Want to Save on Startup Legal costs? Talk to your Lawyer!

The best startup lawyers can help emerging companies save money, achieve better business results and avoid errors and pitfalls.  Since most legal work is billed by the hour, it’s not intuitive that talking to your lawyer more will save your company money… especially at those early stages where a bootstrapped company is trying to manage very limited resources.  But most lawyers will tell you that the clients who manage legal spend the best happen to be the ones who don’t hesitate to send an email or call counsel for, uh, counsel.    

“Here is what we are considering.  What do you think?”

“Is there any way we can structure this better?”

“How can you be more cost-efficient here?”

Sometimes clients are radio silent until they’ve already completed that key executive hire, signed a term sheet or memo of understanding, or shook hands on something meaningful. 

They miss out:

  1. They miss out on the benefit of our experience on substantive terms. (Smart founders recognize that sometimes they don’t know what they don’t know, and that others do)
  2. They miss out of the benefit of our input on structuring and planning. (We regularly help clients arrange processes so repetitive tasks like option grants can be completed in bulk, and suggest ways to avoid cost and headache.)
  3. They miss out on easy changes that can help control costs. (Can’t tell you how much money we save for E/N clients each year by pointing out that most early stage equity financings are well suited for nationally recognized Series Seed form documents, rather than the national NVCA form documents that investors often push for. And how much time and money we save for clients by pre-vetting the right tools.)

This isn’t one of those “clients need to do what their lawyer suggests” lectures.  Far from it.  My clients let me know their goals, and their concerns.  They run ideas by me, help me better understand their counter-party’s point of view, and ask lots and lots of questions.  They know that I am not here to make business choices for them… the lawyers who think they know startup ops better than their clients are usually painfully misguided.  I tell clients what I think and, where it’s appropriate, suggest alternatives.  My advice is rarely driven by “gut” – it is usually driven by what I have observed already.  When you work with a real startup lawyer, you benefit from the experience built through serving others.  This experience can help level the playing field between a startup and highly experienced and sophisticated investors who often control not only purse strings, but also key decisions.  I like it when clients act on my feedback, but I’m not here to take offense if a client goes in a different direction than my suggestion.  I just want clients to make informed decisions.   

By Jeremy Raphael

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