A lot of startups go through many firsts as they start their company. One of these firsts is hiring a lawyer. Oftentimes, startups that have never engaged a lawyer before are unsure how to go about it, and they take a meandering path to establishing a relationship. To help make sure you can establish the best lawyer relationship possible in the least amount of time, I’ve created this guide to finding, interviewing, and retaining a lawyer. I even include a sample email, because any time you spend second-guessing yourself on what to write in an email to a lawyer you might not even hire, is time that could be spent on other, higher value tasks for your startup.
Finding a Lawyer
Think of what sort of lawyer you’d like to work with first. The different considerations you can use to evaluate attorneys are: (1) working style, (2) comfort with technology and (3) price.
- Working Style. Do you prefer to meet in person or over the phone? Do you like someone who is laid back and talks to you like a best friend (swearing and slang and all), or do you prefer someone a bit more formal with old-school professionalism? Do you send over requests for meetings 2 weeks in advance in writing, or do you expect people to be free for impromptu meetings when you call? Which brings us to our next point of comfort with technology...
- Comfort with technology. Do you routinely jump on Google Hangouts with your employees at your startup? Do you keep important things you’ll be sharing with your lawyer in Google Docs or Google Sheets? I once had a lawyer say they could not open any of the Google suite documents because their IT department forbade it. When you mention keeping your cap table in a software platform like ours, instead of Excel, do the lawyers wince and say that’s not how they do things? Or do they nod and say they work with numerous startups on various software platforms depending on what the client prefers? This will tell you something.
- Price. Lawyers' prices can vary widely, and it will help to determine their price per hour, or at least their ballpark. The more prestigious and famous the law firm, the higher the prices are (and the fancier the offices).
After you’ve decided on the type of lawyer, you can read the biographies and see whose experience you think might possibly line up with the type of legal advisor you’ve envisioned. Although you can make a first impression on who might be a good fit just based on the website, you’ll really need to talk to them and ask questions to be sure.
Introducing Yourself to Potential Lawyers and Setting Up an Interview
At this point, there’s nothing left to do but contact the potential “good fits” you’ve identified and introduce yourself. When you introduce yourself to potential lawyers, remember they’re curious about you. You’ll want to include the basics about yourself like your full name, your background, your business name, what your business does, where it’s located, and what stage it’s at (did you already fundraise? Are you about to fundraise? Both?).
Don’t forget to include WHY you are reaching out—what about your stage of company or situations your business is currently facing inspired you to reach out? Is it an HR-related issue, questions about equity issuances to founders, potential investor conversations and fundraising, IP, or a lawsuit that just came up? This is perhaps the most important part because it’s possible that the lawyer you’re reaching out to doesn’t have the expertise to deal with your issue, and they’ll pass you along to a lawyer at their firm that does, or let you know they don’t have that practice area at their firm at all. For example, if you email a business transactions lawyer about needing patents, she’ll likely refer you to a colleague, or let you know her firm doesn’t do patents. Including your business’ current needs in the email saves you a wasted call.
If going all the way down to the law firm office to meet in person isn’t convenient for you, feel free to suggest a call. Your preference matters—you’re the client! Here’s a template you can use when you’re reaching out to a lawyer for the first time:
Making the Final Choice
My name is Kathy and I’m an entrepreneur building Unicorn Inc. A bit more about my background in case it’s helpful—I’m an engineer by training and have a Harvard MBA as well. I worked for Oracle before I left to start this company. Unicorn Inc. is a SaaS platform that matches unicorns with people who want to house unicorns on their farms. We are based out of Cambridge, we’ve been building the company for a while now (3 years), and we’re about to go through a Series Seed fundraise.
I’d love to connect and see if you’d be interested in being our lawyer—particularly in helping us apply for patents and negotiate a term sheet. Would you be free for a quick call at any of the following times?*Monday, June 2nd at 3pm
Tuesday, June 3rd at 10am
Wednesday, June 4th at 1pm
Just let me know what times work for your calendar!
Feel free to do as many interviews as you need to determine which lawyer you’ll want to retain. You may want to engage a lawyer who is not only a subject matter expert, but who you’ll actually enjoy talking to. Someone you will feel comfortable sharing your company’s dirty laundry and difficult situations that will inevitably come up with. One of the biggest mistakes I see entrepreneurs make is retaining a lawyer that has an impressive command of the law, but that the entrepreneur is too intimidated or just plain scared to talk to. Or they feel scorned or talked down to when they have conversations with their lawyer. If your lawyer doesn’t make you feel comfortable and invite your confidences, the lawyer is probably not a good match. Their subject matter expertise might not do you any good if you avoid talking to them until a legal matter has gotten seriously out of hand. There are a lot of unpleasant experiences that come with starting a business. Talking to your lawyer shouldn’t be one of them.
Before you retain a lawyer, you should also feel comfortable with the prices. They should be clearly laid out. Not only the standard price of how much the person you’re interviewing charges, but ask who you’ll be working with at the law firm, how the work will be divided (“you’ll be working mostly with Bob”) and what their rates are. You can also let the lawyer know what projects you’re thinking of having them complete to start out, have them estimate how many hours they think it will take (which you can then take and multiply by their hourly fee to figure out the true cost). You can also ask them, when you’re looking at your bill at the end of the month, will it be itemized? What else will appear on the bill besides legal work (printing, 3% administrative fee, FedEx and normal postage stamps etc.)?
If you have deferred fees, you’ll want to understand what amount of fees will be deferred ($10,000? $20,000?) and more importantly, under what circumstances or on what date you’ll be expected to pay these fees.
When you find a lawyer, you actually want to work with, and that you feel has fairly transparent pricing that you can afford, it’s time for the engagement letter!
The last step of signing an engagement letter means it’s official. You have engaged a law firm! Congratulations! But read it carefully before you sign it to make sure you’re both on the same page. Major terms that will be listed and are worth reading twice include a range of billable hours for lawyers and paralegals, who will be working on your legal problems (although this usually comes with language that this is subject to change without notice at any time), how many days you have after receiving a bill to send them payment, and how often you’ll get bills from them.
Interviewing and signing the engagement letter is just a beginning step of managing your relationship with your lawyer. During the interview you set the tone for what you expect from them and how this years-long relationship will go. Looking for wisdom on how to make the most out of your lawyer once you’ve engaged them? Check out our other article about managing your lawyer throughout your startup’s lifecycle.
Fidelity does not provide legal or tax advice. The information herein is general in nature and should not be considered legal or tax advice. Consult an attorney or tax professional regarding your specific situation.
Sample scenarios are for illustrative purposes only.