When Should You Use a Business Startup Lawyer?

January 25, 2020

Starting a new business can be extremely complicated. Whether you are just sitting in your living room or garage or setting up in an office space, the leases and agreements…

Starting a new business can be extremely complicated. Whether you are just sitting in your living room or garage or setting up in an office space, the leases and agreements can be very overwhelming. You begin to wonder whether to hire a business startup lawyer or use an online site for all the legal related forms and filings. The truth is you could do either of these things, but there some disadvantages to consider before you do opt for the seemingly easy route.

The Disadvantages of Not Using Business Startup Lawyers

Startups that use services, like Legal Zoom, can end up financially weaker. These sites have limitations that without reading their website’s disclaimers, you may not fully understand. There are some very significant ones, such as:

  • Not a law firm – They state this clearly. If anything in your legal agreement created by them requires litigation, you will need a lawyer.
  • Your communications with them do not fall under attorney-client privilege, nor do any work products, and they are not bound legally in any way.
  • They do not and cannot provide- legal advice, explanations, opinions, or recommendations on your legal rights, remedies, and defenses options, which forms to use, or any possible legal strategies you should use.

These seem like substantial legal holes when you are a startup, and the future is uncertain.

Why Do You Need a Lawyer for Starting a Business?

There are many excellent reasons for having a lawyer when starting a business. Beyond the forms and filings, as your business progresses, it will have legal needs.

  • Company Establishment – During this stressful time, a lawyer will provide you with advice you can trust on the appropriate type of business entity for your startup and the right state to incorporate in.
  • Agreements between Founders or Partners – There are several agreements to protect the business and partners that need to be developed: Articles or Certificates of Incorporation, Intellectual Property (IP) Agreements, Bylaws, Operating Agreements, Non-Disclosure Agreements, Employee Contracts and Offer Letters, and Shareholder Agreements.
  • Leases – If you are leasing space for your business, a lawyer will make sure the contract is written to the benefit of the company and partners.
  • Brand protection – Startups have a list of brand protection concerns to navigate in the beginning. Undoubtedly, a startup can make many branding mistakes from which it may not be able to recover.
  • Hiring workers – An offer of employment is a legal agreement between the employee and the company. It needs to state the terms and conditions for both parties in clear and concise language.
  • Websites – Having a website requires several legal documents for your site to limit or eliminate legal liability. Terms of Use and Privacy Policies are just the beginning. There are other legal requirements, as well that are determined based on the type of business.
  • Contracts – These vary depending on the nature of your business.
  • Raising Funds – When you begin to seek investors for your business, there are several documents investors will want to see. Business plans and executive summaries are just the tip of the iceberg.

What Startups Should Know About Hiring a Startup Business Lawyer

If you have decided to hire a startup business lawyer, there are few things to consider. Not every lawyer is the right lawyer. You want to make sure there’s a good fit.

Look for a lawyer who has already worked with similar companies or startups and is already familiar with the kinds of legal issues similar companies face. Different types of companies have different needs and ways of handling them. You want a lawyer who is responsive, competent, and experienced, so go with a list of questions to help guide the conversation.

Lawyer Fees – How Do They Bill for Their Time?

Startups usually incur lawyer fees in the $300-$600 an hour range. Still, this cost can vary depending on the firm. The hourly rate is undoubtedly an essential part of the costs, but you will also want to factor in the mix of lawyers doing your work. The rates can vary based on this part of the equation.

Asking questions about this can help you figure out what works better for your company, so ask a lot and suggest what you would like.

Final Thoughts

Starting up a business is an exciting yet stressful time. Wondering whether the website you used to create these crucial documents is doing it the best way for your company should not be one of those stresses. Preserving resources should be priority, but it shouldn’t be the only consideration.

The contracts needed for your business startup are better made by a business startup lawyer than anywhere else. If you’d like to get started, just get in touch!