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.