4 ms·

Hiring a Startup Lawyer

70 points by teachingaway 12y ago

crb002 12y ago
I've seen http://www.ofenbakhlaw.com http://www.ofenbakhlaw.com have a lot of happy clients. A good business attorney does more than just help you draft the contracts that your company will run on. They are active in helping you get your business out there. Find an attorney that started their own law practice. They built their business from the ground up and have personally dealt with many of the problems you will face.
teachingaway 12y ago
What are the other good posts I should add to the collection? Who else writes about hiring startup lawyers?
- hkmurakami 12y ago
  There's a post by Sam Altman which argues that founders should negotiate for a 30-40k cap for processing Series A paperwork.
  - nwenzel 12y ago
    You can use your term sheet to talk to your firm about fees. Your VC will have a number in the term sheet to address their legal fees. Your should be somewhere in the 1.25-1.5x neighborhood of that number. More if your books aren't organized and your records are all over the place. $30-$40k is probably right in a lot of cases (if you touch HIPAA, Crowdfunding, Bitcoin, issues you'll need to bump those numbers up).
- teachingaway 12y ago
  Picking a Startup Lawyer in NYC - http://mattmireles.com/picking-a-startup-lawyer-in-nyc/ http://mattmireles.com/picking-a-startup-lawyer-in-nyc/
joshmlewis 12y ago
I would like to know what most startups experiences are with filing with the SEC for SAFE notes and what is a reasonable cost for a very early stage round and seed round.
briandoll 12y ago
If anyone is looking for a lawyer, I'd highly recommend Gabe Levine: http://levinebakerlaw.com/attorneys/gabriel-levine/ http://levinebakerlaw.com/attorneys/gabriel-levine/ He's shares some advice on his blog (http://mylawyergabe.com/ http://mylawyergabe.com/) and gave a great presentation with Mike Monteiro called "F*ck you, pay me!": http://vimeo.com/22053820 http://vimeo.com/22053820
ptype 12y ago
Any recommendations for London/UK based startup lawyer? (Incorporation, shareholder agreement etc)
- reinhardt 12y ago
  https://www.lexoo.co.uk/ https://www.lexoo.co.uk/
  - thechrisoshow_ 12y ago
    Chris here, the CTO of Lexoo. Thanks for the recommendation! Just out of curiosity - how did you hear about us? (Feel free to email me at chris@lexoo.co.uk)
- josephlord 12y ago
  Also recommendations solicitors for employment/contractor agreements (from both sides) with understanding of startups would be great too.
digitallawyer 12y ago
Upfront disclosure: I am one of the founders of LawGives, an online legal marketplace focussed on fixed fee services. I used to work at DLA Piper as a tech / IP lawyer. Opinions are my own. As part of our work with LawGives we've helped hundreds of entrepreneurs find legal help with business and immigration matters. In my experience, there are basically three ways in which companies go about dealing with their legal work at the startup stage: 1. Do it yourself Many founders start out using a service like LegalZoom to take care of basic legal needs. The price point is attractive but the process is completely automated. While DIY solutions may be a good option for some people, there are a couple of caveats to be aware of: - The actual cost, once you finish going through the automated process, is typically higher than advertised. (For example, a LegalZoom incorporation is marketed at $99, but the actual cost once you are done is usually much higher.) - Many of the documents are not tailored to the typical startup situation. (For example, typically the number of units / shares authorized in the corporate formation documents is by default set to a low number, which becomes a problem when the company raises money.) This leads to problems down the road, often forcing companies to redo (part of) the incorporation work, at significant cost and at an inconvenient time (when fundraising). - No lawyer is involved throughout the document automation process. As a result, the founders remain unaware of key risks (often depending on the specific activity the company is engaging in) which would have been easily picked up by a lawyer. Examples include picking a corporate name that is already trademarked, pursuing a business model that has significant implications from a regulatory perspective, and choosing the wrong kind of legal entity type. 2. Use a big law firm At the other end of the spectrum, there is the option of going with a big law firm. Many of the companies that we have interacted with end up going this route: - You are dealing with well-trained lawyers who have deep expertise in their practice area. These lawyers will be able to identify key risks easily, and will typically flag them early. We've interacted with lawyers at DLA Piper, Cooley, Fenwick, Wilmer Hale, Dorsey and several of the other big firms out here, and quality is generally high. - These firms will often offer deferred fees. This means that you do not pay your legal bill until a certain trigger happens, usually raising a certain amount or doing a priced round. This option is attractive for clients who have yet to raise money. - However, deferment comes at a cost: we've seen big firm legal bills for incorporation and basic documents that range in the 10 to 20k dollar range. This may not matter for companies that raise significant amounts of money following a deferment. Other companies prefer to pay upfront, and often end up paying less than a quarter of the aforementioned price. - Big law firms will often ask for equity in the company. We’re not fans of this model, as it may affect (or seem to affect) the independence of the firm in relation to the client. In addition, it is costly to give up equity, and there are enough big law firms out there who will proceed (and offer a deferment) without requesting equity. However, it is fairly typical for big law firms to ask for this, so it’s good to be aware of it. You should feel free to push back, if asked. 