During my career I have been an employee, a manager, an entrepreneur and an investor; no matter my role, lawyers were always around.
I have worked with many different kinds of lawyers, and have come to the conclusion that one needs to work with an excellent lawyer, and that when it comes to lawyers, you get what you pay for. My most painful memories are from mediocre lawyers I hired in the past, so I am here to help you learn from my mistakes. In my experience, the most important things to consider when hiring a lawyer include:
It is imperative that you and your lawyer have a good connection. Your lawyer is your confidant, the person who will be there closing an investment deal, and the person interrupting your family vacation when you are offered the acquisition deal of your dreams. This must be a person you connect with, and someone who you feel very comfortable working with.
There are several professions in which trust is a key factor – doctors, accountants, and lawyers, to name a few. You must be able to trust your lawyer, since the most trivial piece of information can be crucial, and something you may feel uncomfortable telling other people about may come back to haunt you.
In my dealings with high-tech investment agreements, I am often asked to explain standard and trivial sections of the agreements to the other side. I always start with asking about their legal counsel’s area of expertise – of course, the lawyers asking irrelevant questions are the lawyers with no high-tech expertise. Take it from me: even if your uncle is the country’s top real estate lawyer, that doesn’t mean he can handle your high-tech legal needs. Hiring a real estate lawyer to oversee a high-tech investment is akin to asking a soccer referee to official a basketball game. Sure, there may be some commonalities, but these are still two very different games. Don’t settle for someone who is not a high-tech professional, get a lawyer with the relevant expertise. Don’t take piano lessons from a guitar teacher, even though the latter can read sheet music.
Finding a lawyer who is also an expert in the relevant field is well and good, but don’t be a guinea pig – find out which companies have worked with this lawyer and if they succeeded. If you cannot find a single startup on the lawyer in question’s resume, it means that he/she may be new to law, or new to the high-tech field. More importantly, if there is no company to be found on the resume, it means no startup they have worked with has gone big, and you should definitely not plan on being the first.
Your lawyer should believe in you and your idea! Otherwise, either the idea is worthless in the eyes of an expert, or the lawyer does not share your vision, and is therefore not the right lawyer for you. Lawyers must have faith in their client and their idea. You are probably asking, but how does one test faith? And the answer is… money!
If you can get a substantial startup discount from your lawyer, it shows willingness to defer immediate gain for future profit. Of course, there is also a business model based on faith, where a lawyer is willing to work almost for free in return for profit share. This can, however, be tricky since good lawyers will be less willing to do this than not-so-good ones, so don’t make this your bottom line. If you do go with profit share, keep in mind that when your startup does take off, you will often make the decision to change lawyers. Your lawyer may not take this well, and if you signed off some of your profits to him/her in a profit-share agreement, you may end up with an angry partner on your hands.
Show and tell
Tell your lawyer everything, even the embarrassing stuff. A good lawyer will have heard everything you can imagine, so don’t think that you are the first one sharing your silly miscalculations with them. Tell them about the mistakes you have made and your deepest darkest worries; believe me, you will sleep better at night. We are often unknowingly worrying about trifles. So get it out and get advice – you have nothing to lose. Only the sharks among lawyers will charge you for a five-minute conversation.
A lawyer as a business adviser
I have ample experience in the business world, and I have seen a lot. And yet, there are still so many times when I call my lawyer and said: “Listen, I know this is not legal stuff, but…”
Good lawyers see hundreds of companies, giving them an amount of experience that prompts even seasoned venture capitalists to go to them for advice, never mind a startup entrepreneur. Most good and decent lawyers will not charge you for these types of things.
I know that lawyers are often regarded as one of the most disliked and expensive professional groups. And yet, I must tell you that I cannot recommend my lawyers highly enough. When I tried other lawyers in the past, I always ended up greatly regretting my decision. I have lost more money through not working with these lawyers than I would have paid them for their services throughout my entire career (and I have paid no small amount).
In short, don’t compromise on quality to save money, hiring a high-priced lawyer, who you trust, who has the relevant experience and record, and with whom you connect with, is money well spent.
Written by Gal Kalkshtein, Angel Investor and founder of GKI Group