There are only really three things to look for when hiring a startup lawyer. But actually these three are the only three things anyone looks to when hiring any business, company, etc. I’ll go through them here in this article. In order to not do some nonsense and make you wait til the end of the article to “find out what they are!!” the three factors that you need to look at when hiring a startup lawyer are these:
1. Price
2. Trust
3. Product
That’s it.
That’s all there is.
Everything else is fluff. Watch out for fluff in lines when people talk about their business. The fact of the matter is that people try to complicate everything. All of this stuff is quite simple really. Have you seen companies that say things like: “A global innovator in business”; “a true leader in vision”; “a legal tour de force”? Yadda, yadda, yadda. You know what I’m talking about. There’s a reason why no one cares for talk like that. Because it doesn’t mean anything.
So let’s talk about what actually means something.
The things that mean something when it comes to hiring a lawyer, company, whatever are price, trust, and product.
It is extremely difficult to find a business that really nails all three of these categories. And if you think a company does, there may be a shortcut that they are taking somewhere that you’re not seeing. Maybe they’re selling data you give them in ways that push the boundaries of what is and what is nonconsensual (that’s a big thing these days—watch out for this). Or maybe they are screwing over their employees or committing some unethical act.
People love taking shortcuts here and there. But legal matters is not where to take such a shortcut. Shortcuts will catch up to you. It’s the same as eating properly. The fact of the matter is that to eat well takes plenty of time, energy, and money. There is no way around it. Taking a shortcut will catch up to you in pretty awful ways. So if you can’t take a shortcut when it comes to legal matters, what do you do? You understand and focus on the only things that matter, in this case, price, trust, and product and make sure that it’s a good fit.
Let’s go through each of these:
1. Price
Hiring an attorney costs money.
There’s not any real way around this. And if there is—be careful. A lot of people avoid talking about pricing and legal fees; but let’s not beat around the bush—price is a factor that people think about.
If you find an attorney that is willing to do the job extremely cheaply—beware. Quality costs money. Like I said, there’s no way around that. However, a good attorney actually saves you money because it keeps more costly mistakes from happening later down the road. I’ve had to correct mistakes before made by other attorneys. It’s not cheap. As I’ve said before, few attorneys actually give numbers for things like this. For actual numbers regarding legal fees of lawyers in Houston and Dallas see this post.
So a lawyer and legal costs are pricey. But there are ways to mitigate that. Here’s how:
Hire a startup lawyer earlier in the process
The earlier you do this in the process the less costly it ends up being. It’s easier and it’s cheaper to have an attorney start you off with a few documents than it is to hire an attorney in year 5 and have a ton of documents for the attorney to go through just for something simple. That gets costly. And it takes a lot of time.
I’ve noticed that a number of entrepreneurs have the attitude that they’ll get legal on board when their company has grown a bit and when more funds are available. I get it. Money can be tight at the beginning, but this is the wrong attitude. It’s better to make sure that mistakes don’t get made from the get-go. At the very least, get the conversation going with an attorney. Some guidance is better than none.
Understand the structure of legal fees
There are different ways to structure attorney’s fees. It’s possible that an hourly rate for your matter doesn’t align incentives the best for all of the parties. In that case, a fixed fee or unbundled fee can make sense. There are all sorts of mechanisms available. Work with your lawyer. Tell your lawyer what kinds of costs you are expecting and how that fits into your budget. See if they can unbundle certain fees and such.
2. Trust
Trust is a huge factor.
Take a look at a company like Amazon. People love, or at least, order from Amazon in part because they can trust them. It’s easier to order from them than some site you’ve never heard of. Why? Because of trust. You can trust that they’ll ship the product when they say they will. You can trust that you’ll get it in 2 days like you want.
In the legal profession you will not be able to get that level of commitment with a promised result; and in fact there are attorney ethical issues about promising certain results. So what does trust mean here? It means the following:
Do you trust their decision making process?
