Selecting a Business Law Firm
By David Hehman
From years of working with start-ups, and starting our own business, we have created a few principles to help in the process of selecting the right law firm to work with you.
As with any professional help that you enlist for your company, it is smart to create your own checklist of criteria. Then use that list to evaluate the prospects. Get referrals from people who you already trust and who are succeeding in their fields.
Our first three criteria for selecting a lawyer, and his firm are:
- They are smart. They understand business and can speak your language clearly.
- There is good chemistry. When you talk to them, you feel understood. You feel you can trust them to be your advocate.
- They are experienced. Look for the more senior partners in a law firm, and be sure that they will not be delegating your work to their junior partners.
Negotiating A Package
Many good lawyers who work with start-ups will offer a package of services. If they don’t offer then you can ask them. The package might include:
- A fixed flat-rate fee for all legal services related to initial incorporation and formation, and even initial capitalization, if possible
- Discounted hourly rate for the first year
- Standard templates for hiring contractors, non-disclosure agreements, etc.
Payment of Fees
As a start-up, access to cash is always a challenge. One of the tactics that is helpful with legal fees is to request a deferral of fees until the funding has been obtained. This is especially successful with lawyers who are helping you through the funding process, as it is also in their interest then to make the process happen expeditiously.
Alternatively, lawyers may request, or you may be tempted to offer, equity in addition to cash payments, especially when fees are deferred. As a rule of thumb, we don’t recommend that. However, there can be exceptions. If the legal help that you are seeking will be one of the key factors in successfully gaining the funding, you might consider equity as an alternative.