One of the favorite questions I’m asked (at least 2-3 times a week) by entrepreneurs is, “Hey do you have a good lawyer”. So I figured it was about time I tackled a few major topics surrounding lawyers and startups. I called Kevin Vela, of Vela Keller, to ask him a few essential questions new companies should look for when they are on the hunt for a lawyer.
Lauren : How do you know if a lawyer is right for you, your company &/or situation?
Kevin: You need to interview several attorneys. You’ll get a good feeling with the right attorney. Ask around, too. Others in the startup community will know who to recommend. Ask your accountant and banker if you don’t know any lawyers. Yes, typically the best attorneys are the busiest, but client development is part of the practice of law. You shouldn’t have to pay for an initial consult.
L: What is the best way to structure deals or hire lawyers as a startup with not a ton of cash on hand?
K: Don’t be afraid to ask to defer payment. Most startup attorneys will do so for the right clients, especially if you pay a little up front, and have a capital raise coming soon. But you need to show a commitment to your attorney in order for her or him to do the same in return. Note, I don’t like it when people ask us to discount fees. As a rule, we don’t discount fees at all, but it used to drive me nuts when a startup would ask us to discount fees and defer them. You don’t want to put your lawyer in a situation where he/she is financially motivated to answer someone else’s call first.
L: What a lawyer should be fired over?
K: Lack of communication is the issue we hear most often from new clients changing firms. The other big flags are covering up mistakes, bad billing practices, and advising on things that the attorney isn’t really experienced with. Regarding legal fees, your attorney’s invoices should be very detailed and straightforward. When our clients get a bill, they know exactly what they’re being charged for and where our time was spent.
Regarding mistakes – lawyers are going to make them. When we do so, we try to bring it to the client’s attention immediately, with a plan of how we are going to fix it, at no cost to the client.
L: How much time a startup should expect a lawyer to dedicate to their company to create contracts, handle deals, etc?
K: You have to know how to utilize your attorney. Asking them to “do this quickly” or to “cut corners” to save money is not a good way to go. To protect you and get the job done right, your lawyer will need to spend a reasonable amount of time on your matter. Have a candid conversation with your attorney. I love it when clients asks ahead of time, “what should I expect, how much will it cost, and how long will it take?” It usually costs much more in the long run to clean up rush jobs or deals where the client tried to cut corners by using forms incorrectly, or piecing together deal docs.
For more great tips on costs check out this Vela Keller blog.