Welcome to a BetaKit weekly series designed to help startups and entrepreneurs. Each week, investors Roger Chabra and Katherine Hague tackle the tough questions facing founders today. Have a question you would like answered? Tweet them with the #askaninvestor hashtag, or email them here.
This week on Ask An Investor, we answer a question on how to select a lawyer and how to get the most value out of the lawyer you pick.
To answer this question, we called upon Gal Smolar, a BC-based corporate lawyer from Miller Thomson. Smolar has 15 years of experience in the tech world, starting as an in-house legal team member for IBM Global Services, and has worked with entrepreneurs, startups, investors, and parties in M&A transactions.
How should founders who are just starting out pick a lawyer?
Marc Suster says that a close relationship with a few law firms is one of the most important relationships that any entrepreneur can have. With that in mind, you should be strategic in selecting legal counsel, considering your company’s current and future needs. A few thoughts to keep in mind when going through the selection process:
When do you need to get a lawyer involved?
Founders should consider a lawyer whose firm has the capability to effectively serve startups.
Right away. Your lawyer needs to be a key member of your business team and able to assist with strategic decision making. Your legal counsel should be involved in the development of various corporate strategies, and thoroughly assess their potential impact from a legal standpoint. Keep in mind that your lawyer will act in the best interests of the company as a whole, not just the individual founders.
What can a lawyer help with in the early days? What about ongoing?
There are many ways in which a lawyer can assist in the early going and as the company develops. For example, your lawyer can:
As your company grows, your lawyer can provide additional support in areas such as labour and employment, financing transactions, mergers & acquisitions, activities in foreign jurisdictions, et cetera.
What can lawyers help with that founders don’t typically realize they can help with?
Lawyers are often seen as problem solvers. A general misconception is that there is no need to seek legal advice unless there is a specific legal issue that requires a solution. However, your lawyer acts as a strategic advisor and ambassador for your business; someone who understands your company values and will represent those values in every contract and legal matter. They will provide smart growth and risk management advice, find answers quickly, and have the know-how to implement an idea or project legally.
Cash is king for startups. What’s the best way to be cost-effective when working with your lawyer?
As an integral part of trust-building and creation of a long-lasting business relationship, you should consider sharing legal budget estimates with your counsel up front, and ensure you get estimates for all work product for cost certainty. Ask your lawyer to let you know if an issue arises that will impact their ability to meet those cost estimates so that there are no surprises.
High-quality legal advice and mentoring can be critical to the success of startup and early-stage businesses. In that respect, Miller Thomson LLP has developed the MTech program for emerging businesses which helps startup entrepreneurs achieve their objectives and grow. MTech gives founders, owners, and managers of rapidly emerging businesses access to sophisticated legal advice and top lawyers at competitive pricing. A few fundamentals of the program are:
Any other advice for founders when selecting or working with a lawyer?
There must be a fit between you and your lawyer, professionally, culturally, and personally. Founders should seek a lawyer who is genuinely interested not only in their business, but in them as well, i.e. about their background and the sacrifices they have made to build their business.
Approaching the relationship from a continuous meeting of expectation is useful, and serves as the foundation in building the trust and relationship between company and counsel, which can be tested as the company grows and faces more challenges.
The value of the lawyer is probably best expressed at critical moments in the company’s lifecycle.
The value of the lawyer is probably best expressed at critical moments in the company’s lifecycle, whether such moments stem from strategic decisions made by the founders which alter the course of the company or are caused by external circumstances which create a situation of crisis for the company (such as economic downturn, laws or regulations which have a negative impact on the startup’s industry sector, growing competition, etc.)
Great legal advice helps to build trust and a strong client-counsel relationship.
Furthermore, founders should consider a lawyer whose firm has the capability and resources to effectively serve startups, as well as maturing companies with more sophisticated needs, such as tax, IT, regulatory, M&A, etc. The ability to provide such wide-ranging legal advice can only reinforce the existing relationship between the startup and counsel, a relationship which would grow in parallel with the growth of the startup.
If the startup operates in an industry that requires very specific expertise — such as biotechnology for example — the founders should make sure that the “chosen one” is able to cover all the bases and, when needed, draw on the resources of colleagues specializing in other areas to offer the startup true value-added solutions.
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Feature photo via Unsplash