How to Pick a Startup Lawyer
An ETW Q&A with Paul Neibergs of Viewpoint Law
You form a company. You invest thousands of hours tweaking your solution. You search tirelessly for product-market-fit. What feels like eons later, you finally find it.
Things are going well.
Until one random Tuesday you receive a strongly worded email from an old collaborator. You haven’t spoken in months. But low and behold, they claim to be the reason for your success. They want a piece of the company. In fact, they want a piece of you. And they won’t stop until they get it.
You know the claim is bogus. And fighting these things can be distracting and expensive. But before panic sets in, you channel your inner Don Draper and remind yourself… this is what lawyers are for.
Of course, this assumes you already have a legal gladiator on your team. If you don’t, you better find one quickly. But how does one actually go about picking a startup lawyer?
To answer your questions, we consulted Paul Neibergs of Viewpoint Law.
Paul has served as counsel to startups for 20+ years (and in full disclosure, he represents more than a handful of ETW portfolio companies). He was kind enough to chat with us about the daunting task of properly picking the right startup lawyer.
Enjoy!
When do founders most typically reach out to you first?
The best scenario is that a founder simply wants to start a business and they need help getting things set up. But more often, founders first seek intensive legal assistance during a financing or when something has gone wrong. That can include a number of things. Maybe there’s a dispute between founders regarding equity or someone takes issue with another employee’s IP claim. The last thing you want to see is a legal dispute disrupt the focus of a promising young company. Unfortunately, it happens sometimes.
How should founders go about hiring a startup lawyer?
I think the best way is to simply ask around and seek referrals. But it’s important that you know exactly with whom you’ll be working. You may get referred to a partner at a law firm, but moving forward with that firm doesn’t always mean moving forward with that partner.* You might be handed off to someone else. That’s not always a bad thing. But it’s best to seek clarity early and avoid any surprises.
*ETW note: Many founders become enamored with working with a particularly famous law firm thinking somehow the firm’s brand will provide value. That’s not what matters. It’s the specific lawyers at the firm who will handle your account that will guide your company. Vet the people, not the firm.
What are some good questions to ask prospective attorneys?
Inquire about the specifics that are most relevant to you and your company. If your startup is approaching Series A, you’ll want to know how much legal fees will cost through a Series A financing.* Or if you’re dealing with an IP dispute, understand what goes into resolving the issue. Perhaps just as important, ask whatever it takes to decide whether this is someone with whom you want to work. Like any business relationship, you’ll be investing time, money, and trust in your lawyer. Make sure you’re compatible.
*ETW note: Give the prospective attorney a real-life scenario to see how they think, whether they probe for more detail, and whether they demonstrate a hunger for your business.
How would you compare the investor-founder relationship to that of the attorney-founder?
There are a lot of parallels. But the big difference is the investor has money. As a founder, it can be very tempting to accept an investment despite a less-than-symbiotic relationship. Even when a founder should pass, they might give in. Sometimes these relationships end up working, sometimes they don’t.
But with a startup lawyer, I think you can be much more selective. Different people have different styles — different ways of doing things. So you can really play the field until you’re absolutely certain that your attorney is a great match.
What is a healthy amount of communication between founder and attorney?
I think more is always better than less. I’ve never had a problem with this philosophy. If a client has a question about something important, I’d much rather they call and ask about it before it turns into a problem. And a key part of providing quality legal service is to simply provide perspective. So I never tell my clients to think twice when they have questions and I don’t charge for phone calls.
*ETW note: Average lawyers point out risks. Great attorneys point out risks and raise solutions to unlock business opportunities; however, they can only do that if given the chance. Too many founders are reticent to make that extra call fearing the size of the eventual legal bill.
What, if anything, should founders avoid when communicating with an attorney?
I think inquiry should be unrestricted when it comes to your lawyer. I encourage my clients to ask anything. The attorney-client privilege creates a unique relationship in which communication is protected and confidential. This dynamic only strengthens the importance of picking the right lawyer. You want someone with whom you’re comfortable sharing all sorts of information that you generally wouldn’t want to share with others.*
*ETW note: One important caveat: Most often the attorney works for the company, not the founder. In the rare situation where the founder is at odds with the company, this might mean that the communication cannot be as open as it would be otherwise.
What are some red flags that founders should look out for when picking a lawyer?
It’s a bit of a red flag if a lawyer can’t provide accurate estimates. They should be familiar enough with the practice to know what something is going to cost. People sometimes forget that legal counsel is a service. Services should be priced accurately and consistently. This is especially important in the startup world where young companies feel the pressure to budget accurately.
Another red flag is slow responsiveness. Since startups typically require fairly intensive support, responsiveness is very important. Like many people in startup culture, lawyers often take on more work than they can handle. So you don’t want to pick an attorney who can’t give you enough of their time.
Should startups form relationships with more lawyers as they mature?
Certain lawyers specialize in specific stages of the startup lifecycle. And in some cases, it might makes sense to pursue a specialist. But that doesn’t necessarily mean that it’s better to continually form new attorney relationships. I typically represent a startup from formation through exit. I find it very satisfying to counsel a founder through the entire journey — through formation, financing, operational issues, employment issues, commercial agreements, and ultimately a successful exit. Again, this field of work is all about relationships. Founders and lawyers who discover great compatibility often end up riding the entire wave together.*
*ETW note: Which is part of the reason Paul handles ETW’s legal work as well. 😊
You can catch Paul in person at our May 9th ETW Advisors & 10x Management event being held at Chandran Gallery at 6:30pm in San Francisco. Contact us directly (etw@etwadvisors.com) if you would like to be added to the invite list.
