As a start-up founder, you spend a LOT of money on your law firm every year. Simple financings now-a-days can run over $25k. Then you’ve got board issues, options, intellectual property, etc. And if you’re filing patents, you’re going to be spending more money on your law firm per year than you might on one of your software engineers.

But most people don’t actually interview their law firm. They get a referral from a friend, check out the rates, and hire the firm. But would you hire an engineer like that? Just on a referral from a friend? Of course not, you’d still have multiple rounds of interviews, coding tests, and references for the engineer.

Do the same for your law firm.

First — specifically understand what partner and associate will be working on your docs. The associate is the most important as this person will be working on 95% of your legal work.

Second — you should read up on everything you can on legal matters … So you can credible interview the lawyer.

Third — Actually interview them. Send them a sample term sheet and have them critique it (if you are interviewing three firms at once, you’ll likely get three different critiques … so you’ll be able to ask each lawyer questions from the other’s recommendations). And understand the notable absences (most law firms have incredible disdain for angel investors and recommend terms that favor the venture guys over your early backers).

Fourth — do LOTS of reference checks. Ask for 5-10 references on the ASSOCIATE. Call the CEOs of these firms and talk to them. Ask detailed questions.

Remember — hiring your lawyer is just as important as any of the first 5 people you hire, so put the time into the hiring process that it deserves.

our engineers at Rapleaf have been able to innovate much faster than at any company I have ever witnessed before. and to celebrate their innovations, the engineers are going to selectively reveal some of their secrets with Ruby, MySQL, and more.

if you’re a geeky software engineer, check out the new Rapleaf engineering blog…

Hiring (and firing) is most important thing a CEO can focus on. It is also the thing that most first-time CEOs do a poor job on. From my own experience, I’m much better at hiring now than I was in my first few start-ups. Much better.

False positives and false negatives
When you are hiring, there are two mistakes you can make — the false positive (hiring the wrong person) or the false negative (not hiring the right person). Depending on your hiring strategy, you are going to fall into one camp or the other.

Big companies hire differently than small companies. Big companies need a lot of people (or, at least, they think they need a lot of people). Small companies need a few dedicated people.

So these big companies often err towards false positives. Great start-ups, by contrast, can’t afford to hire a B-player and must focus on only hiring great people and thus end up having lots of false negatives.

The biggest mistake I made on my first couple of start-ups (and the biggest mistake that most first-time CEOs make) is not being better at hiring great people.