3. Use a solo attorney / small law firm A middle ground between the do it yourself approach and going with a big law firm is to look for a good solo attorney: - Many big law firm attorneys leave their firms for one reason or another, and start offering their services to clients directly, at rates that are significantly lower then the big law firm rates. - The client still gets the benefit of big law firm expertise, given that the lawyer was trained there and saw a wide range of legal issues, from the complex to the mundane. - Solos usually do not have the financial capacity to offer deferred fees, which means that the client pays immediately. This may be a showstopper for some companies. If the company has the capacity to pay, it is generally much cheaper to pay upfront (in our experience, often 25% of the big law firm rate). - Solos are more amenable to alternative billing models: flat fee services gives a high degree of price certainty, which many clients prefer over the more uncertain hourly billing model. Not all services can be priced like this, but many of the services that you are likely to need at this point can be. - Solos can also - in a later stage of the business - act as an interface with a big law firm. For example, we've seen many companies work with solos, and engage a big law firm at Series A. At this point, the solo acts almost as an in-house counsel, making sure everything goes smoothly and keeping an eye on the bill. -- Recap: - Doing it yourself is tricky; thread carefully. - Big law is attractive if you can get a deferred fees, but you will end up paying more. Avoid giving up equity. - A solo or small firm with startup experience is a great way to start building your legal team and keeping cost down. These are some quick thoughts which I hope are helpful. In case it's useful: LawGives: https://www.lawgives.com/l/5p https://www.lawgives.com/l/5p LawGives startup packages: https://www.lawgives.com/l/5q https://www.lawgives.com/l/5q LawGives guide on starting a business: https://www.lawgives.com/l/36 https://www.lawgives.com/l/36 My twitter: @digitallawyer
larrys 12y ago
The list is helpful but the truth is it's hard to believe that someone who says: "There’s lots of advice on the internet, mostly bad. Our new series, “Tech Law Link Lists” picks out the more useful guidance for startups." ...would agree with everything that is being said in all of those links. And to me that's an irony worth explaining. Further it says "This first installment is about finding the right lawyer for your startup. " Installment of what? Curated set of links? Why not, if you are so good, take the time to pick apart and specifically discus what is right and what might be wrong and how your opinion differs. You certainly can't agree with everything that others say, right?
jacquesm 12y ago
I'd like to plug George Grellas ( https://news.ycombinator.com/user?id=grellas https://news.ycombinator.com/user?id=grellas ) in case you're not aware of him, just reading his comment history should give you a lot of food for thought. He's one of HN's secret assets. See also: http://www.grellas.com/faq_business_startup.html http://www.grellas.com/faq_business_startup.html
- digitallawyer 12y ago
  +1 one that one. Protip: If you get a chance to meet George, make sure to ask him about 83(b) elections.
  - brandnewlow 12y ago
    George represented me personally on the Perfect Audience acquisition deal and was immensely helpful and responsive.
- teachingaway 12y ago
  whoa... just spent an hour reading some of Grellas' HN essays. Insightful stuff. DC Toedt is another solid lawyer worth reading on HN. Out of Texas, I think. https://news.ycombinator.com/user?id=dctoedt https://news.ycombinator.com/user?id=dctoedt
employeethrwy 12y ago
Does anyone have any recommendations for legal advice for startup employees? Specifically, I've been offered equity in the startup I work for and would like a professional opinion on the stock grant contract they're offering etc. Any links to blog posts, recommended lawyers, or fixed fee services would be appreciated! (Throwaway account as my colleagues know my real one)
- digitallawyer 12y ago
  Check out: - https://angel.co/salaries https://angel.co/salaries. It includes equity and salary info. - http://avc.com/2010/11/employee-equity-how-much/ http://avc.com/2010/11/employee-equity-how-much/
  - employeethrwy 12y ago
    Thanks for the links! I was meaning more to check over the draft of the contract they've prepared (type of stock units, terms and conditions related to vesting, etc) rather than what's a reasonable equity expectation. In any case, I just created an account and sent a message through LawGives. If anyone else has any other links they'd be much appreciated.
- teachingaway 12y ago
  explanation of stock options generally - http://blog.alexmaccaw.com/an-engineers-guide-to-stock-options http://blog.alexmaccaw.com/an-engineers-guide-to-stock-optio...

