notice in a newspaper for four weeks. You need to do this right or you could face other problems, which is another reason why hiring a lawyer for your business startup is a wise decision. 3.

Do small business owners need an attorney?

Regardless, owners need a small business attorney at the ready to fight for their company when such situations arise. An attorney who isn’t going to hesitate to advocate zealously for clients can level the playing field and even help resolve issues before they become much larger problems.

What is an organizational client?

[1] An organizational client is a legal entity, but it cannot act except through its officers, directors, employees, shareholders and other constituents. * * * The duties defined in this Comment apply equally to unincorporated associations. “Other constituents” as used in this Comment means the positions equivalent to officers, directors, employees and shareholders held by persons acting for organizational clients that are not corporations * * * * * [3] When constituents of the organization make decisions for it, the decisions ordinarily must be accepted by the lawyer even if their utility or prudence is doubtful. Decisions concerning policy and operations, including ones entailing serious risk, are not as such in the lawyer's province. Paragraph (b) makes clear, however, that when the lawyer knows that the organization is likely to be substantially injured by action of an officer or other constituent that violates a legal obligation to the organization or is in violation of law that might be imputed to the organization, the lawyer must proceed as is reasonably necessary in the best interest of the organization. As defined in Rule 1.0(i), knowledge can be inferred from circumstances, and a lawyer cannot ignore the obvious.

What are the requirements of paragraph (a)?

The requirements of paragraph (a) must be met even when the transaction is not closely related to the subject matter of the representation, as when a lawyer drafting a will for a client learns that the client needs money for unrelated expenses and offers to make a loan to the client . The Rule applies to lawyers engaged in the sale of goods or services related to the practice of law, for example, the sale of title insurance or investment services to existing clients of the lawyer's legal practice. See Rule 5.7. It also applies to lawyers purchasing property from estates they represent. It does not apply to ordinary fee arrangements between client and lawyer, which are governed by Rule 1.5, although its requirements must be met when the lawyer accepts an interest in the client's business or other nonmonetary property as payment of all or part of a fee. In addition, the Rule does not apply to standard commercial transactions between the lawyer and the client for products or services that the client generally markets to others, for example, banking or brokerage services, medical services, products manufactured or distributed by the client, and utilities' services. In such transactions, the lawyer has no advantage in dealing with the client, and the restrictions in paragraph (a) are unnecessary and impracticable.

What is a conflict of interest in a lawyer?

[8] Even where there is no direct adverseness, a conflict of interest exists if there is a significant risk that a lawyer's ability to consider, recommend or carry out an appropriate course of action for the client will be materially limited as a result of the lawyer's other responsibilities or interests. For example, a lawyer asked to represent several individuals seeking to form a joint venture is likely to be materially limited in the lawyer's ability to recommend or advocate all possible positions that each might take because of the lawyer's duty of loyalty to the others. The conflict in effect forecloses alternatives that would otherwise be available to the client. The mere possibility of subsequent harm does not itself require disclosure and consent. The critical questions are the likelihood that a difference in interests will eventuate and, if it does, whether it will materially interfere with the lawyer's independent professional judgment in considering alternatives or foreclose courses of action that reasonably should be pursued on behalf of the client.

What is the relationship between a lawyer and a client?

[1] Loyalty and independent judgment are essential elements in the lawyer's relationship to a client. Concurrent conflicts of interest can arise from the lawyer's responsibilities to another client, a former client or a third person or from the lawyer's own interests. For specific Rules regarding certain concurrent conflicts of interest, see Rule 1.8.

What does "comply with federal and state securities laws" mean?

(f) Comply with federal and state securities laws, including determining whether the acquisition of stock will increase or complicate the client’s disclosure or licensing requirements.

What is the following passage?

The following passage provides a fairly typical description of a scenario that ultimately leads a lawyer to invest in a new corporate client, thereby providing the reader with a succinct summary of the factual backdrop for the issues to be explored in this Essay:

Can a lawyer enter into a business transaction with a client?

(a) A lawyer shall not enter into a business transaction with a client or knowingly acquire an ownership, possessory, security or other pecuniary interest adverse to a client unless:

Experience with Startups

The day-to-day…

Law Firm Culture

Connections to Capital

Cost

Chemistry

• A great legal advisor is important as you launch and grow your company. Choose a lawyer who is smart, accessible, interested in you and your company, easy to talk to, and is someone you can count on to be available and honest with you. You’ll be working with your lawyer through exciting and occasionally difficult times – choose wisely!

See more on cooleygo.com