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What Kind of Lawyer Do You Need?

startup lawyer

The answer depends on too many variables, so let’s assume you’re a high-tech early-stage company looking for capital with realistic prospects of doing say $50 million or more in five years (i.e., VC material).

First, you’ll need a good securities attorney. These are the folks that make sure that you have the right corporate form (usually a C corporation), get you set up in the right state (often your home state, but possibly a place like Delaware or Nevada), draw up the incorporation documents, review or create nondisclosure agreements, review or create contracts with early partners, create employment agreements for the founders (in a way that doesn’t scare off investors), establish your employee stock option plan, advise you on how to keep appropriate records, help you prepare to raise capital in a way that doesn’t violate state and federal securities laws, and much more. Your securities attorney, in short, helps make sure that you keep a clean house. Well connected securities attorneys can introduce you to potential investors. Finally, a prestigious securities attorney may make investors more willing to invest – sometimes for no better reason than name recognition.

Second, you’ll probably need a good intellectual property attorney. These are the folks who help you register your trademarks, prepare and file patent applications, and develop a sensible intellectual property strategy.

Legal matters are complex, and you’re almost always better off by consulting qualified attorneys. If you are cash-strapped, go ahead and do the groundwork and prepare initial drafts, but make it sure that you get a pro to check your work.

When selecting attorneys, be sure to check references, interview at least three of them in depth, and don’t be afraid to ask tough questions. Finally, be sure to choose somebody that you “click” with and really feel that you can trust.

This Post Has One Comment
  1. The “securities” attorney you’re looking for is better known as an “SEC” attorney. Securities and Exchange Commission. Don’t look for an SEC attorney, per se. Look for a FIRM with an SEC lawyer available. It’ll be awhile before you’ll need his SEC services but it’s best to find one early on if your growth accelerates. SEC skills will be available in any moderately large firm in major markets. Any “Corporate” Attorney can do all the preliminaries. An SEC skilled lawyer generally costs more. He’s like having a cannon to fill out forms. Wait until you can afford one. Usually when you’re planning a filing for a public offering which, for a startup, is farther down the road. As far as patents go, and the related patent attorney are concerned, forget about it. If you are smart you won’t use a patent attorney for a long time. “Trade Secrets” will be all you need — probably for years. “Trade Secrets” means you protect your “goodies” by keeping the details of your “secret sauce” under your hat and SECRET. Remember! A patent WILL NOT PROTECT YOUR INVENTION! A patent only GIVES YOU THE RIGHT TO DEFEND YOUR PRODUCT, INVENTION, PROCESS. And you do not want to get in that position. Getting a patent too early could destroy your company. AND PATENTS ARE NOT CHEAP! A regular Corporate Attorney will do everything you need for your first few years and you can pick up your “specialty” lawyers in five minutes. Stay quiet, stay cheap, use legal sparingly. Get your corporate stuff out of the way first thing. Don’t form a “C” corp right away. Form an “S” Corp and capitalize THAT puppy. It’s far less expensive than a “C” Corp and you can go “C” in five minutes. The state in which you incorporate may charge you annual fees based on your number of shares. Do you want to capitalize with 30 million shares? Insane for a startup. You can choose 1,000 shares of “No Par” in the beginning and let your successes and needs, legal advisors and financial supporters dictate your moves.in the beginning. NEVER LISTEN TO YOUR ATTORNEY OR ACCOUNTANT WHEN THEY START TELLING YOU “YOU CAN’T DO THAT.” They’re predisposed to sing that song. I am not an attorney. These comments are from personal scars through starting, building, financing, investing, managing, and IPO-ing companies successfully. Your experiences may be different — but I’d be surprised if they were. Good luck.

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