Thinking about getting a lawyer to help with all the legal stuff for your startup? A great startup lawyer is way more than just someone who can draft a document or navigate laws and regulations. They’re like a key teammate for your business.
Picking the right lawyer for your startup isn’t just another item on your to-do list. It requires vetting startup law firms and individual lawyers to find a key partner for your business. This guide will help you find your startup’s perfect legal representative.
Finding a Startup Law Firm
Startup lawyers are a valuable asset for emerging technology companies looking to incorporate their startup, manage legal documents, hire employees, take on seed financing, and/or mitigate legal problems. But, finding the right startup law firm or service for your business requires you to understand your startup’s legal needs and how to determine the right law firm to address them.
When a Startup May Require Legal Services
When launching or running a startup, there are specific situations where the expertise of a lawyer becomes not just beneficial but essential. Legal guidance can prevent potential pitfalls, ensure compliance with laws, and protect your intellectual property, among other crucial aspects. Particularly, a lawyer can be essential in circumstances like:
- Choosing a business structure and completing the formation process
- Navigating complex legal regulations or compliance requirements
- Drafting or reviewing contracts, such as employment agreements or a founders’ agreement
- Protecting intellectual property, including patents and trademarks
- Handling disputes or litigation — whether with competitors, customers, or employees
- Structuring the business for investment, such as venture capital or private equity
- Preparing for acquisition
- Issuing or transferring stock
Recommended: For more in-depth information on when your startup may need legal services, check out our full guide.
How to Find a Lawyer for Your Startup
Once you determine your startup needs legal representation, the next step is to find the right lawyer for your new business. There are several effective ways to find a startup attorney, including word-of-mouth referrals and digital referrals or legal services.
Referrals
One of the best places to look for a startup lawyer is through referrals from people you know. Ask your advisors, mentors, investors, and fellow entrepreneurs who they use for their legal needs and who they’d recommend. You also can ask your personal or family lawyer, or a lawyer you trust, for their recommendations. Chances are, they know a good startup lawyer they’d happily recommend to you as well.
Online Referral Services
Online referral services make it possible for startup founders to gain access to a wide range of corporate law options and even schedule a free consultation with a firm they’re vetting. Here are a few of the most common referral services:
- American Bar Association (ABA) — The ABA provides many ways to find legal help, including free legal answers and a referral service to help you find a lawyer.
- State Bar Associations — Many state bar associations offer referral services that can help you find a lawyer in your area. Check with your state bar association to learn more about referral services in your state.
- Commercial Referral Services — Several commercial referral services, such as Avvo, UpCounsel, and LegalMatch, will help match you with a specialized lawyer who can support your legal needs by specialty and location.
Online Legal Services
Online services, such as LegalZoom, offer a host of legal services. For a fee, you can find standardized and customizable forms for business formation. These forms often include registering a business name, business compliance, non-disclosure agreements, leases and contracts, registering trademarks and copyrights, and applying for a patent.
Many digital services also allow you to contact an attorney online, by email, or by phone for routine legal guidance and advice. Many of these legal services are available through a monthly subscription or as one-off contracts.
Recommended: Explore our fill list of the best online legal services for startups.
How to Choose the Right Lawyer for Your Startup
Before you select a legal representative for your business, you need to ensure they have relevant experience and are a good match for your business. You should look for several important things in a startup attorney, including:
- Experience Helping Startups — Your lawyer should be able to guide you through the legal issues high-growth startups commonly face — from incorporation and raising money from venture capitalists to ultimately exiting through an acquisition or initial public offering (IPO).
- A Specialization in Your Legal Needs — You should have a strong idea of what legal issues your lawyer should specialize in. Whether it be employment law or real estate, your lawyer should have extensive experience in the areas where your startup may need support.
- Experience With Clients in Your Industry — Different industries are subject to particular laws, rules, and regulations. Your lawyer needs to understand the legal landscape of your industry to ensure your business complies with the relevant rules and regulations
- Alignment With Your Startup — Look for a lawyer who you trust, get along with, and find approachable. As a member of your startup’s team, your lawyer should align with your startup’s values and culture.
Small Law Firm vs. Large Firm: Which Is Better?
