working with lawyers
Just as there are reasons for selling your house without involving a real estate agent, there are reasons for doing-it-yourself in certain basic legal and regulatory areas like company formation (starting your company). You can save a lot of money and time by not working with a lawyer, but there are also many circumstances where you should work with a lawyer. When you do so, select a lawyer carefully. A good lawyer can protect you from countless risks, provide critical advice and guidance, and help you effectively navigate difficult negotiations. A poor lawyer will do none of these things well and can cost you a lot of money. The best approach is to educate yourself about the key legal issues for which you are seeking advice and about lawyers in general, determine how much help you will need, and then find the right lawyer. Once you have found the right lawyer, establish boundaries up front, be careful of the clock, and focus on the key issues.
educate yourself
The Internet has become a treasure trove of free information. This is changing the way that entrepreneurs educate themselves about legal information. Two decades ago, it was difficult for entrepreneurs to find information on tricky legal concepts like company formation options, dilution, vesting, fundraising, employee incentive programs, and more. Now you can find this information relatively quickly. Early Stage Legal has a large and growing library of content to help you become smart on these concepts even before you even need a lawyer. Educating yourself will provide you with a number of benefits:
- Helping you to decide if and when you need to use a lawyer
- Enabling you to focus your conversations with lawyers on the most important points
- Allowing you to spend less time getting educated on basic concepts by a lawyer and more time discussing the most critical items
- Promoting a better dialogue between you and your lawyer so that you can make better decisions as a team
We invite you to visit our Learning Center to discover a wealth of information that will prepare you for most of major legal decisions you will face.
how much help do you need?
One thing that you should understand is that lawyers, like everybody else, are driven by economic incentives. Obviously, this does not mean that lawyers are improperly motivated any more than any other partner with whom you might work. Unlike many business partners, lawyers have a strict code of ethics that is enforced (at least in the United States) by the American Bar Association. However, just like everybody else lawyers seek to maximize their economic profits.
Most lawyers bill by the hour, which means that the more time that they work, the more money they make. Some law firms are increasingly adding flat-fee or fixed-rate packages but the vast majority of lawyers and law firms bill by the hour. An unfortunate consequence of this billing methodology is an incentive for lawyers to spend as much time as possible, within the ultimate boundary of their client's willingness to pay. Much, if not most, of this time is spent effectively and lawyers know that they will not retain customers for long if they are wasting time on the clock. Yet the stark reality is that it is in lawyers' best interests to take as much time as possible working on a project without jeopardizing the client relationship. In most countries (like the US), lawyers also enjoy a monopoly on offering legal advice. So the supply for their servicies is naturally limited allowing them to charge higher prices than customers would otherwise pay.
For these reasons, Early Stage Legal recommends that you be judicious in your use of lawyers. Early-stage companies employing a Mimimum Viable Product culture should spend as little money as possible on anything that does not move the company's basic aim forward--finding and developing a viable, profitable product as quickly and inexpensively as possible. While legal protections are necessary, we recommend finding the best way to minimize legal costs.
Affirmative responses to the following questions might indicate that you could use a legal document preparation service like Early-Stage Legal:
- Are you familiar enough with the legal issues that you will not need specific legal advice?
- Can you educate yourself regarding the legal concepts from material on Early Stage Legal or elsewhere?
- Are the legal documents highly standard with widely accepted norms?
- Are the legal documents relatively simple?
- Are the legal risks associated with the documents relatively limited?
- Are you seeking to minimize legal costs?
Affirmative response to the following questions might indicate that you need a lawyers guidance:
- Are you unfamiliar with the legal issues surrounding the legal documents?
- Are you looking for specific legal advice to a specific legal problem?
- Are the legal documents highly unique, customized or non-standard?
- Are the legal documents complex?
- Are the legal risks associated with the documents relatively high?
- Are you OK with higher legal fees?
Remember that working with a document preparation service like Early Stage Legal does not force you into an either/or scenario. Early Stage Legal is happy to work with a lawyer. We can also refer you to great lawyers who are familar with our model and comfortable with the cost savings it represents to entrepreneurs.
finding a lawyer
There are several ways to find a good lawyer:
- Interview several different lawyers at different firms
- Get a referral from somebody you trust
- Go to a highly reputable firm
- Find lawyers who have a name or reputation within your industry
In general, we believe that the most effective way to find a great lawyer is to get a referral from a trusted source. However, the founders of Early Stage Legal have also had good experiences working with lawyers at large, reputable law firms. In the latter case, you should expect to pay premium rates.
Early Stage Legal is happy to refer you to a lawyer that is familiar with the way we work and will help you to save significant amounts of money relative to the traditional model where lawyers do all of the document preparation themselves. If you are intersted, visit or Services page, pick the service you are looking for and simply tell us that you would like to work with a lawyer. We will take care of the rest for you.
Working Effectively with a Lawyer
Working effectively with a lawyer is a skill that develops naturally over time and as you develop a trusting relationship with a great lawyer. In the meantime, you should keep in mind the following:
- Establish boundaries up front. It is important to communicate your expectations and capabilities with regard to payment and timing of legal services. High-quality early-stage lawyers generally charge about $200-300 per hour so the cost of legal services can mount rapidly. Be aware of this before engaging a lawyer. Communicate your pricing expectations and try to get the lawyer to commit to a fixed budget for services rendered rather than an hourly fee, if possible. It is OK to communicate your expectations very clearly about budgetary constraints and the amount of time that you would like to spend.
- Be mindful of the clock. If you are working with a lawyer that is charging you an hourly rate, it is obviously important to be mindful of how much time you are spending on the phone or in meetings. It is easy to explore important but not critical items with a lawyer and the costs will accrue rapidly. Even if a lawyer agrees to cap their rates or offer services for a flat or fixed-fee, you should know that they are losing money the more time that they spend on a fixed-fee
- Focus on the key issues. Focus your time with your lawyer on your most important issues. Prepare in advance so that you do not have to spend hours learning more basic or simple concepts.