Startup Toolkit

Gregg Fairbrothers: Lawyers are the place to find legal advice, but using them can’t substitute for your own judgment and decisions. It’s your job to manage your lawyers, not be so ignorant or unconcerned that they end up managing you.

1. If you are starting a company you have to be versant enough in all the diverse elements of business law that you do things right the first time and make good decisions from the standpoint of the law. In today’s environment, getting legal things wrong can be incredibly damaging. Litigation and non-compliance may not be fatal, but dealing with them can be a tremendous drain on your time, energy, and finances.
2. You can find lots of people who will give you legal advice. If they aren’t lawyers you should think twice about taking it. Listen to it and consider it. But don’t confuse laymen’s advice for authority.
3. Unless you are already an experienced business attorney, lawyering is not a place to waste money (which unfortunately is easy to do), but neither is getting legal things right the first time a place to scrimp unwisely. Between books, online resources, and advice, it’s not hard to educate yourself on legal basics. But in the end, you can’t know enough to manage your own affairs, only enough to let false confidence and hubris get you in trouble sooner or later.
4. The two best books I know for law basics for entrepreneurs are Constance Bagley’s and Craig Dauchy’s Entrepreneur’s Guide to Business Law (Mason, Ohio: West, 2008) and Business Law Today: The Essentials by Roger Miller and Gaylord Jenz (Mason, OH: Soutwestern-CENGAGE Learning, 2011).
5. Where to find good lawyers? Referrals are by far the best—directors/advisors, people you know, investors. Always interview more than one. First encounters—consultations—should be at no charge, usually an hour. These are a getting-to-know-each-other interview, but they also should be opportunities to ask questions of substance and technical issues. Early in your launch many lawyers experienced with working with startups will cut you slack in charging for advice, as well as breaks on cost and payment terms.

Gary Schall (Of Counsel, Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP):  You’ll make good legal decisions if you do two things – first, become an educated consumer of legal services and second, work with a lawyer that has extensive experience with entrepreneurs and startups.  In terms of educating yourself, I recommend reading The Entrepreneur’s Guide to Business Law by Craig Dauchy and Constance Bagley.  It provides a very good summary of legal issues entrepreneurs need to consider.  In addition, the book illustrates the issues by following a hypothetical startup from formation through exit and how the entrepreneurs handle them these issues.

In terms of finding legal advice, you need to find the right lawyer, so what you want are referrals – someone who can recommend someone they know and trust.  However, you want referrals from people who work with experienced startup lawyers all the time, so the best place to look for referrals are other entrepreneurs and venture capitalists.   In particular, VCs know which law firms are consistently working with entrepreneurs and startup companies. If you don’t have any contacts with entrepreneurs and VCs, you look to make connections by participating in networking events which these people typically attend.  Business journals like Mass High Tech have calendars of events for different organizations throughout the year where entrepreneurs and VCs meet.  You can also attend events like the “VC office hours” at the Cambridge Innovation Center, where entrepreneurs can show-up and have a few minutes to speak with a VC.  Another source is your college or university.  If there is an entrepreneurship program or entrepreneurship courses are taught, locate the faulty that teach in these courses and ask them for recommendations for startup lawyers as well as other entrepreneurs and VCs whom they think could be helpful.  If your college or university doesn’t have an entrepreneurship program or courses, you can locate one in your area that does and reach out to the faulty for recommendations. For example, in the Boston area, there are several institutes and centers for entrepreneurship at colleges and universities, such as Babson College, Boston University, Harvard Business School and MIT.  One other place to contact would be organizations like TechStars, which is a mentor driven seed program in Boston, Boulder, NYC and Seattle and whose mentors are experienced entrepreneurs and VCs.  You could contact a managing director and get recommendations from him or her. 

You want to collect several names and hopefully see some of the same names showing up from different sources.  You should also visit website for each lawyer to see what areas of law they practice in and what types of clients they work with.  The bottom line from these referrals is that you want to talk to the lawyers that consistently work with entrepreneurs and startups. Once you have a short list of lawyers, you should meet with each one and ask lots of questions about him or her, his or her clients and transactions, his or her team and the terms of legal engagement.  The key thing is that you’re comfortable with the lawyer – you’re going to working closely with this person over time and you need to feel comfortable that he or she will be responsive and that you can have a good working relationship with him or her.