70 points by teachingaway 12y ago

I've seen http://www.ofenbakhlaw.com http://www.ofenbakhlaw.com have a lot of happy clients. A good business attorney does more than just help you draft the contracts that your company will run on. They are active in helping you get your business out there. Find an attorney that started their own law practice. They built their business from the ground up and have personally dealt with many of the problems you will face.

teachingaway 12y ago

What are the other good posts I should add to the collection? Who else writes about hiring startup lawyers?

hkmurakami 12y ago
There's a post by Sam Altman which argues that founders should negotiate for a 30-40k cap for processing Series A paperwork.
- nwenzel 12y ago
  You can use your term sheet to talk to your firm about fees. Your VC will have a number in the term sheet to address their legal fees. Your should be somewhere in the 1.25-1.5x neighborhood of that number. More if your books aren't organized and your records are all over the place. $30-$40k is probably right in a lot of cases (if you touch HIPAA, Crowdfunding, Bitcoin, issues you'll need to bump those numbers up).
teachingaway 12y ago
Picking a Startup Lawyer in NYC - http://mattmireles.com/picking-a-startup-lawyer-in-nyc/ http://mattmireles.com/picking-a-startup-lawyer-in-nyc/

joshmlewis 12y ago

I would like to know what most startups experiences are with filing with the SEC for SAFE notes and what is a reasonable cost for a very early stage round and seed round.

briandoll 12y ago

If anyone is looking for a lawyer, I'd highly recommend Gabe Levine: http://levinebakerlaw.com/attorneys/gabriel-levine/ http://levinebakerlaw.com/attorneys/gabriel-levine/ He's shares some advice on his blog (http://mylawyergabe.com/ http://mylawyergabe.com/) and gave a great presentation with Mike Monteiro called "F*ck you, pay me!": http://vimeo.com/22053820 http://vimeo.com/22053820

ptype 12y ago

Any recommendations for London/UK based startup lawyer? (Incorporation, shareholder agreement etc)

reinhardt 12y ago
https://www.lexoo.co.uk/ https://www.lexoo.co.uk/
- thechrisoshow_ 12y ago
  Chris here, the CTO of Lexoo. Thanks for the recommendation! Just out of curiosity - how did you hear about us? (Feel free to email me at chris@lexoo.co.uk)
josephlord 12y ago
Also recommendations solicitors for employment/contractor agreements (from both sides) with understanding of startups would be great too.

digitallawyer 12y ago

Upfront disclosure: I am one of the founders of LawGives, an online legal marketplace focussed on fixed fee services. I used to work at DLA Piper as a tech / IP lawyer. Opinions are my own. As part of our work with LawGives we've helped hundreds of entrepreneurs find legal help with business and immigration matters. In my experience, there are basically three ways in which companies go about dealing with their legal work at the startup stage: 1. Do it yourself Many founders start out using a service like LegalZoom to take care of basic legal needs. The price point is attractive but the process is completely automated. While DIY solutions may be a good option for some people, there are a couple of caveats to be aware of: - The actual cost, once you finish going through the automated process, is typically higher than advertised. (For example, a LegalZoom incorporation is marketed at $99, but the actual cost once you are done is usually much higher.) - Many of the documents are not tailored to the typical startup situation. (For example, typically the number of units / shares authorized in the corporate formation documents is by default set to a low number, which becomes a problem when the company raises money.) This leads to problems down the road, often forcing companies to redo (part of) the incorporation work, at significant cost and at an inconvenient time (when fundraising). - No lawyer is involved throughout the document automation process. As a result, the founders remain unaware of key risks (often depending on the specific activity the company is engaging in) which would have been easily picked up by a lawyer. Examples include picking a corporate name that is already trademarked, pursuing a business model that has significant implications from a regulatory perspective, and choosing the wrong kind of legal entity type. 2. Use a big law firm At the other end of the spectrum, there is the option of going with a big law firm. Many of the companies that we have interacted with end up going this route: - You are dealing with well-trained lawyers who have deep expertise in their practice area. These lawyers will be able to identify key risks easily, and will typically flag them early. We've interacted with lawyers at DLA Piper, Cooley, Fenwick, Wilmer Hale, Dorsey and several of the other big firms out here, and quality is generally high. - These firms will often offer deferred fees. This means that you do not pay your legal bill until a certain trigger happens, usually raising a certain amount or doing a priced round. This option is attractive for clients who have yet to raise money. - However, deferment comes at a cost: we've seen big firm legal bills for incorporation and basic documents that range in the 10 to 20k dollar range. This may not matter for companies that raise significant amounts of money following a deferment. Other companies prefer to pay upfront, and often end up paying less than a quarter of the aforementioned price. - Big law firms will often ask for equity in the company. We’re not fans of this model, as it may affect (or seem to affect) the independence of the firm in relation to the client. In addition, it is costly to give up equity, and there are enough big law firms out there who will proceed (and offer a deferment) without requesting equity. However, it is fairly typical for big law firms to ask for this, so it’s good to be aware of it. You should feel free to push back, if asked. 3. Use a solo attorney / small law firm A middle ground between the do it yourself approach and going with a big law firm is to look for a good solo attorney: - Many big law firm attorneys leave their firms for one reason or another, and start offering their services to clients directly, at rates that are significantly lower then the big law firm rates. - The client still gets the benefit of big law firm expertise, given that the lawyer was trained there and saw a wide range of legal issues, from the complex to the mundane. - Solos usually do not have the financial capacity to offer deferred fees, which means that the client pays immediately. This may be a showstopper for some companies. If the company has the capacity to pay, it is generally much cheaper to pay upfront (in our experience, often 25% of the big law firm rate). - Solos are more amenable to alternative billing models: flat fee services gives a high degree of price certainty, which many clients prefer over the more uncertain hourly billing model. Not all services can be priced like this, but many of the services that you are likely to need at this point can be. - Solos can also - in a later stage of the business - act as an interface with a big law firm. For example, we've seen many companies work with solos, and engage a big law firm at Series A. At this point, the solo acts almost as an in-house counsel, making sure everything goes smoothly and keeping an eye on the bill. -- Recap: - Doing it yourself is tricky; thread carefully. - Big law is attractive if you can get a deferred fees, but you will end up paying more. Avoid giving up equity. - A solo or small firm with startup experience is a great way to start building your legal team and keeping cost down. These are some quick thoughts which I hope are helpful. In case it's useful: LawGives: https://www.lawgives.com/l/5p https://www.lawgives.com/l/5p LawGives startup packages: https://www.lawgives.com/l/5q https://www.lawgives.com/l/5q LawGives guide on starting a business: https://www.lawgives.com/l/36 https://www.lawgives.com/l/36 My twitter: @digitallawyer

