By David McMahon & Jeevan Subbiah
This post in our startup blog series, How to Select New Counsel and Manage Legal Fees, focuses on how to select an attorney. Your attorney search should move beyond cost, prominent firm name or whom an industry leader hired. By evaluating your company’s needs prior to your free initial consultations with prospective attorneys, you can hone in on counsel that can be the best asset for your company.
“Know Thyself” - Every Startup is Unique
Every startup is unique depending on its personality, goals, phase of funding, budget, needs, timeline and structure. Ask yourself questions such as these:
- Is this a small project? Do we want the same attorney for future projects?
- Do we prefer an attorney with strong startup experience?
- Do we require technical intellectual property expertise?
- Would we prefer using a small boutique law firm?
- Do we need counsel with governmental agency or international corporate experience?
- Do we need a national law firm if we relocate or face issues in different states?
- What type of billing model do we prefer?
- Would a law firm with strong venture capital contacts be a blessing or a burden?
- Do we want to develop business contacts through our lawyer?
A good legal relationship requires honest communication from both sides. Do you feel talked down to or intimidated by your lawyer or does your lawyer seem ‘too smooth or slick’ to you? Are you comfortable discussing alternative project approaches (time, costs, preference) instead of agreeing with your lawyer? You should not be embarrassed to ask questions about budgets, cost estimates or ways to save money.
Startups also operate on a radically different pace than most 9-5 companies. You may require an attorney to review a document and provide feedback at a moments notice. Is your lawyer easily accessible?
Find a Problem Solver
Prior to hiring in house general counsel, you may need an attorney to supplement your business perspective. Yet your lawyer should not be just another business advisor. Your lawyer is trained to give you legal opinions and advice while identifying issues and potential risks in a conservative manner. To many entrepreneurs, lawyers may seem to be cautious ‘wet blankets’ that only slow business from moving forward while charging high rates. But a good lawyer will have the vision to identify risks and find solutions when legally possible.
References and Research
Good references (personal, corporate, LinkedIn) are one of the best ways to find a lawyer. Your city may also have a legal newspaper with links to local reference websites. Here are a few other sites to review:
- Chambers and Partners USA
- Martindale-Hubbell Peer Review Ratings
- US News & World Report Best Law Firms and Best Lawyers
- Law.Com Top Rated Lawyers
- Vault Law Firm Ranking
Fees and Billing - Are You Paying For Expertise or a Bay View?
It is surprising that many startups select counsel with little consideration of fees, especially when most startups are very cost conscious. Take a hard look at billing rates, especially since legal projects can take longer than expected. High billing rates sometimes reflect high legal acumen. Other times, high billing rates reflect the firm’s prominent location, catered lunches and firm parking lot. (Future posts will detail sources to compare billing rates and discuss negotiating a rate, project rates, retainer fees and deferred billing).
When is Your Counsel Billing You? Meetings, Phone Calls, Travel, Lunch?
It was common for an attorney to bill a client for every instance of communication or any action slightly related to the client. However, the legal field is changing drastically due to the challenging economy. Some lawyers may be willing to work with your budget and present informal, non billable advice in order to limit your fees.
Next Post - Big Firms and Small Firms
Once you identify your startups’ needs, budget and preferences, you can make a better decision on selecting legal counsel. Our next post will focus in greater detail on some of the differences between big and small law firms.