interview your lawyer

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.

1 thought on “interview your lawyer

  1. Matthew Dundon

    This is great advice Auren. Choosing your lawyer with care is vitally important.
    I want to suggest three qualifications to your advice.
    (1) (Don’t overvalue) specific industry expertise. Lawyers are all generalists. Even specialists are simply somewhat narrow generalists. This is inevitable, and it is a serious mistake to make a >high< degree of familiarity with your particular sector a selection criteria. You want someone who knows deals back and forth, not someone who is necessarily conversant in the latest Web 2.0 buzzwords (or whatever). That said, you should be wary of someone who manifests no curiosity or interest in what you do — that's a bad sign too.
    (2) Conflicts. Understand who else your prospective law firm represents, and don't sign waivers of conflicts of interest without carefully thinking them through. Some overlap in clientele is inevitable, too much overlap can be fatal when it really counts: those rare occasions when you need your lawyer to give you the hard advice to walk away from a deal or the appetite to throw down if things go pear shaped.
    (3) Associate screening is a good idea, but you need to bear in mind huge associate turnover — you can't count on an associate staying with you, as associates are constantly quitting and constantly being internally reassigned. The partner is ultimately who you can count on to see a deal out and to be there for you three years later when the deal is being restructured (or litigated!) (While there is partner turnover, partners simply take their files with them to another nearby firm where they're just as available; associates tend to scatter to the four winds, geographically and professionally.)

    Reply

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