MaRS Library Legal advice: Lawyers and legal counsel for your startup
As a startup founder, you might have a rough sense of your legal needs, but you might not have experience in engaging a lawyer or know what to expect from one. Frequently, new entrepreneurs wonder:
- When should we engage a lawyer?
- How can we afford one before we establish the business?
- How much work should we do on our own?
- How much should we involve a lawyer?
These questions commonly arise, and are addressed below. Keep in mind that a good lawyer will explain their work for their clients and empower them to take control over legal expenses.
Read on for information on what to expect, how to prepare and how to get the most benefit from your legal services provider.
When should our startup engage legal counsel?
Founders have pretty a good instinct for a start-up’s shift from possibility to reality. Once you get some momentum behind the idea and the team, it’s worthwhile to lay out a near-term roadmap (say, six months) for what you’ll accomplish during that period.
If you can access experienced counsel (hopefully at no cost) at this early stage to briefly share this vision and wed your structuring and legal needs to this timeline, your plan will be more complete and you may avoid some roadblocks along the way.
Lawyers see and know a lot of people and businesses, especially if they are experienced with early-stage knowledge-based ventures. They can be great resources for putting together a management team and acquiring first customers, and may be able to help with the initial introductions for long-term angel and institutional investor relationships.
How will our startup get billed for legal expenses?
Once you settle upon a relationship with a lawyer, ask for and be clear about information on the following:
- Retainers (deposits upfront)
- Billing rates
- Timing of billing (some lawyers won’t bill until you actually get investment or sell your product—inquire about that possibility)
- Fixed quotes for any given task (such as incorporation)
- Any other charges that might cost you money
Once we engage counsel, how can we most effectively limit legal expenses?
Besides simply picking a lawyer that you feel good about and trust, the best way to get the most from your counsel is to be prepared and organized.
Make sure that you provide your lawyer with complete instructions, so he or she doesn’t spend unnecessary time clarifying arrangements as circumstances evolve or change.
In addition, always ask your counsel: “How much of this can I do myself?” For example, you might be able to take over assembling disclosure schedules for a potential investment, or tailoring a template employment agreement for your team.
Remember that an open dialogue will ensure that the time you pay for will be well spent.
This article was produced by James Smith and Shane MacLean and is made available through the generosity of Labarge Weinstein Professional Corporation.