There’s definitely a right and wrong way to make decisions. There’s a whole field of study dedicated to decision making. There are some good books out there on this topic. If you’re interested in this, and if you’re making decisions you should be: check out this book by the Heath brothers: click here. It’s about how to make better choices.
Look, no lawyer has the answer for everything. No person does either to be fair. The question is if this lawyer doesn’t know the answer to the question, will they be able to figure out the answer to the question. It’s not about having every answer. It’s about trusting the person to go out and get the right answer. Do I trust this person to do that?
Doing that requires good decision making skills. Do you trust your lawyer to know how to make decisions properly?
Do you trust them to be a reasonable person?
I’ve had people come to me and show me what some other lawyers charge and what was completely out of line. You need to find someone who is fundamentally a reasonable person. I’ve not had a single billing issue/dispute/problem with a single client. If there’s an issue, will they handle it and talk to you about it in a reasonable way? Or will they just tell you to stuff it?
Being reasonable also extends to other matters. When a lawyer says they will contact you at a certain time, do they? One of the biggest grievances against many lawyers is that they avoid emails, phone calls, and other forms of contact. You need to be able to trust your lawyer that they’ll be reasonable with these kinds of things. Trust goes beyond just what the attorney produces.
Do you trust this person to be diligent?
You have to trust that this person is a diligent person—that this lawyer keeps updated with the ongoings with the law and the field in general. This kind of thing is important.
3. Product
Legal work product is inherently extremely intangible.
So it becomes difficult for many lay people to understand the quality of a legal product. This is unlike many other fields such as consumer goods. If you have a crappy camping stove, it’s probably not difficult to tell. It doesn’t feel right in the hand. Or it breaks quickly. Or it seems unpolished. The legal field isn’t like that. In the legal field, it can just be difficult to ascertain the quality of work. It’s just very intangible.
Because of this intangibility there is a trap that’s there. And it’s this: even though it can be difficult to see the differences in attorney work-product, don’t mistake that for there not being any differences—subtle or otherwise.
Subtle differences make a big difference. An attorney who really focuses on startup law will have differences in their work-product than an attorney who doesn’t.
Let’s say that two attorneys are 80% the same in their approach to a document. That means that there’s a 20% difference. Now if you consider that the attorney is preparing for you hundreds of pages of documents over a number of years—that 20% difference really makes a real difference as it adds up. Small improvements collectively add up.
Quality work product is also not just throwing every thing under the sun into a document. There’s a real art to this. At the law firm I worked at in Tokyo, I really understood what this meant. Some lawyers, particularly in the U.S., try to put too much into their agreements and make documents hundreds of pages long unnecessarily. There’s actually a legal movement here in America to reduce all of that excessive legalese type of work. I applaud these efforts.
Given the intangible nature of legal work, here are the qualities to look for in order to understand the quality of work-product:
What type of work does this person do?
Is there an air of polish? You know what this means. Does stuff just look . . . sloppy? The product should also be clear. I’ve had clients come to me and complain that other lawyers they’ve worked with left them confused and didn’t properly explain matters to them. Look at how a lawyer you’re going to hire answers your questions and concerns in discussions, conversations, emails etc. Are answers clear? Remember—how they do anything is how they do everything.
Does this person have the experience for this type of work?
There are a lot of lawyers out there. Find one that focuses on the particular area of law that you are involving yourself in. If you’re in the maritime field in Houston, maybe you shouldn’t hire a Texas startup lawyer and should look to a lawyer in the maritime industry. Each practice area has it’s own best practices and methods of accomplishing tasks.
Does this product work for me?
If some lawyer is located in Argentina and you’re trying to create your startup in Dallas or Houston, then maybe their product, while it may be an otherwise awesome product, might not be the best fit for you. So this is a personal matter on some level. The product needs to be a proper fit for you.
Make sure the product is right for you.
Conclusion: the only factors that really matter when hiring a startup lawyer is price, trust, and product. Focus on getting that right balance. Beware of those that attempt to take shortcuts. Legal is not the place to do that. Like I said—you can keep eating garbage/processed food, but it’s going to catch up to you.