Choosing between a large or small firm for your startup involves weighing the pros and cons to find the right fit. Large firms offer a broad range of legal specialties and more resources, which can be beneficial as your startup grows. They tend to have more connections and influence, but also higher rates due to greater overhead costs. Small firms, on the other hand, may provide more personalized attention and lower costs. However, they might not cover all specialized legal needs your startup might have.
What to Ask a Startup Lawyer
The fit between startup companies and their attorneys is extremely important. You should perform your due diligence on a lawyer just as you would an advisor, cofounder, or investor.
We encourage you to speak to several lawyers and law firms for legal representation. Here are the questions you need to ask:
- Do you have experience with startups?
- Do you have experience in the areas we need?
- Do you have experience with other clients in my industry?
- How do you communicate with your clients?
- How does your fee structure and billing work?
By asking these questions, you’ll ensure your potential legal hire will be able to address your startup’s legal needs and fit seamlessly within your company culture.
Red Flags to Watch for in Startup Lawyers
There are several warning signs that may indicate an attorney or law firm isn’t the right fit for your company. Before you select a lawyer for your startup, watch out for these three red flags:
- They don’t understand your business. Your startup attorney should understand your startup and your industry. You don’t want to pay your lawyer to learn on the job. If a lawyer doesn’t have experience with startups and/or other firms in your industry, they may not be able to adequately provide you with the guidance and advice your startup needs.
- They’re bad communicators. You should be able to get in contact with your attorney within a reasonable amount of time and get advice and guidance you understand. If it’s difficult to reach your startup attorney or they don’t take the time to explain things in a way you understand, you should look for a lawyer who communicates in a way that meets your needs.
- Their pricing isn’t transparent. Beware of lawyers who aren’t upfront about their fees and billing methods. You have the right to know who’s working on your legal matters, how much they charge, and how long they expect to work on your behalf. If you start receiving surprise bills, it might be a telling sign you need to switch attorneys.
How Much Do Startup Lawyers Cost?
The cost of hiring a startup attorney varies significantly based on the firm’s size and reputation, the complexity of your legal needs, and who handles your case. Prices can range from a flat fee of $40 to $50 for basic online services to more than $1,000 per hour for senior partners at prestigious firms. The total cost of your startup’s legal services will depend on the law firm’s fee structure.
Common Fee Structures for Startup Law Firms
Understanding the variety of retainers and fee structures is crucial to anticipating legal expenses effectively. Knowing these costs upfront is essential to budget for your startup’s legal support needs efficiently.
Hourly Billing
Many lawyers bill by the hour — or fraction of an hour — that the law firm works on your behalf. This may include differing fees, depending on who works on your case. For example, the hourly fees for work performed by a paralegal, a junior associate, and a partner would differ greatly.
Most lawyers who use hourly billing will ask for a lump sum payment upfront. This is known as a retainer. The firm will then draw from this retainer as it works for you until it uses up the money placed into the retainer.
Monthly Billing
Some lawyers allow clients to pay a monthly subscription fee for access to routine legal review and advice. This is sometimes known as prepaid legal insurance or prepaid legal memberships.
There are many different types of memberships for legal services. Many of these services provide unlimited document, letter, and contract reviews as well as free or discounted consultation with in-network attorneys on routine legal matters.
Flat-Fee Billing
For routine services, such as filing for a business license or reviewing a contract, a lawyer may charge a flat fee per service — no matter the time involved. For example, drafting or filing founders’ agreements, incorporation documents, confidentiality agreements, bankruptcy documents, and patent applications may all be considered routine services to attorneys who specialize in them and might be billed as a flat fee.
When agreeing to flat-fee billing, make sure to find out what is and isn’t included. Filing fees, court fees, and processing fees can add up to hundreds of dollars and often aren’t included in a flat fee.
Contingency Billing
Contingency billing is when the cost of the service is tied to the outcome of a case. It’s most often used in matters of civil litigation, such as negligence, malpractice, and personal injury.
In these instances, attorneys representing the plaintiffs often take on cases at no upfront costs with an agreement that they’ll receive a portion of the judgment or proceeds of a case should they be successful. Although the fees can vary by case, the typical fee is around 33%. However, should the attorney lose the case, they often receive nothing at all.