larrys 12y ago

The list is helpful but the truth is it's hard to believe that someone who says: "There’s lots of advice on the internet, mostly bad. Our new series, “Tech Law Link Lists” picks out the more useful guidance for startups." ...would agree with everything that is being said in all of those links. And to me that's an irony worth explaining. Further it says "This first installment is about finding the right lawyer for your startup. " Installment of what? Curated set of links? Why not, if you are so good, take the time to pick apart and specifically discus what is right and what might be wrong and how your opinion differs. You certainly can't agree with everything that others say, right?

jacquesm 12y ago

I'd like to plug George Grellas ( https://news.ycombinator.com/user?id=grellas https://news.ycombinator.com/user?id=grellas ) in case you're not aware of him, just reading his comment history should give you a lot of food for thought. He's one of HN's secret assets. See also: http://www.grellas.com/faq_business_startup.html http://www.grellas.com/faq_business_startup.html

digitallawyer 12y ago
+1 one that one. Protip: If you get a chance to meet George, make sure to ask him about 83(b) elections.
- brandnewlow 12y ago
  George represented me personally on the Perfect Audience acquisition deal and was immensely helpful and responsive.
teachingaway 12y ago
whoa... just spent an hour reading some of Grellas' HN essays. Insightful stuff. DC Toedt is another solid lawyer worth reading on HN. Out of Texas, I think. https://news.ycombinator.com/user?id=dctoedt https://news.ycombinator.com/user?id=dctoedt

employeethrwy 12y ago

Does anyone have any recommendations for legal advice for startup employees? Specifically, I've been offered equity in the startup I work for and would like a professional opinion on the stock grant contract they're offering etc. Any links to blog posts, recommended lawyers, or fixed fee services would be appreciated! (Throwaway account as my colleagues know my real one)

digitallawyer 12y ago
Check out: - https://angel.co/salaries https://angel.co/salaries. It includes equity and salary info. - http://avc.com/2010/11/employee-equity-how-much/ http://avc.com/2010/11/employee-equity-how-much/
- employeethrwy 12y ago
  Thanks for the links! I was meaning more to check over the draft of the contract they've prepared (type of stock units, terms and conditions related to vesting, etc) rather than what's a reasonable equity expectation. In any case, I just created an account and sent a message through LawGives. If anyone else has any other links they'd be much appreciated.
teachingaway 12y ago
explanation of stock options generally - http://blog.alexmaccaw.com/an-engineers-guide-to-stock-options http://blog.alexmaccaw.com/an-engineers-guide-to-stock-optio...